[Federal Register Volume 66, Number 91 (Thursday, May 10, 2001)]
[Rules and Regulations]
[Pages 23845-23849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11810]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 630

[FHWA Docket No. 2000-7426]
RIN 2125-AE77


Federal-Aid Project Agreement

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Final rule.

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SUMMARY: The FHWA is amending its regulation on project agreements. 
Section 1305 of the Transportation Equity Act for the 21st Century 
(TEA-21) amended 23 U.S.C. 106(a) and combined authorization of work 
and execution of the project agreement for a Federal-aid project into a 
single action. Changes to the agreement provisions reflect these 
adjustments. Additionally, section 1304 of the TEA-21 amended 23 U.S.C. 
102(b) to include a provision to allow the granting of time extensions 
for engineering cost reimbursement. Changes to the agreement procedures 
are added to provide this new flexibility.

DATES: This final rule is effective June 11, 2001.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Wasley, Office of Program 
Administration (HIPA), 202-366-4658, or Harold Aikens, Office of the 
Chief Counsel, 202-366-0791, Federal Highway Administration, 400 
Seventh Street, SW., Washington, DC 20590-0001. Office hours are from 
7:45 a.m. to 4:15 p.m., e.t., Monday through Friday except Federal 
holidays.

SUPPLEMENTARY INFORMATION: The amendments in this final rule are based 
primarily on the notice of proposed rulemaking (NPRM) published on 
August 31, 2000, at 65 FR 52962 (FHWA Docket No. 2000-7426). All 
comments received in response to this NPRM have been considered in 
adopting these amendments.

Electronic Access

    Internet users may access all comments received by the U.S. DOT 
Dockets, Room PL-401 by using the universal resource locator (URL): 
http://dms.dot.gov. It is available 24 hours each day, 365 days each 
year. Electronic submission and retrieval help and guidelines are 
available under the help section of the web site.
    An electronic copy of this document may be downloaded by using a 
computer, modem and suitable communications software from the 
Government Printing Office's Electronic Bulletin Board Service at (202) 
512-1661. Internet users may reach the Office of the Federal Register's 
home page at: http://www.nara.gov/fedreg and the Government Printing 
Office's database at: http://www.access.gpo.gov.

Background

    Under the provisions of 23 U.S.C. 106, a formal agreement between 
the State transportation department (STD) and the FHWA is required for 
Federal-aid highway projects. This agreement, referred to as the 
``project agreement,'' is in essence a written contract between the 
State and the Federal Government defining the extent of the work to be 
undertaken, the State and the Federal shares of a project's cost, and 
commitments concerning maintenance of the project.

[[Page 23846]]

    The present regulation at 23 CFR 630, subpart C, provides 
requirements concerning the project agreement. It includes detailed 
instructions on preparation of the project agreement, and an assemblage 
of agreement provisions that are part of the project agreement.
    The present regulation at 23 CFR 630, subpart A, provides 
requirements concerning the project authorization. The FHWA project 
authorization commits the Federal Government to participate in the 
funding of a project, except in those instances where the State 
requests FHWA authorization without the commitment of Federal funds. In 
addition, FHWA authorization also establishes a point in time after 
which costs incurred on a project are eligible for Federal 
participation.
    Requirements covering project agreements are contained in this 
final rule. This final rule updates and modifies the existing 
regulation to incorporate needed changes made by sections 1304 and 1305 
of the TEA-21, Public Law 105-178, 112 Stat.107, it combines the 
project agreement and the project authorization of work. The final rule 
amends these regulations in the manner and for the reasons indicated 
below.

Discussion of Comments

    The FHWA published a notice of proposed rulemaking (NPRM) 
concerning proposed revisions to Part 630 on August 31, 2000, at 65 FR 
52962. Interested persons were invited to participate in the 
development of this final rule by submitting written comments to the 
FHWA. Only one State transportation agency submitted comments. The 
State agency provided two comments on proposed Sec. 630.106(f), and 
four comments concerning clarification of the NPRM's section-by-section 
analysis of Sec. 630.106(f).
    Section 630.106(f)(2) discusses the manner for establishing the 
Federal share of eligible project costs. The comment was: Could an 
agreement with a lump sum Federal share be changed to a pro rata 
Federal share? Yes, when the Federal share in the project agreement is 
changed, the manner in which the Federal share is established can also 
be changed. The Federal share established as either lump sum or pro 
rata in the project agreement at the time of authorization does not 
have to be the same, but the Federal share can only be adjusted to 
reflect the actual bid amount received. The final rule is not changed 
as a result of this comment.
    Concerning the section-by-section analysis for Sec. 630.106(f), the 
commenter requested explanation of the following: (1) whether the 
Federal share agreed to would continue through the life of the project; 
and (2) whether manipulation of the funding levels of individual 
projects to accommodate program funding changes or needs would not be 
allowed. The FHWA believes that once a project is under agreement the 
amount of Federal funds and appropriation type cannot be changed except 
to reflect a change in the bids received or any one of the four general 
categories for exceptions contained in Sec. 630.106(c)(1) through 
(c)(4).
    A follow up comment stated that the agency would not support any 
regulation that would require additional funds to cover project cost 
overruns. Establishing the contractual obligation of the Federal 
Government for the payment of the Federal share of the cost of the 
project is a legislative requirement of 23 U.S.C. 106(a)(3). The 
Federal Government cannot commit future funds that might not be 
available. Funds must be available at the time the project agreement is 
executed. The State is still required to prepare a modification to a 
project agreement as changes occur. In the same paragraph, it was 
suggested that the term ``significantly'' be removed from the analysis 
section to avoid any vagueness. The term ``significant'' rather than 
``substantive'' is used in the discussion to account for different 
interpretations of what is substantial. The word ``significantly'' 
might suggest considerable in amount, which might not recognize that 
flexibility may be applied for project implementation. The rule does 
not attempt to apply hard and fast rules or percentages as project 
needs and circumstances vary. Current Sec. 630.106(f)(2), that allows a 
change in the project agreement to reflect the actual bid received, 
uses the term ``substantive'' when compared to the STD's estimated cost 
to trigger an adjustment to the Federal share. The cost difference 
should have real meaning when compared to the total cost before an 
adjustment is made to the Federal share. For example, a thousand dollar 
cost difference, when compared to a million dollar estimate doesn't 
have much meaning. Therefore, substantial may be viewed differently 
among local, regional, and State projects.
    The State agency asked if the manner established for the Federal-
aid share of eligible project costs under proposed Sec. 630.106(f)(1) 
could be changed at the time an adjustment is made to reflect the 
actual bids received. The long standing regulatory provision, retained 
in Sec. 630.106(f)(2), that allows a one time change in the project 
agreement to reflect the actual bid received, also permits the manner 
established for the Federal-aid share to be changed. Adjustments to the 
Federal share, or the manner in which established under 
Sec. 630.106(f)(1) will only be permitted for projects in situations 
where bid prices are significantly different from the estimates at the 
time of FHWA authorization. A change in the Federal commitment from the 
agreed to amount of Federal funds obligated from a specific Federal 
appropriation type or category of funds, to take advantage of new 
appropriations or to switch appropriations of individual projects to 
accommodate program funding changes or needs, is not allowed except for 
authorization to proceed under Sec. 630.106(c). The four general 
categories for exceptions to this rule contained in Sec. 630.106(c)(1) 
through (4) allow a change to any category of funds eligible at the 
time funds are available for conversion to a contractual obligation of 
the Federal government under 23 U.S.C. 106.
    The State agency proposed changing the wording in 
Sec. 630.106(f)(2) from ``shortly after'' to ``based on.'' The State 
agency felt that the term ``shortly'' was too vague. It is our intent 
to make any funding changes, made as a result of actual bids, as soon 
as it is practical after the bids are received within the same Federal 
fiscal year. Our intent is not to have Federal commitments outstanding. 
Funding changes in the amount of Federal funds committed as a result of 
actual bids received should be as soon as practicable within the same 
Federal fiscal year that the bids are received. For these reasons, we 
are not changing the wording in Sec. 630.106(f)(2).

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The FHWA has determined that this action is not a significant 
regulatory action within the meaning of Executive Order 12866 or 
significant within the meaning of U. S. Department of Transportation 
regulatory policies and procedures. The final rule updates the Federal-
aid project agreement regulation to conform to recent laws, 
regulations, or guidance and clarifies existing policies. The economic 
impact of this rulemaking will be minimal; therefore, a full regulatory 
evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this rule on small 
entities. Based on the evaluation, the FHWA certifies that this action 
will not have a significant

[[Page 23847]]

economic impact on a substantial number of small entities. This rule 
clarifies and simplifies procedures used by State highway agencies in 
accordance with existing laws, regulations, or guidance.

Unfunded Mandates Reform Act of 1995

    This rule would not impose a Federal mandate resulting in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year (2 
U.S.C. 1531 et seq.).

Executive Order 12988 (Civil Justice Reform)

    This action meets applicable standards in sections 3(a) and 3(b)(2) 
of Executive Order 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

    We have analyzed this action under Executive Order 13045, 
Protection of Children from Environmental Health Risks and Safety 
Risks. This rule is not economically significant and does not concern 
an environmental risk to health or safety that may disproportionately 
affect children.

Executive Order 12630 (Taking of Private Property)

    This rule would not effect a taking of private property or 
otherwise have taking implications under Executive Order 12630, 
Governmental Actions and Interference with Constitutionally Protected 
Property Rights.

Executive Order 13132 (Federalism)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132, dated August 4, 1999, and 
it has been determined that it does not have a substantial direct 
affect or significant federalism implications on States or local 
governments that would limit the policymaking discretion of the States. 
Nothing in this document directly preempts any State law or regulation.

Executive Order 13175 (Tribal Consultation)

    The FHWA has analyzed this proposal under Executive Order 13175, 
dated November 6, 2000, and believes that the final rule will not have 
substantial direct effects on one or more Indian tribes; will not 
impose substantial direct compliance costs on Indian tribal 
governments; and will not preempt tribal law. A formal project 
agreement between the FHWA and a State is required for all Federal-aid 
projects. The project agreement process under this final rule has not 
changed for Indian tribal governments. Federal-aid funds for projects 
involving Indian tribal governments will continue indirectly through 
the State. Authorization, project agreement, and obligation of funds 
are by statute a combined action. To avoid confusion and 
misinterpretations, the final regulation (23 CFR 630) is being revised 
to reflect current procedures. Therefore, a tribal summary impact 
statement is not required.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing 
Executive Order 12372 regarding intergovernmental consultation on 
Federal programs and activities apply to this program.

Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et 
seq.), Federal agencies must obtain approval from the Office of 
Management and Budget (OMB) for each collection of information they 
conduct, sponsor, or require through regulations. The FHWA has reviewed 
this rule and determined that the information collection requirements 
associated with this rulemaking are covered by a currently approved 
information collection, OMB Approval No. 2125-0529, entitled, 
``Preparation and Execution of the Project Agreement and 
Modifications,'' which is due to expire on May 31, 2001. There are no 
changes to the current information collection burden estimates as a 
result of this final rule. Interested persons were invited to provide 
comments regarding this information collection as a part of the 
development of this final rule by submitting written comments on the 
NPRM. No comments were received regarding these information collection 
requirements. This final rule updates and modifies the existing 
requirements to reflect statutory changes to the project agreement 
process enacted by section 1305 of the Transportation Equity Act for 
the 21st Century (TEA-21, Pub. L. 105-178) amended 23 U.S.C. 106(a) and 
combined authorization of work and execution of the project agreement 
for a Federal-aid project into a single action.

National Environmental Policy Act

    The agency has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has 
determined that this action would not have any effect on the quality of 
the environment.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects in 23 CFR Part 630

    Government contracts, Grant programs--Transportation, Highways and 
roads, Project agreement procedures.

    Issued on: May 3, 2001.
Vincent F. Schimmoller,
Deputy Executive Director, Federal Highway Administration.

    In consideration of the foregoing, the FHWA amends title 23, 
chapter I, Code of Federal Regulations, by amending part 630, as set 
forth below.

PART 630--PRECONSTRUCTION PROCEDURES

    1. Revise the authority citation for part 630 to read as follows:

    Authority: 23 U.S.C. 106, 109, 115, 315, 320, and 402(a); 23 CFR 
1.32; and 49 CFR 1.48(b).

    2. Revise subpart A of part 630 to read as follows:

Subpart A--Project Authorization and Agreements

Sec.
630.102  Purpose.
630.104  Applicability.
630.106  Authorization to proceed.
630.108  Preparation of agreement.
630.110  Modification of original agreement.
630.112  Agreement provisions.


Sec. 630.102  Purpose.

    The purpose of this subpart is to prescribe policies for 
authorizing Federal-aid projects through execution of the project 
agreement required by 23 U.S.C. 106(a)(2).


Sec. 630.104  Applicability.

    (a) This subpart is applicable to all Federal-aid projects unless 
specifically exempted.
    (b) Other projects which involve special procedures are to be 
approved, or authorized as set out in the implementing instructions or 
regulations for those projects.

[[Page 23848]]

Sec. 630.106  Authorization to proceed.

    (a)(1) The State transportation department (STD) must obtain an 
authorization to proceed from the FHWA before beginning work on any 
Federal-aid project. The STD may request an authorization to proceed in 
writing or by electronic mail for a project or a group of projects.
    (2) The FHWA will issue the authorization to proceed either through 
or after the execution of a formal project agreement with the State. 
The agreement can be executed only after applicable prerequisite 
requirements of Federal laws and implementing regulations and 
directives are satisfied. Except as provided in paragraphs (c)(1) 
through (c)(4) of this section, the FHWA will obligate Federal funds in 
the project or group of projects upon execution of the project 
agreement.
    (b) Federal funds shall not participate in costs incurred prior to 
the date of a project agreement except as provided by 23 CFR 1.9(b).
    (c) The execution of the project agreement shall be deemed a 
contractual obligation of the Federal government under 23 U.S.C. 106 
and shall require that appropriate funds be available at the time of 
authorization for the agreed Federal share, either pro rata or lump 
sum, of the cost of eligible work to be incurred by the State except as 
follows:
    (1) Advance construction projects authorized under 23 U.S.C. 115.
    (2) Projects for preliminary studies for the portion of the 
preliminary engineering and right-of-way (ROW) phase(s) through the 
selection of a location.
    (3) Projects for ROW acquisition in hardship and protective buying 
situations through the selection of a particular location. This 
includes ROW acquisition within a potential highway corridor under 
consideration where necessary to preserve the corridor for future 
highway purposes. Authorization of work under this paragraph shall be 
in accord with the provisions of 23 CFR part 710.
    (4) In special cases where the Federal Highway Administrator 
determines it to be in the best interest of the Federal-aid highway 
program.
    (d) For projects authorized to proceed under paragraphs (c)(1) 
through (c)(4) of this section, the executed project agreement shall 
contain the following statement: ``Authorization to proceed is not a 
commitment or obligation to provide Federal funds for that portion of 
the undertaking not fully funded herein.''
    (e) For projects authorized under paragraphs (c)(2) and (c)(3) of 
this section, subsequent authorizations beyond the location stage shall 
not be given until appropriate available funds have been obligated to 
cover eligible costs of the work covered by the previous authorization.
    (f)(1) The Federal-aid share of eligible project costs shall be 
established at the time the project agreement is executed in one of the 
following manners:
    (i) Pro rata, with the agreement stating the Federal share as a 
specified percentage; or
    (ii) Lump sum, with the agreement stating that Federal funds are 
limited to a specified dollar amount not to exceed the legal pro rata.
    (2) The pro-rata or lump sum share may be adjusted before or 
shortly after contract award to reflect any substantive change in the 
bids received as compared to the STD's estimated cost of the project at 
the time of FHWA authorization, provided that Federal funds are 
available.
    (3) Federal participation is limited to the agreed Federal share of 
eligible costs actually incurred by the State, not to exceed the 
maximum permitted by enabling legislation.
    (g) The State may contribute more than the normal non-Federal share 
of title 23, U.S.C. projects. In general, financing proposals that 
result in only minimal amounts of Federal funds in projects should be 
avoided unless they are based on sound project management decisions.
    (h)(1) Donations of cash, land, material or services may be 
credited to the State's non-Federal share of the participating project 
work in accordance with title 23, U.S.C., and implementing regulations.
    (2) Contributions may not exceed the total costs incurred by the 
State on the project. Cash contributions from all sources plus the 
Federal funds may not exceed the total cost of the project.


Sec. 630.108  Preparation of agreement.

    (a) The STD shall prepare a project agreement for each Federal-aid 
project.
    (b) The STD may develop the project agreement in a format 
acceptable to both the STD and the FHWA provided the following are 
included:
    (1) A description of each project location including State and 
project termini;
    (2) The Federal-aid project number;
    (3) The work covered by the agreement;
    (4) The total project cost and amount of Federal funds under 
agreement;
    (5) The Federal-aid share of eligible project costs expressed as 
either a pro rata percentage or a lump sum as set forth in 
Sec. 630.106(f)(1);
    (6) A statement that the State accepts and will comply with the 
agreement provisions set forth in Sec. 630.112;
    (7) A statement that the State stipulates that its signature on the 
project agreement constitutes the making of the certifications set for 
in Sec. 630.112; and
    (8) Signatures of officials from both the State and the FHWA, and 
the date executed.
    (c) The project agreement should also document, by comment, 
instances where:
    (1) The State is applying amounts of credits from special accounts 
(such as the 23 U.S.C. 120(j) toll credits, 23 U.S.C. 144(n) off-system 
bridge credits and 23 U.S.C. 323 land value credits) to cover all or a 
portion of the normal percent non-Federal share of the project;
    (2) The project involves other arrangements affecting Federal 
funding or non-Federal matching provisions, including tapered match, 
donations, or use of other Federal agency funds, if known at the time 
the project agreement is executed; and
    (3) The State is claiming finance related costs for bond and other 
debt instrument financing (such as payments to States under 23 U.S.C. 
122).
    (d) The STD may use an electronic version of the agreement as 
provided by the FHWA.
    (Approved by the Office of Management and Budget under control 
number 2125-0529)


Sec. 630.110  Modification of original agreement.

    (a) When changes are needed to the original project agreement, a 
modification of agreement shall be prepared. Agreements should not be 
modified to replace one Federal fund category with another unless 
specifically authorized by statute.
    (b) The STD may develop the modification of project agreement in a 
format acceptable to both the STD and the FHWA provided the following 
are included:
    (1) The Federal-aid project number and State;
    (2) A sequential number identifying the modification;
    (3) A reference to the date of the original project agreement to be 
modified;
    (4) The original total project cost and the original amount of 
Federal funds under agreement;
    (5) The revised total project cost and the revised amount of 
Federal funds under agreement;
    (6) The reason for the modifications; and,

[[Page 23849]]

    (7) Signatures of officials from both the State and the FHWA and 
date executed.
    (c) The STD may use an electronic version of the modification of 
project agreement as provided by the FHWA.


Sec. 630.112  Agreement provisions.

    (a) The State, through its transportation department, accepts and 
agrees to comply with the applicable terms and conditions set forth in 
title 23, U.S.C., the regulations issued pursuant thereto, the policies 
and procedures promulgated by the FHWA relative to the designated 
project covered by the agreement, and all other applicable Federal laws 
and regulations.
    (b) Federal funds obligated for the project must not exceed the 
amount agreed to on the project agreement, the balance of the estimated 
total cost being an obligation of the State. Such obligation of Federal 
funds extends only to project costs incurred by the State after the 
execution of a formal project agreement with the FHWA.
    (c) The State must stipulate that as a condition to payment of the 
Federal funds obligated, it accepts and will comply with the following 
applicable provisions:
    (1) Project for acquisition of rights-of-way. In the event that 
actual construction of a road on this right-of-way is not undertaken by 
the close of the twentieth fiscal year following the fiscal year in 
which the project is authorized, the STD will repay to the FHWA the sum 
or sums of Federal funds paid to the transportation department under 
the terms of the agreement. The State may request a time extension 
beyond the 20-year limit with no repayment of Federal funds, and the 
FHWA may approve this request if it is considered reasonable.
    (2) Preliminary engineering project. In the event that right-of-way 
acquisition for, or actual construction of, the road for which this 
preliminary engineering is undertaken is not started by the close of 
the tenth fiscal year following the fiscal year in which the project is 
authorized, the STD will repay to the FHWA the sum or sums of Federal 
funds paid to the transportation department under the terms of the 
agreement. The State may request a time extension for any preliminary 
engineering project beyond the 10-year limit with no repayment of 
Federal funds, and the FHWA may approve this request if it is 
considered reasonable.
    (3) Drug-free workplace certification. By signing the project 
agreement, the STD agrees to provide a drug-free workplace as required 
by 49 CFR part 29, subpart F. In signing the project agreement, the 
State is providing the certification required in appendix C to 49 CFR 
part 29, unless the State provides an annual certification.
    (4) Suspension and debarment certification. By signing the project 
agreement, the STD agrees to fulfill the responsibility imposed by 49 
CFR 29.510 regarding debarment, suspension, and other responsibility 
matters. In signing the project agreement, the State is providing the 
certification for its principals required in appendix A to 49 CFR part 
29.
    (5) Lobbying certification. By signing the project agreement, the 
STD agrees to abide by the lobbying restrictions set forth in 49 CFR 
part 20. In signing the project agreement, the State is providing the 
certification required in appendix A to 49 CFR part 20.

Subpart C--[Removed and Reserved]

    3. In part 630, remove and reserve subpart C.

[FR Doc. 01-11810 Filed 5-9-01; 8:45 am]
BILLING CODE 4910-22-P