[Federal Register Volume 78, Number 168 (Thursday, August 29, 2013)]
[Proposed Rules]
[Pages 53380-53383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20315]



[[Page 53380]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 627

[FHWA Docket No. FHWA-2013-0039]
RIN 2125-AF64


Value Engineering

AGENCY: Federal Highway Administration (FHWA), U.S. Department of 
Transportation (DOT).

ACTION: Notice of Proposed Rule Making (NPRM); request for comments.

-----------------------------------------------------------------------

SUMMARY: The FHWA proposes to update the existing value engineering 
(VE) regulations to make the regulations consistent with the statutory 
changes in the Moving Ahead for Progress in the 21st Century Act (MAP-
21) and to make other non-substantive changes for clarity.

DATES: Comments must be received on or before October 28, 2013. Late 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments, identified by docket number FHWA-
2013-0039, by any of the following methods:
    Federal eRulemaking Portal: Go to http://www.regulations.gov and 
follow the online instructions for submitting comments.
    Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.
    Hand Delivery: West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.
    Instructions: You must include the agency name and docket number 
FHWA-2013-0039 on your comments. All comments received will be posted, 
without change, to http://www.regulations.gov, including any personal 
information provided.

FOR FURTHER INFORMATION CONTACT: Mr. Ken Leuderalbert, Value 
Engineering and Utilities Program Manager, FHWA Office of Program 
Administration, Federal Highway Administration, 575 North Pennsylvania 
Street, Indianapolis, IN 46204, (317) 226-5351, or via email at 
[email protected], or Mr. Michael Harkins, FHWA Office of the 
Chief Counsel, Federal Highway Administration, 1200 New Jersey Avenue 
SE., Washington, DC 20590, (202) 366-4928, or via email at 
[email protected]. Office hours for the FHWA are from 8:00 a.m. 
to 4:30 p.m. e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    This document and all comments received may be viewed online 
through the Federal eRulemaking portal at: http://www.regulations.gov. 
The Web site 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 also be downloaded by 
accessing the Office of the Federal Register's home page at: http://www.archives.gov or the Government Printing Office's Web page at: 
http://www.gpo.gov/fdsys/.

Background

    The FHWA proposes to update the existing regulations governing the 
conduct of VE analyses in the planning and development of highway 
improvement projects to ensure consistency and compatibility with 
recent changes to the underlying statutory authority at section 106(e) 
of title 23, United States Code (U.S.C.). On July 6, 2012, MAP-21 (Pub. 
L. 112-141) was signed into law. Section 1503(a)(3) of MAP-21 amended 
23 U.S.C. 106(e) by increasing the project monetary thresholds 
triggering the need for a VE analysis, specifying that a VE analysis is 
not required for projects delivered using the design-build method of 
construction, and defining the requirements for a State Transportation 
Agency (STA) to establish and sustain a VE Program under which VE 
analyses are conducted on all applicable projects.
    In late 1995, Congress passed the National Highway System 
Designation Act which directed the Secretary to establish a program 
that required States to carry out a VE analysis for all Federal-aid 
highway projects on the National Highway System (NHS) with an estimated 
total cost of $25 million or more. On February 14, 1997, FHWA 
established its VE regulations in 23 CFR part 627, formally 
establishing the FHWA VE program along with the requirement that STAs 
create and sustain a VE program. Section 1904 of the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users (Pub. 
L. 109-59), required that a VE analysis be conducted for bridge 
projects with an estimated total cost of $20 million or more and any 
other projects determined by the Secretary of Transportation to be 
appropriate.
    Section 1503(a)(3) of MAP-21 modified the requirements and raised 
the thresholds for when a VE analysis is required to $50,000,000 or 
more for projects on the NHS using Federal-aid Highway Program Funding 
(FAHP) assistance, and $40,000,000 or more for bridge projects on the 
NHS receiving Federal assistance. Section 1503(a)(5) removed the 
requirement to conduct a VE analysis for projects delivered using the 
design-build method of construction. In addition, MAP-21 defined the 
requirements for an STA to establish and sustain a VE Program under 
which VE analyses are conducted on all applicable projects, consistent 
with the current regulations pertaining to STA VE programs (as 
specified in 23 CFR 627.9).
    In Fiscal Year 2011, STAs performed VE analyses on 378 Federal-aid 
highway projects and approved and implemented a total of 1,224 VE 
recommendations, resulting in a construction cost savings of $1.006 
billion. In addition, a savings of $38.33 million was realized as the 
result of approved construction VE change proposals (VECP) that were 
submitted by contractors and accepted by STAs.
    The STA VE programs, the VE analyses conducted on applicable 
projects, and VECPs have resulted in annual cost savings of $1.7 
billion on average from 2002 through 2011. Additional information on 
STA, local authority, and FHWA VE programs and practices is available 
at: http://www.fhwa.dot.gov/ve. In light of these savings, the FHWA 
notes that Congress has provided the Secretary with authority to 
require STAs to conduct VE analyses on other projects where the 
Secretary determines that it is appropriate to do so. As such, the FHWA 
may exercise this discretion on a project-by-project basis for projects 
that do not fall within the statutory thresholds where the FHWA 
determines that there is a clear potential for significant savings that 
outweighs the administrative burden associated with conducting the VE 
analysis.

Section by Section Discussion of the Proposed Changes to 23 CFR 627

    The FHWA proposes to revise 23 CFR part 627--Value Engineering as 
follows:

Section 627.1--Purpose and Applicability

    Paragraph (b) would be amended to clarify that the policies and 
procedures of a State DOT's VE program shall include the requirement to 
implement approved VE analysis recommendations when a VE analysis is 
conducted.

[[Page 53381]]

Section 627.3--Definitions

    The definition of final design would be amended to read as follows: 
``Final design. Any design activities following preliminary design and 
expressly includes the preparation of final construction plans and 
detailed specifications for the performance of construction work.'' The 
definition of total project costs would be revised to clarify that the 
total estimated cost of a project includes all of the work that is 
conducted. The definition of VE Job Plan would be revised to state that 
the VE Job Plan ``may'' be scaled to meet the needs of the project 
rather than that it ``should'' be scaled.

Section 627.5--Applicable Projects

    Paragraph (b)(1) would be amended to specify that a VE analysis is 
required for each project on the NHS with an estimated total project 
cost of $50 million or more that utilizes Federal-aid highway funding 
instead of the previous threshold of $25 million.
    Paragraph (b)(2) would be amended to specify that a VE analysis is 
required for each bridge project on the NHS with an estimated total 
project cost of $40 million or more that utilizes Federal-aid highway 
funding instead of the previous threshold of $20 million. Paragraph 
(b)(2) would also be amended to remove the VE analysis requirement for 
bridges off the NHS.
    Paragraph (e) would be amended to clarify that a VE analysis is no 
longer required for projects delivered using the design-build method of 
construction. However, STAs and local public agencies are still 
encouraged to conduct VE analyses for such projects.
    Paragraph (f) would be amended to clarify that a VE analysis is 
required for projects delivered using the Construction Manager/General 
Contractor (CM/GC) method of contracting that meet the monetary 
thresholds defined in 23 CFR 627.5(b).

Section 627.9--Conducting a VE Analysis

    Paragraph (c) would be amended to clarify that when a STA or local 
authority chooses to conduct a VE analysis on a design-build project, 
the VE analysis must be performed prior to the release of the Request 
for Proposal (RFP).
    Paragraph (d) would be amended to add a section clarifying that a 
VE analysis is not required to be completed prior to the release of the 
RFP for CM/GC contracts. However, the VE analysis would need to be 
completed, and approved recommendations would need to be incorporated 
into the project plans, prior to requesting a construction price 
proposal from the CM/GC contractor.

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable. In addition to late comments, the 
DOT will also continue to file relevant information in the docket as it 
becomes available after the comment period closing date, and interested 
persons should continue to examine the docket for new material. A final 
rule may be published at any time after close of the comment period.

Executive Order 12866 (Regulatory Planning and Review), Executive Order 
13563 (Improving Regulation and Regulatory Review), and DOT Regulatory 
Policies and Procedures

    The FHWA has determined that this proposed rule is not a 
significant regulatory action within the meaning of Executive Order 
12866 and is not a significant rulemaking within the meaning of the DOT 
regulatory policies and procedures.
    The changes that this rule proposes are requirements mandated by 
MAP-21 and are intended to clarify and revise the requirements for 
conducting a VE analysis. Additionally, this action complies with the 
principles of Executive Order 13563. After evaluating the costs and 
benefits of these proposed amendments, the FHWA anticipates that the 
economic impact of this rulemaking will be minimal. These changes are 
not anticipated to adversely affect any action taken or planned by 
another agency and will not materially alter the budgetary impact of 
any entitlements, grants, user fees, or loan programs.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612), the FHWA has evaluated the effects of this rule on 
small entities, such as local governments and businesses. Based on this 
evaluation, the FHWA anticipated this action would not have a 
significant economic impact on a substantial number of small entities. 
The proposed amendment clarifies and revises the requirements for 
conducting a VE analysis on applicable projects using Federal-aid 
highway funding. After evaluating the cost of these proposed 
amendments, as required by changes in authorizing legislation, the FHWA 
believes the impacts upon small entities that use FAHP funding on 
projects would be negligible. Therefore, I certify that the proposed 
action would not have a significant economic impact on a substantial 
number of small entities.

Unfunded Mandates Reform Act of 1995

    This NPRM would not impose unfunded mandates as defined by the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995, 
109 Stat. 48). The actions proposed in this NPRM would not result in 
the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector, of $143.1 million or more in any 
one year (2 U.S.C. 1532). Furthermore, in compliance with the Unfunded 
Mandates Reform Act of 1995, FHWA will evaluate any regulatory action 
that might be proposed in subsequent stages of the proceeding to assess 
the effects on State, local, and Tribal governments and the private 
sector. Additionally, the definition of ``Federal Mandate'' in the 
Unfunded Mandates Reform Act excludes financial assistance of the type 
in which State, local, or Tribal governments have authority to adjust 
their participation in the program in accordance with changes made in 
the program by the Federal Government. The Federal-aid highway program 
permits this type of flexibility.

Executive Order 13132 (Federalism Assessment)

    This proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132, dated 
August 4, 1999, and the FHWA has determined that this proposed action 
does not have a substantial direct effect or sufficient federalism 
implications on States that would limit the policymaking discretion of 
the States. Nothing in this proposed rule directly preempts any State 
law or regulation or affects the States' ability to discharge 
traditional State governmental functions.

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

    The FHWA invites public comment about our intention to request the 
Office

[[Page 53382]]

of Management and Budget approval for a new information collection, 
which is summarized in the Background section of this document. We are 
required to publish this notice in the Federal Register by the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.).
    Collection Title: Value Engineering Analyses on Federal-aid Highway 
Projects.
    Type of Request: New information collection requirement.
    Respondents: 50 States, the District of Columbia, and Puerto Rico.
    Frequency: One collection every year.
    Estimated Average Burden per Response: Nationwide on average there 
are approximately 400 VE analyses that are conducted annually. It will 
take approximately 30 minutes to compile the results of each VE 
analysis that is conducted. It will also take approximately 3 hours to 
compile the results of all of the VE analyses that are conducted 
annually in each State DOT, the District of Columbia, and Puerto Rico 
and to submit these results to FHWA.
    Estimated Total Annual Burden Hours: Approximately 356 hours per 
year. When submitting comments for this proposed information 
collection, use the FHWA Docket ID Number FHWA- 2013-0039. You may use 
by any of the following methods:
    Web site: For access to the document to read background documents 
or comments received go to the Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Fax: 1-202-493-2251.
    Mail: Document Management Facility, U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590.
    Hand Delivery or Courier: U.S. Department of Transportation, West 
Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., 
Washington, DC 20590.

National Environmental Policy Act

    The FHWA has analyzed this rule for the purpose of the National 
Environmental Policy Act (42 U.S.C. 4321 et seq.) and has determined it 
will not have any effect on the quality of the human and natural 
environment, because this rule merely establishes the requirements to 
conduct a VE analyses whenever an applicable Federal-aid highway 
project is to be design and constructed. Therefore, this action is 
categorically excluded in 23 CFR 771.117(c)(20).

Executive Order 13175 (Tribal Consultation)

    The FHWA has analyzed this action under Executive Order 13175, 
dated November 6, 2000, and believes that this rule would not have 
substantial direct effects on one or more Indian Tribes; would not 
impose substantial direct compliance costs on Indian Tribal 
governments; and would not preempt Tribal law. This proposed rulemaking 
revises the existing requirements to conduct a VE analyses whenever an 
applicable Federal-aid highway project is to be designed and 
constructed. As such, this proposed rule would not impose any direct 
compliance requirements on Indian Tribal governments nor would it have 
any economic or other impacts on the viability of Indian Tribes. 
Therefore, a Tribal summary impact statement is not required.

Executive Order 13211 (Energy Effects)

    The FHWA has analyzed this proposed action under Executive Order 
13211, Actions Concerning Regulations that Significantly Affect Energy 
Supply, Distribution or Use. We have determined that this proposed 
action would not be a significant energy action under that order 
because any action contemplated would not be likely to have a 
significant adverse effect on the supply, distribution, or use of 
energy. Therefore, the FHWA certifies that a Statement of Energy 
Effects under Executive Order 13211 is not required.

Executive Order 12898 (Environmental Justice)

    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations. The FHWA has 
determined that this rule does not raise any environmental justice 
issues.

Executive Order 12630 (Taking of Private Property)

    The FHWA has analyzed this proposed rule and has determined that 
this proposed action would not affect 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 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)

    The FHWA has analyzed this proposed action under Executive Order 
13045, Protection of Children from Environmental Health Risks and 
Safety Risks, and certifies that this proposed action would not cause 
an environmental risk to health or safety that may disproportionately 
affect children.

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 number 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 627

    Grant programs--transportation, Highways and roads.

    Issued On: August 12, 2013.
Victor M. Mendez,
FHWA Administrator.
    In consideration of the foregoing, the FHWA proposes to amend title 
23, Code of Federal Regulations, part 627 as follows:

Title 23

PART 627--VALUE ENGINEERING

0
1. The authority citation for part 627 continues to read as follows:

    Authority: 23 U.S.C. 106(e), 106(g), 106(h), 112(a) and (b), 
302, 315; and 49 CFR part 18.


Sec.  627.1  [Amended]

0
2. In Sec.  627.1, amend paragraph (b) by removing the words 
``identifying when a VE analysis is required'' and adding in its place 
the words ``under which VE analyses are identified, conducted and 
approved VE recommendations implemented on applicable projects (as 
defined in 627.5 of this part)''.
0
3. Amend Sec.  627.3 by:
0
a. Revising the definitions ``Final Design'' and ``Total Project 
Costs,'' and
0
b. Amending the definition of ``Value Engineering VE Job Plan'' by 
removing the word ``should'' and adding in its place the word ``may''.
    The revisions read as follows:

[[Page 53383]]

Sec.  627.3  Definitions.

* * * * *
    Final Design. Any design activities following preliminary design 
and expressly includes the preparation of final construction plans and 
detailed specifications for the performance of construction work.
* * * * *
    Total Project Costs. The estimated costs of all work to be 
conducted on a project including the environment, design, right-of-way, 
utilities and construction phases.
* * * * *
0
4. Amend Sec.  627.5 by:
0
a. Amend paragraph (a) by adding the words ``prior to authorizing the 
project for construction (as specified in 23 CFR 630.205)'' at the end 
of the sentence.
0
b. Revise paragraphs (b) introductory text, (b)(1), (2) and (3),
0
c. Amend paragraph (b)(4) by removing the words ``for which'' and 
adding in its place ``where'', and by adding the word ``construction'' 
between the words ``the letting''.
0
d. Amend paragraph (b)(5) by removing the words ``Federal-aid'' and 
``the'' and adding the words ``that utilizes Federal-aid highway 
program funding'' to the end of the sentence.
0
e. Revise paragraph (c).
0
f. Amend paragraph (d) by removing the words ``any additional VE 
analysis'' and adding in its place ``additional VE analyses'' and by 
adding the words ``where there is a high potential for the project to 
benefit from a VE analysis'' at the end of the sentence.
0
g. Revise paragraph (e) to read.
0
h. Add paragraph (f).
    The revisions and additions read as follows:


Sec.  627.5  Applicable projects.

* * * * *
    (b) Applicable projects requiring a VE analysis shall include the 
following:
    (1) Each project located on the National Highway System (NHS) (as 
specified in 23 U.S.C. 103) with an estimated total project cost of $50 
million or more that utilizes Federal-aid highway funding;
    (2) Each bridge project located on the NHS with an estimated total 
project cost of $40 million or more that utilizes Federal-aid highway 
funding;
    (3) Any major project (as defined in 23 U.S.C. 106(h)), located on 
or off of the NHS, that utilizes Federal-aid highway funding in any 
contract or phase comprising the major project;
* * * * *
    (c) An additional VE analysis is not required if, after conducting 
a VE analysis required under this part, the project is subsequently 
split into smaller projects in the design phase or the project is 
programmed to be completed by the letting of multiple construction 
projects. However, the STA may not avoid the requirement to conduct a 
VE analysis on an applicable project by splitting the project into 
smaller projects, or multiple design or construction projects.
* * * * *
    (e) A VE analysis is not required for projects delivered using the 
design build method of construction. While not required, FHWA 
encourages STAs and local public authorities to conduct a VE analysis 
on design build projects that meet the requirements identified in 
subsection (b) of this section.
* * * * *
    (f) A VE analysis is required on projects delivered using the 
Construction Manager/General Contractor (CM/GC) method of contracting, 
if the project meets the requirements identified in subsection (b) of 
this section.
* * * * *


Sec.  627.7  [Amended]

0
5. Amend Sec.  627.7 by:
0
a. Amending paragraph (a) by removing the phrase ``conducted for all 
applicable projects'' and inserting the phrase ``identified, conducted 
and approved VE recommendations implemented on all applicable projects 
(as defined in 627.5 of this part)''.
0
b. Amending paragraph (b) by adding the words ``prior to the project 
being authorized for construction (as specified in 23 CFR 630.205).'' 
to the end of the sentence.
0
6. Amend Sec.  627.9 by:
0
a. Revising paragraph (c).
0
b. Redesignating paragraphs (d), (e), (f), (g) and (h) as paragraphs 
(e), (f), (g), (h) and (i) respectively.
0
c. Adding a new paragraph (d) to read as follows:
    The revisions and additions read as follows:


Sec.  627.9  Conducting a VE analysis.

* * * * *
    (c) When a STA or local public agency chooses to conduct a VE 
analysis for a project utilizing the design-build project delivery 
method the VE analysis must be performed prior to the release of the 
final Request for Proposals or other applicable solicitation documents.
* * * * *
    (d) For projects delivered using the CM/GC contracting method, a VE 
analysis is not required prior to the preparation and release of the 
RFP for the CM/GC contract.
    The VE analysis is required to be completed and approved 
recommendations incorporated into the project plans prior to requesting 
a construction price proposal from the CM/GC contractor.

[FR Doc. 2013-20315 Filed 8-28-13; 8:45 am]
BILLING CODE 4910-22-P