[Federal Register Volume 81, Number 207 (Wednesday, October 26, 2016)]
[Notices]
[Pages 74490-74494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25894]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[Docket No: FHWA-2016-0030]


Local Empowerment for Accelerating Projects (LEAP) Pilot Program

AGENCY: Federal Highway Administration, U.S. Department of 
Transportation.

ACTION: Notice. Solicitation of interest and participation in Direct 
Aid Pilot Program.

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SUMMARY: The Federal Highway Administration (FHWA) is announcing a 
pilot program to permit, on an experimental basis, direct delivery of 
Federal-aid funding of up to five Local Public Agencies (LPAs). These 
LPAs will be subject to Federal oversight, and the State DOT will be 
relieved of direct oversight and accountability for projects funded 
under the LEAP pilot program. The pilot program will be carried out for 
a period of 5 years (unless extended). It will be implemented in 
accordance with FHWA's experimental authority provided by the project 
flexibility authority granted under section 1420 of the Fixing 
America's Surface Transportation Act.

DATES: Applications must be received by November 25, 2016.

ADDRESSES: To ensure that you do not duplicate your docket submissions, 
please submit them by only one of the following means:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for submitting 
applications.
     Electronic mail: [email protected].
     Mail: U.S. Department of Transportation, Dockets 
Management Facility, Room W12-140, 1200 New Jersey Ave. SE., 
Washington, DC 20590-0001.
     Hand Delivery: West Building Ground Floor, Room W12-140, 
1200 New Jersey Ave. SE., between 9 a.m. and 5p.m., Monday through 
Friday, except Federal holidays. The telephone number is (202) 366-
9329.
    All applications must include the docket number DOT-FHWA-2016-0030 
at the beginning of the submission.

FOR FURTHER INFORMATION CONTACT: Mr. Robert (Bob) Wright, Local Public 
Agencies Program Manager, 1200 New Jersey Avenue SE., Washington, DC 
20590, 202-366-4630, [email protected]., or Mr. Steve Rochlis, 
Office of Chief Counsel, 202-366-1395, [email protected].

SUPPLEMENTARY INFORMATION: 

Electronic Access

    A copy of this notice and the related Attachment A: Sequencing of 
Certain Key Direct Recipient Requirements is available for download and 
public inspection under the docket number noted above at the Federal 
eRulemaking portal at: http://www.regulations.gov. The Web site is 
available 24 hours each day, 365 days each year. Electronic retrieval 
help and guidelines are available under the help section of the Web 
site.
    An electronic copy of this document may also be downloaded from the 
Office of the Federal Register's home page at: https://www.federalregister.gov/ and the Government Publishing Office's Web 
page at: https://www.gpo.gov/fdsys/.

Background

    The Federal-aid highway program is a federally funded, State-
administered program, under which State DOTs are responsible for 
determining which projects are federally funded, including highway 
projects within the boundaries of the LPAs.
    The American Public Works Association (APWA), National Association 
of County Engineers (NACE), and other local entities have advocated for 
improvements to the Federal-aid Highway Program delivery to LPAs. The 
FHWA is aware of concerns expressed by LPAs related to cost and time 
delays in delivery of projects, inadequate communication and 
collaboration among transportation partners, accessibility to Federal 
funding, and the need for improved statewide consistency in project 
administration and oversight, including the need for clarity and 
consistency as to direction and interpretation.
    The FHWA has long supported innovative approaches to project 
delivery and is constantly searching for new and better ways to 
oversee, accelerate, and reduce the cost of the delivery of highway 
projects. FHWA's goals in launching the LEAP pilot program are twofold. 
The first is to evaluate the impact of direct Federal-aid funding on 
the effectiveness, efficiency, and expediency of projects delivered by 
LPAs utilizing innovative approaches to project delivery. The second is 
to assess the cost and benefit of direct Federal-aid funding of LPAs as 
well as FHWA's ability, administrative costs, and resources needed to 
oversee an expanded base of direct aid recipients by using various 
approaches to oversight.

Objective of the Leap Pilot Program

    The objectives of the LEAP pilot program are as follows:
    1. To determine whether qualified LPAs can deliver Federal-aid 
highway projects more expeditiously and at a lower cost via innovative 
approaches to project delivery when the LPA is a direct Federal-aid 
recipient and employs its own project delivery processes, in compliance 
with Federal and State requirements.
    2. To assess the additional costs and other impacts to FHWA 
associated with providing effective and efficient stewardship and 
oversight to an expanded number of direct Federal-aid recipients, and 
to explore various approaches to stewardship and oversight.

Leap Pilot Program Description

    The Federal-aid highway program (FAHP), under which the LEAP pilot 
program is being administered, is a Federally-assisted, State 
administered program. The FAHP supports States and localities by 
providing financial assistance for the design, construction, preventive 
maintenance, and other Federal eligible costs associated with about 25 
percent of the 3.9 million mile highway network of the United States, 
including the Interstate Highway System and the National Highway 
System, as well as primary highways and other major collector roads. 
Federal funds and obligation authority are distributed to the State 
DOTs, which act on behalf of the States in accordance with 23 U.S.C. 
145, 302, and 23 CFR 1.3. State DOTs, in turn, make subawards of 
Federal-aid highway funds to LPAs. These subrecipient LPAs are jointly 
responsible with the State DOTs for meeting Federal and State 
requirements. The LEAP pilot program, carried out pursuant to authority 
in 23 U.S.C. 502(b)(1)(B), 502(b)(5) and 23 U.S.C. 104(f)(3)(A), will 
rely upon a cooperative partnership among State DOTs, participating 
LPAs, and FHWA to fund and administer the program and to assess its 
impact on project delivery and on FHWA's ability to carry out the 
additional responsibilities that the direct aid to the LPAs would 
require.
    The LPAs (primarily counties, cities, and towns) own and operate 
about 43 percent of the roughly 1.0 million miles of the Nation's 
Federal-aid highways. These LPAs build and maintain this network using 
a variety of funding sources, including FAHP funding. An estimated 
7,000 LPAs deliver about $7 billion annually in Federal-aid projects, 
or roughly 15 percent of the total Federal-aid program. As noted in the 
Background Section above, LPAs have requested direct accessibility to 
Federal funding. At the same time, some States are experiencing 
budgetary constraints that result in oversight challenges and project 
delivery delays associated with LPA administered projects. The LEAP 
pilot program will reduce State DOTs' oversight responsibility of their 
LPAs for projects delivered under the LEAP pilot program. The pilot 
program will also test the impact of direct LPA funding on project 
delivery efficiency and effectiveness.
    FHWA believes this pilot program is in alignment with the findings 
of the draft report Beyond Traffic: Trends and

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Choices 2045. Beyond Traffic was released by the Department in February 
2015. It examines the long-term and emerging trends affecting our 
Nation's transportation system and the implications of those trends. It 
describes how demographic and economic trends, as well as changes in 
technology, governance, and our climate, will increase the importance 
of our metropolitan regions in making decisions that cross State, 
political, socioeconomic, and often transportation planning lines. By 
2045, the population is anticipated to increase by 70 million people, 
with most of that growth occurring in metropolitan areas. Providing 
LPAs with direct funding is consistent with these trends.

Application and Submission Information for the Leap Pilot Program

    Applications must include all of the information below. Incomplete 
applications will not be considered. The FHWA may ask any applicant to 
supplement data in its application, but expects the applications to be 
complete upon submission. The FHWA will expect finalist LPAs to provide 
additional information described in the participant selection section, 
if requested.
    Applications must include all of the following information for it 
to be considered for the LEAP pilot program:
    Title page: The title page must include the name, location, and 
population of the LPA, Federal program funding size, total program 
funding size (Federal plus other), and primary point of contact for the 
LEAP pilot program.
    Structure: The LPA must show its organizational structure and 
clearly articulate that it is adequately staffed and suitably equipped 
to administer the Federal-aid program and deliver Federal-aid projects 
in compliance with Federal requirements.
    Narrative: The narrative should include and address the following:
    (1) Describe and quantify how participation in the LEAP pilot 
program will accelerate project delivery and improve efficiency and 
accessibility to the benefits derived from the Federal-aid highway 
program, generally and specifically, with regard to LPA program 
administration in the applicant's State. The benefits discussion must 
address the anticipated overall program and project delivery cost and 
schedule savings. The LPAs should compare the anticipated savings 
between current and proposed delivery and oversight approaches 
utilizing innovations, streamlined processes and procedures, and 
technology. The LPAs should identify administrative impediments or 
delays associated with the current project delivery and oversight 
process that would be modified or eliminated under the LEAP pilot 
program.
    (2) Describe and quantify how participation in the LEAP pilot 
program will provide added value to the LPA, FHWA, community, and 
project delivery (e.g., creates jobs and paves the way for business, 
particularly small and disadvantaged business enterprises; provides 
Americans with safe, reliable, and affordable connections to 
employment, education, healthcare, and other essential services; lifts 
up neighborhoods and regions by attracting new opportunities, jobs, and 
housing; ensures intellectual opportunity to improve the LPA staffing 
abilities and/or strategic delivery capability; fosters effective and 
efficient stewardship and oversight as well as integrity of the FAHP 
funds; promotes sustainability; captures higher impact opportunities; 
and includes technological or collaborative processes and procedures).
    (3) Describe how the LPA will evaluate the effects of applicable 
Federal-aid project delivery requirements on the LPA's project delivery 
capacity under the LEAP pilot program. In doing so, the LPA should 
consider comparing the costs and efficiency of project delivery as a 
subrecipient of the State DOT with delivery as a direct recipient under 
the LEAP pilot program.
    (4) Describe how the LPA currently administers State funded (State 
only and Federal-aid funds subawarded by the State) capital improvement 
projects and the level of State administration and oversight associated 
with these projects.

Application Review and Selection

    This section outlines the process and factors that FHWA will use to 
evaluate and select applicants to participate in the LEAP pilot 
program. The FHWA will use a two-step process for the selection of LEAP 
pilot program participants.

Step 1--Selection of Finalists

    The FHWA will provide an initial evaluation of applicants by 
reviewing the application information with particular consideration of 
the rating factors listed below.

Rating Factors

    1. Anticipated project delivery cost savings;
    2. Anticipated project delivery time savings;
    3. The added value of the proposed approaches to the LPA, FHWA, 
community, and project delivery (e.g., creates jobs and paves the way 
for business, particularly small and disadvantaged business 
enterprises; provides Americans with safe, reliable, and affordable 
connections to employment, education, healthcare, and other essential 
services; lifts up neighborhoods and regions by attracting new 
opportunities, jobs, and housing; ensures intellectual opportunity to 
improve the LPA staffing abilities and/or strategic delivery 
capability; fosters effective and efficient stewardship and oversight 
as well as integrity of the FAHP funds; promotes sustainability; 
captures higher impact opportunities; and includes technological or 
collaborative processes and procedures); and
    4. The population affected by the projects included in the pilot.

Step 2--Selection of Leap Pilot Program Participants

    FHWA intends to ask specific LPAs, based on the initial evaluation 
in Step 1 above, to provide the following supplemental information for 
further evaluation of their applications:
    (1) A certification verifying that:
    a. The applicant LPA has legal authority under State law to act 
independently or on behalf of the State to fulfill the State's 
responsibilities under title 23 of the United States Code.
    b. The State has agreed or will agree to transfer to FHWA (i) 
formula funds and obligation authority in accordance with 23 U.S.C. 
104(f)(3)(A) for purposes of the LEAP pilot program and (ii) a schedule 
of the annual amount of such funds and obligation authority to be 
transferred.
    c. The LPA and/or partnering State has agreed or will agree to a 
voluntary contribution from non-Federal funds (LPA, State, or other) in 
an amount equal to one percent (for the first year) of the funds 
transferred to FHWA. The FHWA will use these non-Federal funds to 
administer the pilot program and provide direct stewardship and 
oversight of the LPA's delivery of Federal-aid projects that would have 
otherwise been provided by the State. The amount is to be deposited 
into a special account, as authorized by 23 U.S.C. 502(b)(5). The LPA 
must identify the source of the funds and certify that those funds can 
and will be used for this purpose. The LPA and/or State will need to 
acknowledge that FHWA may adjust this amount annually to ensure that 
adequate funds are allocated for the proper administration and 
associated experimental activities of the pilot program.
    (2) Input from the State DOT as to whether the applicant LPA:

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    a. Has an adequate project delivery system as required in 23 U.S.C. 
106(g); and
    b. has in place the necessary financial management systems and 
processes to carry out government requirements outlined in 23 U.S.C. 
106(g) and 2 CFR 200.302-303.
    (3) The auditor's reports of the LPA's last 5 years of Federal and/
or State required audits, including those conducted in accordance with 
2 CFR 200 Subpart F.
    (4) A description of the funding categories and annual amounts the 
State DOT agrees to transfer to FHWA under 23 U.S.C. 104(f)(3)(A) for 
purposes of the LEAP pilot program.
    (5) A description of the state of the LPA's Federal-aid obligation 
and expenditure history over the last 5 years, with a particular 
emphasis on inactive obligations (see 23 CFR 630.106(a)(4)-(6)). If the 
LPA has a high rate of inactive obligations, the LPA should explain the 
circumstances associated with that high inactive obligation rate and 
quantify how the LEAP pilot program would increase the effectiveness 
and efficiency associated with use of Federal funds and project 
delivery.
    The FHWA will use the supplemental information above to assess the 
LPA's likelihood of success, readiness, and capability to successfully 
deliver Federal-aid projects effectively, efficiently, and in 
compliance with Federal and State requirements. Based upon this 
evaluation, the FHWA will select up to five LPA applicants as LEAP 
pilot program participants, pending further verification as described 
below.

Verification of Leap Pilot Program Participants

    Before FHWA can grant authority for direct administration of 
Federal Funds, LPAs selected as LEAP pilot program participants must 
fulfill key Federal-aid requirements as shown in Attachment A. As 
deemed necessary by FHWA, participating LPAs must verify their 
capability to comply with requirements applicable to State DOTs under 
23 U.S.C. 302. In particular, eligible LPAs, including cities and 
counties that apply with a State DOT partner, must be adequately 
staffed and suitably equipped and have (or able to quickly integrate) 
requisite project delivery, financial, accounting, recordkeeping, and 
internal controls to carry out the FAHP as a direct recipient of FAHP 
funding. The LPAs must match direct aid in accordance with 23 U.S.C. 
120 and other applicable cost sharing requirements. Finally, LPAs must 
contribute funds at the beginning of each pilot year from non-Federal 
(State, local, or other) resources to cover FHWA's administration, 
oversight, and other pilot costs. This amount will be equal to one 
percent of the LPA's annual Federal-aid allotment and may be adjusted 
annually by FHWA as needed, based upon administrative costs.
    The verification required may include, but is not limited to, the 
following:
     Evaluation of the LPA's financial management and project 
delivery systems in accordance with 23 U.S.C. 106 (g)(2)(A) and (g)(3);
     compliance assessment of the LPA's financial controls and 
project delivery program in accordance with government-wide 
requirements in 2 CFR 200.302-303; and
     review and assessment of critical core program areas.
    Based upon the verification above and the associated documentation, 
FHWA will confirm, or adjust as necessary, the selected LPAs as LEAP 
pilot program participants.
    The amount of direct aid funding, the formula fund categories, and 
obligation authority that a selected LPA will ultimately receive 
depends upon the cooperative relationship between the LPA and the State 
DOT. A State DOT and LPA that desire to participate in the LEAP pilot 
program should assess current annual and out-year program needs at the 
State and local levels. Collaboratively, they should develop a budget 
that addresses current and projected required budgetary resources to be 
made available by the State DOT to FHWA, and then in turn by FHWA to 
the LPA throughout the term of the pilot. This budget should be based 
upon the formula (apportioned) contract authority, program funding, and 
obligation authority the State DOT agrees to transfer. For any LPA that 
is selected for the pilot, the State DOT must submit a request to 
transfer formula program funding and obligation authority to FHWA in 
accordance with 23 U.S.C 104(f)(3)(A). After receipt and processing of 
the transfer request and the receipt of FHWA's anticipated 
administrative expenses from non-Federal funds, FHWA will directly 
award the transferred funding and obligation authority to the 
participating LPA. Under the LEAP pilot program, the State DOT is not 
accountable for the funding transferred by the State to FHWA and 
directly awarded by FHWA to the LPA.

Other Pertinent Requirements

    The FHWA will establish a special account under 23 U.S.C. 502(b)(5) 
to which a selected participating LPA (or State) will contribute from 
non-Federal resources an amount equal to one percent (for the first 
year) from the LPA's Federal-aid allotment that a State transfers to 
FHWA. The FHWA will use these funds to administer the pilot and provide 
direct stewardship and oversight of LPAs that the LPA's State DOT would 
have provided otherwise under the FAHP. The LPA agrees to deposit such 
amount on an annual basis within 30 days of acceptance into the LEAP 
pilot program and annually thereafter, no later than October 15 of each 
succeeding year. The FHWA may adjust this amount annually to ensure 
that adequate funds are allocated for the proper administration and 
associated experimental activities of the pilot program. When adjusted, 
FHWA will provide the LPAs and/or States with a 60-day advance notice.
    The FHWA will carry out the LEAP pilot program for a period of five 
years, unless FHWA elects to extend the program.

Performance of Leap Pilot Program Participants

    An LPA selected to participate in the LEAP pilot program will 
assume responsibility under this section for compliance with all 
procedural and substantive requirements as would apply if that 
responsibility were carried out by the State DOT. These requirements 
include LEAP pilot program specific reporting, regular Federal-aid 
reporting, right-of-way acquisition, environmental compliance, 
engineering, civil rights, design and inspection, procurement, 
construction administration, financial administration, performance 
management, and all other applicable Federal requirements, unless FHWA 
determines that such assumption of responsibility for one or more of 
the procedural or substantive requirements is not appropriate. Each 
applicant selected for the LEAP pilot program must work with FHWA to 
develop and implement a plan to collect information and report on the 
LPA's performance with respect to the relevant objectives outlined in 
the LEAP pilot program.
    Each recipient will enter into a Memorandum of Agreement (MOA) with 
FHWA and its respective State DOT. The MOA will have a term of no more 
than 5 years, with the option to extend if approved by FHWA. The MOA 
will also require the LPA to provide to FHWA any information that FHWA 
considers necessary to ensure that the LPA carries out the requirements 
of the LEAP pilot program, the Federal-aid Highway Program, and project 
related

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requirements. To ensure compliance with the LEAP pilot program by 
participating LPAs, FHWA will conduct audits, reviews, and/or 
assessments during the pilot program. Such audits will be in addition 
to any of FHWA's other stewardship and oversight responsibilities 
relating to the LEAP pilot program, as well as any other projects and/
or other activities carried out under the LEAP pilot program.
    The FHWA will assess the partnership developed under this pilot 
program in accordance with existing requirements. The FHWA may 
terminate the agreement and/or pilot program at any time or for any 
reason consistent with 2 CFR 200.339, including, but not limited to, 
inadequate LPA performance or inadequate FHWA resources to administer 
the LEAP pilot program. The participating LPA may also terminate the 
pilot program upon FHWA's receipt of a 90-day notice from both the LPA 
and State DOT.

    Authority:  23 U.S.C. 502; Sec. 1420, Pub. L. 114-94, 129 
Stat.1423; 49 CFR 1.85.

    Issued on: October 21, 2016.
Gregory G. Nadeau,
Administrator, Federal Highway Administration.
[FR Doc. 2016-25894 Filed 10-25-16; 8:45 am]
 BILLING CODE 4910-22-P