Fair Market Value and Design-Build Amendments, 58908-58913 [E8-23729]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 196 (Wednesday, October 8, 2008)]
[Proposed Rules]
[Pages 58908-58913]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23729]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Parts 620, 635, 636, and 710

[FHWA Docket No. FHWA-2008-0136]
RIN 2125-AF29


Fair Market Value and Design-Build Amendments

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: This NPRM proposes to amend FHWA regulations, to require State 
departments of transportation (DOT) and other public authorities to 
negotiate for and obtain fair market value as part of any concession 
agreement involving a facility acquired or constructed with Federal-aid 
highway funds. Additionally, this NPRM proposes to amend FHWA 
regulations to permit public agencies to compete against private 
entities for the right to obtain a concession agreement involving such 
facilities. Also, this notice proposes to amend the design-build 
regulations to permit contracting agencies to incorporate unsuccessful 
offerors' ideas into a design-build contract upon the acceptance of a 
stipend.

DATES: Comments must be received on or before November 7, 2008. Late-
filed comments will be considered to the extent practicable.

ADDRESSES: Mail or hand deliver comments to the U.S. Department of 
Transportation, Dockets Management Facility, Room PL-401, 400 Seventh 
Street, SW., Washington, DC 20590, or submit electronically at https://
dms.dot.gov/submit or fax comments to (202) 493-2251.
    Alternatively, comments may be submitted to the Federal eRulemaking 
portal at https://www.regulations.gov. All comments should include the 
docket number that appears in the heading of this document. All 
comments received will be available for examination and copying at the 
above address from 9 a.m. to 5 p.m., e.t., Monday through Friday, 
except Federal holidays. Those desiring notification of receipt of 
comments must include a self-addressed, stamped postcard or you may 
print the acknowledgment page that appears after submitting comments 
electronically. Anyone is able to search the electronic form of all 
comments in any of our dockets by the name of the individual submitting 
the comment (or signing the comment, if submitted on behalf of an 
association, business, or labor union). You may review DOT's complete 
Privacy Act Statement in the Federal Register published on April 11, 
2000 (Volume 65, Number 70, Pages 19477-78) or you may visit https://
dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Marcus J. Lemon, Chief Counsel, 
Mr. Michael Harkins, Office of Chief Counsel, or Mr. Steve Rochlis, 
Office of Chief Counsel, (202) 366-0740, Federal Highway 
Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590-0001. 
Office hours are from 7:45

[[Page 58909]]

a.m. to 4:15 p.m., e.t., Monday through Friday, except Federal 
holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    You may submit or retrieve comments online through the Document 
Management System (DMS) at: https://dms.dot.gov/submit. It is available 
24 hours each day, 365 days each year. Please follow the instructions 
online for more information and help.
    An electronic copy of this document may also be downloaded by 
accessing the Office of the Federal Register's home page at: https://
www.archives.gov and the Government Printing Office's Web page at: 
https://www.access.gpo.gov/nara.

Background

    In this NPRM, the FHWA is proposing to make changes to existing 
regulations for two reasons: (1) To clarify that fair market value must 
be negotiated for and received under a concession agreement in 
accordance with 23 U.S.C. 156, and (2) to amend the design-build 
regulations to allow contracting agencies to incorporate unsuccessful 
proposers' ideas into a contract upon payment of a stipend.

Fair Market Value

    In recent years, some State and local governments have successfully 
entered into concession agreements to provide for the long-term 
development, construction, operation and maintenance of a public 
highway. Under these agreements, a third-party concessionaire pays the 
government a large sum of money in return for the right to operate and 
collect revenues from the facility. Examples include the Chicago Skyway 
and the Indiana Toll Road. For the Chicago Skyway, the Skyway 
Concession Company, a joint venture between Cintra Concesiones de 
Infraestructuras de Transporte SA of Madrid, Spain (Cintra), and 
Macquarie Infrastructure Group of Australia (Macquarie) paid Chicago a 
$1.83 billion up-front payment for the right to operate the Skyway. For 
the Indiana Toll Road, the ITR Concession Company, also made up of 
Cintra and Macquarie, paid the State of Indiana $3.8 billion for the 
right to operate the Indiana Toll Road. Other forms of concession 
agreements involve the financing of specific infrastructure 
improvements to the facility in conjunction with the right to operate 
and collect tolls. An example includes the Capital Beltway HOT Lanes 
Project under which Fluor-Transurban will finance the majority of the 
total estimated $1.9 billion project costs to widen and construct new 
lanes on the Capital Beltway in Virginia in return for the right to 
operate and collect tolls on the facility for 75 years.
    Concession agreements are very important tools that State and local 
agencies may use to enhance their transportation program. By entering 
into a concession agreement, not only can the State accelerate an 
expensive and needed infrastructure improvement, but the State can, 
under certain statutory provisions, allocate its budgetary resources to 
other highway projects and use the proceeds from the concession payment 
to supplement its overall transportation program. Given these benefits, 
many States are beginning to view concession agreements as a vital and 
indispensable part of their transportation programs, given that 
traditional methods of taxing and spending have largely proven to be 
ineffective in addressing congestion, performance, reconstruction, and 
development issues.
    Current FHWA regulations do not contemplate the use of concession 
agreements. While 23 U.S.C. 156 requires State and local agencies to 
charge fair market value for the sale, lease, or use of any real 
property acquired with funding made available under title 23, U.S.C., 
it excludes sales, leases, or uses for utility use and occupancy or for 
a title 23 eligible project at 23 CFR 710.403(d)(5). In the context of 
concession agreements, the FHWA is concerned that this broad exception 
for transportation projects could be construed to exempt concession 
agreements from the fair market value requirement. Moreover, FHWA 
regulations at 23 CFR 620.203(j) specifically provide that State DOTs 
need not charge a public agency for a relinquishment of a Federal-aid 
facility.
    In order to avoid a situation where a State or local agency enters 
into a transaction at less than fair market value, the FHWA proposes to 
amend its regulations. The FHWA does not believe that the 
transportation project exception in 23 U.S.C. 156 is intended to 
encompass proceeds received under a concession agreement. The plain 
language of the exception is ``for a transportation project eligible 
for assistance made available under [title 23].'' While a concession 
agreement may provide for the construction of a title 23 eligible 
project, the legal and administrative costs of the State to enter into 
a concession agreement itself is not a Federal-aid eligible cost. The 
concession terms under these agreements spell out the right to operate 
and collect revenues from the facility over an extended period of time, 
which also are not title 23 eligible.
    The Federal Government has a substantial interest in assuring that 
fair market value is received since 23 U.S.C. requires the Federal 
share of the proceeds from these transactions to be reinvested into the 
surface transportation system. The Federal Government's interest in 
States attaining fair market value to be reinvested in the surface 
transportation system furthers interstate commerce, strengthens 
national defense and security, and improves the overall performance of 
the national Federal-aid highway system. Moreover, given that the 
substantial majority of these facilities were constructed with public 
tax dollars, the overall public interest is better served when the 
public is able to realize maximum return on its tax investment in the 
form of additional surface transportation improvements.
    Most concession agreements to date have been procured pursuant to a 
competitive process. Whenever the concession agreement is procured 
competitively, there is a high degree of probability that fair market 
value will be received. As such, these regulations create a presumption 
that fair market value is received whenever a highway agency procures a 
concession agreement through a competitive process. An exception may be 
made for situations where the highway agency can demonstrate that the 
process used resulted in fair market value.
    Additionally, these amended regulations would permit public 
agencies to submit proposals for concession agreements against private 
entities in an open competition. We are aware of instances where public 
agencies are willing to enter into a concession agreement with a State 
DOT. Examples include agreements between the Texas Department of 
Transportation (TxDOT) and the North Texas Turnpike Authority (NTTA) 
involving State Highway (SH) 121 and SH 161 in Texas. Rather than being 
strictly governmental in nature, these are commercial transactions with 
consideration being exchanged between the parties with arm's length 
negotiations being conducted. The agreements include binding legal 
commitments to provide the concession payments, meet certain 
conditional and operational performance requirements, and comply with 
other legally enforceable requirements.
    In the case of SH 121, TxDOT originally sought private bids and, 
through a competitive process, selected a private developer's bid of 
$2.8 billion. However, prior to accepting the bid, the Texas 
Legislature enacted a law mandating that local toll agencies, such

[[Page 58910]]

as NTTA, be given a right of first refusal. After conducting a market 
valuation analysis, as required by Texas State law, TxDOT awarded 50-
year concession to NTTA for $3.3 billion. In the case of SH 161, TxDOT 
awarded a 50-year concession to NTTA for $1.1 billion after conducting 
the required market valuation analysis.
    In these situations, TxDOT may have benefitted from conducting a 
competition. In fact, with respect to SH 121, the Texas legislature 
originally directed that TxDOT open the bidding process to NTTA. 
Although the timing of the Texas legislature's mandate was too late in 
the procurement process that had already been initiated for the 
project, FHWA regulations for Federal-aid construction contracts 
prohibited even the option of a competition involving both public and 
private entities. By opening up the competitive process to public 
agencies, the changes in this proposed rule would provide States an 
opportunity to expand the range of potential bidders for concession 
agreements. However, the States still retain the option to award these 
agreements exclusively to public agencies in accordance with their own 
policy objectives provided the States can demonstrate to the FHWA that 
fair market value for the concession has been obtained.
    In addition to complying with 23 U.S.C. 156, these regulations also 
ensure that these transactions comply with the revenue use restrictions 
under the Federal tolling provisions. The Federal tolling provisions 
include the general toll program at 23 U.S.C. 129; high occupancy toll 
(HOT) lanes at 23 U.S.C. 166; the value pricing pilot program (VPPP) at 
section 1012(b) of the Intermodal Surface Transportation Efficiency Act 
(ISTEA), as amended by section 1216(a) of the Transportation Equity Act 
for the 21st Century (TEA-21) and section 1604(a) of the Safe, 
Accountable, Flexible, Efficient, Transportation Efficiency Act: A 
Legacy for Users (SAFETEA-LU); the Interstate System reconstruction and 
rehabilitation pilot program (ISRRPP) at section 1216(b) of TEA-21; the 
express lanes demonstration program at section 1604(b) of SAFETEA-LU; 
and the Interstate System construction toll pilot program (ISCTPP) at 
section 1604(c) of SAFETEA-LU. Each of these programs require toll 
revenue to be used first (1) for debt service, (2) to provide a 
reasonable return on investment to any private party financing a 
project, and (3) for the costs that are necessary for the proper 
operation and maintenance of the facility.\1\ With the exception of the 
ISRRPP and ISCTPP, toll revenues in excess may be applied to other 
projects eligible for assistance under title 23, United States Code.
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    \1\ The VPPP requires toll revenue to be used first for the 
project's operating costs. This has been interpreted to include the 
facility's debt service, reasonable return on investment to a 
private party, and costs necessary for the proper operation and 
maintenance. 73 FR 53478 (2008).
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    The FHWA considers concession payments, which are substantively 
lease acquisition payments, to be included in the costs incurred by the 
concessionaire to operate the facility and operational costs for 
purposes of the toll revenue use restrictions under the Federal toll 
programs. However, the amount of the concession payment must be based 
on the market value of acquiring an interest in the facility. The 
concession amount may not be based exclusively on factors unrelated to 
the market value of the facility, such as State transportation program 
funding needs or shortfalls in other areas such as transit or bridges. 
This change would bring consistency with other pilot programs such as 
the ISRRPP, which require a similar showing of an arm's length 
transaction. Otherwise, the concession payment is not a valid operating 
cost and simply becomes a means to create excess toll revenue.

Design-Build

    The FHWA also proposes to amend 23 CFR Part 636 to permit 
contracting agencies to incorporate unsuccessful offerors' technical 
concepts into a contract or future solicitation upon the acceptance of 
a stipend by the unsuccessful offeror whose ideas the contracting 
agency intends to use. FHWA regulations currently permit contracting 
agencies to use unsuccessful offerors' ideas upon acceptance of a 
stipend for other solicitations. However, current regulations do not 
permit contracting agencies to do so in the negotiations conducted with 
the winning offeror after source selection, but rather only allow such 
a transaction before contract execution. Although prohibited by current 
regulations, the FHWA has permitted States to use unsuccessful 
offeror's ideas for other's solicitations upon acceptance of a stipend 
after source selection through Special Experimental Project 14 (SEP-
14). This practice has generally been well received and afforded more 
flexibility to contracting agencies in tailoring their projects to best 
suit the public interest. Therefore, we are proposing to amend 23 CFR 
Part 636 accordingly to allow maximum design flexibility and ingenuity.

Section-by-Section Analysis

Section 620.203(b)

    This subsection would be amended to clarify that a concession 
agreement awarded to a public entity is not to be considered a 
relinquishment. As such, whenever a concession agreement is awarded to 
a public entity, the State would be required to negotiate for and 
charge fair market value.

Section 635.112(e)

    This subsection would be amended to permit public agencies to 
compete against private entities for concession agreements. As 
proposed, the public entity could either submit a bid for itself or 
join a team with other public or private entities to submit a bid.

Section 636.113

    This section would be amended by adding a new subsection to require 
contracting agencies to clearly state in their RFPs of their intention 
to incorporate an unsuccessful offeror's ideas into the final contract 
with the selected design-builder upon acceptance of a stipend.

Section 636.513

    This section would be amended to permit contracting agencies to 
conduct negotiations to incorporate an unsuccessful offeror's ideas 
into the contract with the selected design-builder.

Section 710.405(d)(5)

    This section would be amended to clarify that concession agreements 
do not meet the transportation project exemption under 23 U.S.C. 
156(a).

Section 710.701

    This section would establish that the purpose of Subpart G is to 
prescribe the standards to ensure fair market value is received under 
concession agreements involving Federally funded highways.

Section 710.703

    This section would establish the definitions that are applicable to 
23 CFR Part 710 Subpart G. Fair market value, for purposes of this 
Subpart, is defined to be the price at which a highway agency is ready 
and willing to enter into a concession or a contractual agreement to 
lease a Federally funded highway on the open market and in an arm's 
length transaction. The acquisition price of the facility should 
reflect the value that it is worth on the open market for a reasonable 
period of time to any willing, knowledgeable and able buyers. The value 
should include not only the market value of the land, but also the

[[Page 58911]]

facility's capital earning potential taking into account both any toll 
revenues that are expected to be collected and any additional ancillary 
income, such as parking fees, commercial revenue, and advertising. 
Also, in order to be considered fair market value, the transaction in 
which the agreement is negotiated and the price is established would be 
required to be an arm's length transaction. In order to be considered 
an arm's length transaction, the parties, including the public 
entities, would have to be able to act independently from each other 
and free from any conflicts of interest.
    Also, consistent with 23 U.S.C. 156, a Federally funded highway 
would be defined as any highway acquired with Federal assistance made 
available under title 23, United States Code. This definition would 
clarify that the phrase ``acquired with Federal assistance'' applies 
not only to Federal assistance in the actual purchase of real property, 
but also to any capital expenditure or improvements including any 
fixtures located on any real property. Thus, a highway would be subject 
to these regulations if any title 23, United States Code, funds 
participated in the costs associated with the facility, as by way of 
example, costs incurred in design, construction or reconstruction of 
the facility.

Section 710.705

    This section would provide that subpart G applies to all concession 
agreements involving Federally funded highways.

Section 710.707

    This section would establish that fair market value must be 
received for any concession agreement involving a Federally funded 
highway.

Section 710.709

    This section would set forth general requirements concerning how 
fair market value is to be determined. First, this section would 
provide that fair market value may be determined either on a best value 
basis or on the basis of the highest bid received. Whichever method the 
highway agency elects to use would have to be specified in the relevant 
solicitation documents. Second, this section would provide that the 
terms of the concession agreement must be legally binding and 
enforceable. This includes agreements between two public entities. 
Third, this section would establish a rule that any concession 
agreement procured through a fair and open competition is presumed to 
be fair market value. Fourth, if a highway agency does not wish procure 
the agreement through a competitive process, then the highway agency 
would have to demonstrate to the FHWA that the process used resulted in 
fair market value being received. Finally, this section would clarify 
that Parts 172, 635, and 636, as applicable, must be followed whenever 
any Federal funds are to be used for a project under the concession 
agreement.

Request for Comment

    The FHWA invites and requests comments on the proposed regulations 
contained in this NPRM. 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 FHWA 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.

Rulemaking Analyses and Notices

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

    The FHWA has determined preliminarily that this action would not be 
a significant regulatory action within the meaning of Executive Order 
12866 and would not be significant within the meaning of U.S. 
Department of Transportation regulatory policies and procedures. It is 
anticipated that the economic impact of this rulemaking would be 
minimal. These proposed changes would not adversely affect, in a 
material way, any sector of the economy. In addition, these changes 
would not interfere with any action taken or planned by another agency 
and would not materially alter the budgetary impact of any 
entitlements, grants, user fees, or loan programs. Consequently, a full 
regulatory evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 60l-612) the FHWA has evaluated the effects of this proposed 
action on small entities and has determined that the proposed action 
would not have a significant economic impact on a substantial number of 
small entities. This proposed action does not affect any funding 
distributed under any of the program administered by the FHWA. It 
ensures that State and local governments comply with both 23 U.S.C. 156 
to receive fair market value and the Federal tolling provision listed 
above regarding operating expenses whenever a concession agreement is 
executed involving a Federally funded highway. For these reasons, the 
FHWA certifies that this action would not have a significant economic 
impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule would not impose unfunded mandates as defined by 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48). 
This proposed rule will not result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$128.1 million or more in any one year (2 U.S.C. 1532). Further, in 
compliance with the Unfunded Mandates Reform Act of 1995, the FHWA will 
evaluate any regulatory action that might be proposed in subsequent 
stages of the proceeding to assess the effects on State, local, tribal 
governments and the private sector.

Executive Order 13132 (Federalism Assessment)

    This proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132, and the 
FHWA has determined preliminarily that this proposed action would not 
have sufficient federalism implications to warrant the preparation of a 
federalism assessment. The FHWA has also determined that this proposed 
action would not preempt any State law or State regulation or affect 
the States' ability to discharge traditional State governmental 
functions.

Executive Order 13211 (Energy Effects)

    We have analyzed this action under Executive Order 13211, Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use, dated May 18, 2001. We have determined that it is 
not a significant energy action under that order since it is not likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy. Therefore, a Statement of Energy Effects 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

[[Page 58912]]

Order 12372 regarding intergovernmental consultation on Federal 
programs and activities apply to this program. Accordingly, the FHWA 
solicits comments on this issue.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501), 
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 determined that this 
proposal does not contain collection of information requirements for 
the purposes of the PRA.

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

Executive Order 12630 (Taking of Private Property)

    The FHWA has analyzed this proposed rule under Executive Order 
12630, Governmental Actions and Interface with Constitutionally 
Protected Property Rights. The FHWA does not anticipate that this 
proposed action would affect a taking of private property or otherwise 
have taking implications under Executive Order 12630.

National Environmental Policy Act

    The agency has analyzed this proposed action for the purpose of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) and has 
determined that this proposed 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

23 CFR Part 620

    Grant programs--transportation, Highways and roads, Rights-of-way.

23 CFR Part 635

    Construction and maintenance, Grant programs-transportation, 
Highways and roads, Reporting and recordkeeping requirements.

23 CFR Part 636

    Design-build, Grant programs--transportation, Highways and roads.

23 CFR Part 710

    Grant programs--transportation, Highways and roads, Real property 
acquisition, Rights-of-way, Reporting and recordkeeping requirements.

    Issued on: October 1, 2008.
Thomas J. Madison, Jr.,
Federal Highway Administrator.
    In consideration of the foregoing, the FHWA amends chapter I of 
title 23, Code of Federal Regulations, as set forth below:

PART 620--ENGINEERING

    1. The authority citation for part 620 continues to read as 
follows:

    Authority: 23 U.S.C. 315 and 318; 49 CFR 1.48, 23 CFR 1.32.

    2. Revise Sec.  620.203(b) to read as follows:


Sec.  620.203  Procedures.

* * * * *
    (b) Other than a conveyance made as part of a concession agreement 
as defined in Sec.  710.703 of this chapter, for purposes of this 
section, relinquishment is defined as the conveyance of a portion of a 
highway right-of-way or facility by a State highway agency (SHA) to 
another Government agency for highway use.
* * * * *

PART 635--CONSTRUCTION AND MAINTENANCE

    3. The authority citation for part 635 continues to read as 
follows:

    Authority: Sec. 1503 of Pub. L. 109-59, 119 Stat. 1144; 23 
U.S.C. 101 (note), 109, 112, 113, 114, 116, 119, 128, and 315; 31 
U.S.C. 6505; 42 U.S.C. 3334, 4601 et seq.; Sec. 1041 (a), Pub. L. 
102-240, 105 Stat. 1914; 23 CFR 1.32; 49 CFR 1.48(b).

    4. Revise Sec.  635.112(e) to read as follows:


Sec.  635.112  Advertising for bids and proposals.

* * * * *
    (e) Except in the case of a concession agreement, as defined in 
Sec.  710.703 of this chapter, no public agency shall be permitted to 
bid in competition or to enter into subcontracts with private 
contractors.
* * * * *

PART 636--DESIGN-BUILD CONTRACTING

    5. The authority citation for part 636 continues to read as 
follows:

    Authority: Sec. 1503 of Pub. L. 109-59, 119 Stat. 1144; Sec. 
1307 of Pub. L. 105-178, 112 Stat. 107; 23 U.S.C. 101, 109, 112, 
113, 114, 115, 119, 128, and 315; 49 CFR 1.48(b).

    6. Amend Sec.  636.113 by adding a new paragraph (c) to read as 
follows:


Sec.  636.113  Bid opening and bid tabulations.

* * * * *
    (c) If you intend to incorporate the ideas from unsuccessful 
offerors into the same contract on which they unsuccessfully submitted 
a proposal, you must clearly provide notice of your intent to do so in 
the RFP.
    7. Amend Sec.  636.513 by designating the existing text as 
paragraph (a) and adding a new paragraph (b) to read as follows:


Sec.  636.513  Are limited negotiations allowed prior to contract 
execution?

* * * * *
    (b) Limited negotiations conducted under this section may include 
negotiations necessary to incorporate the ideas and concepts from 
unsuccessful offerors into the contract if a stipend is offered by the 
contracting agency and accepted by the unsuccessful offeror and if the 
requirements of Sec.  636.113 are met.

PART 710--RIGHT-OF-WAY AND REAL ESTATE

    8. The authority citation for part 710 continues to read as 
follows:

    Authority: Sec. 1307, Pub. L. 105-178, 112 Stat. 107; 23 U.S.C. 
101(a), 107, 108, 111, 114, 133, 142(f), 156, 204, 210, 308, 315, 
317, and 323; 42 U.S.C. 2000d et seq., 4633, 4651-4655; 49 CFR 
1.48(b) and (cc), 18.31, and parts 21 and 24; 23 CFR 1.32.

    9. Amend 710.403(d)(5) to read as follows:


Sec.  710.403  Management.

    (d) * * *
    (5) Use for transportation projects eligible for assistance under 
title 23 of the United States Code, except for

[[Page 58913]]

concession agreements as defined in Sec.  710.703.
* * * * *
    10. Add new Subpart G to Part 710 to read as follows:

Subpart G--Concession Agreements

Sec.
710.701 Purpose.
710.703 Definitions.
710.705 Applicability.
710.707 Fair market value.
710.709 Determination of fair market value.

    Authority: 23 U.S.C. 129,156, 166, 315; Pub. L. 102-240, section 
1012(b); Pub. L. 105-178, section 1216(b); Pub. L. 109-59, section 
1604.


Sec.  710.701  Purpose.

    The purpose of this subpart is to prescribe the standards that 
ensure fair market value is received by a highway agency under 
concession agreements involving Federally funded highways.


Sec.  710.703  Definitions.

    As used in this subpart:
    (a) Best value means the proposal offering the most overall public 
benefits as determined through an evaluation of the amount of the 
concession payment and other appropriate considerations. Such other 
appropriate considerations may include, but are not limited to, 
qualifications and experience of the concessionaire, expected quality 
of services to be provided, the history or track record of the 
concessionaire in providing the services, timelines for the delivery of 
services, performance standards, complexity of the services to be 
rendered, and revenue sharing.
    (b) Concession agreement means an agreement between a highway 
agency and a concessionaire under which the concessionaire is given the 
right to operate and collect revenues or fees for the use of a 
Federally funded highway in return for compensation to be paid to the 
highway agency. A concession agreement may include, but not be limited 
to, obligations concerning the development, design, construction, 
maintenance, operation, level of service, and/or capital improvements 
to a facility over the term of the agreement.
    (c) Concessionaire means any private or public entity that enters 
into a concession agreement with a highway agency.
    (d) Fair market value, for purposes of this Subpart, means the 
price at which a highway agency is ready and willing to enter into a 
concession agreement for a Federally funded highway on the open market 
for a reasonable period of time and in an arm's length transaction to 
any willing, knowledgeable, and able buyer.
    (e) Federally funded highway means any highway (including highways, 
bridges, and tunnels) acquired with Federal assistance made available 
under title 23, United States Code. A highway shall be deemed to be 
acquired with Federal assistance if Federal assistance participated in 
either the purchase of any real property, or in any capital 
expenditures in any fixtures located on real property, within the 
right-of-way, including the highway and any structures located upon the 
property.
    (f) Highway agency means any State transportation department or 
other public authority with jurisdiction over a Federally funded 
highway.


Sec.  710.705  Applicability.

    This subpart applies to all concession agreements involving 
Federally funded highways.


Sec.  710.707  Fair market value.

    A highway agency shall receive fair market value for any concession 
agreement involving a Federally funded highway.


Sec.  710.709  Determination of fair market value.

    (a) Fair market value may be determined either on a best value 
basis or upon the basis of highest bid received, as may be specified by 
the highway agency in the request for proposals or other relevant 
solicitation.
    (b) In order to be considered fair market value, the terms of the 
concession agreement must be both legally binding and enforceable.
    (c) Any concession agreement awarded pursuant to a competitive 
process shall be presumed to be fair market value. Any such competitive 
process shall afford all interested proposers an equal opportunity to 
submit a proposal for the concession agreement and shall comply with 
applicable State and local law.
    (d) If a concession agreement is not awarded pursuant to a 
competitive process, the highway agency must demonstrate to the FHWA 
that the process used resulted in fair market value being received.
    (e) Nothing in this subpart is intended to waive the requirements 
of Part 172, Part 635, and Part 636 of this chapter whenever any 
Federal-aid (including TIFIA assistance) is to be used for a project 
under the concession agreement.

 [FR Doc. E8-23729 Filed 10-7-08; 8:45 am]
BILLING CODE 4910-22-P