Private Investment Project Procedures, 24672-24679 [2018-11385]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 83, Number 104 (Wednesday, May 30, 2018)]
[Rules and Regulations]
[Pages 24672-24679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-11385]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 650

[Docket No. FTA-2016-0008]
RIN 2132-AB27


Private Investment Project Procedures

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Final rule.

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SUMMARY: The Federal Transit Administration (FTA) is issuing a final 
rule describing new, experimental procedures to encourage increased 
project management flexibility, more innovation in project funding, 
improved efficiency, timely project implementation, and new project 
revenue streams for public transportation capital projects. A primary 
goal of this final rule is to address impediments to the greater use of 
public-private partnerships and private investment in public 
transportation capital projects. FTA anticipates using the lessons 
learned from these experimental procedures to develop more effective 
approaches to including private participation and investment in project 
planning, project development, finance, design, construction, 
maintenance, and operations.

DATES: The effective date of this final rule is June 29, 2018.

FOR FURTHER INFORMATION CONTACT: For program matters, Tom Yedinak, 
Private Sector Liaison, Office of Budget and Policy, (202) 366-5137 or 
[email protected]. For legal matters, Bonnie Graves, Attorney-
Advisor, Office of Chief Counsel, (202) 366-4011 or 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Executive Summary
    A. Purpose of Regulatory Action
    B. Statutory Authority
    C. Summary of Major Provisions
    D. Costs and Benefits
II. Rulemaking Background
III. Summary of NPRM Comments and FTA's Responses
    A. General Comments
    B. Section-by-Section Comments
IV. Regulatory Analyses and Notices

I. Executive Summary

A. Purpose of Regulatory Action

    This final rule establishes procedures by which FTA recipients 
contemplating public transportation capital projects may seek a waiver 
or modification of a mandatory FTA regulation, policy, procedure, or 
guidance document in order to address impediments to the use of public-
private partnerships (P3s) and private investment in public 
transportation capital projects. The Private Investment Project 
Procedures (PIPP) are intended to encourage project sponsors to seek 
modifications of Federal requirements such that the modification will 
accelerate the project development process, attract private investment 
and lead to increased project management flexibility, more innovation, 
improved efficiency, and/or new revenue streams.

B. Statutory Authority

    Section 20013(b)(1) of the Moving Ahead for Progress in the 21st 
Century Act (MAP-21), Public Law 112-141 (July 6, 2012), requires FTA 
to identify any provisions of 49 U.S.C. chapter 53, and any regulations 
or practices thereunder, that impede greater use of P3s and private 
investment. The law requires FTA to develop and implement, on a project 
basis, procedures and approaches that address such impediments in a 
manner similar to the Federal Highway Administration's (FHWA) Special 
Experimental Project Number 15 process (SEP-15), and protect the public 
interest and any public investment in public transportation capital 
projects that involve P3s or private investment. Section 20013(b)(5) of 
MAP-21 requires FTA to issue a rule to carry out the procedures and 
approaches developed under Section 20013(b)(1).
    In accordance with Section 20013(b)(6) of MAP-21, the PIPP may not 
be used to waive any requirement under the National Environmental 
Policy Act (NEPA), 42 U.S.C. 4321, et seq.; 49 U.S.C. chapter 53 
(including 49 U.S.C. 5333); or any other provision of Federal statute. 
Thus, the PIPP will allow for innovations in project delivery while 
maintaining FTA's stewardship responsibilities. FTA expects the lessons 
learned from projects approved under the PIPP to aid FTA in developing 
more effective approaches to project planning, project development, 
finance, design, construction, maintenance, and operations.

[[Page 24673]]

C. Summary of Major Provisions

    In the notice of proposed rulemaking (82 FR 35500, Jul. 31, 2017), 
FTA proposed to add a new part 650, ``Private Investment Project 
Procedures,'' to title 49 of the Code of Federal Regulations (CFR). 
This final rule adds a new part 650 to title 49 of the CFR. In response 
to public comments, FTA has made several nonsubstantive, clarifying 
edits. In addition, FTA has made the following substantive changes:
    1. Amended the definition of ``Eligible Project'' to require a 
project be included in the statewide long-range transportation plan or 
the metropolitan transportation plan, as those terms are defined in 23 
CFR part 450;
    2. Amended section 650.11 to permit one application per phase of a 
project, and to clarify that multiple waivers or modifications may be 
sought in one application;
    3. Amended section 650.21 to require reporting to FTA one year 
after construction is complete, and for projects that include private 
investment in operations and maintenance, a report is required two 
years after the project has entered into revenue operations; and
    4. Amended section 650.31 to permit applicants to identify 
proposed, as well as committed funding for the project, and to provide 
that FTA will post on its public website information related to waivers 
the FTA Administrator has granted.

D. Costs and Benefits

    This final rule is an Executive Order 13771 deregulatory action, as 
FTA believes it will reduce the cost of complying with FTA 
requirements. FTA requested comment on the potential benefits or cost 
savings associated with this rule but did not receive any relevant 
information. Therefore, FTA is unable to quantify the benefits or cost 
savings due to the lack of information about (1) the types of waivers 
that will be requested, (2) the number of waivers that will be 
requested, and (3) the difference in cost between complying with FTA's 
existing requirements and complying with the requirements of a waiver 
and this final rule.

II. Rulemaking Background

    Over the past decade, Federal transportation legislation has 
evolved to encourage increased use of public-private partnerships and 
private investment in public transportation capital projects. FTA's 
notice of proposed rulemaking for this final rule goes into some detail 
on this history. See 82 FR 35500, Jul. 31, 2017, https://www.gpo.gov/fdsys/pkg/FR-2017-07-31/pdf/2017-15985.pdf.
    More recently, Section 20013(b)(1) of MAP-21 directs FTA to 
identify impediments in chapter 53 of title 49 of the United States 
Code, and any regulations or practices thereunder, to the use of 
public-private partnerships and private investment in public 
transportation capital projects, and to develop and implement 
procedures on a project basis that address such impediments in a manner 
similar to FHWA's SEP-15 process.
    In 2004 FHWA initiated SEP-15, pursuant to authority granted to the 
Secretary by 23 U.S.C. 502(b), to create a procedure to waive certain 
requirements of title 23 of the United States Code and implementing 
regulations on a case-by-case basis in order to encourage tests and 
experimentation in the entire project development process, specifically 
aimed at attracting private investment, leading to increased project 
management flexibility, more innovation, improved efficiency, timely 
project implementation, and new revenue streams. 69 FR 59983 (Oct. 6, 
2004). SEP-15 permits FHWA to experiment in four major areas of project 
delivery--contracting, right-of-way acquisition, project finance, and 
compliance with NEPA and other environmental requirements. SEP-15 
enables FHWA to actively explore changes in the way it approaches the 
oversight and delivery of highway projects to further the 
Administration's goals of reducing congestion and preserving 
transportation infrastructure. A key feature of SEP-15 is that it 
allows FHWA to identify current FHWA laws, regulations, and practices 
that inhibit greater use of P3s and private investment in 
transportation improvements and allows FHWA to develop procedures and 
approaches that address these impediments.
    FTA conducted an online dialogue from October 2014 to January 2015 
with public transportation recipients and stakeholders to help inform 
this rulemaking process. In general, commenters identified the 
following impediments to private investment in public transportation 
capital projects: The timing of Federal grant awards can discourage 
lender interest because it is perceived to be incompatible with the 
timing of private financing schedules, public agency procurement 
schedules and U.S. Department of Transportation (DOT) financing 
programs, such as the Transportation Infrastructure Finance and 
Innovation Act (TIFIA), Railroad Rehabilitation and Improvement 
Financing (RRIF) and Private Activity Bonds (PAB); the level of Federal 
oversight could be more flexible and dependent upon the experience of 
the project sponsor, terms of agreements, and the existence of 
concurrent, independent oversight, such as state or regulatory 
agencies, and type of financing; FTA could rely more heavily upon 
approvals of third parties with jurisdiction over a project, rather 
than replicate certain reviews, and commenters questioned whether any 
necessary FTA reviews could be expedited by having them performed by an 
independent third party selected by FTA, but paid for by the project 
sponsor.
    Under this final rule, recipients funding a public transportation 
capital project subject to 49 U.S.C. chapter 53 with FTA, RRIF, TIFIA 
or other Federal financial assistance could request a modification or 
waiver, in whole or in part, of one or more specific FTA regulations, 
practices, procedures or guidance documents (including circular 
provisions) that is an impediment to the use of P3s or private 
investment in that project. For example, an applicant could propose 
that FTA rely upon approvals of third parties with jurisdiction over an 
eligible project, rather than replicate certain FTA oversight reviews.

III. Summary of NPRM Comments and FTA Responses

    FTA received comments from 21 entities, including State DOTs, 
transit agencies, industry associations, consultants, and individuals, 
as well as a metropolitan planning organization (MPO), a union, a 
private operator, a P3 authority, and a development corporation. Most 
commenters expressed support for the rulemaking, with one commenter 
suggesting that private investment is not appropriate for public 
transit projects and should not be encouraged by FTA.
    Some comments were outside the scope of the rulemaking. For 
example, two commenters suggested they would support initiatives 
related to waivers of FHWA and USDOT rules; this rulemaking pertains 
only to FTA. Some commenters suggested lists of requirements or 
processes that could be waived or modified; this rulemaking does not 
include such lists, as waiver or modification of administrative 
requirements will be done on a project (case-by-case) basis. One 
commenter asked if FTA would consider increasing the Federal share of a 
project's cost where a P3 is involved, and asked if a project would get 
a higher rating in the U.S. DOT Transportation Investment Generating 
Economic Recovery (TIGER)

[[Page 24674]]

application process if a P3 is involved. The Federal share is statutory 
and something FTA cannot waive or modify; rating for the TIGER program 
is outside the scope of this rulemaking. Similarly, commenters' 
proposed changes to FTA's Capital Investment Grants (CIG) program and 
requests for preferential treatment for FTA discretionary grant awards 
that include public and private sector benefits are outside the scope 
of this rule. Finally, some commenters requested that any public 
transportation capital project that includes private investment should 
include a ``value for money'' or cost-benefit analysis. Project 
sponsors contemplating private participation in project delivery should 
ensure that the public interest is protected and the return on 
investment makes sense, but such an analysis is beyond the scope of 
this rulemaking.

A. General Comments

    Comments. Several commenters addressed the scope of the rule, with 
one commenter acknowledging the limitations of the rulemaking, in that 
Section 20013(b) of MAP-21 does not permit FTA to waive or modify 
statutory requirements, and asserting that often statutory requirements 
can be the most significant barriers to P3 involvement. Another 
commenter suggested the scope of the rule appeared narrower than SEP-
15, and suggested the rule should be broadened to cover any innovative 
idea, such as improvements to project delivery and incentivizing local 
investment. One commenter noted that the rule applies only 
prospectively, and not to existing projects, suggesting that existing 
projects may benefit from P3s and may require relief from FTA 
requirements related to grant administration or lease of federally-
assisted assets. Another commenter suggested that a P3 should include 
those situations in which a public entity enters into a contract with a 
private entity to operate, manage, or maintain all or part of a transit 
system that receives federal funding.
    Response. A key difference between FHWA's SEP-15 and the authority 
provided to FTA by Section 20013(b) of MAP-21 is that SEP-15 permits 
waiver of statutory requirements in title 23 of the United States Code, 
and Section 20013(b) does not permit FTA to waive any provision of 
federal statute. Thus, FTA is limited to waiver or modification of FTA 
administrative requirements, including regulations, policies, guidance, 
etc., and not statutory provisions. However, FTA believes that waiver 
or modification of administrative requirements may result in increased 
flexibility, improved project efficiency, and timely implementation of 
project delivery. While there are limitations, FTA does not believe the 
rule is otherwise significantly narrower than SEP-15; recipients or 
project sponsors may propose any innovative idea that they believe will 
remove an impediment to private investment or participation in public 
transportation capital projects. The rule does apply prospectively and 
not to existing capital projects. Further, this rule does not apply to 
contracts between public entities and private entities solely for the 
operation, management, or maintenance of a transit system. There is no 
evidence that there are challenges involving the private sector in 
state of good repair, general maintenance, or other ongoing capital 
projects, including the capital cost of contracting for operations. 
Indeed, many transit agencies contract with private entities for 
ongoing capital needs, maintenance, and operations. The purpose of this 
rulemaking is to encourage private entity participation in designing 
and building new public transportation capital projects, to include, as 
a component of the whole project, long-term investments in operations 
and maintenance where desired and appropriate.
    Comments. One commenter suggested FTA provide resources to assist 
recipients in identifying regulations, procedures, policies, etc., that 
may be waived or modified, to include a list of such provisions, with 
another commenter suggesting the rule does not appear to provide 
certainty in the decision-making process. Another commenter suggested 
that FTA should delay implementation of PIPP until after FTA has 
published the transparency guidance required by Section 20013(b)(2) of 
MAP-21.
    Response. FTA intends to develop frequently asked questions (FAQs) 
and other guidance related to the final rule prior to or closely 
following publication of the final rule, but does not intend to develop 
a list of provisions that might be waived or modified. It is up to the 
recipient/project sponsor to identify FTA administrative requirements 
that are standing in the way of private investment or participation in 
a particular project. Such impediments are likely to vary from project 
to project. FTA's Private Sector Liaison is available to provide 
technical assistance to recipients contemplating a request for a waiver 
or modification. FTA has not yet developed the guidance required by 
Section 20013(b)(2) of MAP-21, but does not believe the rulemaking 
should be delayed. FTA has developed a robust Private Sector 
Participation web page that includes numerous resources for recipients 
and private entities. See https://www.transit.dot.gov/funding/funding-finance-resources/private-sector-participation/private-sector-participation-1.

B. Section-by-Section Comments

Section 650.5 Definitions
    One commenter suggested that projects should be eligible for waiver 
or modification of administrative requirements only if the project is 
part of a region's approved long-range transportation plan. This will 
help to assure the project is a priority for the region. FTA agrees 
with this comment and has amended the definition of ``eligible 
project'' to require the project be included in the statewide long-
range transportation plan or the metropolitan transportation plan, as 
those terms are defined in 23 CFR part 450.
    Several commenters suggested various amendments to the proposed 
definition in the NPRM of Public-Private Partnership (P3). FTA proposed 
that a P3 be defined as, ``a contractual agreement formed between a 
public agency and a private sector entity that is characterized by 
private sector investment and risk-sharing in the delivery, financing 
and operation of a project.'' Commenters generally sought a broader 
definition that would go beyond the conventional project delivery and 
financing approaches to include other characteristics or elements, such 
as when federal funding benefits both the public and private sectors 
and their respective abilities to enhance economic development, 
mitigate congestion, enhance safety, and improve capacity. One 
commenter asserted the definition could be read to be limited to 
various project delivery contracting mechanisms such as design-build-
finance, design-build-operate-maintain, or design-build-finance-
operate-maintain. One commenter suggested FTA amend the definition to 
read ``one or more private sector agencies.'' Two commenters suggested 
FTA amend the definition to read ``private sector investment and/or 
risk-sharing.'' Two commenters suggested that an operations-only 
agreement should be eligible.
    FTA did not amend the definition of P3 proposed in the NPRM. The 
definition provides the framework necessary for the rule; it is not 
clear how the definition would prohibit characteristics of a P3 that 
include enhancing economic development, mitigating congestion, etc. The 
purpose of the rule is to provide a process by which recipients can 
request a waiver or modification of an administrative requirement that 
impedes greater use of

[[Page 24675]]

public-private partnerships and private investment in public 
transportation capital projects. Thus, design-build is a critical 
component of a P3 under this rule. As stated above in the ``General 
Comments'' section, there is no evidence that FTA requirements impede 
recipients' ability to contract with private entities for state of good 
repair projects, transit operations, or general maintenance. While the 
rulemaking is not limited to CIG projects, generally speaking, the rule 
will apply to new construction of public transportation corridors, 
systems, lines, etc. Further, while the definition provides for an 
agreement between ``a public entity and a private sector entity,'' the 
rule does not prohibit an agreement between a public entity and two or 
more private entities. Finally, private sector investment inherently 
involves sharing the risk of the project, so FTA declines to amend the 
definition of P3 to read ``and/or.''
Section 650.11 Private Investment Project Procedures
    Several commenters expressed concern about the proposed provision 
in the NPRM that only one application per project could be submitted. 
Commenters asserted that FTA should permit multiple applications 
through the development of the project, either by phase or when new 
opportunities are identified. One commenter suggested that if a project 
has more than one FTA recipient, each of the recipients should be 
permitted to request a waiver or modification.
    In response to comments, FTA has amended this section to provide 
that one application per phase of a project may be submitted, and that 
an application may include requests for waiver or modification of more 
than one FTA requirement. Allowing an application for each phase of a 
project means a recipient may submit one application during the project 
development phase, a second application during the engineering phase, 
and a third application during construction. FTA encourages recipients 
to include all of their requests for waiver or modification into one 
application, in order to streamline the waiver request process.
    Where more than one recipient is carrying out a project, the rule 
does not prohibit each recipient from requesting a waiver or 
modification of FTA administrative requirements. FTA does, however, 
expect recipients to work together in such situations to ensure 
recipients are not working at cross-purposes or submitting duplicate 
requests. Thus, section 650.31(b)(7) requires recipients to obtain the 
concurrence of other recipients involved in the same project prior to 
submitting an application for waiver or modification.
    One factor considered by the FTA Administrator in section 650.11(b) 
is ``the amount of private sector participation or risk transfer 
proposed is sufficient to warrant modification or waiver of FTA 
requirements.'' One commenter suggested this is a subjective factor and 
that FTA should provide clarity on the type or level of private 
participation that is deemed sufficient. In response, we note that this 
will be a case-by-case determination, likely dependent on project size, 
scope and cost, and thus not quantifiable in the rule.
Section 650.13 Limitation
    The proposed text included language from Section 20013(b) of MAP-
21, providing the Administrator may not waive or modify ``any 
requirement under'' 49 U.S.C. 5333, NEPA, or any other provision of 
Federal statute. One commenter suggested FTA amend the text to read, 
``statutory provision of'' to better distinguish between statutory 
requirements that cannot be waived and regulatory requirements that 
can. FTA declines to make this change, as the language in the rule is 
the same language that is in the statute.
Section 650.21 Lessons Learned Report
    FTA proposed in the NPRM that a project receiving a waiver or 
modification of an FTA requirement would be required to submit a report 
to FTA not later than one year after completion of the project. The 
report would evaluate the effectiveness of the waiver or modification 
on project delivery. One commenter suggested that in the case of a 
design-build-operate-maintain agreement, it could be decades before the 
project is ``complete.'' In response to this comment, we have amended 
the language to provide that a report is due one year after completion 
of construction, and for projects that include private entity 
involvement in operations or maintenance, a second report will be 
required two years after the project begins revenue operations. Other 
commenters suggested that reporting best practices and lessons learned 
could be reported as they are learned over the life of the project; FTA 
believes the reporting requirements of one year after construction and 
two years into revenue operations is the appropriate balance between 
getting the information as it is available and not imposing unduly 
burdensome reporting requirements.
    Several commenters suggested FTA make the waiver process as 
transparent as possible, with determinations on waivers, supporting 
materials, etc. available online. In response, FTA has added a new 
provision, section 650.31(e) stating FTA will publish on its public 
website information related to waivers the FTA Administrator has 
granted, including the waiver application and any supporting 
documentation. FTA will redact proprietary information prior to 
publication.
Section 650.31 Application Process
    This section proposed a number of requirements that an application 
for waiver or modification must meet in order to be considered. Two 
commenters suggested that the requirement under 650.31(b)(7), that 
other recipients concur with the application submission where more than 
one recipient is involved with a project, be deleted. FTA declines to 
delete this requirement; where two or more recipients are involved in 
the same project, FTA expects them to work together to submit the 
application, or at least be aware that one recipient is submitting an 
application. This will help speed up the process in getting a decision. 
Several commenters suggested that FTA should accept applications with 
information available to the recipient at the time the application is 
submitted; FTA expects complete applications, and will inform any 
applicant that submits an incomplete application that FTA will not 
consider an application until it is complete. Several commenters 
suggested recipients be permitted to resubmit an application with 
additional information to address a denial or partial approval. FTA 
declines to accept this suggestion, but will make its Private Sector 
Liaison available to recipients seeking a waiver or modification for 
technical assistance purposes, which should help to ensure 
applications, once submitted, are complete and ready for consideration 
by the FTA Administrator. One commenter suggested recipients not be 
required to include duplicative information previously submitted in an 
earlier application (as in an earlier phase of the project). FTA 
believes reference to information in an earlier application should be 
sufficient; we have not amended the regulatory text.
    One commenter suggested including additional bases for waivers, 
such as hardship, unforeseen circumstances, a need for additional time 
for compliance, etc. FTA declines to include any of

[[Page 24676]]

these as bases for waivers. The purpose of the rule is to remove 
impediments to private sector participation in public transportation 
capital projects. Thus, the additional bases proposed are not 
applicable here.
    One of the requirements in the proposed rule was that recipients 
provide, ``a financial plan identifying sources and uses of funds 
committed to the project.'' Several commenters suggested that funding 
sources might not be committed at the time of a waiver or modification 
application, and that in fact such sources might not be available 
unless FTA granted a waiver or modification. Two commenters suggested 
FTA amend the provision to state funds should be ``proposed or 
committed.'' FTA has accepted this suggestion and amended the 
regulatory text accordingly.
    FTA did not propose any timeframes for submission or review of 
applications. Applications may be submitted at any time when a 
recipient or project sponsor has the information necessary to submit a 
complete application. Several commenters suggested timeframes for FTA's 
response to an application, generally varying from 30 to 60 days. Given 
that the goal of the application is to remove impediments to private 
sector investment in capital projects, FTA recognizes that a prompt 
response to an application is important. FHWA generally provides a 
response to an applicant for SEP-15 within 60 days, depending on the 
complexity of the request. FTA believes this is a reasonable timeframe 
and will strive to respond to complete applications within 60 days. If 
an application is incomplete, FTA will not wait 60 days to respond, but 
will notify the applicant as soon as FTA determines the application is 
not complete. While FTA will strive to respond to applications in a 
timely manner, we decline to include specific timeframes in the 
regulatory text.

IV. Regulatory Analyses and Notices

Executive Order 12866 and 13563; USDOT Regulatory Policies and 
Procedures

    Executive Orders 12866 and 13563 direct Federal agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits--including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity. Also, 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, reducing costs, harmonizing rules, and promoting 
flexibility. The final rule will encourage tests and experimentation in 
the project development process and is specifically aimed at attracting 
public-private partnerships and private investment. Public-private 
partnerships of capital projects are rare in the U.S. transit industry, 
although they are common in other countries. The final rule provides an 
avenue to address existing impediments to P3 projects with the aim of 
increasing their use, but it is unlikely, on its own, to significantly 
increase the level of P3 activity in the U.S. transit industry.
    FTA has determined this rulemaking is a non-significant regulatory 
action within the meaning of Executive Order 12866 and is non-
significant within the meaning of the U.S. Department of 
Transportation's regulatory policies and procedures. FTA has examined 
the potential economic impacts of this rulemaking and has determined 
that this rulemaking is not economically significant because it will 
not result in an effect on the economy of $100 million or more. Today's 
rule will not adversely affect the economy, interfere with actions 
taken or planned by other agencies, or generally alter the budgetary 
impact of any entitlements, grants, user fees, or loan programs.

Executive Order 13771

    This final rule is an E.O. 13771 deregulatory action because FTA 
believes it will reduce the cost of complying with FTA requirements. 
However, FTA is unable to quantify the cost savings due to the lack of 
information about (1) the types of waivers that will be requested, (2) 
the number of waivers that will be requested, and (3) the difference in 
cost between complying with FTA's existing requirements and complying 
with the requirements of a waiver and this final rule.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354; 
5 U.S.C. 601-612), FTA has evaluated the likely effects of the final 
rule on small entities, and has determined that the rule will not have 
a significant economic impact on a substantial number of small 
entities.

Unfunded Mandates Reform Act of 1995

    This rulemaking does not impose unfunded mandates as defined by the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4; 109 Stat. 48).

Executive Order 13132 (Federalism)

    This rulemaking has been analyzed in accordance with the principles 
and criteria established by Executive Order 13132 (Aug. 4, 1999). FTA 
has determined that the rule does not have sufficient Federalism 
implications to warrant the preparation of a Federalism assessment. FTA 
has also determined that this rule does not preempt any State law or 
State regulation or affect the States' abilities to discharge 
traditional State governmental functions. Moreover, consistent with 
Executive Order 13132, FTA has examined the direct compliance costs of 
the final rule on State and local governments and has determined that 
the collection and analysis of the data are eligible for Federal 
funding under FTA's grant programs.

Executive Order 12372 (Intergovernmental Review)

    The regulations effectuating Executive Order 12372 regarding 
intergovernmental consultation on Federal programs and activities apply 
to this rulemaking.

Paperwork Reduction Act (PRA)

    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 for each collection of information they conduct, 
sponsor, or require through regulations. FHWA has received an average 
of less than one application per year for its SEP-15 program since its 
inception. Therefore, FTA believes that this rule will not generate 
collection of information requirements that impact ten or more 
applicants. FTA sought comment on whether FTA should anticipate ten or 
more applications to the PIPP on an annual basis, but did not receive 
any comments on this issue.

National Environmental Policy Act

    NEPA requires Federal agencies to analyze the potential 
environmental effects of their actions in the form of a categorical 
exclusion, environmental assessment, or environmental impact statement. 
This final rule is categorically excluded under FTA's environmental 
impact procedure at 23 CFR 771.118(c)(4), pertaining to planning and 
administrative activities that do not involve or lead directly to 
construction, such as the promulgation of rules, regulations, and 
directives. FTA has determined that no unusual circumstances exist in 
this instance, and that a categorical exclusion is appropriate for this 
rulemaking.

[[Page 24677]]

Executive Order 12630 (Taking of Private Property)

    This rulemaking will not affect a taking of private property or 
otherwise have taking implications under Executive Order 12630 (March 
15, 1998), Governmental Actions and Interference with Constitutionally 
Protected Property Rights.

Executive Order 12898 (Federal Actions To Address Environmental Justice 
in Minority Populations and Low-Income Populations)

    Executive Order 12898, Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations, and DOT 
Order 5610.2(a) (77 FR 27534) require DOT agencies to achieve 
environmental justice (EJ) as part of their mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects, including interrelated social and 
economic effects, of their programs, policies and activities on 
minority and/or low-income populations. The DOT Order requires DOT 
agencies to address compliance with the Executive Order and the DOT 
Order in all rulemaking activities. In addition, on July 17, 2014, FTA 
issued a circular to update its EJ Policy Guidance for Federal Transit 
Recipients (www.fta.dot.gov/legislation_law/12349_14740.html), which 
addresses administration of the Executive Order and DOT Order.
    FTA has evaluated this rule under the Executive Order, the DOT 
Order, and the FTA Circular and has determined that this rulemaking 
will not cause disproportionately high and adverse human health and 
environmental effects on minority or low income populations.

Executive Order 12988 (Civil Justice Reform)

    This action meets the applicable standards in sections 3(a) and 
3(b)(2) of Executive Order 12988 (February 5, 1996), Civil Justice 
Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

    FTA has analyzed this final rule under Executive Order 13045 (April 
21, 1997), Protection of Children from Environmental Health Risks and 
Safety Risks. FTA certifies that this rule will not cause an 
environmental risk to health or safety that may disproportionately 
affect children.

Executive Order 13175 (Tribal Consultation)

    FTA has analyzed this action under Executive Order 13175 (November 
6, 2000), and believes that it 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 laws. Therefore, a tribal summary impact statement is not 
required.

Executive Order 13211 (Energy Effects)

    FTA has analyzed this rulemaking under Executive Order 13211, 
Actions Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). FTA has determined that this 
action is not a significant energy action under the Executive Order, 
given that the action 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 requirement.

Privacy Act

    Anyone is able to search the electronic form of all comments 
received into any of FTA's dockets by the name of the individual 
submitting the comment or signing the comment if submitted on behalf of 
an association, business, labor union, or any other entity. Interested 
persons may review U.S. DOT's complete Privacy Act Statement published 
in the Federal Register on April 11, 2000, at 65 FR 19477-8.

Statutory/Legal Authority for This Rulemaking

    This rulemaking is issued under the authority of Section 
20013(b)(1) of MAP-21, which requires the Secretary to issue rules to 
carry out procedures and approaches for alleviating impediments to P3s 
or private investment in public transportation.

Regulation Identifier Number

    A Regulation Identifier 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 set forth in the heading of 
this document can be used to cross-reference this action with the 
Unified Agenda.

List of Subjects in 49 CFR Part 650

    Grant programs--transportation, Mass transportation.


0
For the reasons set forth in the preamble, and under the authority of 
Section 20013(b)(1) of The Moving Ahead for Progress in the 21st 
Century Act (Pub. L. 112-141) and the delegations of authority at 49 
CFR 1.91, FTA hereby amends Chapter VI of Title 49, Code of Federal 
Regulations by adding Part 650 to read as follows:

PART 650--PRIVATE INVESTMENT PROJECT PROCEDURES

Sec.
Subpart A--General Provisions
650.1 Purpose.
650.3 Applicability.
650.5 Definitions.
Subpart B--Private Investment Project Procedures
650.11 Private investment project procedures.
650.13 Limitation.
Subpart C--Reporting
650.21 Lessons learned report.
Subpart D--Applications
650.31 Application process.

    Authority: Sec. 20013(b)(5), Pub. L. 112-141, 126 Stat 405; 49 
CFR 1.91.

Subpart A--General Provisions


Sec.  650.1   Purpose.

    This part establishes private investment project procedures that 
seek to identify and address Federal Transit Administration 
requirements that are impediments to the greater use of public-private 
partnerships and private investment in public transportation capital 
projects, while protecting the public interest and any public 
investment in such projects.


Sec.  650.3   Applicability.

    This part applies to any recipient subject to 49 U.S.C. chapter 53 
that funds a public transportation capital project with Federal 
financial assistance under 49 U.S.C. chapter 53, the Transportation 
Infrastructure Finance and Innovation Act (TIFIA) (23 U.S.C. 181-189, 
601-609), the Railroad Rehabilitation and Improvement Financing (RRIF) 
program (45 U.S.C. 821-823), or with any other Federal financial 
assistance.


Sec.  650.5   Definitions.

    All terms defined in 49 U.S.C. chapter 53 are applicable to this 
part. The following definitions also apply to this part:
    Administrator means the Administrator of the Federal Transit 
Administration.
    Application means the formal documentation of an applicant's 
request to modify FTA requirements for an eligible project.

[[Page 24678]]

    Eligible project means any surface transportation capital project 
that is subject to 49 U.S.C. chapter 53, included in the statewide 
long-range transportation plan or the metropolitan transportation plan, 
as those terms are defined in 23 CFR part 450, and that will be 
implemented as a public-private partnership, a joint development, or 
with other private sector investment.
    FTA means the Federal Transit Administration.
    FTA requirements means, for purposes of this part, existing FTA 
regulations and mandatory provisions of practices, procedures or 
guidance documents, including circulars.
    Joint development has the meaning ascribed to it in FTA Circular 
7050.1 ``Federal Transit Administration Guidance on Joint Development'' 
and, for purposes of this part, includes private sector contributions, 
whether in the form of cash investment, capital construction 
contributed at the private sector's cost or other contribution 
determined by the Administrator to qualify.
    Other private sector investment means a financial or capital 
contribution to an eligible project from a private sector investor that 
is not provided through a public-private partnership or joint 
development.
    Private investment project procedures means the procedures by which 
applicants may propose, and the Administrator may agree, subject to the 
requirements of this part, to modify or waive existing FTA requirements 
for an eligible project.
    Private sector investor means the private sector entity that 
proposes to contribute funding to an eligible project.
    Public-private partnership (P3) means a contractual agreement 
formed between a public agency and a private sector entity that is 
characterized by private sector investment and risk-sharing in the 
delivery, financing and operation of a project.
    Recipient means an entity that proposes to receive Federal 
financial assistance for an eligible project under 49 U.S.C. chapter 
53, RRIF, TIFIA or other Federal financial assistance program.

Subpart B--Private Investment Project Procedures


Sec.  650.11   Private investment project procedures.

    (a) A recipient may, subject to the requirements of this part, 
submit applications to modify or waive existing FTA requirements for an 
eligible project. For projects with multiple recipients, recipients 
may, but are not required to, submit an application for a project 
jointly; however, only one application per phase of a project may be 
submitted. Applications may contain requests for modification or waiver 
of more than one FTA requirement. All applications shall comply with 
the requirements of Sec.  650.31.
    (b) Subject to Sec.  650.13, the Administrator may modify or waive 
FTA requirements if the Administrator determines the recipient has 
demonstrated that--
    (1) The FTA requirement proposed for modification discourages the 
use of a public-private partnership, a joint development, or other 
private sector investment in a federally assisted public transportation 
capital project,
    (2) The proposed modification or waiver of the FTA requirements is 
likely to have the effect of encouraging a public-private partnership, 
a joint development, or other private sector investment in a Federally-
assisted public transportation capital project,
    (3) The amount of private sector participation or risk transfer 
proposed is sufficient to warrant modification or waiver of FTA 
requirements, and
    (4) Modification or waiver of the FTA requirements can be 
accomplished while protecting the public interest and any public 
investment in the proposed federally assisted public transportation 
capital project.


Sec.  650.13   Limitation.

    (a) Nothing in this part may be construed to allow the 
Administrator to modify or waive any requirement under--
    (1) 49 U.S.C. 5333;
    (2) The National Environmental Policy Act of 1969 (42 U.S.C. 4321, 
et seq.); or
    (3) Any other provision of Federal statute.
    (b) The Administrator's approval of an application under this part 
does not commit Federal-aid funding for the project.

Subpart C--Reporting


Sec.  650.21   Lessons learned report.

    For a project for which the Administrator has modified or waived 
any FTA requirement pursuant to this part, not later than one year 
after completion of construction, and not later than two years after a 
project that includes private entity involvement in operations or 
maintenance activities has entered revenue operations, the recipient 
shall submit to FTA a report that evaluates the effects of the 
modification or waiver of Federal requirements on the delivery of the 
project. The report shall describe the modification or waiver applied 
to the project; evaluate the success or failure of the modification or 
waiver; evaluate the extent to which the modification or waiver 
addressed impediments to greater use of public-private partnerships and 
private investment in public transportation capital projects; and may 
include any recommended statutory, regulatory or other changes with an 
explanation of how the changes would encourage greater use of public-
private partnerships and private investment in public transportation 
capital projects.

Subpart D--Applications


Sec.  650.31   Application process.

    (a) Applications must be submitted to the FTA Private Sector 
Liaison at FTA Headquarters and provide a copy to the FTA Regional 
Administrator for the region in which the project is located. Addresses 
for FTA Headquarters and Regions are available at www.transit.dot.gov.
    (b) To be considered, an application submitted under this part 
must--
    (1) Describe the proposed project with respect to anticipated 
scope, cost, schedule, and anticipated source and amount of Federal 
financial assistance,
    (2) Identify whether the project is to be delivered as a public-
private partnership, as a joint development or with other private 
sector investment,
    (3) Describe in detail the role of the private sector investor, if 
any, in delivering the project,
    (4) Identify the specific FTA requirement(s) that the recipient 
requests to have modified or waived and a proposal as to how the 
requirement(s) should be modified,
    (5) Provide a justification for the modification(s) or waiver(s), 
including an explanation of how the FTA requirement(s) presents an 
impediment to a public-private partnership, joint development, or other 
private sector investment,
    (6) Explain how the public interest and public investment in the 
project will be protected and how FTA can ensure the appropriate level 
of public oversight and control, as determined by the Administrator, is 
undertaken if the modification(s) or waiver(s) is allowed,
    (7) Provide other recipients' concurrence with submission of the 
application and waiver of the right to submit a separate application 
for the same project, where a project has more than one recipient at 
the time of application,
    (8) Provide a financial plan identifying sources and uses of funds

[[Page 24679]]

proposed or committed to the project, and
    (9) Explain the expected benefits that the modification or waiver 
of FTA requirements would provide to address impediments to the greater 
use of public-private partnerships and private investment in the 
project.
    (c) The Administrator shall notify the recipient in writing if the 
application fails to meet the requirements of paragraph (b) of this 
section. If the recipient does not supplement an incomplete application 
within thirty days of the date of the Administrator's notification, the 
application will be considered withdrawn without prejudice. The 
Administrator will not consider an application until the application is 
complete. The Administrator reserves the right to request additional 
information beyond the requirements in paragraph (b) upon determining 
that more information is needed to evaluate an application.
    (d) For applications that have been deemed complete, the 
Administrator will notify the recipient in writing as to whether the 
request for modification or waiver is approved or denied. Any approval 
may be given in whole or in part and may be conditioned or contingent 
upon the recipient satisfying the conditions identified in the 
approval.
    (e) FTA will publish on its public website information related to 
waivers the FTA Administrator has granted. This may include a copy of 
the waiver application and any supporting documents, with proprietary 
information redacted.
    Under authority delegated in 49 CFR 1.91.

K. Jane Williams,
Acting Administrator.
[FR Doc. 2018-11385 Filed 5-29-18; 8:45 am]
 BILLING CODE 4910-57-P