[Federal Register Volume 72, Number 83 (Tuesday, May 1, 2007)]
[Notices]
[Pages 23886-23889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8227]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
[Docket No: FTA-2006-23697]
Public-Private Partnership Pilot Program
AGENCY: Federal Transit Administration (FTA), DOT.
ACTION: Notice of agency response to comments.
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[[Page 23887]]
SUMMARY: Section 3011(c) of the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (``SAFETEA-LU'')
authorizes the U.S. Secretary of Transportation (the ``Secretary'') to
establish and implement a pilot program to demonstrate the advantages
and disadvantages of public-private partnerships (``PPPs'') for certain
new fixed guideway capital projects (the ``Pilot Program''). This
notice summarizes and responds to comments solicited by FTA by notice
published in the Federal Register on March 22, 2006 (71 FR 14568).
Availability of the Notice: Copies of this notice, and any
documents indicated in the supplementary information as being available
in the docket, are part of docket FTA-2006-23697. To read materials
relating to this notice, please visit the DOT docket (http://dms.dot.gov) at any time or go to the Docket Management System
facility, U.S. Department of Transportation, Room PL-401, on the plaza
level of the Nassif Building; 400 Seventh Street, SW., Washington, DC,
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays.
FOR FURTHER INFORMATION CONTACT: Shauna J. Coleman, Esq., Federal
Transit Administration, Office of the Chief Counsel, U.S. Department of
Transportation, 400 Seventh Street, SW., Washington, DC 20590-0001,
(202) 366-4011, [email protected].
SUPPLEMENTARY INFORMATION: Section 3011(c) of the SAFETEA-LU authorizes
the Secretary to establish and implement the Pilot Program to
demonstrate the advantages and disadvantages of public-private
partnerships for certain new fixed guideway capital projects. On March
22, 2006, FTA issued a notice and solicitation for comments with
respect to the Secretary's establishment and implementation of the
Pilot Program (71 FR 14568). FTA received comments from 19 parties in
response to the notice. FTA responds to these comments by topic and in
the following order: (A) Statutory background; (B) objective of the
Pilot Program; (C) operation of the Pilot Program; (D) common grant
rule; (E) seniority of the Federal Interest; and (F) tax-exempt
financing.
A. Statutory Background
FTA requested comments on the following questions: (i) What, if
any, operative criteria beyond those set forth in the statute should
the Secretary adopt to implement the Pilot Program; (ii) what, if any,
benefits should the Secretary confer on selected projects; (iii)
whether it is significant that section 3011(c) provides no special
funding for the Pilot Program; and (iv) what, if any, changes in law or
new financial incentives are appropriate or necessary to promote the
participation of private enterprise in the delivery and operation of
transit systems?
(i) What, if any, operative criteria beyond those set forth in the
statute should the Secretary adopt to implement the Pilot Program?
Six commenters responded to this question. Some of these commenters
thought that additional operating criteria should not limit the
opportunities for creativity and that FTA should allow private, state,
and local parties maximum latitude to determine the parameters and
merits of potential projects. In addition, several of these commenters
recommended that selected projects should incorporate innovative
contracting mechanisms.
FTA response: FTA agrees that operating criteria should not limit
the opportunities for creativity. FTA further agrees that innovative
procurement contracting mechanisms and financing should be
considerations used in the selection of an eligible project.
(ii) What, if any, benefits should the Secretary confer on selected
projects?
Five commenters responded to this question. Two commenters
submitted general comments on the benefits the Secretary should confer
on selected projects. For instance, one commenter generally recommended
that FTA tailor the benefits it confers to the particular requirements
of a project. Another commenter generally recommended that FTA award
PPPs the highest priority available from programs for which such
projects apply and qualify. Two commenters recommended that FTA waive
strict compliance with one or more New Starts and/or NEPA evaluation
requirements. One commenter recommended that FTA support Congressional
earmarks for selected projects.
FTA response: FTA agrees that it should identify alternative bases
for compliance with one or more New Starts evaluation requirements
applicable to projects that participate in the Pilot Program, insofar
as consistent with law. The Pilot Program offers Pilot Projects that
are candidates for funding under FTA's New Starts certain program
incentives--in the form of improved ratings, accelerated review
process, and other benefits--to enter into PPPs for project delivery.
FTA's role is not to advocate for Congressional earmarking on behalf of
projects, but FTA does recommend projects for funding in the annual New
Starts Report and in the President's budget request.
(iii) Whether it is significant that section 3011(c) provides no
special funding for the Pilot Program.
FTA received the following three comments on this question: one
commenter thought that it was unremarkable that Congress authorized no
special funding for this program; one commenter noted that by not
designating any specific source of funding, Congress provided FTA with
the flexibility to identify funds and develop program requirements; and
one commenter thought Congress intended to limit the use of private
investment in PPPs for selected fixed guideway projects.
FTA response: Based on FTA's review of section 3011(c) and
pertinent sections of the Conference Report that accompanied SAFETEA-
LU, FTA is not limited to funding the Pilot Program from the New Starts
program. FTA reminds commenters that while the statute states that the
Secretary may establish the Pilot Program to demonstrate the advantages
of PPPs for ``certain new fixed guideway projects,'' it does not
expressly limit financial support of such projects to New Starts
funding. FTA notes that new fixed guideway capital projects may be
funded not only through the New Starts program but with certain formula
funds, as well.
(iv) What, if any, changes in law or new financial incentives are
appropriate or necessary to promote the participation of private
enterprise in the delivery and operation of transit systems?
Three commenters responded to this question. One commenter
suggested that FTA reclassify the retirement of a capital debt from an
operating expense to a capital expense. Two commenters suggested that
providing Federal grant or loan money for developmental or pre-
construction work could induce private investment.
FTA response: FTA agrees that reclassifying the retirement of a
capital debt from an operating expense to a capital expense and
providing Federal grant or loan money for developmental or pre-
construction work would promote the participation of private enterprise
in the delivery and operation of transit systems. Within the context of
the Pilot Program, FTA would be prepared to evaluate proposals to do so
on a case-by-case basis, if permitted by law and supported by sound
policy that is consistent with the Pilot Program's objectives.
[[Page 23888]]
B. Objective of the Pilot Program
FTA requested comments on whether, and on what terms, the Pilot
Program should streamline the New Starts application process,
specifically with regard to its due diligence and NEPA components, to
promote PPPs that would realize significant savings in the procurement
of eligible projects.
(i) Due Diligence
FTA requested comments regarding how its New Starts application
process may be altered to accelerate project delivery without impairing
FTA's duties as a steward of Federal funds. Six commenters responded to
this question. Two commenters supported the use of contract terms to
allocate risk and ensure due diligence. Three commenters recommended
that FTA utilize concurrent rather than linear procedures in its New
Starts process, and provided specific recommendations on how FTA could
alter its New Starts application process. One commenter requested that
FTA clarify how the requirement for public accountability and due
diligence can be met under the PPP approach.
FTA response: FTA agrees that it should streamline certain New
Starts due diligence requirements and directs interested parties to
section 3(i) of FTA Federal Register notice issued on January 19, 2007
(72 FR 2587) for a detailed discussion on how FTA might alter certain
due diligence requirements for selected Pilot Projects. In response to
the commenter requesting clarity, FTA directs this commenter to section
3(c) of FTA Federal Register notice issued on January 19, 2007 (72 FR
2587), which details how commercial arrangements negotiated between the
project sponsor and private partner may adequately safeguard the
Federal Interest.
(ii) National Environmental Policy Act (``NEPA'')
FTA requested comments on whether, and on what terms, the Pilot
Program should streamline its NEPA components to accelerate project
delivery without impairing FTA's duties as a steward of the
environment.
(a) Whether the Pilot Program should permit acquisition of
engineering and design services prior to the issuance of a Record of
Decision (``ROD'').
Several commenters responded to this question. All but one of these
commenters supported the acquisition of engineering and design services
prior to the issuance of a ROD.
FTA response: FTA agrees that it should permit acquisition of
engineering and design services prior to the issuance of a ROD, as
provided in section 3(l) of FTA's Federal Register notice published at
72 FR 2587 (January 19, 2007). FTA notes that on several prior
occasions it has allowed project sponsors to negotiate and award
design-build contracts when (1) the contract did not commit the project
sponsor or FTA to final design or construction prior to the completion
of compliance with NEPA, and (2) the entities performing the NEPA
studies had no financial interest in the outcome of the project under
the study. FTA directs interested parties to section 3(l) of FTA's
Federal Register notice published at 72 FR 2587 (January 19, 2007) for
a full discussion on the extent to which FTA may permit acquisition of
engineering and design services prior to the completion of compliance
with NEPA.
(b) Whether the Pilot Program should adopt procedures with the same
or similar effects as those described in 23 U.S.C. 112(b)(3), as
amended by section 1503 of SAFETEA-LU, concerning design-build
contracts.
Three commenters responded to this question and all of these
commenters supported FTA's adoption of procedures similar to those in
section 1503 of SAFETEA-LU, concerning design-build contracts.
FTA response: FTA agrees that the Pilot Program should adopt
procedures with the same or similar effects as those set forth in 23
U.S.C. 112(b)(3), as amended. FTA directs commenters to section 3(l) of
FTA's Federal Register notice published at 72 FR 2587 (January 19,
2007), which outlines the environmental procedures that FTA adopted
with respect to the design-build elements of a Pilot Project's
procurement.
(c) How should the Pilot Program construe the Categorical Exclusion
(``CE'') to realize savings for project sponsors in connection with the
acquisition of rights-of-way and parcels of land?
One commenter responded to this question. This commenter urged FTA
to consider increasing real estate prices as one factor used to
establish the imminence of increasing development pressures so that
increasing prices in highly developed or rapidly developing areas would
permit an agency to rely upon the CE.
FTA response: FTA notes that with a few limited exceptions, joint
FTA/FHWA regulations implementing NEPA specifically prohibit real
estate acquisition activities prior to the completion of the NEPA
process. Those exceptions, specified at 23 CFR 771.117, allow for pre-
ROD real estate acquisition in some limited circumstances, but not on
the basis of rising property values. Moreover, when it authorized
SAFETEA-LU, Congress amended 49 U.S.C. 5324(c) to allow for the pre-ROD
acquisition of contiguous railroad right-of-way in certain cases.
(d) How should the Pilot Program address NEPA to anticipate changes
in project scope?
Five commenters responded to this question and all of these
commenters recommended that FTA should not reopen the NEPA process and/
or existing ROD for review of a new impact that is not determined to be
substantial.
FTA response: In general, FTA policy is to perform a supplemental
Environmental Assessment (``EA'') for review of a new impact if that
impact is potentially significant, and a supplemental Environmental
Impact Statement (``EIS'') in cases where FTA is certain that the new
impact is significant. In some cases, a reevaluation may be required to
assist FTA in deciding whether supplemental NEPA work is needed.
C. Operation of the Pilot Program
FTA requested comments on whether, and on what terms, the Pilot
Program should provide grants for eligible projects contemplated by
long-term operation or concession agreements with private enterprise.
Six commenters supported FTA providing grants for eligible projects
contemplated by long-term operation or concession agreements with
private enterprise. Three commenters offered suggestions as to how the
Pilot Program might encourage transit systems to enter into PPPs. One
commenter suggested that FTA allow the Pilot Program to privatize all
or part of the capital asset. Another commenter suggested FTA provide
financial capacity for pre-construction work. One commenter recommended
that FTA tie the Pilot Program directly to New Starts funding.
FTA response: FTA agrees that projects involving long-term private
operations or concession contracts should be eligible for funding under
the Pilot Program.
D. Common Grant Rule
FTA requested comments on whether, and to what extent, the Pilot
Program should authorize the use of program income to support a PPP
that sponsors an eligible project. Five commenters supported the
flexible use of program income.
FTA response: FTA agrees and supports flexible uses of program
income, as permitted pursuant to 49 CFR 18.25(g).
[[Page 23889]]
E. Seniority of the Federal Interest
FTA requested comments on whether, and to what degree, FTA's
subordination of priority of repayment of Federal loans would be useful
in structuring a PPP. FTA also requested comments on the extent to
which loans, loan guarantees, and other credit enhancing devices
available under the Transportation Infrastructure Financing and
Innovation Act (``TIFIA'') might be used to facilitate the financing of
an eligible project. Four commenters supported subordination of the
Federal Interest. Three commenters generally supported the use of the
loan guarantees available under TIFIA for financing PPPs.
FTA response: FTA agrees that subordination of priority of
repayment of Federal loans could be useful in structuring a PPP. FTA
also agrees that project sponsors should utilize a wide range of
financing tools to support PPPs, including loan guarantees and other
mechanisms available under the TIFIA program to finance eligible PPPs.
F. Tax Exempt Financing
FTA requested comments on the extent to which private activity
bonds (``PABs'') or PABs not subject to State population-based bond
issuance limits (``new PABs'') might assist in financing an eligible
project. Seven commenters generally supported the use of PABs to assist
in financing eligible projects.
FTA response: FTA agrees that project sponsors should utilize a
wide range of financing tools, including PABs and new PABs, to support
PPPs, if the project is eligible to use such financing tools.
Issued in Washington, DC, this 25th day of April 2007.
James S. Simpson,
Administrator.
[FR Doc. E7-8227 Filed 4-30-07; 8:45 am]
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