Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 2583 

1Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for Users H.R. 

REP. NO. 109–203, at 936–37 (2005), reprinted in 

2005 U.S.C.C.A.N. 452. 

2Section 5309(c)(4)(A), which permits the 

Secretary to approve an application to the Pilot 

Program if ‘‘State and local laws permit publicprivate agreements for all phases of project 

development, construction and operation of the 

project’’ (emphasis added) indicates that the Pilot 

Program is intended to demonstrate the advantages 

and disadvantages of PPPs for all aspects certain 

new fixed guideway capital projects, including their 

operation and maintenance. 

of No Significant Impact was issued in 

June 1997. The Monroe Connector study 

previously addressed improvements in 

the US 74 corridor from I–485 to US 601 

in the City of Monroe, where it ended 

at the proposed Monroe Bypass. A Draft 

EIS for this project was approved in 

November 2003; however, a public 

hearing was never held. In February 

2005, the NCTA adopted the Monroe 

Connector as a toll candidate facility, 

and in January 2006, the Notice of Intent 

for the Monroe Connector EIS was 

rescinded (Federal Register Vol. 71, No. 

19, page 4958). Subsequently, NCTA 

adopted the Monroe Bypass project as a 

toll candidate facility in October 2006. 

The Monroe Connector and Monroe 

Bypass projects have been combined 

into a single project and will be 

evaluated in a single EIS. 

The EIS for the proposed action will 

consider alternatives for improvements 

in the US 74 corridor from I–485 to US 

74 in the vicinity of the Town of 

Marshville. Alternatives, including a 

‘‘No-Build’’ Alternative (continuation of 

the existing condition), improving the 

existing US 74 corridor, and 

constructing a new location facility, will 

be considered. Several alternative 

corridors for a new location facility will 

be studied. As part of the EIS, NCTA 

will study the feasibility and impacts of 

developing the proposed project, in 

whole or in part, as a toll road. 

Letters describing the proposed action 

and soliciting comments will be sent to 

appropriate Federal, State and local 

agencies. Scoping will occur over a 

series of meetings with the agencies and 

citizens informational workshops with 

the public. Information on the dates, 

times, and locations of the citizens 

informational workshops will be 

advertised in the local news media and 

newsletters will be mailed to those on 

the project mailing list. If you wish to 

be placed on the mailing list, contact 

Jennifer Harris at the address listed 

below. The Draft EIS will be available 

for public and agency review and 

comment prior to the public hearing. 

To ensure the full range of issues 

related to the proposed action are 

addressed and all significant issues 

identified, comments and suggestions 

are invited from all interested parties. 

Comments and questions concerning the 

proposed action should be directed to 

the FHWA at the address provided 

above or directed to: Ms. Jennifer Harris, 

Staff Engineer, North Carolina Turnpike 

Authority, 5400 Glenwood Avenue, 

Suite 400, Raleigh, North Carolina, 

27612. Telephone: (919) 571–3004. 

(Catalog of Federal Domestic Assistance 

Program Number 20.205, Highway Research, 

Planning and Construction. The regulations 

implementing Executive Order 12372 

regarding intergovernmental consultation of 

Federal programs and activities apply to this 

program.) 

George Hoops, 

Major Projects Engineer, Federal Highway 

Administration, Raleigh, North Carolina. 

[FR Doc. 07–196 Filed 1–18–07; 8:45 am] 

BILLING CODE 4910–22–M 

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 establishment of 

Public-Private Partnership Pilot 

Program; solicitation of applications. 

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 to 

establish and implement a pilot program 

to demonstrate the advantages and 

disadvantages of public-private 

partnerships for certain new fixed 

guideway capital projects (the ‘‘Pilot 

Program’’). This notice establishes and 

sets forth the definitive terms of the 

Pilot Program. By separate notice to be 

published in the Federal Register not 

later than March 31, 2007, FTA will 

summarize and respond to comments 

solicited by FTA by notice published in 

the Federal Register on March 22, 2006, 

at 71 FR 14568. This notice is not a 

‘‘binding obligation’’ as defined at 49 

U.S.C. 5334(l)(2). This notice is 

organized into three sections: (1) 

‘‘Background;’’ (2) ‘‘Overview of Pilot 

Program;’’ and (3) ‘‘Definitive Terms.’’

DATES: To be considered in FTA’s first 

quarterly review of applications to the 

Pilot Program, applications must be 

received by FTA on or before March 31, 

2007. Applications received by FTA 

between March 31, 2007, and July 1, 

2007, will be reviewed in FTA’s second 

quarterly review of applications to the 

Pilot Program. See ‘‘Applications’’ at 

section 3(f) of this notice. 

ADDRESSES: Applications should be 

submitted by U.S. Post or express mail 

to the Federal Transit Administration, 

c/o the Chief Counsel, Office of Chief 

Counsel, Room 9328, 400 Seventh 

Street, SW., Washington, DC 20590. 

Please note that due to security 

procedures in effect since October 2001 

regarding mail deliveries, mail received 

through the U.S. Postal Service may be 

subject to delays. Parties making 

applications to the Pilot Program should 

consider using an express mail service 

to ensure the prompt filing of any 

applications not filed by express mail. 

FOR FURTHER INFORMATION CONTACT: 

Questions concerning the Pilot Program 

should be addressed to David B. Horner, 

Esq., Chief Counsel, Federal Transit 

Administration, by e-mail at 

David.Horner@dot.gov or by telephone 

at (202) 689–4464. To read materials on 

the DOT docket responsive to FTA’s 

notice published in the Federal Register 

on March 22, 2006, at 71 FR 14568, 

please go to http://dms.dot.gov at any 

time or to the Docket Management 

System. 

SUPPLEMENTARY INFORMATION: 

1. Background 

(a) Objective. The Public-Private 

Partnership Pilot Program (the ‘‘Pilot 

Program’’) is intended to demonstrate 

the advantages and disadvantages of 

public-private partnerships (‘‘PPPs’’) for 

certain new fixed guideway capital 

projects funded by the Federal Transit 

Administration (‘‘FTA’’). In particular, 

the Pilot Program is intended to study 

whether, in comparison to conventional 

procurements, PPPs better reduce and 

allocate risks associated with new 

construction, accelerate project delivery, 

improve the reliability of projections of 

project costs and benefits, and enhance 

project performance. The Pilot Program 

will accordingly study projects that, 

among other things, utilize methods of 

procurement that integrate risk-sharing 

and streamline project development, 

engineering, construction,1 operation, 

and maintenance.2 The amount and 

terms of private investment to be made 

in such projects will be a significant 

consideration in selecting projects to 

participate in the Pilot Program. 

(b) PPPs in General. As the growth in 

traditional transportation revenue 

sources, such as gasoline taxes, 

continues to decline and transportation 

operation, maintenance, replacement, 

and expansion needs and costs increase, 

transportation agencies are experiencing 

significant pressure to find ways to 


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2584 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 

3 Design-bid-build (‘‘DBB’’) is the traditional form 

of project delivery where the design and 

construction of the facility are awarded separately 

to private sector engineering and contracting firms. 

As a result, the DBB process is divided into a twostep delivery process involving separate phases for 

design and construction. In the design phase, the 

project sponsor either performs the work in-house 

or contracts with multiple engineering and design 

firms to prepare the preliminary engineering plans 

and environmental clearance, which results in a 

project plan, and the final drawings and 

specifications for the project. Once the design phase 

is complete, the project sponsor separately contracts 

with private construction firms through a 

competitive bidding process. Under a DBB contract, 

the project sponsor, not the construction 

contractors, is solely responsible for the financing, 

operation, and maintenance of the facility and 

assumes the risk that the drawings and 

specifications are complete and free from error. 

manage their costs and find new sources 

of revenue. One of the most successful 

methods to control costs and generate 

revenues employed by other 

infrastructure sectors is the use of PPPs. 

This success has led transportation 

agencies, including several transit 

agencies, to pursue opportunities for 

applying PPPs to deliver major capital 

projects. 

PPPs are essentially a form of 

procurement. Unlike conventional 

methods of contracting for new 

construction (e.g., ‘‘design-bid-build’’), 

in which discrete functions are divided 

and procured through separate 

solicitations, PPPs contemplate a single 

private entity, typically a consortium of 

private companies (a ‘‘private partner’’), 

being responsible and financially liable 

for performing all or a significant 

number of functions in connection with 

a project. In transferring responsibility 

and risk for multiple project elements to 

the private partner, the project sponsor 

relaxes its control of the procurement, 

and the private partner receives the 

opportunity to earn a financial return 

commensurate with the risks it has 

assumed. 

Structured in multiple forms, PPPs 

vary generally according to the scope of 

responsibility and degree of risk 

assumed by the private partner with 

respect to the project. In each case, the 

private partner assumes financial risk in 

some form—for example, through an 

equity investment, liability for 

indebtedness, a fixed priced contract, a 

long-term warranty or a combination 

thereof. 

In recent years transit agencies have 

increasingly turned to PPP project 

delivery approaches in order to procure 

new or expanded transit services. 

Agencies have used PPP delivery 

approaches in an attempt to obtain time 

savings, cost savings, and more 

innovative, higher quality projects with 

reduced risks. The principal forms of 

project delivery PPPs (and their 

respective benefits) include the 

following: 

Design-Build. Unlike design-bid-build 

procurements, in which the design and 

construction of projects is procured 

under at least two separate contracts 

with little or no overlap in the 

respective project work phases,3 the 

design-build (‘‘DB’’) delivery approach 

combines the design and construction 

phases into one, fixed-fee contract. 

Under a DB contract, the design-builder, 

not the project sponsor, assumes the risk 

that the drawings and specifications are 

free from error. While the design and 

construction phases are performed 

under one contract, it is important to 

note that the design-builder may be one 

company or a team of companies 

working together. The DB selection 

process may be based on a negotiation 

with one or more contractors or a 

competitive process based on some 

combination of price, duration, and 

qualifications. Increasingly, DB 

contracts are being awarded on the basis 

of best value, considering each of these 

factors. Since the late 1990s, five transit 

New Starts projects have been procured 

using a DB approach, including: the 

Denver RTD Southeast Corridor LRT; 

the South Florida Commuter Rail 

Upgrades; the Minneapolis Hiawatha 

LRT Line; the BART Extension to the 

San Francisco International Airport; and 

the WMATA Largo Metrorail Extension. 

In addition there is one non-New Start 

transit project built in part with Federal 

funds that has been delivered using a 

DB approach: The Portland MAX 

Airport Extension. 

In comparison to traditional designbid-build delivery, the primary benefits 

that have been associated with DB 

delivery approaches (and other PPP 

delivery approaches that incorporate DB 

delivery) include: 

• Time savings. The potential for time 

savings results from early contractor 

involvement in the design phase, which 

increases the constructability of the 

design plans; the ability to work 

concurrently on the design and 

construction phases for portions of the 

project; and the elimination of the 

bidding process between the design and 

construction phases that is required of 

traditional DBB project delivery. 

• Cost savings. The potential for cost 

savings results from continued 

communication between design, 

engineering, and construction team 

members throughout the delivery; 

reduced inspection requirements by the 

project sponsor because these activities 

are the responsibility of the designbuilder; reduced change orders due to 

early involvement of the construction 

contractors in the design phase; and 

shortened project timeline. 

• Shared risks. Since the potential 

project risks are shared among the 

public and private sectors, the risks may 

be assigned to the party best able to 

handle them. For example, the private 

sector may be better equipped to handle 

the risks associated with design quality, 

construction costs, and delivery 

schedule adherence since they are 

responsible for both the design and 

construction of the facility; while the 

public sector may be better able to 

manage the public risks of 

environmental clearance, permitting, 

and right-of-way acquisition. 

• Improved quality. The potential for 

improved quality results from the 

involvement of the design team through 

project development and opportunities 

to incorporate project innovations and 

new technology that may arise based on 

project needs and contractor 

capabilities. 

It is important to note, however, that 

design-build project delivery 

increasingly includes a variety of 

structures and combinations that results 

in private participation not only in the 

design and construction phases but also 

in operations, maintenance, and project 

financing. These advancements based 

on the DB delivery approach (and that 

incorporate the benefits of the DB 

approach) include the following: 

Design-Build with a Warranty. Under 

the design-build with a warranty 

approach, the design-builder guarantees 

to meet material, workmanship, and/or 

performance measures for a specified 

period after the project has been 

delivered. The warranties may last five 

to twenty years. The potential benefits 

of the DB with a warranty approach 

include the assigning of additional risk 

to the design-builder and reducing the 

project sponsor’s need for inspections 

and testing during project delivery. 

Construction Manager at Risk. 

Construction manager at risk (‘‘CMR’’) 

utilizes a separate contract for a 

construction manager (‘‘CM’’). The CM 

begins work on the project during the 

design phase to provide 

constructability, pricing, and 

sequencing analysis of the design. The 

project sponsor generally holds a 

separate contract with the design team 

through these initial phases of the CM 

contract. The CM becomes the designbuild contractor when a guaranteed 

maximum price is agreed upon by the 

project sponsor and CM. The benefits 

associated with CMR delivery may 

include the continued advancement of 

the project during price negotiations 

and the potential for more optimal 

teaming because the CM can negotiate 


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Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 2585 

4The statute omits other important information 

and provisions. For example, the statute is silent on 

whether the Pilot Program, if established, would 

apply solely to candidates for New Starts funding. 

FTA routinely funds new fixed guideway capital 

projects through both its New Starts program and 

certain formula programs. The statute itself states 

that the Secretary may establish the Pilot Program 

to demonstrate the advantages of PPPs for ‘‘certain 

new fixed guideway capital projects’’ but does not 

expressly limit such projects to New Starts projects. 

The first and last sentences of the pertinent section 

of the Conference Report, which is not legally 

binding, make reference to New Starts projects but 

omit words of limitation: ‘‘The Conference is 

seeking to identify cost drivers for critical, complex, 

and capital intensive transit New Starts projects 

* * * The Committee expects the Secretary to 

initiate the pilot program as soon as practical after 

enactment [of SAFETEA–LU], in order that the 

benefits of PPPs may be understood and potentially 

applied to other transit New Starts projects.’’ See 

H.R. Rep. No. 109–203, at 937 (2005), reprinted in 

2005 U.S.C.C.A.N. 452 (emphasis added). The 

statute provides no definition of the term ‘‘publicprivate partnership.’’ No monies have been 

authorized expressly for the Pilot Program. 

5 49 U.S.C. 5309(d)(3) provides: ‘‘In making the 

determination * * * for a major capital investment 

grant, the Secretary shall analyze, evaluate, and 

consider * * * (K) other factors that the Secretary 

determines to be appropriate to carry out this 

subsection.’’

with all firms, rather than having to 

select from a limited number under DB 

delivery. 

Design-Build-Operate-Maintain. 

Under a design-build-operate-maintain 

(‘‘DBOM’’) delivery approach, the 

selected contractor is responsible for the 

design, construction, operation, and 

maintenance of the facility for a 

specified time. The contractor must 

meet all agreed upon performance 

standards relating to physical condition, 

capacity, congestion, and/or ride 

quality. The potential benefits of the 

DBOM approach are the increased 

incentives for the delivery of a higher 

quality plan and project because the 

design-builder is responsible for the 

performance of the facility for a 

specified period of time after 

construction. Since the late 1990s, three 

transit projects have been procured as 

DBOMs: the New Jersey Transit 

Hudson-Bergen LRT MOS–1 and MOS–

2 and the JFK Airtrain. 

Design-Build-Finance-Operate. The 

design-build-finance-operate (‘‘DBFO’’) 

delivery approach is a variation of the 

DBOM approach. The major difference 

is that in addition to the design, 

construction, and operation of the 

project, the contractor is also 

responsible for all or a major part of the 

project’s financing. The potential 

benefits for the DBFO approach are the 

same as those under the DBOM 

approach and also include the transfer 

of the financial risks to the designbuilder during the contract period. 

While the project sponsor retains 

ownership of the facility, the DBFO 

approach attracts private financing for 

the project that can be repaid with 

revenues generated during the facility’s 

operation. As of the publication of this 

notice, BART is expected to solicit 

proposals to design, build, operate, and 

finance the Oakland Airport Connector. 

Build-Operate-Transfer. Buildoperate-transfer (‘‘BOT’’) is similar to 

the DBFO approach whereby the 

contract team is responsible for the 

design, construction, and operation of 

the facility for a specified time, after 

which the ownership and operation of 

the project are returned to the project 

sponsor. Under a BOT approach, the 

project sponsor retains ownership of the 

facility as well as the operating revenue 

risk and any surplus operating revenues. 

The potential benefits of using a BOT 

approach are similar to the benefits 

associated with using a DBOM contract: 

increased incentives for the delivery of 

a higher quality plan and project 

because the contractor is responsible for 

the operation of the facility for a 

specified time period after construction. 

Build-Own-Operate. Under a buildown-operate (‘‘BOO’’) delivery 

approach, the design, construction, 

operation, and maintenance of a facility 

is the responsibility of the contractor. 

The major difference between BOO and 

DBOM, DBFO, or BOT approaches is 

that ownership of the facility remains 

with the private contractor. As a result, 

the potential benefits associated with a 

BOO approach are that the contractor is 

assigned all operating revenue risk and 

any surplus revenues for the life of the 

facility. 

Full Delivery or Program 

Management. With a full delivery or 

program management (‘‘Full Delivery’’) 

approach, the construction contractor 

provides a wide variety of services 

beyond construction to the project 

sponsor. These services generally begin 

during the design phase and may 

continue through the operation and 

maintenance of the facility. The 

potential benefit of the Full Delivery 

approach is that it allows the project 

sponsor to leverage its resources 

throughout the design, construction, 

and operation of the facility. 

2. Overview of Pilot Program 

(a) Overview of Statutory Framework. 

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 

the Pilot Program to demonstrate the 

advantages and disadvantages of PPPs 

for certain new ‘‘fixed guideway capital 

projects’’ (each, a ‘‘project’’). Section 

3011(c) sets forth generally the terms 

and conditions of the Pilot Program. 

• Section 3011(c)(2) authorizes the 

Secretary to select up to three projects 

to participate in the Pilot Program. 

• Section 3011(c)(3) provides that no 

project is eligible to participate in the 

Pilot Program unless the project sponsor 

of a project submits an application that 

contains, at a minimum: (i) An 

identification of a project that has not 

entered into a full funding grant 

agreement or project construction grant 

agreement with FTA; (ii) a schedule and 

finance plan for the construction and 

operation of the project; and (iii) an 

analysis of the costs, benefits, and 

efficiencies of the proposed publicprivate agreement. 

• Section 3011(c)(4) provides that the 

Secretary may approve the application 

of a project to participate in the Pilot 

Program if the Secretary determines 

that: (i) Applicable State and local laws 

permit public-private agreements for all 

phases of development, construction, 

and operation of the project; (ii) the 

recipient is unable to advance the 

project due to fiscal constraints; and (iii) 

the plan implementing the publicprivate partnership is justified. 

• Section 3011(c)(5) requires that 

applications to the Pilot Program be 

made between the beginning of fiscal 

year 2006 and the end of fiscal year 

2009. 

Beyond the terms set forth above, 

section 3011(c) states no operative 

criteria for implementation of the Pilot 

Program and is notably silent on what 

benefits, if any, participation in the Pilot 

Program would confer on a project.4

However, section 3011(c) affords the 

Secretary broad discretion to devise 

criteria or approve arrangements 

between a public entity and its private 

partner setting forth incentives and 

obligations within the framework of 

section 3011(c) that would demonstrate 

the advantages or disadvantages of PPPs 

as applied to projects. In the event that 

a Pilot Project is a candidate for New 

Starts funding, the Secretary 

additionally has the authority under 49 

U.S.C. 5309 (d)(3)(K) to supplement 

rating criteria identified specifically by 

statute with ‘‘other factors’’ that the 

Secretary determines appropriate to 

carry out the New Starts program.5

(b) How the Pilot Program Will Work. 

FTA will designate as Pilot Projects 

those projects that exhibit high 

‘‘demonstration value.’’ In determining 

the extent to which a project exhibits 

demonstration value, FTA will consider, 

among other things: (i) The number of 

project elements for which the private 

partner is responsible, (ii) the quality of 


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2586 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 

6The term ‘‘Federal interest’’ typically denotes a 

range of interests of the Federal government in a 

project, including, for example, the interest of the 

Federal government in the project’s compliance 

with applicable Federal law. For purposes of the 

Pilot Program, the term ‘‘Federal interest’’ means, 

with respect to a Pilot Project, the interest of the 

Federal government in having the project 

completed in accordance with the budget, schedule, 

and public-private agreement on the basis of which 

(i) in the case of a Pilot Project that is a candidate 

for New Starts funding, FTA recommends the 

project in the Annual Report to the U.S. Congress 

for a Full Funding Grant Agreement and (ii) in the 

case of any other Pilot Project, FTA permits nonNew Starts Federal funding in support of the 

project. See section 3(b) of this notice. 

risk allocation with respect to the cost 

and ridership of the project, as set forth 

in the public-private agreement, (iii) the 

extent to which equity capital and 

development proceeds are contributed 

to the project and the terms on which 

such capital is contributed, (iv) whether 

the project is part of a congestion 

mitigation plan that incorporates 

system-wide congestion pricing, and (v) 

the expected effects of the foregoing 

arrangements on (A) The speed of 

delivery of the project, (B) the quality of 

delivery and performance of the project, 

and (C) the reliability of the projections 

of costs and benefits associated with the 

project. 

Pilot Projects that are candidates for 

funding under FTA’s New Starts 

program will be evaluated and rated in 

accordance with the rating scheme of 

the New Starts program, as adjusted to 

account for their ‘‘demonstration 

value.’’ Accordingly, Pilot Projects that 

receive an overall rating of Medium or 

higher and a cost-effectiveness rating of 

Medium or higher, as adjusted for their 

demonstration value, will be included 

in the President’s Budget to Congress for 

New Starts funding. 

Pilot Projects that propose to use nonNew Starts Federal funds may receive 

certain benefits, such as regulatory 

relief, as negotiated with FTA on a caseby-case basis, after taking into account 

the demonstration value of the project. 

FTA expects to utilize an opening in the 

Pilot Program for a project receiving 

non-New Starts Federal funds only if 

the project presents exceptionally high 

demonstration value. 

FTA budget recommendations and 

other final approvals with respect to a 

Pilot Project—together with any 

procedural or rating benefits received by 

the project under the Pilot Program 

prior to a funding recommendation—

would be conditioned on the project 

sponsor and the private partner having 

entered into a public-private agreement 

that, in the opinion of FTA, safeguards 

the ‘‘Federal interest.’’ 6 If the parties 

failed to enter into such an agreement, 

FTA would rescind the procedural and 

substantive benefits received by the 

Pilot Project and remove the Pilot 

Project from the Pilot Program. 

It follows that the Pilot Program will 

not focus on innovative finance as such 

but on innovative procurements of 

major capital projects in which private 

capital is invested. The PPPs to be 

studied in the Pilot Program may be 

distinguished from other collaborative 

arrangements between public and 

private sectors that are not 

procurements but instead are 

mechanisms to provide private capital 

to transit projects. Many transit 

agencies, for example, are partnering 

with the private sector in order to 

promote real estate development in and 

around transit facilities, which is often 

referred to as ‘‘joint development.’’

These partnerships provide access to 

additional capital and operating 

revenues for transit agencies through the 

receipt of lease payments, access fees, 

and increased fare revenues, as well as 

direct private sector funding of capital 

facilities that promote access between 

transit and private development. The 

capital-raising function, however, is but 

one element of a PPP. 

(c) Rationale for Pilot Program Terms. 

FTA is interested in understanding the 

extent to which the private sector’s 

requirement for a financial return and 

agreement to assume risk for costs and 

benefits in major transit system 

procurements may permit FTA to relax 

certain requirements or accelerate 

approvals applicable to major capital 

projects funded by FTA. In particular, 

FTA wishes to study the proposition 

that when risks associated with new 

construction are appropriately allocated 

between a project sponsor and its 

private partner, FTA may rely on the 

commercial due diligence, financial 

incentives, and potential liabilities of 

the private partner to control for such 

risks, rather than evaluate those risks 

solely or primarily by means of FTA’s 

own due diligence. 

Currently, FTA’s New Starts program 

and certain Federal transit regulations 

attempt to safeguard the Federal interest 

in major transit system procurements by 

means of extensive due diligence. These 

are designed, among other things, to 

allow FTA to validate the projections of 

project costs, benefits, and financing 

that, in turn, form the basis of FTA’s 

statutorily-required findings of project 

justification and local commitment. 

FTA believes, however, that 

determinations of project justification 

and financial commitment may not 

require the independent verification by 

FTA of estimated project costs, benefits, 

and financing in all cases. FTA wishes 

to study whether, in some instances, 

such determinations might be reliably 

based on commercial arrangements 

negotiated between the project sponsor 

and private partner that are typical of 

PPPs. Such arrangements might include 

‘‘design-build’’ or ‘‘design, build, 

operate, and maintain’’ agreements, 

fixed priced contracts, equity 

investments by private contractors and 

other risk-shifting or risk-reducing 

devices customary in private sector 

project development transactions. The 

Pilot Program accordingly offers projects 

sponsors incentives—in the form of 

improved ratings, accelerated process 

and other benefits—to enter into PPPs 

for project delivery. The benefit to the 

public generally of relying on thirdparty commercial validation of project 

costs, benefits, and local commitment is 

that, in doing so, FTA may accelerate 

the review process for New Starts, 

thereby realizing savings for project 

sponsors and Federal taxpayers. 

Similarly, in the case of projects that 

intend to use non-New Starts Federal 

funds, FTA may relax certain 

regulations that impose additional costs 

on project sponsors to the extent such 

regulations are redundant with private 

sector safeguards, incentives, and 

obligations that have the effect of 

protecting the Federal interest. 

Accordingly, under the Pilot Program, 

FTA’s decision to recommend funding 

or to grant certain regulatory relief will 

not turn primarily on FTA’s review of 

project costs and benefits; it will turn 

instead on whether the commercial 

terms between project sponsor and 

private partner allocate risks and create 

the incentives and liabilities in a way 

that safeguards the Federal interest. For 

this reason, FTA budget 

recommendations and other final 

approvals with respect to a Pilot 

Project—together with any other 

benefits received by the project under 

the Pilot Program prior to a funding 

recommendation or other approval—

will be conditioned on the project 

sponsor and its private partner having 

entered into a public-private agreement 

satisfactory to FTA. If the parties fail to 

enter into a satisfactory agreement, FTA 

will rescind the benefits received by the 

Pilot Project and remove the Pilot 

Project from the Pilot Program. 

(d) Environmental Matters. On several 

occasions in years past, FTA has 

allowed project sponsors to negotiate 

and award design-build contracts in 

instances in which the contract did not 

commit the project sponsor or FTA to 

final design or construction prior to the 

completion of compliance with NEPA, 

and the entities performing the NEPA 

studies had no financial interest in the 

outcome of the project under study. For 


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7Unless stated otherwise, all section references in 

this section 3 are references to sections of 

SAFETEA–LU. 

purposes of the Pilot Program, FTA will 

observe environmental procedures 

substantially the same as FTA’s existing 

approach on environmental matters, as 

set forth in section 3(l) of this notice. 

3. Definitive Terms 

(a) Public-Private Partnership Pilot 

Program Established. The Federal 

Transit Administration (‘‘FTA’’), acting 

for the Secretary of the U.S. Department 

of Transportation (the ‘‘Secretary’’) 

pursuant to section 3011(c)(1) of the 

Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for 

Users (‘‘SAFETEA–LU’’),7 establishes a 

pilot program to demonstrate the 

advantages and disadvantages of publicprivate partnerships for certain new 

fixed guideway capital projects (the 

‘‘Pilot Program’’). The Pilot Program 

will be administered by FTA in 

accordance with the terms and 

conditions set forth in this section 3. 

(b) Certain Definitions. As used in this 

section 3, 

‘‘Administrator’’ means the 

Administrator of FTA. 

‘‘Alternatives analysis’’ has the 

meaning provided in 49 CFR 611.7(a). 

‘‘business improvement district’’

means an association (i) Organized 

voluntarily by its members for the 

purpose of financing a project by means 

of self-assessments, (ii) managed by its 

members or by a non-governmental 

entity under the direction of a board 

elected by its members, and (iii) whose 

members are located within a defined 

geographic area. 

‘‘Demonstration value’’ has the 

meaning provided in section 3(h) of this 

notice. 

‘‘Department’’ means the U.S. 

Department of Transportation. 

‘‘development proceeds’’ means cash 

contributed by a governmental entity to 

the project company raised through the 

sale or lease to a non-governmental forprofit entity of rights to develop, 

control, occupy, enter, or otherwise use 

for commercial purposes any real 

property (or the space above the 

physical surface of real property) 

adjacent or proximate to any part of a 

Pilot Project. 

‘‘Equity capital’’ means the amount 

equal to the sum of: (i) Cash paid into 

the project company by a nongovernmental entity in exchange for 

shares of capital stock, membership 

interest, partnership interest or another 

interest therein that entitles the holder 

thereof to (A) Vote on the selection of 

directors, managers, or general partners 

of the project company, as the case may 

be, and (B) receive distributions of 

profits of the project company with 

respect to such interest (an ‘‘equity 

interest’’); (ii) the amount represented 

by a letter of credit made in favor of 

senior lenders of the project company 

by the holder of an equity interest in 

lieu of cash payments for an equity 

interest; (iii) cash loaned to the project 

company by the holder of an equity 

interest in exchange for the unsecured 

subordinated obligation of the project 

company to repay indebtedness; and (iv) 

cash contributed to the project company 

by a business improvement district (as 

defined above). For avoidance of doubt, 

‘‘equity capital’’ shall not include 

proceeds raised by tax increment 

financing. 

‘‘Federal transit law’’ means 49 U.S.C. 

5301 et seq. 

‘‘Federal interest’’ means, with 

respect to a Pilot Project, the interest of 

the Federal government in having the 

project completed in accordance with 

the budget, schedule, and public-private 

agreement on the basis of which (i) in 

the case of a Pilot Project that is a 

candidate for New Starts funding, FTA 

recommends the project in the Annual 

Report to the U.S. Congress for a full 

funding grant agreement or project 

construction grant agreement and (ii) in 

the case of any other Pilot Project, FTA 

consents to non-New Starts Federal 

funding in support of the project. 

‘‘Final design’’ for purposes of section 

3(l) of this notice, means any design 

activities following preliminary design 

and includes the preparation of final 

construction plans and detailed 

specifications for the performance of 

construction work, and for all other 

purposes, shall have the meaning 

provided in 49 CFR 611.7(b). 

‘‘Fixed guideway capital project’’

means a ‘‘capital project,’’ as defined at 

49 U.S.C. 5302(a)(1), that is a ‘‘fixed 

guideway,’’ as defined at 49 U.S.C. 

5302(a)(4). 

‘‘NEPA’’ means the National 

Environmental Policy Act of 1969, as 

amended, at 42 U.S.C. 4321 et seq. 

‘‘New Starts program’’ means the 

capital investment programs authorized 

at 49 U.S.C. 5309(d) and (e). 

‘‘Non-New Starts Federal funding’’

means any grants provided pursuant to 

5309(b)(2) or (3) (and, for avoidance of 

doubt, shall exclude grants provided 

pursuant to 49 U.S.C. 5309(d) or (e)). 

‘‘Pilot Program’’ has the meaning 

provided in section 3(a) of this notice. 

‘‘Pilot Project’’ means a project 

designated by FTA as Pilot Project 

pursuant to the definitive terms of the 

Pilot Program. 

‘‘Preliminary design’’ means, for 

purposes of section 3(l) of this notice 

only, all design and engineering 

activities undertaken for the purposes 

of: (a) Defining the project alternatives 

and completing the NEPA review 

process; (b) complying with other 

related environmental laws and 

regulations; (c) supporting agency 

coordination, public involvement, 

permit applications and development of 

mitigation plans; or (d) advancing the 

design development of the preferred 

alternative when authorized by the lead 

Federal agency in accordance with 23 

U.S.C. 139(f)(4)(D) or as necessitated by 

49 U.S.C. 5309. Preliminary design 

expressly includes, but is not limited to, 

preliminary engineering and other preconstruction activities such as 

environmental assessments, topographic 

surveys, metes and bounds surveys, 

geotechnical investigations, hydrologic 

analysis, hydraulic analysis, utility 

engineering, traffic studies, financial 

plans, revenue estimates, hazardous 

materials assessments, and other work 

that does not materially affect the 

consideration of alternatives in the 

NEPA review process. Preliminary 

design specifically excludes any activity 

that would constitute an irreversible or 

irretrievable commitment of resources 

that has the effect of foreclosing the 

formulation or implementation of any 

reasonable and prudent alternatives. 

‘‘Preliminary engineering’’ has the 

meaning provided in 49 CFR 611.7(b). 

‘‘Private partner’’ means any 

corporation, general partnership, 

limited liability company, limited 

partnership, joint venture, business 

trust, or other business entity that has 

entered into a public-private agreement 

with respect to a Pilot Project. 

‘‘Program income’’ has the meaning 

provided in 49 CFR 18.25. 

‘‘Project’’ means a new, or extension 

to an existing, fixed guideway capital 

project. 

‘‘Project company’’ means the 

company that will own or lease a Pilot 

Project pursuant to a public-private 

agreement. 

‘‘Public-private agreement’’ means a 

definitive agreement with respect to the 

development, design, construction, 

financing, maintenance, or operation of 

a Pilot Project made by and between the 

project sponsor of such project and its 

private partner. 

‘‘Project sponsor’’ means, with respect 

to any project, the public entity that 

procures the project. 

‘‘RFP’’ means request for proposal. 

‘‘RFQ’’ means request for 

qualifications. 

‘‘Urban Partnership Program’’ means 

the program established by the 


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8Neither section 3011(c) nor related sections of 

the conference report directs the Secretary to 

establish the Pilot Program. (See § 3011(c) of 

SAFETEA–LU: ‘‘The Secretary may establish and 

implement a pilot program to demonstrate the 

advantages and disadvantages of public-private 

partnerships for certain new fixed guideway capital 

projects.’’ (emphasis added); H.R. Rep. No. 109–

203, at 937 (2005), reprinted in 2005 U.S.C.C.A.N. 

452: ‘‘The Committee expects the Secretary to 

initiate the pilot program as soon as practicable 

after enactment [of SAFETEA–LU], in order that the 

benefits of PPPs may be understood and potentially 

applied to other transit New Starts projects.’’

Section 3011(c)(4) clearly implies that the Secretary 

has broad discretion to devise and apply additional 

criteria for determining whether a project will be 

approved as Pilot Project. In particular, by 

providing that the Secretary ‘‘may’’ approve a 

project as a Pilot Project if it meets the statutory 

criteria, the statute implies that the Secretary has 

the authority to require projects to satisfy additional 

criteria (beyond what is required by statute) 

developed on an administrative basis in order to 

become Pilot Projects. In addition, FTA believes 

that the research value of the Pilot Program would 

be compromised if FTA did not develop and apply 

additional criteria for the selection of Pilot Projects. 

9Section 3011(c)(2): ‘‘The Secretary may permit 

the establishment of 3 [sic] public-private 

partnerships for new fixed guideway capital 

projects.’’

10Section 3011(c)(5): ‘‘Program Term.—The 

Secretary may approve an application of a recipient 

for a public-private partnership for fiscal years 2006 

through 2009.’’

11Section 3011(c)(3)(A). 

12Section 3011(c)(3)(B). 

13Section 3011(c)(3)(C). 

Department to demonstrate strategies 

with a combined track record of 

effectiveness in reducing traffic 

congestion, as further described in the 

Department’s notice published in the 

Federal Register on December 8, 2006 

(see Applications for Urban Partnership 

Agreements as Part of Congestion 

Initiative, 71 FR 71231–36, Dec. 8, 

2006). 

(c) No Obligation to Establish Pilot 

Program or to Designate Pilot Projects. 

FTA is under no legal obligation to 

establish the Pilot Program or to 

designate Pilot Projects under the Pilot 

Program once established. The Pilot 

Program and its terms and conditions 

(other than the terms and conditions set 

forth in sections 3011(c)(2), (3), (4) and 

(5)), are established by FTA in its 

discretion pursuant to section 3011(c).8

At any time, FTA may (i) Terminate the 

Pilot Program or (ii) amend or wave any 

of its terms or conditions. 

(d) Withdrawal; Removal; Automatic 

Termination; Completion. 

(i) At any time, by written notice to 

the Administrator, a project sponsor 

may withdraw its Pilot Project from the 

Pilot Program for any reason. In the 

event that a Pilot Project so withdrawn 

is a New Starts project, the Pilot Project 

(A) Shall not be removed from the New 

Starts program solely because of its 

withdrawal from the Pilot Program and 

(B) shall not be eligible to reapply to the 

Pilot Program. 

(ii) At any time, FTA may remove a 

Pilot Project from the Pilot Program for 

any reason, including, without 

limitation, the failure of the project 

sponsor and its private partner to enter 

into a public-private agreement 

satisfactory to FTA. 

(iii) The participation of a Pilot 

Project in the Pilot Program shall 

terminate automatically and without 

further action by FTA upon the second 

anniversary of the project’s designation 

as a Pilot Project unless the 

Administrator determines otherwise in 

writing. 

(iv) A Pilot Project will have 

completed its participation in the Pilot 

Program when its project sponsor and 

private partner have entered into a 

public-private agreement that, in the 

opinion of FTA, provides for the risk 

allocation, obligations, and incentives 

necessary to safeguard the Federal 

interest in the project. Completion of a 

Pilot Project’s participation in the Pilot 

Program will not open a position in the 

Pilot Program for another project. 

(v) No rights, obligations or benefits 

afforded a Pilot Project hereunder shall 

survive its withdrawal, removal, or 

termination as a Pilot Project in 

accordance with sections 3(d)(i), (ii), or 

(iii) of this notice, respectively. FTA 

will post any written notice of 

withdrawal, removal, termination, or 

completion of a Pilot Project on the 

Department’s docket within thirty 

calendar days after such withdrawal, 

removal, termination, or completion. 

(e) Number of Pilot Projects; Term of 

Pilot Program. At any time during the 

term of the Pilot Program, no more than 

three projects will be designated as Pilot 

Projects.9 The term of the Pilot Program 

will begin on the date of publication of 

this notice in the Federal Register and 

continue for so long as any Pilot Project 

has not been withdrawn, removed, 

terminated, or completed as a Pilot 

Project in accordance with section 3(d) 

of this notice. FTA will post notice of 

the designation of a project as a Pilot 

Project on the Department’s docket 

within thirty calendar days after FTA 

advises the project sponsor of such 

designation in writing. 

(f) Applications. 

(i) An application for designation as a 

Pilot Project must be (A) Signed by the 

General Manager, Chief Executive 

Officer, or similar officer of the project 

sponsor and (B) include information 

that establishes the eligibility of the 

project under the criteria set forth in 

section 3(g) of this notice. An 

application to the Pilot Program may not 

exceed twenty pages (excluding 

appendices, if any). In its application, a 

project sponsor should (A) Describe the 

proposed project, (B) the project’s 

demonstration value (as defined in 

section 3(h) of this notice) and (C) the 

regulatory relief and procedural and/or 

rating benefits it is seeking for the 

project under the Pilot Program, 

including those benefits listed in section 

3(i) of this notice, if any. An application 

should be submitted by U.S. Post or 

express mail to the Federal Transit 

Administration, c/o the Chief Counsel, 

Office of Chief Counsel, Room 9328, 400 

Seventh Street, SW., Washington, DC 

20590. 

(ii) FTA will review applications to 

the Pilot Program quarterly on a rollingbasis for so long as at least one position 

in the Pilot Program is available. The 

deadline for submission of applications 

for FTA’s first quarterly review of 

proposals will be March 31, 2007. 

Applications received by FTA between 

March 31, 2007 and July 1, 2007 will be 

reviewed in FTA’s second quarterly 

review of applications to the Pilot 

Program. No application for designation 

as a Pilot Project will be approved by 

FTA after September 30, 2009.10 The 

withdrawal, removal, or termination of 

a Pilot Project in accordance with 

sections 3(d)(i), (ii), or (iii) of this 

notice, respectively, will open a 

position in the Pilot Program for another 

project. FTA will solicit applications to 

fill the opening by means of a notice in 

the Federal Register. FTA will evaluate 

applications for eligible projects on the 

basis of their absolute merit under the 

criteria described in section 3(h) of this 

notice, and not on the basis of their 

merit in relation to other applications 

for eligible projects then pending. 

(g) Eligibility. A project will be 

eligible to participate in the Pilot 

Program if: 

(i) All or part of the project is a new 

fixed guideway capital project and, with 

respect to the project, the project 

sponsor has not entered into a full 

funding grant agreement or project 

construction grant agreement with 

FTA; 11

(ii) The project sponsor has 

developed, and has submitted with its 

application to the Pilot Program, a 

schedule and finance plan for the 

construction and operation of the 

project; 12

(iii) The project sponsor has 

developed, and has submitted to FTA 

with its application to the Pilot 

Program, an analysis of the costs, 

benefits, and efficiencies of the publicprivate agreement proposed for the 

project; 13


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14Section 3011(c)(4)(A). 

15The statutory selection criterion that requires 

that ‘‘State and local laws permit public-private 

agreements for all phases of project development, 

construction and operation of the project’’ indicates 

that the Pilot Program is intended to study not only 

study PPPs with respect to the delivery of fixed 

guideway capital projects but also their operation. 

16 Depending on the degree to which the private 

sector entity has assumed management, 

construction, and financial risks, FTA may also 

alter the scope and content of the Project 

Management and Financial Management Oversight 

reviews as appropriate. 

(iv) Applicable State and local laws 

(together with the charter or other 

organizational document of the project 

sponsor) permit public-private 

agreements for all phases of project 

development, construction, and 

operation of the project; 14

(v) The project is not a Pilot Project 

previously withdrawn, removed, or 

terminated under the Pilot Program; 

(vi) The recipient cannot advance the 

project due to fiscal constraints; 

(vii) An opinion of counsel of the 

project sponsor, addressed to FTA in 

form and substance satisfactory to FTA, 

that each of the conditions set forth in 

sections 2(g)(i) through (v) of this notice 

has been satisfied in all material 

respects; and 

(viii) If the project is a candidate for 

New Starts funding, the project shall 

have completed alternatives analysis. 

(h) Selection Criteria. Section 

3011(c)(4) provides that the Secretary 

may approve the application for the 

designation of a project as a Pilot Project 

if ‘‘(A) State and local laws permit 

public-private agreements for all phases 

of project development, construction, 

and operation of the project; (B) the 

recipient is unable to advance the 

project due to fiscal constraints; and (C) 

the plan implementing the publicprivate partnership is justified.’’

With respect to the condition set forth 

in subsection (A) of section 3011(c)(4), 

FTA will rely on the opinion of project 

sponsor’s counsel submitted with its 

application to the Pilot Program to 

determine whether ‘‘State and local 

laws permit public-private agreements 

for all phases of project development, 

construction, and operation of the 

project.’’

With respect to the condition set forth 

in subsection (B) of section 3011(c)(4), 

FTA will find that ‘‘the recipient is 

unable to advance the project due to 

fiscal constraints’’ if its project sponsor 

submits an application to the Pilot 

Program for the project. 

With respect to the condition set forth 

in subsection (C) of section 3011(c)(4), 

projects that exhibit the highest degree 

of ‘‘demonstration value’’ will be 

deemed ‘‘justified.’’ In determining the 

degree of a project’s demonstration 

value, FTA shall take into account the 

following, among other factors: 

(i) The number and type of project 

elements for which the private partner 

is responsible; 

(ii) Whether the project utilizes 

procurements that integrate risk sharing 

and streamline project development, 

engineering, construction, operations, 

and maintenance; 15

(iii) The risk allocation with respect to 

the project’s costs set forth in the 

public-private agreement; 

(iv) The risk allocation with respect to 

the project’s revenues generated by 

ridership set forth in the public-private 

agreement; 

(v) The extent to which the risk 

allocation set forth in the public-private 

agreement increases the reliability of 

projections of the project’s capital and 

operating costs; 

(vi) The terms on and extent to which 

equity capital is contributed to project; 

(vii) The terms on and extent to which 

development proceeds are contributed 

to the project; 

(viii) The sequence in which Federal, 

State, local, and private funds are 

contributed to the project; 

(ix) The experience of the 

management of the project sponsor and 

the private partner in (A) negotiating 

and overseeing major system 

procurements and (B) designing, 

building, operating and maintaining the 

mode of transportation contemplated for 

the project; 

(x) The extent to which the project is 

part of a congestion mitigation plan that 

incorporates system-wide congestion 

pricing consistent with the 

Department’s Urban Partnership 

Program; and 

(xi) The expected effects of the 

foregoing arrangements on (A) the 

quality of delivery and performance of 

the project, (B) the speed of delivery of 

the project, and (C) the reliability of 

projections of costs and benefits with 

respect to the project. 

(i) Benefits. 

(i) New Starts Projects. A Pilot Project 

that is a candidate for funding under the 

New Starts program may receive some 

or all of the following benefits: 

(A) An adjustment in the Pilot 

Project’s ‘‘cost-effectiveness’’ rating, 

calculated by excluding from the 

computation of cost-effectiveness 100% 

of the costs of the Pilot Project to be 

paid for by equity capital and/or 50% of 

the costs of the Pilot Project to be paid 

for by development proceeds (subject to 

approval by the U.S. Office of 

Management and Budget); 

(B) An adjustment in the Pilot 

Project’s ‘‘project justification’’ rating, 

determined by (x) assigning a weighting 

of 20% to the status of the project as 

Pilot Project (as an ‘‘other factor’’

pursuant to 49 U.S.C. 5309(e)(3)(K)) and 

(y) assigning weightings of 50% and 

30% to cost-effectiveness and land-use 

ratings, respectively, in the 

development of the Pilot Project’s 

project justification rating (subject to 

approval by the U.S. Office of 

Management and Budget); 

(C) Concurrent approvals of the Pilot 

Project into Preliminary Engineering 

and Final Design; 

(D) Elimination or limitation of 

certain risk assessments from the rating 

process, as negotiated with FTA on a 

case-by-case basis, including the 

elimination or limitation of FTA risk 

assessments conducted during 

preliminary engineering and prior to 

entering into a full funding grant 

agreement; 16

(E) Elimination or limitation of certain 

reviews of the projections of 

transportation user benefits, as 

negotiated with FTA on a case-by-case 

basis, including FTA’s accepting, 

without further review, projections of 

transportation user benefits on the basis 

of which cost-effectiveness and mobility 

measures for the Pilot Project’s rating 

will be developed, subject to the private 

partner’s assuming levels of risk with 

respect to such benefits on terms 

satisfactory to FTA; 

(F) Issuance of a Letter of Intent by 

FTA setting forth FTA’s intention to 

obligate a specified amount of New 

Starts funds for the Pilot Project from 

future available budget authority 

specified in law and subject to the 

availability of appropriations; 

(G) Early issuance by FTA of Letters 

of No Prejudice (or other assurances) to 

accelerate commencement of preconstruction services and planning; 

(H) Flexible uses of program income, 

as permitted by agreement with FTA 

pursuant to 49 CFR 18.25(g); and 

(I) Certain incentives for the benefit of 

contractors to enter into public-private 

agreements or other commitments for 

construction prior to the award of a full 

funding grant agreement, as negotiated 

with FTA on a case-by-case basis, 

including significant streamlining of the 

project development process resulting 

in an earlier Federal funding 

commitment (subject to the availability 

of appropriations), and the opportunity 

to earn higher returns in exchange for 

assuming the risk associated with 

achieving the cost estimates and/or 

ridership projections. 


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17Please note FTA has not adopted a requirement 

that a proposed New Starts project must receive a 

rating of ‘‘Medium’’ or better before FTA will 

execute a final environmental impact statement 

(‘‘FEIS’’), record of decision (‘‘ROD’’), or finding of 

no significant impact (‘‘FONSI’’). However, when it 

is clear that FTA will need to issue a supplemental 

environmental document in order to accommodate 

scope changes needed to justify a ‘‘medium’’ or 

better rating, FTA will not issue a FEIS or ROD 

until this supplemental document is completed. For 

projects not perceived as requiring a supplemental 

document, FTA will include a statement in the 

FEIS, ROD or FONSI as to how a New Starts rating 

of less than ‘‘medium’’ may affect the ability of the 

project to advance to implementation. See ‘‘Notice 

of Availability of Final Guidance on New Starts 

Policies and Procedures, Updated Reporting 

Instructions and New Starts Rating and Evaluation 

Process (May 22, 2006) at: http:// 

a257.g.akamaitech.net/7/257/2422/01jan20061800/ 

edocket.access.gpo.gov/2006/E6-7781.htm. 

Pilot Projects that receive an overall 

rating of Medium or higher and a costeffectiveness rating of Medium or 

higher, as adjusted, will be included in 

the President’s Budget to Congress for 

New Starts funding. 

(ii) Project Receiving Formula Funds. 

Pilot Projects that propose to utilize 

non-New Starts Federal funding may 

receive certain procedural and 

substantive benefits, as negotiated with 

FTA on a case-by-case basis. 

(j) Public-Private Agreement. No Pilot 

Project will be approved for funding by 

FTA unless the project sponsor and its 

private partner enter into a binding 

public-private agreement that, in the 

opinion of FTA, provides for the risk 

allocation and incentives necessary to 

safeguard the Federal interest. In 

reviewing the public-private agreement 

proposed by the project sponsor and its 

private partner, FTA may consider the 

following, among other factors: 

(i) The type of economic interest the 

private partner will have in the Pilot 

Project; 

(ii) Which party to the agreement will 

assume responsibility for which 

elements of the Pilot Project and the 

timing of the assumption of 

responsibility for such elements; 

(iii) If and the extent to which the 

private partner is liable for nonperformance under the private partner 

under the agreement; 

(iv) If and how the agreement 

provides for the assignment, 

subcontracting or other delegation of 

responsibilities to third parties by the 

project sponsor and the private partner; 

(v) If and how the parties to the 

agreement will share management of the 

risks of the Pilot Project; 

(vi) If and how the parties to the 

agreement will share the costs of 

development of the Pilot Project; 

(vii) If and how the parties to the 

agreement will allocate financial 

liability for cost overruns; 

(viii) If and the extent to which the 

private partner is subject to liability for 

non-performance under the agreement; 

(ix) If and the extent to which the 

private partner is incented to perform 

under the agreement; 

(x) Whether the agreement provides 

for accounting and auditing standards 

for measuring the progress of the Pilot 

Project and the quality of such 

standards; and 

(xi) The grounds for termination of 

the agreement by the project sponsor or 

the private partner. 

(k) Memorandum of Understanding. 

In connection with a project’s 

designation of as a Pilot Project, FTA 

and the project sponsor will enter into 

a non-binding memorandum of 

understanding that identifies the 

benefits for the project being sought 

under the Pilot Program. 

(l) Certain Environmental Matters.17

With respect to the design-build 

elements of a Pilot Project’s 

procurement: 

(i) The project sponsor may: 

(A) Issue an RFQ prior to the 

conclusion of the NEPA process as long 

as the RFQ informs proposers of the 

general status of NEPA review; 

(B) Issue an RFP after the conclusion 

of the NEPA process; 

(C) Issue an RFP prior to the 

conclusion of the NEPA process as long 

as the RFP informs proposers of the 

general status of the NEPA process and 

that no commitment will be made as to 

any alternative under evaluation in the 

NEPA process, including the no-build 

alternative; 

(D) Proceed with the award of a 

design-build contract prior to the 

conclusion of the NEPA process; 

(E) Issue notice to proceed with 

preliminary engineering pursuant to a 

design-build contract that has been 

awarded prior to the completion of the 

NEPA process; and 

(F) Allow a design-builder to proceed 

with final design and construction for 

any projects, or segments thereof, for 

which the NEPA process has been 

completed. 

(ii) If the project sponsor proceeds to 

award a design-build contract prior to 

the conclusion of the NEPA process, 

then: 

(A) The design-build contract must 

include appropriate provisions 

preventing the design-builder from 

proceeding with final design activities 

and physical construction prior to the 

completion of the NEPA process (e.g., 

contract hold points or another method 

of issuing multi-step approvals must be 

used); 

(B) The design-build contract must 

include appropriate provisions ensuring 

that no commitment is made to any 

alternative being evaluated in the NEPA 

process and that the comparative merits 

of all alternatives presented in the 

NEPA document, including the no-build 

alternative, will be evaluated; 

(C) The design-build contract must 

include appropriate provisions ensuring 

that all environmental and mitigation 

measures identified in the NEPA 

document will be implemented; 

(D) The design-builder may not 

prepare the NEPA document or have 

any decision-making responsibility with 

respect to the NEPA process; 

(E) Any consultants who prepare the 

NEPA document must be selected by 

and subject to the exclusive direction 

and control of the project sponsor, but 

this shall not preclude a sub-consultant 

on the design-builder/developer team 

from preparing the NEPA decision 

document, provided that such subconsultant does not have a financial or 

other interest in the outcome of the 

project (except as otherwise permitted 

by FTA in its sole discretion) and 

provided further that the services of the 

sub-consultant relating to the 

preparation of the NEPA decision 

document shall at all times be subject to 

the exclusive direction and control of 

the project sponsor; 

(F) The design-builder’s work product 

may be considered in the NEPA analysis 

and included in the record; and 

(G) The design-build contract must 

include termination provisions in the 

event that the no-build alternative is 

selected. 

(iii) The project sponsor must receive 

prior FTA concurrence (A) Before 

issuing the RFP and (B) awarding a 

design-build contract. Should the 

project sponsor proceed with any of the 

activities specified in this section before 

the completion of the NEPA process, 

FTA’s concurrence merely constitutes 

FTA’s acquiescence that any such 

activities complies with Federal 

requirements and does not constitute 

project authorization or obligate Federal 

funds, unless otherwise provided by 

FTA. 

In addition, if the NEPA process has 

been completed prior to issuing the 

RFP, the project sponsor may allow a 

consultant and/or sub-consultant who 

acted as preparer of the NEPA document 

to submit a proposal in response to the 

RFP. 

If the NEPA process has not been 

completed prior to issuing the RFP, the 

project sponsor may allow a subconsultant to the preparer of the NEPA 

document to submit a proposal in 

response to the RFP only if the project 

sponsor releases such sub-consultant 

from further responsibilities with 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 2591 

respect to the preparation of the NEPA 

document. 

(m) Reservation of Rights. All rights of 

FTA not expressly provided herein are 

hereby reserved by FTA. 

Issued this 12th day of January, 2007. 

James S. Simpson, 

Administrator. 

[FR Doc. E7–651 Filed 1–18–07; 8:45 am] 

BILLING CODE 4910–57–P 

DEPARTMENT OF TRANSPORTATION 

Research & Innovative Technology 

Administration 

[Docket: OST—2007—26835] 

Agency Information Collection; 

Activity Under OMB Review; Report of 

Passengers Denied Confirmed 

Space—BTS Form 251 

AGENCY: Research & Innovative 

Technology Administration (RITA), 

Bureau of Transportation Statistics 

(BTS), DOT. 

ACTION: Notice. 

SUMMARY: In compliance with the 

Paperwork Reduction Act of 1995, 

Public Law 104–13, the Bureau of 

Transportation Statistics invites the 

general public, industry and other 

governmental parties to comment on the 

continuing need for and usefulness of 

BTS collecting reports on the number of 

passengers holding confirmed 

reservations that voluntarily or 

involuntarily give up their seats when 

the airline oversells the flight. 

Comments are requested concerning 

whether (a) the collection is still needed 

by the Department of Transportation; (b) 

BTS accurately estimated the reporting 

burden; (c) there are other ways to 

enhance the quality, utility and clarity 

of the information collected; and (d) 

there are ways to minimize reporting 

burden, including the use of automated 

collection techniques or other forms of 

information technology. 

DATES: Written comments should be 

submitted by March 20, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Bernie Stankus, Office of Airline 

Information, RTS–42, Room 4125, RITA, 

BTS, 400 Seventh Street, SW., 

Washington, DC 20590–0001, 

Telephone Number (202) 366–4387, Fax 

Number (202) 366–3383 or E-Mail 

bernard.stankus@dot.gov. 

Comments: Comments should identify 

the associated OMB approval # 2138–

0018 and Docket OST—2007–26835. 

Persons wishing the Department to 

acknowledge receipt of their comments 

must submit with those comments a 

self-addressed stamped postcard on 

which the following statement is made: 

Comments on OMB # 2138–0018, 

Docket OST—26835. The postcard will 

be date/time stamped and returned. 

SUPPLEMENTARY INFORMATION: 

OMB Approval No. 2138–0018 

Title: Report of Passengers Denied 

Confirmed Space. 

Form No: BTS Form 251. 

Type of Review: Extension of a 

currently approved collection. 

Respondents: Large certificated and 

foreign air carrier. 

Number of Respondents: 100. 

Number of Responses: 400. 

Total Annual Burden: 1,670 hours. 

Needs and Uses: BTS Form 251 is a 

one-page report on the number of 

passengers denied boarding (voluntarily 

and involuntarily), whether the bumped 

passengers were provided alternate 

transportation and/or compensation, 

and the amount of the payment. U.S. 

and foreign air carriers that operate 

scheduled passenger service with large 

aircraft (over 60-seats) must submit 

Form 251. In addition, carriers report 

data from inbound international flights 

because the protections of 14 CFR part 

250 Oversales do not apply to these 

flights. The report allows the 

Department to monitor the effectiveness 

of its oversales rule and take 

enforcement action when necessary. 

While the involuntarily denied-boarding 

rate has decrease from 4.38 per 10,000 

passengers in 1980 to 1.04 for the nine 

months ended September 2006, the rate 

is up from the 0.89 attained for the nine 

months ended September 2005. The 

publishing of the carriers’ individual 

denied boarding rates has negated the 

need for more intrusive regulation. The 

rate of denied boarding can be examined 

as a continuing fitness factor. This rate 

provides an insight into a carrier’s 

customer service policy and its 

compliance disposition. A rapid 

sustained increase in the rate of denied 

boarding often in an indicator of 

operational difficulty. Because the rate 

of denied boarding is released quarterly, 

travelers and travel agents can select 

carriers with low bumping incidents 

when booking a trip. This information is 

available in the Air Travel Consumer 

Report at: http:// 

airconsumer.ost.dot.gov/reports/ 

index.htm. The Air Travel Consumer 

Report is also sent to newspapers, 

magazines, and trade journals. Without 

Form 251, determining the effectiveness 

of the Department’s oversales rule 

would be impossible. 

The Confidential Information 

Protection and Statistical Efficiency Act 

of 2002 (44 U.S.C. 3501 note), requires 

a statistical agency to clearly identify 

information it collects for non-statistical 

purposes. BTS hereby notifies the 

respondents and the public that BTS 

uses the information it collects under 

this OMB approval for non-statistical 

purposes including, but not limited to, 

publication of both Respondent’s 

identity and its data, submission of the 

information to agencies outside BTS for 

review, analysis and possible use in 

regulatory and other administrative 

matters. 

Issued in Washington, DC, on January 12, 

2007. 

Donald W. Bright, 

Assistant Director, Airline Information, 

Bureau of Transportation Statistics. 

[FR Doc. E7–711 Filed 1–18–07; 8:45 am] 

BILLING CODE 4910–FE–P 

DEPARTMENT OF TRANSPORTATION 

Surface Transportation Board 

[STB Ex Parte No. 664] 

Methodology To Be Employed in 

Determining the Railroad Industry’s 

Cost of Capital 

AGENCY: Surface Transportation Board, 

DOT. 

ACTION: Notice of Public Hearing. 

SUMMARY: The Surface Transportation 

Board will hold a public hearing 

beginning at 9:30 a.m. on Thursday, 

February 15, 2007, at its offices in 

Washington, DC. The purpose of the 

hearing will be for members of the 

public to present their views to assist 

the Board in its examination of the 

appropriate methodology to be 

employed in determining the railroad 

industry’s estimated cost of capital to be 

used in future annual cost-of-capital 

determinations. Persons wishing to 

speak at the hearing should notify the 

Board in writing. 

DATES: The public hearing will take 

place on Thursday, February 15, 2007. 

Any person wishing to speak at the 

hearing should file with the Board a 

written notice of intent to participate 

and should identify the party, the 

proposed speaker, the time requested, 

and the topic(s) to be covered, as soon 

as possible but no later than February 5, 

2007. Each speaker should also file with 

the Board a written summary of his/her 

testimony by February 12, 2007. Written 

submissions by interested persons who 

do not wish to appear at the hearing will 

also be due by February 12, 2007. 

ADDRESSES: All notices of intent to 

participate and testimony may be 

submitted either via the Board’s e-filing 


sroberts on PROD1PC70 with NOTICES