[Federal Register Volume 62, Number 31 (Friday, February 14, 1997)]
[Rules and Regulations]
[Pages 6869-6874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3746]


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DEPARTMENT OF TRANSPORTATION
23 CFR Parts 630, 635, and 771

[FHWA Docket No. 96-3]
RIN 2125-AD58


Federal-Aid Project Agreement

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Final rule.

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SUMMARY: The FHWA is amending its regulation on project agreements. The 
Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 
modified the requirement that preliminary engineering and right-of-way 
projects must be advanced to the construction stage within certain time 
limits. Changes to the agreement provisions reflect these adjustments. 
The new procedures provide more flexibility in the format of the 
agreement document and permit the development of a single document to 
serve as both the project authorization and project agreement document. 
Other changes were made to shorten the agreement document and to add 
clarity to the process.

EFFECTIVE DATE: This final rule is effective March 17, 1997.

FOR FURTHER INFORMATION CONTACT: Jack Wasley, Office of Engineering, 
202-366-0450, or Wilbert Baccus, Office of the Chief Counsel, 202-366-
0780, FHWA, 400 Seventh Street, SW., Washington, DC 20590. Office hours 
are from 7:45 a.m. to 4:15 p.m., e.t., Monday through Friday except 
Federal holidays.

SUPPLEMENTARY INFORMATION: The amendments in this final rule are based 
primarily on the notice of proposed rulemaking (NPRM) published in the 
January 30, 1996, Federal Register at 61 FR 2973 (FHWA Docket No. 96-
3). All comments received in response to this NPRM have been considered 
in adopting these amendments.
    Under the provisions of 23 U.S.C. 110, a formal agreement between 
the State highway agency and the FHWA is required for Federal-aid 
highway projects. This agreement, referred to as the ``project 
agreement,'' is in essence a written contract between the State and the 
Federal government defining the extent of the work to be undertaken and 
commitments made concerning the project.
    Requirements covering project agreements are contained in this 
final rule. This final rule updates and modifies the existing Federal-
aid project agreement regulation to incorporate changes mandated by the 
ISTEA, Pub. L. 102-240, 105 Stat. 1914, to streamline the project 
agreement form and provisions, and to allow more versatility in its 
use. This final rule amends the existing regulation in the following 
manner and for the reasons indicated below.

Section 630.301  Purpose

    The statement of purpose is revised with minor changes for clarity.

Section 630.303  Preparation of Agreement

    This section no longer requires the use of a specific form. 
Instead, a State has the flexibility to use whatever format is suitable 
to provide the information required for a project agreement document.

Section 630.305  Modification of Original Agreement

    A State is still required to prepare a modification to a project 
agreement as changes occur. However, this section no longer requires 
the use of a specific form. Instead, a State is allowed to develop its 
own form for modification of the project agreement, provided it 
contains necessary information as identified by the regulation.

Section 630.307  Agreement Provisions

    This section identifies the provisions that must be a part of each 
agreement. The project agreement has been simplified by eliminating all 
the boilerplate provisions that are not required from the agreement 
itself. The provisions that are necessary have been included in this 
section of the regulation. The simplified project agreement would 
incorporate, by reference to this section, these provisions into each 
agreement. The following discussion covers each of the required 
provisions.
    Section 630.307(a) is a general provision under which the State 
agrees to comply with title 23, United States Code (U.S.C.), the 
regulations implementing title 23, and the policies and procedures 
established by the FHWA. In addition, States must also comply with all 
other applicable Federal laws and regulations. This general provision 
is broad in scope and there is little need for other provisions which 
cover only a limited feature of title 23, U.S.C.
    Section 630.307(b) represents an acknowledgment by the State that 
it has a financial obligation for the non-Federal share of the cost of 
the project.
    Sections 630.307(c)(1) and (c)(2) contain provisions that implement 
statutory requirements concerning a State's payback of Federal funds it 
has received for right-of-way acquisition or preliminary engineering 
should the project not be advanced within the designated statutory time 
frames. Paragraph (c)(1), Project for Acquisition of Rights-of-Way, 
implements the requirement in 23 U.S.C. 108(a) that the agreement 
between the State and the FHWA for right-of-way acquisition projects 
shall include a provision that construction shall begin within 20 
years. This reflects an amendment to 23 U.S.C. 108(a) resulting from 
passage of section 1017(a) of the ISTEA.
    With regard to paragraph (c)(2), Preliminary engineering project, 
prior to passage of the ISTEA, an administrative decision by the FHWA 
required repayment of Federal-aid highway funds authorized for 
preliminary engineering if right-of-way acquisition or actual 
construction had not begun within 5 years after authorization of the 
preliminary engineering. The general concept of this provision is now 
found in the statute; section 1016(a) of the ISTEA incorporated this 
provision into 23 U.S.C. 102(b). One significant difference between the 
statutory provision and the existing FHWA practice is that 10 years 
instead of 5 years must pass before payback is required. Paragraph 
(c)(2) reflects the 10-year payback period.
    Sections 630.307(c)(3), (c)(4) and (c)(5) contain provisions for a 
drug-free workplace, suspension/debarment, and lobbying required by 49 
CFR 29.630, 49 CFR 29.510 and 49 CFR 20.110, respectively.
    According to 49 CFR 29.630(c), a State is allowed to make one 
yearly certification for the drug-free workplace certification. 
Although the FHWA has used annual or quarterly program certifications 
for the others in the past, it was determined that these certifications 
do not fully comply with the provisions of previously cited 
requirements in 49 CFR 29.510 and 49 CFR 20.110. Placing language in 
the project agreement as part of the general provisions provides the 
separate certification action required for every project. Project-by-
project certifications are deemed to fully satisfy the requirements in 
title 49, CFR, and

[[Page 6870]]

constitute the making of the certifications by virtue of signature on 
the project agreement document.
    In the NPRM, the FHWA proposed to remove provision 20, 
Environmental Impact Mitigation Features, from Sec. 630.307, appendix 
A, and to move it to 23 CFR part 771. The requirements of this 
provision ensure that State Highway agencies comply with Federal 
mitigation standards as directed by the Council on Environmental 
Quality (CEQ) regulations for implementing the National Environmental 
Policy Act (NEPA)(40 CFR 1505.3). The State Highway agencies would then 
be required to comply with 23 CFR part 771 through the broad scope of 
23 CFR 630.301.

Section 635.102  Definitions

    Section 635.102 incorporates the definitions contained in 
Sec. 630.302 (b), (d), (h), (i), and (k). These definitions apply to 
Sec. 630.305, Agreement provisions regarding overrun in contract time. 
Due to the move of Sec. 630.305 to Sec. 635.127, the definitions 
contained in Sec. 630.302 (b), (d), (h), (i), and (k) have been 
inserted in alphabetical order into the definitions currently in this 
section. The term Secondary Road Plan is removed as this plan no longer 
exists.

Section 630.305  Agreement Provisions Regarding Overruns in Contract 
Time

    Section 630.305 has been redesignated as Sec. 635.127. The text of 
the section remains unchanged.
    The FHWA is also making three minor technical changes to 23 CFR 
part 635, which were not included in the NPRM. Those changes simply 
involve the removal of the term ``Secondary Road Plan'' in 
Secs. 635.103, 635.124, and 635.126. As in 23 CFR 635.102, these 
sections need to be updated to reflect the nonexistence of the 
Secondary Road Plan, which was phased out in the ISTEA. The FHWA 
believes that prior notice and comment are unnecessary because these 
changes are not substantive in nature, but merely update 23 CFR part 
635 to reflect current law.

Discussion of Comments

    Interested persons were invited to participate in the development 
of this final rule by submitting written comments on the NPRM to FHWA 
Docket 96-3 on or before April 1, 1996. There were 15 commenters to 
this docket, all representing State transportation agencies. Ten State 
transportation agencies specially stated their endorsement of the 
proposed rewrite of the regulation. The remainder were in agreement 
with the rewrite and raised items for consideration. A summary of the 
comments received relative to each proposed amendment follows.
    For Sec. 630.301, no comments were received.
    Section 630.303 discusses preparation of the project agreement. All 
commenters were in favor of eliminating from the regulation the 
specified form for this agreement. One commenter objected to the 
requirement in proposed Sec. 630.303(b)(5) that the project agreement 
include information on the Federal share expressed either as a pro rata 
percentage or lump sum. The FHWA agrees with this comment because the 
Federal share is established at authorization and does not have to be 
repeated in the agreement. Therefore, this requirement is not included 
in the regulation.
    In addition, an electronic version of the agreement, as provided by 
the FHWA, may be used. Two commenters suggested that they also be 
allowed to provide their own electronic version of the agreement 
subject to FHWA approval. It is noted that the FHWA version is closely 
tied to the agency's Fiscal Management and Information System (FMIS). 
Any alternate electronic form proposed would need to be fully 
compatible with the FMIS. Use of electronic format also requires 
acceptance of an electronic signature. The FHWA has established 
procedures under which electronic signatures, both by State and FHWA 
officials, can be used for executing project agreements. One State 
suggested it be allowed to use its own digital signature format. Again, 
any alternate signature format would have to be compatible with the 
FMIS.
    Section 630.305 discusses preparation of modifications to the 
project agreement. No specific form is specified, and similar to the 
project agreement, the FHWA has provided an electronic version to 
modify project agreements. Again, all commenters were in favor of 
eliminating from the regulation the specified form for a project 
agreement modification. Two commenters were concerned about the need to 
provide a sequential number identifying the modification and the need 
to provide the revised total project cost and amount of Federal funds 
under agreement. These two data items have long been required as part 
of the standard modification of project agreement form. The FHWA's 
electronic process for modifying a project agreement will automatically 
assign a sequential number to the modification and determine the new 
total project cost and amount of Federal funds. If a State chooses to 
use its own written form, it will need to provide this information. The 
FHWA believes these two data items are reasonable information to 
require in tracking agreement changes, and the final rule continues the 
requirement that these data items be included in a modification to the 
project agreement. The FHWA recognizes that using the project agreement 
to modify the cost continues to present problems. This is even more 
complex and complicated when translated into an electronic version of 
the agreement. The FHWA will continue to review this situation and will 
consider issuing additional guidance or undertaking further rulemaking 
as appropriate.
    Section 630.307 identifies provisions that, by reference, must be 
included in each project agreement. The first provision, 
Sec. 630.307(a), is a general provision in which the State agrees to 
comply with the requirements of title 23, United States Code, and the 
implementing regulations and policies, as well as other applicable 
Federal laws and regulations such as title VI of the 1964 Civil Rights 
Act. In the NPRM preamble, the FHWA solicited input on the need to 
specifically refer to other non-title 23 Federal laws and regulations 
with which the States must comply. Most commenters on this issue felt 
that it was not necessary to list the non-title 23 laws and 
regulations. Many felt that such a listing would become outdated, and 
that the general statement contained in the first provision, 
Sec. 630.307(a), referencing these other laws and regulations is 
sufficient. Based on this input, the FHWA has decided to proceed with 
Sec. 630.307(a) only providing the general reference to other non-title 
23 laws and regulations.
    Section 630.307(c) (1) and (2) implement the requirements in 23 
U.S.C. 108(a) and 102(b) for payback of Federal-aid funds authorized 
for right-of-way or preliminary engineering should a project not be 
advanced within designated time frames. Section 108(a) of title 23, 
U.S.C., requires payback of Federal funds made available for right-of-
way acquisition if the actual construction of the project has not 
started within 20 years following the fiscal year that Federal funding 
is made available for right-of-way acquisition. Section 102(b) of title 
23, U.S.C., requires payback of Federal funds made available for 
preliminary engineering if right-of-way acquisition or construction has 
not started within 10 years after the date that Federal funding is made 
available for the preliminary engineering.
    For these payback requirements, the term ``available'' has been 
interpreted by the FHWA to mean the fiscal year in which the FHWA 
authorizes the right-

[[Page 6871]]

of-way or preliminary engineering activity. One commenter believes the 
term ``available'' should instead be interpreted to mean the date the 
project agreement is executed. The FHWA disagrees. The FHWA's 
commitment or obligation of Federal funds to a specific project 
activity occurs at the time that the FHWA authorizes Federal funds for 
that activity. It is reasonable to equate this authorization action to 
a point in time that funds are first made available for an activity.
    Another commenter suggested that the 10-year payback requirement 
for preliminary engineering include a provision that would allow 
extension of this time limit under special circumstances. It is noted 
that under 23 U.S.C. 108(a), the statute does allow extensions of the 
20-year payback limit for right-of-way acquisition projects. However, 
under 23 U.S.C. 102(b), the statute contains no provision for 
extensions of the 10-year limit for preliminary engineering. 
Consequently, the FHWA does not have the authority to establish 
extensions to the preliminary engineering payback limit.
    Sections 630.307(c)(3), (c)(4), and (c)(5) cover certifications for 
a drug-free workplace, suspension/debarment, and lobbying required by 
49 CFR 29.630, 49 CFR 29.510, and 49 CFR 20.110, respectively. One 
commenter suggested that these certifications be done on an annual 
basis. Although the FHWA has used annual certifications in the past, a 
question arose as to whether an annual certification fully complies 
with the provisions of previously cited requirements in title 49, CFR. 
Project-by-project certifications satisfy the requirements in title 49, 
CFR, and the final rule provides that by signing the project agreement, 
the State is providing the required certifications.
    The language in the NPRM for proposed 23 CFR 630.307(c)(3), (4), 
and (5) was intended to implement the requirements of 49 CFR 29.630, 49 
CFR 29.510, and 49 CFR 20.110, respectively. Differences in language 
between title 23 and title 49, however, could lead to confusion. 
Accordingly, it was decided to replace the proposed language for 23 CFR 
630.307(c)(3), (4), and (5) with explicit cross-references to the 
relevant provisions in title 49.
    No comments were received on the amendments to parts 635 and 771.
    The following table is provided to assist the user in locating the 
regulatory paragraph changes made by this rulemaking:

------------------------------------------------------------------------
             Old section                          New section           
------------------------------------------------------------------------
630.301.............................  630.301.                          
630.302.............................  Removed (except (b), (d), (h),    
                                       (i), and (k)).                   
630.302(b)..........................  635.102.                          
630.302(d)..........................  635.102.                          
630.302(h)..........................  635.102.                          
630.302(i)..........................  635.102.                          
630.302(k)..........................  635.102.                          
630.303.............................  630.303.                          
630.304.............................  630.303.                          
630.305.............................  635.127.                          
630.306.............................  630.305.                          
None................................  630.307 (a) and (b).              
Appendix A..........................  Removed.                          
Prov. 1.............................  Removed.                          
Prov. 2.............................  Removed.                          
Prov. 3.............................  630.307(c)(1).                    
Prov. 4.............................  630.307(c)(2).                    
Prov. 5 through 19..................  Removed.                          
Prov. 20............................  771.109(d).                       
Appendix B..........................  Removed.                          
Appendix C..........................  Removed.                          
None................................  630.307(c)(3), (c)(4), and (c)(5).
------------------------------------------------------------------------

Rulemaking Analyses and Notices

    As noted above, the FHWA is also making three minor technical 
changes to 23 CFR part 635, which were not included in the NPRM. Those 
changes simply involve the removal of the term ``Secondary Road Plan'' 
from Secs. 635.103, 635.124, and 635.126. The FHWA has determined that 
prior notice and opportunity for comment as to these changes are 
unnecessary under 5 U.S.C. 553(b)(3)(B) because these changes are 
required to reflect the nonexistence of the Secondary Road Plan, which 
was phased out in the ISTEA, and are therefore only minor and technical 
in nature. The removal of the references to Secondary Road Plan does 
not substantively effect sections 635.103, 635.104, and 635.126, but 
merely updates 23 CFR part 635 to reflect current law.

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

    The FHWA has determined that this action is not a significant 
regulatory action within the meaning of Executive Order 12866 or 
significant within the meaning of Department of Transportation 
regulatory policies and procedures. The proposed amendments would 
update the Federal-aid project agreement regulation to conform to 
recent laws, regulations, or guidance and to clarify existing policies. 
It is anticipated that the economic impact of this rulemaking will be 
minimal; therefore, a full regulatory evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the FHWA has evaluated the effects of this rule on small 
entities. Based on the evaluation, the FHWA certifies that this action 
will not have a significant economic impact on a substantial number of 
small entities. The amendments clarify or simplify procedures used by 
State highway agencies in accordance with existing laws, regulations, 
or guidance.

Executive Order 12612 (Federalism Assessment)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 12612, and it has been determined 
that this action does not have sufficient federalism implications to 
warrant the preparation of a federalism assessment.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing 
Executive Order 12372 regarding intergovernmental consultation on 
Federal programs and activities apply to this program.

Paperwork Reduction Act

    The information collection requirements associated with this 
rulemaking in Sec. 630.303 have been approved by the Office of 
Management and Budget under control number OMB 2125-0529 and expire 
June 30, 1997. The information collection requirements associated with 
this rulemaking would update and modify existing requirements to 
reflect statutory changes to the project agreement process enacted by 
the ISTEA, streamline the project agreement form and provisions, and 
allow more versatility in its use.

National Environmental Policy Act

    The agency has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has 
determined that this action would not have any effect on the quality of 
the environment.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

[[Page 6872]]

List of Subjects

23 CFR Parts 630

    Government contracts, Grant programs--Transportation, Highways and 
roads, Project agreement procedures, Reporting and recordkeeping 
requirements.

23 CFR Parts 635

    Buy America, Government contracts--construction authorization, 
Grant programs--transportation, Highways and roads, Intergovernmental 
relations, Interstate maintenance, Materials and product selection.

23 CFR Parts 771

    Environmental impact statements, Grant programs--transportation, 
Highways and roads, Historic preservation, Public lands, Recreation 
areas, Wildlife refuges.

    Issued on: February 4, 1997.
Rodney E. Slater,
Federal Highway Administrator.

    In consideration of the foregoing, the FHWA amends Title 23, Code 
of Federal Regulations, Parts 630, 635, and 771 as set forth below.

PART 630--PRECONSTRUCTION PROCEDURES

    1. The authority citation for part 630 is revised to read as 
follows and all other authority citations which appear throughout part 
630 are removed:

    Authority: 23 U.S.C. 105, 106, 109, 110, 115, 315, 320, and 
402(a); 23 CFR 1.32; 49 CFR 1.48(b).

    2. The authority citation for part 635 is revised to read as 
follows:

    Authority: 23 U.S.C. 101 (note), 109, 112, 113, 114, 116, 117, 
119, 128, and 315; 31 U.S.C. 6506; 42 U.S.C. 3334, 4601 et seq.; 23 
CFR 1.32; 49 CFR 1.48(b); sec. 1041(a), Pub. L. 102-240, 105 Stat. 
1914.


Sec. 630.305  [Redesignated as Sec. 635.127]

    3. Section 630.305, Agreement provisions regarding overruns in 
contract time, is redesignated as Sec. 635.127.
    4. Part 630, subpart C is revised to read as follows:

Subpart C--Project Agreements

Sec.
630.301  Purpose.
630.303  Preparation of agreement.
630.305  Modification of original agreement.
630.307  Agreement provisions.

Subpart C--Project Agreements


Sec. 630.301  Purpose.

    The purpose of this subpart is to prescribe the procedures for the 
execution of the project agreement required by 23 U.S.C. 110(a) for 
Federal-aid projects, except for forest highway projects pursuant to 23 
U.S.C. 204, and for non-highway public mass transit projects 
administered by the Federal Transit Administration.


Sec. 630.303  Preparation of agreement.

    (a) The State highway agency (SHA) shall prepare a project 
agreement for each Federal-aid highway and FHWA planning and research 
project eligible for Federal-aid funding.
    (b) The SHA may develop the project agreement in a format 
acceptable to both the SHA and the FHWA provided the following are 
included:
    (1) A description of the project location including State and 
project termini;
    (2) The Federal-aid project number;
    (3) The phases of work covered by the agreement along with the 
effective date of authorization for each phase;
    (4) The total project cost and amount of Federal funds under 
agreement;
    (5) A statement that the State accepts and will comply with the 
agreement provisions set forth in 23 CFR 630.307;
    (6) A statement that the State stipulates that its signature on the 
project agreement constitutes the making of the certifications set 
forth in 23 CFR 630.307; and
    (7) Signatures of officials from both the State and the FHWA and 
date executed.
    (c) The project agreement may be combined with the project 
authorization required under 23 CFR part 630, subpart A.
    (d) The SHA may use an electronic version of the agreement as 
provided by the FHWA.

(Approved by the Office of Management and Budget under control 
number 2125-0529)


Sec. 630.305  Modification of original agreement.

    (a) When changes are needed to the original project agreement, a 
modification of agreement shall be prepared.
    (b) The SHA may develop the modification of project agreement in a 
format acceptable to both the SHA and the FHWA provided the following 
are included:
    (1) The Federal-aid project number and State;
    (2) A sequential number identifying the modification;
    (3) A reference to the date of the original project agreement to be 
modified;
    (4) The original total project cost and the original amount of 
Federal funds under agreement;
    (5) The revised total project cost and the revised amount of 
Federal funds under agreement;
    (6) The reason for the modifications; and,
    (7) Signatures of officials from both the State and the FHWA and 
date executed.
    (c) The SHA may use an electronic version of the modification of 
project agreement as provided by the FHWA.


Sec. 630.307  Agreement provisions.

    (a) The State, through its highway agency, accepts and agrees to 
comply with the applicable terms and conditions set forth in title 23, 
United States Code, Highways, the regulations issued pursuant thereto, 
the policies and procedures promulgated by the FHWA relative to the 
designated project in which the FHWA authorized certain work to 
proceed, and all other applicable Federal laws and regulations.
    (b) Federal funds obligated for the project must not exceed the 
amount agreed to on the project agreement, the balance of the estimated 
total cost being an obligation of the State. Such obligation of Federal 
funds extends only to project costs incurred by the State after the 
FHWA authorization to proceed with the project involving such costs.
    (c) The State must stipulate that as a condition to payment of the 
Federal funds obligated, it accepts and will comply with the following 
applicable provisions:
    (1) Project for acquisition of rights-of-way. In the event that 
actual construction of a road on this right-of-way is not undertaken by 
the close of the twentieth fiscal year following the fiscal year in 
which the project is authorized, the SHA will repay to the FHWA the sum 
or sums of Federal funds paid to the highway agency under the terms of 
the agreement.
    (2) Preliminary engineering project. In the event that right-of-way 
acquisition for, or actual construction of, the road for which this 
preliminary engineering is undertaken is not started by the close of 
the tenth fiscal year following the fiscal year in which the project is 
authorized, the SHA will repay to the FHWA the sum or sums of Federal 
funds paid to the highway agency under the terms of the agreement.
    (3) Drug-free workplace certification. By signing the project 
agreement, the SHA agrees to provide a drug-free workplace as required 
by 49 CFR part 29, subpart F. In signing the project agreement, the 
State is providing the certification required in appendix C to 49 CFR 
part 29, unless the State provides an annual certification.

[[Page 6873]]

    (4) Suspension and debarment certification. By signing the project 
agreement, the SHA agrees to fulfill the responsibility imposed by 49 
CFR 29.510 regarding debarment, suspension, and other responsibility 
matters. In signing the project agreement, the State is providing the 
certification for its principals required in appendix A to 49 CFR part 
29.
    (5) Lobbying certification. By signing the project agreement, the 
SHA agrees to abide by the lobbying restrictions set forth in 49 CFR 
part 20. In signing the project agreement, the State is providing the 
certification required in appendix A to 49 CFR part 20.

PART 635--CONSTRUCTION AND MAINTENANCE  [AMENDED]

    5. Subpart A of part 635 is amended by revising Sec. 635.102 to 
read as follows:


Sec. 635.102  Definitions.

    As used in this subpart:
    Administrator means the Federal Highway Administrator.
    Calendar day means each day shown on the calendar but, if another 
definition is set forth in the State contract specifications, that 
definition will apply.
    Certification acceptance means the alternative procedure which may 
be used for administering certain highway projects involving Federal 
funds pursuant to 23 U.S.C. 117.
    Contract time means the number of workdays or calendar days 
specified in a contract for completion of the contract work. The term 
includes authorized time extensions.
    Division Administrator means the chief FHWA official assigned to 
conduct business in a particular State. A State is as defined in 23 
U.S.C. 101.
    Force account means a basis of payment for the direct performance 
of highway construction work with payment based on the actual cost of 
labor, equipment, and materials furnished and consideration for 
overhead and profit.
    Formal approval means approval in writing or the electronic 
transmission of such approval.
    Incentive/disincentive for early completion as used in this 
subpart, describes a contract provision which compensates the 
contractor a certain amount of money for each day identified critical 
work is completed ahead of schedule and assesses a deduction for each 
day the contractor overruns the incentive/disincentive time. Its use is 
primarily intended for those critical projects where traffic 
inconvenience and delays are to be held to a minimum. The amounts are 
based upon estimates of such items as traffic safety, traffic 
maintenance, and road user delay costs.
    Liquidated damages means the daily amount set forth in the contract 
to be deducted from the contract price to cover additional costs 
incurred by a State highway agency because of the contractor's failure 
to complete the contract work within the number of calendar days or 
workdays specified. The term may also mean the total of all daily 
amounts deducted under the terms of a particular contract.
    Local public agency means any city, county, township, municipality, 
or other political subdivision that may be empowered to cooperate with 
the State highway agency in highway matters.
    Major change or major extra work means a change which will 
significantly affect the cost of the project to the Federal Government 
or alter the termini, character or scope of the work.
    Materially unbalanced bid means a bid which generates a reasonable 
doubt that award to the bidder submitting a mathematically unbalanced 
bid will result in the lowest ultimate cost to the Federal Government.
    Mathematically unbalanced bid means a bid containing lump sum or 
unit bid items which do not reflect reasonable actual costs plus a 
reasonable proportionate share of the bidder's anticipated profit, 
overhead costs, and other indirect costs.
    Public agency means any organization with administrative or 
functional responsibilities which are directly or indirectly affiliated 
with a governmental body of any nation, State, or local jurisdiction.
    Publicly owned equipment means equipment previously purchased or 
otherwise acquired by the public agency involved primarily for use in 
its own operations.
    Specialty items means work items identified in the contract which 
are not normally associated with highway construction and require 
highly specialized knowledge, abilities or equipment not ordinarily 
available in the type of contracting organizations qualified and 
expected to bid on the contract; in general, these items are to be 
limited to minor components of the overall contract.
    State highway agency (SHA) means that department, commission, 
board, or official of any State charged by its laws with the 
responsibility for highway construction. The term ``State'' should be 
considered equivalent to ``State highway agency'' if the context so 
implies.
    Workday means a calendar day during which construction operations 
could proceed for a major part of a shift, normally excluding 
Saturdays, Sundays, and State-recognized legal holidays.


Sec. 635.103  [Amended]

    6. Section 635.103 is amended by removing the words ``or secondary 
road plan''.
    7. In Sec. 635.124, paragraph (b) is amended by revising the last 
sentence to read as follows:


Sec. 635.124  Participation in contract claim awards and settlements.

* * * * *
    (b) * * *. Claims arising on projects handled on Certification 
Acceptance projects or on exempt non-NHS projects should be processed 
in accordance with the State's approved Certification Acceptance Plan 
or Stewardship Plan, as appropriate.
* * * * *
    8. In Sec. 635.126, the introductory text of paragraph (b) is 
revised to read as follows:


Sec. 635.126  Record of materials, supplies, and labor.

* * * * *
    (b) On all Federal-aid construction contracts of $1 million or more 
for projects on the National Highway System, the SHA shall require the 
contractor:
* * * * *

PART 771--ENVIRONMENTAL IMPACT AND RELATED PROCEDURES

    9. The authority citation for part 771 is revised to read as 
follows and all other authority citations which appear throughout part 
771 are removed:

    Authority: 42 U.S.C. 4321 et seq.; 23 U.S.C. 109, 110, 128, 138 
and 315; 49 U.S.C. 303(c), 5301(e), 5323, and 5324; 40 CFR part 1500 
et seq.; 49 CFR 1.48(b) and 1.51.

    10. Section 771.109 is amended by adding paragraph (d) to read as 
follows:


Sec. 771.109  Applicability and responsibilities.

* * * * *
    (d) When entering into Federal-aid project agreements pursuant to 
23 U.S.C. 110, it shall be the responsibility of the State highway 
agency to ensure that the project is constructed in accordance with and 
incorporates all committed environmental impact mitigation measures 
listed in approved environmental documents unless the State requests 
and receives written Federal Highway Administration

[[Page 6874]]

approval to modify or delete such mitigation features.

[FR Doc. 97-3746 Filed 2-13-97; 8:45 am]
BILLING CODE 4910-22-P