15250 Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Rules and Regulations 

Business activity Controlled substances 

DEA Application 

forms 

Application 

fee 

($) 

Registration 

period 

(years) 

Coincident activities allowed 

(x) Chemical 

Analysis.

Schedules I–V ... New–225 Renewal–225a.244 1 May manufacture and import controlled substances 

for analytical or instructional activities; may distribute such substances to persons registered or 

authorized to conduct chemical analysis, instructional activities, or research with such substances 

and to persons exempted from registration pursuant to § 1301.24; may export such substances to 

persons in other countries performing chemical 

analysis or enforcing laws related to controlled 

substances or drugs in those countries; and may 

conduct instructional activities with controlled substances. 

* * * * * 

PART 1309—REGISTRATION OF 

MANUFACTURERS, DISTRIBUTORS, 

IMPORTERS, AND EXPORTERS OF 

LIST I CHEMICALS 

■ 3. The authority citation for part 1309 

is revised to read as follows: 

Authority: 21 U.S.C. 802, 821, 822, 823, 

824, 830, 871(b), 875, 877, 886a, 952, 953, 

957, 958. 

■ 4. Revise § 1309.11 to read as follows: 

§ 1309.11 Fee amounts. 

(a) For each application for 

registration or reregistration to 

manufacture the applicant shall pay an 

annual fee of $3,047. 

(b) For each application for 

registration or reregistration to 

distribute, import, or export a List I 

chemical, the applicant shall pay an 

annual fee of $1,523. 

■ 5. In § 1309.21, revise paragraph (c) to 

read as follows: 

§ 1309.21 Persons required to register. 

* * * * * 

(c) * * * 

SUMMARY OF REGISTRATION REQUIREMENTS AND LIMITATIONS

Business 

activity Chemicals DEA Forms Application fee 

Registration 

period 

(years) 

Coincident activities allowed 

Manufacturing .. List I ..................................... New–510 ....... $3,047 1 May distribute that chemical for which registration was issued; may not distribute 

any chemical for which not registered. 

Drug products containing 

ephedrine, 

pseudoephedrine, phenylpropanolamine.

Renewal– 

510a.

3,047 

Distributing ....... List I ..................................... New–510 ....... 1,523 1 

Scheduled listed chemical 

products.

Renewal– 

510a.

1,523 

Importing .......... List I ..................................... New–510 ....... 1,523 1 May distribute that chemical for which registration was issued; may not distribute 

any chemical for which not registered. 

Drug Products containing 

ephedrine, 

pseudoephedrine, phenylpropanolamine.

Renewal– 

510a.

1,523 

Exporting .......... List I ..................................... New–510 ....... 1,523 1 

Scheduled listed chemical 

products.

Renewal– 

510a.

1,523 

Dated: March 12, 2012. 

Joseph T. Rannazzisi, 

Deputy Assistant Administrator. 

[FR Doc. 2012–6253 Filed 3–12–12; 11:15 am] 

BILLING CODE 4410–09–P 

DEPARTMENT OF TRANSPORTATION 

Federal Highway Administration 

23 CFR Part 627 

[FHWA Docket No. FHWA–2011–0046] 

RIN 2125–AF40 

Value Engineering 

AGENCY: Federal Highway 

Administration (FHWA), DOT. 

ACTION: Final rule. 

SUMMARY: This rule updates regulations 

to enhance the integration of value 

engineering (VE) analysis in the 

planning and development of highway 

improvement projects. In issuing the 

final rule, FHWA revises the VE 

regulations to make them consistent 

with prior changes in legislation and 

regulations. This rulemaking does not 

otherwise impose any new burdens on 

States, revise the threshold of projects 

for which a VE analysis is required, or 

change the reporting structure now in 

place. 


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DATES: This final rule is effective April 

16, 2012. 

FOR FURTHER INFORMATION CONTACT: For 

technical information: Mr. Jon 

Obenberger, Preconstruction Team 

Leader, FHWA Office of Program 

Administration (HIPA), (202) 366–2221, 

or via email at jon.obenberger@dot.gov. 

For legal questions, please contact Mr. 

Michael Harkins, FHWA Office of the 

Chief Counsel, (202) 366–4928, or via 

email at michael.harkins@dot.gov. 

Office hours for the FHWA are from 8 

a.m. to 4:30 p.m., e.t., Monday through 

Friday, except Federal holidays. 

SUPPLEMENTARY INFORMATION: 

Electronic Access and Filing 

This document, the notice of 

proposed rulemaking (NPRM), and all 

comments received may be viewed 

online through the Federal eRulemaking 

portal at: http://www.regulations.gov. 

The Web site is available 24 hours each 

day, 365 days each year. Please follow 

the instructions. An electronic copy of 

this document may also be downloaded 

by accessing the Office of the Federal 

Register’s home page at http:// 

www.archives.gov or the Government 

Printing Office’s Web page at http:// 

www.gpo.gov/fdsys/. 

Background 

This rulemaking modifies existing 

regulations to make them consistent 

with several changes in applicable laws 

and regulations and to ensure 

compatibility with 23 U.S.C. 106 and 

the Office of Management and Budget 

(OMB) Circular A–131 on Value 

Engineering. These revisions also will 

address certain findings contained in a 

2007 Office of Inspector General (OIG) 

report on value engineering in the 

Federal-aid highway program (FAHP) 

(http://www.oig.dot.gov/sites/dot/files/ 

pdfdocs/mh2007040.pdf) in which the 

OIG recommended that the FHWA make 

certain changes to the VE policy. 

The regulation is also being revised to 

enhance the consistency of VE analyses 

that are conducted and to improve 

FHWA’s stewardship and oversight of 

these regulations. Additionally, these 

revisions will advance the integration of 

VE analysis into the planning and 

development of Federal-aid projects. 

Furthermore, these revisions will 

facilitate enhancements to the VE 

analyses agencies conduct and will 

foster the use of innovative technologies 

and methods while eliminating 

unnecessary and costly design elements, 

thereby improving the projects’ 

performance, value, and quality. The 

proposed revisions are discussed in the 

section analysis below. 

The VE analyses on Federal-aid 

highway projects were first established 

by Congress in the Federal-Aid Highway 

Act of 1970. The current requirement to 

conduct a VE analysis for certain 

Federal-aid highway projects is codified 

at 23 U.S.C. 106(e). The OMB Circular 

A–131 on Value Engineering, which was 

issued in May 1993 (http:// 

www.whitehouse.gov/omb/ 

circulars_a131), requires all Federal 

agencies to establish and maintain a VE 

program to improve the quality of their 

programs and acquisition functions. 

Under the OMB Circular, Federal 

agencies are required to develop and 

maintain policies and procedures to 

ensure a VE analysis is conducted on 

appropriate projects and report annually 

on the results and accomplishments of 

the analyses conducted and the 

program’s accomplishments. The FHWA 

annually collects and reports on VE 

accomplishments achieved within the 

Federal-aid and Federal Lands Highway 

Programs. For VE studies conducted 

during the planning and development 

phases of projects, the FHWA tracks the 

number of studies conducted, the 

number of proposed and implemented 

recommendations, the value of the 

implemented recommendations, 

information regarding the State 

transportation agency’s (STA’s) VE 

program (e.g., policies, procedures, 

training conducted), and FHWA’s 

stewardship and oversight of the VE 

program. Conducting VE analyses 

continues to be an effective tool in 

improving the quality and cost 

effectiveness of the FAHP projects. 

Additional information on STA, local 

authority, and FHWA VE programs and 

practices is available at: http:// 

www.fhwa.dot.gov/ve. 

Summary Discussion of Comments 

Received in Response to the NPRM 

On June 22, 2011, the FHWA 

published a Notice of Proposed 

Rulemaking (NPRM) in the Federal 

Register at 76 FR 36410 soliciting public 

comments on its proposal to update the 

existing regulations. The following 

presents an overview of the comments 

received in response to the NPRM. 

Comments were submitted by STAs, 

industry organizations, and individuals. 

The docket contained comments from 

nine parties, including seven STAs, the 

American Association of State Highway 

and Transportation Officials (AASHTO), 

and one individual. 

Overall, the commenters supported 

the proposed rule, namely to enhance 

the integration of VE analysis in the 

planning and development of highway 

improvement projects. The FHWA 

appreciates the feedback the 

commenters provided and has carefully 

reviewed and analyzed all the 

comments that were submitted. 

The AASHTO and STAs support 

conducting a VE analysis to improve the 

quality, efficiency, and effectiveness of 

developing and implementing highway 

improvement projects. While there was 

support for revising the VE regulations 

to ensure consistency with prior 

changes in legislation and regulations, 

AASHTO and several STAs commented 

on issues they believe FHWA needs to 

consider related to the type of projects 

subject to a VE analysis, and when the 

VE analysis is required to be conducted 

on applicable projects. The AASHTO 

and STAs also commented on the need 

to clarify definitions, when and what 

type of projects require a VE analysis, 

how life-cycle costs should be 

considered and integrated in a VE 

analysis, the expectations of STAs to 

facilitate VE training, and STA VE 

Program requirements. 

Comments Directed at Specific Sections 

of the Proposed Revisions to 23 CFR 

Part 627 

Section 627.1—Purpose and 

Applicability 

The NPRM stated that STAs and local 

authorities shall establish the policies, 

procedures, functions, and capacity to 

monitor, assess, and report on the 

performance of the VE program. The 

AASHTO commented that local 

authorities are obligated to meet all 

Federal requirements and that reference 

to local authorities is redundant. Local 

public agencies (as specified in 23 CFR 

635.105) already are required to meet all 

Federal requirements, which includes 

the requirement to operate under 

approved VE policies and procedures, 

when Federal-aid highway program 

funding is utilized on projects. The 

FHWA agrees with these comments. 

However, there are instances within this 

regulation where additional emphasis is 

provided to identify specific VE 

requirements for which STAs must 

ensure that local public agencies meet 

when administering projects utilizing 

Federal-aid highway program funding. 

Most references to local public agencies 

have been removed from 23 CFR part 

627. The term local public agency was 

used throughout 23 CFR part 627 for 

consistency with 23 CFR 635.105. 

Section 627.3—Definitions 

The AASHTO and Wyoming DOT 

suggested adding a definition for a 

bridge project. The FHWA agreed with 

this comment, and the definition of a 

bridge project was added to section 

627.3. 


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The AASHTO and several STAs 

provided comments regarding how final 

design is referenced with regard to the 

need to conduct a VE analysis (as 

specified in section 627.5). The FHWA 

agreed with these comments, and a 

definition of final design was added to 

section 627.3 by referencing its current 

definition in 23 CFR 636.103. 

The AASHTO and several STAs 

commented on the need to consistently 

use one term when referencing a VE 

study or analysis. Currently, several 

terms are used interchangeably in 

practice to describe the VE process and 

analysis that is conducted. The FHWA 

agreed that one term should be used in 

this regulation. Part 627 has been 

changed to use the term ‘‘VE analysis’’ 

for consistency with the provisions in 

23 U.S.C. 106(e). 

The AASHTO and several STAs 

expressed concern with the lowest 

overall life-cycle cost (LCCA) being the 

primary factor to consider when 

evaluating and selecting VE 

recommendations. Under 23 U.S.C. 

106(e) and (f), LCCA is required to be 

conducted during a VE analysis. The 

FHWA agreed with this comment and 

has modified the definition of VE 

analysis in section 627.3(e), by 

eliminating the use of ‘‘lowest’’ when 

used with LCCA, and has clarified that 

LCCA should be a consideration along 

with other factors, such as quality, 

environment, safety, and operational 

efficiency, in determining whether a VE 

recommendation is viable. The FHWA 

has made similar changes in other 

sections of this regulation where LCCA 

is referenced. 

The Washington State DOT 

recommended FHWA require STAs to 

follow the guidance developed by SAVE 

International for a VE Job Plan, which 

would better align with the State’s 

practices. The SAVE International 

guidance fits, in principle, with the 

particular requirements applicable to 

the FAHP, but not in its entirety. Thus, 

FHWA agreed and changed the 

definition of a VE Job Plan to outline the 

intent without replicating the SAVE 

International guidance in Section 

627.3(f). 

The AASHTO and four STAs 

commented that the proposed step in 

the VE Job Plan to evaluate and track the 

implemented VE recommendations 

would be a burden. The intent of FHWA 

was to track VE recommendations to 

ensure they are either approved or 

rejected and incorporated into the 

design of the project(s). The intent was 

not to evaluate the implementation of 

these recommendations in the 

construction phase. The FHWA 

recognizes that tracking VE 

recommendations into the construction 

phase would be a burden for STAs and 

has clarified the definition of the VE Job 

Plan to require the implementation of 

approved recommendations during the 

design phase. 

The AASHTO and several STAs 

stated that as proposed, the VE Job Plan 

was too burdensome and that all the 

steps should not be required for every 

VE analysis. Specifically, smaller 

projects should have the ability to 

eliminate some of the steps in the VE 

Job Plan. The VE Job Plan identifies the 

phases to be followed in conducting a 

VE analysis. The VE Job Plan does not 

specify the analysis that is to be 

performed, level of effort expended, or 

how the VE analysis should be 

conducted. Thus, the VE Job Plan and 

the analysis that is actually conducted 

are scalable to meet the needs of each 

project. The changes described above 

that FHWA has made to the definition 

of a VE Job Plan identified only the 

phases to be followed in conducting a 

VE analysis. The changes do not specify 

the level of effort and analysis to be 

conducted, which should be determined 

by the STAs based on the specific 

conditions of each project. Section 

627.3(f) was modified to clarify the 

intent and purpose of the VE Job Plan. 

The Montana DOT stated that it 

would be beneficial to define what is 

included in the determination of total 

project costs. The FHWA agreed with 

this comment and added a definition for 

total project costs, which specifies that 

it includes all the costs associated with 

the environmental, design, right-of-way, 

utilities, and construction phases of a 

project. 

Section 627.5—Applicable Projects 

The AASHTO and several STAs 

stated that the requirements in sections 

627.5(b)(4) were too restrictive because 

projects with completed designs should 

not require a VE analysis if their costs 

exceed the threshold due to 

construction cost escalation. Also, 

several STAs stated that after the final 

design of a project has been completed, 

a scope or design change should be the 

trigger to require a VE analysis, and not 

a 3 year delay. The FHWA agreed with 

these comments, and revisions were 

made to section 627.5 to clarify when a 

VE analysis is required. 

The requirement to conduct VE 

analyses on projects that exceed the 

thresholds for applicable projects must 

be satisfied (as specified in 23 U.S.C. 

106(e)), and FHWA does not have the 

authority to change these thresholds. A 

VE analysis is not required for projects 

with a total project cost that is under the 

thresholds established for applicable 

projects at the completion of final 

design if there is no scope or design 

change prior to the letting and the 

construction costs have escalated to 

where the project is over these 

thresholds. However, a VE analysis is 

required for a project that is under the 

thresholds established for applicable 

projects at the completion of final 

design, but a change made to the 

project’s scope or design prior to the 

letting causes the total project cost to 

exceed these thresholds. By definition, 

if a scope or design change is made to 

a final set of plans, the project has gone 

back to the design phase where a VE 

analysis is required if these changes 

result in the project exceeding the 

thresholds established for applicable 

projects. 

The AASHTO and the Kansas and 

Wyoming STAs recommended that 

FHWA reinsert the current provision (as 

specified in 23 CFR 627.5(d)) which 

states that VE analysis is an activity that 

is eligible for reimbursement from the 

Federal-aid highway program. This 

provision was removed since Federal 

eligibility for engineering services is 

defined in 23 CFR 1.11. Value 

engineering analysis is an engineering 

service and is therefore an expense that 

is eligible for reimbursement from the 

Federal-aid highway program funding. 

Accordingly, specifically identifying 

this cost as eligible in part 627 is 

redundant. 

The AASHTO and several STAs 

commented that the proposed section 

627.5 was confusing because it 

addressed two issues: FHWA-directed 

additional VE analysis, and the need for 

a STA’s VE Policy to identify when it 

may be appropriate to conduct 

additional VE analyses. Some STAs 

stated that they should be solely 

responsible for identifying when 

additional studies are required while 

others felt that it should be a 

determination made in collaboration 

between the STA and FHWA. These two 

issues have been separated for 

clarification. Section 627.5(b)(5) 

specifies that FHWA may direct an 

additional VE analysis when 

appropriate, and section 627.5(d) was 

revised to address the single issue of the 

STA VE Policy identifying, on a 

programmatic basis, when any 

additional VE analysis should be 

considered or conducted in the 

planning and development of 

transportation projects. Additionally, 

this section was modified to clarify that 

when a VE analysis is required, it must 

be conducted prior to completing the 

final design of the project and prior to 

the release of the final request for 

proposals or other applicable VE 


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solicitation documents for design-build 

projects or other alternative project 

delivery methods. 

The AASHTO and several STAs 

stated that the thresholds for applicable 

projects should be increased since it has 

been a number of years since the 

thresholds were established. The FHWA 

does not have the authority to increase 

the thresholds, as they are specified in 

the enabling legislation and codified in 

Federal law at 23 U.S.C. 106(e). 

Section 627.7—VE Programs 

The AASHTO and several STAs 

stated that the requirement to conduct 

the VE analysis prior to initiating final 

design will limit the ability of STAs to 

effectively manage their VE program. 

The FHWA agreed with these 

comments. This section was modified to 

clarify that when a VE analysis is 

required, it must be conducted prior to 

completing the final design of a project. 

For design-build projects, the VE 

analysis must be completed prior to the 

release of the final request for proposals 

or other applicable solicitation 

documents for alternative project 

delivery methods. 

The AASHTO and several STAs 

stated that the term ‘‘capacity building 

initiative’’ needed more clarification. 

The FHWA agreed with these 

comments. This section was modified to 

clarify the need for STAs’ VE programs 

to facilitate training in place of the 

originally proposed capacity building 

initiative. 

Section 627.9—Conducting a VE 

Analysis 

The AASHTO and Wyoming STA 

commented that the statement ‘‘a 

consideration of combining or 

eliminating inefficient use of the 

existing facility’’ in section 627.9(b) was 

unclear as written. The FHWA agreed 

with these comments. This sentence has 

been deleted from this section. 

The AASHTO and several STAs 

stated that a VE analysis is only 

required on substructures and expressed 

concern over the inclusion of 

superstructure in the required VE 

analysis to be conducted on bridges. 

The STAs are required to consider the 

substructure requirements of a bridge 

(as specified in 23 U.S.C. 106(e)(4)(A)); 

however, this provision does not limit 

the VE analysis to only the substructure. 

The VE analysis conducted for bridges 

must ‘‘be evaluated on engineering and 

economic basis, taking into 

consideration acceptable designs for 

bridges’’ (as specified in 23 U.S.C. 

106(e)(4)(B)). This consideration would 

include all bridge elements, 

substructure, superstructure, 

approaches, and any other design 

elements in the contract. Therefore, the 

FHWA determined that this section did 

not require any revisions. 

The AASHTO and several STAs 

stated that the reference to conflict of 

interest in section 627.9(f) was unclear. 

The FHWA agrees with this comment 

and this section was modified to 

include a reference to FHWA’s existing 

provisions at 23 CFR 1.33. 

Rulemaking Analyses and Notices 

Executive Order 12866 (Regulatory 

Planning and Review), Executive Order 

13563 (Improving Regulation and 

Regulatory Review), and DOT 

Regulatory Policies and Procedures 

The FHWA has determined that this 

rule is not an economically significant 

rulemaking action within the meaning 

of Executive Order 12866 and is not a 

significant rulemaking action within the 

meaning of the U.S. Department of 

Transportation regulatory policies and 

procedures. Additionally, this action 

complies with the principles of 

Executive Order 13563 by fostering the 

use of innovative technologies and 

methods while eliminating unnecessary 

and costly design elements. This rule 

establishes revised requirements for 

conducting VE analyses and it is 

anticipated that the economic impact of 

this rulemaking will be minimal. In 

addition, these changes will not 

interfere with any action taken or 

planned by another agency and will not 

materially alter the budgetary impact of 

any entitlements, grants, user fees, or 

loan programs. 

Regulatory Flexibility Act 

In compliance with the Regulatory 

Flexibility Act (RFA) (Pub. L. 96–354, 5 

U.S.C. 60l–612), the FHWA has 

evaluated the effects of this rule on 

small entities. The FHWA has 

determined that this action does not 

have a significant economic impact on 

a substantial number of small entities. 

The proposed amendment addresses VE 

studies performed by STAs on certain 

projects using Federal-aid highway 

funds. As such, it affects only States, 

and States are not included in the 

definition of small entity set forth in 5 

U.S.C. 601. Therefore, the RFA does not 

apply, and the FHWA certifies that this 

action will not have a significant 

economic impact on a substantial 

number of small entities. 

Unfunded Mandates Reform Act of 

1995 

This final rule does not impose 

unfunded mandates as defined by the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4, March 22, 1995, 109 

Stat. 48). Furthermore, in compliance 

with the Unfunded Mandates Reform 

Act of 1995, FHWA evaluated this rule 

to assess the effects on State, local, and 

Tribal governments and the private 

sector. This rule does not result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $140.8 million or more 

in any one year (2 U.S.C. 1532). 

Additionally, the definition of ‘‘Federal 

Mandate’’ in the Unfunded Mandates 

Reform Act excludes financial 

assistance of the type in which State, 

local, or Tribal governments have 

authority to adjust their participation in 

the program in accordance with changes 

made in the program by the Federal 

Government. The Federal-aid highway 

program permits this type of flexibility. 

Executive Order 13132 (Federalism 

Assessment) 

This rule has been analyzed in 

accordance with the principles and 

criteria contained in Executive Order 

13132, dated August 4, 1999, and the 

FHWA has determined that this rule 

will not have a substantial direct effect 

or sufficient federalism implications to 

warrant preparation of a federalism 

assessment. The FHWA has also 

determined that this rule does not 

preempt any State law or regulation or 

affect the States’ ability to discharge 

traditional State governmental 

functions. 

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 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et. seq.), 

Federal agencies must obtain approval 

from the OMB for each collection of 

information they conduct, sponsor, or 

require through regulations. 

The FHWA has determined that this 

rule contains a requirement for data and 

information to be collected and 

maintained in support of compiling the 

results of the VE analyses that are 

conducted annually. The FHWA 

received no comments to this 

information collection. 

It will take approximately 200 burden 

hours to compile the results of the VE 

analyses annually (400 analyses at 

30 minutes each). It will take 

approximately 156 burden hours to 


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compile the results of all of the VE 

analyses that are conducted annually in 

each State DOT, the District of 

Columbia, and Puerto Rico and to 

submit these results to FHWA (52 

analyses at 3 hours each). The estimated 

total burden to provide the additional 

information to attain full compliance 

with the final rule is 356 hours. 

National Environmental Policy Act 

The FHWA has analyzed this rule for 

the purpose of the National 

Environmental Policy Act (42 U.S.C. 

4321 et seq.) and has determined it will 

not have any effect on the quality of the 

human and natural environment, 

because this rule merely establishes the 

requirements that apply to VE analyses 

whenever an applicable Federal-aid 

highway project is to be constructed. 

The promulgation of this regulation has 

been determined to be a categorical 

exclusion under 23 CFR 771.117(c)(20). 

Executive Order 13175 (Tribal 

Consultation) 

The FHWA has analyzed this action 

under Executive Order 13175, dated 

November 6, 2000, and believes that this 

rule does not have substantial direct 

effects on one or more Indian Tribes; 

does not impose substantial direct 

compliance costs on Indian Tribal 

governments; and does not preempt 

Tribal law. This rule establishes the 

requirements that apply to VE analyses 

whenever an applicable Federal-aid 

highway project is to be constructed and 

does not impose any direct compliance 

requirements on Indian Tribal 

governments, nor does it have any 

economic or other impacts on the 

viability of Indian Tribes. Therefore, a 

Tribal summary impact statement is not 

required. 

Executive Order 13211 (Energy Effects) 

The FHWA has analyzed this rule 

under Executive Order 13211, Actions 

Concerning Regulations that 

Significantly Affect Energy Supply, 

Distribution or Use. We have 

determined that this rule does not 

constitute a significant energy action 

under that order since it will not have 

a significant adverse effect on the 

supply, distribution, or use of energy. 

Therefore, the FHWA certifies that a 

Statement of Energy Effects under 

Executive Order 13211 is not required. 

Executive Order 12630 (Taking of 

Private Property) 

The FHWA has analyzed this rule 

under Executive Order 12630, 

Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights. The FHWA has determined that 

this rule does not effect a taking of 

private property or otherwise have 

taking implications under Executive 

Order 12630. 

Executive Order 12988 (Civil Justice 

Reform) 

This action meets applicable 

standards in sections 3(a) and 3(b)(2) of 

Executive Order 12988, Civil Justice 

Reform, to minimize litigation, 

eliminate ambiguity and reduce burden. 

Executive Order 13045 (Protection of 

Children) 

The FHWA has analyzed this rule 

under Executive Order 13045, 

Protection of Children from 

Environmental Health Risks and Safety 

Risks. The FHWA certifies that this rule 

does not cause an environmental risk to 

health or safety that may 

disproportionately affect children. 

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 number 

contained in the heading of this 

document can be used to cross-reference 

this action with the Unified Agenda. 

List of Subjects in 23 CFR Part 627 

Grant programs—transportation, 

Highways and roads. 

Issued on: January 27, 2012. 

Victor M. Mendez, 

Administrator. 

In consideration of the foregoing, the 

FHWA amends title 23 of the Code of 

Federal Regulations by revising part 627 

to read as follows: 

PART 627—VALUE ENGINEERING 

Sec. 

627.1 Purpose and applicability. 

627.3 Definitions. 

627.5 Applicable projects. 

627.7 VE programs. 

627.9 Conducting a VE analysis. 

Authority: 23 U.S.C. 106(e), 106(g), 106(h), 

112(a) and (b), 302, 315; and 49 CFR part 18. 

§ 627.1 Purpose and applicability. 

(a) The purpose of this part is to 

prescribe the programs, policies and 

procedures for the integration of value 

engineering (VE) into the planning and 

development of all applicable Federalaid highway projects. 

(b) Each State transportation agency 

(STA) shall establish and sustain a VE 

program. This program shall establish 

the policies and procedures identifying 

when a VE analysis is required. These 

policies and procedures should also 

identify when a VE analysis is 

encouraged on all other projects where 

there is a high potential to realize the 

benefits of a VE analysis. 

(c) The STAs shall establish the 

policies, procedures, functions, and 

capacity to monitor, assess, and report 

on the performance of the VE program, 

along with the VE analyses that are 

conducted and Value Engineering 

Change Proposals (VECP) that are 

accepted. The STAs shall ensure that its 

subrecipients conduct VE analyses in 

compliance with this part. 

§ 627.3 Definitions. 

The following terms used in this part 

are defined as follows: 

Bridge Project. A bridge project shall 

include any project where the primary 

purpose is to construct, reconstruct, 

rehabilitate, resurface, or restore a 

bridge. 

Final Design. Final design has the 

same meaning as defined in 23 CFR 

636.103. 

Project. A portion of a highway that 

a STA or public authority proposes to 

construct, reconstruct, or improve as 

described in the preliminary design 

report or applicable environmental 

document. A project is defined as the 

logical termini in the environmental 

document and may consist of several 

contracts, or phases of a project or 

contract, which are implemented over 

several years. 

Total Project Costs. The costs of all 

phases of a project including 

environment, design, right-of-way, 

utilities and construction. 

Value Engineering (VE) Analysis. The 

systematic process of reviewing and 

assessing a project by a 

multidisciplinary team not directly 

involved in the planning and 

development phases of a specific project 

that follows the VE Job Plan and is 

conducted to provide recommendations 

for: 

(1) Providing the needed functions, 

considering community and 

environmental commitments, safety, 

reliability, efficiency, and overall lifecycle cost (as defined in 23 U.S.C. 

106(f)(2)); 

(2) Improving the value and quality of 

the project; and 

(3) Reducing the time to develop and 

deliver the project. 

Value Engineering (VE) Job Plan. A 

systematic and structured action plan 

for conducting and documenting the 

results of the VE analysis. While each 

VE analysis shall address each phase in 

the VE Job Plan, the level of analysis 

conducted and effort expended for each 


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phase should be scaled to meet the 

needs of each individual project. The 

VE Job Plan shall include and document 

the following seven phases: 

(1) Information Phase Gather project 

information including project 

commitments and constraints. 

(2) Function Analysis Phase Analyze 

the project to understand the required 

functions. 

(3) Creative Phase Generate ideas on 

ways to accomplish the required 

functions which improve the project’s 

performance, enhance its quality, and 

lower project costs. 

(4) Evaluation Phase Evaluate and 

select feasible ideas for development. 

(5) Development Phase Develop the 

selected alternatives into fully 

supported recommendations. 

(6) Presentation Phase Present the VE 

recommendation to the project 

stakeholders. 

(7) Resolution Phase: Evaluate, 

resolve, document and implement all 

approved recommendations. 

(g) Value Engineering Change 

Proposal (VECP). A construction 

contract change proposal submitted by 

the construction contractor based on a 

VECP provision in the contract. These 

proposals may improve the project’s 

performance, value and/or quality, 

lower construction costs, or shorten the 

delivery time, while considering their 

impacts on the project’s overall lifecycle cost and other applicable factors. 

§ 627.5 Applicable projects. 

(a) A VE analysis shall be conducted 

prior to the completion of final design 

on each applicable project that utilizes 

Federal-aid highway funding, and all 

approved recommendations shall be 

included in the project’s plans, 

specifications and estimates. 

(b) Applicable projects shall include 

the following: 

(1) Each project located on the 

National Highway System (NHS) (as 

specified in 23 U.S.C. 103) where the 

estimated total project cost is $25 

million or more that utilizes Federal-aid 

highway funding; 

(2) Each bridge project located on or 

off of the NHS where the estimated total 

project cost is $20 million or more that 

utilizes Federal-aid highway funding; 

(3) Any major project (as defined in 

23 U.S.C. 106(h)), on or off of the NHS, 

that utilizes Federal-aid highway 

funding in any contract or phase 

comprising the major project; 

(4) Any project for which a VE 

analysis has not been conducted and a 

change is made to the project’s scope or 

design between the final design and the 

letting which results in an increase in 

the project’s total cost exceeding the 

thresholds identified in paragraphs 

(b)(1), (2) or (3) of this section; and 

(5) Any other Federal-aid project the 

FHWA determines to be appropriate. 

(c) An additional VE analysis is not 

required if, after conducting the VE 

analysis required under this part for any 

project meeting the criteria of paragraph 

(b) of this section, the project is 

subsequently split into smaller projects 

in the design phase or if the project is 

programmed to be completed by the 

letting of multiple construction projects. 

However, the STA may not avoid the 

requirement to conduct a VE analysis on 

an applicable project by splitting the 

project into smaller projects, or multiple 

construction projects. 

(d) The STA’s VE Program’s policies 

and procedures shall identify when any 

additional VE analysis should be 

considered or conducted in the 

planning and development of 

transportation projects. 

(e) For projects utilizing design-build 

and other alternative project delivery 

methods for which final design is not 

complete prior to the release of the final 

request for proposals or other applicable 

solicitation documents, the estimated 

total cost for purposes of the thresholds 

identified in paragraphs (b)(1) and (2) of 

this section, shall be based on the best 

estimate of the cost to construct the 

project. 

§ 627.7 VE programs. 

(a) The STA shall establish and 

sustain a VE program under which VE 

analyses are conducted for all 

applicable projects. The STA’s VE 

program shall: 

(1) Establish and document VE 

program policies and procedures that 

ensure the required VE analysis is 

conducted on all applicable projects, 

and encourage conducting VE analyses 

on other projects that have the potential 

to benefit from this analysis; 

(2) Ensure the VE analysis is 

conducted and all approved 

recommendations are implemented and 

documented in a final VE report prior to 

the project being authorized to proceed 

to a construction letting; 

(3) Monitor and assess the VE 

Program, and disseminate an annual 

report to the FHWA consisting of a 

summary of all approved 

recommendations implemented on 

applicable projects requiring a VE 

analysis, the accepted VECPs, and VE 

program functions and activities; 

(4) Establish and document policies, 

procedures, and contract provisions that 

identify when VECP’s may be used; 

identify the analysis, documentation, 

basis, and process for evaluating and 

accepting a VECP; and determine how 

the net savings of each VECP may be 

shared between the agency and 

contractor; 

(5) Establish and document policies, 

procedures, and controls to ensure a VE 

analysis is conducted and all approved 

recommendations are implemented for 

all applicable projects administered by 

local public agencies; and ensure the 

results of these analyses are included in 

the VE program monitoring and 

reporting; and 

(6) Provide for the review of any 

project where a delay occurs between 

when the final plans are completed and 

the project advances to a letting for 

construction to determine if a change 

has occurred to the project’s scope or 

design where a VE analysis would be 

required to be conducted (as specified 

in 23 CFR 627.5(b)). 

(b) STAs shall ensure the required VE 

analysis has been performed on each 

applicable project including those 

administered by subrecipients, and shall 

ensure approved recommendations are 

implemented into the project’s plans, 

specifications, and estimate. 

(c) STAs shall designate a VE Program 

Coordinator to promote and advance VE 

program activities and functions. The 

VE Coordinator’s responsibilities should 

include establishing and maintaining 

the STA’s VE policies and procedures; 

facilitating VE training; ensuring VE 

analyses are conducted on applicable 

projects; monitoring, assessing, and 

reporting on the VE analyses conducted 

and VE program; participating in 

periodic VE program and project 

reviews; submitting the required annual 

VE report to the FHWA; and supporting 

the other elements of the VE program. 

§ 627.9 Conducting a VE analysis. 

(a) A VE analysis should be 

conducted as early as practicable in the 

planning or development of a project, 

preferably before the completion of the 

project’s preliminary design. At a 

minimum, the VE analysis shall be 

conducted prior to completing the 

project’s final design. 

(b) The VE analysis should be closely 

coordinated with other project 

development activities to minimize the 

impact approved recommendations 

might have on previous agency, 

community, or environmental 

commitments; the project’s scope; and 

the use of innovative technologies, 

materials, methods, plans or 

construction provisions. 

(c) For projects utilizing design-build 

and other alternative project delivery 

methods that will be advertised prior to 

the completion of final design, the STA 

or local public agency shall conduct a 

VE analysis prior to the release of the 


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15256 Federal Register / Vol. 77, No. 51 / Thursday, March 15, 2012 / Rules and Regulations 

final Request for Proposals or other 

applicable solicitation documents. 

(d) STAs shall ensure the VE analysis 

meets the following requirements: 

(1) Uses a multidisciplinary team not 

directly involved in the planning or 

design of the project, with at least one 

individual who has the training and 

experience with leading a VE analysis; 

(2) Develops and implements the VE 

Job Plan; 

(3) Produces a formal written report 

outlining, at a minimum: 

(i) Project information; 

(ii) Identification of the VE analysis 

team; 

(iii) Background and supporting 

documentation, such as information 

obtained from other analyses conducted 

on the project (e.g., environmental, 

safety, traffic operations, 

constructability); 

(iv) Documentation of the stages of the 

VE Job Plan which would include 

documentation of the life-cycle costs 

that were analyzed; 

(v) Summarization of the analysis 

conducted; 

(vi) Documentation of the proposed 

recommendations and approvals 

received at the time the report is 

finalized; and 

(vii) The formal written report shall 

be retained for at least 3 years after the 

completion of the project (as specified 

in 49 CFR 18.42). 

(e) For bridge projects, in addition to 

the requirements in paragraph (d) of this 

section, the VE analyses shall: 

(1) Include bridge substructure and 

superstructure requirements that 

consider alternative construction 

materials; and 

(2) Be conducted based on: 

(i) An engineering and economic 

assessment, taking into consideration 

acceptable designs for bridges; and 

(ii) An analysis of life-cycle costs and 

duration of project construction. 

(f) STAs and local public agencies 

may employ qualified consultants (as 

defined in 23 CFR 172) to conduct a VE 

analysis. The consultant shall possess 

the training and experience required to 

lead the VE analysis. A consulting firm 

or individual shall not be used to 

conduct or support a VE analysis if they 

have a conflict of interest (as specified 

in 23 CFR 1.33). 

(g) VECPs, STAs, and local public 

agencies are encouraged to use a VECP 

clause (or other such clauses under a 

different name) in an applicable 

project’s contract, allowing the 

construction contractor to propose 

changes in the project’s plans, 

specifications, or other contract 

documents. Whenever such clauses are 

used, the STA and local authority will 

consider changes that could improve the 

project’s performance, value and 

quality, shorten the delivery time, or 

lower construction costs, while 

considering impacts on the project’s 

overall life-cycle cost and other 

applicable factors. The basis for a STA 

or local authority to consider a VECP is 

the analysis and documentation 

supporting the proposed benefits that 

would result from implementing the 

proposed change in the project’s 

contract or project plans. 

(h) Proposals to accelerate 

construction after the award of the 

contract will not be considered a VECP 

and will not be eligible for Federal-aid 

highway program funding participation. 

Where it is necessary to accelerate 

construction, STAs and local public 

agencies are encouraged to use the 

appropriate incentive or disincentive 

clauses so that all proposers will take 

this into account when preparing their 

bids or price proposals. 

[FR Doc. 2012–6244 Filed 3–14–12; 8:45 am] 

BILLING CODE 4910–22–P 

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Parts 4022 and 4044 

Allocation of Assets in SingleEmployer Plans; Benefits Payable in 

Terminated Single-Employer Plans; 

Interest Assumptions for Valuing and 

Paying Benefits 

AGENCY: Pension Benefit Guaranty 

Corporation. 

ACTION: Final rule. 

SUMMARY: This final rule amends the 

Pension Benefit Guaranty Corporation’s 

regulations on Benefits Payable in 

Terminated Single-Employer Plans and 

Allocation of Assets in Single-Employer 

Plans to prescribe interest assumptions 

under the benefit payments regulation 

for valuation dates in April 2012 and 

interest assumptions under the asset 

allocation regulation for valuation dates 

in the second quarter of 2012. The 

interest assumptions are used for 

valuing and paying benefits under 

terminating single-employer plans 

covered by the pension insurance 

system administered by PBGC. 

DATES: Effective April 1, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Catherine B. Klion 

(Klion.Catherine@PBGC.gov), Manager, 

Regulatory and Policy Division, 

Legislative and Regulatory Department, 

Pension Benefit Guaranty Corporation, 

1200 K Street NW., Washington, DC 

20005, 202–326–4024. (TTY/TDD users 

may call the Federal relay service toll 

free at 1–800–877–8339 and ask to be 

connected to 202–326–4024.) 

SUPPLEMENTARY INFORMATION: PBGC’s 

regulations on Allocation of Assets in 

Single-Employer Plans (29 CFR Part 

4044) and Benefits Payable in 

Terminated Single-Employer Plans (29 

CFR Part 4022) prescribe actuarial 

assumptions—including interest 

assumptions—for valuing and paying 

plan benefits under terminating singleemployer plans covered by title IV of 

the Employee Retirement Income 

Security Act of 1974. The interest 

assumptions in the regulations are also 

published on PBGC’s Web site (http:// 

www.pbgc.gov). 

The interest assumptions in Appendix 

B to Part 4044 are used to value benefits 

for allocation purposes under ERISA 

section 4044. PBGC uses the interest 

assumptions in Appendix B to Part 4022 

to determine whether a benefit is 

payable as a lump sum and to determine 

the amount to pay. Appendix C to Part 

4022 contains interest assumptions for 

private-sector pension practitioners to 

refer to if they wish to use lump-sum 

interest rates determined using PBGC’s 

historical methodology. Currently, the 

rates in Appendices B and C of the 

benefit payment regulation are the same. 

The interest assumptions are intended 

to reflect current conditions in the 

financial and annuity markets. 

Assumptions under the asset allocation 

regulation are updated quarterly; 

assumptions under the benefit payments 

regulation are updated monthly. This 

final rule updates the benefit payments 

interest assumptions for April 2012 and 

updates the asset allocation interest 

assumptions for the second quarter 

(April through June) of 2012. 

The second quarter 2012 interest 

assumptions under the allocation 

regulation will be 3.11 percent for the 

first 20 years following the valuation 

date and 3.36 percent thereafter. In 

comparison with the interest 

assumptions in effect for the first 

quarter of 2012, these interest 

assumptions represent no change in the 

select period (the period during which 

the select rate (the initial rate) applies), 

a decrease of 0.63 percent in the select 

rate, and a decrease of 0.34 percent in 

the ultimate rate (the final rate). 

The April 2012 interest assumptions 

under the benefit payments regulation 

will be 1.25 percent for the period 

during which a benefit is in pay status 

and 4.00 percent during any years 

preceding the benefit’s placement in pay 

status. In comparison with the interest 

assumptions in effect for March 2011, 

these interest assumptions are 

unchanged. 


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