This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

46716 

Vol. 82, No. 193 

Friday, October 6, 2017 

DEPARTMENT OF TRANSPORTATION 

Office of the Secretary 

2 CFR Part 1201 

[Docket DOT–OST–2015–0013] 

RIN 2105–AE38 

Geographic-Based Hiring Preferences 

in Administering Federal Awards 

AGENCY: Office of the Secretary (OST); 

U.S. Department of Transportation 

(DOT). 

ACTION: Notice of withdrawal of 

proposed rulemaking and related pilot 

programs. 

SUMMARY: The Department of 

Transportation (the Department) is 

withdrawing a Notice of Proposed 

Rulemaking (NPRM) issued on March 6, 

2015, that proposed to amend its 

regulations implementing the 

Government-wide Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards to permit recipients and 

subrecipients of certain DOT funds to 

impose geographic-based hiring 

preferences whenever not otherwise 

prohibited by Federal law. The 

Department is withdrawing this NPRM 

because, after review of all comments, 

the Department has determined that 

promulgating a provision to allow 

geographic-based hiring preferences is 

not practicable for the efficient and costeffective delivery of projects. 

Additionally, this Notice rescinds two 

related pilot programs: 1. Innovative 

Contracting and 2. FHWA HUD 

Livability Local Hire Initiative. 

DATES: As of October 6, 2017, the NPRM 

‘‘Geographic-Based Hiring Preferences 

in Administering Federal Awards,’’ 

published on March 6, 2015 (80 FR 

12092), is withdrawn. As of October 6, 

2017, the Department’s two 

experimental contracting pilot 

programs—1. Innovative Contracting 

(Local Labor Hire) (80 FR 12557), and 2. 

the FHWA HUD Livability Local Hire 

Initiative (75 FR 36467)—are 

withdrawn. 

ADDRESSES: U.S. Department of 

Transportation, 1200 New Jersey Ave. 

SE., Washington, DC 20590, 202–366– 

9152. 

Electronic Access: You can view and 

download related documents and public 

comments by going to the Web site 

http://www.regulations.gov. Enter the 

docket number DOT–OST–2015–0013 

in the search field. 

FOR FURTHER INFORMATION CONTACT: 

Terence Carlson, Assistant General 

Counsel for General Law (OST–C10), 

U.S. Department of Transportation, 1200 

New Jersey Ave. SE., Washington, DC 

20590, 202–366–9152. 

SUPPLEMENTARY INFORMATION: 

Background 

On March 6, 2015, the Department 

published an NPRM proposing to 

amend the Department’s regulations at 2 

CFR part 1201 to permit recipients and 

subrecipients of certain DOT funds to 

impose geographic-based hiring 

preferences whenever not otherwise 

prohibited by Federal law. On March 

13, 2015, the American Public 

Transportation Association (APTA) filed 

a comment requesting that the 

Department extend the comment period 

for the NPRM by 30 days to May 6, 

2015. The Department granted APTA’s 

request on April 8, 2015 (80 FR 18784). 

Recipients and subrecipients at the 

local government level have local hiring 

provisions that they apply to 

procurements that do not involve 

Federal funding. However, the 

Department’s regulations at 2 CFR part 

1201, which adopted the Office of 

Management and Budget’s (OMB) 

revised Government-wide Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal awards to non-Federal entities 

at 2 CFR part 200 (Common Rule), 

prohibit the use of in-State or local 

geographic-based preferences in the 

evaluation of bids or proposals except 

where Federal statute mandates or 

encourages the use of such preferences. 

This prohibition extends to the use of 

geographic-based hiring preferences in 

contracts that are awarded by recipients 

and subrecipients with Federal financial 

assistance since such preferences could 

result in a competitive advantage for 

contractors based in the targeted hiring 

area. 

Under the NPRM, the Department 

proposed to amend Part 1201 by 

promulgating a provision that would 

have deviated from the OMB guidance 

by making clear that geographic-based 

hiring preferences might be used in 

certain DOT grant programs. However, 

the proposed deviation would have only 

applied to the extent that such 

geographic-based hiring preferences 

would not have otherwise been 

prohibited by Federal statute or 

regulation. 

Approximately 181 comments were 

filed in response to the NPRM. These 

comments were submitted by 

approximately 23 contractors, 22 

contractor trade groups, 11 rolling stock 

manufacturers, 4 unions, 14 government 

agencies, 32 advocacy groups, 70 

individuals, and 5 Federal and State 

elected officials (U.S. Senator Charles E. 

Schumer, U.S. Representative Tom 

Reed, Georgia State Senator Nan Orrock, 

California State Senator Connie M. 

Leyva, and California State Assembly 

Member Cheryl R. Brown). All of the 

construction and rolling stock industry 

comments were opposed to the adoption 

of the proposed rule, while the 

advocacy groups and unions all were in 

favor. The individual commenters were 

split. States and municipalities were 

mostly in favor of the proposed rule. 

However, the California Department of 

Transportation (Caltrans), Regional 

Transportation District in Denver (RTDDenver), Foothill Transit, and the 

Capital Metropolitan Transportation 

Authority expressed concerns with the 

implementation of the rule. Generally, 

commenters agreed that transportation 

investments and policies can improve 

access to jobs, education, and goods 

movement, while providing 

construction and operations jobs. 

However, many commenters questioned 

the assertion that local and geographicbased hiring preferences led to such 

economic benefits. 

Discussion of Comments 

While there were comments regarding 

the benefits of transportation 

investments, commenters opposed to 

the Department’s proposed amendments 

to Part 1201 expressed concerns about 

the unintended consequences of the 

NPRM, including, for example, impacts 

on safety, competitive bidding, the 

ability to maintain a well-trained 

workforce, and increased project costs. 


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Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Proposed Rules 46717 

Some commenters supported the 

proposed amendments because, among 

other reasons, local residents would 

benefit from such investments. Other 

commenters explained that the NPRM 

did not go far enough and should have 

included other types of preferences, in 

addition to geographic-based. 

The Department’s proposed NPRM 

did not make a distinction by project 

type (e.g., transit vs. maritime project). 

Many commenters, especially in the 

transit arena, expressed strong 

opposition to the application of the 

NPRM to rolling stock procurements 

because of the potential effect on 

existing manufacturing plants and the 

capital and personnel investments 

already made in specific parts of the 

country. 

Reason for Withdrawal 

The Department operates two 

experimental contracting pilot programs 

under FHWA and FTA’s existing 

authorities: (i) Innovative Contracting 

(Local Labor Hire) (80 FR 12257) and (ii) 

FHWA HUD Livability Local Hire 

Initiative (75 FR 36467). The Local 

Labor Hire pilot is conducted under 23 

U.S.C. 502 (i.e., FHWA’s Special 

Experimental Project No. 14 (SEP–14)) 

and 49 U.S.C. 5312, 5314 and 5325, and 

the FHWA HUD initiative is conducted 

under SEP–14. The Department has 

used these research authorities to 

advance non-traditional contracting 

practices for contracts awarded by FTA 

and FHWA. 

Under SEP–14 and 49 U.S.C. 5312, 

5314 and 5325, the Department has the 

flexibility to experiment with 

innovative approaches to highway and 

transit contracting. However, the 

Department is discontinuing these two 

pilot programs because of minimal 

interest from intended participants and 

the difficulty in evaluating cost 

effectiveness based upon objective 

criteria. 

For additional background, 23 U.S.C. 

112 requires a state transportation 

department to award contracts using 

federal highway funds by ‘‘competitive 

bidding, unless the State transportation 

department demonstrates . . . that 

some other method is more cost 

effective.’’ 23 U.S.C. 112(b)(1) (2006). 

For a bidding process to be 

‘‘competitive,’’ the state transportation 

department must award contracts for 

projects ‘‘only on the basis of the lowest 

responsive bid submitted by a bidder 

meeting established criteria of 

responsibility.’’ Id. section 112(b)(1). 

For example, a 1986 opinion from the 

Office of Legal Counsel (OLC) at the 

Department of Justice concluded that 

section 112 obligated the Secretary of 

Transportation to withhold federal 

funding for highway construction 

contracts that were subject to a New 

York City law imposing disadvantages 

on a class of responsible bidders, where 

the city failed to demonstrate that its 

departure from competitive bidding 

requirements was justified by 

considerations of cost effectiveness. See 

Compatibility of New York City Local 

Law 19 with Federal Highway Act 

Competitive Bidding Requirements, 10 

Op. O.L.C. 101 (1986) (‘‘Competitive 

Bidding Requirements’’). Since that 

1986 opinion, FHWA had taken the 

position that state or local bidding 

specifications or contract requirements 

that limit the pool of potential bidders 

violate section 112’s competition 

requirement unless they directly relate 

to the bidder’s performance of the 

necessary work in a competent and 

responsible manner. 

In 2013, OLC opined that a state or 

local requirement that has only an 

incidental effect on the pool of potential 

bidders or that imposes reasonable 

requirements related to the performance 

of the necessary work would not unduly 

limit competition. However, a 

requirement that has more than an 

incidental effect on the pool of potential 

bidders and does not relate to the work’s 

performance would unduly limit 

competition unless it promotes the 

efficient and effective use of federal 

funds. OLC stated that generally 

speaking, state or local government 

requirements that eliminate or 

disadvantage a class of potential 

responsible bidders (and thus have a 

non-trivial effect on the pool of such 

bidders) to advance objectives unrelated 

to the efficient use of federal funds or 

the integrity of the bidding process (or 

to the performance of the necessary 

work in a competent and responsible 

manner) are likely to unduly impede 

competition in contravention of the 

substantive component of section 112’s 

competitive bidding requirement. OLC 

further reaffirmed the view expressed in 

its 1986 opinion that ‘‘the efficient use 

of federal funds is the touchstone by 

which the legality of state procurement 

rules for federally funded highway 

projects is to be tested,’’ Competitive 

Bidding Requirements, 10 Op. O.L.C. at 

105. In 2013, OLC did not understand 

section 112’s competitive bidding 

requirement to compel FHWA to reject 

every state or local bidding specification 

or contract requirement that may have 

the effect of reducing the number of 

potential bidders for a particular 

contract. 

The stated purpose of this NPRM was 

to permit recipients and subrecipients of 

certain DOT grant program funds to 

impose geographic-based hiring 

preferences whenever not otherwise 

prohibited by Federal law. DOT agrees 

that the efficient use of federal funds is 

the touchstone by which the legality of 

state procurement rules, including any 

proposed geographic-based hiring 

preferences, for federally funded 

projects is to be tested. Here, in light of 

the responses to the NPRM, the lack of 

data on whether specific local 

geographic preferences would have an 

incidental effect on competition, the 

long-standing Federal government 

prohibition in the Common Rule on the 

use of in-State or local geographic-based 

preferences, the demonstrated minimal 

interest from intended participants 

under the two experimental programs, 

and the inability to evaluate costeffectiveness based upon objective 

criteria under the two experimental 

programs, the Department has 

determined that promulgating a 

regulation that would have deviated 

from the OMB guidance in the Common 

Rule, by allowing the use of geographicbased hiring preferences in some of the 

Department’s grant programs, is not 

practicable for the efficient and costeffective delivery of projects. The 

comments received did not include any 

data that demonstrates that the claimed 

benefits of the proposed rule justify the 

costs. The Department has also 

determined that an additional request 

for public comment based on the 

proposed NPRM would not provide the 

information needed to accomplish the 

stated purpose. 

Issued in Washington, DC, on October 2, 

2017. 

Elaine L. Chao, 

Secretary of Transportation. 

[FR Doc. 2017–21574 Filed 10–5–17; 8:45 am] 

BILLING CODE 4910–9X–P 

NUCLEAR REGULATORY 

COMMISSION 

10 CFR Part 50 

[Docket No. PRM–50–115; NRC–2017–0132] 

Fire Protection Compensatory 

Measures 

AGENCY: Nuclear Regulatory 

Commission. 

ACTION: Petition for rulemaking; notice 

of docketing and request for comment. 

SUMMARY: The U.S. Nuclear Regulatory 

Commission (NRC) has received a 

petition for rulemaking dated May 1, 

2017, from David Lochbaum with copetitioner Paul Gunter, on behalf of the 

Union of Concerned Scientists and 


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