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Good News and Bad News: Proposed Amendments to FHWA Design-Build and PPP Rule

By: Nancy C. Smith

The Good News: 

On Thursday, May 25, 2006 the Federal Highway Administration ("FHWA") issued proposed revisions to its design-build rule.  These revisions were mandated by Congress in SAFETEA–LU and, among other things, establish procedures allowing state and local transportation agencies to proceed with design-build contracts and public-private partnership ("PPP") procurements prior to receipt of final approval under NEPA.  For a .pdf copy of the notice of proposed rulemaking to this e-alert, please click here.

The Bad News: 

FHWA's proposed rule unduly restricts the types of design activities allowed to be undertaken under design-build contracts and PPP agreements prior to NEPA approval, precluding agencies from proceeding with activities that are otherwise permitted under NEPA, and creating practical problems for project owners in determining what is allowed and what isn't.  The proposed limitations do not appear consistent with the philosophy underlying the SAFETEA-LU amendments. 

The specific problem is found in the definition of "preliminary design" in the proposed new rule, limiting the term to "design activities necessary to complete the NEPA alternatives analysis and review process."  This definition would require project owners to analyze each proposed design activity to determine whether it is necessary under NEPA.

Nossaman Comments on Proposed Rule:

We are in the process of reviewing the proposed rule and plan to send out a detailed analysis to our e-alert mailing list in mid-June.

Also, FHWA is currently accepting comments on the proposed rule and has specifically requested comments on the definition of preliminary design.  We plan to provide comments to FHWA and would be interested in receiving input from our readers.  In particular we would like your ideas on suggested alternative definitions for the term "preliminary design." 

Deadline for Submission of Comments on Proposed Rule to FHWA: 

FHWA will accept comments on the proposed rule through July 24, 2006.  E-alert recipients are urged to review the proposed regulation and to ask FHWA to adopt a broader definition of preliminary design, allowing design-builders/developers to proceed with activities to advance the project as permitted by NEPA and case law under NEPA.

Formal comments on the proposed rule can be mailed or hand delivered to the U.S. Department of Transportation, Dockets Management Facility, Room PL-401, 400 Seventh Street, SW., Washington, D.C. 20590-0001. All comments should reference FHWA Docket No. FHWA-2005-22477.

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