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Major Project Financial Plan Guidance

American Government Special Collections Reference Desk

American Government

Major Project Financial Plan Guidance

Greg G. Nadeau
Federal Highway Administration
December 18, 2014


[Federal Register Volume 79, Number 243 (Thursday, December 18, 2014)]
[Notices]
[Pages 75612-75617]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29653]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2013-0042]


Major Project Financial Plan Guidance

AGENCY: Federal Highway Administration (FHWA), Department of 
Transportation (DOT).

ACTION: Final Notice.

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SUMMARY: This final notice announces the availability of Major Project 
Financial Plan Guidance. February 2, 2015

DATES: Effective Date: The final notice is effective February 2, 2015.

FOR FURTHER INFORMATION CONTACT: Jim Sinnette, Office of Innovative 
Program Delivery, 202-366-1561, james.sinnette@dot.gov or, Janet Myers, 
Office of the Chief Counsel, 202-366-2019, janet.myers@dot.gov, Federal 
Highway Administration, 1200 New Jersey Ave. SE., Washington, DC 20590-
0001. Office hours for the FHWA are from 8:00 a.m. to 4:30 p.m., e.t., 
Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    This document may be viewed online through the Federal eRulemaking 
portal at: http://www.regulations.gov. Electronic submission and 
retrieval help and guidelines are available on the Web site. It is 
available 24 hours each day, 365 days this year. Please follow the 
instructions. An electronic copy of this document may also be 
downloaded from the Office of the Federal Register's Web site at: 
http://www.archives.gov/federal-register and the Government Printing 
Office's Web site at: http://www.gpo.gov/fdsys.

Background

    On September 6, 2013, FHWA published a notice and request for 
comments regarding the FHWA's proposal to revise the Major Project 
Financial Plan Guidance. Major projects are defined in section 106(h) 
of title 23, United States Code (23 U.S.C. 106(h)), as projects 
receiving Federal financial assistance with an estimated total cost of 
$500 million or other projects as may be identified by the Secretary. 
Major projects are typically large, complex projects designed to 
address major highway needs and require the investment of significant 
financial resources. The preparation of the annual financial plan, as 
required by 23 U.S.C. 106(h)(3), ensures that the necessary financial 
resources are identified, available, and monitored throughout the life 
of the project.
    The proposed Major Project Financial Plan Guidance replaces the 
existing January 2007 Major Project Financial Plan Guidance. Title 23 
U.S.C. 106, as amended by section 1503 of the Moving Ahead for Progress 
in the 21st Century Act (MAP-21), allows financial plans to include a 
phasing plan when there are insufficient financial resources to 
complete the entire project. In addition, 23 U.S.C. 106 now requires 
recipients of Federal financial assistance to assess the 
appropriateness of a public-private partnership (P3) to deliver the 
project. In addition to these MAP-21 changes, the proposed Major 
Project Financial Plan Guidance also incorporates a recommendation 
included in a 2009 Government Accountability Office report titled 
``Federal-Aid Highway: FHWA Has Improved Its Risk Management Approach, 
but Needs to Improve Its Oversight of Project Costs'' (GA-090-751). The 
report recommended that financial plans include the cost of financing 
the project.

Discussion of Comments

I. Summary

    All comments received in response to the notice and request for 
comments have been considered in adopting this final notice. Comments 
were received from the American Association of State Highway and 
Transportation Officials (AASHTO), Professional Engineers in California 
Government (PECG), Ernst & Young Infrastructure Advisors, LLC (E&Y), 
and representatives of seven State DOTs. The following discussion 
identifies and summarizes the major comments submitted by the 
commenters in response to the September 6, 2013, notice and the FHWA's 
responses.

II. General Comments--Approval of Financial Plans

    Comment: The AASHTO believes that the FHWA approval of financial 
plans for projects with an estimated cost of $500 million or more is 
not supported by the language of the statute (23 U.S.C. 106(h)(1)) and 
recommends that the guidance be modified to require only that the 
project sponsor submit the financial plan to the DOT. The AASHTO notes 
that the DOT would still approve financial plans for projects receiving 
Transportation Infrastructure Finance and Innovation Act (TIFIA) 
assistance. The Nevada Department of Transportation (NDOT) notes that 
the statute only requires submission of financial plans and does not 
mention approval or concurrence.
    FHWA Response: The submission of major project financial plans is 
required by statute (23 U.S.C. 106(h)(1)). The FHWA's review and 
approval of major project financial plans is to ensure that the plans 
contain the information required by 23 U.S.C. 106(h)(3), and is 
necessary for FHWA to carry out its stewardship and oversight 
responsibilities for major projects. No changes have been made to the 
guidance.
    Comment: AASHTO recommends adding a statement clarifying that the 
guidance does not impose any binding legal requirements.
    FHWA Response: FHWA acknowledges that this guidance does not impose 
any binding legal requirements. The purpose of this guidance is to 
clarify the FHWA review and approval of financial plans. As noted in 
the guidance, it applies only to the development and updates of major 
project financial plan. It does not apply to the application of any 
other Federal requirements. No changes have been made to the guidance.
    Comment: The NDOT recommends that the FHWA Division Office 
determine the acceptability of the financial plans and respond to the 
sponsor within 30 days.
    FHWA Response: The guidance states that FHWA will determine a 
financial plan's acceptability within 60 days after receipt by the 
Office of Innovative Program Delivery Project Delivery Team. Due to the 
importance and complexity associated with financial plans and based on 
previous experience, FHWA believes that this timeframe is appropriate. 
No changes have been made to the guidance.

III. General--Project Exemptions

    Comment: The Washington State Department of Transportation (WSDOT) 
and the Arkansas State Highway and Transportation Department (AHTD) 
recommend that financial plans underway prior to MAP-21 be exempted 
from this updated guidance.
    FHWA Response: Consistent with this comment the final notice states 
that this guidance will be in effect for all financial plans submitted 
to FHWA 45 days after date of publication in the Federal Register. This 
identifies specific criteria that can be verified by FHWA and provide a 
timeline that will allow financial plans submitted prior to the

[[Page 75613]]

effective date in the Federal Register to be reviewed by FHWA using the 
previous guidance. This will help ensure a timely and consistent 
implementation of the updated guidance. No changes have been made to 
the guidance.

IV. General--Other Projects ($100 Million to $500 Million)

    Comment: The Alaska Department of Transportation and Public 
Facilities (AKDOT & PF), the Minnesota Department of Transportation 
(MnDOT), and the PECG recommend that FHWA make a distinction between 
the guidance for projects with an estimated cost of $500 million or 
more and projects with an estimated cost of $100 million or more that 
are not designated major projects. The AASHTO recommends that the 
guidance clarify that financial plans for projects with an estimated 
cost of $100 million or more that are not designated major projects 
will be less detailed.
    FHWA Response: The statute (23 U.S.C. 106(i)) uses the same term, 
``annual financial plan,'' for both major projects and other projects 
(projects with an estimated cost of $100 million or more that are not 
designated major projects). The only distinction in the statute is that 
financial plans for other projects only need to be made available upon 
request, which is reflected in the guidance. Thus, financial plans for 
projects $100 million to $500 million must address the same information 
as financial plans for major projects. No changes have been made to the 
guidance.
    Comment: AASHTO recommends that for projects with an estimated cost 
of $100 million or more that are not designated major projects, project 
sponsors should have the option of submitting a single financial plan 
that covers multiple projects in a single geographical area.
    FHWA Response: The guidance has been modified to allow project 
sponsors to submit a single financial plan that covers multiple 
projects with prior concurrence of the FHWA Division Office.
    Comment: AASHTO recommends that a project sponsor have the option 
of preparing a phased financial plan for a project with an estimated 
cost of $100 to $500 million.
    FHWA Response: As stated within, this guidance applies to section 
106(i) and allows the option to prepare a phased financial plan. (23 
U.S.C. 106(h)(1)(B)) No changes have been made to the guidance.
    Comment: AASHTO recommends that if a phased financial plan is 
prepared for a project with an estimated cost of $100 million to $500 
million, that plan should be deemed to satisfy fiscal constraint 
requirements for that project.
    FHWA Response: The guidance now states that if a phasing plan is 
included in an approved financial plan and fiscal constraint 
requirements are met for the funded phase, then pursuant to 23 U.S.C. 
106(h)(3)(c) the overall project is deemed to meet fiscal constraint 
requirements under 23 U.S.C. 134 and 135.
    Comment: The MnDOT recommends that the identification of projects 
with an estimated cost of less than $500 million, where FHWA requires a 
submission of financial plans, be done at the time of the National 
Environmental Policy Act (NEPA) decision and include a written 
explanation from FHWA.
    FHWA Response: The preparation of financial plans for other 
projects (projects with an estimated cost of $100 million or more that 
are not designated major projects) is required by statute (23 U.S.C. 
106(i)). They are to be made available for review upon request by FHWA. 
The statue does not require specific notification or rationale for 
requesting the submission of financial plans for other projects. The 
FHWA Division Offices will work with project sponsors to establish 
expectations for financial plans for other projects as part of the 
Division Office's overall stewardship and oversight approach. No 
changes have been made to the guidance.
    Comment: The MnDOT recommends a standardized process be implemented 
to ensure that the requirement to submit annual updates based on 
reasonable assumptions ``as determined by the Secretary'' is applied 
consistently by FHWA.
    FHWA Response: This updated guidance along with the technical 
assistance provided by FHWA staff to project sponsors is intended to 
promote consistency in the FHWA review of financial plans. No changes 
have been made to the guidance.

V. General--Project Applicability

    Comment: The AHTD recommends that financial plans should only be 
completed if the Federal funds used for the project are $80 million or 
more.
    FHWA Response: The threshold for financial plans is contained in 
statute (23 U.S.C. 106(h)(1)) and does not specify a minimum amount of 
Federal financial assistance. No changes have been made to the 
guidance.
    Comment: The PECG commented that the guidance, especially with 
respect to the P3 assessment, should not apply to all TIFIA assisted 
projects.
    FHWA Response: The requirement for the P3 assessment is contained 
in the statute (23 U.S.C. 106(h)(3)(D)) and therefore, must be applied 
to TIFIA assisted projects that require compliance with major project 
financial plan requirements. No changes have been made to the guidance.

VI. General--Guidance References

    Comment: The NDOT recommends including, by reference, accompanying 
documents that must be read at the same time to understand and put into 
context changes in the guidance. The NDOT specifically mentions the 
Operational Independence and Non-Concurrent Construction guidelines, 
the FHWA Major Project Program Cost Estimating Guidance, and any risk 
management reference.
    FHWA Response: The reference to the Major Project Program Cost 
Estimating Guidance is included in the Major Project Financial Plan 
Guidance. This revised guidance replaces the previously separate 
Operational Independence and Non-Concurrent Construction guidelines and 
there is no FHWA risk management reference included in this guidance. 
No changes have been made to the guidance.

VII. General--Fiscal Constraint Requirements (23 U.S.C. 134 and 135)

    Comment: AASHTO recommends that project sponsors be allowed to 
submit an initial financial plan prior to the completion of NEPA to be 
used as the basis for meeting fiscal constraint requirements.
    FHWA Response: As noted in the guidance, the FHWA will not approve 
a major project financial plan until the selected alternative for the 
project has been identified in the NEPA decision document for the 
project. An annual financial plan is a comprehensive document that 
reflects the project's scope, schedule, cost estimate, and funding 
structure to provide reasonable assurance that there will be sufficient 
funding available to implement and complete the entire project, or a 
fundable phase of the project, as planned. This documentation cannot be 
prepared until a project has been identified through the NEPA process. 
No changes have been made to the guidance.
    Comment: AASHTO recommends that the guidance should state that 
financial plans prepared during the NEPA process will have a lower 
level of detail than a financial plan that is prepared at a later stage 
of project development.

[[Page 75614]]

    FHWA Response: This guidance only applies to financial plans needed 
to meet the major project requirements. Financial plan approval is 
required from FHWA prior to the first Federal construction 
authorization. The FHWA will not approve a major project financial plan 
until the selected alternative for the project has been identified in 
the NEPA decision document for the project. No changes have been made 
to the guidance.

VIII. General--Risk Assessments

    Comment: The NDOT commented that the guidance does not separate the 
Planning Stage Risk Assessment Process with its corresponding level of 
effort versus the Major Project Risk Assessment Process. The NDOT 
recommends that under the phased plan discussion, additional guidance 
should be provided to explain the risk assessment expectations for 
projects within the Statewide Transportation Improvement Program 
(STIP), for projects 2 to 3 years outside the STIP, and projects within 
the 20-year Long Range Plan. The NDOT also recommends that the guidance 
describe the specific level of effort for preparing and maintaining a 
risk register and include risk management expectations for the projects 
and risk strategies to deliver projects early if funding is identified 
after the financial plan has been approved.
    FHWA Response: This guidance only applies to financial plans needed 
to meet the major project requirements. It is not intended to prescribe 
to project sponsors the methods and efforts required to conduct project 
risk assessments and develop and implement risk strategies. This 
comment is outside the established scope of the guidance. No changes 
have been made to the guidance.

IX. Project Funding

    Comment: For a phased financial plan, the NDOT recommends the 
guidance clarify that the identified funded phase is the only portion 
of the project that is to be fiscally constrained.
    FHWA Response: The guidance does note in Section 4 under Contents 
of the Financial Plan that detailed funding information only needs to 
be included for each funded phase. No changes have been made to the 
guidance.

X. Operationally Independence and Non-Concurrent Construction (OINCC) 
Projects

    Comment: The AHTD and the Wisconsin Department of Transportation 
(WisDOT) recommend that the guidance clarify the definition of OINCC. 
Similarly, AASHTO recommends that the guidance clarify that a finding 
of OINCC is not required for each phase of the project that is covered 
in a phased financial plan. The AASHTO and the WisDOT further recommend 
that the term ``phase'' should not be used to refer to a project stage 
that is determined to be OINCC. Additionally, AASHTO recommends that 
the guidance clarify that a finding of OINCC is required only if the 
project defined in the NEPA document will be divided into small 
projects, each of which will be covered in a separate financial plan.
    FHWA Response: FHWA has revised the definition of OINCC in the 
guidance to clarify discussion on phased financial plans. Specifically, 
the term ``phase'' will not be used in the definition. The guidance now 
specifies that each phase of a phased financial plan does not have to 
meet the OINCC criteria and that such a finding is needed only when the 
project defined in the NEPA document will be divided into smaller 
portions for the purposes of applying major project requirements.
    Comment: AASHTO recommends that the application of the OINCC 
criteria be flexible and pragmatic. Specifically, AASHTO recommends 
that the 5-year and 20-year periods be used as general guides, not 
rigid requirements. The AASHTO also recommends that the guidance 
include examples to describe the types of projects that would (and 
would not) be considered OINCC.
    FHWA Response: The FHWA will continue to be flexible and pragmatic 
regarding the entire guidance. Due to the varied characteristics of 
major projects, examples would not be able to cover the many potential 
scenarios and therefore will not be included in the guidance. The FHWA 
staff will be available to discuss the OINCC criteria with project 
sponsors. No changes have been made to the guidance.
    Comment: The Colorado Department of Transportation (CDOT) commented 
that the 20-year threshold is excessive because of changing priorities 
and the unpredictability of OINCC projects within that period. The CDOT 
further recommends that subsequent OINCC projects could be determined 
with the remaining criterion of a 5-year threshold between the 
completion of one portion and the beginning of the next portion. 
Finally, CDOT recommends that if funding is identified for future OINCC 
projects, they may be added to a project's financial plan. Similarly, 
the AKDOT & PF commented that the 20-year threshold criterion should be 
removed and that a State DOT should be able to adapt to changes in 
available funding to accelerate the project schedule.
    FHWA Response: The OINCC section has been revised to clarify the 
application of the criteria and identify when financial plans are 
required for OINCC projects. The 20-year threshold ensures that the 
OINCC guidance is used for projects that are scheduled to be delivered 
over such an extended period of time that it is not realistic to expect 
that a project sponsor's financial plan can provide enough detail for 
the entire project. The 5-year threshold is the time between the OINCC 
project and the next portion of the overall project. The threshold is 
used to determine if non-concurrent construction exists between 
separate portions of the overall project. Requests for revisions, as a 
result of changes in funding availability to an OINCC project 
determination, should be submitted to the FHWA Division Office.
    Comment: The NDOT recommends that the three criteria for OINCC 
should be guidelines, not specific requirements.
    FHWA Response: The criteria are considered guidelines and the 
application of each criterion will be considered by FHWA on a project 
specific basis. No changes have been made to the guidance.
    Comment: The NDOT recommends that the guidance clarify when a 
financial plan for OINCC projects is required and the level of detail 
needed to conduct a risk assessment.
    FHWA Response: The guidance has been revised to clarify when 
financial plans for OINCC projects are required. This guidance is for 
the preparation of major project financial plans. It is not intended to 
prescribe to project sponsors the methods and efforts required to 
conduct project risk assessments.

XI. TIFIA Projects

    Comment: The CDOT recommends that when TIFIA assistance is provided 
to a project, an approval from the TIFIA Office for both the initial 
major project financial plan and annual updates would simplify and 
streamline the approval process for the project sponsors.
    FHWA Response: When TIFIA assistance is provided to a project, the 
initial financial plan and annual updates are reviewed by both the 
Project Delivery Team and the TIFIA Office. A consolidated concurrence 
from both the TIFIA Office and Project Delivery Team is prepared. The 
Division Office will then provide the approval to the project sponsor. 
This review process incorporates a multi-disciplined approach as each 
office has a different

[[Page 75615]]

function. No changes have been made to the guidance.
    Comment: AASHTO recommends that the guidance clarify that it is 
permissible, but not required, to submit a single document that serves 
as both the major project financial plan and the TIFIA financial plan.
    FHWA Response: The guidance does not require the submission of a 
single document, however, it may be more efficient to submit one 
financial plan since it is a TIFIA requirement that the TIFIA financial 
plan be prepared in accordance with major project financial plan 
guidance. The guidance has been clarified.
    Comment: AASHTO states that the entity submitting the major project 
financial plan may be different than the entity submitting the TIFIA 
financial plan.
    FHWA Response: FHWA recognizes in the guidance that there may be 
multiple documents submitted by multiple project sponsors needed to 
meet the requirement of a major project financial plan and the 
requirement of a TIFIA financial plan. However, the documents would 
supplement each other and together satisfy both requirements. No 
changes have been made to the guidance.
    Comment: AASHTO states that the requirement to submit annual 
updates under a TIFIA loan agreement extends for the duration specified 
in the agreement while the requirement to submit annual updates for 
major projects extends only through the completion of construction.
    FHWA Response: The guidance notes that the submission of annual 
updates of projects with TIFIA assistance may extend beyond substantial 
completion of the project. The TIFIA office requires its financial 
plans to be prepared in accordance with the major project financial 
plan guidance after the completion of construction. The guidance also 
notes that after the major project requirements have been met, 
financial plans with TIFIA assistance may be required throughout the 
life of the loan. No changes have been made to the guidance.
    Comment: AASHTO recommends clarification that the guidance can be 
superseded by provisions in the TIFIA loan agreement or other project 
agreements with FHWA and/or DOT.
    FHWA Response: All TIFIA loan agreements, regardless of total 
project cost, require the borrower to submit annual financial plans in 
accordance with this guidance. The methods for developing and updating 
major project financial plans presented in the guidance are not legally 
binding requirements, and may be modified, as appropriate by TIFIA loan 
agreements or other legally binding agreements, to meet both the TIFIA 
and other legal requirements. No changes have been made to the 
guidance.

XII. Multiple Project Sponsors

    Comment: The NDOT asks if a project sponsor, whose only role was to 
contribute certain funds to the project, has to provide a certification 
for the entire financial plan or just for their contribution.
    FHWA Response: The guidance now includes a definition of a project 
sponsor. A project sponsor is defined as an entity that provides funds 
for the project and administers any Construction or Construction 
Engineering/Inspection activities for the project. If an entity was 
only providing funds and not administering construction related 
activities, then a financial plan letter of certification from that 
entity is not required.
    Comment: The NDOT recommends defining the term ``otherwise'' in the 
sentence: ``If the State DOT granting the concession has also provided 
funds (whether Federal-aid or otherwise), then both the public and 
private entities would be considered Project Sponsors.'' The NDOT also 
recommends adding that P3s should submit a financial plan.
    FHWA Response: The phrase ``Federal-aid or otherwise'' has been 
replaced with ``any type of funds.'' The guidance states that single or 
multiple financial plans can be submitted at the discretion of the 
project sponsors. This may include financial plans from P3s.
    Comment: AASHTO recommends that the guidance clarify if it is 
permissible for each project sponsor to submit a separate financial 
plan when there are multiple project sponsors.
    FHWA Response: The guidance allows for each project sponsor to 
submit separate financial plans for its portion of the project. No 
changes have been made to the guidance.

XIII. Financial Plan Submission Process

    Comment: E&Y and the NDOT recommend that the guidance clarify that 
projects other than design/bid/build projects will not be subject to 
stricter standards, but FHWA will allow flexibility in the timing of 
the initial financial plan submissions. The E&Y further recommends that 
the guidance include examples of possible timeframes and suggest ways 
for the FHWA Division Offices to coordinate with project sponsors 
regarding financial plan submissions.
    FHWA Response: This guidance will be applied to all projects 
regardless of procurement method. For all projects, the initial 
financial plan should be approved prior to the first authorization of 
Federal funds for construction. Since major projects procurement 
methods are often unique, there would be too many timeframe examples to 
include in the guidance to cover all scenarios. The guidance states 
that project sponsors should coordinate with FHWA Division Offices 
regarding financial plan submittals for projects other than design/bid/
build. No changes have been made to the guidance.
    Comment: The MnDOT recommends that the FHWA Division Office 
Financial Manager should be the one designated contact to ensure 
conformity across plans.
    FHWA Response: The guidance is intended to ensure that consistency 
of financial plan reviews. It is at the discretion of each FHWA 
Division Office to designate points of contact for its oversight 
activities. No changes have been made to the guidance.
    Comment: The WSDOT recommends annual updates be submitted no later 
than 90 days after the end of each reporting period or ``unless 
otherwise specified in other project related obligations (e.g. TIFIA 
agreements).''
    FHWA Response: The guidance recognizes that TIFIA agreements may 
affect submission dates and reporting periods in the Financial Plans 
Including TIFIA Assistance section. The revision proposed by WSDOT for 
``other project related obligations'' is too broad to be included since 
it could be interpreted that non-Federal project related obligations 
could impact the timing of annual update submissions. No changes have 
been made to the guidance.
    Comment: The WSDOT recommends allowing a designee, delegated in 
writing from the Chief Executive Officer, to sign the project sponsor 
certification.
    FHWA Response: It is acceptable for a designee delegated in writing 
from the Chief Executive Officer, to sign the project certification. 
The guidance has been revised to adopt this recommendation.

XIV: Project Description

    Comment: The WSDOT recommends adding examples (e.g. for toll 
funding, local government pledged funding, etc.) in the Project 
Description of types of anticipated funding. The WSDOT further 
recommends providing examples of what should be included when 
evaluating the likelihood of anticipated amounts being dedicated.
    FHWA Response: The guidance has been revised to remove the 
identification of funding in the Project

[[Page 75616]]

Description section of the guidance. The identification of funding for 
phased financial plans is discussed in the Project Funds section. Due 
to the varied characteristics of major projects, examples would not be 
able to cover the many potential scenarios and therefore, will not be 
included in the guidance. The FHWA staff will be available to discuss 
the different types of projects and project funding sources.
    Comment: AASHTO recommends that the guidance not require an 
``outline'' of the entire environmental review process. They stated 
that it should be sufficient to describe the components of the project 
as they are defined in the applicable NEPA document.
    FHWA Response: It is important that FHWA has a clear understanding 
of the environmental review process since it results in the 
identification of the project scope. The term ``outline'' is used in 
the guidance to convey that a detailed discussion is not required. No 
changes have been made to the guidance.

XV. Project Cost

    Comment: The AKDOT & PF and WSDOT recommend that including the 
costs of NEPA and other environmental documentation should be 
revisited. Large corridor projects often have multiple layers of 
environmental documentation that go back over many years. The AKDOT&PF 
recommends that FHWA should work with project sponsors to determine 
appropriate boundaries for these costs.
    FHWA Response: The purpose of including NEPA and other 
environmental documentation costs is to have a total cost for the major 
project. The FHWA will continue to work with project sponsors to 
determine appropriate boundaries for all project costs. No changes have 
been made to the guidance.
    Comment: The WSDOT, NDOT, and AASHTO recommend that FHWA allow for 
alternatives to the FHWA Cost Estimate Review (CER) process, including 
those developed by the project sponsor. The WSDOT and AASHTO further 
recommend that FHWA not mandate the use of 70th percentile costs.
    FHWA Response: The guidance has been revised to address alternative 
CER processes or variations from the 70th percentile cost. Alternatives 
to the CER process and variations from the 70th percentile cost will be 
considered by FHWA on a case-by-case basis.
    Comment: The NDOT questioned if CERs are needed for other specific 
milestones.
    FHWA Response: CERs should be conducted prior to the submission of 
the initial financial plan. Major changes that occur in the project 
that significantly affect the estimated cost of the project should be 
evaluated to determine if an additional CER needs to be conducted. The 
guidance has been revised to include a reference to when additional 
CERs may be considered.
    Comment: AASHTO recommends that the project sponsor participate in 
the CER.
    FHWA Response: It is important for the project sponsor to 
participate in the CER since the project sponsor is often the best 
source to provide project information and answer questions. The 
guidance has been revised to indicate that the project sponsor should 
participate in the entire CER.

XVI. Project Funds

    Comment: The CDOT commented that referring to advance construction 
funds as State funds will confuse the presentation of the financial 
plan. Providing a statement of amounts converted in the annual updates 
will achieve the desired objective. The CDOT recommends eliminating 
this requirement from the initial financial plan, but instead 
recommends reporting the conversion amounts in the annual update. The 
WisDOT recommends State DOTs be excluded from reporting annual 
conversion amounts when using advance construction to manage funds 
internally within a budget year, but not as a special funding technique 
that borrows from future Federal funds.
    FHWA Reponses: The guidance has been revised to eliminate the 
reporting of estimated annual conversion amounts. Project sponsors 
should work with FHWA to identify a mutually agreeable method to show 
advance construction in the financial plans. In all cases the total 
special funding technique amount, the amount converted to date, and the 
amount remaining should be reported.
    Comment: The WisDOT comments that there would be an inconsistency 
between financial plans and State budget authority if the financial 
plan included the annual conversion amounts.
    FHWA Response: The guidance has been revised to clarify how special 
funding techniques are documented and that estimated annual conversion 
amounts do not need to be provided. The financial plan will only 
reflect actual conversion amounts and so there should be no 
inconsistency.

XVII. Financing Issues

    Comment: E&Y and WSDOT recommend that financing from debt proceeds 
address project-specific debt, or incremental additional borrowing 
related to the project, and not programmatic financing. Similarly, 
AASHTO recommends that the guidance allow project sponsors discretion 
to determine the appropriate level of detail in discussing financing 
costs. When a project sponsor is not proposing project-specific 
borrowing, AASHTO recommends that the project sponsor should not be 
required to quantify borrowing costs. Where a project sponsor is 
proposing to issue bonds specifically for the project, AASHTO 
recommends that it should be sufficient for the financial plan to 
provide an estimate of annual payments and revenues.
    FHWA Response: FHWA recognizes that project-specific financing cost 
information is more readily available. When project-specific debt is 
issued, the financial plan should show the total cost of financing for 
the project, which could be an estimate if that is the best information 
available at the time of the financial plan submission. The 
programmatic financing cost discussion would be at a programmatic level 
of detail. No changes have been made to the guidance.
    Comment: The AKDOT&PF and WSDOT believe that the adequacy of the 
financial plan should be based on the ability to fully fund and 
complete construction, not on future debt service for non-Federal 
financing. The WisDOT recommends flexibility to allow project sponsors 
to determine the level of total debt financing for a project because at 
the time of the initial financial plan adoption, the total financing 
cost for a project is not known.
    FHWA Response: The purpose of the Financing Issues section of the 
financial plan is to document financing costs and estimates to fully 
fund and complete construction of the project. Non-Federal financing 
will not be evaluated and FHWA will not make a determination on whether 
the project sponsor is capable of repayment. Any changes to the amount 
of financing costs or estimates can be reflected in annual updates to 
the initial financial plan. No changes have been made to the guidance.

XVIII. Cash Flow

    Comment: E&Y and the NDOT recommend adding clarification or an 
example narrative for the discussion of the project sponsor's ability 
to deliver its capital program in the guidance. The

[[Page 75617]]

MnDOT and NDOT offer that the project sponsor could be allowed to refer 
to a current annual STIP Financial Report to demonstrate the project 
sponsor's ability to deliver its capital program.
    FHWA Response: The guidance has been revised to remove the 
discussion on the overall impact of the project sponsor's ability to 
deliver the State transportation capital program. As discussed in the 
guidance, the review of the STIP is an important step by FHWA in the 
review and approval process for financial plans. This review of the 
STIP, along with the option of submitting a phased financial plan, 
makes further discussion on the overall impact of the project sponsor's 
ability to deliver its capital program unnecessary.
    Comment: The MnDOT recommends that FHWA consider drawing on the 
expertise of financial credit rating agencies when assessing the 
credibility of a project sponsor for major projects.
    FHWA Response: This guidance is not intended to document the FHWA 
methods and efforts required to assess the creditability of a project 
sponsor. This comment is outside the established scope of the guidance. 
No changes have been made to the guidance.

XIX. Public-Private Partnership Assessment

    Comment: The PECG recommends that the P3 assessment include a 
complete cost-benefit analysis to deliver the project with a detailed 
list of contents in the analysis.
    FHWA Response: Title 23 U.S.C. 106(h) requires the financial plan 
to include an assessment regarding the appropriateness of a P3 to 
deliver the project. The guidance includes appropriate discussion 
regarding the comparison of benefits and challenges of procuring the 
project as a P3 compared to traditional procurement methods. The 
guidance is intended to allow different assessment methods by project 
sponsors. No changes have been made to the guidance.
    Comment: The PECG recommends that public servants be used, rather 
than private sector employees, to perform all construction inspection 
functions for P3 projects.
    FHWA Response: This guidance is for the preparation of financial 
plans and is not intended to prescribe project sponsor decisions for 
how the project is managed, including how project inspection services 
will be performed. This comment is outside the established scope of the 
guidance. No changes have been made to the guidance.
    Comment: E&Y and the NDOT recommend that FHWA should not second 
guess the project sponsor's delivery decision based on the P3 
assessment.
    FHWA Response: The purpose of the P3 assessment is to provide a 
brief documentation of the procurement decisionmaking process. The P3 
assessment is not intended to prescribe a process for the project 
sponsor's delivery decision or to evaluate the decision of the project 
sponsor. The guidance is consistent with this purpose. No changes have 
been made to the guidance.
    Comment: The AHTD recommends that if P3 mechanisms are not allowed 
by State law, there should be no reporting requirements. The WisDOT 
recommends that if there is no enabling legislation for P3s, then a 
generic statement to that effect will suffice for responding to this 
section. The AASHTO recommends that the consideration of a P3 be brief 
if it is obvious that a P3 is not viable because of State law and there 
is no reasonable basis for expecting that law to change.
    FHWA Response: The guidance identifies the items that should be 
covered in the narrative to assess the appropriateness of a P3 to 
deliver the project. The absence of legislative authority is included 
in these items. Therefore, if State law does not allow the use of P3s, 
then the narrative should reflect that. No changes have been made to 
the guidance.
    Comment: The AHTD recommends that when tolling, bonding, or TIFIA 
financing methods are not appropriate for the project, previous 
analyses should be adequate with no further reporting requirements.
    FHWA Response: The guidance notes that the P3 assessment is a 
narrative describing the process used to consider whether a P3 
procurement is appropriate to deliver the project. Referencing and 
summarizing previous analyses may be adequate to meet these criteria. 
No changes have been made to the guidance.
    Comment: The MnDOT states that the analysis for a P3 delivery would 
be based on historic rather than recent consideration. The WSDOT 
recommends that only the results of earlier P3 analyses, if any, should 
be identified in the initial financial plan. Similarly, AASHTO 
recommends that the guidance should specify that the discussion of a P3 
should include the reasons for or against using a P3 when the decision 
is made by the time the initial financial plan is submitted.
    FHWA Response: A P3 assessment can be based on a previous project 
level analysis. If a P3 assessment has not been conducted at the time 
of the initial financial plan preparation, then an assessment must be 
done before the initial financial plan is submitted to meet the 
statutory requirements in 23 U.S.C. 106(h). The guidance has been 
revised to clarify when a P3 assessment is required for phased 
financial plans. The P3 assessment for the unfunded portion of a phased 
financial plan should be provided in annual updates as the portion of 
the project is added to the financial plan.
    Comment: AASHTO recommends that annual updates to a financial plan 
should not be required to revisit the appropriateness of a P3, and that 
it should be sufficient for the annual updates to summarize the 
assessment that was included in the initial financial plan.
    FHWA Response: There is no need to revisit the appropriateness of a 
P3 in the financial plan, except in the case of phased financial plans 
when a new portion of the project is added or when the procurement 
method changes to use a P3 or not. No changes have been made to the 
guidance.

XX. Final Major Project Financial Plan Guidance

    The FHWA has updated its Major Project Financial Plan Guidance. The 
FHWA published the proposed guidance for public comment on September 6, 
2013. After considering all the comments, the FHWA has incorporated all 
appropriate edits into the guidance. As such, the revised guidance, 
which can be found at http://www.fhwa.dot.gov/ipd, will be in effect 
for all financial plans submitted to FHWA February 2, 2015.

    Authority:  23 U.S.C. 315; 23 CFR 633.104(a)

    Issued On: December 9, 2014.
Greg G. Nadeau,
Acting Administrator, Federal Highway Administration.
[FR Doc. 2014-29653 Filed 12-17-14; 8:45 am]
BILLING CODE 4910-22-P

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