FTA Proposes Rule Waiving Regulatory Burdens on Public-Private Partnerships (P3s) for Public Transportation Projects

On July 31, 2017, the Federal Transit Administration (FTA) published a notice of proposed rulemaking in the Federal Register, for a proposed regulation that would establish new, experimental procedures to encourage use of public-private partnerships (P3s), joint developments and other private investment mechanisms in surface transportation capital projects. The rulemaking is linked to a statutory provision in the Moving Ahead for Progress in the 21st Century Act, which requires FTA to identify provisions at 49 U.S.C. chapter 53 and any regulations or practices thereunder that impede greater use of P3s and private investment. Potential private investors in public transportation infrastructure projects, as well as local and state transportation agencies that may be considering mechanisms of private funding, should be aware of the proposed new procedures. Public comments on the proposal are due September 29, 2017.

The rulemaking seeks to codify new Private Investment Project Procedures (PIPP) at 49 C.F.R. Part 650 that would allow entities to identify FTA requirements that impede private investment in surface transportation capital projects, and submit applications to modify or waive those requirements. “FTA requirements” would include not only FTA regulations, but mandatory provisions of the agency’s practices, procedures and guidance materials. To obtain a divergence from FTA requirements, applicants would need to demonstrate:

1. The FTA requirement(s) at issue hinder P3s or similar private investment mechanisms;
2. A waiver or modification of the requirement(s) is likely to encourage P3s or similar private investment;
3. The amount of private sector participation is sufficient to warrant such a waiver/modification; and
4. Waiver/modification of the FTA requirement(s) could be accomplished while still protecting public interest and public investment.

If these criteria are met, the FTA Administrator would have sole discretion to grant the waiver or modification.

P3s are mutualistic collaborations between public and private entities, wherein parties share resources and skills in a project’s development, and share the financial risks and rewards of the project’s outcome. Through this rulemaking, FTA hopes to eliminate impediments to P3s as its sister agency (the FHWA) has accomplished through SEP-15 projects.

However, there are limits on FTA’s authority to waive requirements under the proposed rule. The PIPP clearly states that federal labor standards at 59 U.S.C section 5333 and the requirements of the National Environmental Policy Act (NEPA) and “any other provision of Federal statute” cannot be waived or modified.