News | May 30, 2018

P3 Law Alert – FTA Issues Final Rule to Boost P3s in Transit Projects

FTA Issues Final Rule Establishing “Private Investment Project Procedures” to Facilitate P3s and Private Investment in Rail and Transit Capital Projects

On May 30, 2018, the Federal Transit Administration (FTA) issued a Final Rule 83 FR 24672 establishing Private Investment Project Procedures to encourage project sponsors to seek modifications of Federal requirements otherwise applicable to public-private partnership projects (P3s) that are intended to accelerate project development processes, attract private investment and lead to increased project management flexibility, more innovation, improved efficiency, and/or new revenue streams. The procedures provides a process for the FTA to consider and grant waivers or modifications of otherwise mandatory administrative regulations, policies, procedures, or guidance documents, but not statutory requirements, in order to address impediments to the greater use of P3 and private investment in public transportation capital projects.

The Private Investment Project Procedures apply to any recipient of Federal financial assistance under 49 U.S.C. chapter 53, the popular Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing Act (RRIF) loan programs, or any other Federal financial assistance, for public transportation capital projects that will be implemented through:

  • a public-private partnership, defined as a contractual agreement formed between a public agency and a private sector entity that is characterized by private sector investment and risk-sharing in the delivery, financing and operation of a project;
  • a joint development agreement, defined by reference to FTA Circular 7050.1 “Federal Transit Administration Guidance on Joint Development”; or
  • with other private sector investment (i.e. funding).

Under the Private Investment Project Procedures, the FTA will consider applications from any recipient of Federal assistance to waive or modify any existing FTA regulation, or mandatory provisions of practices, procedures, or guidance documents, including circulars, if the recipient demonstrates that:

  • the requirement discourages the use of a P3, a joint development, or other private sector investment;
  • the proposed modification or waiver is likely to encourage private sector investment;
  • the amount of private sector investment or risk transfer warrants the request; and
  • the request can be granted while protecting the public interest and any public investment in the project.

For projects with multiple recipients, recipients may, but are not required to, submit an application for a project jointly; however, only one application per phase of a project may be submitted. An application may include a request for a modification or waiver of more than one FTA requirement.

Notably, the final rule is largely identical to the procedures outlined in the initial notice of proposed rulemaking [82 FR 35500, Jul. 31, 2017]. The substantive amendments relative to the initial notice are:

  • a new requirement that an “Eligible Project” be included in a statewide long-range transportation plan or a metropolitan transportation plan [23 CFR part 450];
  • an allowance for one application per phase of a project, together with clarification that multiple waivers or modifications may be sought in a single application;
  • the modification of the timing and frequency of “lessons learned” reporting requirements; and
  • an allowance for applicants to identify proposed, as well as committed funding for the project.

Please contact Adam Giuliano in our New York office for further information or for assistance in submitting an application for a waiver or modification of FTA requirements for an eligible project.