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Construction and Maintenance--Promoting Innovation in Use of Patented and Proprietary Products

American Government

Construction and Maintenance--Promoting Innovation in Use of Patented and Proprietary Products

Nicole R. Nason
Federal Highway Administration
27 September 2019

[Federal Register Volume 84, Number 188 (Friday, September 27, 2019)]
[Rules and Regulations]
[Pages 51023-51028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20933]



Federal Highway Administration

23 CFR Part 635

[FHWA Docket No. FHWA-2018-0036]
RIN 2125-AF84

Construction and Maintenance--Promoting Innovation in Use of 
Patented and Proprietary Products

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

ACTION: Final rule.


SUMMARY: The FHWA is revising its regulations to provide greater 
flexibility for States to use proprietary or patented materials in 
Federal-aid highway projects. This final rule rescinds the requirements 
limiting the use of Federal funds in paying for patented or proprietary 
materials, specifications, or processes specified in project plans and 
specifications, thus encouraging innovation in transportation 
technology and methods.

DATES: This final rule is effective October 28, 2019.

Preconstruction, Construction, and Pavements, (720) 437-0515, or Mr. 
William Winne, Office of the Chief Counsel, (202) 366-1397, Federal 
Highway Administration, 1200 New Jersey Avenue SE, Washington, DC 
20590. Office hours are from 8 a.m. to 4:30 p.m., e.t., Monday through 
Friday, except Federal holidays.


Electronic Access and Filing

    This document, the notice of proposed rulemaking (NPRM), supporting 
materials, and all comments received may be viewed online through the 
Federal eRulemaking portal at http://www.regulations.gov. An electronic 
copy of this document may also be downloaded from the Office of the 
Federal Register's home page at: http://www.archives.gov/federal-register and the Government Publishing Office's web page at: http://www.gpo.gov/fdsys.

Executive Summary

    The FHWA is revising its regulations at 23 CFR 635.411 to provide 
greater flexibility for States to use patented or proprietary materials 
in Federal-aid highway projects. Based on a century-old Federal 
requirement, the outdated requirements in 23 CFR 635.411(a)-(e) are 
being rescinded to encourage innovation in the development of highway 
transportation technology and methods. As a result, State Departments 
of Transportation (State DOTs) will no longer be required to provide 
certifications, make public interest findings, or develop research or 
experimental work plans to use patented or proprietary products in 
Federal-aid projects. Federal funds participation will no longer be 
restricted when State DOTs specify a trade name for approval in 
Federal-aid contracts. In addition, Federal-aid participation will no 
longer be restricted when a State DOT specifies patented or proprietary 
materials in design-build Request-for-Proposal documents.


    The FHWA published an NPRM titled ``Construction and Maintenance--
Promoting Innovation in Use of Patented and Proprietary Products'' at 
83 FR 56758 on November 14, 2018. The NPRM offered two alternative 
deregulatory options relating to the use of patented and proprietary 
products. The use of these products has been limited by regulation for 
over a century (since 1916), and FHWA undertook this rulemaking in an 
effort to increase innovation and reduce regulatory burdens. The first 
option (Option 1) proposed removing the requirements of 23 CFR 
635.411(a)-(e) and replacing them with a general certification 
requirement ensuring competition in the selection of materials and 
products. Alternatively, the second option (Option 2) proposed to 
rescind the patented and proprietary materials requirements of 23 CFR 
635.411(a)-(e) and change the title of section 635.411 to ``Culvert and 
Storm Sewer Materials Types.'' Under its new title, the former 
paragraph (f) of section 635.411 would be retained to fulfill the 
mandate of section 1525 of the Moving Ahead for Progress in the 21st 
Century Act (MAP-21) (Pub. L. 112-141, 126 Stat. 405, July 6, 2012) for 
States to retain autonomy for the selection of storm sewer material 
    The NPRM solicited comments regarding this deregulatory initiative. 
The FHWA received 107 comments to the docket, including comments from 
16 State DOTs, 14 associations, 22 manufacturers or suppliers, 4 
construction companies, and numerous individuals. The FHWA considered 
all comments received before the close of business on the comment 
closing date, and the comments are available for examination in the 
docket (FHWA-2018-0036) at http://www.regulations.gov. The FHWA also 
considered comments received after the comment closing date and filed 
in the docket prior to this final rule.

Discussion of Comments

    After consideration of the comments, FHWA selected Option 2 for the 
reasons summarized below. Option 2 reduces the regulatory burden on the 
States, fosters innovation in highway transportation technology, and 
provides greater flexibility for State DOTs in making materials and 
product selections in planning Federal-aid highway projects.

Reducing Regulatory Burdens

    Commenters argued Option 2 (rescinding the patented and proprietary 
materials requirements) better serves the purpose of decreasing 
unnecessary regulatory burdens on the States. These commenters argue 
Option 2 eliminates unnecessary regulatory and administrative burdens 
imposed by the existing regulations. Commenters who support Option 2 
further argued that if an objective of the NPRM is to reduce regulatory 
and administrative burdens imposed on the States by the existing 
regulation, those burdens should not be replaced by new ones as 
proposed under Option 1 (replacing existing regulations with a general 
certification requirement). For example, the American Association of 
State Highway and Transportation Officials (AASHTO) commented that 
about half of its member State DOTs consider the paperwork required 
under the current regulation to be difficult and lengthy. Several State 
DOTs reported difficulty in: (1) Proving to FHWA Division Offices the 
availability or non-availability of competitive products; (2) providing 
the benefit of using one

[[Page 51024]]

product over another; and (3) performing a reasonable cost analysis.
    Commenters also reported that at least some State DOTs are 
reluctant to request Public Interest Findings (PIF) or develop 
experimental product work plans (hereinafter: Proprietary product 
approval process) to use patented and proprietary materials in Federal-
aid projects because they see it as time consuming, cumbersome, and 
believe it increases overhead costs. One State DOT commented that the 
proprietary product approval process causes delays by adding layers of 
approval between the State DOTs and FHWA. The same State DOT further 
commented it is difficult to determine the availability of equally 
suitable products under the existing regulation.
    Commenters expressed concerns that the existing regulation imposes 
undue administrative burdens on the States relating to documenting and 
justifying the use of patented and proprietary products under the 
current proprietary product approval process. Rescinding the current 
regulation, FHWA believes, is consistent with reducing the time--
consuming and cumbersome process that commenters believe increases 
overhead costs.
    The FHWA agrees Option 2 best reduces unnecessary regulatory and 
administrative burdens on the States. State DOTs are responsible for 
the effective and efficient use of Federal-aid funds, subject to the 
requirements of Federal law. The FHWA believes, absent the existing 
regulation governing patented and proprietary products, State DOTs may 
implement material selection procedures that ensure fair and open 
competition while allowing for, and encouraging, innovation. The 
statutory requirements of 23 U.S.C. 112 for competition and competitive 
bidding continue to apply to federally assisted projects.
    In addition, this proposal could generate cost savings resulting 
from reduced administrative burden associated with the efforts by the 
States and FHWA related to the existing methods for approving patented 
and proprietary materials. These cost savings, measured in 2018 
dollars, are expected to be $313,848 per year.
    After reviewing the comments received, FHWA is persuaded that 
rescinding the existing regulation would achieve the goal of reducing 
an unnecessary regulatory or administrative burden on the States, where 
such regulations or burdens are outdated or no longer serve an 
important public purpose. The FHWA is further persuaded that rescinding 
the existing regulation's requirement to identify equally suitable 
alternatives may reduce project planning delays.

Fostering Innovation

    Commenters who supported Option 2 also cited four primary reasons 
related to promoting innovation: (1) Option 2 would eliminate the 
existing regulation, which is a barrier to innovation; (2) Option 2 
would best foster and accelerate innovation in the future; (3) Option 2 
encourages innovation that may improve transportation systems relating 
to: (a) Safety; (b) quality, resilience, performance, durability, and 
service life of transportation facilities; (c) efficiency and cost-
effectiveness of repairs, treatment, maintenance, preservation, 
rehabilitation, reconstruction, or replacement of highway facilities; 
(d) minimizing congestion; and (e) implementing autonomous vehicle (AV) 
technology; and (4) Option 2 would best fulfill the Federal 
Government's important role in supporting research and development 
leading to improvements in highway transportation technology.
    Some commenters argued that the existing regulation is a barrier to 
innovation in highway technology. For example, one State DOT commented 
that the current regulation has created an industry perception that 
certain innovative products are excluded from federally funded highway 
projects. Commenters supporting Option 2 generally argued that FHWA 
should promote, encourage, and accelerate innovation and the 
improvements that may follow.
    One commenter argued that fostering a competitive market for these 
products may lead to lower prices on old products as new ones become 
available. Another commenter argued that innovative products can lower 
the overall project cost or future maintenance costs. For example, by 
increasing the useful life of transportation facilities, the commenter 
argues, innovative products may both reduce the cost of maintenance and 
increase safety.
    The AASHTO commented that a regulatory change would provide greater 
flexibility in approving connected and AV components that are certain 
to incorporate more proprietary and patented components than 
traditional highway products. One commenter suggested Option 2 may 
encourage development of AV technology, and suggested the proprietary 
product approval process under the existing regulation is not suitable 
for accelerated development of AV technology.
    The FHWA agrees Option 2 best provides State DOTs greater 
flexibility to use innovative technologies in highway transportation. 
The Agency is persuaded by comments that rescinding the regulation may 
accelerate innovation in planning Federal-aid projects by removing a 
requirement that may have been a ``barrier'' to innovation in highway 
transportation technology. Moreover, FHWA believes that the 
specification of innovative, higher-performing products will encourage 
others in the industry to develop and market products with comparable 
performance. This will ultimately result in a lower cost for the higher 
performing product due to the greater availability in the market.

Providing Flexibility for the States Relating to Materials Selection

    Commenters who supported Option 2 also cited two primary reasons 
related to its ability to provide flexibility for States. First, 
commenters argued that the existing regulation limits their flexibility 
on materials selection. Next, commenters also argued that, considering 
the uncertainty regarding how Option 1 would be administered by FHWA, 
it could also limit the flexibility of State DOTs.
    Multiple commenters argued the existing regulation lacks 
flexibility. Multiple commenters observed that the existing regulation 
is too restrictive, complicated, unclear, time-consuming, and not 
consistently implemented by State DOTs and FHWA. For example, certain 
State members of AASHTO that support Option 2 commented about 
difficulties they encountered under the current regulation. Some of 
these State DOTs cited difficulties in completing the paperwork for use 
of patented or proprietary products to the satisfaction of the relevant 
FHWA Division Office. Those States also cited related difficulties in 
successfully obtaining Federal participation after the paperwork was 
    The AASHTO commented that some of its member State DOTs have 
experienced variability in dealing with FHWA Division Offices. Certain 
State DOTs believe that division offices interpret the existing 
regulation inconsistently among States. The AASHTO maintains that, 
while some division offices provide more leeway, others do not 
recognize the State's prerogative to certify patented and proprietary 
products and, in some instances, have discouraged them from doing so. 
Some commenters also argued that some State DOTs are reluctant to use 
the proprietary product approval process because they perceive it as 
too cumbersome and time consuming.

[[Page 51025]]

    Commenters also argued that Option 2 would provide the most 
flexibility to the States. Multiple State DOTs commented that Option 1 
may not adequately unburden States from current regulatory restrictions 
in this area--and thus may not increase flexibility, or at least not in 
a way comparable to Option 2. Several State DOTs, including Oregon, 
Washington, Idaho, Montana, North Dakota, South Dakota, and Wyoming, 
expressed support for Option 2 as providing the most flexibility. One 
commenter argued that Option 2 would provide State DOTs with the most 
flexibility to determine which products are the best fit for their own 
unique transportation needs.
    The FHWA agrees Option 2 best provides flexibility to State DOTs in 
selecting materials for use in Federal-aid highway projects. A common 
theme among the comments indicated that the level of effort necessary 
to comply with the existing regulation is time consuming, cumbersome, 
and imposes undue administrative ``paperwork'' burdens on the States.
    The added flexibility provided to States by this rescission may 
also provide State DOTs an advantage by potentially obtaining highway 
materials or products at a lower price. Specifying a patented article 
in the solicitation materials would not, by itself, limit competition.
    The FHWA believes State DOTs utilize new product evaluation 
processes and approved product lists that provide fair and transparent 
procedures for the evaluation, selection, and use of materials, 
including patented and proprietary products.
    The FHWA is persuaded that rescinding the existing regulation 
provides needed flexibility to the States to manage Federal financial 
assistance under 23 U.S.C. 145.

Comments Relating to Option 1

    Under Option 1 of the NPRM, the existing regulatory requirements of 
23 CFR 635.411(a)-(e) were proposed for removal. The FHWA proposed 
replacing them with general certification requirements in new 
paragraphs 23 CFR 635.411(a) and 23 CFR 630.112(c)(6) to ensure 
competition in the selection of materials and products. This change 
would have required a State DOT to: (1) Implement procedures and 
specifications that provide for fair, open, and transparent competition 
awarded only by contract to the lowest responsive bid submitted by a 
responsible bidder pursuant to 23 U.S.C. 112; and (2) certify adherence 
to those procedures and specifications.
    Commenters who supported Option 1, including some State DOT members 
of AASHTO, argued that one of its benefits is that FHWA would create 
regulations establishing a general framework for the State processes 
and would provide for greater consistency across the country as 
compared to Option 2. Those commenters expressed a preference for 
consistency that would promote competition and provide more 
transparency regarding Federal-aid decisionmaking compared to Option 2. 
The commenters expressed the belief that manufacturers might better 
understand the protocols for the use of patented and proprietary 
materials under a national framework. One State DOT compared the 
patented and proprietary rules to the design exception process. It 
argued that process is well defined and it could be used as a model if 
FHWA adopts Option 1.
    Another commenter argued the existing regulation is misunderstood 
with respect to competition requirements. The commenter believes that 
arguments that the existing regulation stifles innovation and patented 
and proprietary products cannot be used in Federal-aid projects are 
incorrect. The commenter further stated that patented and proprietary 
materials can be used in Federal-aid projects based on a proper 
justification, those justifications provide a critical oversight 
function, and they guard against the imposition of sole-source 
specifications that restrict competition. The same commenter further 
argued the existing regulation provides a safeguard that when data is 
obtained through independent experimentation of new transportation 
technology, better and more objective evidence about its effectiveness 
is available as compared to a vendor's sales or promotional material.
    Commenters opposing Option 1 suggested, among other things: (1) 
Existing requirements discourage State DOTs from using patented and 
proprietary products to improve highway transportation technology, and 
this may continue under new requirements established by Option 1; (2) 
State DOTs are confused by the current requirements for certifications 
to obtain approval for the use of patented and proprietary products and 
similar confusion may continue under the as-yet-undefined certification 
process for Option 1; (3) the existing process for certification is 
unduly complicated and time consuming, and there is no indication 
Option 1 would resolve this; and (4) the term ``fair, open, and 
transparent competition'' lacks clarity and would require new 
regulation to define the term. Commenters also expressed the belief 
that the existing regulations are outdated, unclear, and not applied 
    Comments about Option 1 lacking clarity with respect to the 
definition of the term ``fair, open, and transparent competition'' were 
not considered by FHWA as they were speculative in nature. However, 
after considering comments submitted to the docket, FHWA agrees Option 
1 is not the appropriate regulatory alternative to finalize as part of 
this rulemaking. The FHWA notes that rescinding the existing 
regulations without replacing them with a new certification process 
better reduces regulatory burdens on the States, fosters greater 
innovation in highway transportation technology, affords greater 
flexibility to the States for materials selection in Federal-aid 
highway projects, and is consistent with the statutory authority 
provided under 23 U.S.C. 106(c). In addition, rescinding the existing 
regulation affords deference to the States to determine which projects 
are subject to Federal financial assistance pursuant to 23 U.S.C. 145.


    Commenters who supported either Option 1 or the existing regulation 
cited two primary reasons why they believed that Option 2 constitutes a 
harm to competition. First, commenters argued that under Option 2 
suppliers of patented products may control prices. Next, commenters 
also argued that the bidding process may be manipulated under Option 2 
by limiting access to certain proprietary products or offering 
inconsistent pricing.
    Similarly, some commenters who supported either Option 1 or the 
existing regulation also argued that Option 2 would eliminate 
nationwide consistency on requirements for competition. Some commenters 
argued that Option 1 would provide adequate nationwide consistency 
while others preferred the existing regulation and argued that it 
should be maintained. Some commenters argued that a uniform standard 
under Option 1 would also benefit product manufacturers that operate in 
multiple States.
    In contrast to commenters raising concerns about competition, many 
commenters supporting Option 2 argued that it is improper to speculate 
about competition problems in advance of the regulatory change. There 
is no basis, they argued, for FHWA to simply presume that Option 2 
would create a problem. These commenters either argued that no problem 
was likely to arise or suggested that FHWA should first remove the 
existing regulation and

[[Page 51026]]

then monitor whether any problem arises that should be addressed.
    Commenters supporting Option 2 also pointed to the standards found 
in the Office of Management and Budget's (OMB) Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards. These commenters argued that reliance on OMB's regulations 
would adequately ensure that a State's specification of a patented or 
proprietary product complies with the competition mandate in 23 U.S.C. 
    The FHWA acknowledges the commenters who argued that, under Option 
2, suppliers of patented products may control prices, but these 
concerns are speculative. Some commenters attempted to compare the 
Federal-aid highway program to the prescription drug industry in this 
regard, but these markets are inherently different. The FHWA believes 
that States, as responsible stewards of the limited amount of Federal 
funding apportioned to them, have an incentive not to waste limited 
resources on proprietary products that would have costs exceeding 
demonstrated benefits. It is important to note that this final rule 
does not require States to use proprietary products, and FHWA believes 
that States would not choose to do so unless there are benefits that 
exceed the costs associated with the use of such products. States, as 
rational market actors, are best situated to make this determination on 
a case-by-case basis as they consider whether a proprietary product 
would fit a specific programmatic need.
    In response to comments regarding competition, many States already 
have procedures established under State law or regulation relating to 
competition for federally assisted contracts, and the use of patented 
and proprietary materials in Federal-aid projects. Nevertheless, 
ensuring competition and requiring awards to the lowest responsive 
bidder in the Federal-aid highway program remain statutory duties of 
the Secretary and the statutory requirements of 23 U.S.C. 112 continue 
to apply to Federal-aid assisted State contracts. As long as the 
contract specifications are clear in terms of what materials the State 
DOT requires, it remains the responsibility of any prospective bidder 
to find materials that are responsive to the applicable contract 
specification. Concerns relating to potential prosecution of 
anticompetitive legal actions is speculative and outside the scope of 
FHWA's authority.

Additional Comments

    Some commenters supported retaining the existing regulation and 
expressed support for the current process for using patented and 
proprietary materials in Federal-aid projects. Those commenters 
included five State DOTs, one industry association, and three 
manufacturers. The commenters expressed the belief that the regulation 
should not be changed and existing procedures allow State DOTs to 
justify the use of innovative, patented, or proprietary products. They 
went on to express the belief the existing regulation works well and 
strikes an appropriate balance between ensuring competition while 
allowing the use of patented and proprietary products based on a 
documented proprietary product approval.
    As noted above, FHWA believes that cost savings would result if the 
requirements at 23 CFR 635.411(a) through (e) are rescinded by this 
rulemaking. In addition, State DOTs remain responsible for the 
effective and efficient use of Federal-aid funds, and continue to be 
subject to the statutory requirements of 23 U.S.C. 112 for competition 
and competitive bidding.


Executive Order 12866 (Regulatory Planning and Review), Executive Order 
13563 (Improving Regulation and Regulatory Review), Executive Order 
13771 (Reducing Regulations and Controlling Regulatory Costs), and DOT 
Policies and Procedures for Rulemaking

    The FHWA has determined that this action is not a significant 
regulatory action within the meaning of Executive Order (E.O.) 12866, 
and within the meaning of the U.S. Department of Transportation's 
regulatory policies and procedures. This action complies with E.O.s 
12866, 13563, and 13771 to improve regulation. The FHWA anticipates 
that the economic impact of this rulemaking would be minimal. The FHWA 
anticipates that the rule would not adversely affect, in a material 
way, any sector of the economy. In addition, these changes would not 
interfere with any action taken or planned by another agency and would 
not materially alter the budgetary impact of any entitlements, grants, 
user fees, or loan programs.
    Although FHWA has determined that this action would not be a 
significant regulatory action, this action is considered an E.O. 13771 
deregulatory action. This action could generate cost savings that are 
applicable to offsetting the costs associated with other regulatory 
actions as required by E.O. 13771. These cost savings, measured in 2018 
dollars, are expected to be $313,848 per year.
    The cost savings resulting from this action result from reduced 
administrative burden associated with the efforts by the States and 
FHWA related to the existing methods for approving patented and 
proprietary materials.
    Currently, there are three methods available to approve specific 
patented and proprietary products for use on Federal-aid highway 
construction projects: \1\

    \1\ https://www.fhwa.dot.gov/programadmin/contracts/011106qa.cfm#_Hlk307505978.

    1. Certification: A certification is the written and signed 
statement of an appropriate contracting agency official certifying that 
a particular patented or proprietary product is either:
    a. Necessary for synchronization with existing facilities; or
    b. A unique product for which there is no equally suitable 
    2. Experimental Products: If a contracting agency requests to use a 
proprietary product for research or for a distinctive type of 
construction on a relatively short section of road for experimental 
purposes, it must submit an experimental product work plan for review 
and approval. The work plan should provide for the evaluation of the 
proprietary product, and where appropriate, a comparison with current 
    3. Public Interest Finding: A PIF is an approval by the FHWA 
Division Administrator, based on a request from a contracting agency 
that it is in the public interest to allow the contracting agency to 
require the use of a specific material or product even though other 
equally acceptable materials or products are available.
    To estimate the cost savings from removing the need for the above 
categories of approvals, FHWA estimated the number of new approvals 
that would be generated in the future in the above categories if the 
rule does not change as a baseline scenario and compared it to the 
scenario in the final rule. The estimated number of new approvals per 
year is multiplied by the estimated number of hours required to process 
the documentation for that specific type of approval (including 
conducting analysis and documenting methods and results) by the 
appropriate labor cost (wage rate multiplied by a factor to account for 
employer provided benefits). Currently, the work related to

[[Page 51027]]

approvals is conducted by both FHWA and State agencies because, in some 
cases, FHWA has delegated authority to States via stewardship and 
oversight agreements for such issues. In addition to the time required 
to process the approvals, time is also required by FHWA to review the 
resulting documentation. Finally, both of those activities require a 
minimal time allowance for management of the process.
    Under the final rule, the costs associated with approvals for 
patented and proprietary materials may not be completely removed. This 
is because twelve States are believed (according to information from 
FHWA Division offices) to have their own laws or policies that are 
similar to existing FHWA requirements. Absent other information, this 
analysis assumes those State laws or policies would remain in place 
even after an FHWA rule change. For those States, this analysis assumes 
that the total number of hours associated with processing and managing 
approvals would remain unchanged but that the work would be conducted 
solely by State agency staff (rather than a mix of State and FHWA staff 
as is assumed in the baseline calculations) and that time spent on FHWA 
review would no longer be needed.
    In addition to the cost savings that have been quantified here, 
there may be additional positive impacts from the rulemaking related to 
supporting the adoption of patented and proprietary products. Although 
FHWA has undertaken various efforts to grant States the flexibility to 
use such products, to the extent that the current rules and guidance 
discourage their use, the final rule removes those barriers. Since 
patented and proprietary products are/may be more expensive than non-
proprietary alternatives, this could lead to States paying more for 
proprietary and patented products if certain products are specified in 
Federal-aid contracts. However, ARTBA, in its petition for repeal, 
states that such products could ``save lives, minimize congestion, and 
otherwise improve the quality of our Nation's highways.'' \2\ Thus, 
there may be benefits associated with greater adoption of existing 
products. An increase in the willingness to adopt patented and 
proprietary products may have secondary impacts and spur additional 
innovation if product developers perceive there to be a larger market 
for new products. Those potential benefits from additional innovation 
have not been quantified in this analysis.

    \2\ ARTBA, ``Petition for Rulemaking to Repeal the Proprietary 
and Patented Products Rule 23 CFR 635.411'', March 27, 2018.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601- 612), FHWA has evaluated the effects of this action on 
small entities and has determined that the action is not anticipated to 
have a significant economic impact on a substantial number of small 
entities. The amendment addresses obligation of Federal funds to States 
for Federal-aid highway projects. As such, it affects only States and 
States are not included in the definition of small entity set forth in 
5 U.S.C. 601. Therefore, the Regulatory Flexibility Act does not apply, 
and FHWA certifies that the action will not have a significant economic 
impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This rule would not impose unfunded mandates as defined by the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48, 
March 22, 1995) as it will not result in the expenditure by State, 
local, Tribal governments, in the aggregate, or by the private sector, 
of $155 million or more in any 1 year (2 U.S.C. 1532 et seq.). In 
addition, the definition of ``Federal mandate'' in the Unfunded 
Mandates Reform Act excludes financial assistance of the type in which 
State, local, or Tribal governments have authority to adjust their 
participation in the program in accordance with changes made in the 
program by the Federal Government. The Federal-aid highway program 
permits this type of flexibility.

Executive Order 13132 (Federalism)

    This action has been analyzed in accordance with the principles and 
criteria contained in E.O. 13132 dated August 4, 1999, and FHWA has 
determined that this action would not have a substantial direct effect 
or sufficient federalism implications on the States. The FHWA has also 
determined that this action would not preempt any State law or 
regulation or affect the States' ability to discharge traditional State 
governmental functions.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing E.O. 
12372 regarding intergovernmental consultation on Federal programs and 
activities apply to this program.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, 
et. seq.), Federal agencies must obtain approval from OMB for each 
collection of information they conduct, sponsor, or require through 
regulations. The FHWA has determined that the rule does not contain 
collection of information requirements for the purposes of the PRA.

National Environmental Policy Act

    The FHWA has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 et seq.), 
and has determined that this action would not have any effect on the 
quality of the environment and meets the criteria for the categorical 
exclusion at 23 CFR 771.117(c)(20).

Executive Order 12630 (Taking of Private Property)

    The FHWA has analyzed this rule under E.O. 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights. The FHWA does not anticipate that this action would affect a 
taking of private property or otherwise have taking implications under 
E.O. 12630.

Executive Order 12988 (Civil Justice Reform)

    This action meets applicable standards in sections 3(a) and 3(b)(2) 
of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate 
ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

    We have analyzed this rule under E.O. 13045, Protection of Children 
from Environmental Health Risks and Safety Risks. The FHWA certifies 
that this action would not cause an environmental risk to health or 
safety that might disproportionately affect children.

Executive Order 13175 (Tribal Consultation)

    The FHWA has analyzed this action under E.O. 13175, dated November 
6, 2000, and believes that the action would not have substantial direct 
effects on one or more Indian Tribes; would not impose substantial 
direct compliance costs on Indian Tribal governments; and would not 
preempt Tribal laws. The rulemaking addresses obligations of Federal 
funds to States for Federal-aid highway projects and would not impose

[[Page 51028]]

any direct compliance requirements on Indian Tribal governments. 
Therefore, a Tribal summary impact statement is not required.

Executive Order 13211 (Energy Effects)

    We have analyzed this action under E.O. 13211, Actions Concerning 
Regulations That Significantly Affect Energy Supply, Distribution, or 
Use. The FHWA has determined that this is not a significant energy 
action under that order since it is not a significant regulatory action 
under E.O. 12866 and is not likely to have a significant adverse effect 
on the supply, distribution, or use of energy. Therefore, a Statement 
of Energy Effects is not required.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in the spring and fall of each year. The RIN number contained in the 
heading of this document can be used to cross-reference this action 
with the Unified Agenda.

List of Subjects

23 CFR Part 630

    Grant programs, transportation, highways and roads.

23 CFR Part 635

    Construction materials, Design-build, Grant programs, 
transportation, highways and roads.

    Issued on September 23, 2019.
Nicole R. Nason,
Administrator, Federal Highway Administration.

    In consideration of the foregoing, FHWA amends 23 CFR part 635 as 


1. The authority citation for part 635 continues to read as follows:

    Authority:  Sections 1525 and 1303 of Pub. L. 112-141, Sec. 1503 
of Pub. L. 109-59, 119 Stat. 1144; 23 U.S.C. 101 (note), 109, 112, 
113, 114, 116, 119, 128, and 315; 31 U.S.C. 6505; 42 U.S.C. 3334, 
4601 et seq.; Sec. 1041(a), Pub. L. 102-240, 105 Stat. 1914; 23 CFR 
1.32; 49 CFR 1.85(a)(1).

2. Revise Sec.  635.411 to read as follows:

Sec.  635.411  Culvert and Storm Sewer Material Types.

    State Departments of Transportation (State DOTs) shall have the 
autonomy to determine culvert and storm sewer material types to be 
included in the construction of a project on a Federal-aid highway.

[FR Doc. 2019-20933 Filed 9-26-19; 8:45 am]

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