This week, the Federal Highway Administration formally lifted a 103-year-old regulation that has banned the use of patented or proprietary materials in federal-aid highway projects. In a Federal Register notice published today and announced earlier this week, FHWA said:

…the outdated requirements in 23 CFR 635.411(a)–(e) are being rescinded to encourage innovation in the development of highway transportation technology and methods.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.

(Full disclosure: this process was put in motion by a petition filed on behalf of the American Road and Transportation Builders Association in March 2018 by former Transportation Secretary James Burnley, who also serves as chairman of the Eno Center’s Board of Directors.)

“This much-needed update of a century-old, obsolete rule will benefit state transportation infrastructure projects and save millions of taxpayer dollars,” said U.S. Transportation Secretary Elaine Chao.

FHWA Administrator Nicole Nason added “This final rule promotes innovation by empowering states to choose which state-of-the-art materials, tools, and products best meet their needs for the construction and upkeep of America’s transportation infrastructure.”

This process brought up an interesting and rarely-used question – how do you challenge a regulation that was promulgated decades before the Administrative Procedure Act of 1946 (APA) established the formal proposed rule, public comment, revised final rule process?

The original federal-aid highway law was enacted on July 11, 1916, and the process by which the implementing regulations were written was, shall we say, not particularly APA-compliant.

As related in an article by FHWA historian Richard Weingroff, the apportionment of the first year’s matching aid to states was issued just ten days later (July 21), but the lack of implementing regulations and rules meant that the money could not yet be used, and the head of the Office of Public Roads and Rural Engineering (OPRRE), Logan Waller Page, wanted to have at least some projects underway before winter suspended outdoor construction.

So a summit meeting was called, and the heads of all of the state highway agencies came to Washington D.C. in mid-August 1916 at what is now the Smithsonian’s Natural History Museum. Weingroff relates:

The night before, AASHO President Henry Shirley convened a meeting of state highway officials at the Raleigh Hotel with OPRRE officials in attendance. State officials went over the draft rules and regulations and agreed on recommendations to be proposed the following day to Page. In addition, AASHO unanimously agreed to appoint a special committee to work with the OPRRE on standard plans, specifications, and forms for the construction and maintenance of federal-aid roads.

The following day at 10 a.m., Page convened the conference at the National Museum. Page assured the AASHO representatives from 35 states that his intent was to cooperate with the states in every way possible and so far as it was practical to do so. Inevitably, he said, because this was the first time the federal government and the states had cooperated in highway construction, a great many points would come up that would have to be straightened out. For that reason, he had invited the states to participate in the conference on the rules for the new program.

As OPRRE’s J.E. Pennybacker read each section of the draft rules, Shirley explained any changes proposed by AASHO. Page adopted most of AASHO’s recommendations in the final rules and regulations, issued as Department of Agriculture Circular 65 on Sept. 1, just six weeks after President Wilson signed the Federal Aid Road Act. The final regulation contained 11 provisions for the federal-aid program and seven for forest road projects.

As originally issued by the Secretary of Agriculture on September 1, 1916, the rule was section 4 of Regulation 8 (Construction Work and Labor):

The rule is currently codified at 23 CFR 635.411 and has been expanded some in the last 103 years, but the heart of it is still the same.

In response to the petition, FHWA issued a notice in November 2018 asking for public comments on the existing rule and two proposed fixes: Option 1, a loosening of state certification requirements, or Option 2, an outright repeal of the rule. 108 comments were received. AASHTO convened a 12-state working group to discuss the issue, but according to AASHTO’s comment letter, “the states were divided in selecting a single option. There is a group of states that prefers to keep the regulations as they currently are, but there is also a group that supports Option 2. The first group generally relies on the Federal Regulations for state contracting as well as federal contracts, or already has a stricter policy in place for state contracts. The second group has the commonality of having difficulty in completing the current process’s paperwork to the satisfaction of the Division Office, and thereby successfully obtaining Federal participation for patented or proprietary products.”

Some state DOTs submitted their own comments, and many, like Texas, supported the repeal of the rule. At the end of the day, “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.”

Repeal of the rule will be effective on October 28, 2019.