Transit Asset Management; National Transit Database, 48889-48970 [2016-16883]

Download as PDF Vol. 81 Tuesday, No. 143 July 26, 2016 Part II Department of Transportation asabaliauskas on DSK3SPTVN1PROD with RULES Federal Transit Administration 49 CFR Parts 625 and 630 National Transit Database; Transit Asset Management; Final Rule; Notices; National Transit Database: Capital Asset Reporting; Transit Asset Management: Proposed Guidebooks VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\26JYR2.SGM 26JYR2 48890 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations DEPARTMENT OF TRANSPORTATION Federal Transit Administration III. Regulatory Analyses and Notices A. Regulatory Analyses and Notices NPRM Comments and FTA’s Responses B. Final Rule Analyses and Notices 49 CFR Parts 625 and 630 I. Executive Summary [Docket No. FTA–2014–0020] A. Purpose of Regulatory Action This final rule establishes a National Transit Asset Management (TAM) System in accordance with section 20019 of the Moving Ahead for Progress in the 21st Century Act (MAP–21; Pub. L. 112–141 (2012), codified at 49 U.S.C. 5326).1 A transit asset management system is ‘‘a strategic and systematic process of operating, maintaining, and improving public transportation capital assets effectively through the life cycle of such assets.’’ 49 U.S.C. 5326(a)(3). Critical to the safety and performance of a public transportation system is the condition of its capital assets—most notably, its equipment, rolling stock, infrastructure, and facilities. When transit assets are not in a state of good repair, the consequences include increased safety risks, decreased system reliability, higher maintenance costs, and lower system performance. Comprehensive quantitative information about the consequences of capital assets not being in a state of good repair is unavailable. However, insufficient funding combined with inadequate transit asset management practices have contributed to an estimated $85.9 billion transit state of good repair (SGR) backlog—a value derived from FTA’s Transit Economic Requirements Model (TERM).2 The SGR backlog is representative of the reinvestment cost to replace any transit assets whose condition is below the midpoint on TERM’s 1 (poor) to 5 (excellent) scale, or 2.5. The SGR backlog poses a significant challenge RIN 2132–AB07 Transit Asset Management; National Transit Database Federal Transit Administration (FTA), Department of Transportation (DOT). ACTION: Final rule. AGENCY: The Federal Transit Administration is publishing a final rule to define the term state of good repair and to establish minimum Federal requirements for transit asset management that will apply to all recipients and subrecipients of chapter 53 funds that own, operate, or manage public transportation capital assets. This final rule requires public transportation providers to develop and implement out transit asset management (TAM) plans. TAM plans must include an asset inventory, condition assessments of inventoried assets, and a prioritized list of investments to improve the state of good repair of their capital assets. This final rule also establishes state good repair standards and four state of good repair (SGR) performance measures. Transit providers are required to set performance targets for their capital assets based on the SGR measures and report their targets, as well as information related to the condition of their capital assets, to the National Transit Database. DATES: Effective October 1, 2016. FOR FURTHER INFORMATION CONTACT: For program matters, Mshadoni Smith, Office of Budget and Policy, (202) 366– 4050 or Mshadoni.Smith@dot.gov. For legal matters, Candace Key, Office of Chief Counsel, (202) 366–4011 or Candace.Key@dot.gov. SUPPLEMENTARY INFORMATION: SUMMARY: asabaliauskas on DSK3SPTVN1PROD with RULES Table of Contents I. Executive Summary A. Purpose of Regulatory Action B. Statutory Authority C. Summary of Major Provisions 1. Transit Asset Management 2. National Transit Database D. Summary of Costs and Benefits II. Summary of Notice of Proposed Rulemaking (NPRM) Comments and Responses A. Rulemaking Background B. General NPRM Comments and FTA’s Responses C. Section by Section NPRM Comments and FTA’s Responses VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 1 On December 4, 2015, the President signed into law the Fixing America’s Surface Transportation (‘‘FAST’’) Act (Pub. L. 114–94), which supersedes MAP–21; however, FAST made no amendments to the transit asset management statute at 49 U.S.C. 5326. This notice will refer to MAP–21 throughout the preamble. 2 Individual transit agencies were not involved in developing the assessment of the $85.9 billion state of good repair backlog. FTA developed the estimate by feeding combined data into TERM. TERM produces national-level estimates of the national state of good repair backlog, based on an underlying set of models relating the expected average true condition of an asset to the asset’s age. Currently, FTA does not collect the systematic data necessary to do a detailed time-series analysis on whether the SGR backlog is growing in real terms. The $2.5 billion estimate is based on the 2013 Conditions and Performance Report, which uses a combination of National Transit Database, systematic and ad hoc data collections in combination with estimates produced by TERM. Under this final rule, FTA will collect additional data which will improve future estimates. The 2013 Conditions and Performance Report is available at http://www.fhwa.dot.gov/ policy/2013cpr/. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 during these fiscally constrained times, given FTA’s estimates that an additional $2.5 billion per year above current funding levels from all levels of government is needed just to prevent the SGR backlog from growing. The National TAM System is a scalable and flexible framework. The components of the National TAM System will work together to ensure that achieving and maintaining a state of good repair becomes, and remains, a top priority for transit providers, as well as States and Metropolitan Planning Organizations (MPOs). B. Statutory Authority Section 20019 of MAP–21 amended Federal transit law by adding a new section 5326 to Chapter 53 of title 49 of the United States Code. The provisions of 49 U.S.C. 5326 require the Secretary of Transportation to establish and implement a National TAM System which (1) defines the term state of good repair, (2) requires that all Chapter 53 recipients and subrecipients develop a TAM plan, (3) establishes annual reporting requirements, and (4) includes technical assistance. 49 U.S.C. 5326(b). The Secretary also must establish SGR performance measures, and recipients must set performance targets based on the measures. 49 U.S.C. 5326(c)(1) and (2). Each designated recipient must submit two annual reports to the Secretary—one report on the condition of their recipients’ public transportation systems, including a description of any change in condition since the last report, and another describing its recipients’ progress towards meeting performance targets established during that fiscal year and a description of the recipients’ performance targets for the subsequent fiscal year. 49 U.S.C. 5326 (b)(3) and 49 U.S.C. 5326(c)(3).3 C. Summary of Major Provisions 1. Transit Asset Management This final rule adds a new part 625, ‘‘Transit Asset Management,’’ to title 49 of the Code of Federal Regulations (part 625). This rule implements the several statutory requirements of 49 U.S.C. 5326(b) and (c), referenced in the previous section, by coalescing them into a comprehensive National TAM 3 The term ‘‘designated recipient’’ is defined in statute as ‘‘(A) an entity designated, in accordance with the planning process under sections 5303and 5304, by the Governor of a State, responsible local officials, and publicly owned operators of public transportation, to receive and apportion amounts under section 5336 to urbanized areas of $200,000 or more in population; or (B) a State or regional authority, if the authority is responsible under the laws of a State for a capital project and for financing and directly providing public transportation.’’ 49 U.S.C. 5302(4). E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations System. The National TAM System is comprised of the following five pillars: (1) The definition of ‘‘state of good repair,’’ 49 U.S.C. 5326(b)(1); (2) a requirement that recipients and subrecipients develop TAM plans, 49 U.S.C. 5326(b)(2); (3) SGR performance measures, and a requirement that recipients and subrecipients set performance targets based on the measures, 49 U.S.C. 5326(c)(1) and (2); (4) annual reporting requirements for recipients and subrecipients, 49 U.S.C. 5326(c)(3); and (5) technical assistance from FTA. 49 U.S.C. 5326(b)(4) and (5). The elements of the National TAM System are listed in § 625.15. Section 625.17 establishes basic principles of transit asset management and requires a transit provider to balance competing needs when considering the life-cycle investment needs of its assets. The disrepair of any particular asset within a public transportation system does not necessarily mean that other assets are in disrepair; whether an asset has achieved a state of good repair is an independent determination that would be made by each transit provider. Sections 625.25 through 625.33 set forth specific requirements for TAM plans. Each transit provider that receives Chapter 53 funds as a recipient or subrecipient and either owns, operates, or manages capital assets used in the provision of public transportation, is required to develop and implement a TAM plan. A TAM plan is a tool that will aide transit providers in: (1) Assessing the current condition of its capital assets; (2) determining what the condition and performance of its assets should be (if they are not already in a state of good repair); (3) identifying the unacceptable risks, including safety risks, in continuing to use an asset that is not in a state of good repair; and (4) deciding how to best balance and prioritize reasonably anticipated funds (revenues from all sources) towards improving asset condition and achieving a sufficient level of performance within those means. Section 625.25 lists the TAM plan requirements, including an asset inventory, condition assessments, a description of analytical processes or decision-support tools used to estimate and prioritize capital investment needs over time, and a project-based prioritization of investments. In general, an asset inventory must include all equipment, rolling stock, facilities and infrastructure that a provider owns. A provider may exclude from its asset inventory any equipment with an acquisition value of less than $50,000, VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 unless the asset is service vehicle equipment. The inventory also must include all rolling stock (revenue vehicles), passenger stations, administrative and exclusive use maintenance facilities, and guideway infrastructure owned by a third-party and used by the provider in the provision of public transportation. The level of detail in a provider’s asset inventory should be commensurate with the level of detail in its program of capital projects. A transit provider is required to conduct a condition assessment on all inventoried assets for which the provider has direct capital responsibility, and also set targets and develop a project-based prioritization of investments for those assets. Section 625.27 requires States to develop a group TAM plan for all subrecipients under the Rural Area Formula Program, authorized under 49 U.S.C. 5311, including American Indian tribes. TAM plan sponsors, which include States, and designated and direct recipients, must develop group TAM plans for their tier II provider subrecipients, except those subrecipients that also are direct recipients under the Urbanized Area Formula Program authorized at 49 U.S.C. 5307. Tier II providers are those transit operators that do not operate rail fixed-guideway public transportation systems and have either one hundred (100) or fewer vehicles in fixed-route revenue service during peak regular service or have one hundred (100) or fewer vehicles in general demand response service during peak regular service hours. Tier I providers are those operators with one hundred and one (101) or more vehicles in revenue service during peak regular service or operators of rail fixed-guideway public transportation systems. Tier I providers must develop their own, individual TAM plan. The group TAM plan approach is intended to reduce the burden on smaller transit providers of developing their own TAM plans and reporting to FTA’s National Transit Database (NTD). A group TAM plan is subject to the same requirements for individual TAM plans. However, sponsors and participants should coordinate to determine their specific roles and responsibilities in complying with this rule. Section 625.33 implements requirements for investment prioritization. Transit providers are required to rate state of good repair projects in order of priority. The investment prioritization requirements aid a transit provider in making more informed investment decisions to PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 48891 improve the state of good repair of its capital assets. Sections 625.41 through 625.45 implement specific performance management requirements. Section 625.41 lists the objective standards for measuring the condition of capital assets. Section 625.43 establishes SGR performance measures based on the SGR standards. Section 625.45 requires recipients and subrecipients to set one or more performance targets per asset class based on the SGR measures and also requires transit providers to coordinate with States and with Metropolitan Planning Organizations (MPOs), to the maximum extent practicable, in the selection of State and MPO performance targets. Together, these requirements allow transit providers to better assess their SGR needs, and in turn make more informed investment decisions. The coordination amongst transit providers, States and MPOs should influence MPO and State transportation funding investment decisions and is intended to increase the likelihood that transit SGR needs are programmed, committed to, and funded as part of the planning process. Section 625.55 requires transit providers to report their targets and the condition of their capital assets annually to FTA’s NTD. This data both helps FTA better estimate the Nation’s SGR backlog and supports the need for additional funding at all levels of government to maintain, improve, and replace the Nation’s aging transit capital assets. 2. National Transit Database This final rule amends the regulations for FTA’s National Transit Database (NTD) at 49 CFR part 630, to conform to the reporting requirements for the National TAM System. Previously, the scope of 49 CFR part 630 was limited to implementing the reporting mandate at 49 U.S.C. 5335(b) for recipients and beneficiaries of section 5307 urban formula funds and section 5311 rural formula funds to report to the NTD. Under this rule, FTA has aligned 49 CFR part 630 with the requirements found at 49 U.S.C. 5326(c)(3) that require recipients of Federal financial assistance under 49 U.S.C. Chapter 53 that own, operate, or manage capital assets used in the provision of public transportation to report their performance targets and their progress towards meeting those targets to the NTD. Under this rule, recipients that receive neither Urbanized Area Formula funds (49 U.S.C. 5307) nor Rural Area Formula funds (49 U.S.C. 5311) remain excluded from other NTD reporting E:\FR\FM\26JYR2.SGM 26JYR2 48892 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations requirements that are unrelated to transit asset management. D. Summary of Costs and Benefits TABLE 1—SUMMARY OF THE FINAL RULE’S BENEFITS AND COSTS [$ Millions] 4 Low cost case Undiscounted dollars Quantified Costs (20 years) ..................... Quantified Costs Annualized ................... Unquantified Costs ................................... asabaliauskas on DSK3SPTVN1PROD with RULES Qualitative Benefits .................................. High cost case Discounted at 7% discount rate Discounted at 3% discount rate 246 23.2 338 22.8 449 22.5 Undiscounted dollars 868 43.4 Discounted at 7% discount rate Discounted at 3% discount rate 471 44.5 652 43.8 • Additional asset maintenance, rehabilitation and replacement. • Costs of inventory and assessment for non-revenue vehicles and for equipment, administrative buildings, and parking facilities that are not part of a station or maintenance facility. • Other third party assets not reported to NTD. • Reduced operation and maintenance costs and/or reduced lifecycle costs of asset ownership. • Reduced mechanical breakdowns and other improvements to transit system performance, reliability and safety. The costs benefits analysis includes both qualitative and quantitative components and is designed to provide information about the likely impacts of the final rule at the societal level. FTA estimated the costs and benefits of the final rule by using Bureau of Labor Statistics studies and through dialogue with transit providers. Due to the limited number of quantitative resources, many of the estimated impacts are based on explicit assumptions that are outlined in section III of this notice. As described in section III, both low case and high case estimates were calculated based on inhouse versus contractor estimated costs. According to Government Accountability Office (GAO) reports and other studies, existing practices in transit asset management vary widely from transit provider to transit provider, though most providers already perform at least some of the functions required under the final rule. FTA estimated the costs of the final rule based on the incremental time that it will take a transit provider’s staff to fulfill each of the National TAM System requirements, deducting the costs of the transit industry’s current practices. Where relevant, the estimates are associated with the size of a transit provider’s asset portfolio, as reported in the NTD. FTA monetized the time requirements using average wage rates from relevant job categories, as reported by the Bureau of Labor Statistics in 2015, and adjusted for employee fringe benefits. Table 1 includes a summary of the estimated costs of the National TAM System. The quantified costs are for transit providers to assess their assets, develop TAM plans, and report certain information to the NTD. They do not include any incremental costs related to asset replacement, rehabilitation or maintenance—those costs are presented in the table as unquantified costs. FTA was also unable to estimate costs for assessing the condition of equipment that is not located at maintenance facilities or passenger stations or facilities not reported to NTD. The analysis covers a period of twenty years following the effective date of the final rule. Under the low cost case, the total undiscounted costs for the twenty years are $449 million. Using a discount rate of 7% (with 3% sensitivity case) for future values, the final rule has annualized costs of $23.2 million. Under the high cost case, if all the tasks are contracted out by the transit agencies or States, rather than performed in-house, the cost of the final rule will be roughly double the estimated in-house cost. The total undiscounted costs for the twenty years are $868 million. Using a discount rate of 7% (with 3% sensitivity case) for future values, the final rule has annualized costs of $44.5 million. The initial costs for collecting data and developing new methodologies will be just over $62 million spread over the first two years, followed by reduced amounts in subsequent years under the low cost case. Under the high cost case, initial costs will be approximately $115 million over two years. FTA expects that the benefits of the final rule will stem from improved maintenance practices and from improved decisionmaking in capital asset maintenance and replacement. By identifying and prioritizing state of good repair needs, a transit provider could reduce costs for mechanical breakdowns of transit vehicles, reduce travel delays for passengers, and yield potential safety improvements. For some providers, this may be feasible by shifting priorities within their maintenance budgets. For example, by identifying slow zones where deteriorated asset conditions have reduced system travel speeds, transit systems may assign maintenance efforts towards repairs that will eliminate the slow zone and ensure consistent and reliable travel times for passengers. For other providers, this may be accomplished through proactive replacement of capital assets. For example, rather than operating buses until they become unreliable in old age, some transit providers will now establish a consistent replacement age for their buses that will prevent costly in-service breakdowns. Some providers may need additional funding to more effectively maintain their capital assets. To increase funding for maintenance, providers may, need to reduce expenditures for system expansion, particularly if the agencies’ goal is to reduce the SGR backlog. Additionally, assembling a quantitative asset inventory and condition assessments will better equip transit providers to make the case to funding stakeholders for how much money is needed to bring their systems into a state of good repair. However, it is difficult to predict accurately how each provider is likely to respond. The final rule’s benefits could not be quantified due to the lack of available information on the impacts of asset 4 Cost estimates are sensitive to the extent agencies use in-house or contractor staff to conduct compliance activities. If all compliance activities are contracted out by the transit agencies or States, rather than performed in-house, the cost of the final rule will be roughly double the estimated in-house cost. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES management programs on transit systems. Instead, FTA conducted a breakeven analysis based on the incidence of transit vehicle mechanical breakdowns reported to NTD and their associated costs. For instance, in 2013, 524,629 mechanical failures of vehicles in service were reported to the NTD, and a total of $2.2 billion in vehicle maintenance costs were reported to the NTD. Assuming that in the absence of the rule, vehicle maintenance costs in each of the next 20 years are the same as they were in 2013, the final rule would need to avoid 1.02% or 1.95% of the mechanical failure breakdowns each year to yield savings that are equal to the portion of the rule’s costs that FTA was able to monetize, in the low and high cost cases, respectively. For the rule’s benefits to equal all of its costs, it would need to prevent a larger but unknown amount of vehicle maintenance costs. The full methodology for the low and high cost cases are described in the Regulatory Analysis section. Current management practices may delay maintenance of vehicles due to various reasons. For instance, some providers may keep vehicles in operation to meet the current demand, delaying regular maintenance of vehicles, resulting in mechanical failure of vehicles in service. Others may shortchange maintenance budgets to expand their systems. In each case, providers struggle to meet system demands with limited resources. Implementing a TAM system will require a provider to collect and use asset condition data, set targets, and develop strategies to prioritize investments to meet the provider’s goals. One strategy may be to ensure that assets are maintained on a regular schedule to avoid failure of vehicles in service, which are expensive to manage and cause delays on the system. Based on limited findings on transit asset management-related cost savings from transit provider initiatives and from the literature in other transportation fields, notably highways, this level of improvement appears readily achievable. Additionally, there will be important non-quantifiable benefits in areas such as improved transparency and accountability. II. Summary of Notice of Proposed Rulemaking (NPRM) Comments and Responses A. Rulemaking Background On October 3, 2013, FTA published a consolidated advance notice of proposed rulemaking (ANPRM) requesting public comment on a wide VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 range of topics pertaining to the Public Transportation Safety Program and the TAM program authorized by MAP 21. 78 FR. 61251 (Oct. 3, 2013). Throughout the ANPRM, FTA expressed its intention to adopt a scalable and flexible approach to transit asset management and safety and highlighted the inherent linkages between asset condition and safety performance. On September 30, 2015, FTA published a Notice of Proposed Rulemaking (NPRM) for Transit Asset Management and the National Transit Database (80 FR 58911). The NPRM provided a summary of the status of the Nation’s state of good repair backlog and the history behind FTA’s proposals for the National TAM System. FTA took into consideration public comments it received in response to the ANPRM and NPRM during the development of this final rule. FTA received a total of 119 public comments on the NPRM. In general, FTA has not responded to those comments that related specifically to other rulemakings. Several commenters requested an extension to the comment period. FTA did not extend the comment period, but did accept late filed comments. A couple of comments suggested that FTA provide an opportunity for States and others to offer additional comments after FHWA and FTA issue all of the performance management-related NPRMs. FTA will continue to engage with the States, transit agencies and other members of the public on the implementation of its programs and requirements. The public can also submit questions or comments at any time to FTA’s Web site at http:// ftawebprod.fta.dot.gov/ContactUsTool/ Public/NewRequest.aspx. A number of comments requested guidance from FTA on how to implement the requirements of the proposed rule. The Transit Asset Management page on FTA’s Web site at www.transit.dot.gov/regulations-andguidance/asset-management/transitasset-management contains a number of useful guidance documents and resources. For example, FTA has developed an Asset Management Guide for Small Providers 5 to assist small providers and States’ Department of Transportations in developing TAM plans. FTA encourages transit providers and sponsors to visit the page regularly to access the most up-to-date resources. Following is a summary of the public comments on the NPRM and FTA’s responses. 5 https://www.transit.dot.gov/researchinnovation/asset-management-guide-smallproviders-fta-report-no0092. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 48893 B. General Comments and FTA’s Responses This section provides summarized comments that are not specifically related to a section of the NPRM. This section is organized around common themes found in the responses to the NPRM such as, FTA’s approach to implementing the TAM requirements, Nexus between state of good repair and safety, Nexus between transit asset management and planning, responses to the NPRM appendix that provided examples of asset classes and individual assets, Implementation and Oversight, and Technical assistance needs. COMMENTS: FTA’s Approach to Implementing the TAM Requirements Some commenters expressed general support for FTA’s efforts to use transit asset management to help transit providers maintain bus and rail systems in a state of good repair (SGR). A State agency expressed support for FTA’s efforts to increase safety through the NRPM. A transit operator emphasized that investments to resolve the SGR backlog must be guided by a plan that emphasizes the goals stated for the TAM program. However, a few commenters expressed general concern about the proposal. For example, although supporting the idea of a National TAM System, one commenter urged that the implementation be directed towards bringing the nation’s transit system into a state of good repair, rather than creating reporting and oversight requirements that have no relation to this goal. A transit operator expressed concern that the guidance prescribed in the NPRM could require transit providers already mature in TAM best practices to alter their programs, which could result in compliant but less optimal TAM programs. An anonymous commenter said the rule must be kept as simple as possible. FTA’S RESPONSE: FTA’s Approach to Implementing the TAM Requirements FTA appreciates those comments in support of its efforts to implement a National TAM System to achieve and maintain a state of good repair for the Nation’s transit assets, improving transit safety, and increasing service reliability and performance. FTA agrees that transit providers should be guided by the goals of the National TAM System in using their funding from all sources for state of good repair. Throughout the NPRM, FTA expressed its intention to adopt a scalable and flexible approach to transit asset management and safety. This final E:\FR\FM\26JYR2.SGM 26JYR2 48894 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES rule sets minimum Federal requirements that can be adopted by any transit provider and tailored to any transit system. COMMENTS: Nexus Between State of Good Repair and Safety Several transit operators, a business association, and other commenters recommended that FTA clarify the interaction between TAM and safety, expressing concern that failure to do so could subject transit agencies to unnecessary litigation risk. These commenters suggested that Useful Life Benchmarks (ULBs) should not drive replacement cycles to the exclusion of safe operations and asserted that the safety of any asset should be the determining factor in prioritization of asset replacement. For similar reasons, a professional association argued that SGR and safety should not be tied together and urged FTA not to use SGR and safety reporting as a methodology for awarding or not awarding funding to transportation agencies. A transit operator stated that operator experience, training, and prudence play a more critical role in life safety than asset condition. This commenter suggested that it would be more prudent to have a separate safety flag that identifies any asset that poses an ‘‘imminent danger’’ to an operator or passenger with specific guidelines for the management of such assets. Although acknowledging that consideration for safety in asset management decisions is important, one transit operator stated that there should not be a direct measurable link to safety performance because that determination would require greater innovation in integrating safety and asset management systems. Further, this commenter stated that it is difficult to assess the link between safety and asset management because it is not a direct relationship. A local transit operator suggested that FTA provide documentation and guidance on how to integrate SMS directly into TAM plans. Further, this commenter suggested that FTA allow each individual transit provider to make their own determinations about the safety of their assets. A State transit association expressed concerns about the viability of a topdown approach, stating that it may conflict with already-negotiated union contracts or hinder future negotiations. The commenter stated that, rather than the overly burdensome SMS and TAM plan requirements, a National Transit Institute (NTI) course with appropriate certification(s) could achieve the same goals and outcomes. In contrast, one transit operator concurred with FTA VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 that MAP–21 requirements for a National TAM System can best be implemented within the context of an SMS framework imposed by the overarching Public Transportation Safety Program. Another transit operator and an individual commenter expressed concern that because FTA has not published a final National Public Transportation Safety Plan, it is difficult to address issues in the TAM NPRM that pertain to the linkage between the two documents. A transit operator expressed concerns about the identification of unacceptable safety risks in safety plans and TAM plans, reasoning that public access to this information may increase safety risks for the rail system. An individual commenter said a National TAM System will significantly affect the efficiency and costeffectiveness of capital asset management and maintenance. The commenter said it also will help to improve transit safety. A State agency and a transit operator also agreed with FTA’s statements on the linkages between SGR and safety. A transit operator recommended that part 625 should reference part 670 and ‘‘prioritize’’ the significance that safety plays in determining SGR. FTA’S RESPONSE: Nexus Between State of Good Repair and Safety FTA believes that Congress intended for it to establish a National TAM System that not only increases the performance and reliability of capital assets, but also ‘‘improve[s] safety.’’ 6 For example, pursuant to 49 U.S.C. 5329(b)(2)(B), FTA must develop and implement a new National Public Transportation Safety Plan that includes the definition of state of good repair developed under this final rule. Additionally, pursuant to 49 U.S.C. 5329(d)(1)(E), a transit agency safety plan must include performance targets based on the SGR measures that will be included in a National Safety Plan. The final rule reflects FTA’s recognition of the nexus between transit asset management and safety. While asset condition is not always a 6 H.R. Rep. No. 112–557 at 603 (2012) (Conf. Rep.). In addition, the text of the Public Transportation Safety Act of 2010 was incorporated into both the transit asset management and safety provisions of MAP–21. See S. 3638, 111th Cong. (2010). In the report accompanying the 2010 Act, Congress stated that ‘‘state of good repair directly relates to the safety of a public transportation system, as the likelihood of accidents increases as the condition of equipment and infrastructure worsens.’’ S. Rept. 112–232 at 10 (2010). The requirements proposed under the Act were intended to establish a ‘‘monitoring system for the safety and condition of the nation’s public transportation assets.’’ Id. at 1. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 contributing factor in safety events, FTA believes that there is a relationship between the condition of an asset and safety performance. FTA acknowledges that a transit asset that is in a state of good repair may be operated unsafely; conversely, a transit asset that is not in a state of good repair may be operated safely through appropriate safety risk mitigation strategies. FTA’s approach to TAM is consistent with its proposed SMS approach to safety. A fundamental aspect of transit asset management is the monitoring of asset condition data as an indicator of system performance. Similarly, SMS is a formal data-driven approach to managing safety risk and assuring the effectiveness of safety risk mitigations. SMS does not require a provider to take a specific action be taken to address a specific safety risk. Implementing SMS merely provides an organization with a systematic way to identify and understand safety risks, and subsequently make a determination about how to mitigate those risks. The requirements of this final rule can be implemented in the absence of the components of the National Safety Program referenced in the comments. Again, this final rule is scalable and flexible. The final rule neither defines nor prescribes standards for ‘‘unacceptable safety risk.’’ FTA believes that each provider is in the best position, based on knowledge of both its unique operating environment and availability of resources, to make determinations regarding categorization and mitigation of risks. The final rule merely requires that a transit provider give due consideration in its investment prioritization to those assets that pose an identified unacceptable safety risk. FTA does not agree with the commenter who suggested that public access to those safety risks that may be identified in a TAM plan or safety plan, may increase safety risks for the rail system. FTA did not propose in the NPRM that a transit provider document its safety risks in its TAM plan. In determining the state of good repair of an asset, FTA proposed that a provider consider whether or not the asset poses an identified unacceptable safety risk and that a provider considers those risks in the development of its investment prioritization. This final rule allows a transit provider to determine its own ULBs, based on knowledge of its operating environment and the performance of its individual assets. Each transit provider will need to determine what investments should be made in order to improve the performance of its transit system. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES FTA understands the uncertainty expressed by some commenters regarding the nexus between transit asset management and safety. FTA also understands the uncertainty expressed in those comments regarding compliance with the requirements of the final rule that are related to safety, in the absence of a final National Public Transportation Safety Plan and a final rule for public transportation agency safety plans. On February 5, 2016, FTA issued a proposed National Public Transportation Safety Plan (81 FR 6372– 3) and a notice of proposed rulemaking (NPRM) for Public Transportation Agency Safety Plans (Agency Safety Plans). 81 FR 6344–71. The proposed rule for Agency Safety Plans would require transit agencies to set performance targets based on the safety performance criteria under the National Safety Plan. FTA proposed one criterion to measure the relationship between asset condition and safety performance. The proposed Agency Safety Plan rule also would require a transit operator to establish methods for identifying and evaluating safety risks throughout all elements of its public transportation system, including its capital assets. In the coming months, FTA plans to issue both a final National Safety Plan and a final rule for Agency Safety Plans and accompanying guidance, technical assistance and other tools for both safety and TAM. COMMENTS: Nexus Between Transit Asset Management and Planning A Metropolitan Planning Organization (MPO) commented that States and MPOs must consider and integrate transit providers’ TAM plans and targets, as well as Transit Agency Safety Plans and targets, into the planning process, including decision-making on funding allocations and prioritization of investment strategies. A State DOT stated that consistency between FTA’s and Federal Highway Administration’s (FHWA’s) TAM final rules is necessary and that State DOTs should be given flexibility to choose a phase-in option for the development of its first initial asset management plan and targets. Several State DOTs said FTA should promote more definitive language for how TAM plans will feed into long- and short-range transportation planning and programming. Some commenters said the investment prioritization approach must be relevant to the existing planning and programming process without supplanting the statewide transportation improvement program (STIP) project selection process and capital programming processes. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 One commenter requested clarification on the relationship between TAM plans and their future impacts on the development of Regional Transportation Plans. A transit operator said the proposed rule is written as if the National TAM System and TAM Program start at procurement and there is little to no mention of planning, requirements gathering, concept of operations, and hazard avoidance, which are central to true whole lifecycle management and SMS concepts. FTA’S RESPONSE: Nexus Between Transit Asset Management and Planning The NPRM did not propose that a transit provider abandon its existing capital planning program and the TAM requirements are not intended to supplant the capital planning process. This final rule is a baseline. The TAM requirements are intended to produce information critical to informed, sound decision-making for capital asset lifecycle investment needs. FTA understands that there may be other processes, considerations, or concepts that are not explicitly referenced in the rule, but may be central to a transit provider’s implementation of a comprehensive TAM program. FTA believes that a transit provider could incorporate these other elements into its TAM plan through several of the requirements at § 625.25(b), specifically: 1. The SGR policy; 2. The TAM plan implementation strategy; and 3. An outline of how the TAM plan and related business practices will be monitored, evaluated and updated, as needed, to ensure the continuous improvement of transit asset management practices. FTA acknowledges that compliance with the requirements for metropolitan planning will not become effective until the publication of the final TAM rule that establishes the SGR performance measures. Therefore, in the final rule on metropolitan and statewide and nonmetropolitan planning, FTA and FHWA have provided a phase-in of certain requirements to support States, MPOs and transit providers as they transition into performance-based planning and programming. FTA directs commenters to the Final Rule on Metropolitan and Statewide Planning and Non Metropolitan Planning 7 where State and MPO integration of transit providers’ TAM plans, targets, and investment priorities into the 7 https://www.federalregister.gov/articles/2016/ 05/27/2016-11964/statewide-and-nonmetropolitantransportation-planning-metropolitantransportation-planning. PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 48895 performance-based planning and programming process are addressed. COMMENTS: Appendix A: Examples of Asset Categories, Asset Classes, and Individual Assets One commenter supported FTA’s approach in Appendix A. However, a professional association and several State DOTs recommend that either Appendix A be removed from the final rule, or that the content included in Appendix A be replaced with asset categories and asset classes required for reporting to the NTD in order to align the two processes and keep reporting to a minimum. If Appendix A is retained, several of these commenters recommended that FTA either remove ‘‘Administration’’ assets from Appendix A or amend its definition to clarify what falls under the class of assets known as ‘‘Administration.’’ A professional association and a couple of State DOTs asked if the asset category infrastructure is only applicable to fixed guideway. Based on Appendix A, a couple of State DOTs said it is unclear whether FTA envisions that office equipment and vehicle related equipment (such as bus cameras) or shop equipment (e.g., vehicle lifts, fueling and lubricating fuel dispensers, test equipment, etc.) would be included in a TAM plan. A local government recommended that FTA delineate furniture and fixtures as an asset class or individual asset that is not applicable when categorizing under TAM. The commenter also suggested that FTA clarify that TAM is not a replacement for, nor should be confused with, the standard generally accepted accounting principle fixed asset categories such as Buildings, Leasehold Improvements, Land, Furniture and Fixtures, Technology, etc. Rather it is an extension or categorization of transit capital assets within the limited scope of TAM in improving safety, reliability, and performance of our nation’s public transportation; thereby reducing the SGR backlog. An individual commenter asked if FTA will provide a cross reference from Appendix A—Asset Classification in the TERM Lite Quick Start User Guide—to the Asset Category/Asset Class in Appendix A in the rule. A transit operator stated that, in lieu of the categorizations as proposed for Appendix A, and associated definitions throughout the rule, it would support a system of asset categories and classes that is consistent with the one described in Table 2.9 in Transit Cooperative Research Program (TCRP) Report 172, ‘‘Guidance for Developing a Transit E:\FR\FM\26JYR2.SGM 26JYR2 48896 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES Asset Management Plan,’’ which also aligns more closely with the asset aggregations used in the TERM model. Another transit operator suggested that Appendix A should align with the corresponding table in FTA’s 2012 Asset Management Guide because proposed Appendix A deviates from past FTA sanctioned practices and would likely disrupt systems already in use without improving the quality of data obtained. An MPO asked FTA to clarify the detail expected in Appendix A when a TAM plan is prepared as part of a group TAM plan by a State versus when prepared by the individual transit provider. FTA’S RESPONSE: Appendix A: Examples of Asset Categories, Asset Classes, and Individual Assets FTA included Appendix A in the NPRM to provide an illustrative example of an asset hierarchy. FTA did not intend for Appendix A to serve as an exhaustive list of asset classes and individual assets. Appendix A did not include systems as a separate asset category because systems would fall under the infrastructure category. Each asset category in the final rule is broad enough for a transit provider to incorporate its existing defined categories. Components of an asset, such as bus cameras or shop equipment, would be itemized in the asset inventory at the level of detail found in a transit providers program of capital projects. Specifically, with regard to the equipment asset category, the only assets that a provider must include in its inventory are non-revenue service vehicles and owned equipment over $50,000 in acquisition value. Additionally, equipment assets considered under the SGR performance measure and reported to NTD are exclusively non-revenue service vehicles. The equipment asset category does not include supplies, such as trash bins or pencils. A transit provider is not required to include any third-party equipment in its asset inventory. Also, see FTA’s response to comments on ‘‘Capital Asset’’ and ‘‘Equipment’’ in § 625.25 Definitions. The infrastructure asset category includes infrastructure assets for all modes. However, FTA proposed that the performance measure for infrastructure be limited to rail fixed-guideway assets. Therefore, a transit provider that does not operate a rail system would not have to set a performance target for its nonrail infrastructure assets. Similarly, the performance measure for equipment is limited to non-revenue service vehicles, and a transit provider is only required to set an equipment target for service vehicles. However, all other owned VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 equipment over $50,000 must be included in a TAM plan. The asset inventory compiled for a transit provider’s own TAM plan, particularly a rail transit provider’s TAM plan, may have a greater level of detail than the inventory information reported to the NTD. COMMENTS: Implementation and Oversight Two commenters suggested that the oversight of the asset management reporting requirements should occur as part of a regularly scheduled oversight activity and existing programs, such as the triennial oversight program. One of these commenters encouraged FTA to set forth criteria that would prompt an as-needed asset management review, ensuring that reviews are triggered based on quantifiable criteria and defined risk, rather than on an arbitrary basis. Another commenter assumed that audit and compliance checks will be done during the triennial review because it was stated at the FTA webinars supporting the issuance of the NPRM that the TAM plans would not be submitted to FTA. The commenter requested that FTA clarify the audit and compliance verification of TAM plans in the final rule. One commenter expressed concern about FTA’s assertion that it reserves the right to conduct additional oversight of TAM plans outside the triennial review process. A State DOT asked for FTA’s determination of whether the National TAM System will be part of Satisfactory Continuing Control or Maintenance as it relates to the triennial review. Several commenters said the rule should state how individual and group TAM plans will be reviewed and approved. A professional association said FTA should explicitly state that for rail fixed guideway systems, the State Safety Oversight Agency has a review and approval role. Some commenters recommended that FTA further engage stakeholders with regard to implementing the rule. A State DOT suggested that FTA conduct a survey of all data requirements from the user level to determine if there is a way to coordinate and consolidate the process. A transit operator said FTA should consider providing an opportunity for a small delegation of transit providers to have a face-to-face dialogue to discuss concerns with the NPRM. A transit operator said there should be no additional changes to add more specific requirements in the final rule beyond those included in the NPRM, without another opportunity for the transit industry to review and comment. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 FTA’S RESPONSE: Implementation and Oversight FTA will not routinely collect or approve TAM plans. Individual transit providers, and sponsors on behalf of group TAM plan participants, must selfcertify their compliance with the requirements of the final rule. FTA will consider developing a self-assessment tool as part of its technical assistance efforts. FTA intends to oversee selfcertifications of TAM plans through the existing Triennial Review and State Management Review (SMR) processes, likely through the addition of a TAM module. FTA continues to reserve the right to conduct additional oversight of any of its requirements, including those related to TAM, outside of the Triennial Review and SMR processes. FTA fully appreciates the role that State Safety Oversight (SSO) Agencies play in the safety of rail fixed guideway transit systems. FTA supports a rail transit provider’s decisions to further align its safety program with its TAM program by seeking review and approval of its TAM plan by its SSO Agency. However, the final rule does not require SSO Agencies to review and approve the TAM plans of the rail transit systems that they oversee. FTA has provided a number of opportunities for the public to comment on its approach and proposals on transit asset management. In addition to the ANPRM and NPRM, FTA sponsored several SGR roundtables, conducted an online dialogue, and issued a Transit Asset Management Guide. FTA will continue to engage with the industry on the implementation of both the TAM and safety requirements. COMMENTS: Technical Assistance Needs Several commenters provided statements concerning a potential template for TAM plans. A transit operator asked if FTA will issue a template that service providers can use to assure they are providing all required information FTA requires in an acceptable format. One commenter said FTA should offer technical assistance for tier II providers, or work with tier II stakeholders, to create TAM plan templates for smaller agencies and/or group TAM plans. Another commenter supported the idea that the State DOT and other sponsoring agencies develop one TAM plan template, but expressed concern about DOT’s lack of adequate resources to develop a template, provide oversight, track assets and provide NTD reports on SGR and asset management. Several commenters said FTA should provide training on the use of TERM E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations and the TERM scale for State DOTs and subrecipients prior to inclusion of facilities in the TAM plan. A couple of commenters said FTA could provide assistance to those transit agencies that are new to asset management by publishing a sample definition of an asset. One of these commenters also said FTA should provide a toolkit as part of the final rule. Some commenters asked for technical assistance from FTA on the following specific topics: 1. Decision processes and tools for assessing probability of risks. 2. SGR backlog calculation. 3. Developing quality and costeffective condition assessments. 4. The new reporting requirements. One commenter requested that FTA engage in a comprehensive asset management technical assistance effort as soon as the final rule has been published. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: Technical Assistance Needs FTA appreciates the recommendations for technical assistance tools. FTA’s suite of TAM technical assistance tools will include one or more TAM plan templates, guidance or training for TERM, and guidance for performance measurement. Currently, the 2012 TAM Guide is FTA’s primary guidance on transit asset management. It combines previous research, case studies, lessons learned from other FTA initiatives, and best practices. COMMENTS: Additional Comments A couple of commenters said FTA should ensure consistency between FTA and FHWA transportation asset management rulemakings. One commenter said FTA should clarify to what degree the new asset management framework is potentially displacing local agency decisionmaking. The commenter said it has been a long-standing understanding that FTA will not substitute its judgment for that of its grantees, and final decisions on the allocation of both Federal and local funds should still rest with the implementing agency, not an entity operating at the national level. Another commenter urged FTA to consider and request comments on adding governance metrics to the TAM rule that would permit external stakeholders to understand the challenges faced by individual agencies in balancing their capital and operating needs, and to identify agencies exerting insufficient effort in prioritizing SGR projects. For example, the commenter suggested that the following metrics VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 might be appropriate: Available capital funding per transit asset; available capital funding per cumulative annual passenger trip; and proportion of capital budget appropriate to SGR projects. An individual commenter asserted that the proposed rule’s failure to address public transportation’s human capital assets is a missed opportunity to address the high risks to both safety and performance that have resulted from the sector’s failure to take a more strategic and systematic approach to acquiring, developing, and retaining individuals with needed skills. This commenter urged FTA to incorporate into the National TAM System requirements that would ensure the collection and reporting of basic workforce data, and provided specific suggestions of human resources performance data to collect. FTA’S RESPONSE: Additional Comments The FHWA and FTA asset management statutes are not identical; therefore the requirements under each agency’s asset management rule will be different. However, the purpose of both rulemakings is to improve the condition of the Nation’s transportation assets. Another rulemaking effort, the coordinated FHWA and FTA Metropolitan and Statewide and NonMetropolitan Transportation Planning, will implement a performance-based approach to planning and programming (PBPP). This final rule supports the PBPP framework by requiring transit providers to share their TAM plans with their State and MPO planning partners and to coordinate with States and MPOs in the selection of State and MPO targets. The requirements of the final rule do not displace local agency decisionmaking. The requirements of the final rule do not limit a transit provider from implementing additional TAM provisions, activities, and metrics. The final rule’s information gathering, analysis, and prioritization requirements are intended to inform the local decision-making process. FTA recognizes that human capital assets are an essential component of implementing a TAM plan; however they do not meet the statutory definition of ‘‘capital asset.’’ In the NPRM, FTA proposed that a tier I provider develop a nine element TAM plan, and has maintained this requirement in the final rule. One of the nine elements was a specification of resources, including personnel needed to develop and implement the TAM plan. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 48897 C. Section by Section NPRM Comments and FTA’s Responses This section provides summarized comments by NPRM section, FTA’s responses, and changes made in the final rule. Section 625.1 Purpose This section proposed that the purpose of these regulations is to carry out the mandate of 49 U.S.C. 5326 for transit asset management. COMMENTS: A few commenters expressed support for the Federal objectives for the National TAM System laid out in proposed § 625.1. A transit operator asked if FTA has considered using the ISO 55000 framework to accomplish this mandate. FTA’S RESPONSE: Prior to MAP–21, FTA began researching transit asset management and developing TAM policies and best practices for the transit industry. FTA reviewed a number of resources prior to developing the NPRM, including the international asset management standard established by ISO. FTA believes that this final rule sets forth a flexible approach to implementing transit asset management that is consistent with current best practices. FINAL RULE: FTA is including this section in the final rule without change. Section 625.3 Applicability This section proposed that the regulations would apply to all transit providers that: (1) Are recipients or subrecipients of Federal financial assistance under 49 U.S.C. Chapter 53; and (2) own, operate, or manage transit capital assets. COMMENTS: Applicability—Assets Maintained, Owned, or Operated by a Third-Party Many public comments addressed the applicability of the rule to contractor assets. Numerous local transit operators, several State DOTs, and other commenters asserted that a third party contractor’s assets should not be required to be included in a provider’s TAM plan. Some of these commenters suggested that this is a matter of contract administration and a transit provider should determine how they will approach the issue of the condition of a contractor’s assets based on the nature of each individual contract. A private company in supply of transit assets recommended that assets other than rolling stock that are fully owned E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48898 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations by a private contractor (e.g., tools and diagnostic equipment) should not be incorporated into TAM asset inventory. In contrast, one State DOT expressed support for the applicability of TAM performance targets to a transit provider’s leased assets and assets operated under a service contract. Two transit operators and an MPO pointed out that in some instances a contractor may be providing services to several transit agencies using the same assets or multiple transit agencies may share an intermodal terminal, and it is unclear which agency would be responsible for collecting condition information and reporting of those shared assets. For this reason, the MPO commented that overlapping reporting of the same assets by different agencies would cause reconciliation issues, unnecessary data collection costs, and unnecessary coordination issues to ensure consistency in asset representation. Also relating to shared assets, a transit operator expressed concern that the transit provider has no control over the maintenance schedule; repair or replacement of contractor owned assets and suggested that each transit provider should be allowed to determine which assets to include in its TAM plan. For similar reasons, two transit operators and a business association recommended that capital assets outside a transit operator’s control—such as passenger stations maintained by station cities, track owned and maintained by freight railroads used under shared-use agreements, or a building for which a transit agency is leasing a portion— should not be included in the agency’s TAM plan. Some commenters asked whether assets owned by a third party contractor and used in the provision of public transportation service (e.g., vehicles owned by third party paratransit provider, maintenance facilities where contractor-owned buses are stored and maintained) must be included in a recipient’s asset inventory. A transit operator asked if space it leases for its administrative offices needs to be included in its TAM asset inventory. Two transit operators asked if taxicabs and other vehicles occasionally used to provide paratransit service pursuant to the Americans with Disabilities Act (ADA) should be included in the TAM asset inventory. If so, one of these commenters requested that FTA provide an explanation in the final rule as to how an agency would decide which vehicles to include. Commenting that a transit provider has little control over which assets are used by a third-party provider, a transit operator asked if VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 rolling stock that is used intermittently through third-party providers would be included in the TAM plan. A transit operator expressed concern that condition assessments for assets maintained by its contractual partners may be considered proprietary information that the private carriers are not willing to share due to liability issues. A local transit provider asked how FTA would suggest an agency impose and monitor more stringent safety/SGR investment standards to third party providers that have a service contract for asset maintenance and/or operation. Several State DOTs and another commenter recommended that leased assets that otherwise would be required to be included in a TAM plan should not be included unless the lease is for a minimum of 5 years. A State DOT asked whether a nonprofit agency providing specialized transportation service to complement a subrecipient’s service would need to include all of its vehicles in a TAM plan or only those vehicles that is leases from the subrecipient. If the assets of a contracted service provider do fall under a transit agency’s asset inventory for purposes of TAM plan requirements, a transit operator recommended that FTA allow for a transition period for contracted services in which existing contracts can be modified or new contracts can be bid and awarded to accommodate the new requirements. This commenter also expressed concern that the introduction of TAM requirements into service contracts would increase contract costs without meaningfully improved service, and in some cases could lead to service reductions as a result of contracted cost increases. An MPO suggested that, if FTA is interested in getting the full picture of an agency, it could require reporting of the shared, leased, and contracted assets that are directly used by the agency, but at a very basic level and that the nonowners should be exempted from the performance metrics for these assets. As an alternative to reporting leased and contracted assets, this commenter suggested that FTA could request that agencies meet the performance requirements of leased and contracted assets by including language regarding compliance with FTA’s SGR performance standards in the agency’s contracts with vendors. A transit operator commented that a tier I provider should not be required to include assets used and maintained by other tier I providers as part of its TAM asset inventory. An MPO requested guidance from FTA on how and which TAM plan(s) should incorporate capital PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 assets that are collectively purchased and collectively maintained by a regional authority. FTA’S RESPONSE: Applicability— Assets Maintained, Owned, or Operated by a Third-Party The applicability of the requirements proposed in the NPRM was consistent with FTA’s analysis of the SGR backlog and with current NTD reporting requirements. The Nation’s $85.9 billion SGR backlog is a value derived from FTA’s TERM, which is based on a comprehensive assessment of the Nation’s transit capital stock reported to the NTD, including those assets that are owned by third parties. FTA agrees with commenters who suggested that requiring the inclusion of contracted assets in a TAM plan may be difficult to implement and may prove to be overly burdensome and costly. However, the agency continues to believe that a TAM plan should, to a certain extent, take into account these types of assets. Thus, in this final rule, FTA has attempted to strike a balance between these concerns. This final rule requires that a transit provider include in its asset inventory all equipment, rolling stock, facilities, and infrastructure that it owns. A provider may exclude from its asset inventory any equipment with an acquisition value of less than $50,000, unless the equipment asset is a service vehicle. A transit provider must only include in its asset inventory third-party owned, or jointly-procured rolling stock, passenger stations, administrative and exclusive-use maintenance facilities, and guideway infrastructure assets for which it has direct capital responsibility. Further, the final rule only requires a transit provider to conduct condition assessments, establish performance targets, and include in its investment prioritization, those inventoried assets for which it has direct capital responsibility.8 A transit provider has direct capital responsibility for any asset that it owns. A transit provider also has direct capital responsibility for any asset that is currently included in its program of capital projects or an asset that the provider can reasonably anticipate it will include in its program of capital projects during the TAM plan horizon period. Once an asset becomes a part of a transit provider’s capital program, the transit provider must comply with the final rule’s condition assessment, target setting (if applicable), and investment prioritization requirements. This 8 See Appendix C for example tables to illustrate the relationship amongst TAM plan elements. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations reduction of scope allows a transit provider to obtain a broad view of the condition of the assets within its system, but limits the majority of the burden of associated with other activities that may have limited impact due to the provider not having direct capital responsibility. FTA does not believe that it will be overly burdensome for a transit provider to include third-party owned vehicles, facilities, and guideway infrastructure in its asset inventory. Transit providers are already required to include detailed information on third-party vehicles and third-party guideway infrastructure in the NTD. FTA believes expanding asset inventories to include third-party passenger facilities and exclusive use maintenance facilities is important, as it will provide valuable information on the total number, size, and scope of facilities in the transit industry. The inclusion of a broad set of assets into the inventory is intended to provide funding decision makers with a full picture of their system and an opportunity to think proactively and long term about investment priorities for state of good repair. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA is including this section in the final rule without substantive change. However, FTA is revising § 625.25(b)(1) to clarify which assets used in the provision of public transportation must be included in an asset inventory and to require condition assessments for those asset that a transit provider has direct capital responsibility for. FTA will issue guidance to aid transit providers in the implementation of the requirements of this final rule. COMMENTS: Applicability—Other Comments Some public comment submissions included other comments relating to the scope or applicability of the proposed rule. A State DOT, a business association, and a tribal government suggested that the TAM rule should apply only to capital assets purchased (or eligible to be funded) with FTA funding. State DOTs and other commenters said TAM plans for providers that only receive Section 5310 funds should only be required to include ‘‘FTA-funded’’ assets, even if FTA does not apply this definition to all TAM plans. An MPO, a State DOT, and a State transit agency said Section 5310 recipients should be excluded if they do not own vehicles funded through FTA sources. Two State DOTs and a transit operator suggested that all Section 5310 subrecipients that are not also Section 5307 or 5311 subrecipients should be VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 excluded from the FTA TAM requirements. Three State DOTs, an MPO, and other commenters recommended that 5310 requirements for TAM reporting should be scaled back to a level that is reasonable and appropriate, reasoning that most 5310 subrecipients do not have the resources to implement a TAM or report to the NTD. A professional association and a transit operator requested that FTA provide an exemption from the FTA TAM requirements to transportation providers that have fewer than 30 or 31 vehicles operating during peak service, which the commenters said would include most Section 5310 agencies. The transit operator stated that subrecipients awarded Section 5310 program funds are predominantly very small human service agencies including disability, aging, and health service providers, and asserted that human services agencies performing as transit providers are vastly different than transportation agencies in size, function, investment, and target populations served. Further, the professional association stated that the 30-vehicle threshold is consistent with the definition used in NTD reporting requirements to differentiate small from large agencies. Similarly, a State DOT urged FTA to reduce the requirements for rural transit systems that have a minimal number of assets, including Section 5310 and Section 5311 subrecipients. An MPO recommended the creation of a tier III for Section 5311 subrecipients to ensure that the Group plans are manageable in scope and size. Two State DOTs and other commenters suggested that Section 5310 subrecipients should be exempt from the rule; however, if they are included, then these commenters recommended that Section 5310 subrecipients having less than ten vehicles should be exempt. Another State DOT suggested that any transit agency with fewer than ten vehicles should be exempt from TAM plan requirements. One commenter stated that the inclusion of Section 5310 vehicles was confusing because they have a much smaller useful life and operate in a different area than public transportation vehicles. This commenter was concerned that including these vehicles would dilute the SGR for the program as a whole. An association that serves as a liaison between state departments of transportation and the Federal government said that 5310 subrecipients will find the burden of accepting FTA funds to significantly outweigh the PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 48899 benefits to their organization. According to this association: ‘‘State DOTs will find it increasingly difficult to find effective subrecipients with the final result being loss of essential transportation services. Seniors and persons with disabilities will lose their only means for transportation to the grocery store, friends and family, and medical services. Section 5310 is an important aspect of the Rides to Wellness Initiative. One of the goals of the Coordinating Council on Access and Mobility is to ‘‘Streamline federal rules and regulations that may impede the coordinated delivery of services, and improve the efficiency of services using existing resources.’’ However, without scaling back the TAM plan requirements for Section 5310 subrecipients, FTA is adding barriers that may be impossible to overcome.’’ Other commenters also stated that the cost of complying with the TAM requirements may result in Section 5310 entities discontinuing the services they provide. A transit operator recommended that tier II providers that can demonstrate that they have effective existing asset management systems should be eligible for waivers from the TAM plan requirement. Several State DOTs and other commenters said subrecipients that receive solely Section 5311(f) funds should be excluded from the TAM planning process because intercity bus service (Section 5311(f)) is expressly excluded as a public transportation provider under the MAP–21 definition of public transportation in 49 U.S.C. 5302. If the final rule does not exempt the Section 5311(f) program in its entirety, one State DOT suggested that the rule should clarify that for the Section 5311(f) program, each State DOT may limit its TAM plan to just those assets deployed in their State and the State DOT has directly funded with Section 5311(f) funds, given that many States contract with national or regional private companies for the program. An anonymous commenter asked if subrecipients of 5309 grant-funded vehicles that serve their clients and do not provide public transit service must be included in the TAM plan. Two State DOTs said assessing the condition of and making an investment plan for each capital asset unit will place too large of a burden on subrecipients since the unit or units in question might represent a very small portion of the total dollar value of the provider’s assets. Another State DOT suggested that (1) the rule should only focus on those assets that require longterm financial planning windows, (2) leased assets should not be included in the scope of the rule unless the lease is for a minimum of 5 years, and (3) the rule should expressly exclude office E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48900 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations space or other administrative support facilities or equipment. A representative of tribal governments commented that it interprets the proposal as covering every Indian tribe that receives Chapter 53 transit funding, regardless of how small such Federal assistance may be or how few capital assets a tribal transit system may possess. A tribal government suggested that FTA consider a tier III transit provider classification for Indian tribal governments that would mandate much simpler planning and reporting requirements. This commenter reasoned that because Indian tribes own and operate ten vehicles or less at any given point in time, the man-hours burden to comply with the TAM rule cannot be justified for transit systems of this size and scale. A State DOT recommended that FTA should develop a four tiered approach similar to current Federal regulations, with tier requirements based on population (i.e., less than 50,000, 50,000–200,000, and greater than 200,000), with a fourth tier for specialized services. This commenter reasoned that the proposed two-tier framework based on a threshold of peak revenue vehicles would not adequately segregate systems with varying sizes and asset management capabilities. A trade association recommended that FTA revise its proposed TAM rule to incorporate scalable mechanisms for TAM plans appropriate to the size and scope of each agency. Two commenters suggested that FTA change proposed § 625.3 language to read: ‘‘This part applies to all recipients or subrecipients of Federal financial assistance under 49 U.S.C. Chapter 53 that own, operate, or manage capital assets used in the provision of all modes of public transportation.’’ A State DOT recommended that FTA provide in § 625.3 a more comprehensive list of all FTA recipient and subrecipient types that would be subject to the FTA TAM regulation. An MPO commented that the requirements for non-public transit provider recipients to comply with the TAM rule potentially would create an undue burden for FTA and the funding recipients and the cost for these projects and services to comply likely outweighs their impacts to the transit SGR for most regions. For this reason, the commenter recommended that FTA should either exempt recipients that receive only Section 5307 or Section 5310 funds from the TAM plan requirements, or further reduce the requirements for those providers. Asserting that TAM requirements should be different for bus-only VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 systems, a professional association suggested that FTA consider using the language and concepts developed in the voluntary bus safety program developed from the 2003 Memorandum of Understanding signed by FTA, American Association of State Highway and Transportation Officials (AASHTO), the American Public Transportation Association (APTA), and the Community Transportation Association of America (CTAA). FTA’S RESPONSE: Applicability— Other Comments In order to address the SGR backlog in a meaningful way, FTA believes that a TAM plan must account for both those assets acquired with FTA funding and those that were not. In many cases, it is neither feasible nor does it make sense to distinguish between assets that were acquired with FTA funds and those that were not. Indeed, many of the legacy rail assets in the state of good repair backlog that are most in need of replacement were procured decades ago, prior to the establishment of a Federal financial assistance program for public transportation. The source of funds used to acquire the asset is of no consequence when making a determination regarding whether or not an asset is in a state of good repair and whether or not the asset needs to be included in the investment prioritization. FTA believes that accounting for all assets will provide a transit provider with important information that should be used to make more informed investment decisions for state of good repair. FTA believes that this final rule is sufficiently scalable and flexible. FTA does not agree that it should provide waivers for tier I providers who already have effective transit asset management systems. The rule does not require a transit provider to abandon existing effective practices. Instead, the requirements of the rule can be integrated into and complement existing practices. Moreover, FTA does not agree that some or all tier II providers should be exempted from the TAM requirements. Tier II providers are only required to develop a four element TAM plan. A tier II plan must include only (1) an asset inventory, (2) condition assessments, (3) a decision support tool, and (4) a prioritization of investments for state of good repair.9 A tier II 9 By contrast, a tier I plan must include these four elements and also these five additional elements: A TAM and SGR policy; a TAM plan implementation strategy; a description of key TAM activities that the provider intends to engage in over the TAM plan horizon period; a summary or list of the resources, including personnel, that the provider needs to develop and carry out the TAM plan; and PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 provider also is required to set performance targets and report to the NTD. The fewer assets a provider has, the fewer assets would be included in an asset inventory, and the less time and effort would be required to comply with the other requirements. In addition to the reduced requirements, tier II providers also may be eligible to participate in a group TAM plan that would be developed by a sponsor. The sponsor would be responsible for developing the TAM plan, setting targets, and reporting to the NTD on behalf of the group TAM plan participants. FTA believes that the twotiered approach and group TAM plan option significantly reduce the burden of the TAM requirements on smaller, less sophisticated transit providers. To the commenter concerned that inclusion of 5310 would ‘‘dilute the SGR of the program as a whole,’’ under the final rule, the performance measure for vehicles is based on the ULB. A transit provider may set a ULB in consideration of the type of vehicle, type of service, and operating environment. The ULB option allows for a more accurate assessment of the useful lives of vehicles based on operational realities. This final rule only applies to recipients and subrecipients of chapter 53 funds who own, operate, or manage public transportation capital assets used in the provision of public transportation. The final rule does not apply to recipients of planning or research grants and cooperative agreements that do not provide public transportation. The term ‘‘public transportation’’ is defined at 49 U.S.C. 5302(14) and means regular, continuing shared-ride surface transportation services that are open to the general public or open to a segment of the general public defined by age, disability, or low income; and does not include— 1. intercity passenger rail transportation provided by the entity described in chapter 243 (or a successor to such entity) of Title 49, 2. intercity bus service, 3. charter bus service, 4. school bus service, 5. sightseeing service, 6. courtesy shuttle service for patrons of one or more specific establishments, or 7. intra-terminal or intra-facility shuttle services. Public transportation does not include intercity bus transportation that may be an outline of how the provider will monitor, update, and evaluate, as needed, its TAM plan and related business practices, to ensure the continuous improvement of its TAM practices. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations eligible for financial assistance under 49 U.S.C. 5311(f). In addition, public transportation does not include service that is closed to the general public and only available to a particular clientele. For example, a subrecipient under the formula program for elderly persons and persons with disabilities (49 U.S.C. 5310) that operates service that is open to a segment of the general public (e.g. elderly persons or persons with disabilities) must comply with this final rule. However, a nonprofit subrecipient under the section 5310 program that operates closed-door service (e.g. for members of a specific senior center or for participants in a specific sheltered workshop program only), is not a provider of public transportation and is not subject to the final rule. To clarify, recipients and subrecipients of 49 U.S.C. 5310 program funds that do not operate public transportation are not subject to this rule. FTA estimates that this rule would apply to approximately 20% of all recipients and subrecipients of section 5310 funds. Those 5310 providers that are subject to the rule are eligible to participate in a group plan developed by a TAM plan sponsor which significantly reduces the impact of this rule to 5310 providers.. FTA does not believe the TAM provisions in this rule will result in a reduction or discontinuation of 5310 services, nor does FTA believe that State DOTs will find it difficult to find effective subrecipients to participate in their 5310 programs as a result of the rule. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA is including this section in the final rule without substantive change. However, FTA has revised § 625.25(b)(1) to clarify which assets used in providing public transportation, including but not limited to all revenue vehicles, all passenger stations, all exclusive use maintenance facilities, all non-revenue service vehicles regardless of value, and owned equipment over $50,000 in acquisition value, must be included in an asset inventory and § 625.25(b)(2) to require condition assessments of only those asset that a transit provider has direct capital responsibility for. Section 625.5 Definitions This section proposed definitions for terms that would be applicable to the proposed part. Some of the terms were familiar to the transit industry, but were defined slightly differently for purposes of the NPRM. This final rule includes a number of non-substantive changes to the definitions proposed in the NPRM to provide further clarity regarding the meaning of terms. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 COMMENTS: Definition of ‘‘Accountable Executive’’ Several State DOTs and other commenters recommended that FTA should clarify the definition of Accountable Executive by adding, ‘‘An official of a State may not be considered to be an Accountable Executive unless the State is a transit provider and, if so, only with respect to the State’s activities as a transit provider.’’ One State DOT requested that FTA redefine ‘‘Accountable Executive’’ for State DOTs or subrecipients who are in a group plan and state that the executive does not necessarily have the full range of responsibilities as defined. Three commenters suggested that the definition should take into consideration that some transit agencies may have an organizational structure where the listed responsibilities are divided among more than one executive. For such agencies, these commenters suggested that the agency should be allowed to identify the Accountable Executives and their respective roles as part of the TAM plan. For similar reasons, rather than defining the Accountable Executive, a transit operator suggested that FTA inform State and local governing bodies that whoever is designated as the Accountable Executive must be granted authority to implement the adopted capital and TAM plan. Further, this commenter proposed that FTA add a provision that states no liability rests on the Accountable Executive personally. An industry association commented that it may be overly burdensome and cause an overlap of job duties to have one Accountable Executive that oversees all safety and asset management requirements in planning, operations, maintenance, and other departments. A transit agency recommended that the Accountable Executive for asset management decisions and for the certification of agency TAM plans, be enabled to be separate from the decision-maker on safety because in many agencies the safety management decision-maker and the asset management decision-maker are different people, reporting to the chief executive. Two MPOs stated that, in the case of the small, urbanized areas, it is unclear how the Accountable Executive at the local level can be responsible for approving the TAM plan if it is developed, approved, and implemented by the State. A transit operator asked FTA to clarify whether the Accountable Executive may be the Chief Executive Officer (CEO) or General Manager (GM). PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 48901 Stating that the proposed definition of Accountable Executive is not consistent with the SMS rule that was provided earlier this year, one commenter suggested that if the intent is to point directly at the GM, CEO, President, or highest ranking executive, the definition should be shortened to that statement. FTA’S RESPONSE: Definition of ‘‘Accountable Executive’’ FTA agrees with commenters who suggested that a group TAM plan sponsor is not the Accountable Executive for each participating transit provider. However, by participating in a group TAM plan, an individual transit provider’s Accountable Executive may be required to defer to the decisions of the sponsor regarding prioritization of investments. Nonetheless, each transit provider’s Accountable Executive is ultimately responsible for implementing TAM at their agency. An Accountable Executive should be a transit provider’s chief executive; this person is often the CEO or GM. FTA understands that at many smaller transit providers, roles and responsibilities are more fluid. However, FTA does believe that, even in circumstances where responsibilities are either shared or delegated, there must be one primary decision-maker who is ultimately responsible for both transit asset management and safety. It is a basic management tenet that accountabilities flow top-down. Therefore, as a management system, transit asset management requires that accountability reside with an operator’s top executive. FINAL RULE: FTA is including the definition in the final rule without substantive change. COMMENTS: Definitions of ‘‘Asset Category’’ and ‘‘Asset Class’’ A transit operator commented that the grantee should have flexibility to establish classes that match its existing planning and/or budgeting systems. This commenter recommended that Appendix A should be clearly labeled as not being definitive. Three commenters recommended that FTA align the proposed asset categories with FTA’s TERM/TERM Lite programs. A transit operator expressed support for FTA’s approach to asset categories stating that this flexible approach would allow the classes to mirror each provider’s capital program more effectively. E:\FR\FM\26JYR2.SGM 26JYR2 48902 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations FTA’S RESPONSE: Definitions of ‘‘Asset Category’’ and ‘‘Asset Class’’ FTA proposed simple, flexible definitions for the terms ‘‘asset category’’ and ‘‘asset class.’’ The proposed definitions are compatible with most existing planning and budgetary systems, including those used by TERM-Lite. The asset class examples listed in appendix A do not represent all possible classes of assets, nor do they represent the only asset categories that may be used. For example, TERM-Lite uses a separate asset category for systems, whereas this rule includes systems as part of the infrastructure category. Nonetheless, the two definitions are compatible, and can be cross-referenced with each other. FTA has labeled Appendix A as an example, as suggested by a commenter. Each transit provider may define its own asset classes within an asset category, provided that the transit provider is able to meet the performance measure target-setting and NTD reporting requirements of the final rule. FINAL RULE: FTA is including the definition in the final rule without change. asabaliauskas on DSK3SPTVN1PROD with RULES COMMENTS: Definition of ‘‘Asset Inventory’’ A transit provider recommended that the regulation and any guidance should specify that the term ‘‘asset inventory’’ refers to the required biennial inventory and that references to the inventory are comparable wherever it is required. Further, this commenter suggested that FTA consider adopting the FHWA Highway Economic Requirements System (HERS) approach, which is based on statistical sampling, and which the commenter asserted would improve data quality and reduce data collection burden. FTA’S RESPONSE: Definition of ‘‘Asset Inventory’’ FTA proposed a simple definition for the term ‘‘asset inventory.’’ A transit provider may develop an asset inventory to meet the requirements of the final rule by using a number of sources, including its existing biennial inventory. FTA did not set forth a sampling method for a transit provider to determine which assets it should include in its asset inventory. This final rule requires that a transit provider’s asset inventory include all assets used in providing public transportation. However, a transit provider may satisfy the requirement for condition assessments by conducting a sampling of assets within an asset class, or use another method of their choosing. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FINAL RULE: FTA is including the definition in the final rule without change. However, FTA notes that § 625.25(b)(1) has been modified to clarify the assets this final rule requires to be included in the TAM plan asset inventory. COMMENTS: Definition of ‘‘Capital Asset’’ Several transit operators and State DOTs requested a clearly defined monetary threshold for ‘‘capital assets.’’ Some commenters that recommended a minimal monetary threshold reasoned that it would allow for the collection of only useful data and eliminate the tracking of items of minimal value that are not critical to the provision of public transportation (such as trash dumpsters, office desks, copiers, fax machines, floor jacks, desk calculators, office chairs, coffee pots, clocks, battery chargers, etc.), which would impose a substantial burden on transit agencies. A transit operator urged FTA to decide on a dollar threshold based on evidence with some likely projection of outcome (e.g., number of assets and value of the data from the assets). Some commenters recommended specific monetary thresholds, including $100,000, $50,000, $25,000, $10,000, and $5,000. Other commenters suggested other criteria in addition to monetary thresholds for what should be considered an asset. For example, three State DOTs and other commenters recommended that a capital asset must meet all of the following criteria to be required as part of TAM plan asset inventory: (a) FTA-funded, including assets likely to be maintained, replaced, or repaired with FTA funds; (b) an initial cost of at least $50,000 (as determined by the provider) or any rolling stock; (c) a ULB of at least 5 years or greater. Two transit operators also suggested that only federally funded assets should be considered capital assets for purposes of the TAM plans. In contrast, one State DOT expressed support for the TAM plan covering all assets in the provision of public transportation and not just the ones purchased with Federal funding, reasoning that it would allow for more consistency in the TAM development, implementation, and review process. A business association agreed with criteria (b) and (c) of the above suggested capital asset definition. This commenter and an MPO also requested that FTA specify the assets to be included to avoid inconsistencies during reviews. For example, these commenters asked whether spare parts PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 with a new bus should be included. These commenters also recommended that FTA provide a phase-in for asset classes that are lower priority, such as equipment with a value of less than $50,000. A State DOT agreed with criteria (a) of the above suggested capital asset definition, but for the monetary threshold (criteria (b)), it recommend a lower value threshold of $20,000. Similarly, to reduce the cost burden to transit providers, two MPOs and three other commenters recommended that FTA limit assets reported in the TAM plan to assets with a value of at least $50,000 and a ULB of five years or greater. A State DOT agreed with these thresholds for non-rolling stock transportation assets, but suggested that the scope of assets included in a TAM plan should include all rolling stock. A joint submission from regional transit organizations said FTA should define a cost/expected life threshold of an asset to be tracked and assessed. For purposes of FTA’s TAM program, assets thresholds should be at higher levels (i.e., over $50,000 and more than a 3year life) or established risk vulnerabilities. A transit operator suggested further defining what is considered a capital asset for purposes of the National TAM System by providing thresholds of a minimum cost of $50,000 and a useful life of 1 year. A professional association, a State DOT, and transit providers requested that FTA permit States and direct recipients to use their own definition of capital asset or existing industry standard best practices (e.g., ISO 12224 standards). Some transit operators recommended that each transit operator should be allowed to determine which assets to include in its TAM plan (e.g., only assets deemed critical to a transit provider’s operation or service/risk model), with one commenter expressing concern about double counting of shared assets. Although commenting that the definition of asset is unique to each agency, an MPO requested that FTA issue broad guidance or a set of parameters that would clarify what FTA considers an asset. A transit operator made the following comments: (1) It is important that asset definitions are understood uniformly across the departments of a single organization, and across transit agencies, nationwide, (2) FTA should refrain from expanding the definition of capital asset beyond the level of detail prescribed by 49 U.S.C. 5326, and (3) the regulatory definition should be narrowed, rather than broadened, to provide clarification. The commenter also said FTA should update its C5010.1 E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES Grants Management and C5300.1 State of Good Repair Grants Program guidance documents to reflect the definitions established by this rulemaking. In contrast, expressing concern that the term ‘‘minimum level of granularity’’ could be construed to include assets whose value is so minimal as to make the maintenance of the asset inventory unreasonable, a State public transportation system urged FTA to instead define and construe capital assets more broadly. Similarly, a transit agency recommended that FTA not restrict agencies to focus only on ‘‘capital assets’’ and simply use the term ‘‘assets.’’ Two commenters suggested that FTA revise the definition to reference an asset ‘‘used in any mode of public transportation.’’ A transit operator suggested that capital assets should, at a minimum, include items that most agencies presently track as an asset due to their cost and impact on the overall asset’s condition (e.g., bus engines, bus transmission, bus axles, rail HVAC units, and rail trucks). Another transit operator also expressed concern with the proposed definition of capital asset, commenting that systems within facilities or portions of infrastructure may be more realistically considered capital assets. FTA’S RESPONSE: Definition of ‘‘Capital Asset’’ FTA proposed a broad definition of ‘‘capital asset’’. The definition encompassed all capital assets that may be used in the provision of public transportation service. Commenters who suggested that FTA include a monetary threshold in the definition of the term capital asset should understand that there is a distinction between what a capital asset is and whether or not it must be included in an asset inventory. FTA clarifies that the definition of ‘‘capital asset’’ does not include supplies (such as trash dumpsters, office desks, copiers, fax machines, floor jacks, desk calculators, office chairs, coffee pots, clocks, battery chargers, etc.); implementation guidelines will provide specific alignment with other FTA program guidance, for example, FTA’s Grant Management Requirements Circular 5010.1.D. FTA has revised the final rule to clarify which capital assets a transit provider must include in its asset inventory. FTA considered including a monetary threshold in the definition of a capital asset, and alternatively, a monetary threshold for including a capital asset in the TAM plan, but has decided against this approach. FTA wanted to propose VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 a flexible and scalable approach to TAM that could apply to all different types of transit agencies. FTA believes the proposed definition is consistent with a scalable and flexible approach that can accommodate many existing capital planning practices. A monetary threshold could work against that interest because it would establish a one size fits all fiscal indicator, which may not have the same significance for every transit provider. Further, in order to stay current, FTA would need to regularly adjust a monetary threshold for inflation over time. However, FTA has identified a monetary threshold for the equipment category to provide structure and consistency to the types of assets required in this category. The equipment category could be misapplied depending on the size of a transit provider’s portfolio, as some transit providers identify equipment to a level of specificity beyond usefulness in a TAM plan. FTA has determined that all non-revenue service vehicles regardless of value and any owned equipment over $50,000 in acquisition value must be included in a TAM plan asset inventory. These constraints maintain the value of including equipment assets in the TAM plan without introducing undue burden on transit providers to include items of minimal value. Historically, FTA has not required tracking of Federally-funded assets below $5,000 in value. This rule does not change that. Transit providers will not be required to include in their asset inventories any assets, regardless of funding source, that fall below the $5,000 threshold, or whatever subsequent threshold is established by FTA Circular 5010 or its successors. In addition, FTA does not agree with the comments that recommended FTA phase-in requirements for assets. Each transit provider will determine the appropriate asset hierarchy and the level of detail based on the level of detail a transit provider already captures in their program of capital plans. The practice of transit asset management requires that a transit provider have a robust and complete assessment and understating of all of the assets within its system. To require a transit provider to identify ‘‘priority’’ assets would undervalue this fundamental aspect of TAM. Moreover, only when a transit provider has a complete understanding of the condition of the assets within its system is it able to create meaningful investment prioritization to improve or maintain a state of good repair. FTA believes that third-party assets are mission-critical to the provision of PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 48903 public transportation service, and need to be accounted for in an asset inventory in order to have a clear picture of which assets are essential to the transit provider in delivering service. In this final rule, a transit provider must incorporate into its inventory only those capital assets that either it owns or specific asset types owned by a third party. Specifically, transit provider is not required to include in its asset inventory equipment that is owned by a third-party or third-party owned shareduse maintenance facilities. For example, a transit provider that uses a commercial, third-party maintenance facility, such as a national chain oil change company, attached to a commercial gas station does not need to include this asset in its inventory. However, a transit provider must only comply with the requirements in the rule for conditions assessments, targets, and investment prioritization for those assets for which the provider has direct capital responsibility, including thirdparty owned assets. This final rule does not prescribe a level of detail for the asset inventory hierarchy. Instead, the final rule requires that a transit provider disaggregate divisible capital assets in a manner that is consistent with how the assets are identified in the transit provider’s program of capital projects. For example, a project for a facility, which is comprised of multiple components, could be programmed as a project for an HVAC system or as a project for condenser and duct work; in either case, if the provider’s program of capital projects itemizes the project as HVAC, then the provider may report HVAC in the TAM asset inventory. If a capital asset is of such low value that it would not be included in a transit provider’s program of capital projects, then that asset need not be identified in the asset inventory required under this final rule. FINAL RULE: FTA is including the definition in the final rule without change. However, § 625.25(b)(1) has been revised to clarify which assets used in the provision of public transportation must be included in an asset inventory, including but not limited to all revenue vehicles, all passenger stations, all exclusive use maintenance facilities, all non-revenue service vehicles regardless of value, and owned equipment over $50,000 in acquisition value, must be included in an asset inventory at a level of detail commensurate with the level of detail used to describe assets in a transit provider’s program of capital projects. E:\FR\FM\26JYR2.SGM 26JYR2 48904 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations COMMENTS: Definition of ‘‘Decision Support Tool’’ Two commenters recommended that FTA revise paragraph (1) of the proposed definition of ‘‘decision support tool’’ to add the phrase ‘‘including safety critical systems and components’’ after ‘‘condition data.’’ FTA’S RESPONSE: Definition of ‘‘Decision Support Tool’’ FTA proposed a broad definition of ‘‘decision support tool.’’ FTA does not believe that it is necessary for the definition to explicitly include reference to ‘‘safety-critical systems and components’’ in the definition of decision support tool asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA is including the definition in the final rule without substantive change. COMMENTS: Definition of ‘‘Equipment’’ A State transit association said the definition of ‘‘equipment’’ should have a dollar threshold attached. An MPO recommended that a unit of equipment be defined as an FTA-funded asset with an initial cost of at least $50,000, or any rolling stock with a ULB of at least 5 years or more. A public transportation association said that no individual asset with an initial value under $50,000 or such higher value as the agency has established for financial statement purposes should be tracked as a ‘‘unit of equipment.’’ Requiring agencies to assess and report TAM information for equipment with lesser values could capture mundane assets such as trash dumpsters. According to this commenter, ‘‘even with a $50,000 or locally established threshold, transit agencies would be free to track other assets deemed critical to their operation. Rolling stock such as paratransit vans would continue to be captured as rolling stock. Both FTA and the individual agency would have useful data, free from the clutter of hundreds or thousands of line items of minimal value and not critical to the agency mission, consistent with the example in draft Appendix A. Additionally, this would allow agencies to report with an eye to risk. Without linking the reporting requirement to operational risk, the transit industry is simply counting and spending money to gather irrelevant data.’’ Several commenters stated that the proposed definition of ‘‘equipment’’ seems to include a wide range of asset classes, while other parts of the proposed rule define equipment as nonrevenue vehicles (e.g., Appendix A, VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 § 625.41, § 625.43(a)). One transit agency recommended that non-revenue vehicles should be included in the vehicle asset class, not the equipment class. Similarly, another transit agency asserted that transit providers use the term ‘‘equipment’’ in regards to portable tools, work machinery, or components, and that it is not a term reserved for non-revenue vehicles. Another commenter suggested that FTA allow the transit agency to define equipment, as well as other categories in the TAM plan, at a level that is suitable to the agency (e.g., ‘‘equipment means an item that is necessary to perform the primary transit function of moving people in a safe efficient manner’’). A transit operator expressed concern that the definition as proposed would unintentionally drive useful life to less than 1 year. This commenter proposed that equipment be grouped together; for example, overhead doors would be maintained and replaced as one group instead of individual assets. Asserting that a 1-year useful life threshold is too short, a transit operator suggested that FTA allow grantees to rely on State laws that determine eligibility for capital investments to determine what property qualifies as ‘‘equipment.’’ FTA’S RESPONSE: Definition of ‘‘Equipment’’ The purpose of the National TAM System is to tackle the Nation’s growing SGR backlog by improving the condition of transit assets. FTA does not believe that a definition of equipment should exclude assets that are not in a state of good repair, but don’t meet a monetary threshold. However, FTA acknowledges that an unspecified minimum threshold is confusing to transit providers. The final rule allows a provider to exclude from its asset inventory all equipment with an acquisition value below $50,000. However, an asset inventory must include all non-revenue service vehicles regardless of value. This final rule does not prescribe a level of detail for the equipment asset category. Instead, the final rule requires that a transit provider identify capital assets in a manner that is consistent with how the assets are identified in the transit provider’s program of capital projects. FTA conducted a review of nine transit providers, representing three types of transit operations, to find out the level of detail captured in their program of capital projects. FTA found that each transit provider, included varying levels of detail in their program of capital projects, but none so detailed as to include items of de minimus value, such as trash bins, pencils etc. FTA clarifies that ‘‘equipment’’ does not PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 include supplies; implementation guidelines will provide specific alignment with other FTA program guidance, for example, FTA’s Grant Management Requirements Circular 5010. FTA recognizes that the threshold in this final rule differs from the current definition of equipment in the 5010 Circular, which states a $5000 acquisition value. FTA believes that equipment assets that fall between the $5000 threshold of the current 5010 Circular and the $50,000 threshold of this final rule are likely to be limited to assets that do not affect the SGR backlog. However, FTA notes that transit providers are encouraged to include equipment assets in their TAM plan that will impact their safety and operations to be considered alongside other assets in their inventory and investment prioritization. FTA included Appendix A example in the NPRM to provide examples of asset classes. FTA did not intend for Appendix A to serve as an exhaustive list. A transit provider may choose how it defines asset classes within the equipment category for its TAM plan. FTA agrees with the commenter that highlights that the final rule allows transit providers to establish locally defined thresholds to track assets deemed critical to their operation, providing ‘‘useful data free from clutter of hundreds of thousands of line items of minimal value not critical to the agency mission’’. FTA notes that this rule does not specify a risk-based approach to asset management but does recognize linking reporting to operational risk is a practice some transit providers may undertake. FINAL RULE: FTA is including the definition in the final rule without change. However, § 625.25(b)(1) has been revised to clarify that the only equipment assets that must be included in a TAM plan asset inventory are; non-revenue service vehicles regardless of value and owned equipment over $50,000 in acquisition value. COMMENTS: Definition of ‘‘Facility’’ A transit provider commented that FTA’s definition should recognize that not all buildings or structures used in the provision of public transportation are the same and asserted that the proposed definition does not provide an adequate description of public facing, operational, and administrative facilities. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations FTA’S RESPONSE: Definition of ‘‘Facility’’ To clarify, FTA proposed a broad definition of facility that encompassed any buildings or structures used in providing public transportation, including passenger stations, operations, maintenance, and administrative facilities. FINAL RULE: FTA’S RESPONSE: Definition of ‘‘Full Level of Performance’’ FTA is including the proposed definition in the final rule without change. asabaliauskas on DSK3SPTVN1PROD with RULES COMMENTS: Definition of ‘‘Full Level of Performance’’ Three transit operators suggested that this term should not include the word ‘‘full’’; rather, they suggested that the performance of the asset is the ability to provide the required level of service to customers or performance. Further, one of these commenters suggested the addition of the sentence, ‘‘Generally, this can be measured in terms of reliability, availability, capacity, and meeting customer demands and needs.’’ The other transit operators reasoned that a benchmark for legacy transit systems is subject to interpretation. Two commenters suggested that FTA expand the definition of ‘‘full level of performance,’’ reasoning that the proposed meaning is unclear because an asset degrades from new overtime and with use, thus, never again being at its ‘‘full level’’ of performance. These commenters also recommended that FTA add references for compliance with the Americans with Disabilities Act (ADA) requirements as set forth in 49 CFR parts 37, 38, and 39, which would speak to ensuring entities are meeting their obligations under 49 CFR 37.161. A transit operator and a business association recommended that FTA use ‘‘fit for intended purpose’’ rather than ‘‘full level of performance’’ because it would still allow for reduced performance as long as an asset meets the required performance level and that the FTA’s proposed SGR definition does not allow for the somewhat degraded performance of some assets experienced over time under even ideal conditions. Minimally, this commenter asserted that ‘‘full level of performance’’ requires additional explanation or slight modification to say ‘‘acceptable level of performance’’ or something similar, reasoning that ‘‘full level of performance’’ implies an absolute condition, which is not always achievable in transit. Although expressing support for the FTA definition of SGR because it would provide flexibility for each local agency VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 to establish its own standards, a State DOT recommended that FTA reconsider the previously proposed definition that included ‘‘fit for purpose’’ and similar descriptions. A State transit association said using safety as a component of ‘‘full level of performance’’ without further clarification overlooks the reality of operating policies. FTA intentionally proposed an aspirational definition of ‘‘state of good repair.’’ FTA intended for the proposed definition to describe an asset at its best ideal performance condition. The term ‘‘full’’ describes an aspirational level of performance, which would require a transit provider, even those of legacy systems, to consider how far beyond optimal performance the system is operating. Full level of performance is not an absolute ‘‘like new’’ condition, but FTA proposed that a transit provider measure the state of good repair of its assets by applying the three objective standards. FTA recognizes that old assets and assets in deteriorated condition may still provide an acceptable level of performance. However, merely operating at an ‘‘acceptable’’ level of performance with older assets in need of replacement does not represent a state of good repair. FTA does not believe that ‘‘fit for its intended purpose’’ is sufficient to meet the statutory requirement that the definition of state of good repair include ‘‘objective standards’’ for measuring the condition of capital assets. For example, it is not uncommon for a transit provider to continue to use a railcar with limited functioning HVAC during high demand periods. While the rail car may be ‘‘fit for the intended purpose’’ of meeting revenue service demands, the performance of the HVAC system indicates the deteriorating condition of that rail car, which is not the same as full performance. This initial indicator of declining condition should be used to inform decisions on asset replacement. The purpose of the National TAM System is to improve the condition of the Nation’s aging capital assets. In order to bring about meaningful change, FTA does not believe it should establish a system based on the status quo. Instead, FTA must establish a baseline that will bring about change. 48905 COMMENTS: Definition of ‘‘Horizon Period’’ A transit operator suggested that FTA explain how the term ‘‘horizon period’’ compares to the term ‘‘useful life.’’ FTA’S RESPONSE: Definition of ‘‘Horizon Period’’ The ‘‘horizon period’’ is the period of time beginning with the completion of a TAM plan and ending four years later. The term ‘‘useful life,’’ used in FTA grant programs refers to the FTAdeveloped performance period for a capital asset. In general, FTA funds may not be used to replace an asset until it has reached or exceeded its useful life. FINAL RULE: FTA is including the definition in the final rule without substantive change. COMMENTS: Definition of ‘‘Infrastructure’’ Two commenters recommended that the definition for infrastructure should also provide itemized categories including but not limited to Power, Track, Ventilation, Elevators, Escalators, Detectable Warning Strips, PA/VMS Equipment, Rolling Stock Subsystem Elements including doors, ramps, bridge plates, lifts, designation signs, public address equipment, and securement systems, among others. A local government said the word ‘‘interconnect,’’ as used in the definition, can be interpreted tangibly or intangibly. In order to provide consistency across what is reported among bus and van providers, the commenter recommended that the final rule should either include applicable examples or else establish that this asset category may not apply to providers whose rolling stock capital assets are limited to buses and vans. A transit operator said that the definition is vague when it is applied to assets other than rail infrastructure. Another transit operator commented that this term overlaps with ‘‘facility.’’ FTA’S RESPONSE: Definition of ‘‘Infrastructure’’ FTA proposed a broad definition of infrastructure, which encompassed all infrastructure classes for all modes of public transportation. Given this broad definition, FTA does not believe that more narrowly itemized categories are necessary. FINAL RULE: FINAL RULE: FTA is including the definition in the final rule without change. FTA is including the definition in the final rule without substantive change. PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48906 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations COMMENTS: Definition of ‘‘Investment Prioritization’’ A transit operator recommended that paragraph (2) of the definition should reference safety risk considerations. Expressing confusion that under this definition, investment prioritization must be fiscally constrained, a transit operator asked what needs to be reported if activities are not undertaken due to such constraints. Another transit operator suggested adding language to acknowledge other factors outside the prioritization criteria, such as intangibles, outside influences, and other defendable mitigating circumstances. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: Definition of ‘‘Investment Prioritization’’ The NPRM proposed that a transit provider consider safety needs in the process of developing its investment prioritization. Resilience to climate change and service reliability are two other risks that transit providers may consider in the process of prioritizing investments. FTA did not propose a mandatory requirement for specific risk based analyses. However, FTA encourages and supports the application of a risk based asset management approach to the development of a transit provider’s investment priorities. Funding for any transit purpose is defined by Congress. FTA may not, through rule, establish additional sources of funding for any purpose that is not already eligible for such funding. A TAM plan should provide a transit provider with quantitative information that may be provided to a transit board and local funding bodies to support a strategic justification for the allocation of additional funds. FINAL RULE: FTA is including the definition in the final rule without substantive change. Section 625.33 included requirements for investment prioritization. Investment prioritization is both the analytical process used to prioritize investments and the resulting list of capital programs and projects. Investment prioritization is temporally and fiscally constrained, and should be based on reasonably anticipated funding levels from all revenue sources. The resultant list can be ranked by category or order. COMMENTS: Definition of ‘‘Key Asset Management Activities’’ A transit operator commented that for a large grantee the size and complexity of this list will reflect the scale of the organization, and the interconnectedness of the grantee’s VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 management structure may make the presentation of such a list seem like an ‘‘unwieldy organization chart.’’ FTA’S RESPONSE: Definition of ‘‘Key Asset Management Activities’’ FTA agrees with the commenter that the scale and complexity of key asset management activities will reflect the scale and complexity of the transit provider’s system. FINAL RULE: FTA is including the definition in the final rule without substantive change. Key asset management activities are the actions that a transit provider determines are necessary for implementing TAM practices within the organization and are critical to achieving the provider’s transit asset management goals. These activities are not limited to outputs of transit asset management, but may include activities that support asset management, such as the purchase of decision-support software or a training program for key personnel. COMMENTS: Public Transportation System A State DOT asked if Section 5310 fund recipients are considered general public transportation. FTA’S RESPONSE: Public Transportation System Public transportation does not include service that is closed to the general public and only available for particular clientele. For example a subrecipient under the section 5310 program that operates service which is open to a segment of the general public, (e.g., all elderly persons or persons with disabilities) would be required to comply with this rule. However, a subrecipient nonprofit or community organization under the section 5310 program that operates closed-door service, (e.g., for members of senior center or work program only) would not be providers of public transportation and therefore are not required to comply with this rule. FINAL RULE: FTA is including the definition in the final rule without change. COMMENTS: Definition of ‘‘Rolling Stock’’ An individual commenter asked which vehicles fall under the Asset Category/Asset Class of Equipment/ Service Vehicles and which vehicles fall under the Asset Category/Asset Class of Rolling Stock/Cars and Vans. PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 FTA’S RESPONSE: Rolling Stock Rolling stock includes vehicles used primarily to transport passengers. Service vehicles, which fall under the equipment category, are used primarily to support maintenance and repair work for a public transportation system, supervisory work, or for the delivery of materials, equipment, or tools. FINAL RULE: FTA is including the definition in the final rule without change and is adding a definition for the term ‘‘service vehicle.’’ COMMENTS: Safety Management Systems A transit operator recommended that FTA consider how it will implement this part of the rule if there will be additional rules for the National Public Transportation Safety Program, suggesting that FTA may want to implement all of its safety related rules at the same time. FTA’S RESPONSE: Safety Management Systems In the NPRM, FTA proposed that the Accountable Executive be responsible for the development and implementation of a TAM plan. The requirements of this rule related to the role and responsibilities of an Accountable Executive related to transit asset management may be implemented in the absence of rules to implement the several components of the National Public Transportation Safety Program. FINAL RULE: FTA is including the definition in the final rule without change. COMMENTS: Definition of ‘‘State of Good Repair’’ Asserting that the proposed rule followed the spirit of MAP–21, one commenter said that MAP–21 directed FTA to establish a nationwide definition for SGR and to use this definition to establish the National TAM System, the goal of which is to enable transit agencies to better use capital funding, and for decision-makers to more efficiently and effectively distribute grants. A transit operator supported FTA’s definition of SGR as the condition in which a capital asset is able to operate at a full level of performance. Another commenter approved of the proposed SGR definition, as it is aspirational with some flexibility. A State DOT said the SGR definition is too limiting and creates a situation where SGR may only be achieved for a very limited time, or not at all, for most E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES assets, especially vehicles, due to the use of the phrase ‘‘full level of performance.’’ Another State DOT said an older asset may not be ‘‘able to operate at a full level of performance,’’ but still be in a state of good repair. A local transit operator asked how FTA envisions tying the asset performance measures to the SGR definition, particularly to safety risk, as well as how FTA would account for asset rehabilitations and life extensions. A State agency said the definition should require that the asset be shown to operate in a safe and reliable manner in order to be considered in a SGR. An individual commenter said the definition may need to be subjective in some way to enable the individual responsible for measuring SGR to improve the safety of the asset. A transit operator proposed a definition that includes ‘‘an asset that performs as designed safely and cost effectively,’’ reasoning that the proposed definition did not address the idea of risk or cost to maintain full level of performance. Two commenters recommended that FTA revise the definition to mean ‘‘the condition in which a capital asset is able to operate safely at a full level of performance,’’ and define ‘‘operate safely’’ as asset functioning within the manufacturer’s recommended specified work limits. A transit operator said that the proposed definition is not consistent with the SGR principles (§ 625.19) and SGR performance metrics (§ 625.41). This commenter recommended that the definition be modified to ‘‘a state of good repair means the condition in which a capital asset is able to operate at the required level of performance and is fit for its intended purpose.’’ FTA’S RESPONSE: Definition of ‘‘State of Good Repair’’ FTA appreciates commenters’ agreement that the definition of SGR achieves the intent of the MAP–21 mandate, while providing flexibility and objective standards for measuring state of good repair. FTA intended for the proposed definition to describe an asset at its best ideal performance condition. FTA disagrees that the SGR definition is not consistent with the SGR principles and standards for measuring condition of capital assets. As proposed, if an asset meets each of the objective standards, it is operating at a full level of performance and is therefore in a state of good repair. FTA agrees that the cross-section of cost and performance are the basis of asset management principles. State of good repair is a threshold that identifies the desired performance condition. Please note the VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 48907 ‘‘full level of performance’’ definition response above provides a more expanded description of this term. The SGR principles § 625.17 outline the relationship of TAM to SGR. FTA recognizes the critical relationship of safety and asset condition. The SGR definition is in part expressed by identifying the presence of an unacceptable safety risk. The National TAM system does not direct transit providers to prove the safe and reliable operation of their assets. FTA will define safety hazard identification and safety risk assessment requirements in a proposed NPRM for public transportation agency safety plans. of vehicles and potentially revise the vehicle threshold. An MPO requested clarity on how the TAM tier thresholds relate to differing service levels. For example, this commenter stated that many vanpool programs have vehicles operating in a single peak hour trip, rather than operating continuously throughout the peak hours. The commenter requested flexibility in how the threshold is defined, particularly for agencies that have limited service operations. A local government asked which tier it would fall under, as it operates less than 100 vehicles but also operates a Vehicular Inclined Plane. FINAL RULE: FTA’S RESPONSE: Definitions of ‘‘Tier I Provider’’ and ‘‘Tier II Provider’’ FTA proposed to establish separate requirements for smaller (tier II) and larger (tier I) transit providers. FTA agrees that the tier definition should parallel the calculation used to determine if a small operator in a large urbanized area is eligible for operating assistance under the 49 U.S.C. 5307 Urbanized Area formula program. FTA does not agree that the tier delineations should solely be based on population, area served or funding program. FTA notes that some of the smallest transit providers in the country, with just a handful of vehicles in operation, are sometimes actually located in some of the largest urbanized areas with more than one million persons in population. Likewise, there are some very large operators that receive some funding under the 49 U.S.C. 5311 Rural Area Formula Grant Program and under the 49 U.S.C. 5310 Grant Program for special services to the elderly and disabled. FTA clarifies that a tier I provider has 101 or more fixed-route vehicles in peak revenue service, or has 101 or more nonfixed route vehicles in peak revenue service. To calculate, the fixed-route vehicles and non-fixed route vehicles should be considered separately. For example, an urbanized area transit provider with no rail service, 80 fixedroute vehicles, and 35 non-fixed-route vehicles (for a total of 115 vehicles) would be considered a tier II provider. This clarification makes the calculation consistent with how the calculation for operating assistance eligibility in large urbanized areas is calculated. Therefore, FTA believes this rule limits the administrative load on smaller transit agencies and has clarified that tier definitions are based on the type of services a provider offers either, fixed route (e.g. busses) or nonfixed route (e.g. paratransit cutaways) peak revenue vehicles. FTA is including the definition in the final rule without change. COMMENTS: Definitions of ‘‘Tier I Provider’’ and ‘‘Tier II Provider’’ A transit operator requested that the distinction between tier I and tier II operators be revised for consistency with the Federal formula grant definition of small-to-medium transit agencies. Specifically, this commenter suggested that tier II should be defined as operators that provide service to geographic areas with populations under 200,000 people. A State DOT recommended the tiers be based on FTA program type (49 U.S.C. 5307, 5310, 5311, etc.) rather than on the number of vehicles a transit provider operates. To limit the administrative load on smaller transit agencies, transit providers, an industry association, and a business association suggested that the tier I and tier II definitions or the definition of vehicle in revenue service during peak operations should be specifically limited to buses, excluding paratransit cutaways, vans, and nondedicated assets (e.g., taxis, vanpools). A transit provider said that the ‘‘100 or fewer vehicles during peak operations’’ criteria for a tier II provider should not include non-dedicated equipment (i.e., contractor-owned and used for other non-contract purposes) and vanpool vehicles. A business association recommended that FTA revise the definition of ‘‘Tier II provider’’ to include any 49 U.S.C. 5310 subrecipients. A transit operator said many small agencies have more than 100 revenue vehicles in peak service if vanpools, mobility programs, and other services are counted, but they may not have more than 50 motorbus revenue vehicles in peak revenue service. The commenter recommended expanding/revising the definition of tier I and tier II agencies to include the types PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48908 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations FINAL RULE: FTA has revised the definitions transit provider, tier I provider, and tier II provider in the final rule. COMMENTS: Definition of ‘‘Transit Asset Management’’ A transit operator said this definition should also include ‘‘disposing’’ in the list of specified lifecycle stages. Two commenters suggested that FTA revise this definition to read in part ‘‘. . . costs over their life cycle in order to provide safe, cost-effective, ADA-compliant, and reliable service.’’ FTA’S RESPONSE: Definition of ‘‘Transit Asset Management’’ FTA proposed a comprehensive definition of the term ‘‘transit asset management,’’ which can be applied to a number of activities, including ensuring that an asset is ADAcompliant. FTA does not believe that adding the language proposed in the comments is necessary. FINAL RULE: FTA is including the definition in the final rule without change. COMMENT: Definition of ‘‘Transit Asset Management Policy’’ One commenter suggested modifying the proposed language defining TAM policy to avoid implying that every agency that falls under this rule is out of SGR. FTA’S RESPONSE: Definition of ‘‘Transit Asset Management Policy’’ FTA did not intend for the proposed definition to imply that every agency that falls under the rule is not in a state of good repair. In fact, FTA purposely proposed an asset-based definition, as opposed to a system-based definition, in order to make achieving and maintaining a state of good repair an achievable goal. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA has revised the definition in the final rule to clarify that a TAM policy and the final rule applies to a provider whose entire inventory of capital assets is in a state of good repair. COMMENTS: Definition of ‘‘Transit Asset Management System’’ Two MPOs recommended removing ‘‘operating, maintaining, and improving’’ from the definition and replacing it with ‘‘managing the use of.’’ A transit operator recommended that FTA revise this definition to replace the word ‘‘system’’ with ‘‘program,’’ reasoning that ‘‘system’’ implies that a software package is necessary for asset VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 management, which the commenter asserted is counter to other recommendations made by FTA. Another commenter expressed support for the proposed definition. FTA’S RESPONSE: Definition of ‘‘Transit Asset Management System’’ The proposed definition of the term transit asset management system was derived from the statute, 49 U.S.C. 5326(a)(3). FTA believes that the statutory definition is sufficient. FINAL RULE: FTA is including the definition in the final rule without change. COMMENTS: Definition of ‘‘Transit Provider’’ Several State DOTs and other commenters suggested that FTA clarify the definition of ‘‘transit provider’’ by adding, ‘‘A State is not considered to be a transit provider by virtue of passing on funds to subrecipients, administering the programs under 49 U.S.C 5310 and 5311, developing and implementing a TAM plan, or taking any other steps required of a State by this or other FTA rules.’’ Two commenters recommended that FTA revise the definition to specify ‘‘capital assets used in the ‘‘provision of all modes of public transportation.’’ A State DOT expressed concern that because the definition of ‘‘transit provider’’ includes operators providing services under the 49 U.S.C. 5310 and 5311 programs, there would be double reporting by the transit providers and the State sponsors of the group TAM plans in which the transit providers are included. FTA’S RESPONSE: Definition of ‘‘Transit Provider’’ In the NPRM, FTA proposed a definition of the term ‘‘transit provider’’ meaning ‘‘a recipient or subrecipient who owns, operates, or manages capital assets used in the provision of public transportation.’’ A transit provider must provide transit service, either directly or through a third-party, not merely pass funds through to a transit provider or develop a group TAM plan. FTA proposed that a sponsor satisfy the reporting requirements on behalf of its group plan participants. Alternatively, any transit provider that develops its own individual plan, including eligible tier II providers that choose to opt-out of a group TAM plan, must report directly to the NTD. FINAL RULE: FTA is including the definition in the final rule without change. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 COMMENTS: Definition of ‘‘Useful Life Benchmark’’ Several State DOTs recommend removing the word ‘‘acceptable’’ from the definition, reasoning that it could lead to arguments that operation past that period is ‘‘not acceptable.’’ If this term cannot be removed, these commenters suggested that at a minimum the final rule should include a statement that the use of the term ‘‘acceptable’’ in the definitions of ‘‘useful life’’ and ‘‘useful life benchmark’’ ‘‘are solely for general asset management planning purposes.’’ A transit operator supported the establishment of a ULB as the proxy for the condition of revenue vehicles but recommended that FTA’s guidance reflect that age is only one aspect that affects SGR. According to this commenter, other factors include usage (including passenger loads, service hours/miles) and operating conditions (including topography and stop frequency). Similarly, another transit operator expressed concern that the ULB assessment threshold based on an asset’s age is problematic in that a set of rolling stock may be beyond its ULB yet remain roadworthy and safe as a result of the agency’s maintenance practices. The commenter said this could discourage agencies from utilizing strong maintenance practices, as even a well-maintained bus or rail vehicle would fail the test of age-based asset condition reporting. One transit provider suggested that FTA revise the definition of ULB to include both safety and cost effectiveness. Another transit operator urged FTA to allow for recognition of obsolescence in defining ULB by ensuring flexibility that would allow individual transit systems to adjust ULBs based on changing conditions or changes in technology lifecycles. Further, this commenter recommended that FTA should allow an exception for the ULB to be less than the minimum life in FTA’s formula programs to account for impacts due to obsolescence if justified with proper documentation. Similarly, a transit operator commented that a ULB could be less than the minimum useful life used in FTA’s formula programs and may also be different from agency depreciation schedules, which are set when the assets are placed on the agency’s books. A transit operator stated that while ULB works well for most of the capital assets, it is challenging to define it based on traditional replacement standards for some assets, such as historic streetcars. This commenter recommended that FTA add language to E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations the ULB definition that includes ‘‘or when they are considered renewed to a good condition.’’ A local government recommended that FTA create a ULB table specific to regions from which transit providers can base their performance and set targets to reduce the potential wide swings from one similar provider to the next. Two commenters suggested that FTA consider referencing compliance with ADA requirements as set forth in 49 CFR parts 37, 38, and 39. FTA’S RESPONSE: Definition of ‘‘Useful Life Benchmark’’ asabaliauskas on DSK3SPTVN1PROD with RULES A ULB takes into consideration both the age of an asset and its operating environment. Consideration of the asset’s operating environment allows transit providers to develop performance targets that reflect their specific operating environments. Transit providers operate their assets in diverse environments, where the geography, frequency of service, passenger loads, etc. will vary. Therefore, a general national standard may not adequately address asset condition. For example, a transit provider that operates for only 4 hours per day would have different vehicle conditions than a transit provider that offers 24-hour service, even if the vehicles for both providers are the same age. As a result, the estimate of a vehicle’s useful life also may be different. The ULB framework enables a transit provider to report its performance and set targets for its performance on a scale that is tailored to it. The term ‘‘acceptable’’ in the proposed definition of ULB was intended to allow a transit provider the ability to define their own period of use based upon their operating environment. A transit provider should establish a ULB by taking into consideration the operating environment of its assets, historical evidence, manufacturer guidelines, and any other relevant factors. Transit providers may elect to use the default ULB for assets, which is derived from FTA’s TERM.10 If an asset exceeds its ULB, then it is an indicator that it may not be in a state of good repair. FTA agrees that age alone is not the only aspect that affects SGR and will 10 The TERM model consists of a database of transit assets and deterioration schedules that express asset conditions principally as a function of an asset’s age. Vehicle condition is based on an estimate of vehicle maintenance history and major rehabilitation expenditures in addition to vehicle age; the conditions of wayside control systems and track are based on an estimate of use (revenue miles per mile of track) in addition to age. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 provide guidance to assist transit providers in developing their own ULBs to reflect their operating conditions, which may include the considerations provided by commenters, historical evidence, and manufacturer guidelines. FTA agrees with the commenter that suggests an asset may be roadworthy and safe as a result of its agency’s maintenance practices. A transit provider may develop its own ULB which reflects its maintenance practices. FTA will provide default ULBs, and encourages providers to develop their own customized ULBs. Once a provider establishes its ULB, it is entirely possible that over time and changes in their policies and practices, the transit provider may need to establish a revised ULB and submit it to FTA for approval. FTA did not propose to change the useful life requirements for vehicle replacement under FTA’s grant programs. A ULB is distinct from the term ‘‘useful life’’ or ‘‘minimum useful life’’ that applies to FTA grant programs. Under FTA grant programs, ‘‘useful life’’ refers to the Federal financial interest in a capital asset, which is based on the length of time in service or accumulated miles. Generally, assets are not eligible for replacement with FTA funds until they have met or exceeded their minimum useful lives. A ULB, however, takes into consideration operational factors, discussed above, that may impact the condition of a capital asset. Thus, a ULB that is less than the useful life for grant programs may impact a transit provider’s ability to maintain their SGR targets. The proposed rule would have required a transit provider to consider ADA requirements in the development of its investment prioritization. FTA has determined that referencing ADA compliance in the definition of ULB is not feasible. FINAL RULE: FTA is including the definition in the final rule without change. COMMENTS: Definitions—Other Comments Two transit agencies and an anonymous commenter requested a definition for ‘‘non-revenue vehicles’’. Another transit operator suggested that FTA consider adding a definition for ‘‘asset condition’’ to mean ‘‘reflects the physical state of the asset, which may or may not affect its performance.’’ A transit operator suggested that the list of definitions should be numbered subparagraphs. PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 48909 FTA’S RESPONSE: Definitions—Other Comments FTA did not propose definitions for ‘‘non-revenue vehicles’’ or ‘‘asset condition’’ because both terms are commonly understood within the transit industry. The structure of the definitions section is consistent with the structure of the definitions sections in previous FTA regulations. FINAL RULE: FTA did not make any changes to the final rule based on these comments. However, FTA has added a definition of ‘‘service vehicle’’ in the final rule. In addition FTA has modified the definition of ‘‘Performance Measure’’ and ‘‘Performance Target’’ to match the definitions in the coordinated FHWA and FTA Metropolitan and Statewide and Non-Metropolitan Transportation Planning final rule. 625.15 Elements of the National Transit Asset Management System This section proposed the elements of the National TAM System as set forth at 49 U.S.C. 5326(b). FTA will establish performance measures, transit providers will set targets, and transit providers will report their targets to FTA’s NTD. The performance management and reporting components of the National TAM System are important for assessing both the benefits of transit asset management on a National level and the transit industry’s current SGR needs. COMMENTS: 625.15 Elements of the National Transit Asset Management System A couple of commenters agreed with the elements of the National TAM System as specified in proposed § 625.15. A State DOT appreciated the flexibility given to transit providers to develop SGR performance measures and performance targets. Regarding paragraph (d), a transit operator said FTA should allow industry best practices (for example ISO) to be the basis of analytical processes and decision tools. The commenter suggested that the paragraph could indicate FTA ‘‘or equivalent’’ best practices. FTA’S RESPONSE: 625.15 Elements of the National Transit Asset Management System FTA appreciates the comments on the elements of a proposed National TAM System. FTA currently is developing guidance and other resources that will aid the industry in its implementation of the requirements of this final rule. FTA is aware that other organizations E:\FR\FM\26JYR2.SGM 26JYR2 48910 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations have developed resources for asset management and encourages transit providers to research those options and use them, as appropriate, to aid in the implementation of the requirements of this final rule. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA is including this section in the final rule without substantive change. 625.17 State of Good Repair Principles FTA proposed SGR principles intended both to highlight the relationship of SGR to other transit priorities and to guide a transit provider’s practice of transit asset management. SGR is related to, but not synonymous with, TAM and is a condition that can be achieved through good TAM practices. TAM practices inform the capital investment planning and programming processes by producing data that informs investment prioritization. TAM allows a transit provider to realistically predict the impact of its policies and investment decisions on the condition of its assets throughout an asset’s life cycle. TAM enhances a transit provider’s ability to maintain a state of good repair and proactively invest in its assets before the asset condition deteriorates to an unacceptable level. A key connection of SGR to TAM is performance management. Asset management is a business model that uses the condition of assets to determine the finances needed in order to achieve predetermined outcomes. In the case of TAM, and this rulemaking, the goal is to achieve and maintain a state of good repair. A key focus of asset management is cost-risk balancing to achieve performance goals through a transparent, organization-wide process of decision-making. TAM provides a framework for how to maintain a state of good repair by considering the condition of assets in the transit provider’s inventory and the transit provider’s local operating environment, along with the policies that a transit provider establishes for prevention, preservation, rehabilitation, disposal, and replacement. TAM allows a transit provider to realistically predict the impact of their TAM and maintenance policies on the condition of their assets and how much it would cost to improve asset condition at various stages of an asset’s life cycle, while balancing prioritization of capital, operating and expansion needs. COMMENTS: 625.17 State of Good Repair Principles Several commenters expressed concern about the use of the term ‘‘full VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 level of performance’’ in § 625.17(a) and (b) (and elsewhere in the rule). Some commenters said FTA should instead use the term ‘‘required level of performance’’ and others suggested ‘‘fit for intended purpose.’’ Another commenter suggested that the second sentence of § 625.17(a) be removed because the ‘‘state’’ of an object is the condition at any point in time without respect to any previous or future conditions. A transit operator said § 625.17(a)’s emphasis on life-cycle maintenance as a determining factor in assessing a capital asset’s SGR would amount to establishing a misleading ‘‘bright line measurement tool’’ based on an asset’s maintenance schedule. A State agency said, due to increased financial constraints, providers may be managing the decline of assets. The commenter said the rule should include specific language stating that without additional financial resources, establishing an asset management plan may not in itself enable a provider or a group to reach a SGR. Several commenters provided input on § 625.17(c), expressing concern about how this paragraph affects the role of the accountable executive. A professional association and several State DOTs said the provision for a transit provider’s accountable executive to ‘‘balance transit asset management, safety, operation, and expansion needs’’ should use the word ‘‘consider’’ rather than ‘‘balance,’’ to help ensure, for example, that an executive does not have to put some funding into expansion in order to ‘‘balance’’ that factor. A State agency said safety should be given a higher level of consideration than other agency needs (e.g., expansion of service). Some of these commenters said this paragraph underscores the importance of a State not being construed as a ‘‘transit provider’’ if it is not an operator (directly or through operating contracts) of public transit service. A few commenters noted that the SGR principles (§ 625.17), SGR standards (§ 625.41) and SGR performance measures (§ 625.43) do not appear to be consistent. In each case, according to these commenters, SGR is defined or measured differently. A couple of these commenters said this is not a concern, as long as affected agencies and the departments understand the differences, and suggested that inserting compliance with ADA requirements as set forth in 49 CFR parts 37, 38, and 39 may also strengthen this definition. Regarding the proposal that each transit provider determine whether they have achieved a state of good repair regarding their assets, a State transit PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 association said this is too subjective and base perimeters need to be set, as well as having third party determinations. Similarly, a transit operator stated that, if an asset’s SGR is determined by the agency without a clear definition and validation by FTA, there will be very little value in the determination. A couple of commenters said the SGR status of an asset should not be affected by the condition of the other assets in the same category. FTA’S RESPONSE: 625.17 State of Good Repair Principles FTA has addressed the ‘‘full level of performance’’ comments previously, in the definition section. FTA disagrees that the term ‘‘state’’ should be removed from the ‘‘state of good repair’’ in § 625.17(a). This section describes the principles of SGR and removing state would be misleading. However, FTA does agree with the commenter that the state of an asset is a condition at a point in time. The intent of this section is to describe the principles supporting SGR and their relationship to TAM. FTA disagrees that elevating the importance of lifecycle investments would establish a misleading emphasis on an asset’s maintenance schedule, although effective and proactive lifecycle investment and maintenance practices are fundamental to SGR. The proposed SGR definition contained three objective standards and maintenance schedules relate directly to just one; the lifecycle maintenance needs being met or recovered. While FTA recognizes that the maintenance of an asset is not the only relevant factor in determining SGR, it is critical to achieving and maintaining a state of good repair. FTA disagrees that a third-party determination is necessary to measure a transit provider’s’ SGR. FTA believes the objective standards are the base parameters for a transit provider to measure its SGR. FTA did not propose that it would validate a transit provider’s SGR determination. FTA agrees that financial constraints may leave a transit provider in the position of managing the deterioration of assets that it can no longer afford to maintain and replace on a timetable that sustains the assets’ full level of performance. The proposed SGR principles do not preclude the management of declining asset condition. In some instances, FTA expects that maintaining an asset’s condition may not be a transit provider’s highest priority, and therefore the asset’s condition may E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations decline based on strategic and informed decisions. FTA agrees that a sponsor is not an accountable executive merely because it develops a group TAM plan. Each transit provider has its own accountable executive. FTA does not agree that it should change ‘‘balance’’ to ‘‘consider’’ because the change would make no substantive difference. In order to balance transit asset management, safety, operation and expansion needs, an operator must consider a number of things, including financial and human capital resources. FTA disagrees that the proposed SGR principles (§ 625.17), standards (§ 625.41) and performance measures (§ 625.43) are inconsistent. These three sections described the fundamental principles of SGR and its relationship to TAM (§ 625.17); the definition and objective measures for a transit provider to measure their assets’ SGR (§ 625.41); and the description of performance measures for which FTA will collect targets (§ 625.43). As discussed above, the SGR performance measures are a proxy for the SGR, nationally. The proposed SGR definitions were intended to standardize the term and its objective measures. The SGR principles are provided to describe the foundation of the SGR definition and its relationship to TAM. The performance measures are provided to describe a transit providers’ obligation to establish and report targets. FINAL RULE: FTA is including this section in the rule without substantive change. FTA is including an example in Appendix B to the final rule to illustrate the relationship amongst the measures, definition and principles. asabaliauskas on DSK3SPTVN1PROD with RULES Section 625.25 Transit Asset Management Plan Requirements Pursuant to 49 U.S.C. 5326(b)(2), the NPRM proposed all recipients and subrecipients of Chapter 53 funds must develop a TAM plan. FTA interpreted this requirement to apply only to those recipients and subrecipients that actually operate public transportation systems and own, operate, or manage capital assets for that system. Therefore, the TAM plan requirements do not apply to an MPO that merely receives funds from FTA and passes the funds along to transit operators. However, a pass through MPO would be required to sponsor a group TAM plan for its eligible tier II subrecipients. Accordingly, § 625.25(a) required each transit provider that owns, operates, or manages public transportation capital VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 assets to develop and carry out a TAM plan. The NPRM proposed that tier II providers have the option to participate in a group TAM plan. The group TAM plan concept is intended to reduce the burden on smaller operators associated with developing individual TAM plans. Under a group TAM plan, a sponsor (typically a State, or direct recipient) develops a single group TAM plan on behalf of one or more tier II providers. Each tier I provider, including group TAM plan sponsors, that operates or manages capital assets must develop its own individual TAM plan for its own system. Under all circumstances, it is the responsibility of the relevant State or MPO to integrate the TAM plans (group or individual) into the statewide and metropolitan transportation planning process. It is the responsibility of each transit provider’s Accountable Executive to ensure that the TAM plan is carried out at his or her organization. For those transit providers that develop an individual TAM plan, the Accountable Executive is responsible for making informed investment decisions and ensuring that meaningful SGR targets are set. The Accountable Executive for a group TAM plan participant is responsible for coordinating development of the group TAM plan with the sponsor, and for implementing the TAM plan at their transit agency. This coordination may involve providing accurate asset inventory data, maintenance and repair records, or other relevant data to the sponsor. It may also involve participating in development of targets for the group and negotiations about investment priorities. Section 625.25(b) listed elements of a TAM plan, including: 1. An asset inventory, which is a list of the transit provider’s capital assets; 2. A condition assessment, which is a rating (e.g., good/fair/poor or percentage of residual life) of the condition of assets in the inventory. The NPRM did not speak to the condition rating scale or process a transit provider should use; 3. A list of the decision support tool or tools that were used to create the TAM plan. A decision support tool is a methodology to help transit providers make decisions, such as prioritizing projects based on condition data and objective criteria. A decision support tool can be software, but is not exclusively software. A decision support tool may be a process; 4. An investment prioritization. The investment prioritization is a list of the proposed projects and programs that a transit provider estimates would achieve its SGR goals, and a ranking of PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 48911 the projects and programs based on priority; 5. An identification of the transit provider’s policies and strategies for developing an effective TAM plan, including a transit provider’s executivelevel directions to set or support the goals for its TAM plan; 6. A strategy for implementation of the TAM plan, which is the process a transit provider identifies to follow in order to achieve its TAM plan. This strategy differs from the strategies identified in element (5) in that this is an operation-level decision; 7. A list of the key activities or actions that are critically important to achieving the transit provider’s asset management goals for the year (—e.g., managementsupported activities such as purchasing software or training); 8. An identification of the financial resources that a transit provider estimates are necessary for implementing its TAM plan and achieving its asset management goals. This might include internal staff time, technology requirements, etc.; and 9. A continuous improvement plan that sets timelines and milestones that can be revisited to track the transit provider’s progress towards meeting its asset management goals. The first four elements relate to identifying performance goals, while elements 5 through 9 relate to the implementation of TAM concepts. To reduce the burden on smaller transit providers, a TAM plan for a tier II provider or other eligible group TAM plan participant is required to include only elements 1 through 4. The majority of the SGR backlog exists in capital assets at larger transit systems, particularly those with rail fixedguideway public transportation systems. As a result, FTA believes that these larger, complex operations require a more holistic and strategic process, addressed through elements 5 through 9, for consideration of asset conditions throughout the asset’s life cycle, as well as institutionalization of TAM principles. Although not required, FTA nevertheless still recommends that tier II providers incorporate elements 5 through 9 as best practices. Section 625.25(b)(1) required that each TAM plan include an inventory of the transit provider’s capital assets. The asset inventory is expected to cover the capital assets that a transit provider owns, operates or manages, including leased assets and those assets operated under contract by an external entity. This asset inventory may be a combination of other inventories a transit provider may have on hand. For example, the grant management E:\FR\FM\26JYR2.SGM 26JYR2 48912 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations guidance circular 5010 requires grantees to collect, maintain, and report records for rolling stock and equipment. This existing inventory could be used to initiate or refresh the capital asset inventory to satisfy the requirements of the proposed rule. Section 625.25(b)(2) required that each TAM plan include a condition assessment of capital assets that generates information in a level of detail sufficient to monitor and predict the performance of each capital asset identified in the asset inventory. Condition assessments are required for only those capital assets in the asset inventory for which a transit provider has direct financial responsibility. This section does not prescribe how a condition assessment must be conducted, rather the required result of the assessment. It is up to the transit provider or group TAM plan sponsor to decide whether to conduct condition assessments at the individual or asset class level. asabaliauskas on DSK3SPTVN1PROD with RULES COMMENTS: TAM Plan—Role of Accountable Executive in Development of TAM Plan Several commenters addressed the proposed role of the Accountable Executive in the development of TAM plans at § 625.25(a)(3). A State transit association asserted that the TAM requirements of Accountable Executive, decision support tools, etc. will result in more transit providers under the 49 U.S.C. 5310 program disengaging from coordination efforts and ‘‘siloing,’’ as was seen with the Community Development Transportation Coordination Plan requirements. A transit provider agreed that a responsible executive should approve the plan, but requested flexibility with regards to where the responsible executive sits within their organization. FTA’S RESPONSE: TAM Plan—Role of Accountable Executive in Development of TAM Plan FTA estimates that approximately 80 percent of 49 U.S.C. 5310 providers will be exempt from this rule because as providers of closed-door service to a specific group or specific program, they are not considered providers of public transportation. Almost all other 49 U.S.C. 5310 providers fall into the tier II category, eligible to participate in a group TAM plan with reduced requirements. The group TAM plan option is intended to reduce the administrative burden on smaller providers associated with developing a TAM plan. An Accountable Executive should be a transit provider’s most-senior VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 executive; often times this person is the CEO or GM. FTA understands that at many smaller transit providers, roles and responsibilities are more fluid. However, FTA does believe that, even in circumstances where responsibilities are either shared or delegated, there must be one primary decision-maker. FINAL RULE: FTA is revising 625.25 (a)(3) to clarify the role and responsibilities of complying with this final rule for group plan sponsors and participants is a local level decision. COMMENTS: TAM Plan—Coordination With State and Metropolitan Planning Organizations (MPOs) Some public comments addressed the proposed requirement that a TAM plan must be coordinated to the extent practicable with States and MPOs at § 625.25(a)(4). A transit operator said that the role of the MPO should be to aggregate the transit operators targets, prioritization, performance and condition information, etc. to form the MPO’s targets and priorities. This commenter stated that it should be a bottom up approach from the transit operators rather than top down imposition of goals from the MPO. A transit operator asked if the State and MPO would now be required to include local transit operators’ asset planning in their TAM plan and, if so, whether the transit operator is required to follow the State/MPO recommendations. Another transit operator recommended that FTA revise § 625.25(a)(4) to state that the ‘‘TAM will be used to inform the grantee’s portion of the MPO TIP, to the extent practicable.’’ An industry association predicted that it is unlikely that States and MPOs could incorporate TAMs in their STIPs and TIPs within the proposed timeline. A transit provider requested clarification about the role of MPOs in setting investment priorities. A State DOT asked if the State can reject a provider’s priorities if they do not meet the state’s investment priorities. A State DOT and an industry association asked that FTA provide an example of when the MPO would have the responsibility for integrating group TAM plans and when it is a State responsibility. One of these commenters stated that it believes it is ultimately the State’s responsibility. An MPO recommended strengthening the requirements for TAM plan developers to coordinate with the MPO. The specific regulatory language recommended by this commenter is ‘‘A TAM plan developed under this part should/shall be developed cooperatively PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 coordinated, to the extent practicable, with States and Metropolitan Planning Organizations.’’ A transit operator suggested that continuous coordination with States and/or MPOs on TAM plans, asset data, finances, and strategies should be restricted to documents and processes where the State and MPO can directly contribute and play a role. FTA’S RESPONSE: TAM Plan— Coordination With State and MPOs MAP–21 fundamentally shifted the focus of Federal investment in transit to emphasize the need to maintain, rehabilitate, and replace existing transit investments. The ability of FTA grant recipients, along with States and MPOs, to both set meaningful transit SGR performance targets and to achieve those targets is critically dependent upon the ability of all parties to work together to prioritize the funding of SGR projects from existing funding sources. How a transit provider sets its performance targets is an entirely local process and decision. However, FTA strongly encourages transit providers, States, and MPOs to set meaningful progressive SGR targets based on creative and strategic leveraging of all available financial resources. This rule does not prescribe requirements for how States and MPOs should integrate TAM plans or targets into the planning process. The rule requires transit providers and sponsors to coordinate with States and MPO’s to the extent practicable in the selection of State and MPO SGR performance targets. However, the NPRM suggested that transit providers and sponsors coordinate individual and group TAM plans, respectively, with the relevant State or MPO to aid in the planning process. FTA clarifies that coordination of TAM plan development with States and MPOs is optional by removing regulatory language for transit providers to coordinate to the extent practicable. Early coordination with planning partners is encouraged but not required under this rule. The joint FHWA/FTA final planning rule prescribes requirements for incorporating components of the National TAM System into the planning processes. FTA and FHWA will develop and issue guidance to aid the transit industry in its implementation of the performance-based planning requirements. FINAL RULE: FTA has removed § 625.25 (a)(4) from the final rule in response to these comments. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations FINAL RULE: COMMENTS: TAM Plan— Responsibilities for Development of TAM Plans Some public comments addressed other issues relating to responsibilities for the development of TAM plans. An anonymous commenter asked whether the following entities must develop their own TAM plan or whether they could be a member of a group TAM plan: (1) a tribal agency that receives both funding from FTA as a direct recipient and funding from the State DOT as a subrecipient under the 49 U.S.C. 5310 or 5311 programs, and (2) an inter-city agency that receives 49 U.S.C. 5310 funds and serves several States. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: TAM Plan— Responsibilities for Development of TAM Plans All tier II providers are eligible to participate in a group TAM plan. Although Group Plan sponsors are not required to include those tier II providers that are also recipients of 49 U.S.C. 5307 funds, a sponsor may allow those tier II providers to participate in a group plan. A transit provider with only 30 vehicles operated in regular, peak, fixed route service that receives both Section 5307 urbanized area formula funds and Section 5311 rural area formula funds from multiple states, remains a tier II provider. A Tribe that receives funds directly through the Tribal Transit Program remains a tier II provider, regardless of other funding received. FTA notes that intercity bus providers are not providers of public transportation, and are therefore exempt from the rule. FTA recognizes the commenter’s confusion in determining the appropriate tier in certain instances and has clarified the definitions of tier I and tier II and is providing the following examples: (1) A transit provider that is a subrecipient of 49 U.S.C. 5311 funds only, but has 150 vehicles and no rail service, is a tier II provider and eligible to participate in a group TAM plan sponsored by a State. (2) a transit provider that is a subrecipient of funds under 49 U.S.C. 5310, 5311, or 5339 with a fleet of 30 vehicles and no rail service, is a tier II provider and eligible to participate in a group TAM plan sponsored by a sponsor. (3) a transit provider that is a subrecipient of funds under 49 U.S.C. 5307 and 5311 with 110 vehicles and no rail service, is a tier II provider, but is only eligible to participate in a group TAM plan through consent of sponsor. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FTA is revising the definition of tier II provider in the final rule to clarify that all American Indian tribes are considered tier II providers and are eligible to participate in a group TAM plan, regardless both of the source of funding it may receive and of its status as a recipient or subrecipient. COMMENTS: TAM Plan—Asset Inventory Several public comments addressed the asset inventory required by proposed § 625.25(b)(1), with several expressing concerns or confusion relating to the expected level of granularity at which transit agencies would be expected to inventory capital assets. A transit provider and several State DOTs asserted that ‘‘the level at which a project would be identified in a provider’s program of capital projects’’ is too vague and could lead to confusion because ‘‘program of capital projects’’ is not a defined term. Two associations and several State DOTs recommended that the final rule include a clearly worded provision that would limit the coverage of the rule to important assets. At least for non-rail assets, these commenters recommended that FTA: 1. Limit coverage to revenue vehicles and to assets other than revenue vehicles with an initial cost of at least $50,000. 2. Limit coverage of assets other than revenue vehicles to those with an initial minimum ULB of at least 5 years. 3. Limit coverage of assets other than revenue vehicles by excluding office space or other administrative support facilities or equipment (and by not including an ‘‘administrative’’ line item in Appendix A to part 625). Similarly, a transit operator stated that the proposed definition of ‘‘equipment’’ would include office chairs, storage cabinets, and other incidental ‘‘equipment,’’ that are not worth investing in data capture and management. The commenter recommended a risk-based approach to prioritize detailed data collection for more important assets (e.g., trackway and rail vehicles) and limited data collection for less important assets (e.g., office chairs). A transit operator requested that FTA clarify the level of detail required in reporting asset data, asserting that it is described differently in sections 625.5 and 625.25(b)(1). Another commenter asked whether it could simply list a bus or whether it needed an inventory for all equipment installed on the bus postmanufacture (e.g., Drive Cam, cameras, PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 48913 fare box, radios, CAD/AVL). This commenter also asked if a vehicle camera system would be classified in the rolling stock or equipment categories. An MPO said that the final rule should either confirm that the TAM plan sponsor has flexibility in defining the granularity of the asset inventory or FTA should provide additional guidance as part of the final rulemaking. A couple of commenters requested additional clarity on the definition of equipment, stating that it is different in §§ 625.5, this section, and 625.43. One of these commenters, a transit agency stated that guidance is necessary for consistency and suggested that FTA could have transit agencies report at a systems-level (i.e., electrical, plumbing, building envelope, roof, lifts, etc.) for facilities/stations, and by miles or linear feet of ROW for specific types of infrastructure assets. Further, the commenter suggested that substations could be reported both as a facility (broken out by systems) with the traction power equipment identified separately based on age and type. This transit agency asserted that by specifying a concrete approach that is replicable across agencies, FTA would ensure that data sets from various agencies can be merged at the national level and aggregated. Another transit operator suggested that transit agencies consider asset attributes in the development of an asset inventory, reasoning that otherwise performance targets would be difficult to establish. Expressing concern about the ability for transit operators to have completed a full asset inventory within the 2-year deadline, a transit operator requested clarification on whether a full inventory would need to be submitted with the first TAM plan. A regional transit operator commented that it will take all prudent steps to complete the data inventory for its contracted assets; however, some of the information may be considered proprietary and the private carriers may not be willing to share it due to liability issues. FTA’S RESPONSE: TAM Plan—Asset Inventory FTA disagrees with the commenters who suggested that FTA only require the asset inventory to include assets above a specific monetary threshold. This final rule does not prescribe a level of detail for the asset inventory. Instead, the rule requires that the disaggregation of a divisible capital asset be identified in a manner that is consistent with the assets identified in a transit provider’s program of capital projects. If an asset is ‘‘large’’ enough that a transit provider E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48914 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations includes it in its capital program, then it should be included in its asset inventory. However, FTA has added clarity for the equipment asset category of what to include in the asset inventory. Specifically, only transit provider owned equipment assets over $50,000 and all non-revenue service vehicles regardless of value must be included in a TAM asset inventory. FTA encourages transit providers to include additional equipment assets that impact safety and operations to be considered alongside other equipment assets in their TAM plan elements. FTA does not believe that the final rule needs to include a definition of program of capital projects. Each transit provider regularly undergoes capital planning and programming activities to determine needs for the following year. FTA understands that each transit provider’s planning and programming process may be unique, and as a result, the final rule provides the flexibility for each transit provider to fulfill the asset inventory requirement without imposing a one-size-fits-all process for identifying capital assets. Readers should understand that there is a distinction between the categorization of an asset (i.e. whether it meets the definition of equipment, infrastructure, rolling stock, or a facility) and whether or not a transit provider must include the asset in its asset inventory. Categorization of an asset is also distinct from whether or not a transit provider must set an SGR performance target for the asset (tabular illustration in Appendix C—Table 1). The final rule requires each transit provider to include in its asset inventory infrastructure, all nonrevenue service vehicles regardless of value and owned equipment assets over $50,000, at a level of detail commensurate with its program of capital projects, and conduct a condition assessment of those assets for which it has capital responsibility. However, at this time, the performance measure for infrastructure is limited to rail fixed guideway assets and the performance measure for equipment is limited to non-revenue service vehicles. Therefore, a transit provider that does not operate a rail fixed guideway transit system would not have to set an SGR performance target for its non-rail infrastructure assets nor any equipment other than non-revenue service vehicles. FTA further clarifies the asset inventory must include all revenue vehicles, all passenger stations, all exclusive use maintenance facilities, all non-revenue service vehicles and provider owned equipment over $50,000, regardless of funding source. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 Also see FTA’s response to definition of ‘‘Capital Asset’’ for an extended discussion. An illustrative example of the relationship between asset inventories, condition assessments and SGR performance measures is found in Appendix C—Table 2. FINAL RULE: FTA is revising § 625.25(b)(1) to clarify which assets (including but not limited to all revenue vehicles, all passenger stations, all exclusive use maintenance facilities, and provider owned equipment over $50,000 including all non-revenue service vehicles regardless of value) used in the provision of public transportation must be included in an asset inventory, at a level of detail commensurate with the level of detail used to describe assets in a transit provider’s program of capital projects. COMMENTS: TAM Plan—Condition Assessment A State DOT and an individual commenter recommended that § 625.25(b)(2) should include a universal condition rating scale. A State agency said it is important to develop objective methodologies to evaluate asset condition and to establish a link between those assessments and an investment prioritization plan. Several transit operators said the asset condition assessment must be more flexible. Two transit operators said FTA should allow transit operators to adopt a more rigorous means of condition assessment than age and ULB and report the results of their local assessment process. Two State DOTs and other commenters recommended allowing condition assessments to be made at the class level, rather than by individual projects, because targets are set at the class level. Another transit operator expressed support for FTA’s proposal for allowing transit providers to choose a method or methods for conducting condition assessments, provided that the level of detail is sufficient to monitor the performance of capital assets. One transit company assumed that because the rule is silent with respect to how condition should be determined, any method is acceptable. Several commenters requested guidance on condition assessment. A transit operator asked if FTA will provide condition assessment guidance and what method of tracking should transit agencies follow. A transit agency similarly expressed concern that ‘‘condition’’ alone is vague, subjective, and open to individual interpretation and requested additional direction PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 regarding condition assessment. An individual commenter requested a minimal condition assessment outline for guidance and to provide consistency. In particular, another transit operator asked to what level of detail service providers are expected to break down facilities and stations and their components for the purpose of the facilities asset category performance measure condition assessment, and whether the standard of condition being ≥3.0 would apply to the whole facility (e.g., a weighted average of all its components). A transit agency requested additional guidance on condition assessments for facilities but also requested that the guidance be flexible to allow current assessment processes to apply. A transit agency asked if actual condition of the asset is required or if age would be an acceptable substitute. The commenter also asked if other proxies, as determined by the implementing agency, would be acceptable in lieu of physical condition. A State DOT said that the requirement to use a 1–5 TERM scale is inconsistent with the NPRM preamble, which states that transit providers may continue to use their own existing condition rating systems. This commenter requested clarification on this point, TERM training, and a conversion mechanism for ratings arrived through other assessment mechanisms. Similarly, a transit agency recommended that FTA develop criteria for assessing asset condition utilizing the TERM scale, recommending that the TERM condition of 2.5 be set as the minimum for which an asset is in a state of good repair, to remain consistent with previously published FTA guidance. A transit operator said that whole collection of actual asset condition data would be useful in the establishment of targets and investment prioritization, and that particular focus should be paid to performance of the asset relative to its designed purpose and cost effectiveness. This commenter asserted that using age, mileage, standard replacement, and maintenance schedules as a condition assessment does not keep to the intent of MAP–21. The commenter suggested that FTA define ‘‘condition assessment’’ in a manner that may include age and mileage information. In its own assessments, this transit operator explained that it also uses fluid analysis and corrosion inspections to determine the remaining useful life of rolling stock assets. This commenter suggested that condition assessments along with performance-based monitoring be used for measuring the condition of infrastructure. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES A transit operator stated that the text implies that that the condition assessment should be informed by the SMS. The commenter expressed concern that because this requirement ties the evaluation of safety risk to another proposed regulation, the application of SMS to the National TAM System is not definitive until the SMS rule is final. A transit operator said the preamble discusses the TAM requirement for a condition assessment that must identify a safety hazard or failure to meet ADA requirements related to the use of that capital asset. The commenter said the requirement to include this sensitive data and analysis in the public TAM document could potentially expose a transit agency to risks that could compromise the agency and its efforts to keep assets in a state of good repair. FTA’S RESPONSE: TAM Plan— Condition Assessment FTA has provided flexibility for condition assessments so individual transit providers and sponsors can determine the most effective methodology to use for their circumstances. A universal condition rating scale would not support this intent. FTA agrees that it is important for a transit provider to develop objective methodologies to evaluate asset condition. FTA is developing guidance to assist transit providers with developing these methodologies, but the final rule does not establish a universal condition rating scale. It is important to note the differences between the TAM plan condition assessment requirement and performance measure development. For the TAM plan asset inventory, FTA only requires that ‘‘a condition assessment generates information in a level of detail sufficient to monitor and predict the performance of capital assets.’’ Conversely, the performance measures are not reflective of the entire asset inventory, only those specific asset classes related to the performance measures. For facilities the performance measure includes: (1) Administrative and maintenance facilities as well as (2) passenger and parking facilities. The equipment performance measure only includes non-revenue service vehicles. The rolling stock performance measure includes all revenue vehicles, by mode. Lastly, the infrastructure performance measure only includes rail fixed guideway. See also Appendix C_Table 1 and 2. FTA asked the industry a number of questions regarding measuring condition in the ANPRM and analyzed those responses in the NPRM. The VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 resulting performance measures represent a range of condition measurement approaches from simple to complex. FTA does not require sophisticated condition measurement methodologies for the TAM plan element or for SGR performance measures, but encourages transit providers of sufficient experience and sophistication to pursue more complex condition assessments based on more than age and mileage for rolling stock as well as other asset categories. FTA recognizes that some transit providers are prepared for more sophisticated condition assessment requirements and some are not, therefore the final rule provides for flexibility. FTA agrees that condition assessments can be conducted at the class level. A transit provider may develop its own condition assessment methodologies. FTA is developing guidance for measuring facility and infrastructure conditions. The performance measure for the facility asset category is measured by the TERM scale. However, FTA does not require that transit providers use this scale in the condition assessments required under § 625.15(b)(2). FTA declines to set the performance benchmark at 2.5, rather than 3.0, because a benchmark of 2.5 would require all transit providers to use the TERM-Lite model in order to calculate the 2.5 rating. FTA believes that this would be overly burdensome on many transit providers. The TERM scale is an integer based scale, thus a direct measure of condition 2.5 is not possible. Instead, condition ratings to one decimal point are produced by the TERM-Lite model as an estimate of condition between condition assessments. Thus, FTA is setting the benchmark at 3.0, as this will reflect the actual results being produced by transit providers carrying out their own condition assessments. FTA does not plan to produce a TERM conversion mechanism, as there are a number of methodologies a transit provider could use for condition assessment. It would not be possible for FTA to produce conversion mechanisms for all of them. However, FTA will provide technical assistance to those transit providers who require assistance with either determining the best condition assessment methodology or adapting their existing methodology to the TERM scale for the SGR performance measure targets. FTA agrees that there is a link between condition assessments and the investment prioritization. The condition assessment informs the investment prioritization and thus must collect the relevant information regarding the PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 48915 asset’s ability to perform in its current condition. For example, if an asset fails to meet an ADA requirement which will increase costs associated with any program or project related to that asset class, this information is gathered at the condition assessment stage and will inform the investment prioritization. This final rule does not increase a transit provider’s responsibilities under the ADA, but merely explicitly incorporates ADA accessibility assets into the TAM framework. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. However the final rule does clarify that recipients and subrecipients are required to assess and report the condition of only assets inventoried for which the transit provider has direct capital responsibility. COMMENTS: TAM Plan—List of Analytical Processes or Decision Support Tools Some public comments addressed the § 625.25(b)(3) proposed requirement that a TAM plan must include the identification of which decision support tool or tools were used to create the TAM plan. A professional association and a State DOT asked for clarification on what decision and support tools are considered appropriate and sufficient. A transit operator asked if an agency’s decision support tool should prioritize investment using the same methodology that FTA has previously used to report to Congress (i.e., TERM and TERM Lite). An individual commenter also urged FTA to provide guidance on this TAM plan element and asserted that requiring a description of decision support tools is shortsighted because the purpose of this section is to ask grantees to provide the method of prioritizing projects. A transit operator asked how FTA anticipates that analytical tools will assist decision-making. Another transit operator recommended that rather than referring to ‘‘list of the’’ following, FTA should say ‘‘A description of the transit provider’s analytical processes or decision-support tools that. . .’’ One transit agency said the decision support tool and methodology will result in more 5310 providers disengaging from coordination efforts and ‘‘siloing.’’ FTA’S RESPONSE: TAM Plan—List of Analytical Processes or Decision Support Tools A decision support tool must be able to support development of the investment prioritization. The tool may be a documented process and does not E:\FR\FM\26JYR2.SGM 26JYR2 48916 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations need to be electronic. Whatever the medium, the tool should assist a transit provider in understanding its capital investment needs and in prioritizing reasonably anticipated funding towards those needs. FTA agrees with the commenter who suggested that FTA change requirements from a listing to a description of analytical processes and decision support tools. FTA believes that this change will make it clearer that the analytical process or decision support tool need not be electronic. FINAL RULE: FTA is revising this section based on comments from NPRM to require that a TAM plan include a description of analytical processes or decision support tools. COMMENTS: TAM Plan—TAM and SGR Policy A few public comments addressed the fifth proposed TAM plan element (§ 625.25(b)(5)), which was described in the NPRM as an identification of the transit provider’s policies and strategies for developing an effective TAM plan, including a transit provider’s executive level directions to set or support the goals for its TAM plan. A transit operator asked what needs to be reported in response to § 625.25(b)(5) and (6) if an agency already has a TAM plan and policy. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: TAM Plan—TAM and SGR Policy The NPRM did not propose to require a transit provider to report its TAM policy to FTA. Transit providers are required to submit to the NTD an annual data report that includes the SGR performance targets for the following year and a current assessment of the condition of the transit providers’ public transportation system. Transit providers are also required to submit an annual narrative report to the NTD that provides a description of any change in the condition of a transit provider’s transit system from the previous year and describes the progress made during the year to meet the performance targets set in the previous reporting year. There are no additional reporting requirements under this rule. This final rule is flexible and scalable. A transit provider may incorporate its existing TAM policies and practices into its TAM plan. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 COMMENT: TAM Plan—Strategy for Implementation of TAM Plan A few public comments addressed the sixth proposed TAM plan element (§ 625.25(b)(6)), which was described in the NPRM as a strategy for TAM plan implementation, i.e., the process a transit provider will follow in order to achieve its TAM plan. A transit agency expressed support for the inclusion of a TAM policy as part of a certified TAM plan. However, the commenter requested additional information on how to meet this non-statuary requirement without being duplicative of other TAM plan components. Without clarification, the commenter recommended removing this provision. through to disposition). If the latter, the commenter asked how it should determine which asset classes warrant specific levels of detail documentation, and how much additional cost and staff effort would be required to prepare such a TAM plan. A transit operator requested that, if FTA is proposing to require a list of annual activities in a TAM plan, then FTA should provide an easy way to update the previous year’s submission because anticipated annual changes would be minor. Another transit operator asked, in the case of an agency that already has a TAM plan, if this TAM plan element would be a list of next steps for continual improvement. FTA’S RESPONSES: TAM Plan— Strategy for Implementation of TAM Plan A transit provider’s TAM plan implementation strategy should outline a plan showing the activities necessary to achieve its asset management goals (including all aspects of change management). The plan should outline a schedule with roles, responsibilities, accountabilities, tasks, and dependencies. The implementation process should addresses dependencies, including reliance on the hiring of new staff, funding availability, or software development. The process also should reconcile asset management priorities against other agency initiatives. Implementing activities should be established based on an assessment of how well they are expected to accomplish the goal of achieving or maintaining a state of good repair of the provider’s assets. To the extent possible, the implementation strategy should address specific problems or deficiencies that improve performance. FTA’S RESPONSES: TAM Plan— Description of Annual Key Transit Asset Management Activities In the NPRM FTA proposed that a TAM plan include a description of a transit provider’s key asset management activities that it plans to accomplish in the upcoming year. This final rule does not prescribe what the description must include or how a transit provider must develop it. However, examples of activities include ‘‘combine three departments’ asset inventories’’, ‘‘develop a lifecycle management template and populate it with information from three most-critical asset classes,’’ or ‘‘hire an asset management program manager.’’ A description of activities also could include a list of next steps for continual improvement. FINAL RULE: FTA is not making any revision to this section in the final rule related to these comments. COMMENTS: TAM Plan—Description of Annual Key Transit Asset Management Activities Some public comments addressed the seventh proposed TAM plan element (§ 625.25(b)(7)), which was described in the NPRM as a list of the key activities or actions that are critically important to achieving the transit provider’s asset management goals for the year. A transit operator asked if the ‘‘key activities’’ are intended to focus on discrete projects and actions or if it meant to document ongoing, routine asset management practices for each asset class (i.e., describing asset life-cycle procedures from specification and procurement, PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 FINAL RULE: FTA is not making revisions to this section in the final rule related to these comments. COMMENTS: TAM Plan—Specification of Resources Needed To Develop and Implement the TAM Plan Some public comments addressed the eighth proposed TAM plan element (§ 625.25(b)(8)), which was described in the NPRM as an identification of the financial resources that a transit provider estimates are necessary for implementing its TAM plan and achieving its asset management goals. A transit operator asked FTA to clarify if this TAM plan element should include an analysis of resources required to perform maintenance activities in addition to capital investment work or whether it is only intended to capture the costs associated with TAM plan preparation. Another transit operator stated that this additional TAM plan requirement for tier I providers as well as the one in proposed § 625.25(b)(9) would create a reporting burden that E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations may divert time and resources from improving asset condition and system safety. FTA’S RESPONSES: TAM Plan— Specification of Resources Needed To Develop and Implement the TAM Plan The NPRM proposed that a transit provider identify the resource needs to develop and implement a TAM plan, including those resources that a transit provider reasonably anticipates would be available over the TAM plan horizon period. In order to set achievable SGR goals and in order to do a meaningful investment prioritization, a transit provider needs to know what resources it anticipates needing and what is available. The resources could include financial, human, equipment, and software. FTA has not required a specific methodology or format in the final rule. FINAL RULE: FTA is not making any revisions to the final rule related to these comments. COMMENTS: TAM Plan—Monitoring TAM Plan and Related Business Practices A few public comments addressed the ninth proposed TAM plan element (§ 625.25(b)(9)), which was described in the NPRM as a continuous improvement plan that sets timelines and milestones to track the transit provider’s progress towards meeting its asset management goal. A transit operator recommended that if FTA is planning to adopt an oversight schedule to evaluate grantees’ TAM plans then it should be integrated into existing FTA oversight functions instead of being a stand-alone requirement. Another transit operator said the requirement for a monitoring and evaluation plan should be better differentiated from other TAM plan components. An individual commenter asked for guidance and instruction on the continuous improvement process. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: TAM Plan— Monitoring TAM Plan and Related Business Practices FTA intends to incorporate compliance with requirements of the final rule into its existing oversight activities. FTA will issue guidance to aid transit providers in their implementation of the final rule. FINAL RULE: FTA is not making any revisions to this section in the final rule related to these comments. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 COMMENT: TAM Plan—Tier II Providers Exempt for TAM Elements A business association expressed appreciation for FTA’s efforts to create a tiered approach for the proposed National TAM System that acknowledges the diversity of transit systems. Some public commenters provided other comments on FTA’s proposed approach to transit asset management. For example, a transit operator asserted that the proposed rule has not provided the necessary flexibility to facilitate the effective participation of small transit operators. A professional association urged FTA to recognize the inherent differences in the size of agencies by ensuring that any new regulations allow flexibility for small operators to more easily comply and by establishing minimal universal requirements that can be applied across all agencies to allow for greater flexibility and a scaled approach for implementation. Voicing similar concerns, a transit operator recommended that FTA finalize the rule by implementing TAM principles without overly burdening States, small providers, and 49 U.S.C. 5310 subrecipients. Some public comments addressed the proposed special provision for tier II providers that would allow them to include only the first four proposed TAM plan elements in their TAM plans (§ 625.25(c)). Several State DOTs and other commenters expressed support for the reduced requirements for small operators. Three State DOTs said Section 5310 subrecipients should be excluded from this rule. One of the State DOTs and another commenter recommended that, at a minimum, Section 5310 subrecipients should be limited to only including the TAM plan elements at proposed § 625.25(b)(1) and (2). Similarly, a transit operator recommended further scaling back the requirements for small operators. A tribal government appreciated the reduced TAM plan requirements for tier II providers but asserted that it is not enough of a burden reduction given FTA’s expectations for the analytical processes, decision support tools, investment needs, and prioritization strategies for tier II providers. However, one State DOT said the non-statutory criteria should extend to tier II providers who are transporting the public. A transit operator supported inclusion of the non-statutory TAM plan requirements in proposed § 625.25(b)(5) through (9) because they align with ISO 55000 and international best practices PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 48917 for asset management. However, the commenter said FTA must understand that grantees will have to dedicate significant resources to developing TAM plans that exceed the statutory requirement. In contrast, a private transit operator asserted that because the TAM plan requirements in proposed § 625.25(b)(5) through (9) are not included in MAP–21, those elements should not be a requirement of the final rule. FTA’S RESPONSE: TAM Plan—Tier II Providers Exempt for TAM Elements The National TAM System is a scalable and flexible framework that establishes terms and concepts and allows for consistency and standardization of formats, without being prescriptive on methods or application. FTA understands that smaller, rural, or less sophisticated transit providers may not have the expertise or resources to develop and implement a nine element TAM plan. FTA believes that this final rule imposes the least burdensome reporting requirements while still meeting the requirements in the law by allowing tier II providers the option to develop and implement a four element TAM plan and participate in a group TAM plan developed by a sponsor. The sponsor would be responsible for reporting required information to FTA on behalf of all group TAM plan participants, thereby reducing the burden on those small providers. FTA believes that the mechanics of the development for a group TAM plan is a local decision. Although sponsors are primarily responsible for the development of the group TAM plan, participants should collaborate or contribute to the development of the group TAM plan, to the extent practicable. FINAL RULE: In the final rule FTA revises the definition of tier II provider to include explicitly American Indian tribes. COMMENTS: TAM Plan—Additional Comments Some commenters provided other comments on the proposed TAM plan requirements that were not otherwise addressed above. Two trade associations and a transit operator urged FTA to provide as much flexibility in compliance as possible so that agencies can make use of their existing processes and documents— including TAM plans required by the State—without too much additional burden. Similarly, a transit operator said attempting to define how each TAM E:\FR\FM\26JYR2.SGM 26JYR2 48918 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES plan should look and how each agency will perform asset management by means of strict regulation and use of required methodology limits all agencies from creating a plan that would add value to their existing processes while meeting the needs of the legislation. An MPO and two transit operators requested that the final rule clarify, that if other documents contain all of the required elements, such as Short Range Transit Plans (SRTPs), such documents may be used to satisfy the requirement for a TAM plan. Two transit operators recommended that FTA eliminate a separate requirement to prepare fleet management plans, stating that separate asset management and fleet management reporting requirements will create redundancy and unnecessarily burden grantees. Some commenters provided suggestions for additional elements to include in the TAM plan, including a description of QA/QC methods, organizational charts, and a list of asset management personnel. A trade association recommended that the grantees’ TAM plan and project prioritization be made public. Expressing concern about the limited resources of tier II systems, a trade association urged FTA to not require— either stipulated or a functional byproduct of the rulemaking—that small urban, rural, or tribal providers hire additional staff to oversee compliance with new regulations. A transit operator recommended that FTA revise its SGR formula program language so that ‘‘transit asset management practices inform the capital investment planning and programming processes by producing data that informs the investment prioritization.’’ FTA’S RESPONSE: TAM Plan— Additional Comments When possible, FTA has remained silent on methodologies transit providers must use and has recognized that a strict national system would not be useful or effective. FTA does not want to create redundancy with effective practices and has established a framework and standard terminology the industry can follow to compare their TAM and SGR nationally. A transit provider may use any source available to it, including existing asset inventories, to develop a TAM plan required under the final rule. The fleet management plan required at the grant making stage of a project may differ from the TAM plan asset inventory as the TAM plan has a four year horizon, while the grant application primarily reflects current acquisitions. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FTA encourages and supports the use of additional TAM plan elements such as QA/QC methods, organizational charts, etc. but does not require them in the final rule. FTA will not collect or approve TAM plans. A transit provider will certify compliance with the final rule through FTA’s certification and assurances process. The role of the sponsor of a group TAM plan is to certify on behalf of their participants. In addition, the sponsor will accept certification from their subrecipients that opt-out of a group TAM plan. FTA has addressed the comments related to the role of SSO previously in the Implementation and Oversight section. FTA has attempted to minimize the compliance burden on small operators and has also provided an option which shifts the administrative and oversight burden from the small operator to the sponsor. However, the individual transit provider is the only entity capable of implementing TAM at its agency. Unless protected under State law, a TAM plan would be available to the public. FINAL RULE: FTA is not making any revisions to this section in the final rule related to these comments. 625.27 Group Plans for Transit Asset Management The NPRM proposed that all recipients and subrecipients of Chapter 53 financial assistance must develop a TAM plan. This requirement is met either through an individual TAM plan or through a group TAM plan. The statute includes other requirements for the National TAM System, which were proposed in the NPRM, and tied to the sponsorship of the TAM plan. Sponsoring a group TAM plan does not make the sponsor a transit provider; a sponsor must own, operate or manage capital assets in transit service to be a transit provider. This section proposed that any recipient of FTA funds with subrecipients must sponsor a group TAM plan for their tier II provider subrecipients that are not also recipients of 5307. Thus, all subrecipients under the 49 U.S.C. 5311 rural area formula program that are not also direct recipients of 49 U.S.C. 5307 urbanized area formula grants, regardless of size, must have the opportunity to participate in a group TAM plan. Sponsors would not be permitted to reject requests from a tier II provider to participate in a group TAM plan and must develop a group TAM plan for all eligible tier II PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 providers. However, a group TAM plan participant may choose to opt-out of a group TAM plan by notifying the group TAM plan sponsor of its intent and by creating its own TAM plan. In addition, an eligible participant that is a subrecipient to more than one sponsor may select which group TAM plan it would like to participate in. For example, a rural area formula program subrecipient that operates in multiple states may be eligible to participate in more than one group TAM plan. The subrecipient would need to select which group TAM plan it wanted to participate in, and formally opt out of the plan that it chose not to participate in. In the absence of explicit notification from a tier II provider of its intent to opt-out, the sponsor must include that provider in the group TAM plan. A State or direct recipient that is also transit provider may only participate in a group TAM plan as the sponsor. Such a State or direct recipient may not include itself in the group plan it is sponsoring for its subrecipients; it is required to develop a separate, individual TAM plan for its own transit system. Each transit provider’s Accountable Executive is required to coordinate, to the extent practicable, with a group TAM plan sponsor in the development of the group TAM plan. Accordingly, a group TAM plan sponsor is required to coordinate the development of the plan with each of the plan participants’ Accountable Executive. Notably, the transit provider retains responsibility for implementing the group TAM plan at their agency. COMMENT: Group Plans— Responsibilities for States, Tribes, and Direct Recipients Numerous public comments addressed the option for tier II providers to participate in a group TAM plan (proposed § 625.27(a)(2)) and the related responsibilities for States, tribes, and direct recipients relating to group TAM plans (proposed § 625.27(a)(1) through (3)). Two State DOTs opposed a mandate on the State to develop a group TAM plan for all of its tier II providers. One State DOT suggested that States should not be required to prepare a TAM plan for their tier I or tier II subrecipients. One State DOT requested that DOTs be allowed to prepare a group TAM plan that includes all transit operators in the State (tier I and tier II). A transit operator stated that sponsorship of a group TAM plan should be a voluntary choice and that the sponsor should serve in a coordinating and collaborative role. The commenter stated that any costs incurred by the group TAM plan E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations sponsor should either be allowed to be passed through to the participating subrecipients or else should be eligible for reimbursement by FTA. Several State DOTs and other commenters recommended that State DOTs be mandated only to do a group TAM plan for its subrecipients under the 49 U.S.C. 5310 and Section 5311 programs as these subrecipients are already subject to State oversight and their Federal funds are already programmed by the State across the entire group. One of these State DOTs and other commenters suggested that separate group TAM plans should be allowed for subrecipients under the 49 U.S.C. 5310 and 5311 programs. A State DOT urged FTA to establish a smaller fleet size threshold for urban systems to qualify for inclusion in a State plan, which the commenter said would recognize the urban/rural distinctions that already exist. Alternatively, this commenter would endorse limiting mandatory State plan participation for subrecipients under 49 U.S.C. 5310 and 5311. Two State DOTs suggested that 49 U.S.C. 5310 subrecipients with less than 10 vehicles should be excluded from the group TAM plan requirements. To decrease the burden further, these commenters recommended that FTA require reporting only on FTA-funded assets for 49 U.S.C. 5310 subrecipients. A State public transportation system also suggested that group TAM plans should be limited to only FTA-funded assets used in the provision of public transportation services, reasoning that it would be an inappropriate burden to apply the TAM regulations to all of subrecipients’ assets that directly or indirectly support its transportation service. This commenter also urged FTA to eliminate the TAM plan requirements for subrecipients that only receive 49 U.S.C. 5310 funds, reasoning that a majority of such subrecipients in the State have fewer than five vehicles, which are used to provide transportation to only program participants with specific needs, rather than for public transportation services. Some State DOTs and a professional association said that for subrecipients other than those that are solely subrecipients under 49 U.S.C. 5310 or 5311, it should be a mutual decision between a group TAM plan sponsor and the eligible providers in the group if a group TAM plan will be done. One of the State DOTs and the professional association stated that after the mutual decision to produce a group plan is made, it should be the sponsor, not the individual providers, who determine if an individual provider may opt out. A VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 State DOT requested that rather than requiring State DOTs to develop a group plan unless participants opt out, the FTA TAM rule should allow operators to develop their own plans with State DOTs developing a group TAM plan for remaining participants. A few State DOTs and a professional association said that by mandating the State DOT to prepare a group plan for small urban providers (e.g., subrecipients under 49 U.S.C. 5307 and Section 5339), FTA would significantly increase the role of the State DOT in planning and subsequent oversight of this group of providers. These commenters opposed the transferring of additional responsibilities for small urban providers from FTA to the States. A professional association requested additional funding for State DOTs to be able to prepare the group TAM plans. A transit operator said it is the direct recipient of 49 U.S.C. 5307 funds, and that it also has one subrecipient of its 49 U.S.C. 5307 funds. This commenter stated that its subrecipient is also a subrecipient of 49 U.S.C. 5310 and Section 5311 funding from the State, and asked if it would be required to complete a Group TAM plan. A transit operator expressed concern that while it will need to complete an individual TAM plan because of its Tier I status, as a 49 U.S.C. Section 5311 subrecipient it will also be obliged to participate in a State group TAM plan. The commenter said this will result in an additional cost that may not have been captured in the cost analysis performed by FTA. A transit operator asked if tier I agencies that have subrecipients will be able to combine their agency plan with those of their subrecipients. A State DOT and a professional association suggested that States that are both transit operators and sponsors of group TAM plans should only be required to prepare a single TAM plan inclusive of the statewide system, which may include all the assets of direct recipients, subrecipients, and transit providers if that makes sense for their State. Some State DOTs and a professional association requested clarity on the State’s roles and responsibilities in resolving conflicts that may arise between TAM plan sponsors and a subrecipient. A State DOT requested an example of a non-State group TAM plan sponsor and clarification as to whether an MPO could be a group TAM plan sponsor. This commenter requested an example of when the MPO would have the responsibility for integrating group TAM plans and when it is a State responsibility. An MPO requested that FTA add explicit clarifying language to PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 48919 the final rule stating that an MPO that merely receives funds from FTA and passes the funds along to transit operators would not be required to develop and carry out a TAM plan or a group TAM plan, consistent with the analysis of §§ 625.5 and 625.27 in the NPRM. Another MPO requested that FTA clarify the level of responsibility of a group TAM plan sponsor by setting a minimum expectation that requires the sponsor to focus on coordination and collaboration while preserving local decision-making. A professional association supported the ability of American Indian tribes to develop their own TAM plans, even when they are (tier II) subrecipients of the State under the 49 U.S.C. 5311 program. This commenter also recommended that the rule should clarify that it is a mutual decision between the tribe and the group TAM plan sponsor if a tribe will be include in a group TAM plan and should clearly state that, if a tribe opts to be part of a group TAM plan, the tribe must to agree to setting targets and prioritizing investment across the entire group, which could result in the State DOT being involved in programming Federal funds available to the tribe both as a subrecipient and direct recipient. A State transit association recommended that FTA should eliminate the lead agency model and not implement a requirement that ‘‘designated recipients [must] review TAM plans for subrecipients.’’ The commenter asserted that many transit agencies the DOT has approached to be lead agency have refused based on unwarranted liability, lack of staffing to monitor sub-grantees, and lack of additional administrative funding to cover oversight. FTA’S RESPONSE: Group Plans— Responsibilities for States, Tribes, and Direct Recipients FTA has established a two-tier approach to TAM plan development to reduce the burden on smaller transit providers. The NPRM proposal was consistent with other FTA programs whereby a State, direct or designated recipient oversees subrecipients and certifies to FTA on their behalf. The costs associated with developing a group TAM plan are eligible under many grant programs (e.g., Urban area formula program, rural area formula program, state of good repair formula), and the Sponsor is in a better position to determine the future funding for investment prioritization. The feasibility of the group TAM plan assumes that the funding relationship between recipients and subrecipients E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48920 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations naturally lends itself to this type of arrangement because the process of prioritizing investments is already occurring at the sponsor level. As a result, it is logical to require States and direct recipients (or designated recipients of 49 U.S.C. 5310 funds) to take a leadership role in developing group TAM plans for their subrecipients. However, if this relationship is not appropriate for a particular tier II provider, then that tier II provider can opt out of the group TAM plan and develop its own TAM plan. The sponsor may determine that multiple group TAM plans are necessary for their subrecipients. For example, a State DOT may decide to establish separate group TAM plans for its 49 U.S.C. 5310 and 5311 subrecipients. Or a State DOT may decide to establish a single group plan for all of its subrecipients. The final rule provides flexibility to sponsors to decide the number of group plans that it should develop. FTA agrees that the group TAM plan should include those subrecipients already subject to the sponsor’s oversight and does not intend to create new relationship of oversight not already in practice. Thus, FTA has revised the final rule to clarify that sponsors are not required to offer a group TAM plan to those subrecipients that are also direct recipients of 49 U.S.C. 5307 funds. However, any direct recipient of 49 U.S.C. 5307 funds that is a tier II provider remains eligible to participate in a group plan by mutual agreement of the sponsor and the transit provider. For example, a tier II transit provider that is a direct recipient of 49 U.S.C. 5307 funds, and is a subrecipient of 49 U.S.C. 5311 funds from the State may participate in the State’s group plan by mutual agreement, but the State is not required to include this subrecipient in a group TAM plan. FTA recognizes that subrecipients with very small fleets of less than ten vehicles have unique circumstances, and FTA has sought to minimize the burden on these providers as much as possible. As noted earlier, the intention of the asset inventory is to provide a strategic perspective capital assets used in the provision of public transit. As such all assets, regardless of funding source, are parts of the landscape and subject to these provisions. FTA wishes to clarify that there are three types of TAM plans (1) a nine element individual tier I plan, (2) a four element individual tier II plan, and (3) a four element group TAM plan. A transit provider that is a recipient under VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 one program and subrecipient under another is not required to do two TAM plans, but must determine which is most appropriate. The role of a sponsor in the development of the TAM plan is that of the leader—the sponsor determines the asset inventory level of detail, the condition assessment methodology, and the criteria and weighting for investment priorities as well as which tools to use to support these efforts. As the leader, the sponsor is responsible to the extent practicable, for coordination and collaboration with all participants, while preserving local decision making. The participant is an active partner in the development of the TAM plan providing information necessary to conduct the analyses and providing feedback to the sponsor. The tier II participant maintains the autonomy to opt-out of a group plan if it is not effective. An example of a non-State sponsor is an MPO or transit provider who may be the designated recipient of 49 U.S.C. 5310 funds for their urbanized area and distributes those funds to subrecipients. Another example would be an MPO or transit provider that distributes some of the 49 U.S.C. 5307 funds for their urbanized area to subrecipients. FTA agrees that Native America tribes preserve the autonomy to develop their own TAM plan even if they are tier II provider subrecipients of the State. A tribe also may choose to participate in a group TAM plan sponsored by the State. Each participant must provide the sponsor with information necessary for the development of the group TAM plan. FTA disagrees that it should eliminate the lead agency model. The lead agency model reduces the burden on smaller providers, which FTA believes justifies the additional coordination burden placed on the sponsor. The lead agency approach seeks to use existing oversight relationships to reduce additional oversight burden to the sponsor. FINAL RULE: FTA has made revisions to the final rule to clarify eligibility for participation in a group TAM plan and the responsibilities of a sponsor. COMMENTS: Group Plan—Opting Out of Group TAM Plan Some public comments addressed the proposed option for a tier II provider subrecipient to ‘‘opt-out’’ of a group TAM plan and create its own TAM plan at proposed § 625.27(a)(4). An MPO requested clarification on the requirements for a State to develop a group TAM plan for all tier II recipients PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 and the ability of a participating accountable executive to opt-out of the State plan. A professional association expressed support for the provision that tier II agencies can elect to complete their own TAM plan. FTA’S RESPONSES: Group Plan— Opting Out of Group TAM Plan The NPRM proposed that all sponsors develop a group TAM plan for their tier II provider subrecipients. A tier II provider’s accountable executive may choose to opt-out of a group TAM plan for a number of reasons, including if the provider will develop its own individual TAM plan. FINAL RULE: FTA is not making any substantive revisions in the final rule related to these comments. COMMENTS: Group Plan—Plan Requirements Several commenters provided input on the group plan requirements proposed in § 625.27(b). A State DOT said the group TAM plan requirements seem reasonable. Several commenters requested clarification on investment prioritization under group plans. Several State DOTs and other commenters said that the sponsor of a group TAM plan should establish targets and investment prioritization for all members of the group, as a whole. An MPO said FTA should clarify that the group investment prioritization should be based on the priorities of the individual tier II providers rather than those of the agency responsible for the development of the group TAM plan. A State DOT said language should be included to specify that policy guidelines by group TAM plan sponsors can guide asset investment prioritization at a high level. A State DOT said investment priorities for group TAM plans should only be advisory since they are set across the entire group. An individual commenter asked if all assets in a group TAM plan must be prioritized as if it were one transit agency, and if so, how this would affect grant decision-making. One commenter questioned whether it would then be advantageous or disadvantageous for a small operator to opt-out of the group plan and create its own plan in order to compete separately for State grant funding. A State DOT said it is unclear whether the proposed rule would require group TAM plan sponsors to develop ULBs for all providers E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES regardless of the providers’ unique operating environments. A transit operator asked for guidance on asset planning, management, and inventory in a group TAM plan where a transit agency operates and maintains assets owned by another transit agency. FTA’S RESPONSES: Group Plan—Plan Requirements In the NPRM, FTA proposed that sponsors develop unified targets for group TAM plans. This means that a sponsor would develop performance targets for each asset class in the group plan, for the entire group. While some participants may not have assets in every asset class included in the group plan, they are responsible for the programs and projects identified in the group plan investment prioritization that relate to their asset inventory. For example, a group plan participant that has ten cutaway vans, but no buses would have its assets included in the cutaway van mode SGR target, but the group plan may also include a target for buses. This participant is only responsible for implementing the TAM plan as it relates to their vans. They would not however, be involved in the attainment of the bus target. FTA agrees that a sponsor should establish the investment prioritization based on the priorities of the whole group, to the extent practicable. The methodology and practice for developing the group TAM plan are a local decision. FTA will provide guidance and technical assistance for sponsors and participants to assist in developing TAM group plans. A benefit of participating in a group TAM plan is the reduced administrative burden. A potential drawback is the lack of individuality in the TAM plan, as the TAM group plan is developed as if the group were one transit operator, pooling asset inventories and ultimately developing unified targets across the group as a whole. FTA clarifies that a ULB is not transit operator specific, but may be specific to a particular number of vehicles within the asset inventory. Group TAM plan sponsors will be able to specify different ULBs for different participants, or even for different fleets operated by a single group plan participant. FTA disagrees with the commenter that asserts the two tiered approach would lead to tier I Accountable Executives being responsible for tier II providers. The group TAM plan approach uses existing relationships between recipients. A tier II provider always reserves the option to opt-out of a group plan. A group TAM plan sponsor that is also a tier I provider VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 must develop its own separate individual TAM plan. FINAL RULE: FTA is not making any revisions to the final rule related to these comments. COMMENTS: Group Plan—Role of the Accountable Executive in Development of Group TAM Plans Several public comments addressed the role of the Accountable Executive in the development of group TAM plans as proposed in § 625.27(c)(2) and (3). Several commenters, including transit operators and professional associations, requested clarification on whether the Accountable Executive responsibilities remain with each tier II agency or whether the responsibility ‘‘rolls up’’ to the group TAM plan sponsor’s Accountable Executive, with most generally expressing that each participating transit agency should have its own Accountable Executive. Some commenters requested FTA to clarity that tier II reporting agencies are not required to cede the role of Accountable Executive (or management of their agency) to their respective States or other direct recipients. A State DOT stated that, if States are required to include tier II 49 U.S.C. 5307 recipients, then it does not wish to assume the responsibility of the group’s Accountable Executive. Another commenter asserted that the group TAM plan sponsor’s designated Accountable Executive, if necessary under the rule, would have limited authority in making progress towards the targets. If the responsibility ‘‘rolls up’’ to the group TAM plan sponsor’s Accountable Executive, a transit operator asked if such responsibility would provide the commenter with the authority to establish the capital program priorities for each of the tier II subrecipients. Some State DOTs and a professional association recommended that FTA clarify that just because the State DOT (as a group TAM plan sponsor) coordinates a group TAM plan, it does not mean that the State is responsible for implementation of the group TAM plan. Additionally, these commenters suggested that the State should not be considered a transit provider and not be required to have an Accountable Executive solely as a result of sponsoring a group TAM plan. A transit operator asserted that since tier I providers do not control the funding of the tier II providers, tier I should not be dictating how tier II providers manage their assets. This commenter said that this would force greater centralization of decisionmaking and tier I would need to have PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 48921 control over tier II funding decisions. Thus, according to this commenter, the Accountable Executive would end up being responsible for both the primary agency and the roll-up agencies managing their assets. FTA’S RESPONSES: Group Plan—Role of the Accountable Executive in Development of Group TAM Plans In this final rule, FTA clarifies that a sponsor for a group TAM plan is not the Accountable Executive for each participating transit provider. By participating in a group TAM plan, an Accountable Executive may be required to defer to the decisions of the sponsor regarding prioritization of investments. However, each Accountable Executive is ultimately responsible for implementing a TAM plan. The Accountable Executive responsibilities do not ‘‘roll-up’’ to the sponsor. FINAL RULE: FTA is not making any revisions to the final rule related to these comments. COMMENT: Group Plan—Providing Sponsors With Necessary Information (Role of Sponsor and Participant) A few public comment submissions addressed the proposed requirement that group TAM plan participants must provide group TAM plan sponsors with all relevant and necessary information for the development of the group TAM plan as proposed in § 625.27(c)(4). An MPO suggested that the rule clarify the consequences of a group TAM plan participant not providing the required information, and provide the group TAM plan sponsor with a remedy or methodology to proceed without the missing information. FTA’S RESPONSES: Group Plan— Providing Sponsors With Necessary Information (Role of Sponsor and Participant) The ultimate responsibility for development of a group TAM plan lies with the sponsor. However, participants should collaborate with sponsors and contribute to the development of the group TAM plan, to the extent practicable. FTA believes that the mechanics of the development for a group TAM plan are a local decision. FINAL RULE: FTA is not making any revisions to the final rule related to these comments. COMMENTS: Group Plan—Other Comments Some commenters provided other comments on group TAM plans. For example, a transit operator asked how E:\FR\FM\26JYR2.SGM 26JYR2 48922 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES SGR measures for several different agencies within a region can be rolled up if each service provider can define its own approach to quantify SGR. This commenter also asked what the role of a regional oversight board would be in the TAM effort if it oversees providers that would develop individual TAM plans due to the tier I level designation. An individual commenter stated that the group TAM plan provider cannot guarantee that they will be able to meet the plan’s SGR goals because they cannot allocate the local funding that is required for capital grants. A trade association requested additional guidance on group TAM plans, including ongoing participation of grantees and subrecipients, in order to ensure consistency. Several State DOTs and other commenters urged FTA to clarify that a group TAM plan is not to be a collection of individual subrecipient plans into a single document; rather, it should provide group-level information. A State DOT requested that the group TAM plan approach provide increased flexibility. An MPO requested clarification on the relationship between the Coordinated Plan and the group TAM plan process requesting confirmation that the TAM plan investment prioritization does not supplant the Coordinated Plan. A State DOT requested guidance on the approval or certification process of a TAM plan. The commenter suggested that group TAM plans should be approved by the plan’s sponsor, in coordination with each member of the group. However, the commenter said that formal approval by each Accountable Executive who is in a group TAM plan should not be mandated because the Accountable Executive for an individual member may not be fully supportive of the investment priorities made for the group as a whole. FTA’S RESPONSES: Group Plan—Other Comments This final rule establishes the SGR performance measures in § 625.43. Each provider or sponsor must set performance targets based on the measures. Each transit provider can make its own SGR determinations taking into consideration the three objective standards. FTA agrees that a sponsor cannot guarantee results of their TAM plan because the responsibility for implementing the TAM plan resides with each transit provider. However, each participant should support the group’s investment priorities. There are VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 no financial rewards or penalties associated with target attainment. The group TAM plan is most effective if the group remains consistent over time. However, the tier II participants maintain the option to opt-out of the group TAM plan and create their own. In addition, a group TAM plan approach will be most effective where the required activities and analyses are conducted in consideration of the group as a whole, as opposed to a compilation of individual analyses, in order to develop unified targets. Nevertheless, the mechanics of the group TAM plan are a local decision. Additionally, FTA agrees that the group TAM plan process does not supplant existing decision making practices, such as the Coordinated Plan for Human Service Transportation. FTA will not routinely collect or approve TAM plans. Each transit provider or sponsor will certify compliance with the final rule through FTAs certification and assurances process. FINAL RULE: FTA is not making any revisions to the final rule related to these comments. 625.29 Transit Asset Management Plan: Horizon Period, Amendments and Updates This section proposed timeframes for developing and updating a TAM plan. A TAM plan is required to be forward looking, and is required to forecast projects, targets, and activities for at least four fiscal years. Some transit providers may desire a longer analysis period, however, the analysis period must be at least four years. Ideally, the TAM plan cycle should coincide, to the extent practicable, with the State and metropolitan planning cycle for development of the STIP and the TIP. This section also provided that a TAM plan should be updated in its entirety at least every four years, and again, this should ideally, coincide, to the extent practicable with the update cycle for the STIP and the TIP. The requirement to update the TAM plan means that a transit provider must revisit every element of its TAM plan and make any necessary changes for a subsequent version, at least once every four years. Additionally, during the course of the horizon period, a transit provider may choose to amend its TAM plan to reflect changes to investment priorities, targets, or other unforeseen occurrences (like a natural disaster) that impact the relevance of the TAM plan. FTA recommends that transit providers should consider current and future climate and weather-related PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 hazards as part of their prioritization of investments. For example, the frequency and severity of potential hazards such as heavy rainfalls, coastal and riverine flooding, heat waves, extreme cold, and wind events may directly impact assets located in vulnerable areas. These potential hazards affect how a provider identifies and prioritizes necessary hazard mitigations, asset-replacement schedules, or the expected useful service duration of capital assets. A transit provider should have knowledge of the vulnerability of its system to natural hazards and prioritize protecting their assets from those hazards and improve the resilience of the system; however, FTA is not requiring a formal climate resiliency analysis as part of this rule. COMMMENTS: Horizon Period Several commenters suggested that the TAM plans allow agencies to better align other plans, such as their capital plan. Accordingly, a few of these commenters suggested that the plan should be valid for four to eight years. Another commenter suggested that the TAM plan and targets should be valid for five years. A business association expressed support for proposed section 625.29 because it would align TAM plans on a cycle that coincides with TIP and STIP development. In contrast, one transit operator commented that the metropolitan planning process (LRTPs, STIPs, and TIPs) is every five years and the FTA triennial review process is every three years, and asked why the TAM plan does not match one of these timeframes. A State transit association supported the peer recommendation that investment prioritization time periods should reflect a provider’s short-term capital plans and be closely coordinated with TIP and STIP processes. However, this commenter recommended that FTA provide some guidance to DOT staff responsible for procurement regarding purchasing timelines, explaining that from the time an agency receives an award confirmation letter from the DOT, it typically takes up to 3 years to receive the vehicle. A transit operator asked in which instances, if any, would FTA allow investment prioritization to exceed the four-year target. If none, this commenter asked if FTA would provide a method in which agencies could request an extension of time to set forth the ‘‘sufficient investment’’ that must be directed to projects that pose safety risks. Another transit operator said that the rule is unclear about how to reflect evolving priorities from year-to-year in E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations a TAM plan that requires project planning and prioritization to occur for a four year period. FTA’S RESPONSE: Horizon Period FTA established the horizon period for TAM plans of four years to align with the Federal metropolitan and statewide planning processes. FTA recognizes that priorities and funding may shift over a four year horizon and has provided the option to update or amend the TAM plan during the horizon period. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA is not making any revisions to the final rule related to these comments. COMMENTS: Amendments and Updates Some transit operators and an MPO stated that developing a fixed 4-year investment plan would be in conflict with their shorter capital budget cycles. These commenters suggested that the updates to the capital budgets should not require updates to the TAM plan. Also, two of the commenters suggested that agencies should be enabled to deviate from the project list in the TAM plan without alerting FTA in order to respond appropriately to changes in risk, financial conditions, service levels, or other considerations of asset management. A transit operator recommended that FTA allow agencies to update projects included in the TAM plan annually, reasoning that it may be difficult for agencies to forecast all projects to be included in the 4-year timeframe, particularly in the early stages of implementing the TAM System. Two commenters recommended that the final rule state that annual target setting should adjust the prior year’s targets only if significant asset changes occurred. Another commenter asserted that requiring updates each time the prioritization of projects changes equates to a yearly update, which is unnecessarily burdensome. This commenter suggested that updates should only be required concurrent with production of the STIP or TIP as written by the governing MPO. A transit operator asked FTA to clarify how it would define a ‘‘significant change’’ that would warrant an annual update to the TAM plan. FTA’S RESPONSE: Amendments and Updates FTA agrees that an update to a transit providers’ capital budget does not by itself require a TAM plan update. However, depending on the magnitude of funding differential initially VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 expected, a transit provider may determine an amendment or update is necessary to align the TAM approach with the current funding conditions. The investment prioritization and program of projects are a strategic projection for the four year horizon period. Using the best data and analysis available, the transit provider should be able to determine the priorities of investments. However, if deviations occur due to change in condition, risk, or other considerations, a transit provider may update or amend its TAM plan to reflect those deviations. The difference between a TAM plan update and a TAM plan amendment is the degree of the unexpected change. For example, a transit provider may update its TAM plan if it receives discretionary program funds that it did not anticipate receiving when it developed its investment prioritization. FINAL RULE: FTA is not making any revisions to the final rule related to these comments. COMMENTS: TAM Plan Process A professional association and three State DOTs said that FTA should clarify in the final rule how individual and group plans will be approved. A transit operator commented that the NPRM is unclear on how transit agencies will report TAM plans and updates to those plans. This commenter also asked to what extent reviewers during the FTA triennial review process will be empowered to reject performance targets in TAM plans. A transit operator said FTA should delay finalization of the present rulemaking to coincide with promulgation of final safety performance criteria for all modes of public transportation; and minimum safety performance standards for vehicles in revenue operations, as prescribed by 49 U.S.C. 5329(b)(2)(A) and (C). FTA’S RESPONSE: TAM Plan Process FTA will not routinely collect or approve all TAM plans. Individual plans will be certified by a transit provider and group TAM plans will be certified by a sponsor as part of the other certifications and assurances that must be provided to FTA as part of any grant. The development and implementation of a TAM plan should not be merely an exercise to comply with the requirements of the final rule. The TAM plan is supposed to be a tool that a transit provider can use to assess the condition of its assets and make decisions on how to best prioritize funding for those assets in order to PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 48923 achieve and maintain a state of good repair. FTA intends to verify compliance with todays’ final rule through its existing oversight activities. Performance targets are a local decision, and are neither approved nor rejected by FTA. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. 625.31 Implementation Deadline This section proposed that all TAM plan development should be completed no more than two years after the effective date of the final rule. If the rule becomes effective at any time after the first day of the transit provider’s or sponsor’s fiscal year, the initial TAM plan should cover the remaining portion of that year plus a four-year time horizon. FTA will allow transit providers to extend the TAM plan implementation deadline by submitting a written request. A written request would need to include documentation which shows that the transit provider has made a good faith effort to meet the deadline, an explanation of why the transit provider could not meet the deadline, and a proposed new deadline, subject to FTA approval. FTA reserves the right to deny a request to extend the deadline. COMMENT: 625.31 Implementation Deadline Some public comments addressed the proposed implementation deadline in § 625.31. Several State DOTs supported FTA’s recognition that the requirement to develop a TAM plan must have a delayed effective date. A State DOT and a transit operator expressed support for the two-year implementation period to develop a TAM plan. Another transit operator expressed support for the proposal to allow transit providers extra time to develop a TAM plan with a written request. Several commenters recommended that FTA phase-in implementation of the TAM plan requirements. Four State DOTs and other commenters recommended that (1) the initial TAM plan (due after two years) only be required to include revenue vehicles, (2) within one year of TERM training in the State, facilities should be included in the plan and (3) all other assets should be included within four years from the final rule date. However, some of these commenters suggested that the third and final phase should only require FTAfunded assets and should occur four years after the initial TAM plan, versus four years from the final rule date. Similarly, a transit operator said two E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48924 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations years may be sufficient for some categories of assets (i.e., rolling stock), but asked that FTA consider phasing in categories where guidance is not currently available, such as facilities. A professional association and a State DOT recommended that facilities be exempted from target setting and from inclusion in a TAM plan until training is provided (preferably State-by-State) on the use of the TERM for the State DOT and its subrecipients. One State DOT explained that it will need a significant amount of time to complete physical inspections on all its facilities. A business association and an MPO recommended phasing in TAM requirements as follows: (1) begin with rail systems only (reasoning that these systems account for the greatest amount of capital assets and have the greatest safety risk exposure); (2) phase in transit systems with 100 vehicles or more between 2 and 4 years after phase 1; (3) consider phasing in transit systems with less than 100 vehicles in revenue service no more than two years after phase 2. An industry association and three State DOTs said the TAM plan should be required no sooner than 2 years after FTA has issued a TAM plan manual and template. A State DOT requested that FTA extend the proposed implementation deadline from two years to three years, reasoning that the additional time would result in sponsored plans and asset management regimes nationwide that will better meet FTA’s objectives. Similarly, two transit operators and a State DOT expressed concern that the two-year time frame is not sufficient to develop a TAM plan, inventory and assess the conditions of assets, and meet all the requirements stated in subpart C, particularly given the number of agencies and partners that must be involved in the TAM development process. A transit operator recommended that the two-year deadline should be for development of the TAM plan, not implementation. Several commenters suggested that, while a two-year deadline for tier I transit agencies to develop an initial individual TAM plan is reasonable, the development of a group TAM plan and tier II plans should be extended to three years to allow adequate time for coordination between agencies. A State DOT said FTA should delay the implementation deadline until after all comments have been received for all performance management-related NPRMs in order to ensure crossfunctionality for each individual performance management area. Two MPOs urged that the implementation of the FTA TAM rule must be coordinated VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 with the implementation of other planning and safety rulemakings mandated by the authorization statutes and requested a single effective date that starts a phase-in process. FTA’S RESPONSE: 625.31 Implementation Deadline FTA believes that the two year statutory timeline is sufficient time for a transit provider to develop and implement a TAM plan. Moreover, the final rule includes an option for a transit provider to submit a written request to FTA for an extension of the implementation deadline. The final rule provides each transit provider with the opportunity to develop and implement a TAM plan that is tailored to its public transportation system. Todays’ final rule does not require a transit provider to conduct a condition assessment on all of its facilities within the two year initial TAM plan development timeframe. Each transit provider may adopt a condition assessment method that is appropriate for its particular operating environment and within its available resources. For example, one commenter suggested and FTA agrees that a transit provider may measure the condition of its assets by measuring the condition of a sampling of like assets. It is not necessary for FTA to wait to issue a final rule for transit asset management until it issues final rules for safety or planning. Todays’ final rule may be implemented in its entirety before the aforementioned rules become effective. FTA and FHWA are aware that transit providers, States, and MPOs will have to comply with the requirements of several rules. FTA will ensure that there is sufficient time for States, transit agencies, and planning agencies to implement the requirements of all related rules. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. 625.33 Investment Prioritization This section proposed requirements for investment prioritization. The investment prioritization provides strategic guidance for improving the condition of assets through both consideration of life-cycle costs and itemization of the actions necessary to achieve desired asset conditions. Each transit provider determines its own approach to investment prioritization and project selection. However, the transit provider is required to base its approach on the policies, goals, objectives, and strategies identified in their TAM plan and ensure that safety PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 is given due consideration. A transit provider’s approach to investment prioritization must reflect the balancing considerations of competing priorities in order to maximize a return on investment and achieve a desired state of good repair. The investment prioritization needs to reflect adequate consideration of safety concerns previously identified within a public transportation system. Moreover, when a transit provider plans for the replacement of an asset, it should ensure that it is complying with all relevant regulatory requirements, including the ADA, which requires that accessibility features be maintained in operating order and are promptly repaired if they are out of service. Certain SGR projects may also be regarded as ‘‘alterations’’ under DOT ADA regulations, and may require additional resources. See generally, 49 CFR part 37. Safety and minimizing life-cycle costs are the most common objectives in prioritizing projects. However, a transit provider may identify additional criteria and factors and weigh them according to local needs. Another criterion that a transit provider may consider is the resiliency of its assets and systems to natural disasters, as described in the NIST National Disaster Resilience Framework 11. The impact that local concerns may have on conditionimprovement costs should be reflected in the investment-prioritization list. Investment prioritization uses the transit provider’s selected prioritization approach and predetermined importance factors to determine rankings. The ability of a project or program to meet the objectives established by the transit provider in its TAM plan should be reflected by a rating. Based on the relative weight a transit provider assigns to each objective, a transit provider can establish a prioritized list of programs and projects. For example, a transit provider may identify track maintenance as the highest priority based on the condition of the track or its maintenance approach as part of its TAM policy. This may result in assigning a higher score to track-asset projects over facility-maintenance projects, even if the facility is in a worse condition, objectively. The costs associated with each project can be assessed and then compared with the transit provider’s estimated funding (from all revenue sources) over the TAM plan horizon for each year. The output 11 For more information on the NIST National Disaster Resilience Framework, please visit http:// www.nist.gov/el/resilience/ E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES of the process is a list of ranked projects by asset class that identify assets from the asset inventory required under § 625.25(b)(1) that would be funded over the TAM plan horizon period. A provider should only include programs and projects in its ranked list that it expects to undertake during the time horizon and identify the project year. COMMENTS: 625.33 Investment Prioritization Numerous public comments addressed the proposed requirements for TAM plan investment prioritization, specified in §§ 625.25(b)(4) (as an element of the TAM plan) and 625.33 (as proposed requirements for investment prioritization process). Several State DOTs and other commenters said any ranking of projects under § 625.33(b) should be a categorical ranking (High, Medium, Low) and not a sequential ranking (First, Second, Third, Fourth etc.). Several State DOTs and a professional association said this approach is preferred if the investment prioritization must include individual projects rather than keeping the prioritization at the asset class level or program level; however, they would prefer there be no requirement to go below the asset class or program level. Specifically, two of these State DOTs said TAM plans and investment prioritization should focus on ‘‘asset class’’ to avoid conflicts between the TIP and TAM plans and to allow transit agencies of all sizes to advocate for Federal, State, and regional funding. A transit operator said an agency should be able to ‘‘bundle’’ less critical asset renewal and replacement projects to make improvements in a concentrated geographic area and achieve cost savings. An individual commenter suggested that it may be more practical to rank investment priorities within specific asset categories rather than across categories. A regional commission requested that investment prioritization include categorical ranking (High, Medium, Low) of the projects in addition to the sequential numerical ranking (1, 2, 3, etc.). A transit operator recommended allowing agencies to define their own investment prioritization methodology or allowing the grouping of investment projects using qualitative levels of priority (i.e. most critical, critical, less critical) rather than age-based assessments. Similarly, some commenters suggested that assets should be weighted to reflect the criticality of a given asset on system operations. Several State DOTs and a professional association said an asset management VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 plan should be able to show assets in declining conditions, not just improving and maintaining. Specifically, one of the State DOTs requested that § 625.33(a) be revised to read ‘‘A TAM plan must include an investment prioritization that identifies projects to improve or maintain or manage the decline in the state of good repair of capital assets over the horizon period of the TAM plan. Alternatively, an MPO suggested changing the phrase ‘‘projects to improve or maintain the state of good repair’’ to ‘‘projects to manage or maintain the state of good repair.’’ Two State DOTs requested clarification regarding the NPRM statement that ‘‘transit providers should consider current and future climate and weather-related hazards as part of their prioritization of investment,’’ asserting that it is unclear which future hazards should be included and which should be excluded from consideration. Two other commenters stated that, without further clarification, this requirement seems unrealistic. A professional association asked if the reference to including ‘‘current and future climate and weather-related hazards’’ meant that an all-hazards approach should be taken to investment prioritization. If so, the commenter asked for an enhanced description of what hazards should be included or excluded. A State DOT, some transit operators, and a local utility, said that the safety of any asset should be the determining factor in prioritization of asset replacement, rather than the ULB. A State DOT recommended that FTA should reinforce this concept by clarifying the interaction between TAM and safety. A State transit operator proposed that each asset should receive a fixed safety rating based on how important that asset is to safety and funding should be prioritized for assets rated higher on the safety scale. Several commenters took issue with the phrase ‘‘pose an identified unacceptable safety risk’’ in § 625.33(d). A professional association asserted that by identifying an opportunity to improve safety, a State has not indicated an unsafe condition. Several commenters proposed that FTA strike the reference to projects that are needed to address circumstances that ‘‘pose an identified unacceptable safety risk.’’ One of these commenters offered an alternative phrases: ‘‘provide opportunities to improve safety or reduction in the frequency and severity of some undesirable events.’’ Other commenters said the rule should state that investment prioritization ‘‘must give due consideration to those projects for state of good repair that address PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 48925 safety risk.’’ A transit operator and a private citizen requested that FTA explain how an unacceptable safety risk is to be incorporated in the investment prioritization, and how unacceptable safety risks should be mitigated, financially, if the investment money is not afforded. One commenter also asked whether there is a requirement to follow the project rankings to address all non-SGR capital assets prior to funding other projects. Regarding the NPRM preamble statement that a transit provider may identify additional criteria and factors for prioritizing projects (in addition to safety and minimizing life-cycle costs) and weigh them according to local needs, a State public transportation system suggested that FTA clarify that such additional criteria should not take priority over considerations of SGR or system safety. A transit operator asked if FTA is recommending any standardized approach for criteria weighting or whether the weighting of criteria is left to the discretion of the transit provider. A State DOT requested guidance on expected investment prioritization criteria and weighting. A transit operator recommended adding language to acknowledge other factors outside the prioritization criteria (e.g., regional needs, non-asset based priorities, and funding mechanisms/ constraints) so there is room for intangibles, outside influences, and other mitigating circumstances that are defendable. A local transit operator asked whether future acquisitions and construction projects (e.g., system expansion) should be included in the project prioritization. This commenter also asked if projects that prevent assets from falling out of a state of good repair should be given higher ranking if they provide a better return on investment. A State DOT and a local transit agency asked if the investment prioritization should be based on the available budget or the needs. If the prioritization must be constrained then the State DOT commenter said it may not be able to meet the SGR principal of ‘‘full level of performance.’’ A transit operator asked how an agency can account for projects/ assets for which it would like to apply for grant funding if investment prioritization is fiscally constrained. A State DOT asked if the investment ranking is binding (that is, if investments must be made in the specific order in the TAM plan). An MPO and a transit operator requested that FTA provide an opportunity to use alternative approaches to prioritizing projects that E:\FR\FM\26JYR2.SGM 26JYR2 48926 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES matches such grantee characteristics as organizational size and maturity. A transit operator supported the FTA in allowing transit providers to use a selected prioritization approach and predetermined importance factors for determining project rankings. A trade association requested that the final rule not specify the value/capitalization levels, but instead allow each agency the flexibility to form their own capitalization policies. Regarding the proposed § 625.33(f) requirement that investment prioritization must take into consideration requirements concerning maintenance of accessible features (at 49 CFR 37.161 and 37.163), a transit operator said that other processes should be the basis for complying with ADA requirements and the TAM prioritization process should not include an expansion of the ADA mandate. A transit operator suggested that existing documents (Metropolitan Transportation Plan (MTP), Regional Transportation Plan (RTP), Statewide Transportation Improvement Plan (STIP, Transportation Improvement Plan (TIP), and Capital Improvement Plan (CIP)) should continue to be the location for documenting specific project listings. FTA’S RESPONSE: 625.33 Investment Prioritization The ranking of investment prioritization programs and projects can be categorical (high, medium, low), sequential (first, second, third), or another method that is appropriate for the transit provider. It must, however, indicate which year the transit provider intends to carry out the program or project. The output of the process is a list of ranked projects at the asset class level that identify assets from the asset inventory. FTA will issue guidance on methodologies for investment prioritization and TAM plan development. FTA notes that the requirement to develop an investment prioritization does not necessarily require a transit provider to invest in that plan. With the exception of 49 U.S.C. 5337 program recipients who are required to identify their projects are included in their TAM plans. However, FTA believes the TAM approach will result in a useable and effective investment prioritization that transit providers are encouraged to use to achieve or maintain a state of good repair for their assets. FTA disagrees that investment prioritization itemized at the asset level could conflict with the TIP process. FTA believes that it is a best practice for VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 transit providers to first prioritize their own projects based on their own needs, before engaging in larger planning processes in conjunction with the State, the MPO, and other transit providers to establish a prioritized over-arching program of projects for the larger area. FTA understands that performance targets, and by extension, asset condition, may decline even with good asset management practices in place. The purpose of the final rule is to provide a proactive strategic framework for transit providers to balance competing needs and limited funds in an informed decision making process to reduce the SGR backlog. FTA agrees that’’ improve or maintain SGR’’ limits the options available and has modified § 625.33(a) to read ‘‘improve or manage the state of good repair’’. FTA recommends that transit providers consider climate resiliency and reliability in their investment prioritization by identifying capital investment and other strategies to preserve the existing and projected future metropolitan transportation infrastructure, provide for multimodal capacity increases based on regional priorities and needs, and reduce the vulnerability of the existing transportation infrastructure to natural disasters.12 For example, severe rainfall events may cause flooding that shuts down operations at a transit maintenance facility. In this case, the continued availability of the asset during such events may require the installation of a watertight perimeter around the facility, which will both protect the condition of the asset and ensure its availability for continued transit operations. FTA is aware of publicly available tools to assist in the identification of vulnerabilities for specific systems or assets, and encourages transit providers to conduct a vulnerability analysis as part of their overall asset management approach. For a TAM plan, FTA recommends that transit providers identify any fixed assets that are located within the current FEMA-published flood hazard area (100-year floodplain), and the degree to which these assets have been built to withstand projected hazards that may occur over the assets anticipated useful life. FTA agrees that safety is a critical factor in determining the prioritization of asset investments; however it is not the only factor. FTA does not propose a specific methodology for investment prioritization. Safety needs are fluid and any fixed assessment limits a transit 12 Fixing America’s Surface Transportation Act (‘‘FAST’’) (Pub. L. 114–94), PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 provider’s ability to respond to the changing environment, FTA agrees that identifying an opportunity to improve safety does not indicate an unsafe condition. If a transit provider identifies an unacceptable safety risk associated with its asset, it should place that asset higher up in its investment prioritization, to the extent practicable. However, this rule does not establish selection criteria for a transit providers’ investment prioritization. FTA supports the proactive strategic approach of identifying future projects and ranking preventative projects with better return on investment higher in the investment prioritization. The final rule establishes that an investment prioritization is a fiscally constrained list of needed projects, ranked or grouped in order of priority. Therefore, a transit provider has discretion in prioritizing projects and programs over the TAM plan horizon period. FTA recognizes that no funding is guaranteed but most resources can be realistically estimated. For example, for FTA formula grant funds, a transit provider may not know the exact amount of funds it may receive two years hence, but it can make a reasonable determination of the projects it wants to pursue if it does receive the funding. Other funding that may be less estimable, such as discretionary funding, may require a TAM update. FTA reiterates that the NPRM did not propose that a transit provider abandon its existing project listing documentation processes nor are these requirements intended to supplant existing decision making practices. FTA disagrees that consideration of the costs associated with maintaining accessible features is an expansion of the existing mandate. FTA further clarifies that the ULB is used for performance measure metrics not for investment prioritization. FINAL RULE: FTA is revising this section to reflect that programs or projects within an investment prioritization can be for either improving or managing state of good repair. FTA also has revised this section to require that investment prioritization only apply to assets for which a provider has direct capital responsibility. 625.41 Standards for Measuring the Condition of Capital Assets Pursuant to 49 U.S.C. 5326(b)(1), the definition of state of good repair must contain objective standards for measuring the condition of capital assets. FTA proposed to define state of good repair for public transportation E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations capital assets as ‘‘the condition in which an asset is able to operate at a full level of performance.’’ This section proposed objective standards for equipment, rolling stock, facilities and infrastructure that are intended to further define ‘‘full level of performance,’’ and clearly indicate when an asset is in a state of good repair. The objective standards allow transit providers to operationalize and quantify state of good repair to audit their SGR performance. To accomplish this, FTA proposed three objective standards, detailed in section 625.41. The proposed objective standards are: (1) the asset is able to perform its manufactured design function; (2) the use of the asset in its current condition does not pose an identified unacceptable safety risk; and (3) the asset’s life-cycle investment needs have been met or recovered, including all scheduled maintenance, rehabilitation and replacements. The objective standards allow for an auditable SGR definition that is highlevel and broad enough to incorporate existing transit asset management practices at transit providers of different modes, different sizes, and different operating environments. An asset is in a state of good repair when each objective standard is met. The first objective standard in § 625.41(b)(1) requires that an asset is able to perform its manufactured design function. This objective standard takes into consideration that an asset may be in poor condition, but is still able to operate. For example, a transit provider may institute a slow zone to allow a rail car to operate on deteriorated track that can no longer support rail cars traveling over it at the original design speed, but can support rail cars traveling at slower speeds. In this case, the infrastructure track segment would not meet this SGR standard because it was designed to carry railcars at a speed that its current condition will not support. Achieving state of good repair means not accepting compromised performance from assets that are over age or of deteriorated condition. The next objective standard in § 625.41(b)(2) requires that an asset not pose an unacceptable identified safety risk. Going back to the previous example, track deterioration can lead to derailments and other safety hazards and, depending on the condition, may not meet this standard. If the asset is operating according to its designed function, but is introducing a safety risk to the system that the Accountable Executive considers to be unacceptable, then the asset is not in a state of good repair. A safety risk may be identified VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 through a number of ways, including through a transit provider’s practice of Safety Management Systems (SMS) as proposed under FTA’s notice of proposed rulemaking for public transportation agency safety plans. Achieving state of good repair means not compromising designed performance to mitigate safety risks or otherwise accepting safety risks from assets that are over age or in deteriorated condition. Lastly, the third objective standard proposed in § 625.41(b)(3) requires that the life-cycle investment needs of the asset be met. This means that the inspection, maintenance, rehabilitation, and replacement schedules have been met or recovered for the asset. Deferring maintenance on an asset may not have immediate consequences for an asset’s safety, reliability, or performance. However, deferred maintenance leads to these long-term consequences in the future. Thus, it cannot be said that an asset is in a state of good repair, when the maintenance practices that will maintain the asset’s full performance level are being deferred. An asset that meets all three objective standards is in a state of good repair. COMMENTS: Objective Standard— ‘‘Capital Asset Is Able To Perform Its Designed Function’’ A few commenters provided input on the SGR standard that an asset must be able to perform its designed function, as specified in § 625.41(b)(1). A transit operator said FTA should add the word ‘‘constructed’’ to the term ‘‘manufactured design function’’ since many facilities and infrastructure assets are constructed on-site rather than manufactured. A couple of transit operators said the inclusion of the term ‘‘designed function’’ in the SGR standard neglects to include the assets’ performance and operating conditions. In the case of legacy transit operators, these commenters said the designed function of an asset may be different than the required performance function. Another commenter asserted that this proposed SGR standard is not objective because the rule provides no definitions for ‘‘perform’’ and ‘‘design standards,’’ which will make it impossible for FTA and other stakeholders to accurately compare agencies against each other. This commenter recommended that FTA define each of these terms, provide transit agencies with additional guidance beyond the definitions that is applicable to varying vehicles and infrastructure, and request comment on the inclusion of specific, measurable statistics (e.g., requiring a vehicle to have fewer than a certain number of PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 48927 maintenance-related breakdowns or fewer than a certain number of maintenance-related passenger injuries per 100,000 revenue miles) to increase the objectivity of this standard. FTA’S RESPONSE: Objective Standard—‘‘Capital Asset Is Able To Perform Its Designed Function’’ This final rule clarifies that the term ‘‘designed function’’ is intended to include facilities that are constructed on-site rather than manufactured. FTA agrees that the designed function objective standard does not explicitly include assets’ performance and operating conditions. When used in concert with the other objective standards, specifically, the lifecycle investment needs standard, a representation of the asset is more fully fleshed out. In addition, a SGR determination is aspirational and should reflect the absence of compromises accepted due to over age and deteriorated assets. With regard to comments about legacy assets, FTA recognizes that the designed function may be outdated. However, this standard is intended to identify the extent of those potential discrepancies. FTA disagrees that this standard is not objective. The intention of the SGR determination and objective standards is to provide agencies with a method to measure their assets’ SGR based on standard principles, as provided by FTA. The final rule also establishes national performance measures to allow for comparisons across similarly situated providers. The metrics proposed by commenters, such as maintenance-related injuries per 100,000 revenue vehicles, are not assetbased measures, but are an output metric of a process that, prior to this final rule, has not been standardized. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. COMMENTS: Objective Standard—‘‘Use in Current Condition Does Not Pose an Unacceptable Safety Risk’’ Some public comments provided input on the SGR standard that use of the asset in its current condition does not pose a identified unacceptable safety risk, as specified in § 625.41(b)(2). Several State DOTs said the final rule should delete the phrase ‘‘[assets that] pose an identified unacceptable safety risk’’ and use a different formulation, possibly such as to projects that ‘‘provide opportunities to improve the safety of an already safe system.’’ These commenters also said the rule should specify that, ‘‘by identifying an E:\FR\FM\26JYR2.SGM 26JYR2 48928 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES opportunity to improve safety, a State has not indicated an unsafe condition.’’ A professional association and a couple of State DOTs supported the rule’s language in § 625.41(b)(2) as a measure for SGR, but said FTA needs to ensure that a provider or plan sponsor is not required to maintain records and report to the FTA that a specific asset has an ‘‘identified unacceptable risk.’’ A trade association and two transit operators stated that identifying ‘‘unacceptable safety risks’’ cannot be defined or addressed until FTA has established safety performance criteria, through notice and comment, for all modes and minimum safety performance standards for vehicles in revenue service. A transit operator said ‘‘unacceptable risk’’ should not apply in an asset management planning context because such risks will be immediately addressed through safety initiatives or safety planning prior to adoption measures through a TAM plan. Stating that ‘‘unacceptable safety risks’’ seems subjective, a transit operator suggested that transit agencies should use procedures under their SMS program to determine unacceptable safety risk and that FTA require transparency on what a provider defines as unacceptable safety risks. Another commenter similarly asserted that this proposed SGR standard is not objective because the rule provides no definitions for ‘‘known,’’ ‘‘unacceptable,’’ and ‘‘safety risk,’’ each of which could be interpreted differently by agencies, which would make it impossible for FTA and other stakeholders to compare transit agencies to each other accurately. This commenter recommended that FTA define each of these terms, provide transit agencies with additional guidance beyond the definitions that is applicable to varying vehicles and infrastructure, and request comment on the inclusion of specific, measurable statistics (e.g., requiring a vehicle to have fewer than a certain number of maintenance-related breakdowns or fewer than a certain number of maintenance-related passenger injuries per 100,000 revenue miles) to increase the objectivity of this standard. FTA’S RESPONSE: Objective Standard—‘‘Use in Current Condition Does Not Pose an Unacceptable Safety Risk’’ FTA understands the uncertainty expressed in some comments regarding compliance with the requirements of this final rule that are related to safety, in the absence of a final National Public Transportation Safety Plan and a final rule for public transportation agency VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 safety plans. However, FTA believes that the requirements of this final rule can be implemented in the absence of the two aforementioned components of the National Safety Program because they are not dependent on the requirements under a final National Safety Plan or a final rule for Public Transportation Agency Safety Plans. Operators are already making decisions about what risks and level of risks are unacceptable within their system. Again, the final rule is scalable and flexible. This proposed standard has both an objective and subjective component. Whether or not the condition of an asset poses a particular risk is an objective determination—it either does or does not pose a risk. Whether or not that risk is unacceptable is a subjective determination. The final rule neither defines nor prescribes standards for ‘‘unacceptable safety risk.’’ To the contrary, intentionally, the rule leaves the determination of what constitutes an ‘‘unacceptable safety risk’’ to the individual transit provider. FTA believes that each provider, not FTA, is in the best position to make a determination, based on knowledge of both its unique operating environment and availability of resources, regarding the categorization and mitigation of risks, to include managing risks arising from an asset not being in state of good repair. Therefore, it would be up to the individual provider to determine what investments should be made to improve the performance of its transit system. The rule does not require that a transit provider rely on performance target as the primary driver in setting its investment priorities. Instead, the rule final requires a transit provider to give due consideration to those assets that pose an identified unacceptable safety risk when setting its investment priorities. FTA’s approach to TAM is consistent with its proposed SMS approach to safety. A fundamental aspect of transit asset management is the monitoring of asset condition data as an indicator of system performance. Similarly, SMS is a formal data-driven approach to managing safety risk and assuring the effectiveness of safety risk mitigations. SMS does not require that an organization take a specific action to address a specific safety risk. Identification, analysis and mitigation of safety risks, and any other risks that exist within a transit system, are activities that a transit provider should already be engaging in. FTA does not agree with the commenter who suggested that public access to safety risks that may be PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 identified in a TAM plan or safety plan may increase safety risks for the rail system. The NPRM did not propose that a transit provider document safety risks in its TAM plan. In making a determination regarding the state of good repair of an asset, the provider must consider whether or not an asset poses an identified unacceptable safety risk. Where the condition of an asset may pose an unacceptable safety risk, the final rule requires a provider to apply an appropriate level of consideration to those assets when making investment prioritization decisions. FINAL RULE: FTA is not making any changes in the final rule related to these comments. COMMENTS: Objective Measure— ‘‘Lifecycle Investment Needs of the Asset Have Been Met or Recovered’’ Several public comments provided input on the SGR standard that lifecycle investment needs of the asset have been met or recovered, as specified in § 625.41(b)(3). Several commenters said the life-cycle maintenance condition must be flexible and fluid. For example, some of these commenters said a bus that is due for maintenance would not be rendered out of good repair because the oil change was delayed. One transit operator urged that maintenance schedules should not be so rigid as to incorrectly label a vehicle out of good repair based on minor deviations from the regular maintenance schedule. A transit operator stated that the maintenance life-cycle can be impacted by major overhauls and repairs, but not minor maintenance tasks. This commenter recommended the phrase ‘‘meets required level of service performance, and whether major maintenance and rehabilitation have been completed.’’ One commenter said there are times when certain assets do not meet the lifecycle expectations, and the agency must weigh the cost of continuous maintenance with the cost of replacement, regardless of the lifecycle. A couple of commenters said FTA should recognize that regulatory and technology changes could render assets obsolete prior to reaching their ULB ages and FTA’s minimum life requirements. A State DOT said FTA should clarify the term ‘‘all scheduled maintenance,’’ asking if it is just those items tied to safe operation of service or inclusive of oil changes and auxiliary systems maintenance. A couple of transit operators stated that the standard should be clarified to show that the E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations rehabilitation and replacement elements are ‘‘as necessary’’ rather than ‘‘scheduled.’’ One of those commenters stated that the proposed wording may lead agencies to prioritize meeting the SGR definition at the expense of making maintenance or replacement decisions based on condition or risk assessments. According to this commenter, it could also incentivize agencies to specify less aggressive maintenance plans in order to achieve greater compliance with the SGR definition. The other commenter noted that ‘‘scheduled’’ rehabilitation and replacement are not always necessary and can reasonably be postponed or cancelled without any notable effect on an asset due to varying usage and wear patterns. A couple of commenters suggested that FTA remove the term ‘‘scheduled maintenance’’ in order to limit the SGR standard to meeting all capital investment needs through an asset’s life-cycle, as opposed to day-to-day operating expenditures. A transit operator asked if, by including this SGR standard, FTA is asking if asset maintenance plans are being followed. Another transit operator said that the addition of this SGR standard is not required under the authorization statute, 49 U.S.C. 5326. The commenter asked, unless FTA is willing to define the lifecycle investment needs of each asset, how will it be determined if they have been met? Another transit operator requested clarity and additional information on the exact meaning of ‘‘recovered’’ in terms of life-cycle investments being met or recovered, and how to make such a determination. A different commenter also expressed concerns that life-cycle needs are identified by the transit agencies and are not standardized where needs are equal, and that this standards does not take into account the quality of maintenance. To remedy this flaw, the commenter recommended that FTA develop standard guidelines for maintenance requirements, with variations permitted for factors such as climate conditions and operating conditions. An individual commenter asked a number of questions about this provision: 1–What about unscheduled maintenance and repair needs such as a bus engine or transmission that needs to be replaced? 2–What are ‘‘rehabilitation’’ schedules when applied to buses? 3–How should assets such as engines and transmissions be tracked, reported, and prioritized as compared to buses? 4–How should ULBs be determined for buses as compared to major components such as engines and transmissions? VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FTA’S RESPONSE: Objective Measure— ‘‘Lifecycle Investment Needs of the Asset Have Been Met or Recovered’’ This final rule establishes three objective standards for the SGR determination. Each of the standards will be evaluated at the transit provider level, which is where the SGR determination occurs. FTA does not define an asset’s life-cycle investment needs, which may include its maintenance schedules, rehabilitation policies and other operational decisions. A transit provider is in the best position to determine the life-cycle needs of its assets. Each transit provider must define its assets’ life-cycle investment needs, and thus must determine if the needs have been met or recovered. Meeting the lifecycle investment needs of an asset means that the maintenance, preventative and responsive, major and minor, has occurred on a schedule and as needed. Recovering the life-cycle investment needs means that the asset may have not strictly adhered to its schedule, but it has received all of the maintenance established for a particular point on its life-cycle. FTA recognizes that some maintenance activities are more impactful to condition, costly, and time dependent. However, FTA also notes that long term delay of relatively minor maintenance has an impact on condition over time. Thus, FTA did not propose a minimum maintenance level for consideration in an asset’s life-cycle investment needs. Further, FTA recognizes that unscheduled maintenance often is more impactful initially, but posits that scheduled maintenance can help to reduce unscheduled maintenance and provide valuable information to the local decision making process. FTA disagrees with the commenter who states that the SGR standard is not required under MAP–21. The law explicitly requires FTA to develop a definition of state of good repair which includes objective standards. FTA is developing guidance and technical assistance to assist transit providers in how to establish life-cycle investment needs. The guidance will address the questions posed by commenters regarding how to develop ULBs for assets and subsystems, how to apply rehabilitation schedules, and more. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 48929 COMMENTS: Objective Standards— Other Comments A couple of commenters said § 625.41(b) should read ‘‘. . . condition sufficient to enable the asset to operate safely at a full level of performance.’’ A few commenters raised other general concerns with the SGR standards. A transit operator said FTA should promulgate final safety performance criteria for all modes of public transportation and minimum safety performance standards for vehicles in revenue operations. A tribal government expressed concern that, while the SGR standards make sense from a maintenance and depreciation standpoint, they do not make sense if funding is not available for capital replacement. This commenter asserted that there will be times when services will shut down in order to comply with these standards. A transit operator said the SGR standards in this section are inconsistent with the definition provided in § 625.5 and the principles provided in § 625.17. The commenter said the final rule should align these three components of the regulation. A transit operator noted that condition by itself is not even a factor in considering whether an asset is in SGR (per the proposed SGR definition and § 625.41 standards). One commenter asserted that none of the three proposed SGR standards are sufficiently objective to comply with the requirement of MAP–21. A transit operator asked how agencies could determine if assets are in SGR if agencies are not required to collect and report uniform objective measurements of safety performance, reliability performance, efficiency performance, and quality performance. Another transit operator suggested that limiting the designation of asset condition as a binary response of ‘‘Yes’’ or ‘‘No’’ in terms of whether the asset in in a state of good repair would be simpler. One commenter requested guidance on measuring asset conditions. A couple of commenters requested guidance on calculating SGR backlog. Expressing concern that the proposed SGR criteria do now allow for sufficient flexibility in determining whether an asset is in an SGR or not, a transit operator recommended that the proposed SGR criteria be provided as guidelines, rather than mandatory criteria for determining SGR. FTA’S RESPONSE: Objective Standards—Other Comments FTA proposed an aspirational SGR definition which identifies an asset at E:\FR\FM\26JYR2.SGM 26JYR2 48930 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations its best operation performance condition. Full level of performance is not an absolute condition, but it can be measured objectively by the three standards identified in § 625.41 (b) (1) through (3). FTA recognizes that there are more SGR needs than funding available for state of good repair projects. The National TAM System provides a strategic, proactive framework for decision making. FTA disagrees that the proposed SGR definition (§ 625.5), SGR principles (§ 625.17), and SGR standards (§ 625.41) are inconsistent with one another. Please refer to FTA’s response to the comments on the state of good repair definition in § 625.5. FTA disagrees that the condition of an asset is not a factor in SGR determination. Each of the objective standards is a measure of an asset’s condition. FTA also disagrees that the standards are not sufficiently objective. Each transit provider can use the standards established in the final rule to determine if its assets are or are not in a condition to meet each standard, and thus operating at a full level of performance, which indicates a state of good repair. FTA agrees that a binary (yes or no) determination of SGR would be simpler, but it would not meet the statutory requirement for objective standards for SGR. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: FTA is not making any revisions in the final rule related to these comments. 625.43 SGR Performance Measures for Capital Assets In accordance with 49 U.S.C. 5326(c)(1), this section proposed four SGR performance measures based on the SGR objective standards proposed in § 625.41. FTA proposed one measure for each asset class. Each SGR performance measure is based on using calculable quantities of asset conditions to assess state of good repair. FTA’s priority in selecting performance measures were to minimize reporting burden, especially on small operators, and to provide a meaningful and consistent basis for transit providers to compare their own state of good repair performance over time. In some cases, this means that FTA selected a proxy for measuring state of good repair, rather than measuring asset condition directly. Although FTA only proposed four performance measures in this rule, one per asset category, a transit provider may still apply its asset management systems to its entire inventory of capital assets, including those assets for which VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 no performance measure has been established. Performance Measures for each asset class might include several SGR measures within each asset category (rolling stock, infrastructure, equipment and facilities). For example, a transit provider that has a fleet of 40′ buses, light rail vehicles and paratransit vans would have 3 rolling stock performance measures: percent of 40′ buses that have met or exceeded their ULB, percent of light rail vehicles that have met or exceeded their ULB, and percent of paratransit vans that have met or exceeded their ULB. COMMENTS: Performance Measures— General Several commenters recommended flexibility in the use of performance measures. A few transit operators and a State DOT said that FTA should allow transit providers the flexibility to rightsize their own performance measures and provide flexibility in the classification of certain assets. One commenter recommended replacing the entirety of § 625.43 with a simple statement that ‘‘performance measures for each asset class must be set and approved by the responsible executive at each agency.’’ Other commenters provided other suggestions for modification of the proposed performance measures. A couple of commenters recommended weighting (or allowing agencies to weight) the performance measures because some assets are of higher value or are more critical than others. A few commenters recommended a phase-in period for asset classes. Specifically, some of these commenters said FTA’s focus should be on rolling stock and infrastructure; equipment and facilities should be phased in three to four years later. A transit operator proposed a comprehensive approach to measuring the condition of all transit assets, including age, physical condition, and performance measurements. Further, this commenter suggested that when grouping assets and measuring condition and performance, FTA should consider the idea that utilization impacts measures of performance at the asset category level. The commenter also cautioned that care must be taken when ‘‘averaging’’ or rolling assets into categories where variability in condition and performance can be hidden. A State DOT said asset performance measures should account for risk. A transit operator stated that FTA should consider permitting the terms ‘‘systems,’’ ‘‘guideway elements,’’ ‘‘vehicles,’’ and ‘‘stations’’ to be used as PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 asset categories for rail transit properties. Several commenters discussed ULBs. A State DOT said, for equipment and rolling stock, the ULB described in the proposed rule does not provide a useful overview of the asset’s actual condition or a practical measure on which to base investment decisions. The commenter requested the flexibility to use its own life-cycle analysis to determine the appropriate useful life. One commenter recommended adding a requirement for RTAs to provide ULBs to State Safety Oversight Agencies (SSOAs) for review and comment. A transit operator said if FTA wishes to use a different ULB for a TAM plan than for grant authorization, the TAM plan useful life should not be shorter than grant useful life. In reference to FTA’s statement that it anticipates publishing ‘‘a default ULB based on TERM data that may be used in lieu of a local condition-based calculation of ULB,’’ several commenters said FTA should cite where and when this default ULB will be published, provide an explanation of how the ULB measure will be calculated, and ensure that the default ULB is available to transit providers before initial targets will need to be set. A tribal government requested clarification regarding the NPRM statement that providers may use FTAestablished default ULB in lieu of a local condition-based calculation of ULB. Asserting that ULB of agency revenue vehicles is not alone a sufficient metric for measuring progress on improving SGR, one commenter recommended that FTA consider including additional performance metrics, such as measures relating to mechanical failures, effects on safety (e.g., passenger injuries per 100,000 revenue miles attributable to maintenance failures). This commenter also discussed the potential costs and benefits associated with implementing this recommendation. A couple of commenters stated that none of the proposed performance measures are tied directly to the proposed definition of SGR, which effectively requires that all three standards outlined in § 625.41 are met. The commenters said FTA should clarify that performance measures serve only as a ‘‘proxy’’ for measuring SGR— they cannot be used alone to calculate the SGR backlog. A trade association urged FTA to issue guidance on performance measures. A transit operator requested more guidance on how to categorize assets such as tunnels, which the commenter said could fall under facilities or infrastructure. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES Regarding the NPRM statement that FTA would support transit providers that elect to use more sophisticated performance measures, a transit operator asked how FTA intends to collect this data in the NTD if every agency uses a different measure for each asset class/category. This commenter also asked if FTA is open to using different measures across all three of the major asset categories, reasoning that in some instances, (e.g., rolling stock) assets can and should be measured using condition and/or performance. FTA’S RESPONSE: Performance Measures—General FTA has developed a combination of performance measures using a variety of approaches, including age, condition, and performance. The measures are actionable and scalable. FTA encourages transit providers with sophisticated TAM practices to pursue more advanced approaches, in addition to setting targets for the performance measures in § 625.43. FTA believes the industry is prepared to use SGR performance measures and a phased-in approach is not necessary. Minimizing reporting burden was a major consideration in FTA’s selection of each measure. FTA believes that the relatively simple and straight-forward approach it selected for each measure will lend itself to immediate implementation. FTA proposed the ULB option to allow a transit provider to incorporate consideration of its operating environment into its performance targets. FTA will publish default ULBs on its asset management Web page concurrent with publication of the final rule, and as suggested, will document the date of publication. FTA is also developing guidance for transit providers to use in calculating localcondition based ULBs. FTA agrees with the comment that the SGR performance measures are a ‘‘proxy’’ for measuring SGR and they cannot be used to calculate the total SGR backlog. Further, the performance measures serve as a ‘‘proxy’’ for SGR and cannot necessarily be used to determine an assets’ SGR. Similarly, the TERM Scale is calibrated such that the number of cases where a facility is below condition 3.0, but still meets all three objective standards for SGR in 625.41, and vice versa, should be relatively small. As discussed earlier, however, FTA believes that the lower burden on the industry of using a 3.0 condition threshold on the TERM Scale, rather than a 2.5 threshold, merits using this in the performance measure. However, almost all rail guideway VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 infrastructure that has a slow zone in place will, by definition, not meet the three objective standards for SGR in 625.41. FTA clarifies that each transit provider or sponsor is required to report their performance measure targets to the NTD as per § 625.43, regardless of the approach used to determine them. FTA will develop guidance and technical assistance for transit providers to assist transit providers in applying each of the performance measures. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. 625.43(a) Equipment- (non-revenue) service vehicles This section proposed the performance measure for non-revenue, support-service and maintenance vehicles is the percentage of vehicles that have met or exceeded their useful life benchmark. To determine the ULB, a transit provider may either use the default ULB established by FTA or a ULB established by the transit provider in consideration of local conditions and usage and approved by FTA. COMMENT: Performance Measure— Equipment Several transit operators noted that the definition provided for equipment in § 625.43(a) is significantly different than the definition provided in § 625.5. One commenter said this provision implies that equipment is only nonrevenue vehicles, while the definition states something more burdensome. A transit operator recommended that nonrevenue vehicles be included in the vehicle asset class. Another transit operator said equipment that impacts operations should be defined as ‘‘equipment,’’ and non-revenue vehicles are not always considered equipment, but usually are grouped as part of a fleet. Several commenters concluded that the transit agency should be allowed to define and track ‘‘equipment’’ that is relevant to their service or risk model. A State DOT recommended the following additional criteria for equipment (and rolling stock): Average ULB, measured as a percentage. A transit operator said the term ‘‘equipment’’ is typically employed in regards to portable tools, work machinery, or components and not reserved for non-revenue vehicles. FTA’S RESPONSE: Performance Measure—Equipment FTA agrees that the definition of equipment (§ 625.5) and the equipment PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 48931 performance measure (§ 625.43) differ. Example 1 in Appendix B to the final rule explains the differences. Specifically, the SGR performance measure for equipment only applies to non-revenue service vehicles; the Asset Category equipment includes all ‘‘articles of expendable, tangible property having a useful life of at least one year;’’ and the TAM plan requires all non-revenue service vehicles and owned equipment over $50,000 in acquisition value. Non-service vehicles are an easily understood and readily identifiable category of equipment, and the age-based performance measure is the most-simple and straight-forward performance measure available. Thus, FTA believes that transit systems of all sizes will be reasonably able to implement this measure. FTA did consider establishing other performance measures for different types of equipment, but ultimately declined to do so based on a desire to minimize reporting burden and there being relatively few ready-to-implement candidate performance measures for other types of equipment at a national level. For example, FTA’s existing TERM Model does not have particularly robust treatment of equipment. Further, FTA did not receive any comments suggesting another performance measure for equipment. FTA, though, is considering conducting additional research in this area. FTA recognizes that non-revenue service vehicles are not always labeled as equipment at every transit provider. However, FTA believes this is a minor burden to align the transit provider asset category for the required SGR performance measure calculation. A transit provider should conduct its performance measure calculation by mode, which means a ULB cannot be averaged across modes. A transit provider may define, calculate, and track additional performance measures and targets. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. 625.43(b) Rolling stock This section proposed the performance measure for rolling stock is the percentage of revenue vehicles within a particular asset class that have either met or exceeded their ULB. To determine the ULB, a transit provider may either use the default ULB established by FTA or a ULB established by the transit provider in consideration of local conditions and usage and approved by FTA. E:\FR\FM\26JYR2.SGM 26JYR2 48932 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations COMMENTS: Performance Measures— Rolling Stock Many public comments provided input on the performance measure for rolling stock, as specified in § 625.43(b). Several transit operators noted the deficiencies of an age-based performance measure and requested flexibility in determining ULB for rolling stock. Several commenters expressed concern that for many agencies (notably smaller and rural agencies), age-based ULB reporting for rolling stock may be inadequate and provide a skewed view of the condition of a particular agency’s assets. Several of these commenters suggested that individual agencies should have the option of utilizing an age-based reporting format and also be allowed to adopt additional or alternative means of condition assessments (e.g., by vehicle type as well as asset class). These commenters also said a strict age-based reporting system would discourage agencies from strong maintenance practices, since even a well-maintained, fully functional bus would fail the test of age based asset condition reporting. A few commenters said SGR for rolling stock should be based on mileage or maintenance history, rather than only age. Another commenter said FTA should consider a condition-based evaluation of vehicles. A transit operator recommended that FTA specify that age-based performance measures are a proxy and not a direct measure of condition when used to evaluate state of good repair. Asserting that many electric vehicles have a useful life that may be largely independent from a strict age-based assessment of the SGR, a transit operator urged FTA to provide clarity regarding how ULB and the standard useful life requirement would apply to electric vehicles. A couple of commenters said this section should reference the standards at 49 CFR part 38. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: Performance Measures—Rolling Stock FTA proposed an age based performance measure for rolling stock. This measure is simple, well understood, and accessible to all transit providers. FTA believes that this performance measure is appropriate to address the national TAM system goals. FTA notes that transit providers will be able to account for variations in maintenance practices and operating conditions by adjusting the useful life benchmark for particular fleets of vehicles. That is, a well-maintained vehicle may have a longer ULB and thus would not meet or exceed their ULB VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 until a later date with regard to a less well-maintained vehicle. FTA encourages transit providers to develop performance measures for rolling stock, in addition to those required in § 625.43, that are more sophisticated and use advanced methods of calculation such as condition, performance, or a risk based models for use at their agency. FTA recognizes that age is not necessarily the most accurate performance measure available. However, age is a simple and widelyused performance measure for vehicles that can approximate the condition of rolling stock assets for capital investment planning. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. Section 625.43(b) requires a measure for rolling stock that is based on the percentage of rolling stock that have met or exceeded their ULB. This performance measure is applicable to all asset classes of revenue vehicles. For example, a transit provider operating buses, replica trolleys, paratransit vans, and light rail vehicles would establish a performance target for each asset class. Each performance target would quantify the percentage of rolling stock in each class that is over the transit provider’s ULB for that asset class. Both the equipment and rolling stock measure assume that most vehicles provide reliable service for a predictable period of time (adjusted by level of usage for some types of assets), after which they should be replaced. Since there is typically a long lead time for replacing transit vehicles, this measure reflects the best practice of planning for the replacement of transit vehicles as they reach a certain age. 625.43(c) Infrastructure-rail fixedguideway track, signals, and systems This section proposed the performance measure for rail fixedguideway track, signals, and systems is the percentage of track segments, signal, and systems with performance restrictions. COMMENTS: Performance Measures— Infrastructure A couple of commenters expressed concern with using performance restrictions (i.e., slow zones or slow orders) as an indicator of asset condition. A State DOT said a slow zone may be imposed to address maintenance of a rail bridge, but has no connection to the state of good repair of the catenary, track or signal system. A transit operator said slow zones can be temporarily alleviated by short-term PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 fixes to track, which do not resolve the underlying problems or create an asset that is truly in a state of good repair, and the connection is more tenuous for other asset types. The commenter said ULB may be more useful for these assets. However, this commenter also acknowledged that the performance restriction metric as applied broadly to this asset category may be an incremental step toward capturing more complete information by asset type, and that agencies may be asked to supply additional information as the industry develops more sophisticated asset tracking capabilities. A State agency said the infrastructure performance measure may discourage RTAs from issuing restrictions when needed, which could reduce safety. A few commenters requested clarification about the parameters for developing performance measures for infrastructure assets. A transit operator specifically asked what standards would apply to calculating the percentage of a system subject to performance restrictions in response to a single defective track component. The commenter also asked if the measure would be calculated be based on the length of the signal blocks affected; the relative share of the defective component among all components of the same asset class; or by some other method. Another transit operator asked how bus systems that do not have guideway should report on assets within the infrastructure asset class (e.g., systems). A transit operator recommended that FTA align the components of the infrastructure asset class with the previously published asset management guidelines. This commenter also recommended utilizing a performance metric of age as a percentage of remaining useful life to assess the performance of infrastructure. A transit operator said this provision should be subdivided to into three separate parts: Track, signals, and systems. However, another commenter said systems and signals be an element of their own and not included in the heavy rail element of infrastructure. A State DOT opposed any requirements that might conflict with the wellestablished, industry wide National Bridge Inventory (NBI) Rating Scale. FTA’S RESPONSE: Performance Measures—Infrastructure FTA recognizes that slow orders may be issued for bridge maintenance. The infrastructure measure is a proxy for both track condition and underlying guideway condition. However, FTA neither intends nor anticipates conflict E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations with the National Bridge Inventory (NBI) rating scale or other established structural policy and procedures. Transit providers should use the data gathered to comply with the final rule to improve their decision making. There is no penalty or reward for target attainment. The asset category for infrastructure includes more asset classes than the SGR performance measure, which only includes rail transit infrastructure. FTA encourages transit providers to develop additional performance measures for infrastructure assets such as signals and systems. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. Section 625.43(c) requires a measure for infrastructure based on the percentage of guideway directional route miles with performance restrictions. This performance measure would be applicable to all rail fixed guideway infrastructure. Most transit providers already collect data on slow zones—this performance measure would standardize their reporting. The performance-based approach is based on a regular, comprehensive assessment of a system’s performance and relies upon the assumption that as assets age, they become less durable and reliable, resulting in decreased operational performance. The ability of an asset to safely and reliably perform its assigned function at a fullperformance level is at the heart of state of good repair. The performance-based approach requires integration of operations and capital maintenance activities and is particularly beneficial because it focuses on the actual outcomes of capital assets being in a state of good repair. asabaliauskas on DSK3SPTVN1PROD with RULES 625.43(d) Facilities This section proposed the performance measure for facilities is the percentage of facilities within an asset class, rated below condition 3 on the TERM scale. COMMENTS: Performance Measures— Facilities Most of the commenters on this topic either requested clarification on or else proposed modifications to FTA’s use of the TERM scale. Several commenters suggested that FTA should not alter its approach to the TERM scale and revert back to a threshold rating of 2.5 under the existing TERM system. For example, two transit operators expressed concern with the TERM scale defined in the proposed rule because FTA’s Asset Management Guide sets 2.5 as the asset VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 condition threshold for ‘‘adequate,’’ while the NPRM proposed 3.0 as ‘‘adequate.’’ One of these commenters asserted that this change would be problematic for agencies that have already begun working on transit asset management. Similarly, another commenter stated that the proposed SGR level of 3.0 is a move in the wrong direction and suggested that the adequate level be moved to level 1 or level 2. Other commenters said use of TERM and the TERM scale should be optional, not required. A transit operator proposed using an industry-established system like the Facilities Condition Assessments and the Facilities Condition Index for buildings and facilities. Another transit operator said FTA should consider extending the ULB and asset age to all asset types, which will be more attainable for agencies than the condition assessment metric prescribed for facilities. The commenter said requiring all assets in this category to have a full condition assessment with a 1–5 ranking based on the TERM scale will be extraordinarily expensive for larger agencies and may also be costprohibitive for smaller agencies with fewer assets and less funding. A transit operator recommended using a performance metric of age as a percentage of remaining useful life to assess the performance of facilities. An MPO supported the condition-based approach proposed for measuring the condition of facilities and encouraged FTA to consider the inclusion of similar measures, in addition to the age-based approach, that were proposed to measure rolling stock and equipment conditions. A State DOT said it currently performs a condition assessment for stations using a similar 0–9 scale as the rail bridges, and it is not familiar with the 1–5 TERM rating system. A transit operator requested clarification about the characteristics of a facility that would be determinate of specific ratings on the TERM scale and also about the parameters for defining facilities asset classes for purposes of grouping and reporting. The commenter stated that use of the TERM scale, in the absence of uniform standards for assessing the SGR of facilities, risks fostering an illusion of precision and comparability across properties. Absent such parameters, the commenter suggested revising the proposed performance measure for facilities to read: ‘‘Percentage of Facilities within an asset class in marginal or poor condition,’’ which would afford grantees with the flexibility they will need to define PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 48933 evaluation criteria based on their current practices. A transit operator said this provision may benefit from measuring ADA compliance with the 49 CFR part 37 standards, at least with respect to sidewalks, walkways, lobbies, vertical circulation, signage, and platforms. Another transit operator stated that FTA has included equipment that is located in the facilities, but some equipment does not lend itself to a condition-based evaluation and should instead be an age-based evaluation. FTA’S RESPONSE: Performance Measures—Facilities FTA proposed a condition based performance measure for the facilities asset category using the TERM scale. As previously mentioned, FTA did not set the performance benchmark at 2.5, because a benchmark of 2.5 would require all transit providers subject to the final rule to use the TERM-Lite model to calculate a 2.5 rating. The TERM scale is an integer based scale, thus a direct measure of condition rating 2.5 is not possible. In contrast, condition ratings to one decimal point are produced by the TERM-Lite model as an estimate of condition between condition assessments. Thus, FTA is setting the benchmark at 3.0, as this will reflect the actual results being produced by transit providers carrying out their own condition assessments. FTA does not agree that TERM scale should be optional, but does agree that using the TERM-Lite model is optional. The TERM scale effectively acts as a standard for reporting facility condition and is already a well-known tool within the transit industry. The condition-based SGR performance measure for the facility asset category is not equivalent to the condition assessment element of TAM plan § 625.25(b)(2). The facility grouping and reporting asset class are determined by the asset inventory asset classes. The asset inventory level of detail is commensurate to the level of detail provided in the transit providers’ program of capital projects. Further, the subsystems and components of each asset category are determined by the transit provider, in their asset inventory. FTA recognizes that the subdivision of component asset classes within the facility asset category may differ from provider to provider. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. Section 625.43(d) requires a conditionbased performance measure for facilities based on the percentage of facilities E:\FR\FM\26JYR2.SGM 26JYR2 48934 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES with a condition rating of less than 3.0 on the TERM). The TERM Scale rates asset condition on a 1 (poor) to 5 (excellent) scale. This condition-based approach would require a transit provider to conduct periodic condition assessments of its assets using a set of standardized procedures and criteria. This approach directly identifies the condition of each asset based upon its actual usage and maintenance history. 625.45 Setting Performance Targets for Capital Assets In accordance with the statutory mandate at 49 U.S.C. 5326(c)(2), this section proposed that transit providers establish quantifiable targets for each performance measure identified in § 625.43. FTA recognizes that in its determination of targets, a transit provider would need to consider a wide range of factors that may either constrain its ability to impact outcomes or may adversely impact outcomes (such as the population growth of an area). Transit providers should consider these factors along with the expected revenue sources from all sources in establishing targets and should explain in the annual report to FTA how the factors were addressed in setting their targets. Under this section, the NPRM proposed group TAM plan sponsors to set one unified performance target for each asset class in the group TAM plan asset inventory. FTA recognizes that the condition of assets may vary significantly among group TAM plan participants. Therefore, each unified target should reflect the anticipated progress in asset performance for a fiscal year for the entire group. For example, group TAM plan participants are responsible for meeting a target. Thus, each transit provider’s asset inventory and condition assessment results are combined to determine the unified targets in the group TAM plan. The group TAM plan sponsor is responsible for coordinating development of the targets with participating transit providers’ Accountable Executives, to the extent practicable. In addition, transit providers are required to coordinate with States and MPOs, to the maximum extent practicable, in the selection of State and MPO TAM performance targets to ensure consistency. COMMENT: Performance Targets— Three-Month Deadline Several commenters expressed concern about the 3-month deadline for target setting specified in § 625.45(a)(1). Some commenters generally requested more time to develop targets, some VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 recommended revising the target-setting deadline to a minimum of 6-months, and others recommended that FTA allow a year to develop the targets. One transit operator recommended that the two-year implementation period for TAM plans should apply to all aspects of the plan, including the performance targets. A trade association said FTA should require the initial setting of targets six months after the completion of the first TAM and annually after that. A State DOT said the three-month target setting process may be sufficient for an individual TAM plan, but a group TAM plan may require more time to build consensus for the targets. Several commenters said until FTA promulgates prerequisite performance criteria and standards, the 3-month turn-around deadline cannot be expected to produce meaningful results. Multiple commenters recommended a phased-in approach for target setting where the initial target setting (those due in three months) are classified as preliminary, with some commenters reasoning that targets set within three months will not be useful in guiding investment decisions. A State DOT said the rule should clarify that recipients and subrecipients will not be held accountable to the initial targets, but rather to the targets that are included in the more formalized asset management plans. Several commenters argued that the establishment of performance targets for capital assets should not need to be accomplished prior to the development of the TAM plan. Most of these commenters said the TAM plan should direct the process and criteria for performance targets and, therefore, must be developed in conjunction with, or prior to, the development performance targets. A few commenters requested that FTA publish the rule but set an effective date several months in the future (consistent with all other U.S. DOT performance rules). A transit operator asked if FTA would consider adjusting the target setting timeframe based on the size of the transit agency. FTA’S RESPONSE: Performance Targets—Three-Month Deadline Pursuant to 49 U.S.C. 5326(c)(2), recipients must set targets within 3 months after the effective date of a final rule to establish performance measures. In many cases, the effective date of a final rule is several months after the publication of the final rule, in which case a transit provider would actually have more than three months to establish performance targets. FTA believes that three months is sufficient PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 time to complete initial target-setting. Sponsors are responsible for setting initial and subsequent targets for small and rural operators that are eligible to participate in a group TAM plan. FTA recognizes the transit industry will be engaged in a learning process as it implements the principles and practices of transit asset management, including those requirements contained in this final rule. FTA understands that as transit providers gather more information, the initial targets will be revised and refined in successive rounds of target-setting. However, the purpose of the initial targets is to establish a performance baseline. That baseline will change as a provider matures in its practice of transit asset management. FINAL RULE: FTA is not making any changes to the final rule related to these comments. COMMENTS: Performance Targets— Annual Performance Targets Some commenters provided input on the requirement to set SGR performance targets annually, as specified in § 625.45(a)(2). Several commenters said the annual target setting should be limited to revisiting the prior year’s target based on prior year investments and updating if significant changes are needed. These commenters said a full re-evaluation of targets should only be required every 4 to 8 years as determined by the provider (for an individual plan) or a sponsor (for a group plan). However, these commenters suggested that new target setting should be done more frequently if a TAM plan is amended prior to the established full reevaluation deadline. A State transit association did not support progressive SGR targets, unless they can be tied to increased levels of funding. A transit operator stated that requiring SGR performance targets to be set each year does not fit with generally accepted methods for developing multi-year capital programs. FTA’S RESPONSE: Performance Targets—Annual Performance Targets 49 U.S.C. 5326 requires recipients of FTA funding to establish performance targets annually. The proposed rule did not prescribe a process for how a transit provider would establish a target, however. A transit provider may establish performance targets by updating the prior year’s target based on the prior year’s investment, or by another approach. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations FINAL RULE: FTA is not making any revisions in the final rule related to these comments. COMMENTS: Performance Targets— Realistic Expectations Several commenters provided input on the requirement that an SGR performance target must be set based on realistic expectations, as specified in § 625.45(a)(4). Several commenters requested clarification of the term ‘‘realistic expectations.’’ Multiple commenters recommended that FTA specify in that an ‘‘SGR performance target must be set on realistic expectations, which could mean that targets are set based on managing a decline in asset condition,’’ rather than just improving or maintaining conditions as proposed. A commenter said this requirement is prescriptive and not required as part of the MAP–21 legislation. One of the State DOT requested that § 625.45(a)(4) be revised to read, ‘‘An SGR performance target must be set on realistic expectations, which could require that targets be established to manage a decline in asset condition.’’ asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: Performance Targets—Realistic Expectations Each transit provider should be setting its performance targets in consideration of the condition of its assets and the funding that it anticipates will be available to it from all available resources. For example, if 30 percent of a transit providers buses are beyond their useful life benchmark, it is not realistic for that provider to set a target of 100 percent to bring all of its buses under the ULB, if it will likely only have funding to renew a portion of those buses through either major life enhancing rehabilitation or replacement. FTA understands that there may be instances where a transit provider may choose to set a negative target. A negative target would indicate a declining asset condition; the target itself is not a negative value, but represents a lack of improvement. For example, a transit provider with a fleet of 100 busses, 15 of which are beyond the default ULB, the current metric for their rolling stock performance measure: Bus metric is equal to 15 percent. If the provider plans to replace 3 vehicles and overhaul 2 in the next fiscal year its projected bus metric would be 10 percent-the target for the performance measure rolling stock, asset class: Bus. If 10 of the busses exceed the ULB this fiscal year, the current year metric is the same at 15 percent, but the projected VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 bus metric is now 20 percent, which indicates a declining asset condition (older vehicle fleet) and a negative target. In this example, for rolling stock, asset class: Bus, a target of 20 percent represents a negative improvement over a target of 10 percent. FINAL RULE: FTA is not making any revisions in the final rule related to these comments. 48935 of transit operations is very limited, one commenter suggested that because the proposed National TAM System includes explicit blocks on funding decisions being tied directly to performance metrics, transit agencies may have little incentive to actually set or achieve a reasonable target. FTA’S RESPONSE: Performance Targets—Other Comments COMMENTS: Performance Targets— Recent Data and Available Resources Several commenters addressed the requirement in § 625.45(a)(5) to base the SGR target on recent data and available financial resources. A couple of commenters expressed concern that transit providers may unilaterally identify competitive (or flexed) financial resources and thus could potentially over-count available resources at the regional level. One commenter said this requires a financial measure, rather than a performance measure. The commenter said the definition of SGR as proposed is not compatible with this statement. FTA does not have the authority to award or penalize a transit provider for achieving or missing a target. However, FTA encourages transit providers to be aggressive about setting targets, both to support making the case for additional funds to meet state of good repair goals, and to encourage finding innovative methods for using existing funding levels to meet state of good repair goals. FTA’S RESPONSE: Performance Targets—Recent Data and Available Resources In the NPRM, FTA proposed that a transit provider set performance targets based on recent data and resources that the provider could reasonably anticipate would be available. This final rule does not prescribe a method for setting performance targets and FTA understands that target-setting is not an exact science. However, FTA believes that the most accurate targets can be established based on recent data and reasonably anticipated funding. FTA understands that effective target-setting and effective development of investment prioritizations will require coordination and communication among funding partners and stakeholders to produce the best results. A transit operator asked if the Accountable Executive would be required to establish and approve each SGR performance target for the subrecipients. FINAL RULE: FTA is not making revisions to the final rule related to these comments. COMMENTS: Performance Targets— Other Comments A State DOT supported FTA’s proposed requirement that performance targets be set for each asset class, as specified in § 625.45(a)(3). A transit operator agreed that agencies should have the ability to set their own performance targets, asserting that this would result in targets that are more aligned with each operating environment. Asserting that the empirical basis for believing that TAM improves efficiency PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 FINAL RULE: FTA is not making any revisions in the final rule related to these comments. COMMENTS: Performance Targets— Role of Accountable Executive FTA’S RESPONSE: Performance Targets—Role of Accountable Executive The Accountable Executive for a transit provider that develops an individual TAM plan must approve the provider’s performance targets. If a transit operator is also a group TAM plan sponsor, it must establish performance targets for the plan participants in coordination with each participant’s Accountable Executive. In its responses to the comments regarding the definition of Accountable Executive, above, FTA clarified that a group TAM plan sponsor is not the Accountable Executive for each participating transit provider. However, by participating in a group TAM plan, a transit provider’s Accountable Executive may be required to defer to the decisions of the sponsor regarding prioritization of investments. FINAL RULE: FTA is not making any changes to the final rule related to these comments. COMMENTS: Performance Targets— Setting Targets for Participants Some public comments addressed the requirement for setting targets for group plan participants in § 625.45(c). Several commenters said the rule should clarify that the plan sponsor for a group plan may establish targets and investment E:\FR\FM\26JYR2.SGM 26JYR2 48936 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations prioritization across the entire group (i.e., for all members of the group). However, several commenters expressed concern that setting a single SGR target at the asset class level would not be useful. An MPO recommended that FTA devise a methodology that recognizes the array of operations and provides a means for setting meaningful performance targets within the group. Similarly, another MPO recommended that within a group plan that multiple performance targets be set depending on a transit agencies size, service type and service levels. A State DOT said setting a single target could be difficult if a group TAM includes rural and smaller urban transit providers from across the State, which may operate within quite different geographic and local conditions. FTA’S RESPONSE: Performance Targets—Setting Targets for Participants The sponsor is responsible for setting unified performance targets for plan participants based on the investment priorities established in the group TAM plan. FTA believes that target-setting approaches and methodologies are local decisions. The sponsor should coordinate with plan participants to develop an approach for setting unified targets. FTA agrees that it may be difficult to set a unified target for both rural and urban providers. This final rule does not prohibit a sponsor from establishing separate group plans and targets for its subrecipients under the urban and rural formula programs. FINAL RULE: FTA is revising the final rule to clarify that a sponsor must set one unified target per asset class, but may set more. asabaliauskas on DSK3SPTVN1PROD with RULES COMMENT: Performance Targets— Coordination Some public comments provided input on the requirement in § 625.45(d) to coordinate with States and MPOs in the selection of performance targets. Several commenters requested clarification regarding the role of the State and MPOs in target setting. Some commenters requested general guidance on how States and MPOs would be responsible for the targets being set or achieved. Some commenters sought clarification on the distinction between performance targets set at the State and MPO level and those established by the transit agencies themselves. A transit operator said it is unclear how transit agencies will report TAM plans and updates to MPOs and States, and it is also unclear how the State and MPO performance targets will impact VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 individual transit agency TAM plans and performance goals. A couple of commenters requested confirmation that the MPO would aggregate targets and measures, prioritization, performance and condition information from the local transit agency in order to set regional measure and targets. A transit operator said FTA should ensure that this section is not interpreted as giving MPOs mandate for developing parallel standards or targets that agencies must meet in addition to what is required by FTA. A State transit association supported the peer recommendation that FTA should not require MPOs to set a region-wide target or incorporate both the safety and transit SGR targets from each transit system within their jurisdictions into the performance-based planning process A State DOT agreed that coordination with regional planning organizations supports the goals of effective transit asset management, but said the State should have the flexibility to develop the appropriate processes to achieve this coordination. However, a transit operator said there should be no requirements for agencies that are not State-funded to involve State agencies in target setting, project prioritization, or strategic leveraging of resources. An MPO said that the requirement for coordination with the MPO should be strengthened by deleting ‘‘to the maximum extent practicable.’’ However, a couple of commenters expressed concern that the rule indicates significant additional work will be required of MPOs and all transit-related partners that may produce speculative results with few tangible benefits. A transit operator said FTA should clarify whether the coordination suggested with the MPO is required for asset management or for service performance. FTA’S RESPONSE: Performance Targets—Coordination Pursuant to the requirements at 49 U.S.C. 5303 and 5304, States and MPOs must coordinate with transit providers to the maximum extent practicable in selecting State and MPO TAM performance targets.13 The performance targets set by transit providers, along with other performance targets set pursuant to other statutes, are an essential component of the planning process. The planning provisions at 49 U.S.C. 5303 and 5304 require States and MPOs to establish performance targets for transit that are based on the national measures for state of good repair and 13 See 49 U.S.C. 5303(h)(2)(B)(ii), 49 U.S.C. 5304(d)(2)(B)(ii). PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 safety established by FTA and to coordinate the selection of those performance targets, to the maximum extent practicable, with performance targets set by transit providers to ensure consistency. See, specifically, 49 U.S.C. 5303(h)(2)(B)(ii), 5304(d)(2)(B)(ii). This final rule does not require a transit provider to coordinate with its planning partners in the selection of its own performance targets. The rule requires transit providers to coordinate with States and MPOs in the selection of State and MPO performance targets. However, FTA would strongly encourage transit providers, States, and MPOs to coordinate in the establishment of meaningful, progressive local and regional targets. FTA believes that target-setting approaches and methodologies are local decisions. Transit providers should work with their planning partners to integrate their TAM plans into the statewide and metropolitan transportation planning processes. See 49 U.S.C. 5303(h)(2)(D), 5304(d)(2)(B)(ii). To support this integration, transit providers must share information regarding transit system condition, targets, investment priorities and strategies, which are parts of its TAM plan, in accordance with § 625.53(b). The final rule on Metropolitan and Statewide Planning and Non Metropolitan published May 27, 2016 14 FTA and FHWA issued e guidance to aid the industry in the implementation of the performance-based planning requirements. FINAL RULE: FTA is not making any substantive changes to the final rule related to these comments. COMMENTS: Performance Targets— Setting Performance Targets Some public comments provided other comments on performance target setting that were not otherwise addressed above. A couple of commenters said additional guidance is needed from FTA to ensure consistent calculation and application of targets. A couple of commenters recommended that facilities be exempted from target setting until training is provided on the use of TERM for the State DOT and its subrecipients. Specifically, commenters recommended that facilities be included in a TAM plan a year after the training has been provided in the region. 14 https://www.federalregister.gov/articles/2016/ 05/27/2016-11964/statewide-and-nonmetropolitantransportation-planning-metropolitantransportation-planning. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations An MPO said the use of the term ‘‘transit provider’’ in this section is inconsistent with the use of tier I and tier II providers in the previous sections. The commenter said it is not intended that the TIP projects be constantly updated to make minor changes to projects that do not represent TIP amendments. One commenter noted that the preamble states that performance targets are required ‘‘for each performance measure identified in § 625.43.’’ If this is the expectation, the commenter said this should be made clearer within the language of § 625.45. A transit operator said FTA should clarify that having and meeting performance targets set at 100 percent is not a prerequisite to meeting the state of good repair standard under § 625.41. Without this clarification, the commenter said some transit agencies may be led to believe only agencies meeting 100 percent performance targets have assets in a state of good repair. A transit operator said agencies need to have flexibility to determine performance targets and how best to establish their definition of a state of good repair. Another transit operator asked to what extent will reviewers during the triennial review process be empowered to reject these targets, and if a transit agency has self-certified its TAM plan, to what extent will the reviewers be empowered to reject the certification if they believe it does not meet the standards. A transit operator said the NPRM includes discussion about the lack of authority for FTA to reward or penalize transit agencies whether or not they meet SGR performance targets. The commenter expressed concern that there is a reasonable expectation that funding, through FTA, MPOs, or States, may in the future be directed to performance areas where transit agencies fell short of SGR performance targets. asabaliauskas on DSK3SPTVN1PROD with RULES FTA’S RESPONSE: Performance Targets—Setting Performance Targets FTA is preparing two guidebooks to aid in the calculation and application of the Facility and Infrastructure performance measures. The National Transit Institute offers training on TERM-Lite.15 FTA disagrees that the term transit provider is inconsistent with the definition of tier I and tier II. 15 National Transit Institute (NTI) Using the Transit Economic Requirements Model (TERM-Lite) Computer Lab (http://www.ntionline.com/courses/ courseinfo.php?id=271.) VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FINAL RULE: FTA is not making any substantive changes to the final rule related to these comments. 625.53 Recordkeeping for Transit Asset Management This section proposed that a transit provider keep records of the documents it develops to meet the requirements of this part for at least four years. Excel spreadsheets, agreements, or policies that were used to develop a TAM plan may prove useful in the next iteration, as well as assist in certification and review. This section proposed also that a transit provider or group TAM sponsor share its records with its State and MPO to aid in the planning process. COMMENTS: 625.53 Recordkeeping for Transit Asset Management Some public comments addressed the proposed recordkeeping requirements in § 625.53. A few commenters expressed support for proposed § 625.53. One commenter stated that the information in proposed § 625.53(b) is public and readily shared with partners, including MPOs and, therefore, unnecessary to include in the rule. A transit operator recommended that tier I agencies only be required to share performance targets and progress with States and MPOs. Another transit operator said the documentation required to be provided to States and MPOs should be limited as such agencies may not provide funding to the transit agency. Expressing concern that the use of supporting records by the MPO would increase the staff burden for some MPOs, a transit operator recommended that FTA revise § 625.53 to only say that the grantee should use its TAM plan to inform its proposal of projects to the MPO for inclusion in the TIP. A business association expressed support for State-level maintenance of records and documents for tier II TAM group plans along with NTD data, as it would lessen the administrative burdens on smaller systems. FTA’S RESPONSE: 625.53 Recordkeeping for Transit Asset Management Through the enactment of MAP–21 in 2012, the Congress fundamentally shifted the focus of Federal investment in transit to emphasize the need to maintain, rehabilitate, and replace existing transit investments. The ability of FTA grant recipients, along with States and MPOs, to both set meaningful transit SGR performance targets and to achieve those targets is critically dependent upon the ability of all parties PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 48937 to work together to prioritize the funding of SGR projects from existing funding sources. In order to work together, all parties, including tier II providers, must share information openly. This final rule requires that a transit provider or group TAM sponsor make its TAM plan and supporting documents available to a State or MPO that provides funding to a transit provider. It will be up to the State or MPO to prescribe how it wants to receive the information. FINAL RULE: FTA has revised this section in the final rule to clarify that a transit provider must make its TAM plan available to a State or MPO that provides funding to it. 625.55 Annual Reporting for Transit Asset Management This section proposed a description of the annual report a transit provider or group TAM plan sponsor would have to submit to NTD. The annual report would include a data report and a narrative report. The data report would need to include performance targets for the next fiscal year and the condition of the system, at minimum. In the case of a group TAM plan, the report would need to include the uniform performance targets and the condition of the amalgamated system. The narrative report would include a description of the change in condition of the transit system, and the progress toward achieving the performance targets set for the previous fiscal year. A report for group TAM plan participants should include the amalgamated system and progress toward the uniform performance targets. Both reports would allow FTA to customize triennial reviews to the transit provider. In addition, the data will be used by FTA to estimate and predict the national SGR backlog and the default ULB for rolling stock assets. COMMENT: 625.55 Annual Reporting for Transit Asset Management Many public comments addressed the proposed annual NTD reporting required by a transit provider or a group TAM plan sponsor in § 625.55. A State transit association supported the peer recommendation that FTA should build upon the existing NTD Safety Event Reporting data collection effort and leverage historical data collection to identify safety trends, rather than establishing a new data collection and reporting system. Similarly, a transit operator expressed support for using the NTD to submit the E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48938 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations annual data reports, performance target reporting, narrative changes in the condition of the transit system, and progress to meet SGR targets. Two State DOTs and other commenters urged FTA to keep the amount of reporting and target setting to a minimum of only what is required for the NTD. A transit operator asked why the data report and the narrative report would not be due at the same time covering the same year. Another transit operator recommended that the deadline for the annual NTD data and narrative reports should be four months after the Federal Fiscal Year (FY) for the data report and six months after for the narrative report, asserting that four months after the end of the standard FY in June would be too short for agencies to collect necessary data and conduct analysis. A few commenters urged FTA to sync up NTD reporting and target setting with TAM plan reporting and target setting, as well as FHWA reporting cycles. A business association urged FTA to allow agencies to report asset condition consistently with their established internal asset management practices, reasoning that forcing agencies to report in what would normally be off years would be expensive and disruptive to agencies, without adding quality to the national view obtained by FTA. A State agency suggested that rail fixed guideway transit systems be required to provide the annual data report and annual narrative report to State Safety Oversight Agencies (SSOAs) simultaneously with their delivery to FTA. Several commenters expressed concern about the data collection resources that would be needed for transit providers to assess and submit performance conditions for all assets annually. A State DOT commented that requiring both annual data and narrative reports describing any changes and requiring TAM plan reassessment every four years is onerous and burdensome. A transit operator stated that annual reporting and annual target setting may be excessive and labor intensive since their own experience indicates that there are not significant changes over the course of a year. A transit operator stated asserted that annual reporting did not make ‘‘good business sense’’ from a risk perspective of a transit agency and that the volume of data in the annual assessment would overwhelm the database system. Absent a change in funding or an unanticipated change in assets condition, an MPO commented that it would be more appropriate to report the SGR targets on a consistent basis with changes in the targets set as part of a VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 new TIP/STIP development every four years. A transit operator commented that it is difficult to comment on proposed reporting requirements without reviewing the forthcoming guidance proposal on the NTD Reporting Manual that would describe the content of the new data report. This commenter recommended that the final rule should include more guidance on the new reporting requirements and that FTA provide a template for the new data and narrative report requirements for NTD. A local transit provider asked if service providers would have to report SGR for each asset in their inventory or whether this would be done at a higher, aggregated asset category level. This commenter also expressed concern about proposed Appendix A to part 625, asserting that FTA should endorse the TERM asset hierarchy throughout the rulemaking rather than changing to a different classification hierarchy. Commenting that the NPRM did not provide guidance on the level of reporting that would be required when submitting NTD required reports, a State public transportation system urged FTA to ensure that the transit provider determine the level of detail in its asset inventory and that the NTD input requirements are structured so that the providers could have one database that could feed both NTD and asset management reporting requirements. An MPO urged FTA to acknowledge in the final rule that it needs to expand the NTD to accommodate the additional reporting and that the scheme for reporting this data has not yet been developed. This commenter suggested that FTA should have a public comment request for its proposal to amend the NTD. A State DOT suggested that because the rule would require annual reporting of asset condition using the NTD, the NTD should include a function that automatically compares a currently reported condition to the most recent previously reported condition in order to meet the requirement for assessing the change in asset condition at § 625.55. The commenter reasoned that this function would help smaller agencies, which typically do not have staff resources to evaluate and document changes in asset condition. A transit operator said capital asset inventories should be afforded the protections of Federal laws prohibiting the public disclosure of sensitive information. Similarly, two other operators said FTA should safeguard sensitive information related to condition and risk, stating that any compromise of data is almost certain to limit any agency’s motivation to fully PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 embrace this strong self-analysis. A transit operator asked to what extent assembled data could be protected from discovery in litigation or disclosure through the Freedom of Information Act (FOIA). A State DOT recommended that the reporting requirement should be for a single annual report that includes both the asset condition report and performance target progress and milestones, rather than requiring both separately. Two commenters noted that, although it seems like a good practice, the proposed rule would not require an agency to report the percentage of assets in SGR or the SGR backlog amount. A State DOT asked FTA to clarify whether annual reporting to NTD will be required for transit agencies receiving 49 U.S.C. 5307 funds. Another transit operator asked several detailed technical questions about the mechanics of National Transit Database Reporting. FTA’S RESPONSE: 625.55 Annual Reporting for Transit Asset Management The NPRM proposed that a transit provider submit two annual reports to the NTD. The reporting requirements for TAM do not conflict other NTD reporting requirements. FTA did not propose that SSOAs review and approve TAM plans. However, a rail transit system may coordinate and collaborate with its SSOA to develop and carry out its TAM plan. FTA believes the reporting and target setting requirements in this final rule are appropriate. FTA recognizes that for many transit providers there will be minimal changes to the asset inventory and condition information reported to the NTD from year to year. The online reporting system of the NTD will prepopulate asset inventory and condition information from the previous year, thus minimizing the annual reporting burden on transit providers when there are few changes. Interested parties can consult the existing NTD Reporting Manuals for technical questions about the logistics of NTD reporting. The NTD data report will not include an exhaustive inventory of all of a provider’s assets, nor an exhaustive deposit of all its condition information available. Transit providers can organize the asset inventory and condition assessment in their own TAM plan according to any asset hierarchy that still allows them to meet the relevant NTD reporting requirements. FTA recognizes that the annual change in targets may be minimal. A transit provider may report targets that are either identical, or only E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations incrementally different from the targets it reported in the previous year. If there is little change from one year to the next, then a transit provider may have the same numerical target for more than one year. In addition, a transit provider may decide to set a longer range target and divide it incrementally to report as annual targets. FTA does not have the statutory authority to exempt the reports required under the final rule from the Freedom of Information Act (FOIA). FINAL RULE: FTA is not making any revisions in the final rule related to these comments. Part 630—National Transit Database FTA proposed to revise §§ 630.3, 630.4, and 630.5 of subpart A of 49 CFR part 630 to conform to the reporting requirements set forth in proposed part 625. The proposed reporting requirements for National TAM System apply to all chapter 53 recipients or subrecipients who own, operate, or manage public transportation capital assets. FTA’s National Transit Database (NTD) currently requires reports from recipients or beneficiaries of the Urbanized Area Formula Program (49 U.S.C. 5307) and the Rural Area Formula Program (49 U.S.C. 5311). FTA proposed to replace references to 49 U.S.C. 5307 and 5311 recipients with references to recipients and subrecipients of chapter 53 funds. This change will require recipients and subrecipients of other FTA grant programs, such as the 49 U.S.C. 5310 formula program for the enhanced mobility of seniors and individuals with disabilities who are not also receiving funds under 49 U.S.C. 5307 or 5311, to start reporting TAM required performance data to the NTD. FTA will not apply existing NTD reporting requirements to all recipients of chapter 53 funds. FTA will only apply the reporting requirements proposed under the National TAM System to those transit providers that do not currently report. proposed reporting; and requested comments on updating the NTD’s approval to collect information under the Paperwork Reduction Act. 80 FR 72137. Some of the proposed reporting requirements in that notice relate to the contents of this rule. The comment period for the notice on NTD reporting closed on January 19, 2016 comments relevant to this final rule made to the docket for NTD reporting requirements are summarized below. The complete list of comments and responses including burden estimates can be found in the NTD Reporting Manual Federal Register notice. NTD Reporting Manual Background The proposed changes to the NTD Reporting Manual stem from amendments to Federal transit law made by the Moving Ahead for Progress in the 21st Century Act (MAP–21) (Pub. L. 112–141, July 6, 2012), which require recipients of Chapter 53 funds to report to the NTD any information relating to a transit asset inventory of condition assessment conducted by the recipient. (59 U.S.C. 5335(c)) Currently, the NTD only collects asset inventory information on revenue vehicles and summary counts for other asset categories, such as maintenance facilities and fixed guideway. There are some assets, such as signal or communications systems, for which NTD collects no data. In both the initial and second notice, FTA proposed to collect additional asset inventory data to meet the asset inventory and condition reporting requirements at 49 U.S.C. 5335(c). asabaliauskas on DSK3SPTVN1PROD with RULES COMMENT: A couple commenters expressed support for FTA’s proposed changes to the NTD regulations at 49 CFR part 630. Comments Relevant to National TAM System Final Rule From the NTD Reporting Manual Notice Docket FTA received comments related to 1Asset inventory burden, 2- Reporting requirements for 5310 recipients, 3Reporting of service equipment, and 4Guidance for useful life benchmark (ULB). In addition, the NTD Reporting Manual notice received duplicative comments to those addressed in this final rule on third party asset reporting and dollar thresholds for asset inventory. FTAs responses to the duplicative comments are addressed previously in this final rule. FTA’S RESPONSE: FTA appreciates the comments in support of its proposed amendments to the NTD. On November 8, 2015, FTA published a notice in the Federal Register which responded to comments on a previous proposed expansion of the NTD; requested comments on additional NTD Notice Comments: Asset Inventory Burden FTA received a number of comments expressing concern over the additional burden imposed by expanding the asset inventory. Twenty (20) commenters stated that the proposal was too burdensome. Thirteen (13) commenters expressed the concern that the VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 48939 additional reporting burden may divert resources away from transit service provision. Eight (8) commenters felt the burden estimates provided by FTA were ‘understated’. FTA’s Response: Asset Inventory Burden The NTD burden estimate, which will be more fully described in the separate Federal Register Notice responding to comments on FTA seeking approval under the Paperwork Reduction Act for updated NTD Reporting Manual guidance, assumes that an agency will already have an asset inventory in place as part of their compliance with the TAM rule and, therefore, only includes the time and costs estimated to enter existing asset inventory information into the NTD reporting system. In some cases, modifications to existing data may be necessary to enter this information into the NTD. The burden estimates provided in the second NTD notice take into account small modifications of existing information in the asset inventories required by the TAM Rule for reporting in the standard formats established by the NTD. In calculating the burden estimate for NTD reporting, FTA asked several agencies to enter their existing asset inventory information into the proposed format and report the time necessary to complete this task. Three agencies completed an entire report and their experience with the new reporting requirements served as the foundation for the final estimates. A ‘per field’ reporting time was calculated and then multiplied out over the estimated data fields expected nationally to create a final burden estimate. Because the numbers presented are averages, some agencies may expect to spend more time and some agencies will spend considerably less than the estimated average. FTA remains committed to implementing reasonable data reporting requirements, while also meeting the requirements in the law for reporting asset condition information. In response to the first round of comments on the asset inventory, FTA made several modifications to reduce the overall reporting burden including removing replacement cost information for all asset types and also eliminating the proposal for reporting details of individual components within facilities. FTA believes that this revised proposal for asset inventory reporting fulfills the MAP–21 update to 49 U.S.C. 4335(c) that recipients report asset inventory and condition assessment information to the NTD. These data will support better state of good repair estimates from E:\FR\FM\26JYR2.SGM 26JYR2 48940 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations FTA’s Transit Equipment Requirements Model and will support the calculation of performance results under the performance measures established in this rule. While FTA recognizes that the proposed changes would result in an increase over the current reporting requirements, the highest burden would exist in the first year of start-up reporting. Once an asset has been entered into the inventory module, the information would be pre-populated for each subsequent year. Reporters only would be responsible for providing annual updates to new or retired asset inventory items in subsequent years. asabaliauskas on DSK3SPTVN1PROD with RULES NTD Notice Comments: Reporting Requirements for 5310 Recipients An additional area of concern was related to the new reporting requirements for 5310 recipients. Commenters stated that reporting for 5310 recipients should be limited or eliminated entirely. In addition, commenters felt that any reporting done on behalf of 5310 recipients should be done at the designated recipient level rather than the subrecipient level to minimize the burden of this new reporting. This same group of commenters suggested that only vehicles used in public transit and, preferably only vehicles purchased with federal money, should be reported. Some commenters requested that performance targets and reporting should be removed for 5310 recipients. FTA’s Response: Reporting Requirements for 5310 Recipients FTA is committed to developing requirements that are mindful of the burden for small transit providers. FTA understands that direct reporting may prove to be a difficulty for small section 5310 recipients. In order to minimize this burden, FTA concurs with the comment that reporting on the assets for 5310 recipients should be done at the designated recipient or State level. The reporting guidance will be updated to reflect this change. In response to the applicability of reporting for 5310 reporters: the NTD asset inventory requirements will mirror the reporting requirements established by the Transit Asset Management rule. The final reporting requirements for National TAM System apply to all chapter 53 recipients or subrecipients who own, operate, or manage public transportation capital assets. FTA currently requires NTD reports from recipients of funds under the Urbanized Area Formula Program (49 U.S.C. 5307) and the Rural Area Formula Program (49 U.S.C. 5311). As such, this new rule replaces references to 49 U.S.C. 5307 VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 and 5311 recipients with references to recipients and subrecipients of chapter 53 funds. This change will require recipients and subrecipients of other FTA grant programs, such as the 49 U.S.C. 5310 formula program for the enhanced mobility of seniors and individuals with disabilities, who are not also receiving funds under 49 U.S.C. 5307 or 5311, to start reporting to the NTD. FTA will not apply existing NTD reporting requirements to all recipients of chapter 53 funds. FTA will apply only the reporting requirements mandated under the National TAM System final rule to those transit providers that do not currently report. NTD Notice Comments: Reporting of Service Equipment Some commenters requested the removal of service equipment from the NTD Asset Inventory. FTA’s Response: Reporting of Service Equipment In order to best align the NTD asset inventory with the TAM rule reporting requirements, FTA believes it is appropriate to keep an inventory of ‘service equipment’ in the NTD. This information will provide verification of the TAM performance targets and performance against those targets. In addition, non-service vehicles and equipment represent a large capital expense for some agencies. Including a basic inventory of these vehicles and equipment in the NTD will provide additional clarity on the state of good repair backlog for the transit industry. The final TAM rule requires transit providers to report the percentage of on non-revenue, support-service and maintenance vehicles that have met or exceeded their useful life benchmark. This is the identified SGR performance measure for equipment. FTA feels that non-service vehicles are an easily understood and readily identifiable category of equipment, and the agebased performance measure is the mostsimple and straight-forward performance measure available. NTD Notice Comment: Guidance for Useful Life Benchmark (ULB) One commenter requested guidance on calculating a useful life benchmark (ULB) that is not based on accounting depreciation standards. FTA’s Response: Guidance for Useful Life Benchmark (ULB) The calculation of a useful life benchmark may vary considerably between transit operators based on original equipment specifications, operating environment and maintenance PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 or capital replacement schedules. Due to these variations, the FTA intends to leave the calculation of such a metric up to the individual providers. To facilitate reporting, FTA will provide a ULB default estimate based on the Transit Economic Requirements Model (TERM) depreciation curves in the NTD reporting system. These default estimates will also be available in the reporting manual. The ULB default estimate provided by NTD will be the point at which a vehicle reaches 2.5 in TERM. FINAL RULE: FTA is including the proposed amendments to the NTD in the final rule without change. III. Regulatory Analyses and Notices A. Regulatory Analyses and Notices NPRM Comments and FTA’s Responses COMMENTS: Funding for Transit Asset Management A transit operator argued that because the TAM rule requirements will come with significant costs, there should be a dedicated funding source that does not diminish other programs. A business association similarly expressed concerns that the current investment from government is insufficient to meet both the capital and operating needs of the nation’s mobility providers and is unlikely to change in the foreseeable future. After expressing concern about the increased resources that would be required to comply with the rule, several commenters requested that funding be allocated to assist transit providers in developing and implementing TAM. A transit agency said dedicated funding should be made available with specific eligibility for TAM business processes needed to comply with the rulemaking requirements that does not include competing eligibilities with capital replacement projects. A transit operator requested that FTA identify a source of funding, in addition to formula funding, to help agencies comply with this new mandate. A State DOT said it is unclear if FTA will provide financial support for training of maintenance and reporting agency staff and for purchasing software to manage TAM systems. A transit operator requested clarification on how a service provider can request funding under specific grant programs. A State transit association noted that the NPRM stated that ‘‘on average, fare revenue cover only one-third of total operating expenses, and do not cover any capital expenses,’’ but there is no discussion about the systems that do not E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES charge fares, thus allowing them to qualify for more Federal funding than the systems charging fares. The commenter said FTA should consider allowing at least 10 percent of fare collection to be set aside for capital purchases or major repairs as local match. The commenter asserted that this would result in an incentive to agencies to seek user financial support in achieving SGR goals. Several commenters said FTA should recognize the lack of funding available to assure state of good repair. An MPO said it is not appropriate to place the burden of SGR on the transit operators’ management practices when Congress has stepped away from the traditional partnership role in funding transit capital needs. Another commenter asked if national and local funding prioritization will be in alignment with SGR targets, as the Secretary is required to establish SGR performance measures and recipients are required to set performance targets based on these measures. This commenter also asked what portions of funding would the FTA consider reasonable to be allocated to achieving these targets and what level of confidence needs to be established that funding of projects will impact measures in reaching targets. A State DOT encouraged FTA to make the case for dedicated Federal funding for the TAM plan initiative, and/or consider clarifying which existing Chapter 53 planning and technical assistance funds may be applied to TAM plan development. FTA’S RESPONSE: Funding for Transit Asset Management In its 2013 Conditions and Performance Report, FTA estimated that the Nation’s SGR backlog is $85.9 billion. FTA recognizes that addressing this backlog will require multiple approaches, including increased funding for asset management activities and state of good repair projects. However, FTA does believe that the National TAM System will support the transit provider’s strategic allocation of available funds towards reducing the SGR backlog. FTA grant recipients, along with States and Metropolitan Planning Organizations (MPOs) will need to coordinate in order to set meaningful SGR targets and to prioritize funding from all sources towards reducing the SGR backlog. There is specific funding available for transit asset management and state of good repair purposes. In MAP–21, Congress created the State of Good Repair Formula Program at 49 U.S.C. 5337. Funding for the SGR Program was reauthorized in the FAST Act at VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 approximately $2.5 billion for fiscal years 2016–2020, a significant increase over MAP–21’s authorized funding levels. Eligible projects include TAM plan development and implementation, and Capital projects to maintain a system in a state of good repair. Upon the effective date of this final rule, projects eligible for funding under the SGR Formula Program must be identified within the investment prioritization of a transit provider’s TAM plan.16 Funds from other FTA grant programs may also be used to cover costs related to TAM plans. In general, costs associated with capital projects to purchase new capital assets or to rehabilitate or maintain existing assets are available for state of good repair purposes. The software costs for an asset inventory system, for estimating capital investment needs over time, or for a decision support tool for investment prioritization are all eligible capital costs. Costs related to assembling and maintaining an asset inventory, or related to condition inspections, are generally eligible preventive maintenance costs that can be funded by capital assistance. Finally, costs related to creating a TAM plan itself are an eligible expense under the section 5307 Urbanized Area Formula Program and the section 5311 Rural Area Formula Program. Although fare revenues that are program income are not currently an eligible source of local match for FTA’s grant programs, FTA does not have the statutory authority under current law to change this approach. Whether or not a transit provider charges a fare does not impact the amount of funding it may receive from FTA. COMMENTS: Other Funding for TAM An MPO said more recordkeeping without additional funding accomplishes nothing other than demonstrate the unmet need. This commenter asserted that a systematic approach to manage existing resources will not fully address the financial need to replace assets. Another commenter suggested that while the TAM rule may provide data and systemization for agencies as they assess their SGR, it is unclear if this will result in a better funding outlook. One commenter expressed concern that requiring service providers to publicly document asset safety shortcomings while possibly not having 16 For more guidance on the SGR Formula Program, please review the program guidance available on FTA’s Web site at http:// www.fta.dot.gov/legislation_law/12349_16262.html. PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 48941 sufficient funding to address all needs would increase legal liability risk for agencies. A State transit association suggested that FTA (1) consider setting guidance to allow for local agencies to have fare set-asides to establish ‘‘sinking funds’’ to pay for new rolling stock purchases or major vehicle repairs, and (2) allow agencies be able to make loan payments from fares, reporting balance of fares less loan payments on quarterly DOT reports. A State DOT recommended that the rule should include specific language stating that, without additional financial resources, establishing an asset management plan may not in itself enable a provider or a group to reach a state of good repair. Expressing concern that the rule would not allow legacy transit providers to work towards improvements in their facilities performance measure without diverting funds from other, potentially more critical needs, a local transit operator asked what the consequences would be of reporting declining performance measures for facilities to ensure maintaining or improving performance targets for fleet and infrastructure. FTA’S RESPONSE: Other Funding for TAM FTA believes recordkeeping and reporting will create a database that can be used to better identify the unmet needs. In many States, data-driven performance management practices have resulted in increased funding for transportation programs from state and local governments. Being able to demonstrate transportation needs, based on sound quantitative analysis, lends credibility to the funding requests and makes it easier for legislatures to support increased funding. FTA acknowledges that the efficiencies realized through improved data-driven decision-making may not be adequate to meet all of the financial needs to address SGR, and that TAM plan development costs may divert funds from the current capital programs and that this may affect system performance. However, FTA anticipates that improved asset management practices will result in decisions that reduce maintenance and rehabilitation costs overtime. These cost savings might offset the costs of the TAM plan. The TAM final rule does not include penalties for agencies that demonstrate declining performance of assets. The goal of the final rule is for transit service providers to develop or improve on existing asset management processes to provide and use data to make better decisions. Making trade-offs among E:\FR\FM\26JYR2.SGM 26JYR2 48942 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations competing investments is part of the process. A goal of the TAM plan is to help agencies improve their current asset management practices to better manage assets over the whole life of an asset and to identify what can be achieved with current funding in order to meet desired performance goals. This rule does not require agencies to list or document assets that pose an unacceptable safety risk. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: No change has been made in the final rule due to these comments. COMMENTS: NPRM Regulatory Impact Analysis—Total Cost Many comments were made on the costs associated with the proposed rule. Many commenters said FTA’s estimated costs of compliance with the rule (coordination, data collection, reporting, etc.) are underestimated. One commenter said the rule’s activities could require more than three times the number of hours estimated by FTA, and approximately five times the estimated cost. A State DOT said its current cost estimate for the initial phase of asset management planning (performance gap analysis) is about $300,000 in upfront costs, including project staff labor, training and consultant services for one year, which is significantly higher than the tier I annual cost of $33,451 per provider estimated by FTA. Some commenters provided specific estimated costs of complying with the rule, which ranged between $20,000 and $500,000 per transit agency. Another commenter stated that it uses two full-time equivalents (FTEs) just to update the asset inventory and the contracted costs for its recently completed TAM plan was three times the average cost from the FTA analysis for all TAM activities. Further, this commenter asserted that there would be further costs to bring it into compliance with the final rulemaking. A transit operator said requiring all assets in the facilities category to have a full condition assessment with a 1–5 ranking based on the TERM scale would be extraordinarily expensive for larger agencies and may also be costprohibitive for smaller agencies with fewer assets and less funding. The commenter stated that, given the geographic breadth of the rail system and the number of stations, it would not be unrealistic to assume a $4–5 million undertaking to produce something of value. The commenter stated that because FTA has been supplied with the budget updates for this project on a monthly basis for several years, it was surprising that the estimates and VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 approach did not reflect any of this information, but rather relied on the feedback from four newer and smaller agencies. FTA’S RESPONSE: NPRM Regulatory Impact Analysis—Total Cost FTA appreciates the comments on the cost estimates and the assumptions used. FTA acknowledges that the general consensus of the comments was that the estimated costs were lower than would be expected. FTA agrees that this may be the case in some instances for various reasons. However, it can be misleading to compare individual agency costs with an average for an industry that is very diverse in size, such that a few large agencies provide a large share of transit services. For example, among agencies receiving 5307 formula funds, 3 percent of the agencies own nearly 50 percent of the revenue vehicles. Since the average cost estimates in NPRM are the average cost per transit provider, they are more representative of the costs for the smaller providers, who are much more numerous, than for the large-medium to large providers. Thus, FTA agrees that costs for particular larger agencies may be higher, while, costs to smaller agencies may be lower, than the estimated average. Tier I agencies range in size from agencies with revenue vehicles of over 101 to 10,000. Out of the 284 agencies in tier I, only twenty three have revenue vehicles greater than one thousand. As mentioned above, the average costs for tier I providers are more representative of the costs to the smaller tier I agencies. To illustrate this point, estimates are made for a large tier I agency, with 2500 vehicles and one with 500 vehicles. The quantified costs of implementing the rule are $234,477 for the larger agency and $109,312 for the smaller agency. The costs would approximately double if most of the tasks were contracted out. However, for a more realistic comparison between the final rule’s costs and the estimates cited by the commenters, FTA compared the costs for the specific agency providing the comment against the costs that would be predicted by FTA’s model as used in the NPRM. For example, a State DOT commented that it has incurred $300,000 in upfront costs for asset management planning (performance gap analysis), significantly more than the average for tier I. FTA’s cost estimate for this agency to implement the TAM rule is $99,000 in upfront costs. Many other agencies provided cost estimates ranging from $20,000 to $500,000. For these agencies, the NPRM upfront cost estimates ranged from $41,000 to PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 $161,000. Another commenter noted that it could cost an agency between $4– 5 million to undertake a full condition assessment based on TERM scales and other TAM requirements. For this agency the NPRM cost estimate is about $240,000 in upfront costs. There are a number of reasons why the cost estimates in the NPRM are lower than the estimates provided by the commenters. First, the cost estimates in the NPRM were for the additional or incremental activities resulting from implementing the final rule. Adopting the requirements of the TAM rule will replace some existing practices and create new ones to better manage assets in a systematic way. In some instances, the TAM provisions may not add any new burden at all. Because the baseline compliance level is different across agencies, the final analysis does not estimate that every agency—or even every agency that is similar in size to the commenter’s agency—will incur the same costs as identified by a particular commenter. For instance, it is known that for the project with estimated costs of $4–5 million, a large component of the cost was for updating asset condition data that had been done previously using a new method. The cost estimate provided is therefore not an incremental cost of the rule. Also, it is noted elsewhere in this rule that FTA has not prescribed any specific condition assessment approaches or other analytical tools. So, if an organization decides to adopt an approach that is more expensive, it is their decision based on their need. Second, the scope of the efforts for which commenters provided costs may be beyond what is required by this rule. For example, the document referenced by the State DOT commenter is referred to as ‘performance gap analysis.’ Performance management is generally more encompassing than asset management and particularly more than what is required in the TAM rule. Without additional information, it is hard to provide a realistic validation of these numbers. Third, FTA acknowledges that its estimates are based on the data available in the NTD. It does not include all the assets owned or operated by an agency or even the ones required to be included in the TAM plan. Fourthly, FTA estimates assume the work is being done in-house with qualified staff available with the appropriate skills. This would result in significant underestimation if most of the work was contracted out. To address this issue the final rule includes a scenario for contracting out work tasks. The costs roughly double under E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations this scenario. This is presented as an upper bound cost (high case) and inhouse as a lower bound cost (low case). The estimates presented above are for the in-house scenario (low case). asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: No changes were made to the rule based on these comments. However, in consideration of other comments summarized below, changes have been made to the assumptions upon which the costs are estimated. These changes include additional asset inventory costs; the presentation of a high-cost case that assumes contractor support; modified personnel category, update of wage rates and additional IT costs. COMMENTS: Regulatory Impact Analysis—Specific Task Costs A commenter said FTA has underestimated the amount of labor hours needed for the continuous tracking and annual reporting process, particularly in the areas of vehicles and facilities. A transit operator said FTA underestimated the effort required for tier I providers in keeping large asset management datasets useful and coordinated. The commenter said FTA’s estimate of 80 hours every 4 years should be at least 4 times that amount, equating to 80 hours per year. A transit operator also commented that creating a prioritized project list would require more time both initially and on an ongoing basis to set criteria and score assets. A transit operator said an estimated 520 person-hours may be sufficient to update or enhance an existing decision support tool but not nearly enough for an agency that is implementing a new decision support tool. Several commenters said FTA should take into consideration that not all agencies have basic asset management software in place and, thus, will need additional time and resources to procure software. An individual commenter said software costs may be eligible for capital costs but the availability of capital costs are so limited that those funds are already allocated to the capital needs of the agency. Several transit operators said it is not accurate to assume that a complete asset inventory (in the correct format) already exists as a baseline for every agency. These commenters explained that FTA’s assumption that financial or property accounting systems may be used as asset inventories for TAM purposes is overstated. The commenters explained that the way this information is captured and reported would need to be modified to support TAM implementation and additional data VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 48943 elements would need to be collected. A transit operator said FTA’s assumption that no incremental costs would result due to completion of asset inventories is not valid for commuter rail operators because currently only vehicle assets are included in the NTD report. Another transit operator said using wage rates based on May 2013 Bureau of Labor Statistics data for urban transit systems significantly understates the cost associated with TAM implementation for services. A couple of commenters said FTA’s average estimated cost for a tier I agency is understated. A State transit association said the assumption that an administrative support worker would develop the prioritized project list is probably incorrect. Similarly, a transit operator did not agree with the level of personnel that the FTA has assumed work on the prioritization of projects that is required of tier I providers. A medium to large size transit operator said the assumption of two staff members with the expertise necessary to assess the condition of all the equipment and subcomponents in one day seems optimistic. A professional association and several State DOTs stated that the rule should take into consideration that transit agencies will likely be unable to implement the TAM requirements inhouse, and would likely hire consultants. Similarly, several other commenters stated the rule would require transit agencies to add resources to comply with the new rules. A joint submission from several State DOTs said the regulations could divert scarce financial and personnel resources from investments that support transit service to regulatory compliance. final rule presents two sets of total costs, one assuming in-house plan development and another with contractor support. It is unknown what percentage of the plans would be inhouse and what percent contracted out, so the cost of the rule is presented as a range. The results indicate the costs to contract development of the TAM plan are assumed to be double that of work performed in-house. FTA has updated the labor rates to use the latest year of data available in this final rule, which is the 2015 Bureau of Labor Statistics. In response to comments on the skill level of staff assumed for investment prioritization, FTA is using higher skilled personnel for the investment prioritization task in the final rule cost estimate. FTA’S RESPONSE: Regulatory Impact Analysis—Specific Task Costs FTA agrees that existing inventory data may not be in the format required for the TAM provisions and may be dispersed in different databases. Therefore, additional costs for creating a single usable database are included in the final rule. Additional labor hours are added for the asset inventory task, which was previously assumed to be zero, to develop a TAM inventory database from disparate existing data systems. In response to comments received about employee responsibilities, FTA has also included costs for IT investments such as new software or other devices for recording information. FTA agrees that some transit providers may use contract support versus in-house resources to develop their TAM plans and compliance. The COMMENTS: Regulatory Impact Analysis—Other Assumptions Regarding FTA’s assumptions used for quantifying costs and benefits, a State DOT asserted that, while theory suggests best practices may yield cost benefits if employed, until the final rules are published, the cost and benefits will be unknown. Several commenters suggested that another nonquantifiable cost will be the time dedicated by managers who will need to attend asset management meetings as part of the coordination efforts throughout the year. Additionally, several commenters asserted that mechanics will need to be trained, which will improve efficiency for the agency, but will affect operating expenses. Another commenter stated that closer scrutiny should result in cost saving benefits but may require more staff time/resources in order to PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 FINAL RULE: FTA made revisions to the Regulatory Impact Analysis and the Paperwork Reduction Act analysis of the final rule in response to these comments. The following revisions are made to the final rule costs: The number of hours for asset inventory task is increased by 96 hours for the first 2 years and 36 hours thereafter for both tier I and tier II agencies; an additional cost of $5,000 per plan is now included for information technology to support TAM plan development; and the wage rate for the analytical processes and project prioritization task for tier II providers is increased from $23.04 to $41.98 to address the low personnel skill level comment. The average wage rate for the staff categories used in this rule has increased by about 2% on average since 2013, and costs estimates have been adjusted to account for the changes in wages in the final rule. E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48944 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations implement the plan. Therefore, the commenter said any cost savings may be offset by a better state of good repair and less down time. Several commenters responded about additional costs for States and MPOs in target setting beyond the coordination costs included in the planning rule. A State DOT said compliance with this rule may result in the need for additional staff or higher level of certification for mechanics. An MPO stated that targets are dependent on financial resources available during a particular time period, and that it is a challenging task for MPOs to coordinate transportation targets with fluctuating funding sources. Another MPO said MPOs, large and small, will need continued support and resources from Federal and State government to implement the new rules regarding transportation planning. A transit operator said the rule does very little to mention or address operating costs which, over time, typically exceed original capital purchase cost. The commenter said this issue must be addressed along with capital asset investments. A transit operator stated that if FTA provides the latitude that has been represented over the last few years in many presentations, then the cost has the potential to be within the limits proposed. However, if FTA mandates specific means of compliance, this commenter asserted that the cost would increase for those agencies that will need to modify existing processes that currently meet the intent of the legislation. One commenter urged FTA to identify and seriously consider plausible alternatives, asserting that FTA did not provide any in the NPRM and where ANPRM commenters proposed alternatives, FTA’s responses were inadequate. For example, this commenter asserted that there are conceivable ways to disaggregate safety and SGR from the way they were presented in the NPRM that would still be consistent with the statute. A transit operator suggested that the analytical processes estimate may increase with implementation of a new SMS. In response to FTA’s request for any data that could assist in quantifying the costs or benefits of the rule, a State DOT said it could analyze rolling stock preventative maintenance costs of the past 2 years, beginning with baseline year of 2015 to determine a baseline and then adjust for inflation. However, these would all be projections and estimates, at best. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FTA’S RESPONSE: Regulatory Impact Analysis—Other Assumptions FTA agrees that additional training for specialists, including mechanics, may be required to perform some of the tasks outlined in the final rule. Instead of adding additional resources for training, the revised cost estimates below include an estimate for contracting out the tasks for the TAM plan. So, rather than training agency staff, a transit agency can contract the services of a trained mechanic, or other skilled services, whichever is more cost effective. Since it is unknown which tasks may require skills unavailable at a transit agency, this rule presents a range of costs. The low cost case assumes in-house work and the higher cost case assumes that all tasks are contracted out. FTA appreciates commenters who stated that the cost estimates are reasonable, providing the agencies latitude under TAM to develop their own practices, rather than being prescriptive. The goal of the TAM rule is not to be prescriptive, but allow agencies to develop practices that meet agency needs. Also, another commenter notes that the agencies will incur additional costs in implementing the TAM rule, but acknowledged that the benefits from improved asset management practice may cover these additional costs. FTA believes that addressing operating costs is a separate issue from managing the assets and is not the subject of this rule. Operating costs are an optional consideration that transit providers may consider when developing their investment prioritization. FTA agrees that the NPRM did not quantify other alternative approaches. However, alternative approaches were considered in developing the rule. As discussed in the NPRM, FTA developed a tiered approach that allows smaller operators to shift certain burdens of this rule to States. The TAM rule has not expanded on the requirements of the MAP–21 mandate, so an alternative was not considered to be essential. The TAM rule provides agencies significant discretion in choosing methods for data analysis, target setting and project selection. The cost of applying SMS principles for the safety programs will be included in the appropriate rules—if such principles are adopted—and is not accounted for under this rule. The TAM NPRM assumed additional costs for coordination of group plans above what was estimated in the planning rule. PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 FINAL RULE: There are no changes to the final rule as a result of these comments. However, other revisions were made to the analysis to conform with changes made to the final rule. For example, the number of 49 U.S.C. 5310 subrecipients required to comply with the requirements of this rule is significantly reduced. Applicability changes that only public transportation providers must follow requirements led FTA to use information from a 2006 study from the University of Montana17 in order to estimate the number of 5310 recipients likely to be effected by this rule. FTA reduced its estimate from 1700 affected in NPRM to 700 in the final rule. This change reduces the cost of inventory and asset condition assessment for the rule. COMMENTS: Regulatory Flexibility Act Some commenters provided input on the impacts of the rule to small entities. Several commenters stated that the rule’s asset management requirements would be a burden to smaller transit providers and urged FTA to minimize the financial burden and allow flexibility so small operators can more easily comply (e.g., minimal universal requirements that can be applied across all agencies). A tribal government expressed concern that the TAM rule requirements would have a profound effect on its transit program, which consists of only seven buses and no access to additional funding sources. An individual commenter suggested that FTA should define small entities as those entities that are not the certain large entities (which the commenter went on to list by name). A transit operator predicted that the additional cost of setup and continued maintenance would cost an additional 416 hours per year (8 hours per week) of staff time in order to meet the requirements set out by FTA. Another commenter supported FTA’s recognition of the disparate needs of the country’s transit agencies and asserted that the proposal’s accommodations for smaller agencies are practical and appropriate. FTA’S RESPONSE: Regulatory Flexibility Act The FTA accommodates the needs of the small providers by establishing a two-tiered approach that limits the number of TAM plan elements and 17 Allocation and Use of Section 5310 Funds in Urban and Rural America, Tom Seekins, Alexandra Enders, Alison Pepper, and Stephen Sticka, Research and Training Center on Disability in Rural Communities of the Rural Institute, University of Montana E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations allows participation in group plans to leverage the administrative burden on small providers. FINAL RULE: No change has been made in the final rule in response to this comment. COMMENTS: Paperwork Reduction Act A transit operator agreed that performance targets are helpful for gauging progress, but expressed concern about the reporting burden FTA proposes to impose on transit agencies, and having this information be used to customize the focus of triennial reviews for individual agencies. FTA’S RESPONSE: Paperwork Reduction Act FTA agrees there is a reporting burden on transit agencies; these estimates of burden were included in the PRA section of the NPRM and are also included in this final rule estimates. asabaliauskas on DSK3SPTVN1PROD with RULES FINAL RULE: No change has been made in the final rule due to these comments. COMMENTS: Other Regulatory Analyses A law firm on behalf of a tribal government stated that meaningful tribal consultation is required for this rulemaking and failure to do so can lead to arbitrary and capricious rulemaking. The commenter disagreed with the Administration’s conclusion that the proposed rule will ‘‘not have substantial direct effects’’ on one or more Indian tribes or will not impose ‘‘substantial direct compliance costs on Indian tribal governments.’’ The commenter asserted that FTA has not yet engaged in any consultation specifically with tribal governments regarding the impact of the rule on tribal transit programs, the vast majority of which do not operate rail systems and receive only modest funding from the FTA. The commenter recommended that the final rule exempt Federally recognized Indian tribes and their transportation agencies from the definition of ‘‘recipient’’ under § 625.5 until such time as the FTA has undertaken meaningful consultation with tribes on this issue. Asserting that the structure of the proposed TAM rule makes it impossible to review retrospectively due to a lack of defined baseline, a commenter recommended that FTA establish a baseline for the rule, i.e., a current snapshot of asset management practices and the corresponding SGR of assets, which could take the form of an overall survey of asset quality sufficiently representative of transit agencies. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FTA’S RESPONSE: Other Regulatory Analyses FTA appreciates the comments from tribal representatives and agrees that the final rule will have a substantial impact on tribes. FTA believes that each of the four elements in a tier II plan is already a part of each transit provider’s capital program. For example, in accordance with FTA’s Grants Management Requirements Circular 5010.1D, those tribes that are direct recipients of FTA grants must demonstrate procedures for asset management and adequate maintenance of equipment and facilities and maintain an inventory of project property. In addition, FTA anticipates that tribes will coordinate with their State partners in the development of a group TAM plan. This rule does not impose a substantial direct effect on one or more Indian tribes, but merely establishes a framework to achieve and maintain a state of good repair by streamlining existing requirements and practices and supporting informed decision making. Please also see the analyses of Executive Order 13175 for more specific information about FTAs approach to tribal outreach. FTA recognizes that developing an individual TAM plan, maintaining documentation and reporting requires that a TAM rule be flexible and scalable. This rule is scalable and flexible and provides several options to reduce the burden on small providers, including American Indian tribes. The baseline for the analysis was developed using current reports published by GAO, FTA and TCRP, and input from five transit agencies interviewed by FTA. SGR baseline is based on current data submitted to NTD. Given the large number of transit agencies, it would be a challenge to develop an exact baseline for the industry to be covered by the rule under the current PRA regulations. B. Final Rule Analyses and Notices Executive Order 12866 and 13563; USDOT Regulatory Policies and Procedures Executive Orders 12866 and 13563 direct Federal agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits— including potential economic, environmental, public health and safety effects, distributive impacts, and equity. Also, Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 48945 reducing costs, harmonizing rules, and promoting flexibility. FTA has examined the potential economic impacts of this rulemaking and has determined that this rulemaking is likely to be economically significant, in that it may lead to transit providers making investment and prioritization decisions that would result in economic impacts that could exceed $100 million in a year. However, as discussed in greater detail below, FTA was unable to quantify the potential impacts of this rule beyond the costs for transit agencies to assess their assets, develop TAM plans, and report certain information to FTA. Most significantly, due to lack of information about how and the extent to which agencies will change their asset maintenance, rehabilitation and replacement plans and practices in response to this rule, FTA was unable to estimate costs or benefits for additional asset maintenance, rehabilitation or replacement. The Need for Federal Regulatory Action In 2014, the number of transit trips exceeded 10 billion for the 8th year in a row. APTA,18 the 10.7 billion public transportation trips taken in 2014 represented the highest ridership level for transit since 1956. There is reason to believe that this is just the beginning of a sustained period of growing demand for public transportation. Moreover, factors such as the migration of people to urban areas, an aging population that will rely heavily on public transportation and a retiring transit maintenance workforce will further increase demands on existing public transportation systems. While this will increase revenues for the transit agencies, there will be an increased need for funds for maintenance and expansion of the system to meet the growth in demand. Given existing fiscal constraints, it is unlikely that the Nation’s SGR backlog can be addressed through increased spending alone. Rather, a systematic approach is needed to ensure that existing funding resources are strategically managed to target the SGR backlog and meet the increased demand for transit. MAP–21 fundamentally shifted the focus of Federal investment in transit to emphasize the need to maintain, rehabilitate, and replace existing transit investments. The ability of FTA grant recipients, along with States and MPOs, to both set meaningful transit SGR performance targets and to achieve 18 http://www.apta.com/resources/statistics/ Documents/FactBook/2016-APTA-Fact-BookAppendix-A.pdf. E:\FR\FM\26JYR2.SGM 26JYR2 48946 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES those targets is critically dependent upon the ability of all parties to work together to prioritize the funding of SGR projects from existing funding sources. Although the new SGR Grant Program for fixed-guideway systems and for fixed-route bus systems operating on high-occupancy vehicle (HOV) lanes will also be an essential component of this process, the SGR grants alone will not be enough to address the backlog. The FAST Act increased appropriations to this program, but funding increases by any one source to any one program will not be enough to fully address the financial needs. In these financially constrained times, transit agencies will need to be more strategic in the use of all available funds. The various components of this new National TAM System would work together to ensure that state of good repair becomes and remains a top priority for transit providers, as well as States and MPOs. Together, these elements will assist FTA and the transit industry in justifying SGR investments, both for securing new funding resources and for prioritizing SGR investments with existing funding sources. Congressional Mandate and Legal Authority Section 20019 of MAP–21, amended Federal transit law by adding a new section 5326 to Chapter 53 of title 49 of the United States Code (section 5326). The provisions of section 5326 require the Secretary of Transportation to establish and implement a National TAM System which defines the term ‘‘state of good repair;’’ requires that all recipients and subrecipients under Chapter 53 develop a TAM plan, which would include an asset inventory, an assessment of the condition of those assets, decision support tools, and investment prioritization; establishes annual reporting requirements; and mandates that FTA provide technical assistance to Chapter 53 recipients and sub-recipients, including an analytical process or decision support tool that allows for the estimation of capital asset needs and assists with investment prioritization. 49 U.S.C. 5326(b). In addition, section 5326 requires the Secretary to establish SGR performance measures, and recipients are required to set performance targets based on the measures. 49 U.S.C. 5326(c)(1) and (2). Furthermore, each designated recipient must submit an annual report to the Secretary on the condition of their recipients’ public transportation systems and include a description of any change in condition since the last report. (49 U.S.C. 5326(b)(3). Each designated recipient must submit also VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 an annual report to the Secretary which describes its recipients’ progress towards meeting performance targets established during that fiscal year and a description of the recipients’ performance targets for the subsequent fiscal year. (49 U.S.C. 5326(c)(3)).19 Identification of Available Alternative Approaches For the purposes of the analysis below, the costs and benefits of the rule are compared against the base case of existing practice. During the development of the rule, FTA considered various alternative approaches to ensure that the rule remained scalable and flexible enough for different types of transit modes and operating environments. As detailed in Section II of this document, FTA issued an advance notice of proposed rulemaking (ANPRM) and a notice of proposed rulemaking (NPRM) to get feedback from the transit industry and other stakeholders on specific questions relevant to developing the final rule. For instance, transit providers are classified into two tiers, based on the number of vehicles operated in revenue service and the mode. A tier I provider owns, operates, or manages (1) a rail transit mode or (2) more than one hundred one revenue vehicles. A tier II provider owns, operates, or manages less than one hundred revenue vehicles, or is a rural subrecipient under 49 U.S.C. 5311, or is an American Indian tribe, and is a provider that has no rail fixed-guideway. A tier II provider’s TAM plan would be required to include only elements 1 through 4 outlined in § 625.25(b), instead of all nine elements required for tier I providers. Moreover, most tier II providers are eligible to participate in a group TAM plan which would reduce the burden on the provider of developing an individual TAM plan. FTA considered several definitions for state of good repair before selecting the definition in the rule. FTA believes that the proposed performance measures have the most potential for use by transit providers in estimating the performance of their system, while imposing the least burden for extensive data collection and calculation of 19 The term ‘‘designated recipient’’ is defined in statute as ‘‘(A) an entity designated, in accordance with the planning process under sections 5303 and 5304, by the Governor of a State, responsible local officials, and publicly owned operators of public transportation, to receive and apportion amounts under section 5336 to urbanized areas of $200,000 or more in population; or (B) a State or regional authority, if the authority is responsible under the laws of a State for a capital project and for financing and directly providing public transportation.’’ 49 U.S.C. 5302(4). PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 measures. Transit providers have the option of using additional performance measures, in particular, for assets for which FTA did not establish performance measures. As discussed in the NPRM, for example, FTA considered alternatives submitted by commenters that would have limited the asset inventory to rolling stock; however, FTA elected to include rolling stock, equipment, infrastructure and facilities because these other asset categories are important components of transit service and were specifically included in the MAP–21 mandate (49 U.S.C. 5326(b)(1)). In response to the comments to the NPRM, FTA further reconsidered the choice of which assets to include in the TAM plan, considering the potential costs and benefits. Many commenters expressed concern about the inclusion of third party assets in the TAM plan, arguing that it would be difficult to implement and may prove to be overly burdensome and costly. In consideration of these comments, this final rule requires that only those vehicles, passenger stations, exclusive use maintenance facilities, and guideway infrastructure used in the provision of transit service be included in a transit providers asset inventory, including those vehicles, facilities, and guideway infrastructure that are owned, operated, or maintained by a third-party or were procured jointly. Equipment owned, operated, or maintained by a third-party need not be inventoried under this final rule. FTA does not believe that it will be overly burdensome for a transit provider to include third-party owned vehicles, facilities, and guideway infrastructure in its asset inventory. Transit providers are already required to include detailed information on third-party vehicles and third-party guideway infrastructure in the NTD, and so already have access to this information for their asset inventory. Expanding asset inventories to include third-party passenger facilities is important, as it will provide valuable information on the total number, size, and scope of facilities in the transit industry, which is an important contributor to state of good repair needs. The inclusion of a broad set of assets into the inventory is intended to provide funding decision makers with a full picture of their system and an opportunity to think proactively and long term about investment priorities for state of good repair. FTA recognizes the challenge of providing asset condition for assets the agencies have no capital responsibility for. This could be burdensome and of E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations little value to FTA or the transit agencies as they are not responsible for the capital expenditures for these assets. So, the final rule only requires a transit provider to conduct condition assessments, establish performance targets, and include in its investment prioritization, those capital assets (vehicles, passenger facilities, exclusiveuse maintenance facilities and guideway infrastructure) that it has direct capital responsibility for. asabaliauskas on DSK3SPTVN1PROD with RULES Estimated Costs and Benefits FTA’s estimates of the costs of the rule are based on current industry practices, and responses to the NPRM from the industry. There is no data on the cost of the current practice in the industry. The section below outlines the current practice based on studies available. FTA used information from the studies to estimate the incremental costs that transit providers likely would incur to implement the rule. FTA did not estimate the benefits of this rule. Instead, FTA conducted a threshold analysis based on a portion of the rule’s costs—specifically those that FTA was able to monetize. Baseline There is no single comprehensive source of information on the existing level of compliance with this rule. Most of the roughly two dozen transit providers that have been profiled in existing reports already conduct some or all of the transit asset management activities that would be required under the rule, and this analysis attempts to consider that baseline as the starting point for identifying the incremental costs and benefits of the rule. The transit providers that were profiled in the reports, though, are not a representative sample of the whole transit industry. In general, they represent the large and medium sized urban transit agencies that would fall into tier I. • The Government Accountability Office (GAO), Transit Asset Management (GAO–13–571) 20 studied nine agencies, which had transit asset management practices with varying levels of sophistication, along with a group of ‘‘leaders’’ in asset management. Overall, GAO found in its case study discussions that all agencies had at least some process for tracking assets and making investment decisions, but many faced challenges with collecting assetcondition data, analyzing performance, and making prioritization decisions in a systematic way. These challenges included a lack of funding, managing 20 http://www.gao.gov/assets/660/655837.pdf. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 48947 staff resources and change in general, and integrating processes such as ranking capital projects with established criteria. In addition, only two of these nine agencies specifically tracked the impact of their capital investment projects on their assets’ conditions. However, at least four agencies did track the impacts on service reliability and on-time performance. • FTA’s 2009 Rail Modernization Study 21 Report to Congress examined seven of the nation’s largest rail systems. The study found that of the seven agencies examined, all had asset inventory data, but only three had comprehensively updated asset condition data (namely, New York City Transit, Metro-North Railroad, and Long Island Rail Road). Experience with using decision support tools and objective investment prioritization was limited. Only one transit provider, the Massachusetts Bay Transportation Authority, used a decision tool. Prioritization decisions were based on mission critical, safety, coordination on line segment maintenance and maintenance of historical funding levels. • A 2010 report from FTA, ‘‘Transit Asset Management Practices: A National and International Review,’’ 22 presents case studies from around the United States. In this report, FTA found that all fourteen of the US agencies studied had asset inventory data and an inspection program, although this was not always systematic; for example, information on asset condition or defects was not typically rolled up into an overall asset condition metric. Vehicles and track tended to have the best coverage. Most agencies had at least some strategies, performance measures, and maintenance policies, though agencies’ project selection and other decision support tools were often separate from the system used to track asset inventory and condition. • Transit Cooperative Research Program Report 92, Transit Asset Condition Report: A Synthesis of Transit Practice,23 notes that large agencies generally have asset-tracking databases, but that many agencies maintain separate equipment rosters that are independent from the mainstream planning, programming and budgeting processes. Most large agencies determine asset condition through age and inspection, and generally do not use asset-condition data to set investment priorities for capital programming. • FTA’s Report to Congress on the State of Good Repair Initiative (2011) 24 stated that only two of the twenty-three agencies contacted were using an objective, multi-factor project- scoring process to help rank and prioritize their investment needs. The report also provided information on FTA’s programs in this area, including SGR grants made to transit agencies to implement or enhance a transit asset management system. Overall, the available literature on current practices suggests that there is room for improvement in transit providers’ asset management practices. A handful of leaders in the field, including roughly a dozen agencies that have been profiled by FTA or GAO reports, have implemented sophisticated decision-support systems and integrated transit asset management principles into their planning and operations, with associated ‘‘agency culture’’ changes to encourage collaboration across departments.25 However, at most other agencies, both large and small, some elements of transit asset management are in place, such as asset inventories, periodic condition assessments, and/or performance measures, but they have not been integrated into a comprehensive system to support datadriven decision-making and project prioritization, much less to trace impacts on ridership, service quality, life-cycle costs, safety and other outcomes. This rulemaking attempts to address that gap by establishing a framework for a National TAM System. 21 http://www.fta.dot.gov/documents/Rail_Mod_ Final_Report_4-27-09.pdf. 22 https://www.transit.dot.gov/sites/fta.dot.gov/ files/docs/TAM_A_National_and_International_ Review_-_6.10_FINAL_0.pdf. 23 http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_ syn_92.pdf. 24 http://www.fta.dot.gov/documents/SGR_ Report_to_Congress_12-12-11_Final.pdf. 25 These initiatives are described as cost-effective in the literature, but there is very little quantitative information about the outcomes associated with these programs, because they have generally not had independent evaluation. PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 Definition and Evaluation of the Benefits and Costs For estimating the incremental costs, FTA assumes that most agencies have already incorporated some elements of asset management into their practice. FTA made this assumption using findings from the literature on the state of the practice, comments received on the ANPRM and NPRM, and a limited number of case study interviews. As such, the incremental cost of some activities is likely to be minimal, as agencies move away from their old practices and adopt new ones. Smaller agencies are less likely to have fullfledged asset management systems, but E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES 48948 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations many of their TAM requirements are already standard practice, such as keeping an inventory of assets and tracking vehicle ages. Costs are estimated for an average transit provider or asset-type. This is a challenge since it is hard to define an average for an industry that is very diverse, ranging from agencies with thousands of vehicles, multiple modes and many facilities to an operator with a few buses. Some of this has been addressed by estimating costs by tiers defined above. In addition, agencies may be at different stages of asset management practice. The estimates presented below are therefore very difficult to apply to any particular provider. Costs are estimated using both FTA records such as NTD data and Bureau of Labor Statistics wage data as detailed more specifically in the sections below. To supplement the information available from existing studies, followup telephone interviews were conducted with four agencies that received funding through FTAsponsored pilot programs for TAM initiatives.26 Although the interviews did not directly address the proposed rule, interviewees’ experiences with transit asset management programs provided background on transit provider impacts and helped to gauge the reasonableness of FTA’s assumptions for development of a TAM plan and related activities. This very limited set must be regarded as a nonrepresentative sample and merely illustrative of the types of impacts that TAM programs can have. FTA has limited data on current practices and the costs associated with asset management activities, such as condition assessment, because TAM is a relatively new practice and requirement for transit agencies. FTA made assumptions in order to estimate costs based on the information available. There is also little in the academic literature on quantified benefits or costs for asset management programs for transit agencies. Another key limitation of the analysis is that FTA has data only on certain asset categories, such as revenue vehicles, stations, maintenance facilities, and guideway miles. As a result, FTA’s cost estimation process could not include non-revenue vehicles, or parking facilities and equipment that are not associated with a station or facility. 26 North Dakota DOT, Long Beach Transit (CA), Sound Transit (WA), and Valley Regional Transit (ID). VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 The analysis takes a societal perspective, including benefits and costs regardless of to whom they accrue. FTA estimates the initial costs (i.e. ‘‘upfront’’ or ‘‘non-recurring’’) and recurring costs at different intervals. Future costs are estimated to reflect the time value of money, using a 7% discount rate (with 3% sensitivity case) and a base year of 2015. Costs to Transit Providers To Implement the Requirements of the National TAM System The costs of the rule are estimated using an incremental approach. The costs of the rule are defined as the costs of the required asset management activities over and above the baseline of current industry practices. Cost items include: the development and implementation of the TAM plan; coordination with group TAM plan sponsors; documentation, recordkeeping and reporting. While no specific training is required for most transit employees, at least one commenter noted that there may be additional training costs, or alternatively that contractor support would be needed. In the analysis below, that is presented as a high-cost case with contractor cost rates. TAM implementation could also help agencies make more cost-effective investment choices with respect to asset maintenance, rehabilitation, and replacement, but FTA was not able to estimate the benefits and costs of those follow-on actions due to limited information. Of the cost items that were monetized, the specific cost estimates primarily reflect staff labor hours in the lower cost scenario and contractor support in the higher cost scenario. The costs of the TAM plan are estimated based on the costs of each component, including asset inventories, condition assessments, project lists, performance metrics, and targets. The TAM final rule does not require transit providers to use any particular technology or software system. FTA has emphasized that transit agencies could use something as simple as an Excel spreadsheet to comply with the requirement for a multi-factor prioritization process. Some transit agencies may choose to engage consultants, purchase commercial software, or pursue other approaches that they find more cost-effective. In addition, some commercial software packages provide more sophisticated systems that integrate transit asset information with other modules, such as scheduling and crew assignment, or provide other functionalities. These packages go beyond what is required by PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 the rule, so their costs are not necessarily indicative of the actual costs of the rule. The overall approach in the subsections below is to estimate the labor-hours required for each TAM task and to multiply by an appropriate wage rate to generate the total cost. The laborhour estimates are based on findings from the limited literature on transit asset management, expert judgment from FTA staff on the approximate level-of-effort required, the information from the four transit provider interviews, and information from public comments to the NPRM. In some cases, it was possible to cross-check the totals that would result from these assumed cost levels against agencies’ actual expenditures on asset management programs, such as those funded through the SGR grant amounts or recent contract awards. These comparisons are discussed in more detail below. Wage rates for transit provider labor hours are based on May 2015 Bureau of Labor Statistics (BLS) data for urban transit systems and interurban and rural bus transportation.27 In response to comment, FTA adjusted the hourly wage rates to account for employee benefits.28 Table 2 below describes the wage rates used and the TAM plan activities to which they relate. For simplicity, FTA applied the urban wage rates to tier I providers and rural rates to tier II providers. FTA received several comments in response to the NPRM noting that transit providers may be more likely to use contractor support to develop their TAM systems than inhouse labor, and that costs would be higher in those cases. To address this comment, FTA developed a higher-cost case that assumes contractor support at costs that were roughly two times the fully loaded in-house costs as detailed above.29 The number of hours per task 27 http://www.bls.gov/oes/current/naics3_ 485000.htm. http://www.bls.gov/oes/current/ naics3_485000.htm. 28 Bureau of Labor Statistics News Release. Employer Costs for Employee Compensation— September 2014. Table 3, Service-providing industry group. http://www.bls.gov/news.release/ pdf/ecec.pdf. BLS data show wages as 64.1% of total compensation, with benefits at 35.9%. Therefore, employees’ wages are factored by 1.56 (100/64.1) to account for employer provided benefits. 29 This cost factor was based on two sources of information. Federal Highway Administration collected data on the cost of developing highway asset management plans from 9 States, with preliminary findings showing the contractor support to cost in the range of 1.5 to 1.6 times as much as in-house efforts. A 2013 research report from the Project on Government Oversight study, while focused on the Federal government rather than state and local agencies, found that contractors were paid 1.8 times more than federal employees for similar work. www.pogo.org/our-work/reports/ 2011/co-gp-20110913.html#Executive Summary. E:\FR\FM\26JYR2.SGM 26JYR2 48949 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations was assumed to be constant, as were IT costs. TABLE 2—SUMMARY OF TRANSIT INDUSTRY WAGE RATES AND FRINGE BENEFITS FOR TAM ACTIVITIES Title Wage rate Loaded wage rate Relevant TAM activities Urban Transit Systems (NAICS 485100) General and Operations Manager ................................ $55.86 $87.14 Operations Specialties Manager .................................. Business Operations Specialists .................................. Buyers and Purchasing Agents .................................... 44.64 30.74 28.94 69.64 47.95 45.15 Installation, Maintenance, and Repair Occupations ..... 24.14 37.66 Plan Strategy, Performance Measures and Targets, Data and Narrative Reporting to NTD. Asset Condition Assessment. Data and Narrative Reporting to NTD. Asset Condition Assessment, Analytical Processes, Prioritized Project List. Asset Condition Assessment. Interurban and Rural Bus Transportation Systems (NAICS 485200) General and Operations Manager ................................ 49.35 76.99 Business Operations Specialists .................................. Other Office and Administrative Support Workers ....... 26.91 13.85 41.98 21.61 Installation, Maintenance, and Repair Occupations ..... 22.82 35.60 Using NTD submissions and other information, FTA estimated that there are approximately 284 tier I providers and 2,714 tier II providers. These totals include subrecipients, as well as public transportation providers that are receiving 49 U.S.C. 5310 formula grant funding, and subject to this rule, but that do not currently report to the NTD. For calculation purposes, FTA assumes, based on knowledge of the industry and the requirements of this final rule, that tier I providers and tier II direct recipient providers would develop their own TAM plans, while Performance Measures and Targets, Data and Narrative Reporting to NTD. Data and Narrative Reporting to NTD. Asset Condition Assessment, Analytical Processes, Prioritized Project List. Asset Condition Assessment. tier II subrecipient providers, which tend to be much smaller organizations, would participate in a group TAM plan. Participating in a group plan minimizes the burden and costs to small providers of transit services and transfers it to States. FTA estimated the number of group TAM plans that would be developed for these subrecipients based on existing funding and reporting relationships. Specifically, it was assumed: That the 120 recipients of section 5307 funding would be covered by 10 group TAM plans; that the estimated 700 subrecipients of section 5310 funding would be covered by 200 group TAM plans; and that the 1,300 rural subrecipients of section 5311 funding and 104 American Indian tribes would be covered by 54 Group TAM plans by State DOTs or an equivalent entity. This yields an estimated total of 264 group TAM plans. The table below shows the number of agencies impacted by the rule and also provides other relevant figures by tier based on our estimates and the 2013 NTD data. TABLE 3—NUMBER OF AGENCIES, PLANS AND ASSETS BY TIER (2013) 30 Tier I agencies Number of Agencies ............................................................................. Tier II agencies 284 ................... 2,714 284 ................... 0 ....................... 490 264 116,472 ............ 12,746 .............. 2,563 ................ 4,195 ................ 1,068 ................ Unknown ........... 62,858 0 0 822 1,367 Unknown Number of TAM Plans Individual ............................................................................................... Group Plans .......................................................................................... MAP–21 Asset Category Number of Assets by Type Rolling Stock .................................. Infrastructure .................................. asabaliauskas on DSK3SPTVN1PROD with RULES Facilities ......................................... Revenue Vehicles ................................................................................. Way Mileage (Track) ............................................................................. Bridges, Tunnels, & Transitions ............................................................ Rail & Bus Stations ............................................................................... Maintenance Facilities ........................................................................... Administrative Buildings and Parking Facilities (not part of a Station or Maintenance Facility). 30 Source: National Transit Database, FTA, 2013 (This is the latest year for which data is available). VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48950 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations TABLE 3—NUMBER OF AGENCIES, PLANS AND ASSETS BY TIER (2013) 30—Continued Tier I agencies Equipment ...................................... Non-Revenue Vehicles 31 ...................................................................... Equipment ............................................................................................. (1) Asset Inventory Under the final rule, transit providers are required to complete an inventory of their capital assets. The inventory needs to provide accessible, consistent, and comprehensive information about the state of good repair of a transit provider’s capital assets. Depending on the provider’s size, this information includes number of revenue vehicles, number of stations, number of facilities, number of equipment, and mileage of track as shown in appendix C.32 Based on knowledge of the transit industry and information from the transit provider interviews, FTA understands that almost all agencies have a basic inventory of assets that is used for accounting and audit purposes. This supports the intuitive conclusion that transit agencies know what assets they have. These inventories will likely be updated as new assets are purchased and others are depreciated or retired, even in the absence of the rule. Therefore, incremental costs for the asset inventory should be relatively minor. However, several agencies noted in response to the NPRM that existing asset inventories may not be in a format this is usable for TAM, and that there may be staff time and costs required for converting the inventory data to the new format and/or gathering information on non-owned assets (to the extent that they are covered by TAM).33 For cost estimation purposes, it is assumed that each TAM plan (tier I plan, tier II Unknown ........... Unknown ........... Tier II agencies Unknown Unknown individual plan, and tier II group plan) will require 96 hours of staff time in the first year, and 36 hours of staff time each year thereafter, to re-format agency asset data into a format that is usable for TAM. For tier I agencies, this labor is estimated at the rate for a purchasing agent ($45.15 per hour including benefits). For tier II agencies, labor costs are estimated using a business operations specialist ($41.98 per hour including benefits). Total costs for the asset inventory are summarized below. The table below represents the calculations described above for tiers I and II as the low case. The high case was calculated in the same manner with the exception that labor costs were doubled as described above. TABLE 4—INITIAL AND RECURRING COSTS FOR ASSET INVENTORY Low case Agency size Initial 2-year period High case Annually recurring Initial 2-year period Annually recurring Tier I ................................................................................................................. Tier II ................................................................................................................ $1,229,246 3,038,651 $460,967 1,139,494 $2,458,492 6,077,303 $921,935 2,278,989 Total .......................................................................................................... 4,267,898 1,600,462 8,535,795 3,200,923 asabaliauskas on DSK3SPTVN1PROD with RULES (2) Asset Condition Assessment Under the final rule, transit providers are required to complete an assessment of capital assets for which they have direct financial responsibility. The assessment must include sufficient information to monitor and predict the performance of each capital asset identified in the asset inventory. Additionally, the process must identify unacceptable safety risks related to the condition of the capital assets. The assessment should also be used when prioritizing investments for transit asset management. While many transit providers already perform these assessments, at least for certain asset types, it is likely that additional effort will be required to meet the standards of the rule. Estimates of the time required for assessment will vary by asset category. FTA’s estimates of the time to assess particular assets are listed below. These 31 The table only includes assets reported to the NTD; therefore, it does not does not include nonrevenue vehicles or equipment assets. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 estimates are based on FTA’s experience with the asset assessment in the transit industry, including unpublished results from a pilot study. For revenue and service vehicles, the rule calls for an age-based assessment for purposes of setting performance targets. Transit providers generally already have records of their vehicles’ ages and many are already required to report this information to the NTD. To be conservative, however, FTA assumes that this information may be in a different format or database and/or require additional effort to be brought into the asset management system. For estimation purposes, FTA assumes that approximately 30 minutes per vehicle would be required. As noted above, one data limitation is that no information was available through NTD on nonrevenue vehicles, but FTA does not expect this to have much impact on the overall total, as the number of service vehicles is presumed to be much smaller than the number of revenue vehicles, which is known. Nonetheless, FTA is including non-revenue vehicles in TAM because they are capital assets that can affect transit service quality, for example through maintenance calls and incident response. For facilities, the rule calls for a condition-based assessment for purposes of setting performance targets. Costs per passenger station are estimated based on two staff members, each working a half day, for a total of eight hours per station. For maintenance facilities, costs are estimated based on two staff members working a full day, for a total of 16 hours per facility. FTA assumes that equipment and parking facilities that are part of stations or maintenance facilities would be part of the assessment for that station or maintenance facility. FTA does not have separate data on equipment, 32 http://www.ntdprogram.gov/ntdprogram/ assetInventory.htm. 33 Non-owned assets would need to be included in the asset inventory if the agency uses them for providing transit service. Asset condition assessment is only required for assets that an agency has direct capital responsibility. PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 asabaliauskas on DSK3SPTVN1PROD with RULES Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations administrative buildings or parking facilities. These are rough averages that reflect the wide range of assets in this category. For example, a downtown subway station may contain multiple platforms, exits, and passageways, whereas an outlying commuter railroad station may consist of little more than a platform and a shelter. It is also possible for equipment to be located at administrative facilities or parking facilities that are not reflected in these totals, though FTA believes that to constitute a small share of transit agency equipment or total facilities. For infrastructure way mileage (e.g., railroad tracks or separated BRT guideways), the rule calls for a performance-based assessment for purposes of setting performance targets. Transit providers already have some performance-related information such as speed restrictions, but again FTA assumes that some additional effort would be required to prepare this information in a way that is consistent with the rule. For estimation purposes, FTA assumes that this would require roughly 30 minutes per mile of way. However, under special circumstances such as for subway tunnels, elevated structures, and the transitions from ground level to these areas, additional time may be necessary to assess the performance and also determine the structural or tunnel integrity. In these cases, FTA assumes that this would require roughly 1 hour per mile of way. For equipment, the rule calls for an age-based assessment for purposes of setting performance targets. Equipment is defined as an article of nonexpendable, tangible property having a useful life of at least one year. FTA lacks specific information about transit providers’ ownership of equipment, this final rule clarifies that asset equipment inventory does not include third party equipment, or owned equipment under $50,000. As a result, the total size of this asset class is not known, and the cost estimates do not include TAM costs associated with equipment. In addition, FTA does not have data on the extent to which condition assessments are already routinely undertaken for these equipment assets. However, FTA believes that most equipment will be located within maintenance facilities and passenger stations, or along rail guideways, and thus the costs of condition assessments for equipment would often be included in the condition assessments for those VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 facilities, stations, or guideways. Even in cases where they are not, the condition assessment for these assets should be relatively simple, as the rule requires only a simple, age-based assessment. FTA assumes that the asset condition assessment would need to be performed as part of the initial plan development, and would also need to be repeated periodically in order to fully implement the other provisions, notably investment prioritization, performance measures, and reporting requirements. FTA assumes that assessments for revenue vehicles, equipment and guideway infrastructure are repeated on an annual basis, while passenger stations and exclusive use maintenance facilities are assessed every three years. Following, is a detailed accounting of incremental costs by provider type. Tier I Providers Based on 2013 NTD data, tier I providers operate a total of 116,472 revenue vehicles, 4,195 stations, 1,068 maintenance facilities, 12,746 miles of standard track, and 2,563 miles of track within subway tunnels or on elevated structures (including transitions). These assets would be tracked or inspected by various employees at the transit provider. It is likely that the age-based assessment of the vehicles would be conducted by a buying or purchasing agent at a loaded wage rate of $45.15, the condition-based station and maintenance facility assessment would be conducted by an installation or maintenance repair worker at a loaded wage rate of $37.66, and the performance-based way mileage, elevated structure, and tunnel assessment would be conducted by an operations specialties manager at a loaded wage rate of $69.64. Multiplying the number of assets, by the corresponding time requirement described above, and by the corresponding wage rate leads to a total initial cost of $5.16 million. Thus, FTA’s analysis finds that, on average, each tier I agency would incur an initial cost of just over $18,000 (low case) to just over $36,000 (high case) to comply with this rule’s requirements for asset condition assessments. FTA assumes that the vehicles and way mileage, elevated structures, and tunnels would be assessed annually at a total annual cost of approximately $3.25 million and the stations and maintenance facilities would be PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 48951 assessed triennially at a tri-annual cost of approximately $1.91 million. Tier II Providers Based on 2013 NTD data and our approximations for non-reporting providers, the tier II providers operate a total of 62,858 vehicles,34 822 stations, 1,367 maintenance facilities, and 0 miles of way mileage.35 These assets would be tracked or inspected by various different employees of the transit provider. It is likely that the agebased assessment of the vehicles would be conducted by an office or administrative support worker at a loaded wage rate of $21.61, and the condition-based station and maintenance facility assessment would be conducted by an installation or maintenance repair worker at a loaded wage rate of $35.60. Multiplying the number of assets, by the corresponding time requirement described above, and by the corresponding wage rate leads to a total initial cost of $1.70 million. FTA assumes that vehicles’ age-based assessments would be updated annually at a total annual cost of approximately $0.68 million and the stations and maintenance facilitates would be assessed triennially at a tri-annual cost of approximately $1.01 million. The table below represents the calculations described above for tiers I and II as the low case. The high case was calculated in the same manner with the exception that labor costs were doubled as described above. Thus, FTA’s analysis finds that, on average, each tier II agency would incur an initial cost of just over $623 (low case) to $1,247 (high case) to comply with this rule’s requirements for asset condition assessments. 34 This includes the vehicle count from NTD, plus an estimated 21,000 vehicles for the roughly 700 section 5310 subrecipients who do not submit any vehicle counts or other asset data to NTD. 35 Rural transit agencies do not submit annual reporting on their miles of right-of-way. These rural agencies typically operate buses and paratransit vehicles on public streets and generally do not own any rail systems or other transit rights-of-way. There may be a small number of exceptions that are not accounted for in this section due to the data limitation. E:\FR\FM\26JYR2.SGM 26JYR2 48952 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations TABLE 5—INITIAL AND RECURRING COSTS FOR THE ASSET ASSESSMENT Low case Initial 2-year period High case Annual recurring Triennial recurring Initial 2-year period Annual recurring Triennial recurring Tier I ......................................................... Tier II ........................................................ $5,158,711 1,691,781 $3,251,448 679,055 $1,907,262 1,012,726 $10,317,422 3,383,562 $6,502,897 1,358,110 $3,814,525 2,025,452 Total .................................................. 6,850,492 3,930,503 2,919,988 13,700,984 7,861,007 5,839,977 asabaliauskas on DSK3SPTVN1PROD with RULES (3) Analytical Processes Under the final rule, transit providers are required to present a list of analytical processes or decision-support tools that allow for capital investment needs to be estimated over time and to assist with capital asset investment prioritization. No specific format or software is mandated, but certain capabilities are required. The investment prioritization plan must identify each asset within the asset inventory that is included within an investment project over the timeframe of the TAM plan. Projects must be ranked in order of priority and the year in which they are expected to be carried out. The prioritization must account for SGR policies and strategies, as well as funding levels and the value of needed investments. GAO’s review of existing practices indicated that, at least among larger transit providers, staff already conduct some form of this analysis when making investment decisions, but to varying degrees and not necessarily in a way that conforms to the proposed requirements. Smaller transit providers may have less in the way of formal analytical tools for prioritizing projects and for incorporating asset condition information into this process. Estimates for this component generally assume that larger agencies would be expanding and strengthening their existing activities, while smaller agencies may be essentially starting from scratch or from more informal processes. Transit providers have a number of options for developing a system that would satisfy the proposed requirements of the TAM plan. Some may choose to purchase commercial software specifically designed for enterprise asset management; these can include packages that combine asset management with software tools for other functions, such as maintenance and scheduling. Others may develop their own tools in-house, for example using a custom Excel workbook to incorporate asset-condition information 36 Schwager, Dianne. Transit Cooperative Research Program Report 172: Guidance for VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 and other asset-management considerations into project prioritization. The in-house development option is used here for cost-estimation purposes, though some providers may find it more cost-effective to purchase software. There are also free and low-cost software packages available for agencies to adapt to their needs, including the TERM-Lite tool from FTA, available free of charge. The TCRP also has a free tool composed of four spreadsheet models entitled the Transit Asset Prioritization Tool (TAPT). This tool ‘‘is designed to assist transit agencies in predicting the future conditions of their assets, and in prioritizing asset rehabilitation and replacement.’’ 36 Such a tool would be particularly useful for smaller providers. The following, is a detailed accounting of incremental costs by provider type. these recurring updates at the $45.15 wage rate. Multiplying the recurring hours required, by the number of agencies, by the wage rate leads to a total recurring cost of $2.66 million. Tier II Providers Tier I Providers The resources required to implement the analytical processes would vary significantly across transit providers, based on the size and complexity of their asset portfolios and the strength of their current practices. As an overall average based on interviews and past pilot projects, FTA estimates that a transit provider would spend the equivalent of 520 person-hours for strengthening its analytical and decision-support tools and processes (or alternatively, purchasing or learning a ready-made software tool for an equivalent sum). FTA assumes that this task would be completed by the aforementioned buyer or purchasing agent at a loaded wage rate of $45.15. Multiplying the hours required, by the number of transit providers, by the wage rate leads to a total initial cost of $6.66 million. Once the initial investment is made in the analytical and decision-support tools and processes, maintaining and updating those processes is estimated to take the equivalent of 208 hours per year on average. The same buyer or purchasing agent is assumed to conduct Tier II providers have smaller vehicle fleets and no rail fixed-guideway service, removing some of the complexities in project prioritization that tier I providers face, but they also tend to have fewer existing formal processes in this area. In order to implement the analytical processes, FTA estimates that providers would spend the equivalent of 520 personhours on average developing their analytical and decision-support tools or processes (or alternatively, purchasing or learning a ready-made software tool for an equivalent sum) for each individual TAM plan or group TAM plan. FTA assumes this task would be completed by a business operations specialist at a loaded wage rate of $41.98. Multiplying the hours required, by the estimated number of individual and group plans created, by the wage rate leads to a total initial cost of $16.46 million. Once the initial system investment is made, maintaining and updating the analytical processes is estimated to take the equivalent of 104 hours per year. This is half of the assumed time needed for tier I providers because of the comparative simplicity of the systems overseen by tier II providers. The same business operations specialist is assumed to conduct these recurring updates at the $41.98 wage rate. Multiplying the recurring hours required, by the estimated number of individual and group plans created, by the wage rate leads to a total recurring cost of $3.29 million. The table below represents the calculations described above for tiers I and II as the low case. The high case was calculated in the same manner with the exception that labor costs were doubled as described above. Developing a Transit Asset Management Program. Sponsored by the Federal Transit Administration. 2014. http://onlinepubs.trb.org/onlinepubs/tcrp/ tcrp_rpt_172.pdf. PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48953 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations TABLE 6—INITIAL AND RECURRING COSTS FOR THE ANALYTICAL PROCESSES Low case Agency size Initial 2-year period High case Annually recurring Initial 2-year period Annually recurring Tier I ................................................................................................................. Tier II ................................................................................................................ $6,658,417 16,459,362 $2,663,367 3,291,872 $13,316,834 32,918,723 $5,326,733 6,583,745 Total .......................................................................................................... 23,117,778 5,955,239 46,235,557 11,910,478 (4) Prioritized Project List Under the final rule, transit providers are required to develop a list of projects from the investment prioritization process described above. The list must include projects for which funding would be sought under the section 5337 SGR Formula Program. While it is known that agencies generally have a method of determining which projects they would need to invest in next—and many large, multi-modal agencies often have sophisticated, multi-year planning tools—the level of detail and process involved in updating the list is unknown. Following is a detailed accounting of incremental costs by provider type. Tier I Providers The large tier I providers in this category tend to have existing processes for generating prioritized project lists based on scenario analysis.37 However, for some transit providers, additional effort may be needed to develop a project list that reflects the requirements of the rule. While there is less casestudy information on the practices of medium-sized tier I providers, most are believed to have existing processes for developing prioritized project lists. To align this process with the requirements of the rule, FTA estimates that transit providers would spend an average of 96 hours above their current baseline in creating the prioritized project list. FTA assumes this task would be completed by the aforementioned buyer or purchasing agent (in coordination with other staff) at a loaded wage rate of $45.15. Multiplying the hours required, by the number of agencies, by the wage rate leads to a total initial cost of $1.23 million. Once the initial project list is created, maintaining and updating the list is estimated to take 36 hours per year. The same buyer or purchasing agent is assumed to conduct these recurring updates at the $45.15 wage rate. Multiplying the recurring hours required, by the number of agencies, by the wage rate leads to a total recurring cost of $0.46 million. Tier II Providers As with larger transit providers, smaller transit providers generally have some form of an existing process for developing a prioritized project plan, but are assumed to require time above their current baseline to make this process consistent with the proposed TAM requirements. FTA estimates that each tier II provider developing a TAM plan, along with each group TAM plan sponsor would spend an average of 96 hours creating their prioritized project list. FTA assumes this task would be completed by the business operations specialist (in coordination with other staff) at a loaded wage rate of $41.98. Multiplying the hours required, by the estimated number of individual and group plans, by the wage rate leads to a total initial cost of $3.04 million. Once the initial project list is created, maintaining and updating the list is estimated to take 24 hours per year. The same business operations specialist is assumed to conduct these recurring updates at the $41.98 wage rate. Multiplying the recurring hours required, by the estimated number of individual and group TAM plans, by the wage rate leads to a total recurring cost of $0.76 million. The table below represents the calculations described above for tiers I and II as the low case. The high case was calculated in the same manner with the exception that labor costs were doubled as described above. TABLE 7—INITIAL AND RECURRING COSTS FOR THE PRIORITIZED PROJECT LIST Low case Agency size Initial 2-year period High case Annually recurring Initial 2-year period Annually recurring Tier I ................................................................................................................. Tier II ................................................................................................................ $1,229,246 3,038,651 $460,967 759,663 $2,458,492 6,077,303 $921,935 1,519,326 Total .......................................................................................................... 4,267,898 1,220,630 8,535,795 2,441,260 asabaliauskas on DSK3SPTVN1PROD with RULES (5) Plan Strategy Under the final rule, tier I transit providers are required to develop TAM and SGR policies and strategies. This includes a description of key TAM activities spanning the time horizon of the plan, a specification of the resources needed to develop and implement the plan, and an outline of how the plan and related business practices would be updated over time. These components are optional for tier II providers. Following, is a detailed accounting of incremental costs by provider type. Tier I Providers FTA estimates that these providers would spend an average of 96 hours developing the elements of the plan strategy above what they are currently doing in this area. Because this component deals with high level strategy, FTA assumes this planning 37 FTA, Transit Asset Management Practices: A National and International Review, June 2010. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48954 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations task will be completed by a general operations manager at a loaded wage rate of $87.14. Multiplying the hours required, by the number of providers, by the wage rate leads to a total initial cost of $2.37 million. Every four years, providers would need to update their strategy document based on recent and planned activities and other developments. FTA estimates that this document update would require an average of 80 hours of incremental staff time. The same operations manager is assumed to conduct these recurring updates at the $87.14 wage rate. Multiplying the recurring hours required, by the number of providers, by the wage rate leads to a total four-year recurring cost of $1.98 million. Tier II Providers There are no initial or recurring costs for this aspect of the TAM plan because tier II providers may opt out of completing these requirements, whether they develop their own TAM plan or participate in a group TAM plan. The table below represents the calculations described above for tiers I and II as the low case. The high case was calculated in the same manner with the exception that labor costs were doubled as described above. TABLE 8—INITIAL AND RECURRING COSTS FOR THE PLAN STRATEGY Low case Agency size Initial 2-year period High case Quadrennially recurring Initial 2-year period Quadrennially recurring Tier I ................................................................................................................. Tier II ................................................................................................................ $2,372,691 0 $1,977,243 0 $4,745,383 0 $3,954,486 0 Total .......................................................................................................... 2,372,691 1,977,243 4,745,383 3,954,486 asabaliauskas on DSK3SPTVN1PROD with RULES (6) Performance Measures and Targets Tier I Providers Tier II Providers In addition to the TAM plan, under the final rule transit providers are required to use performance measures to set targets for capital assets. Transit providers need to use their asset condition assessments to determine the percentage of their assets that meet specified performance standards. Based on these performance measures and available funding, transit providers are required to develop annual SGR performance targets that align with their TAM plan priorities. With the exception of a few transit providers profiled in more depth by GAO reports, it is unknown to what extent agencies are currently monitoring performance or whether their existing metrics and targets would meet the requirements of this section. Transit providers have a number of resources to draw on in developing their measures and targets, including FTA publications 38 and TCRP Report 172.39 Nonetheless, some compliance costs are assumed to be necessary to adapt this guidance to the details of each transit provider’s assets, operating environment, and strategies. Setting performance measures and targets should be more straightforward for tier II providers, which are smaller and do not have the complexities associated with rail fixed-guideway elements. Following, is a detailed accounting of costs by provider type. FTA’s 2010 review of practices found that many large transit providers have existing performance measures for asset management. However, practices vary, and some transit providers would need additional work to comply with the proposed provisions. Compared to the largest tier I providers, medium-sized tier I providers have less complex asset portfolios, but also may have less in the way of existing activities for performance measures. Overall, based on information from interviews, FTA estimates that transit providers would spend an average of 208 hours developing their performance measures and targets. FTA assumes this task would be completed by the aforementioned operations manager at a loaded wage rate of $87.14. Multiplying the hours required, by the number of transit providers, by the wage rate leads to a total initial cost of $5.14 million. Once the initial measures and targets are developed, FTA estimates that reviewing and updating them annually would take the equivalent of 36 hours per year on average. The same operations manager is assumed to conduct these recurring updates at the $87.14 wage rate. Multiplying the recurring hours required, by the number of transit providers, by the wage rate leads to a total recurring cost of $0.89 million. Tier II providers do not have the complexities associated with developing performance measures for rail fixedguideway transit. FTA estimates that tier II providers developing their own TAM plan and group TAM plan sponsors would each spend an average of 80 hours developing the performance measures and targets. FTA assumes this task would be completed by the operations manager at a loaded wage rate of $76.99. Multiplying the hours required, by the estimated number of individual and group plans, by the wage rate leads to a total initial cost of $4.64 million. Once the initial measures and targets are developed, FTA estimates that reviewing and updating them annually would take the equivalent of 24 hours per year on average. FTA assumes the same operations manager will conduct these recurring updates at the $76.99 wage rate. Multiplying the recurring hours required, by the estimated number of individual and group plans, by the wage rate leads to a total recurring cost of $1.39 million. The table below represents the calculations described above for tiers I and II as the low case. The high case was calculated in the same manner with the exception that labor costs were doubled as described above. 38 http://www.fta.dot.gov/documents/FTA_ Report_No._0027.pdf. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 39 TCRP Report 172 is available at http:// www.tcrponline.org/PDFDocuments/tcrp_rpt_ 172.pdf. PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48955 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations TABLE 9—INITIAL AND RECURRING COSTS FOR THE PERFORMANCE MEASURES AND TARGETS Low case Agency size Initial 2-year period High case Annually recurring Initial 2-year period Annually recurring Tier I ................................................................................................................. Tier II ................................................................................................................ $5,140,832 4,643,796 $889,759 1,393,139 $10,281,663 9,287,591 $1,779,519 2,786,277 Total .......................................................................................................... 9,784,627 2,282,898 19,569,254 4,565,796 (7) Data and Narrative Reporting to NTD Tier I Providers Tier II Providers Under the final rule, transit providers are required to submit an annual data report to the NTD, which reflects the SGR performance targets for the following year and assessment of the condition of the transit provider’s transit system. Additionally, transit providers are required to submit an annual narrative report to the NTD that provides a description of any change in the condition of its transit system from the previous year and describes the progress made during the year to meet the targets previously set for that year. FTA estimated costs for the new reporting to the NTD based on a pilot program with seven rail transit providers. Based on internal FTA reports, it is expected that the reporting requires a transit provider’s staff time that is equivalent to 0.16 hours per revenue vehicle initial and 0.08 hours per vehicle in subsequent years. (For simplicity these figures are expressed in terms of hours per vehicle, but include time required for reporting on other assets such as stations and facilities. FTA’s pilot program also used an alternative methodology based on the time required per data field submitted, which yielded nearly identical results.) These estimated labor-hour requirements have been applied in the calculations below. The calculations also include the estimated time required for the narrative report, which was not included in FTA’s pilot program or earlier estimates. With a total of 116,472 revenue vehicles and FTA’s estimate of 0.16 reporting hours per vehicle, FTA estimates that these providers collectively require a total of 18,636 hours for their initial reporting to the NTD under the rule. Multiplied by the loaded wage rate of $47.95 for a Business Operations Specialist, the total cost is approximately $0.89 million for tier I providers. The narrative report is separately estimated to require 24 labor hours per provider to develop and submit, including 22 hours for a Business Operations Specialist (loaded wage rate $47.92) and 2 hours for managerial review of the document by a general operations manager (loaded wage rate $87.14). Across the 284 agencies in this group, the total cost is approximately $0.35 million. Once the initial report and template are created, FTA estimates that updating the data reports annually would take the equivalent of 9,318 hours per year, based on FTA’s estimate of 0.08 hours per revenue vehicle and 116,472 vehicles. At a loaded wage rate of $47.95 for a Business Operations Specialist, the total cost is approximately $0.45 million. Updating the narrative report is estimated to require an additional 20 hours per year (18 hours for preparation by a Business Operations Specialist and 2 hours for review by the general operations manager). Multiplying the respective hours required, by the number of transit providers, by the wage rates leads to a total recurring cost of $0.29 million. With an estimated total of 62,858 revenue vehicles and FTA’s estimate of 0.16 reporting hours per vehicle, FTA estimates that collectively these providers require a total of 10,057 hours for their initial reporting to the NTD under the rule. Multiplied by the loaded wage rate of $41.98 for a Business Operations Specialist, the total cost is approximately $0.42 million. The narrative report is separately estimated to require 16 labor hours per TAM plan (individual or group TAM plan) to develop and submit, including 14 hours for a Business Operations Specialist (loaded wage rate $41.98) and 2 hours for managerial review of the document by a general operations manager (loaded wage rate $76.99). Across the 754 individual and group tier II TAM plans, the total cost is approximately $0.56 million. Once the initial report and template are created, FTA estimates that updating the data report annually would take the equivalent of 5,029 hours per year, based on FTA’s estimate of 0.08 hours per revenue vehicle and 62,858 vehicles. At a loaded wage rate of $41.98 for a Business Operations Specialist, the total cost is approximately $0.21 million. Updating the narrative report is estimated to require an additional 8 hours per year (6 hours for preparation by a Business Operations Specialist and 2 hours for general operations manager review). Multiplying the respective hours required, by the number of transit providers, by the wage rates leads to a total recurring cost of $0.31 million. TABLE 10—INITIAL AND RECURRING COSTS FOR THE DATA AND NARRATIVE REPORTING TO NTD Low case asabaliauskas on DSK3SPTVN1PROD with RULES Agency size Initial 2-year period High case Annually recurring Initial 2-year period Annually recurring Tier I ................................................................................................................. Tier II ................................................................................................................ $1,242,310 981,432 $741,078 517,111 $2,484,619 1,962,864 $1,482,156 1,034,222 Total .......................................................................................................... 2,223,742 1,258,189 4,447,484 2,516,378 VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 E:\FR\FM\26JYR2.SGM 26JYR2 48956 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations (8) State and MPO Target Setting Under the performance management framework established by MAP–21, States, MPOs, and transit providers must establish targets in key national performance areas to document expectations for future performance. In accordance with 49 U.S.C. 5303(h)(2)(B)(ii) and 5304(d)(2)(B)(ii), States and MPOs must coordinate the selection of their performance targets, to the maximum extent practicable, with performance targets set by transit providers under 49 U.S.C. 5326 (transit asset management) and 49 U.S.C. 5329 (safety), to ensure consistency. In the Joint FTA and FHWA Statewide and Nonmetropolitan Transportation Planning; Metropolitan Transportation Planning (Joint Planning) NPRM, both agencies indicated that their performance-related rules would implement the basic elements of a performance management framework, including the establishment of measures and associated target setting. Because the performance-related rules implement these elements and the difficulty in estimating costs of target setting associated with unknown measures, the Joint Planning NPRM did not assess these costs. Rather, FTA and FHWA proposed that the costs associated with target setting at every level would be captured in each provider’s respective ‘‘performance management’’ rules. For example, FHWA’s second performance management rule NPRM, published after the joint planning NPRM, assumes that the incremental costs to States and MPOs for establishing performance targets reflect the incremental wage costs for an operations manager and a statistician to analyze performancerelated data. The RIA that accompanies the forthcoming Joint Planning final rule captures the costs of the effort by States, MPOs, and transit providers to coordinate in the setting of State and MPO transit performance targets for state of good repair and safety. FTA believes that the cost to MPOs and States to set transit performance targets is included within the costs of coordination. asabaliauskas on DSK3SPTVN1PROD with RULES (9) Other Costs In addition to the costs estimated in the subsections above, the final rule also entails costs for FTA to provide technical assistance to support the transit industry in implementing the new requirements, and for internal costs associated with training for FTA employees who work with the new TAM system. FTA estimates that the VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 agency could incur an annual cost of $2 million to develop and provide guidance and training, as well staff for program management. This is based on current FTA costs for research, stakeholder outreach and staffing costs since the MAP–21 Reauthorization Act. It is likely that the FTA costs may decline over time as the program matures and asset management becomes an integral part of transit agencies’ project prioritization practice. FTA assumes that after the first five years, the costs would fall to $1.5 million and then $1 million after 10 years and to $0.5 million after fifteen years. Another cost area is for coordination necessary to develop group TAM plans. For example, group TAM plan sponsors and their participating providers may need to hold meetings or conference calls to collect data, test a software tool, or more generally to coordinate efforts to develop plans for the smaller agencies. For estimation purposes, this coordination is assumed to require a mix of transit provider staff and managerial oversight. For each of the estimated 264 group TAM plans, FTA assumes that coordination would require 120 hours of staff time (business operations specialist, loaded wage rate $41.98) and 40 hours of management time (general operations manager, loaded wage rate $76.99) per transit provider. This yields a total annual coordination cost of approximately $2.1 million. Transit providers are required to keep records of its TAM plan development for at least one cycle of plan development which covers four years. FTA assumes that the tier I providers may spend approximately 80 hours every four years to coordinate the collection and formatting of the data for record keeping purposes. Using the business operations specialists loaded wage rate, the cost of recordkeeping for tier I providers would be $1.1 million every four years. For the tier II providers, FTA assumes that the group plan developers would retain the records on behalf of the small transit agencies. The level of effort for record keeping would be lower at 40 hours per plan cycle, since the coordination cost of gathering the relevant cost is already accounted for. Using the business operations specialist loaded wage rate $41.98, the total cost for recordkeeping for tier II providers would be $1.3 million for every plan cycle. Therefore, the total cost for recordkeeping would be $2.4 million. A final cost area is related to the information technology (IT) costs associated with establishing an asset management system. The TAM PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 requirements are intended to be technology-neutral, and no specific hardware or software is required. However, FTA is aware that some agencies may need to make IT investments to support their implementation of TAM, such as asset management software or handheld computers. The nature and size of these expenditures will vary by agency, and some agencies may not require IT investments. An assumed figure of $5,000 per TAM plan (individual plan or group plan) is used as an overall average. This equates to approximately $1.42 million for tier I providers ($5,000 multiplied by the 284 estimated plans) and $3.77 million for tier II providers ($5,000 multiplied by the 754 estimated plans, which is 490 individual plans and 264 group plans). Cost Summary The costs estimated in the subsections above are based on best estimates of the required labor hours and other costs of implementing the required components of the National TAM System available to the FTA. They are inherently imprecise given the lack of consistent data on existing industry practices, and the variability in costs across agencies due to different labor rates, system sizes and complexities, and other factors. Indeed, even among agencies that have already implemented TAM plans, little information exists on the total costs of implementation due to limited recordkeeping on internal labor costs. One means of providing an external check on the reasonableness of the cost estimates is to compare estimates from the model used here against known TAM projects. For example, for a small tier I transit provider with an asset profile of 10 revenue vehicles and one maintenance facility, the model would predict TAM implementation costs of roughly $42,535 initial (over a period of two years, and thus roughly $21,000 per year) and $9,856 per year thereafter in the lower cost (in-house) case or roughly double for the higher-cost contractor case (see Table 11 below). The figures would be lower if this agency elected to participate in a group TAM plan, as certain fixed costs could be spread across multiple agencies. In addition, the incremental cost now assumed for inventory database development is unlikely to be an issue for an agency operating 10 vehicles and they may not incur extra IT costs, as those are attributed to the group plan sponsor. Making an allowance for these costs, the small agency cost could be as low as around $21,000 upfront. By comparison, in fiscal year 2010, FTA made SGR grants to small transit providers in E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations California and Washington to implement asset management systems; the Federal share of these grants were in the range of $16,000 to $17,000 for agencies that were similar to, or slightly smaller than, the example used here. The general correspondence between model results and actual grant levels for asset management systems suggests that the cost model is producing results that are consistent with the limited real- world experience, at least for smaller agencies. For larger transit providers, actual versus predicted costs may vary more significantly due to differences in existing practices. Information from past grants may not provide a clear picture, and they might face little to no incremental costs from the rule because their existing practices generally meet or exceed the proposed TAM requirements. 48957 The table below represents the calculations described above for the low case along with illustrative examples of three other agency types: A comparatively larger tier II agency with 80 revenue vehicles, a mid-size tier I agency with 500 revenue vehicles, and a large tier I agency with 2,500 revenue vehicles. TABLE 11—ESTIMATION OF INITIAL TAM COSTS FOR ILLUSTRATIVE TRANSIT PROVIDERS Mid-size tier I agency Revenue Vehicles ............................................................................................ Number of Stations .......................................................................................... Low Case—Initial 2-Year Period Cost ............................................................. Low Case—Annually Recurring Cost .............................................................. High Case—Initial 2-Year Period Cost ............................................................ High Case—Annually Recurring Cost ............................................................. Table 12 below shows the total estimated costs for TAM activities under the rule for the low case, aggregated by provider size and separated by initial and recurring costs. Note that TAMrelated implementation costs for capital investments are unknown; this category represents the capital and maintenance projects that agencies would undertake 500 50 $109,312 $45,979 $213,624 $91,958 as a result of their TAM analysis. FTA could not estimate this category due to data limitations. However, FTA believes that these implementation actions would result in zero or negative net costs over the life of the asset (i.e. lifecycle cost savings) compared to a baseline of actions unsupported by TAM analysis where avoided regular Larger tier I agency Small tier II agency 2,500 200 $234,477 $127,320 $463,955 $254,640 10 0 $42,535 $9,856 $80,070 $19,712 Larger tier II agency 80 2 $44,331 $11,071 $83,662 $22,141 timely expenditures may result in higher repair or rehabilitation costs later in the life of the asset, because TAM activities provide insight into prioritization decisions. Table 13 shows the total estimated costs for TAM activities under the rule for the high cost case of contracting out the work. TABLE 12—SUMMARY OF AGENCY COSTS BY GROUP FOR LOW CASE Agency size Initial 2-year period Annually recurring Tier I ...................................... Tier II ..................................... FTA Cost ............................... $24,449,578 ........................ 4,000,000 $8,467,587 ............................ 9,923,220 .............................. 2,000,000, then lower over time. 20,390,807 ............................ 62,073,251 Triennially recurring Quadrennially recurring TAM-related capital investment costs $1,907,262 1,012,726 0 $3,065,328 ........................ 0 Unknown. Unknown. $0. 2,919,988 4,331,433 Unknown. TABLE 13—SUMMARY OF AGENCY COSTS BY GROUP FOR HIGH COST CASE Agency size Initial 2-year period Annually recurring Triennially recurring Quadrennially recurring TAM-related capital investment costs $47,481,030 63,477,346 4,000,000 $16,935,174 .......................... 19,846,440 ............................ 2,000,000, then lower over time. $3,814,525 2,025,452 0 $6,130,656 2,532,209 0 Unknown. Unknown. $0 Total ............................... asabaliauskas on DSK3SPTVN1PROD with RULES Tier I ...................................... Tier II ..................................... FTA Cost ............................... 114,958,376 38,781,614 ............................ 5,839,977 8,662,866 Unknown. Table 14 below shows the total quantified costs and the present value of the rule over the 20-year analysis period, including tier II group TAM plan coordination costs. For the VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 purposes of this analysis, 2015 serves as the discounting base year and dollar figures appear as 2015 dollars. For the low cost case, the annualized cost of the rule is $23.2 million (at the 7% rate) and PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 $22.8 million (at the 3% rate). For the high cost case, the annualized cost of the rule is $44.5 million (at the 7% rate) and $43.8 million (at the 3% rate). E:\FR\FM\26JYR2.SGM 26JYR2 48958 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations TABLE 14—SUMMARY OF QUANTIFIED UNDISCOUNTED AND DISCOUNTED COSTS 2016–2035 [Millions] Low case Year Undiscounted Discounted (7%) Discounted (3%) Undiscounted Discounted (7%) Discounted (3%) ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... ......................................................... $31.0 31.0 20.4 20.4 23.3 24.2 19.9 22.8 19.9 24.2 22.3 19.4 19.4 26.6 19.4 18.9 21.8 23.2 18.9 21.8 $29.0 27.1 16.6 15.6 16.6 16.1 12.4 13.3 10.8 12.3 10.6 8.6 8.0 10.3 7.0 6.4 6.9 6.9 5.2 5.6 $30.1 29.3 18.7 18.1 20.1 20.3 16.2 18.0 15.2 18.0 16.1 13.6 13.2 17.6 12.4 11.8 13.2 13.6 10.8 12.1 $57.5 57.5 38.8 38.8 44.6 46.9 38.3 44.1 38.3 46.9 43.6 37.8 37.8 52.3 37.8 37.3 43.1 45.9 37.3 43.1 $53.7 50.2 31.7 29.6 31.8 31.3 23.8 25.7 20.8 23.9 20.7 16.8 15.7 20.3 13.7 12.6 13.7 13.6 10.3 11.1 $55.8 54.2 35.5 34.5 38.5 39.3 31.1 34.8 29.3 34.9 31.5 26.5 25.7 34.6 24.3 23.2 26.1 27.0 21.3 23.9 Total .................................................. asabaliauskas on DSK3SPTVN1PROD with RULES 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 High case 449.0 245.5 338.4 867.7 470.9 652.0 Benefits As noted above, FTA research, the academic literature, and external reviews from organizations such as GAO have documented a strong case for the value of asset management programs for capital-intensive public agencies in general, including transit agencies. Asset management programs have been described as leading to the following outcomes and benefits: (1) Improved transparency and accountability from the use of systematic practices in tracking asset conditions and performance measures. In turn, this can lead to improved relationships with regulators, funding agencies, taxpayers and other external stakeholders, as well as improved internal communications and decisionmaking. While difficult to quantify or monetize, these impacts are sometimes described as some of the most important benefits from asset management because they relate to stewardship of public resources and the effective delivery of services. (2) Optimized capital investment and maintenance decisions, leading to overall life-cycle cost savings (or alternatively, greater value for dollars spent). (3) More data-driven maintenance decisions, leading to greater effectiveness of maintenance spending and a reduction in unplanned mechanical breakdowns and guideway deficiencies. These impacts can be considered as two distinct benefit areas: VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 travel time savings for passengers in terms of fewer canceled trips and fewer speed restrictions on tracks, and savings for the transit provider in unplanned maintenance and repair. (4) Finally, potential safety benefits, in that greater effectiveness of dollars spent on maintenance can lead to improved vehicle and track condition and fewer safety hazards, and thus reduced injuries and fatalities related to incidents for which maintenance issues or poor conditions were a contributing factor. These benefits have been presented by GAO and others almost exclusively in qualitative terms, presenting a challenge for estimating the quantitative benefits of this rule. Accordingly, a review of the academic literature in this area revealed few studies that attempted to quantify the benefits of transit asset management programs, as distinct from providerspecific implementation details or descriptions of best practices. Within the trade literature, one recent case study from the Bi-State Development Agency (St. Louis) presents results from a transit asset management program that has altered bus maintenance and replacement practices. The results include an increased ‘‘mean time between failures’’ for its bus fleet from 3,400 miles in 2000 to 22,000 in 2014, and bus lifespan targets that have gone from 12 years/600,000 miles to 15 years/ 825,000 miles. These outcomes are the equivalent of a roughly 85% decrease in the failure rate and a 25% increase in PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 bus longevity (with associated capital cost savings).40 Some of the practices that Bi-State put into place were (1) no longer performing major engine overhauls during the period right before a bus was to be retired from service, (2) making investments earlier in bus lifecycles, and (3) replacing key vehicles components proactively based on their average lifespans, rather than waiting for them to fail, which is more costly. Future plans include a condition-based (rather than mileage-based) assessment at the major component level. These actions all go beyond what is required by the TAM rule, but provide a useful real-world illustration of the point that the implementing actions associated with an asset management program are not additional costs but instead opportunities for significant lifecycle cost savings. Case studies of this type provide compelling evidence of the benefits of transit asset management, though by their nature they make it difficult to control for exogenous factors and other initiatives implemented by the transit provider at the same time. Beyond these case studies, there is little to no hard data on the impacts of asset management on ultimate outcomes such as service quality, reliability, and ridership, which would also influence benefit estimates. Indeed, one recent 40 Harnack, Leah. ‘‘Transit as an Economic Driver,’’ Mass Transit, December 2014–January 2015, 10–15. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES academic review of the literature in this field noted that ‘‘efforts to quantify benefits of transit state of good repair have generally stopped short of linking asset condition with user impacts or ridership.’’ 41 This is an unsurprising result given the relatively short period of time in which transit asset management practices have been studied. The literature on asset management for highway investments and pavement management is more mature and includes a few examples of quantified benefits. Many state DOTs use a quantitative model of highway system condition to forecast pavement deterioration. These systems allow planners to allocate funds in the most efficient way among capital and maintenance projects on the highway network to achieve the lowest overall lifecycle costs. A before-and-after study of the Iowa Department of Transportation’s adoption of such a pavement management tool found that the system improved project selection, ultimately leading to benefits in the form of better pavement conditions on the roadway network for the same expenditure level. The value of the improved pavement condition was equivalent to roughly 3% of total construction spending during the 5-year ‘‘after’’ period studied.42 A similar analysis with data from the Arizona Department of Transportation’s pavement management program found that the asset management approach had improved pavement longevity by about 13.5%, with concomitant savings in the pavement budget.43 While useful as benchmarks, the extent to which these findings are applicable to transit agencies is unclear, since transit agencies’ key assets are vehicles, facilities, and guideway rather than pavement, and thus may exhibit different characteristics. However, the voluntary use of asset management programs by for-profit entities, such as utility companies and freight railroads, also strongly suggests that asset management programs allow the efficient selection of capital and maintenance projects that yield cost savings, at least over the longer term, 41 Patterson, L. and D. Vautin. ‘‘Evaluating User Benefits and Cost-Effectiveness for Public Transit State of Good Repair Investments,’’ Transportation Research Board 94th Annual Meeting (2015). 42 Smadi, O. ‘‘Quantifying the Benefits of Pavement Management,’’ 6th International Conference on Managing Pavements (2004). 43 Hudson, W.R., et al. ‘‘Measurable Benefits Obtained from Pavement Management,’’ 5th International Conference on Managing Pavements (2001). VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 that exceed the implementation costs of the asset management effort.44 Since FTA does not have a study on which to estimate the potential benefits of adopting asset management by transit providers, FTA employed a threshold analysis focused on areas where asset management is likely to have an impact by improving decision-making and targeting investments to achieve the highest return on the dollars invested. By implementing the requirements of the TAM rule, providers would develop policies and plans that direct funds toward investments to meet the goal of maximizing the lifespan of assets with timely rehabilitation and maintenance activities. These activities have the potential to reduce the rate of mechanical failures experienced by the transit industry. In 2013, transit agencies in urbanized areas reported to the NTD a total of 524,629 mechanical failures in revenue service, which collectively required an estimated 64.3 million hours of labor for inspection and maintenance.45 At a loaded wage rate of $35.52 per hour (BLS, vehicle and equipment mechanics, interurban and rural bus transport), this equates to annual spending of just under $2.3 billion on unplanned mechanical breakdowns across the industry, in addition to the value of travel time delays that passengers experience during a breakdown. Reducing the mechanical failures by just over 5,300 incidents (1.02 percent) through TAM-supported improvements in project selection would create maintenance cost savings that equal the subset of the rule’s cost that FTA monetized ($23.2 million). (The threshold would be roughly 1.95% in the higher cost case using higher labor costs for contractor support.) In addition to the savings in maintenance expenditures, reduced mechanical failures also would reduce the delays in service, increasing reliability of transit services and yielding travel time savings. FTA expects that the rule’s requirements will significantly reduce potential safety risks, as assets are better maintained and likely to reduce safety hazards due the asset condition, as noted in the nexus between asset condition and safety in this final rule. In addition, transit asset management practices as outlined in the final rule 44 See, for example, private sector case studies at http://www.twpl.com/?page=CaseStudies. 45 The 2013 NTD data do not provide total hours for inspection and maintenance, only the number of mechanical failures. This analysis applies the average number of hours per failure from the most recent year for which both those data points are available (2007). PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 48959 identify list of projects that better serve the performance goals of FTA and the industry to improve safety, asset condition and system performance by allowing for improved cross-functional decision-making. The requirements of this final rule will generate data for transit agencies to analyze over time showing trends in condition and performance, enabling them to better understand the relationship between their actions (expenditures) and outcomes (asset condition, safety, operations). Transit providers will select investments to meet their stated goals and targets. If the transit provider cannot meet the stated goals, it can explore the potential reasons for the gap between the actual performance and targeted performance. This may lead the transit provider to collect additional data, such as the cost of projects, with the intention of better understanding the underlying causes of why it is unable to attain the stated goal. Based on this analysis the transit provider may adjust the target, reprioritize its investments or make other changes in its processes to gain efficiencies. Through this asset management process of planning, executing, re-evaluating and revising, a transit provider can identify economies and best practices that result in better use of resources and improve performance. The performance targets may be achieved through increased efficiencies or shift in funding priorities. The transit asset management process can also help transit providers develop better estimates of its’ systems needs to meet established targets. In addition, the TAM plan will make a transit provider’s policies, goals and performance targets, more transparent to the public and the legislative decisionmakers. The performance reports required under this final rule show how well the agencies are performing against their established targets. Through increased transparency and accountability, it may be possible to make a better case for increased funding, resulting in improved performance over time and reducing the SGR backlog that has accumulated over the years. Other Impacts In 2012, $16.8 billion of capital expenditures were incurred by the transit agencies. As noted above, there is an estimated $85.9 billion transit SGR backlog. Given the size of capital expenditures, the size of the SGR backlog, and the potential benefits of adopting transit asset management systems and creating TAM plans, it is likely that economic impacts in excess E:\FR\FM\26JYR2.SGM 26JYR2 48960 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES of $100 million in a year could result from this final rule. However, FTA has no information on which to estimate the size of these impacts. As noted above, FTA believes that investing funds to improve the state of good repair of capital assets have important benefits. Experience of adopting asset management systems in capital intensive industries has demonstrated that significant gains over time are possible. Regulatory Flexibility Act In compliance with the Regulatory Flexibility Act (Pub. L. 96–354; 5 U.S.C. 601–612), FTA has evaluated the likely effects of the requirements of this final rule on small entities, and has determined that the rule may have a significant economic impact on a substantial number of small entities. The rule would impact roughly 2,700 small entities, most of whom are small government entities and small nonprofit organizations that operate public transit services in non-urbanized areas. Compliance costs would vary according to provider size and complexity and the extent of current asset management practices. Costs are illustrated by an example calculation for a transit provider with 10 vehicles, for which compliance costs were estimated at $42,535 (over two years) for initial implementation and $9,816 per year for updates and reporting (from Table 11 example above). Over a period of years, this would represent a small share (less than 1%) of the operating budget that would be typical for a transit provider of that size. However, under the final rule, small entities who met the criteria for tier II designation and subrecipients under the Rural Area Formula Program, could participate in a group TAM plan sponsored by their State DOT or direct recipient. This would allow for some of the costs of implementation (such as developing analytical tools, prioritization project list, target setting and performance measures) to be borne by the group TAM plan sponsor or spread across a larger number of entities, reducing the cost for each. Overall, while the rule would impact a substantial number of small entities, these effects would not be significant due to the low magnitude of the costs and the potential for offsetting benefits. Moreover, FTA has designed the rule to allow flexibility for small entities, including exemption from certain requirements and the option to participate in a group TAM plan. In addition, transit agencies would also see benefits from improved data-driven decision-making, including qualitative benefits to transparency and VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 accountability and the potential for direct cost savings in maintenance and life-cycle costs of asset ownership. Unfunded Mandates Reform Act of 1995 This rulemaking would not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4; 109 Stat. 48). Under FTA’s grant programs, the development of a TAM plan is eligible for funding as a planning or administrative expense, or capital expense under the SGR Grant Program authorized at 49 U.S.C. 5337. Executive Order 13132 (Federalism) This rulemaking has been analyzed in accordance with the principles and criteria established by Executive Order 13132 (Aug. 4, 1999). FTA has determined that the action does not have sufficient Federalism implications to warrant the preparation of a Federalism assessment. FTA has also determined that this action does not preempt any State law or State regulation or affect the States’ abilities to discharge traditional State governmental functions. Moreover, consistent with Executive Order 13132, FTA has examined the direct compliance costs of the final rule on State and local governments and has determined that the collection and analysis of the data are eligible for Federal funding under FTA’s grant programs. Executive Order 12372 (Intergovernmental Review) The regulations effectuating Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this rulemaking. Executive Order 13653 Preparing the United States for the Impacts of Climate Change, declares a policy that the Federal government must build on recent progress and pursue new strategies to improve the Nation’s preparedness and resilience. The executive order directs Federal agencies to support climate-resilient investment, in part by identifying ‘‘opportunities to support and encourage smarter, more climate-resilient investments by states, local communities and tribes, including by providing incentives through agency guidance, grants, technical assistance performance measures, safety consideration and other programs.’’ This rulemaking does not incorporate risk analysis as part of transit asset management. However, FTA does address the requirements of 1315(b) of MAP–21, in the Emergency Relief Program rule at 49 CFR part 602, by PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 requiring transit agencies to evaluate reasonable alternatives, including change of location and addition of resilience/mitigation elements, for any damaged transit facility that has been previously repaired or reconstructed as a result of an emergency or major disaster. FTA also encourages transit providers to consider climate change resiliency in developing the investment prioritization in their TAM plan. Paperwork Reduction Act (PRA) In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.; ‘‘PRA’’) and the OMB regulation at 5 CFR 1320.8(d), FTA is seeking approval from OMB for the Information Collection Request abstracted below. FTA acknowledges that this final rule entails collection of information to implement the transit asset management requirements of 49 U.S.C. 5326. Specifically, a transit provider subject to the rule would do the following: (1) Develop and implement a TAM plan; (2) set performance targets; (3) submit an annual narrative and data report to the NTD; and (4) maintain required records. Please note, the information provided below pertains to the requirements for the National TAM System final rule. This collection approval does not cover the proposed amendments to regulations for FTA’s NTD at 49 CFR part 630, to conform to the reporting requirements for the National TAM System final rule. The amendments to the NTD are covered by a separate NTD Paperwork Reduction Act Justification Statement. Respondents: Recipients and subrecipients of Chapter 53 funds that own, operate, or manage public transportation systems, including 284 tier I providers and roughly 2,714 tier II providers, or States or direct recipients that sponsor group TAM plans. Estimated Annual Burden on Respondents Tier I Providers—The initial costs for establishing new processes for collecting asset condition data; developing analytical processes, performance measures and targets; and reporting would be higher than the subsequent annual, triennial and quadrennial updates and would be incurred over a period of two years. The initial hours of burden for tier I providers are expected to be 431,424 hours in total for 284 transit providers, averaging to just over 1,519 hours per provider. The annual average recurring burden is 200,015 hours, averaging at 704 hours per transit provider. For the low case, the initial dollar cost of implementing the rule would be $24.45 E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations million over two years and a recurring annual average cost of $9.87 million, averaging to $86,090 and $34,752 per provider respectively. For the high case, the initial dollar cost of implementing the rule would be $47.48 million over two years and a recurring annual average cost of $19.74 million, averaging to $167,187 and $69,505 per provider respectively. Additional costs for FTA exist but are not included here. Tier II Providers—The initial burden for tier II providers is expected to be 679,166 hours in total for 754 plans to be developed by the direct recipients and/or group TAM plan sponsors, with an average of just over 900 hours per plan. The annual average recurring burden is 243,504 hours, averaging at 323 hours per TAM plan. For the low case, the initial dollar cost of implementing the rule would be $33.62 million over two years and a recurring annual average cost of $10.58 million, averaging to $44,594 and $14,028 per plan, respectively. For the high case, the initial dollar cost of implementing the rule would be $63.48 million over two years and a recurring annual average cost of $21.15 million, averaging to $84,187 and $28,057 per plan, respectively. Additional costs for FTA exist but are not included here. 48961 Estimated Total Annual Burden: Tables 15 below shows the initial hours of burden and the dollar cost to the tier I and tier II transit providers to be incurred in the first two years of implementing the rule and the recurring annual average costs thereafter. The table below is based on the assumptions made for the level of effort and the loaded wage rates (wage rate adjusted to account for employer cost of benefits) 46 used for estimating the hours of burden and the cost of implementing the final rule. Hours and costs presented here are based on the assumptions detailed in the regulatory impact analysis above. TABLE 15—ESTIMATED TOTAL ANNUAL PAPERWORK BURDEN Initial costs (total over two years) Agency size Low Case: Tier I Providers ......................................................................................... Tier II Providers ........................................................................................ Average annual recurring costs Initial hours of burden (total over two years) Average annual recurring hours of burden $24,449,578 33,623,673 $9,869,673 10,577,321 431,424 679,166 200,015 243,504 Total ................................................................................................... High Case: Tier I Providers ......................................................................................... Tier II Providers ........................................................................................ 58,073,251 20,446,994 1,110,590 443,519 47,481,030 63,477,346 19,739,346 21,154,643 431,424 679,166 200,015 243,504 Total ................................................................................................... 110,958,376 40,893,989 1,110,590 443,519 National Environmental Policy Act The National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) requires Federal agencies to analyze the potential environmental effects of their proposed actions in the form of a categorical exclusion, environmental assessment, or environmental impact statement. This rulemaking is categorically excluded under FTA’s environmental impact procedure at 23 CFR 771.118(c)(4), pertaining to planning and administrative activities that do not involve or lead directly to construction, such as the promulgation of rules, regulations, and directives. FTA has determined that no unusual circumstances exist in this instance, and that a categorical exclusion is appropriate for this rulemaking. This rulemaking will not affect a taking of private property or otherwise have taking implications under Executive Order 12630 (March 15, 1998), Governmental Actions and Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations) Executive Order (EO) 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, and DOT Order 5610.2(a) (77 FR 27534) require DOT agencies to achieve environmental justice (EJ) as part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects, including interrelated social and economic effects, of their programs, policies and activities on minority and/or low-income populations. The DOT Order requires DOT agencies to address compliance with the Executive Order and the DOT Order in all rulemaking activities. In addition, on July 17, 2014, FTA issued a Circular to update to its EJ Policy Guidance for Federal Transit Recipients (www.fta.dot.gov/legislation_law/ 12349_14740.html), which addresses 46 BLS data show wages as 64.1% of total compensation, with benefits at 35.9%. Therefore, administration of the EO and DOT Order. FTA has evaluated this rule under the EO, the DOT Order, and the FTA Circular and has determined that this rulemaking will not cause disproportionately high and adverse human health and environmental effects on minority or low income populations. employees’ wages are factored by 1.56 (100/64.1) to account for employer provided benefits. Executive Order 12630 (Taking of Private Property) asabaliauskas on DSK3SPTVN1PROD with RULES Interference with Constitutionally Protected Property Rights. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 Executive Order 12988 (Civil Justice Reform) This action meets the applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988 (February 5, 1996), Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Executive Order 13045 (Protection of Children) FTA has analyzed this rulemaking under Executive Order 13045 (April 21, 1997), Protection of Children from Environmental Health Risks and Safety Risks. FTA certifies that this final rule will not cause an environmental risk to health or safety that may disproportionately affect children. E:\FR\FM\26JYR2.SGM 26JYR2 48962 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES Executive Order 13175 (Tribal Consultation) FTA has analyzed this action under Executive Order 13175 (November 6, 2000), and believes that it will have substantial direct effects on one or more American Indian tribes and will impose substantial direct compliance costs on Indian tribal governments. However, FTA has engaged in active consultation with American Indian tribes in the development of todays’ rule, to the extent practicable and consistent with other FTA coordination efforts. In advance of publishing an NPRM, FTA sought comment from the transit industry, including tribes, on a wide range of topics pertaining to the new Public Transportation Safety Program and the requirements of the new transit asset management provisions authorized by MAP–21. FTA asked specific questions about how FTA should apply the new TAM and safety requirements to recipients of the section 5311 Tribal Transit Formula Program and Tribal Transit Discretionary Program. FTA did not receive any comments from American Indian tribes on the ANPRM, although several commenters argued that small transit systems operated by American Indian tribes should be subject to the same requirements as other small systems. In addition to the ANPRM, FTA sought comment from the entire transit industry, including tribes, when it published the NPRM. During the NPRM comment period, FTA engaged with the industry through a number of outreach efforts, including a webinar for small providers held on October 27, 2015. FTA also held several listening session across the country including one at the National Rural Transit Assistance Program Annual Meeting, which historically has been well attended by a number of tribal representatives. FTA remains committed to continuing to provide outreach and technical assistance to American Indian tribes on compliance with the requirements of this rule. FTA recognizes that developing an individual TAM plan, maintaining documentation and reporting requires that a TAM rule be flexible and scalable. This rule is scalable and flexible and provides several options to reduce the burden on small providers, including American Indian tribes. Executive Order 13211 (Energy Effects) FTA has analyzed this rulemaking under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 FTA has determined that this action is not a significant energy action under the Executive Order, given that the action 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 requirement. Privacy Act Anyone is able to search the electronic form of all comments received into any of FTA’s dockets by the name of the individual submitting the comment or signing the comment if submitted on behalf of an association, business, labor union, or any other entity. You may review USDOT’s complete Privacy Act Statement published in the Federal Register on April 11, 2000, at 65 FR 19477–8. Statutory/Legal Authority for This Rulemaking This rulemaking is issued under the authority of section 20019 of the Moving Ahead for Progress in the 21st Century Act (MAP–21), which requires the Secretary of Transportation to prescribe regulations to establish a system to monitor and manage public transportation assets to improve safety and increase reliability and performance and to establish SGR performance measures. The authority is codified at 49 U.S.C. 5326. Regulation Identifier Number A Regulation Identifier 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 April and October of each year. The RIN set forth in the heading of this document can be used to crossreference this action with the Unified Agenda. List of Subjects 49 CFR Part 630 National Transit Database. Issued this day of July 12, 2016, in Washington, DC, under authority delegated in 49 CFR 1.91. Carolyn Flowers, Acting Administrator, Federal Transit Administration. For the reasons set forth in the preamble, and under the authority of 49 U.S.C. 5326, 5335, and the delegations of authority at 49 CFR 1.91, FTA hereby amends Chapter VI of Title 49, Code of Federal Regulations as follows: ■ 1. Add part 625 to read as follows: Fmt 4701 Subpart B—National Transit Asset Management System 625.15 Elements of the National Transit Asset Management System. 625.17 State of good repair principles. Subpart C—Transit Asset Management Plans 625.25 Transit Asset Management Plan requirements. 625.27 Group plans for transit asset management. 625.29 Transit asset management plan: horizon period, amendments, and updates. 625.31 Implementation deadline. 625.33 Investment prioritization. Subpart D—Performance Management 625.41 Standards for measuring the condition of capital assets. 625.43 SGR performance measures for capital assets. 625.45 Setting performance targets for capital assets. Subpart E—Recordkeeping and Reporting Requirements for Transit Asset Management 625.53 Recordkeeping for transit asset management 625.55 Annual reporting for transit asset management Appendix A to Part 625—Asset Categories, Asset Classes, and Individual Assets Appendix B to Part 625—Relationship Amongst SGR Performance Measures, SGR Definition, and SGR Principles Appendix C to Part 625—Assets Included in National TAM System Provisions Authority: Sec. 20019 of Pub. L. 112–141, 126 Stat. 707, 49 U.S.C. 5326; Sec. 20025(a) of Pub. L. 112–141, 126 Stat, 718, 49 CFR 1.91. § 625.1 Public Transportation. Frm 00074 Subpart A—General Provisions Sec. 625.1 Purpose. 625.3 Applicability. 625.5 Definitions. Subpart A—General Provisions 49 CFR Part 625 PO 00000 PART 625—TRANSIT ASSET MANAGEMENT Sfmt 4700 Purpose. This part carries out the mandate of 49 U.S.C. 5326 for transit asset management. This part establishes a National Transit Asset Management (TAM) System to monitor and manage public transportation capital assets to enhance safety, reduce maintenance costs, increase reliability, and improve performance. § 625.3 Applicability. This part applies to all recipients and subrecipients of Federal financial assistance under 49 U.S.C. Chapter 53 that own, operate, or manage capital assets used for providing public transportation. E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations asabaliauskas on DSK3SPTVN1PROD with RULES § 625.5 Definitions. All terms defined in 49 U.S.C. Chapter 53 are incorporated into this part by reference. The following terms also apply to this part: Accountable Executive means a single, identifiable person who has ultimate responsibility for carrying out the safety management system of a public transportation agency; responsibility for carrying out transit asset management practices; and control or direction over the human and capital resources needed to develop and maintain both the agency’s public transportation agency safety plan, in accordance with 49 U.S.C. 5329(d), and the agency’s transit asset management plan in accordance with 49 U.S.C. 5326. Asset category means a grouping of asset classes, including a grouping of equipment, a grouping of rolling stock, a grouping of infrastructure, and a grouping of facilities. See Appendix A to this part. Asset class means a subgroup of capital assets within an asset category. For example, buses, trolleys, and cutaway vans are all asset classes within the rolling stock asset category. See Appendix A to this part. Asset inventory means a register of capital assets, and information about those assets. Capital asset means a unit of rolling stock, a facility, a unit of equipment, or an element of infrastructure used for providing public transportation. Decision support tool means an analytic process or methodology: (1) To help prioritize projects to improve and maintain the state of good repair of capital assets within a public transportation system, based on available condition data and objective criteria; or (2) To assess financial needs for asset investments over time. Direct recipient means an entity that receives Federal financial assistance directly from the Federal Transit Administration. Equipment means an article of nonexpendable, tangible property having a useful life of at least one year. Exclusive-use maintenance facility means a maintenance facility that is not commercial and either owned by a transit provider or used for servicing their vehicles. Facility means a building or structure that is used in providing public transportation. Full level of performance means the objective standard established by FTA for determining whether a capital asset is in a state of good repair. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 Group TAM plan means a single TAM plan that is developed by a sponsor on behalf of at least one tier II provider. Horizon period means the fixed period of time within which a transit provider will evaluate the performance of its TAM plan. Implementation strategy means a transit provider’s approach to carrying out TAM practices, including establishing a schedule, accountabilities, tasks, dependencies, and roles and responsibilities. Infrastructure means the underlying framework or structures that support a public transportation system. Investment prioritization means a transit provider’s ranking of capital projects or programs to achieve or maintain a state of good repair. An investment prioritization is based on financial resources from all sources that a transit provider reasonably anticipates will be available over the TAM plan horizon period. Key asset management activities means a list of activities that a transit provider determines are critical to achieving its TAM goals. Life-cycle cost means the cost of managing an asset over its whole life. Participant means a tier II provider that participates in a group TAM plan. Performance Measure means an expression based on a quantifiable indicator of performance or condition that is used to establish targets and to assess progress toward meeting the established targets (e.g., a measure for on-time performance is the percent of trains that arrive on time, and a corresponding quantifiable indicator of performance or condition is an arithmetic difference between scheduled and actual arrival time for each train). Performance target means a quantifiable level of performance or condition, expressed as a value for the measure, to be achieved within a time period required by the Federal Transit Administration (FTA). Public transportation system means the entirety of a transit provider’s operations, including the services provided through contractors. Public transportation agency safety plan means a transit provider’s documented comprehensive agency safety plan that is required by 49 U.S.C. 5329. Recipient means an entity that receives Federal financial assistance under 49 U.S.C. Chapter 53, either directly from FTA or as a subrecipient. Rolling stock means a revenue vehicle used in providing public transportation, including vehicles used for carrying passengers on fare-free services. PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 48963 Service vehicle means a unit of equipment that is used primarily either to support maintenance and repair work for a public transportation system or for delivery of materials, equipment, or tools. Sponsor means a State, a designated recipient, or a direct recipient that develops a group TAM for at least one tier II provider. State of good repair (SGR) means the condition in which a capital asset is able to operate at a full level of performance. Subrecipient means an entity that receives Federal transit grant funds indirectly through a State or a direct recipient. TERM scale means the five (5) category rating system used in the Federal Transit Administration’s Transit Economic Requirements Model (TERM) to describe the condition of an asset: 5.0—Excellent, 4.0—Good; 3.0— Adequate, 2.0—Marginal, and 1.0— Poor. Tier I provider means a recipient that owns, operates, or manages either (1) one hundred and one (101) or more vehicles in revenue service during peak regular service across all fixed route modes or in any one non-fixed route mode, or (2) rail transit. Tier II provider means a recipient that owns, operates, or manages (1) one hundred (100) or fewer vehicles in revenue service during peak regular service across all non-rail fixed route modes or in any one non-fixed route mode, (2) a subrecipient under the 5311 Rural Area Formula Program, (3) or any American Indian tribe. Transit asset management (TAM) means the strategic and systematic practice of procuring, operating, inspecting, maintaining, rehabilitating, and replacing transit capital assets to manage their performance, risks, and costs over their life cycles, for the purpose of providing safe, cost-effective, and reliable public transportation. Transit asset management (TAM) plan means a plan that includes an inventory of capital assets, a condition assessment of inventoried assets, a decision support tool, and a prioritization of investments. Transit asset management (TAM) policy means a transit provider’s documented commitment to achieving and maintaining a state of good repair for all of its capital assets. The TAM policy defines the transit provider’s TAM objectives and defines and assigns roles and responsibilities for meeting those objectives. Transit asset management (TAM) strategy means the approach a transit provider takes to carry out its policy for E:\FR\FM\26JYR2.SGM 26JYR2 48964 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations TAM, including its objectives and performance targets. Transit asset management system means a strategic and systematic process of operating, maintaining, and improving public transportation capital assets effectively, throughout the life cycles of those assets. Transit provider (provider) means a recipient or subrecipient of Federal financial assistance under 49 U.S.C. chapter 53 that owns, operates, or manages capital assets used in providing public transportation. Useful life means either the expected life cycle of a capital asset or the acceptable period of use in service determined by FTA. Useful life benchmark (ULB) means the expected life cycle or the acceptable period of use in service for a capital asset, as determined by a transit provider, or the default benchmark provided by FTA. Subpart B—National Transit Asset Management System § 625.15 Elements of the National Transit Asset Management System. The National TAM System includes the following elements: (a) The definition of state of good repair, which includes objective standards for measuring the condition of capital assets, in accordance with subpart D of this part; (b) Performance measures for capital assets and a requirement that a provider and a group TAM plan sponsor establish performance targets for improving the condition of capital assets, in accordance with subpart D of this part; (c) A requirement that a provider develop and carry out a TAM plan, in accordance with subpart C of this part, (d) Reporting requirements in accordance with subpart E of this part; and (e) Analytical processes and decision support tools developed or recommended by FTA. asabaliauskas on DSK3SPTVN1PROD with RULES § 625.17 State of good repair principles. (a) A capital asset is in a state of good repair if it is in a condition sufficient for the asset to operate at a full level of performance. In determining whether a capital asset is in a state of good repair, a provider must consider the state of good repair standards under subpart D of this part. (b) An individual capital asset may operate at a full level of performance regardless of whether or not other capital assets within a public transportation system are in a state of good repair. (c) A provider’s Accountable Executive must balance transit asset VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 management, safety, day-to-day operations, and expansion needs in approving and carrying out a TAM plan and a public transportation agency safety plan. Subpart C—Transit Asset Management Plans § 625.25 Transit Asset Management Plan requirements. (a) General. (1) Each tier I provider must develop and carry out a TAM plan that includes each element under paragraph (b) of this section. (2) Each tier II provider must develop its own TAM plan or participate in a group TAM plan. A tier II provider’s TAM plan and a group TAM plan only must include elements under paragraphs (b)(1) through (4) of this section. (3) A provider’s Accountable Executive is ultimately responsible for ensuring that a TAM plan is developed and carried out in accordance with this part. (b) Transit asset management plan elements. Except as provided in paragraph (a)(3) of this section, a TAM plan must include the following elements: (1) An inventory of the number and type of capital assets. The inventory must include all capital assets that a provider owns, except equipment with an acquisition value under $50,000 that is not a service vehicle. An inventory also must include third-party owned or jointly procured exclusive-use maintenance facilities, passenger station facilities, administrative facilities, rolling stock, and guideway infrastructure used by a provider in the provision of public transportation. The asset inventory must be organized at a level of detail commensurate with the level of detail in the provider’s program of capital projects; (2) A condition assessment of those inventoried assets for which a provider has direct capital responsibility. A condition assessment must generate information in a level of detail sufficient to monitor and predict the performance of the assets and to inform the investment prioritization; (3) A description of analytical processes or decision-support tools that a provider uses to estimate capital investment needs over time and develop its investment prioritization; (4) A provider’s project-based prioritization of investments, developed in accordance with § 625.33 of this part; (5) A provider’s TAM and SGR policy; (6) A provider’s TAM plan implementation strategy; (7) A description of key TAM activities that a provider intends to PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 engage in over the TAM plan horizon period; (8) A summary or list of the resources, including personnel, that a provider needs to develop and carry out the TAM plan; and (9) An outline of how a provider will monitor, update, and evaluate, as needed, its TAM plan and related business practices, to ensure the continuous improvement of its TAM practices. § 625.27 Group plans for transit asset management. (a) Responsibilities of a group TAM plan sponsor. (1) A sponsor must develop a group TAM plan for its tier II provider subrecipients, except those subrecipients that are also direct recipients under the 49 U.S.C. 5307 Urbanized Area Formula Grant Program. The group TAM plan must include a list of those subrecipients that are participating in the plan. (2) A sponsor must comply with the requirements of this part for a TAM plan when developing a group TAM plan. (3) A sponsor must coordinate the development of a group TAM plan with each participant’s Accountable Executive. (4) A sponsor must make the completed group TAM plan available to all participants in a format that is easily accessible. (b) Responsibilities of a group TAM plan participant. (1) A tier II provider may participate in only one group TAM plan. (2) A tier II provider must provide written notification to a sponsor if it chooses to opt-out of a group TAM plan. A provider that opts-out of a group TAM plan must either develop its own TAM plan or participate in another sponsor’s group TAM plan. (3) A participant must provide a sponsor with any information that is necessary and relevant to the development of a group TAM plan. § 625.29 Transit asset management plan: horizon period, amendments, and updates. (a) Horizon period. A TAM plan must cover a horizon period of at least four (4) years. (b) Amendments. A provider may update its TAM plan at any time during the TAM plan horizon period. A provider should amend its TAM plan whenever there is a significant change to the asset inventory, condition assessments, or investment prioritization that the provider did not reasonably anticipate during the development of the TAM plan. (c) Updates. A provider must update its entire TAM plan at least once every E:\FR\FM\26JYR2.SGM 26JYR2 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations four (4) years. A provider’s TAM plan update should coincide with the planning cycle for the relevant Transportation Improvement Program or Statewide Transportation Improvement Program. § 625.31 Implementation deadline. (a) A provider’s initial TAM plan must be completed no later than two years after October 1, 2016. (b) A provider may submit in writing to FTA a request to extend the implementation deadline. FTA must receive an extension request before the implementation deadline and will consider all requests on a case-by-case basis. § 625.33 Investment prioritization. (a) A TAM plan must include an investment prioritization that identifies a provider’s programs and projects to improve or manage over the TAM plan horizon period the state of good repair of capital assets for which the provider has direct capital responsibility. (b) A provider must rank projects to improve or manage the state of good repair of capital assets in order of priority and anticipated project year. (c) A provider’s project rankings must be consistent with its TAM policy and strategies. (d) When developing an investment prioritization, a provider must give due consideration to those state of good repair projects to improve that pose an identified unacceptable safety risk when developing its investment prioritization. (e) When developing an investment prioritization, a provider must take into consideration its estimation of funding levels from all available sources that it reasonably expects will be available in each fiscal year during the TAM plan horizon period. (f) When developing its investment prioritization, a provider must take into consideration requirements under 49 CFR 37.161 and 37.163 concerning maintenance of accessible features and the requirements under 49 CFR 37.43 concerning alteration of transportation facilities. Subpart D—Performance Management asabaliauskas on DSK3SPTVN1PROD with RULES § 625.41 Standards for measuring the condition of capital assets. A capital asset is in a state of good repair if it meets the following objective standards— VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 (a) The capital asset is able to perform its designed function; (b) The use of the asset in its current condition does not pose an identified unacceptable safety risk; and (c) The life-cycle investment needs of the asset have been met or recovered, including all scheduled maintenance, rehabilitation, and replacements. § 625.43 SGR performance measures for capital assets. (a) Equipment: (non-revenue) service vehicles. The performance measure for non-revenue, support-service and maintenance vehicles equipment is the percentage of those vehicles that have either met or exceeded their ULB. (b) Rolling stock. The performance measure for rolling stock is the percentage of revenue vehicles within a particular asset class that have either met or exceeded their ULB. (c) Infrastructure: rail fixed-guideway, track, signals, and systems. The performance measure for rail fixedguideway, track, signals, and systems is the percentage of track segments with performance restrictions. (d) Facilities. The performance measure for facilities is the percentage of facilities within an asset class, rated below condition 3 on the TERM scale. § 625.45 Setting performance targets for capital assets. (a) General. (1) A provider must set one or more performance targets for each applicable performance measure. (2) A provider must set a performance target based on realistic expectations, and both the most recent data available and the financial resources from all sources that the provider reasonably expects will be available during the TAM plan horizon period. (b) Timeline for target setting. (1) Within three months after the effective date of this part, a provider must set performance targets for the following fiscal year for each asset class included in its TAM plan. (2) At least once every fiscal year after initial targets are set, a provider must set performance targets for the following fiscal year. (c) Role of the accountable executive. A provider’s Accountable Executive must approve each annual performance target. (d) Setting performance targets for group plan participants. (1) A Sponsor must set one or more unified PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 48965 performance targets for each asset class reflected in the group TAM plan in accordance with paragraphs (a)(2) and (b) of this section. (2) To the extent practicable, a Sponsor must coordinate its unified performance targets with each participant’s Accountable Executive. (e) Coordination with metropolitan, statewide and non-metropolitan planning processes. To the maximum extent practicable, a provider and Sponsor must coordinate with States and Metropolitan Planning Organizations in the selection of State and Metropolitan Planning Organization performance targets. Subpart E—Recordkeeping and Reporting Requirements for Transit Asset Management § 625.53 Recordkeeping for transit asset management. (a) At all times, each provider must maintain records and documents that support, and set forth in full, its TAM plan. (b) A provider must make its TAM plan, any supporting records or documents performance targets, investment strategies, and the annual condition assessment report available to a State and Metropolitan Planning Organization that provides funding to the provider to aid in the planning process. § 625.55 Annual reporting for transit asset management. (a) Each provider must submit the following reports: (1) An annual data report to FTA’s National Transit Database that reflects the SGR performance targets for the following year and condition information for the provider’s public transportation system. (2) An annual narrative report to the National Transit Database that provides a description of any change in the condition of the provider’s transit system from the previous year and describes the progress made during the year to meet the performance targets set in the previous reporting year. (b) A Sponsor must submit one consolidated annual data report and one consolidated annual narrative report, as described in paragraph (a)(1) and (2) of this section, to the National Transit Database on behalf of its participants. BILLING CODE P E:\FR\FM\26JYR2.SGM 26JYR2 48966 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations Appendix A to Part 625—Asset Categories, Asset Classes, and Individual Assets VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4725 E:\FR\FM\26JYR2.SGM 26JYR2 ER26JY16.000</GPH> asabaliauskas on DSK3SPTVN1PROD with RULES EXAMPLE of asset categories, asset classes, and individual assets: Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations Appendix B to Part 625—Relationship Amongst SGR Performance Measures, SGR Definition, and SGR Principles asabaliauskas on DSK3SPTVN1PROD with RULES EXAMPLE Relationship amongst SGR performance measures, SGR definition, and SGR principles: (a) A tier I provider has a TAM asset inventory containing, in total across all modes, over 150 revenue vehicles in peak revenue service, no rail fixed guideway, multiple passenger and exclusive use maintenance facilities, and various pieces of equipment over $50,000. Their asset inventory is itemized at the level of detail they use in their capital program of projects; it also includes capital assets they do not own but use. The provider conducts condition assessments on those assets in its inventory for which it has direct financial responsibility. The results of the condition assessment indicate that there is an identified unacceptable safety risk in the deteriorated condition of one of their non-revenue service vehicles, but that the non-revenue service vehicles are being used as designed. The condition assessment results show the provider that one non-revenue service vehicle is not in SGR. VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 (b) The condition assessment results also inform the investment prioritization process, which for this provider is a regression analysis in a spreadsheet software program. The provider’s criteria, as well as their weightings, are locally determined to produce the ranked list of programs and projects in their investment prioritization. The provider batches its projects by low, medium or high priority, identifying in which funding year each project will proceed. The provider has elected to use the ULB defaults, provided by FTA, for each of their modes until such time as they have resources and expertise to develop customized ULBs. (c) The provider separates assets within each asset category by class to determine their current performance measure metric. For example, the equipment listed in its TAM asset inventory includes HVAC equipment and service vehicles; however, the SGR performance metric for the equipment category only requires the non-revenue vehicle metrics. Thus, the provider measures only non-revenue vehicles that exceed the default ULB for the modes they own, operate, or manage. This metric is the baseline the provider uses to determine its target for the forthcoming year. PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 48967 (d) The provider’s equipment baseline, its investment priorities that show minimal funding for non-revenue vehicles over the next 4 years, and its TAM policies, strategies and key asset management activities are used to project its target for the equipment category. Since one of its non-revenue service vehicles indicated an unacceptable safety risk, it is elevated in the investment prioritization for maintenance or replacement. The provider’s target may indicate a decline in the condition of their equipment overall, but it addresses the unacceptable safety risk as an immediate priority. (e) The cyclic nature of investment prioritization and SGR performance target setting requires the provider to go through the process more than once to settle on the balance of priorities and targets that best reflects its local needs and funding availability from all sources. The provider’s accountable executive has ultimate responsibility for accepting and approving the TAM plan and SGR targets. The targets are then submit to the NTD and shared with the provider’s planning organization. The narrative report, which describes the SGR performance measure metrics, is also submitted to the NTD. E:\FR\FM\26JYR2.SGM 26JYR2 48968 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations Appendix C to Part 625—Assets Included in National TAM System Provisions Table 1—Assets Included in National TAM System Provisions TAM Plan Element Condition assessment Asset inventory 625.15 625.15 MAP-21 Asset Category SGR Performance Measure 625.43 (a)- (d) Only revenue vehicles with direct capital responsibility, by mode Only guideway infrastructure with direct capital responsibility Only fixed rail guideway with direct capital responsibility Only passenger stations and exclusive-use maintenance facilities with direct capital responsibility, excluding bus shelters 1- Maintenance and Administrative facilities with direct capital responsibility, 2- Passenger stations (buildings) and Parking facilities with direct capital responsibility Jkt 238001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4725 E:\FR\FM\26JYR2.SGM 26JYR2 ER26JY16.001</GPH> Only revenue vehicles with direct capital responsibility All passenger stations and all exclusive-use maintenance facilities used in the provision of public transit, excluding bus shelters 22:27 Jul 25, 2016 Only non-revenue service vehicles with direct capital responsibility. All guideway infrastructure used in the provision of public transit VerDate Sep<11>2014 Only inventoried equipment with direct capital responsibility, no third party assets All revenue vehicles used in the provision of public transit asabaliauskas on DSK3SPTVN1PROD with RULES All non-revenue service vehicles and equipment over $50,000 used in the provision of public transit, except thirdparty equipment assets. Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations 48969 Table 2—EXAMPLE of Multiple SGR Performance Targets for a Sample Fleet MAP-21 Asset Category Asset Class Performance Targets 3 vehicle types (cutaway, van, 30ft. bus) asabaliauskas on DSK3SPTVN1PROD with RULES Total 0 - Infrastructure Performance Targets: 2 exclusive-use maintenance garages, 1 administrative office, and 3 passenger stations Total - 2 Facilities Performance Target: 1- maintenance and administrative facilities 2- passenger and parking facilities 3. In § 630.3, amend paragraph (c) by revising the definitions of ‘‘Applicant’’ and ‘‘Reporting entity’’ to read as follows: ■ PART 630—NATIONAL TRANSIT DATABASE 2. The authority citation for part 630 is revised to read as follows: ■ § 630.3 * Authority: 49 U.S.C. 5335. VerDate Sep<11>2014 Total 3- Rolling Stock Performance Targets: 1- cutaway, 2- van, 3- 30ft. bus no track BILLING CODE C Totall- Equipment Performance Target: 1- supervisor car 22:27 Jul 25, 2016 Jkt 238001 PO 00000 Definitions. * * (c) * * * Frm 00081 * Fmt 4701 * Sfmt 4700 Applicant means an entity seeking Federal financial assistance under 49 U.S.C. chapter 53. * * * * * Reporting entity means an entity required to provide reports as set forth in the reference documents. * * * * * E:\FR\FM\26JYR2.SGM 26JYR2 ER26JY16.002</GPH> one non-revenue service vehicle type (automobile) 48970 Federal Register / Vol. 81, No. 143 / Tuesday, July 26, 2016 / Rules and Regulations requirements of 49 U.S.C. 5335, as set forth in the reference documents. * * * * * 4. Amend § 630.4 by revising paragraph (a) to read as follows: ■ § 630.4 Requirements. asabaliauskas on DSK3SPTVN1PROD with RULES (a) National Transit Database Reporting System. Each applicant for and beneficiary of Federal financial assistance under 49 U.S.C. chapter 53 must comply with the applicable VerDate Sep<11>2014 22:27 Jul 25, 2016 Jkt 238001 ■ 5. Revise § 630.5 to read as follows: § 630.5 Failure to report data. [FR Doc. 2016–16883 Filed 7–25–16; 8:45 am] Failure to report data in accordance with this part may result in the PO 00000 Frm 00082 Fmt 4701 Sfmt 9990 noncompliant reporting entity being ineligible to receive any funding under 49 U.S.C. chapter 53, directly or indirectly, until such time as a report is filed in accordance with this part. BILLING CODE P E:\FR\FM\26JYR2.SGM 26JYR2

Agencies

[Federal Register Volume 81, Number 143 (Tuesday, July 26, 2016)]
[Rules and Regulations]
[Pages 48889-48970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16883]



[[Page 48889]]

Vol. 81

Tuesday,

No. 143

July 26, 2016

Part II





Department of Transportation





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Federal Transit Administration





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49 CFR Parts 625 and 630





National Transit Database; Transit Asset Management; Final Rule; 
Notices; National Transit Database: Capital Asset Reporting; Transit 
Asset Management: Proposed Guidebooks

Federal Register / Vol. 81 , No. 143 / Tuesday, July 26, 2016 / Rules 
and Regulations

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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Parts 625 and 630

[Docket No. FTA-2014-0020]
RIN 2132-AB07


Transit Asset Management; National Transit Database

AGENCY: Federal Transit Administration (FTA), Department of 
Transportation (DOT).

ACTION: Final rule.

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SUMMARY: The Federal Transit Administration is publishing a final rule 
to define the term state of good repair and to establish minimum 
Federal requirements for transit asset management that will apply to 
all recipients and subrecipients of chapter 53 funds that own, operate, 
or manage public transportation capital assets. This final rule 
requires public transportation providers to develop and implement out 
transit asset management (TAM) plans. TAM plans must include an asset 
inventory, condition assessments of inventoried assets, and a 
prioritized list of investments to improve the state of good repair of 
their capital assets. This final rule also establishes state good 
repair standards and four state of good repair (SGR) performance 
measures. Transit providers are required to set performance targets for 
their capital assets based on the SGR measures and report their 
targets, as well as information related to the condition of their 
capital assets, to the National Transit Database.

DATES: Effective October 1, 2016.

FOR FURTHER INFORMATION CONTACT: For program matters, Mshadoni Smith, 
Office of Budget and Policy, (202) 366-4050 or Mshadoni.Smith@dot.gov. 
For legal matters, Candace Key, Office of Chief Counsel, (202) 366-4011 
or Candace.Key@dot.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
    A. Purpose of Regulatory Action
    B. Statutory Authority
    C. Summary of Major Provisions
    1. Transit Asset Management
    2. National Transit Database
    D. Summary of Costs and Benefits
II. Summary of Notice of Proposed Rulemaking (NPRM) Comments and 
Responses
    A. Rulemaking Background
    B. General NPRM Comments and FTA's Responses
    C. Section by Section NPRM Comments and FTA's Responses
III. Regulatory Analyses and Notices
    A. Regulatory Analyses and Notices NPRM Comments and FTA's 
Responses
    B. Final Rule Analyses and Notices

I. Executive Summary

A. Purpose of Regulatory Action

    This final rule establishes a National Transit Asset Management 
(TAM) System in accordance with section 20019 of the Moving Ahead for 
Progress in the 21st Century Act (MAP-21; Pub. L. 112-141 (2012), 
codified at 49 U.S.C. 5326).\1\ A transit asset management system is 
``a strategic and systematic process of operating, maintaining, and 
improving public transportation capital assets effectively through the 
life cycle of such assets.'' 49 U.S.C. 5326(a)(3).
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    \1\ On December 4, 2015, the President signed into law the 
Fixing America's Surface Transportation (``FAST'') Act (Pub. L. 114-
94), which supersedes MAP-21; however, FAST made no amendments to 
the transit asset management statute at 49 U.S.C. 5326. This notice 
will refer to MAP-21 throughout the preamble.
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    Critical to the safety and performance of a public transportation 
system is the condition of its capital assets--most notably, its 
equipment, rolling stock, infrastructure, and facilities. When transit 
assets are not in a state of good repair, the consequences include 
increased safety risks, decreased system reliability, higher 
maintenance costs, and lower system performance.
    Comprehensive quantitative information about the consequences of 
capital assets not being in a state of good repair is unavailable. 
However, insufficient funding combined with inadequate transit asset 
management practices have contributed to an estimated $85.9 billion 
transit state of good repair (SGR) backlog--a value derived from FTA's 
Transit Economic Requirements Model (TERM).\2\ The SGR backlog is 
representative of the reinvestment cost to replace any transit assets 
whose condition is below the midpoint on TERM's 1 (poor) to 5 
(excellent) scale, or 2.5. The SGR backlog poses a significant 
challenge during these fiscally constrained times, given FTA's 
estimates that an additional $2.5 billion per year above current 
funding levels from all levels of government is needed just to prevent 
the SGR backlog from growing.
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    \2\ Individual transit agencies were not involved in developing 
the assessment of the $85.9 billion state of good repair backlog. 
FTA developed the estimate by feeding combined data into TERM. TERM 
produces national-level estimates of the national state of good 
repair backlog, based on an underlying set of models relating the 
expected average true condition of an asset to the asset's age. 
Currently, FTA does not collect the systematic data necessary to do 
a detailed time-series analysis on whether the SGR backlog is 
growing in real terms. The $2.5 billion estimate is based on the 
2013 Conditions and Performance Report, which uses a combination of 
National Transit Database, systematic and ad hoc data collections in 
combination with estimates produced by TERM. Under this final rule, 
FTA will collect additional data which will improve future 
estimates. The 2013 Conditions and Performance Report is available 
at http://www.fhwa.dot.gov/policy/2013cpr/.
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    The National TAM System is a scalable and flexible framework. The 
components of the National TAM System will work together to ensure that 
achieving and maintaining a state of good repair becomes, and remains, 
a top priority for transit providers, as well as States and 
Metropolitan Planning Organizations (MPOs).

B. Statutory Authority

    Section 20019 of MAP-21 amended Federal transit law by adding a new 
section 5326 to Chapter 53 of title 49 of the United States Code. The 
provisions of 49 U.S.C. 5326 require the Secretary of Transportation to 
establish and implement a National TAM System which (1) defines the 
term state of good repair, (2) requires that all Chapter 53 recipients 
and subrecipients develop a TAM plan, (3) establishes annual reporting 
requirements, and (4) includes technical assistance. 49 U.S.C. 5326(b).
    The Secretary also must establish SGR performance measures, and 
recipients must set performance targets based on the measures. 49 
U.S.C. 5326(c)(1) and (2). Each designated recipient must submit two 
annual reports to the Secretary--one report on the condition of their 
recipients' public transportation systems, including a description of 
any change in condition since the last report, and another describing 
its recipients' progress towards meeting performance targets 
established during that fiscal year and a description of the 
recipients' performance targets for the subsequent fiscal year. 49 
U.S.C. 5326 (b)(3) and 49 U.S.C. 5326(c)(3).\3\
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    \3\ The term ``designated recipient'' is defined in statute as 
``(A) an entity designated, in accordance with the planning process 
under sections 5303and 5304, by the Governor of a State, responsible 
local officials, and publicly owned operators of public 
transportation, to receive and apportion amounts under section 5336 
to urbanized areas of $200,000 or more in population; or (B) a State 
or regional authority, if the authority is responsible under the 
laws of a State for a capital project and for financing and directly 
providing public transportation.'' 49 U.S.C. 5302(4).
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C. Summary of Major Provisions

1. Transit Asset Management
    This final rule adds a new part 625, ``Transit Asset Management,'' 
to title 49 of the Code of Federal Regulations (part 625). This rule 
implements the several statutory requirements of 49 U.S.C. 5326(b) and 
(c), referenced in the previous section, by coalescing them into a 
comprehensive National TAM

[[Page 48891]]

System. The National TAM System is comprised of the following five 
pillars: (1) The definition of ``state of good repair,'' 49 U.S.C. 
5326(b)(1); (2) a requirement that recipients and subrecipients develop 
TAM plans, 49 U.S.C. 5326(b)(2); (3) SGR performance measures, and a 
requirement that recipients and subrecipients set performance targets 
based on the measures, 49 U.S.C. 5326(c)(1) and (2); (4) annual 
reporting requirements for recipients and subrecipients, 49 U.S.C. 
5326(c)(3); and (5) technical assistance from FTA. 49 U.S.C. 5326(b)(4) 
and (5). The elements of the National TAM System are listed in Sec.  
625.15.
    Section 625.17 establishes basic principles of transit asset 
management and requires a transit provider to balance competing needs 
when considering the life-cycle investment needs of its assets. The 
disrepair of any particular asset within a public transportation system 
does not necessarily mean that other assets are in disrepair; whether 
an asset has achieved a state of good repair is an independent 
determination that would be made by each transit provider.
    Sections 625.25 through 625.33 set forth specific requirements for 
TAM plans. Each transit provider that receives Chapter 53 funds as a 
recipient or subrecipient and either owns, operates, or manages capital 
assets used in the provision of public transportation, is required to 
develop and implement a TAM plan. A TAM plan is a tool that will aide 
transit providers in: (1) Assessing the current condition of its 
capital assets; (2) determining what the condition and performance of 
its assets should be (if they are not already in a state of good 
repair); (3) identifying the unacceptable risks, including safety 
risks, in continuing to use an asset that is not in a state of good 
repair; and (4) deciding how to best balance and prioritize reasonably 
anticipated funds (revenues from all sources) towards improving asset 
condition and achieving a sufficient level of performance within those 
means.
    Section 625.25 lists the TAM plan requirements, including an asset 
inventory, condition assessments, a description of analytical processes 
or decision-support tools used to estimate and prioritize capital 
investment needs over time, and a project-based prioritization of 
investments. In general, an asset inventory must include all equipment, 
rolling stock, facilities and infrastructure that a provider owns. A 
provider may exclude from its asset inventory any equipment with an 
acquisition value of less than $50,000, unless the asset is service 
vehicle equipment. The inventory also must include all rolling stock 
(revenue vehicles), passenger stations, administrative and exclusive 
use maintenance facilities, and guideway infrastructure owned by a 
third-party and used by the provider in the provision of public 
transportation. The level of detail in a provider's asset inventory 
should be commensurate with the level of detail in its program of 
capital projects. A transit provider is required to conduct a condition 
assessment on all inventoried assets for which the provider has direct 
capital responsibility, and also set targets and develop a project-
based prioritization of investments for those assets.
    Section 625.27 requires States to develop a group TAM plan for all 
subrecipients under the Rural Area Formula Program, authorized under 49 
U.S.C. 5311, including American Indian tribes. TAM plan sponsors, which 
include States, and designated and direct recipients, must develop 
group TAM plans for their tier II provider subrecipients, except those 
subrecipients that also are direct recipients under the Urbanized Area 
Formula Program authorized at 49 U.S.C. 5307. Tier II providers are 
those transit operators that do not operate rail fixed-guideway public 
transportation systems and have either one hundred (100) or fewer 
vehicles in fixed-route revenue service during peak regular service or 
have one hundred (100) or fewer vehicles in general demand response 
service during peak regular service hours. Tier I providers are those 
operators with one hundred and one (101) or more vehicles in revenue 
service during peak regular service or operators of rail fixed-guideway 
public transportation systems. Tier I providers must develop their own, 
individual TAM plan.
    The group TAM plan approach is intended to reduce the burden on 
smaller transit providers of developing their own TAM plans and 
reporting to FTA's National Transit Database (NTD). A group TAM plan is 
subject to the same requirements for individual TAM plans. However, 
sponsors and participants should coordinate to determine their specific 
roles and responsibilities in complying with this rule.
    Section 625.33 implements requirements for investment 
prioritization. Transit providers are required to rate state of good 
repair projects in order of priority. The investment prioritization 
requirements aid a transit provider in making more informed investment 
decisions to improve the state of good repair of its capital assets.
    Sections 625.41 through 625.45 implement specific performance 
management requirements. Section 625.41 lists the objective standards 
for measuring the condition of capital assets. Section 625.43 
establishes SGR performance measures based on the SGR standards. 
Section 625.45 requires recipients and subrecipients to set one or more 
performance targets per asset class based on the SGR measures and also 
requires transit providers to coordinate with States and with 
Metropolitan Planning Organizations (MPOs), to the maximum extent 
practicable, in the selection of State and MPO performance targets.
    Together, these requirements allow transit providers to better 
assess their SGR needs, and in turn make more informed investment 
decisions. The coordination amongst transit providers, States and MPOs 
should influence MPO and State transportation funding investment 
decisions and is intended to increase the likelihood that transit SGR 
needs are programmed, committed to, and funded as part of the planning 
process.
    Section 625.55 requires transit providers to report their targets 
and the condition of their capital assets annually to FTA's NTD. This 
data both helps FTA better estimate the Nation's SGR backlog and 
supports the need for additional funding at all levels of government to 
maintain, improve, and replace the Nation's aging transit capital 
assets.
2. National Transit Database
    This final rule amends the regulations for FTA's National Transit 
Database (NTD) at 49 CFR part 630, to conform to the reporting 
requirements for the National TAM System. Previously, the scope of 49 
CFR part 630 was limited to implementing the reporting mandate at 49 
U.S.C. 5335(b) for recipients and beneficiaries of section 5307 urban 
formula funds and section 5311 rural formula funds to report to the 
NTD. Under this rule, FTA has aligned 49 CFR part 630 with the 
requirements found at 49 U.S.C. 5326(c)(3) that require recipients of 
Federal financial assistance under 49 U.S.C. Chapter 53 that own, 
operate, or manage capital assets used in the provision of public 
transportation to report their performance targets and their progress 
towards meeting those targets to the NTD. Under this rule, recipients 
that receive neither Urbanized Area Formula funds (49 U.S.C. 5307) nor 
Rural Area Formula funds (49 U.S.C. 5311) remain excluded from other 
NTD reporting

[[Page 48892]]

requirements that are unrelated to transit asset management.

D. Summary of Costs and Benefits
---------------------------------------------------------------------------

    \4\ Cost estimates are sensitive to the extent agencies use in-
house or contractor staff to conduct compliance activities. If all 
compliance activities are contracted out by the transit agencies or 
States, rather than performed in-house, the cost of the final rule 
will be roughly double the estimated in-house cost.

                                                 Table 1--Summary of the Final Rule's Benefits and Costs
                                                                    [$ Millions] \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Low cost case                                  High cost case
                                                         -----------------------------------------------------------------------------------------------
                                                                           Discounted at   Discounted at                   Discounted at   Discounted at
                                                           Undiscounted     7% discount     3% discount    Undiscounted     7% discount     3% discount
                                                              dollars          rate            rate           dollars          rate            rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Quantified Costs (20 years).............................             449             246             338             868             471             652
Quantified Costs Annualized.............................            22.5            23.2            22.8            43.4            44.5            43.8
                                                         -----------------------------------------------------------------------------------------------
Unquantified Costs......................................   Additional asset maintenance, rehabilitation and replacement.
                                                           Costs of inventory and assessment for non-revenue vehicles and for equipment,
                                                          administrative buildings, and parking facilities that are not part of a station or maintenance
                                                          facility.
                                                           Other third party assets not reported to NTD.
Qualitative Benefits....................................   Reduced operation and maintenance costs and/or reduced lifecycle costs of asset
                                                          ownership.
                                                           Reduced mechanical breakdowns and other improvements to transit system performance,
                                                          reliability and safety.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The costs benefits analysis includes both qualitative and 
quantitative components and is designed to provide information about 
the likely impacts of the final rule at the societal level. FTA 
estimated the costs and benefits of the final rule by using Bureau of 
Labor Statistics studies and through dialogue with transit providers. 
Due to the limited number of quantitative resources, many of the 
estimated impacts are based on explicit assumptions that are outlined 
in section III of this notice. As described in section III, both low 
case and high case estimates were calculated based on in-house versus 
contractor estimated costs.
    According to Government Accountability Office (GAO) reports and 
other studies, existing practices in transit asset management vary 
widely from transit provider to transit provider, though most providers 
already perform at least some of the functions required under the final 
rule. FTA estimated the costs of the final rule based on the 
incremental time that it will take a transit provider's staff to 
fulfill each of the National TAM System requirements, deducting the 
costs of the transit industry's current practices. Where relevant, the 
estimates are associated with the size of a transit provider's asset 
portfolio, as reported in the NTD. FTA monetized the time requirements 
using average wage rates from relevant job categories, as reported by 
the Bureau of Labor Statistics in 2015, and adjusted for employee 
fringe benefits.
    Table 1 includes a summary of the estimated costs of the National 
TAM System. The quantified costs are for transit providers to assess 
their assets, develop TAM plans, and report certain information to the 
NTD. They do not include any incremental costs related to asset 
replacement, rehabilitation or maintenance--those costs are presented 
in the table as unquantified costs. FTA was also unable to estimate 
costs for assessing the condition of equipment that is not located at 
maintenance facilities or passenger stations or facilities not reported 
to NTD. The analysis covers a period of twenty years following the 
effective date of the final rule. Under the low cost case, the total 
undiscounted costs for the twenty years are $449 million. Using a 
discount rate of 7% (with 3% sensitivity case) for future values, the 
final rule has annualized costs of $23.2 million.
    Under the high cost case, if all the tasks are contracted out by 
the transit agencies or States, rather than performed in-house, the 
cost of the final rule will be roughly double the estimated in-house 
cost. The total undiscounted costs for the twenty years are $868 
million. Using a discount rate of 7% (with 3% sensitivity case) for 
future values, the final rule has annualized costs of $44.5 million.
    The initial costs for collecting data and developing new 
methodologies will be just over $62 million spread over the first two 
years, followed by reduced amounts in subsequent years under the low 
cost case. Under the high cost case, initial costs will be 
approximately $115 million over two years. FTA expects that the 
benefits of the final rule will stem from improved maintenance 
practices and from improved decision-making in capital asset 
maintenance and replacement. By identifying and prioritizing state of 
good repair needs, a transit provider could reduce costs for mechanical 
breakdowns of transit vehicles, reduce travel delays for passengers, 
and yield potential safety improvements. For some providers, this may 
be feasible by shifting priorities within their maintenance budgets. 
For example, by identifying slow zones where deteriorated asset 
conditions have reduced system travel speeds, transit systems may 
assign maintenance efforts towards repairs that will eliminate the slow 
zone and ensure consistent and reliable travel times for passengers. 
For other providers, this may be accomplished through proactive 
replacement of capital assets. For example, rather than operating buses 
until they become unreliable in old age, some transit providers will 
now establish a consistent replacement age for their buses that will 
prevent costly in-service breakdowns.
    Some providers may need additional funding to more effectively 
maintain their capital assets. To increase funding for maintenance, 
providers may, need to reduce expenditures for system expansion, 
particularly if the agencies' goal is to reduce the SGR backlog. 
Additionally, assembling a quantitative asset inventory and condition 
assessments will better equip transit providers to make the case to 
funding stakeholders for how much money is needed to bring their 
systems into a state of good repair. However, it is difficult to 
predict accurately how each provider is likely to respond.
    The final rule's benefits could not be quantified due to the lack 
of available information on the impacts of asset

[[Page 48893]]

management programs on transit systems. Instead, FTA conducted a 
breakeven analysis based on the incidence of transit vehicle mechanical 
breakdowns reported to NTD and their associated costs. For instance, in 
2013, 524,629 mechanical failures of vehicles in service were reported 
to the NTD, and a total of $2.2 billion in vehicle maintenance costs 
were reported to the NTD. Assuming that in the absence of the rule, 
vehicle maintenance costs in each of the next 20 years are the same as 
they were in 2013, the final rule would need to avoid 1.02% or 1.95% of 
the mechanical failure breakdowns each year to yield savings that are 
equal to the portion of the rule's costs that FTA was able to monetize, 
in the low and high cost cases, respectively. For the rule's benefits 
to equal all of its costs, it would need to prevent a larger but 
unknown amount of vehicle maintenance costs. The full methodology for 
the low and high cost cases are described in the Regulatory Analysis 
section.
    Current management practices may delay maintenance of vehicles due 
to various reasons. For instance, some providers may keep vehicles in 
operation to meet the current demand, delaying regular maintenance of 
vehicles, resulting in mechanical failure of vehicles in service. 
Others may shortchange maintenance budgets to expand their systems. In 
each case, providers struggle to meet system demands with limited 
resources.
    Implementing a TAM system will require a provider to collect and 
use asset condition data, set targets, and develop strategies to 
prioritize investments to meet the provider's goals. One strategy may 
be to ensure that assets are maintained on a regular schedule to avoid 
failure of vehicles in service, which are expensive to manage and cause 
delays on the system. Based on limited findings on transit asset 
management-related cost savings from transit provider initiatives and 
from the literature in other transportation fields, notably highways, 
this level of improvement appears readily achievable. Additionally, 
there will be important non-quantifiable benefits in areas such as 
improved transparency and accountability.

II. Summary of Notice of Proposed Rulemaking (NPRM) Comments and 
Responses

A. Rulemaking Background

    On October 3, 2013, FTA published a consolidated advance notice of 
proposed rulemaking (ANPRM) requesting public comment on a wide range 
of topics pertaining to the Public Transportation Safety Program and 
the TAM program authorized by MAP 21. 78 FR. 61251 (Oct. 3, 2013). 
Throughout the ANPRM, FTA expressed its intention to adopt a scalable 
and flexible approach to transit asset management and safety and 
highlighted the inherent linkages between asset condition and safety 
performance.
    On September 30, 2015, FTA published a Notice of Proposed 
Rulemaking (NPRM) for Transit Asset Management and the National Transit 
Database (80 FR 58911). The NPRM provided a summary of the status of 
the Nation's state of good repair backlog and the history behind FTA's 
proposals for the National TAM System. FTA took into consideration 
public comments it received in response to the ANPRM and NPRM during 
the development of this final rule.
    FTA received a total of 119 public comments on the NPRM. In 
general, FTA has not responded to those comments that related 
specifically to other rulemakings. Several commenters requested an 
extension to the comment period. FTA did not extend the comment period, 
but did accept late filed comments. A couple of comments suggested that 
FTA provide an opportunity for States and others to offer additional 
comments after FHWA and FTA issue all of the performance management-
related NPRMs. FTA will continue to engage with the States, transit 
agencies and other members of the public on the implementation of its 
programs and requirements. The public can also submit questions or 
comments at any time to FTA's Web site at http://ftawebprod.fta.dot.gov/ContactUsTool/Public/NewRequest.aspx.
    A number of comments requested guidance from FTA on how to 
implement the requirements of the proposed rule. The Transit Asset 
Management page on FTA's Web site at www.transit.dot.gov/regulations-and-guidance/asset-management/transit-asset-management contains a 
number of useful guidance documents and resources. For example, FTA has 
developed an Asset Management Guide for Small Providers \5\ to assist 
small providers and States' Department of Transportations in developing 
TAM plans. FTA encourages transit providers and sponsors to visit the 
page regularly to access the most up-to-date resources.
---------------------------------------------------------------------------

    \5\ https://www.transit.dot.gov/research-innovation/asset-management-guide-small-providers-fta-report-no0092.
---------------------------------------------------------------------------

    Following is a summary of the public comments on the NPRM and FTA's 
responses.

B. General Comments and FTA's Responses

    This section provides summarized comments that are not specifically 
related to a section of the NPRM. This section is organized around 
common themes found in the responses to the NPRM such as, FTA's 
approach to implementing the TAM requirements, Nexus between state of 
good repair and safety, Nexus between transit asset management and 
planning, responses to the NPRM appendix that provided examples of 
asset classes and individual assets, Implementation and Oversight, and 
Technical assistance needs.
COMMENTS: FTA's Approach to Implementing the TAM Requirements
    Some commenters expressed general support for FTA's efforts to use 
transit asset management to help transit providers maintain bus and 
rail systems in a state of good repair (SGR). A State agency expressed 
support for FTA's efforts to increase safety through the NRPM. A 
transit operator emphasized that investments to resolve the SGR backlog 
must be guided by a plan that emphasizes the goals stated for the TAM 
program.
    However, a few commenters expressed general concern about the 
proposal. For example, although supporting the idea of a National TAM 
System, one commenter urged that the implementation be directed towards 
bringing the nation's transit system into a state of good repair, 
rather than creating reporting and oversight requirements that have no 
relation to this goal. A transit operator expressed concern that the 
guidance prescribed in the NPRM could require transit providers already 
mature in TAM best practices to alter their programs, which could 
result in compliant but less optimal TAM programs. An anonymous 
commenter said the rule must be kept as simple as possible.
FTA'S RESPONSE: FTA's Approach to Implementing the TAM Requirements
    FTA appreciates those comments in support of its efforts to 
implement a National TAM System to achieve and maintain a state of good 
repair for the Nation's transit assets, improving transit safety, and 
increasing service reliability and performance. FTA agrees that transit 
providers should be guided by the goals of the National TAM System in 
using their funding from all sources for state of good repair.
    Throughout the NPRM, FTA expressed its intention to adopt a 
scalable and flexible approach to transit asset management and safety. 
This final

[[Page 48894]]

rule sets minimum Federal requirements that can be adopted by any 
transit provider and tailored to any transit system.
COMMENTS: Nexus Between State of Good Repair and Safety
    Several transit operators, a business association, and other 
commenters recommended that FTA clarify the interaction between TAM and 
safety, expressing concern that failure to do so could subject transit 
agencies to unnecessary litigation risk. These commenters suggested 
that Useful Life Benchmarks (ULBs) should not drive replacement cycles 
to the exclusion of safe operations and asserted that the safety of any 
asset should be the determining factor in prioritization of asset 
replacement. For similar reasons, a professional association argued 
that SGR and safety should not be tied together and urged FTA not to 
use SGR and safety reporting as a methodology for awarding or not 
awarding funding to transportation agencies. A transit operator stated 
that operator experience, training, and prudence play a more critical 
role in life safety than asset condition. This commenter suggested that 
it would be more prudent to have a separate safety flag that identifies 
any asset that poses an ``imminent danger'' to an operator or passenger 
with specific guidelines for the management of such assets.
    Although acknowledging that consideration for safety in asset 
management decisions is important, one transit operator stated that 
there should not be a direct measurable link to safety performance 
because that determination would require greater innovation in 
integrating safety and asset management systems. Further, this 
commenter stated that it is difficult to assess the link between safety 
and asset management because it is not a direct relationship.
    A local transit operator suggested that FTA provide documentation 
and guidance on how to integrate SMS directly into TAM plans. Further, 
this commenter suggested that FTA allow each individual transit 
provider to make their own determinations about the safety of their 
assets.
    A State transit association expressed concerns about the viability 
of a top-down approach, stating that it may conflict with already-
negotiated union contracts or hinder future negotiations. The commenter 
stated that, rather than the overly burdensome SMS and TAM plan 
requirements, a National Transit Institute (NTI) course with 
appropriate certification(s) could achieve the same goals and outcomes. 
In contrast, one transit operator concurred with FTA that MAP-21 
requirements for a National TAM System can best be implemented within 
the context of an SMS framework imposed by the overarching Public 
Transportation Safety Program.
    Another transit operator and an individual commenter expressed 
concern that because FTA has not published a final National Public 
Transportation Safety Plan, it is difficult to address issues in the 
TAM NPRM that pertain to the linkage between the two documents. A 
transit operator expressed concerns about the identification of 
unacceptable safety risks in safety plans and TAM plans, reasoning that 
public access to this information may increase safety risks for the 
rail system.
    An individual commenter said a National TAM System will 
significantly affect the efficiency and cost-effectiveness of capital 
asset management and maintenance. The commenter said it also will help 
to improve transit safety. A State agency and a transit operator also 
agreed with FTA's statements on the linkages between SGR and safety.
    A transit operator recommended that part 625 should reference part 
670 and ``prioritize'' the significance that safety plays in 
determining SGR.
FTA'S RESPONSE: Nexus Between State of Good Repair and Safety
    FTA believes that Congress intended for it to establish a National 
TAM System that not only increases the performance and reliability of 
capital assets, but also ``improve[s] safety.'' \6\ For example, 
pursuant to 49 U.S.C. 5329(b)(2)(B), FTA must develop and implement a 
new National Public Transportation Safety Plan that includes the 
definition of state of good repair developed under this final rule. 
Additionally, pursuant to 49 U.S.C. 5329(d)(1)(E), a transit agency 
safety plan must include performance targets based on the SGR measures 
that will be included in a National Safety Plan.
---------------------------------------------------------------------------

    \6\ H.R. Rep. No. 112-557 at 603 (2012) (Conf. Rep.). In 
addition, the text of the Public Transportation Safety Act of 2010 
was incorporated into both the transit asset management and safety 
provisions of MAP-21. See S. 3638, 111th Cong. (2010). In the report 
accompanying the 2010 Act, Congress stated that ``state of good 
repair directly relates to the safety of a public transportation 
system, as the likelihood of accidents increases as the condition of 
equipment and infrastructure worsens.'' S. Rept. 112-232 at 10 
(2010). The requirements proposed under the Act were intended to 
establish a ``monitoring system for the safety and condition of the 
nation's public transportation assets.'' Id. at 1.
---------------------------------------------------------------------------

    The final rule reflects FTA's recognition of the nexus between 
transit asset management and safety. While asset condition is not 
always a contributing factor in safety events, FTA believes that there 
is a relationship between the condition of an asset and safety 
performance. FTA acknowledges that a transit asset that is in a state 
of good repair may be operated unsafely; conversely, a transit asset 
that is not in a state of good repair may be operated safely through 
appropriate safety risk mitigation strategies.
    FTA's approach to TAM is consistent with its proposed SMS approach 
to safety. A fundamental aspect of transit asset management is the 
monitoring of asset condition data as an indicator of system 
performance. Similarly, SMS is a formal data-driven approach to 
managing safety risk and assuring the effectiveness of safety risk 
mitigations. SMS does not require a provider to take a specific action 
be taken to address a specific safety risk. Implementing SMS merely 
provides an organization with a systematic way to identify and 
understand safety risks, and subsequently make a determination about 
how to mitigate those risks.
    The requirements of this final rule can be implemented in the 
absence of the components of the National Safety Program referenced in 
the comments. Again, this final rule is scalable and flexible. The 
final rule neither defines nor prescribes standards for ``unacceptable 
safety risk.'' FTA believes that each provider is in the best position, 
based on knowledge of both its unique operating environment and 
availability of resources, to make determinations regarding 
categorization and mitigation of risks. The final rule merely requires 
that a transit provider give due consideration in its investment 
prioritization to those assets that pose an identified unacceptable 
safety risk.
    FTA does not agree with the commenter who suggested that public 
access to those safety risks that may be identified in a TAM plan or 
safety plan, may increase safety risks for the rail system. FTA did not 
propose in the NPRM that a transit provider document its safety risks 
in its TAM plan. In determining the state of good repair of an asset, 
FTA proposed that a provider consider whether or not the asset poses an 
identified unacceptable safety risk and that a provider considers those 
risks in the development of its investment prioritization.
    This final rule allows a transit provider to determine its own 
ULBs, based on knowledge of its operating environment and the 
performance of its individual assets. Each transit provider will need 
to determine what investments should be made in order to improve the 
performance of its transit system.

[[Page 48895]]

    FTA understands the uncertainty expressed by some commenters 
regarding the nexus between transit asset management and safety. FTA 
also understands the uncertainty expressed in those comments regarding 
compliance with the requirements of the final rule that are related to 
safety, in the absence of a final National Public Transportation Safety 
Plan and a final rule for public transportation agency safety plans.
    On February 5, 2016, FTA issued a proposed National Public 
Transportation Safety Plan (81 FR 6372-3) and a notice of proposed 
rulemaking (NPRM) for Public Transportation Agency Safety Plans (Agency 
Safety Plans). 81 FR 6344-71. The proposed rule for Agency Safety Plans 
would require transit agencies to set performance targets based on the 
safety performance criteria under the National Safety Plan. FTA 
proposed one criterion to measure the relationship between asset 
condition and safety performance. The proposed Agency Safety Plan rule 
also would require a transit operator to establish methods for 
identifying and evaluating safety risks throughout all elements of its 
public transportation system, including its capital assets. In the 
coming months, FTA plans to issue both a final National Safety Plan and 
a final rule for Agency Safety Plans and accompanying guidance, 
technical assistance and other tools for both safety and TAM.
COMMENTS: Nexus Between Transit Asset Management and Planning
    A Metropolitan Planning Organization (MPO) commented that States 
and MPOs must consider and integrate transit providers' TAM plans and 
targets, as well as Transit Agency Safety Plans and targets, into the 
planning process, including decision-making on funding allocations and 
prioritization of investment strategies. A State DOT stated that 
consistency between FTA's and Federal Highway Administration's (FHWA's) 
TAM final rules is necessary and that State DOTs should be given 
flexibility to choose a phase-in option for the development of its 
first initial asset management plan and targets.
    Several State DOTs said FTA should promote more definitive language 
for how TAM plans will feed into long- and short-range transportation 
planning and programming. Some commenters said the investment 
prioritization approach must be relevant to the existing planning and 
programming process without supplanting the statewide transportation 
improvement program (STIP) project selection process and capital 
programming processes.
    One commenter requested clarification on the relationship between 
TAM plans and their future impacts on the development of Regional 
Transportation Plans. A transit operator said the proposed rule is 
written as if the National TAM System and TAM Program start at 
procurement and there is little to no mention of planning, requirements 
gathering, concept of operations, and hazard avoidance, which are 
central to true whole life-cycle management and SMS concepts.
FTA'S RESPONSE: Nexus Between Transit Asset Management and Planning
    The NPRM did not propose that a transit provider abandon its 
existing capital planning program and the TAM requirements are not 
intended to supplant the capital planning process. This final rule is a 
baseline. The TAM requirements are intended to produce information 
critical to informed, sound decision-making for capital asset lifecycle 
investment needs. FTA understands that there may be other processes, 
considerations, or concepts that are not explicitly referenced in the 
rule, but may be central to a transit provider's implementation of a 
comprehensive TAM program. FTA believes that a transit provider could 
incorporate these other elements into its TAM plan through several of 
the requirements at Sec.  625.25(b), specifically:
    1. The SGR policy;
    2. The TAM plan implementation strategy; and
    3. An outline of how the TAM plan and related business practices 
will be monitored, evaluated and updated, as needed, to ensure the 
continuous improvement of transit asset management practices.
    FTA acknowledges that compliance with the requirements for 
metropolitan planning will not become effective until the publication 
of the final TAM rule that establishes the SGR performance measures. 
Therefore, in the final rule on metropolitan and statewide and 
nonmetropolitan planning, FTA and FHWA have provided a phase-in of 
certain requirements to support States, MPOs and transit providers as 
they transition into performance-based planning and programming. FTA 
directs commenters to the Final Rule on Metropolitan and Statewide 
Planning and Non Metropolitan Planning \7\ where State and MPO 
integration of transit providers' TAM plans, targets, and investment 
priorities into the performance-based planning and programming process 
are addressed.
---------------------------------------------------------------------------

    \7\ https://www.federalregister.gov/articles/2016/05/27/2016-11964/statewide-and-nonmetropolitan-transportation-planning-metropolitan-transportation-planning.
---------------------------------------------------------------------------

COMMENTS: Appendix A: Examples of Asset Categories, Asset Classes, and 
Individual Assets
    One commenter supported FTA's approach in Appendix A. However, a 
professional association and several State DOTs recommend that either 
Appendix A be removed from the final rule, or that the content included 
in Appendix A be replaced with asset categories and asset classes 
required for reporting to the NTD in order to align the two processes 
and keep reporting to a minimum. If Appendix A is retained, several of 
these commenters recommended that FTA either remove ``Administration'' 
assets from Appendix A or amend its definition to clarify what falls 
under the class of assets known as ``Administration.''
    A professional association and a couple of State DOTs asked if the 
asset category infrastructure is only applicable to fixed guideway. 
Based on Appendix A, a couple of State DOTs said it is unclear whether 
FTA envisions that office equipment and vehicle related equipment (such 
as bus cameras) or shop equipment (e.g., vehicle lifts, fueling and 
lubricating fuel dispensers, test equipment, etc.) would be included in 
a TAM plan.
    A local government recommended that FTA delineate furniture and 
fixtures as an asset class or individual asset that is not applicable 
when categorizing under TAM. The commenter also suggested that FTA 
clarify that TAM is not a replacement for, nor should be confused with, 
the standard generally accepted accounting principle fixed asset 
categories such as Buildings, Leasehold Improvements, Land, Furniture 
and Fixtures, Technology, etc. Rather it is an extension or 
categorization of transit capital assets within the limited scope of 
TAM in improving safety, reliability, and performance of our nation's 
public transportation; thereby reducing the SGR backlog.
    An individual commenter asked if FTA will provide a cross reference 
from Appendix A--Asset Classification in the TERM Lite Quick Start User 
Guide--to the Asset Category/Asset Class in Appendix A in the rule.
    A transit operator stated that, in lieu of the categorizations as 
proposed for Appendix A, and associated definitions throughout the 
rule, it would support a system of asset categories and classes that is 
consistent with the one described in Table 2.9 in Transit Cooperative 
Research Program (TCRP) Report 172, ``Guidance for Developing a Transit

[[Page 48896]]

Asset Management Plan,'' which also aligns more closely with the asset 
aggregations used in the TERM model. Another transit operator suggested 
that Appendix A should align with the corresponding table in FTA's 2012 
Asset Management Guide because proposed Appendix A deviates from past 
FTA sanctioned practices and would likely disrupt systems already in 
use without improving the quality of data obtained. An MPO asked FTA to 
clarify the detail expected in Appendix A when a TAM plan is prepared 
as part of a group TAM plan by a State versus when prepared by the 
individual transit provider.
FTA'S RESPONSE: Appendix A: Examples of Asset Categories, Asset 
Classes, and Individual Assets
    FTA included Appendix A in the NPRM to provide an illustrative 
example of an asset hierarchy. FTA did not intend for Appendix A to 
serve as an exhaustive list of asset classes and individual assets. 
Appendix A did not include systems as a separate asset category because 
systems would fall under the infrastructure category. Each asset 
category in the final rule is broad enough for a transit provider to 
incorporate its existing defined categories. Components of an asset, 
such as bus cameras or shop equipment, would be itemized in the asset 
inventory at the level of detail found in a transit providers program 
of capital projects. Specifically, with regard to the equipment asset 
category, the only assets that a provider must include in its inventory 
are non-revenue service vehicles and owned equipment over $50,000 in 
acquisition value. Additionally, equipment assets considered under the 
SGR performance measure and reported to NTD are exclusively non-revenue 
service vehicles. The equipment asset category does not include 
supplies, such as trash bins or pencils. A transit provider is not 
required to include any third-party equipment in its asset inventory. 
Also, see FTA's response to comments on ``Capital Asset'' and 
``Equipment'' in Sec.  625.25 Definitions.
    The infrastructure asset category includes infrastructure assets 
for all modes. However, FTA proposed that the performance measure for 
infrastructure be limited to rail fixed-guideway assets. Therefore, a 
transit provider that does not operate a rail system would not have to 
set a performance target for its non-rail infrastructure assets. 
Similarly, the performance measure for equipment is limited to non-
revenue service vehicles, and a transit provider is only required to 
set an equipment target for service vehicles. However, all other owned 
equipment over $50,000 must be included in a TAM plan. The asset 
inventory compiled for a transit provider's own TAM plan, particularly 
a rail transit provider's TAM plan, may have a greater level of detail 
than the inventory information reported to the NTD.
COMMENTS: Implementation and Oversight
    Two commenters suggested that the oversight of the asset management 
reporting requirements should occur as part of a regularly scheduled 
oversight activity and existing programs, such as the triennial 
oversight program. One of these commenters encouraged FTA to set forth 
criteria that would prompt an as-needed asset management review, 
ensuring that reviews are triggered based on quantifiable criteria and 
defined risk, rather than on an arbitrary basis. Another commenter 
assumed that audit and compliance checks will be done during the 
triennial review because it was stated at the FTA webinars supporting 
the issuance of the NPRM that the TAM plans would not be submitted to 
FTA. The commenter requested that FTA clarify the audit and compliance 
verification of TAM plans in the final rule. One commenter expressed 
concern about FTA's assertion that it reserves the right to conduct 
additional oversight of TAM plans outside the triennial review process. 
A State DOT asked for FTA's determination of whether the National TAM 
System will be part of Satisfactory Continuing Control or Maintenance 
as it relates to the triennial review.
    Several commenters said the rule should state how individual and 
group TAM plans will be reviewed and approved. A professional 
association said FTA should explicitly state that for rail fixed 
guideway systems, the State Safety Oversight Agency has a review and 
approval role.
    Some commenters recommended that FTA further engage stakeholders 
with regard to implementing the rule. A State DOT suggested that FTA 
conduct a survey of all data requirements from the user level to 
determine if there is a way to coordinate and consolidate the process. 
A transit operator said FTA should consider providing an opportunity 
for a small delegation of transit providers to have a face-to-face 
dialogue to discuss concerns with the NPRM. A transit operator said 
there should be no additional changes to add more specific requirements 
in the final rule beyond those included in the NPRM, without another 
opportunity for the transit industry to review and comment.
FTA'S RESPONSE: Implementation and Oversight
    FTA will not routinely collect or approve TAM plans. Individual 
transit providers, and sponsors on behalf of group TAM plan 
participants, must self-certify their compliance with the requirements 
of the final rule. FTA will consider developing a self-assessment tool 
as part of its technical assistance efforts. FTA intends to oversee 
self-certifications of TAM plans through the existing Triennial Review 
and State Management Review (SMR) processes, likely through the 
addition of a TAM module. FTA continues to reserve the right to conduct 
additional oversight of any of its requirements, including those 
related to TAM, outside of the Triennial Review and SMR processes.
    FTA fully appreciates the role that State Safety Oversight (SSO) 
Agencies play in the safety of rail fixed guideway transit systems. FTA 
supports a rail transit provider's decisions to further align its 
safety program with its TAM program by seeking review and approval of 
its TAM plan by its SSO Agency. However, the final rule does not 
require SSO Agencies to review and approve the TAM plans of the rail 
transit systems that they oversee.
    FTA has provided a number of opportunities for the public to 
comment on its approach and proposals on transit asset management. In 
addition to the ANPRM and NPRM, FTA sponsored several SGR roundtables, 
conducted an online dialogue, and issued a Transit Asset Management 
Guide. FTA will continue to engage with the industry on the 
implementation of both the TAM and safety requirements.
COMMENTS: Technical Assistance Needs
    Several commenters provided statements concerning a potential 
template for TAM plans. A transit operator asked if FTA will issue a 
template that service providers can use to assure they are providing 
all required information FTA requires in an acceptable format. One 
commenter said FTA should offer technical assistance for tier II 
providers, or work with tier II stakeholders, to create TAM plan 
templates for smaller agencies and/or group TAM plans. Another 
commenter supported the idea that the State DOT and other sponsoring 
agencies develop one TAM plan template, but expressed concern about 
DOT's lack of adequate resources to develop a template, provide 
oversight, track assets and provide NTD reports on SGR and asset 
management.
    Several commenters said FTA should provide training on the use of 
TERM

[[Page 48897]]

and the TERM scale for State DOTs and subrecipients prior to inclusion 
of facilities in the TAM plan.
    A couple of commenters said FTA could provide assistance to those 
transit agencies that are new to asset management by publishing a 
sample definition of an asset. One of these commenters also said FTA 
should provide a toolkit as part of the final rule.
    Some commenters asked for technical assistance from FTA on the 
following specific topics:
    1. Decision processes and tools for assessing probability of risks.
    2. SGR backlog calculation.
    3. Developing quality and cost-effective condition assessments.
    4. The new reporting requirements.

One commenter requested that FTA engage in a comprehensive asset 
management technical assistance effort as soon as the final rule has 
been published.
FTA'S RESPONSE: Technical Assistance Needs
    FTA appreciates the recommendations for technical assistance tools. 
FTA's suite of TAM technical assistance tools will include one or more 
TAM plan templates, guidance or training for TERM, and guidance for 
performance measurement. Currently, the 2012 TAM Guide is FTA's primary 
guidance on transit asset management. It combines previous research, 
case studies, lessons learned from other FTA initiatives, and best 
practices.
COMMENTS: Additional Comments
    A couple of commenters said FTA should ensure consistency between 
FTA and FHWA transportation asset management rulemakings.
    One commenter said FTA should clarify to what degree the new asset 
management framework is potentially displacing local agency decision-
making. The commenter said it has been a long-standing understanding 
that FTA will not substitute its judgment for that of its grantees, and 
final decisions on the allocation of both Federal and local funds 
should still rest with the implementing agency, not an entity operating 
at the national level.
    Another commenter urged FTA to consider and request comments on 
adding governance metrics to the TAM rule that would permit external 
stakeholders to understand the challenges faced by individual agencies 
in balancing their capital and operating needs, and to identify 
agencies exerting insufficient effort in prioritizing SGR projects. For 
example, the commenter suggested that the following metrics might be 
appropriate: Available capital funding per transit asset; available 
capital funding per cumulative annual passenger trip; and proportion of 
capital budget appropriate to SGR projects.
    An individual commenter asserted that the proposed rule's failure 
to address public transportation's human capital assets is a missed 
opportunity to address the high risks to both safety and performance 
that have resulted from the sector's failure to take a more strategic 
and systematic approach to acquiring, developing, and retaining 
individuals with needed skills. This commenter urged FTA to incorporate 
into the National TAM System requirements that would ensure the 
collection and reporting of basic workforce data, and provided specific 
suggestions of human resources performance data to collect.
FTA'S RESPONSE: Additional Comments
    The FHWA and FTA asset management statutes are not identical; 
therefore the requirements under each agency's asset management rule 
will be different. However, the purpose of both rulemakings is to 
improve the condition of the Nation's transportation assets. Another 
rulemaking effort, the coordinated FHWA and FTA Metropolitan and 
Statewide and Non-Metropolitan Transportation Planning, will implement 
a performance-based approach to planning and programming (PBPP). This 
final rule supports the PBPP framework by requiring transit providers 
to share their TAM plans with their State and MPO planning partners and 
to coordinate with States and MPOs in the selection of State and MPO 
targets.
    The requirements of the final rule do not displace local agency 
decision-making. The requirements of the final rule do not limit a 
transit provider from implementing additional TAM provisions, 
activities, and metrics. The final rule's information gathering, 
analysis, and prioritization requirements are intended to inform the 
local decision-making process.
    FTA recognizes that human capital assets are an essential component 
of implementing a TAM plan; however they do not meet the statutory 
definition of ``capital asset.'' In the NPRM, FTA proposed that a tier 
I provider develop a nine element TAM plan, and has maintained this 
requirement in the final rule. One of the nine elements was a 
specification of resources, including personnel needed to develop and 
implement the TAM plan.

C. Section by Section NPRM Comments and FTA's Responses

    This section provides summarized comments by NPRM section, FTA's 
responses, and changes made in the final rule.
Section 625.1 Purpose
    This section proposed that the purpose of these regulations is to 
carry out the mandate of 49 U.S.C. 5326 for transit asset management.
COMMENTS:
    A few commenters expressed support for the Federal objectives for 
the National TAM System laid out in proposed Sec.  625.1. A transit 
operator asked if FTA has considered using the ISO 55000 framework to 
accomplish this mandate.
FTA'S RESPONSE:
    Prior to MAP-21, FTA began researching transit asset management and 
developing TAM policies and best practices for the transit industry. 
FTA reviewed a number of resources prior to developing the NPRM, 
including the international asset management standard established by 
ISO. FTA believes that this final rule sets forth a flexible approach 
to implementing transit asset management that is consistent with 
current best practices.
FINAL RULE:
    FTA is including this section in the final rule without change.
Section 625.3 Applicability
    This section proposed that the regulations would apply to all 
transit providers that: (1) Are recipients or subrecipients of Federal 
financial assistance under 49 U.S.C. Chapter 53; and (2) own, operate, 
or manage transit capital assets.
COMMENTS: Applicability--Assets Maintained, Owned, or Operated by a 
Third-Party
    Many public comments addressed the applicability of the rule to 
contractor assets. Numerous local transit operators, several State 
DOTs, and other commenters asserted that a third party contractor's 
assets should not be required to be included in a provider's TAM plan. 
Some of these commenters suggested that this is a matter of contract 
administration and a transit provider should determine how they will 
approach the issue of the condition of a contractor's assets based on 
the nature of each individual contract. A private company in supply of 
transit assets recommended that assets other than rolling stock that 
are fully owned

[[Page 48898]]

by a private contractor (e.g., tools and diagnostic equipment) should 
not be incorporated into TAM asset inventory. In contrast, one State 
DOT expressed support for the applicability of TAM performance targets 
to a transit provider's leased assets and assets operated under a 
service contract.
    Two transit operators and an MPO pointed out that in some instances 
a contractor may be providing services to several transit agencies 
using the same assets or multiple transit agencies may share an 
intermodal terminal, and it is unclear which agency would be 
responsible for collecting condition information and reporting of those 
shared assets. For this reason, the MPO commented that overlapping 
reporting of the same assets by different agencies would cause 
reconciliation issues, unnecessary data collection costs, and 
unnecessary coordination issues to ensure consistency in asset 
representation. Also relating to shared assets, a transit operator 
expressed concern that the transit provider has no control over the 
maintenance schedule; repair or replacement of contractor owned assets 
and suggested that each transit provider should be allowed to determine 
which assets to include in its TAM plan. For similar reasons, two 
transit operators and a business association recommended that capital 
assets outside a transit operator's control--such as passenger stations 
maintained by station cities, track owned and maintained by freight 
railroads used under shared-use agreements, or a building for which a 
transit agency is leasing a portion--should not be included in the 
agency's TAM plan.
    Some commenters asked whether assets owned by a third party 
contractor and used in the provision of public transportation service 
(e.g., vehicles owned by third party paratransit provider, maintenance 
facilities where contractor-owned buses are stored and maintained) must 
be included in a recipient's asset inventory. A transit operator asked 
if space it leases for its administrative offices needs to be included 
in its TAM asset inventory. Two transit operators asked if taxicabs and 
other vehicles occasionally used to provide paratransit service 
pursuant to the Americans with Disabilities Act (ADA) should be 
included in the TAM asset inventory. If so, one of these commenters 
requested that FTA provide an explanation in the final rule as to how 
an agency would decide which vehicles to include. Commenting that a 
transit provider has little control over which assets are used by a 
third-party provider, a transit operator asked if rolling stock that is 
used intermittently through third-party providers would be included in 
the TAM plan.
    A transit operator expressed concern that condition assessments for 
assets maintained by its contractual partners may be considered 
proprietary information that the private carriers are not willing to 
share due to liability issues. A local transit provider asked how FTA 
would suggest an agency impose and monitor more stringent safety/SGR 
investment standards to third party providers that have a service 
contract for asset maintenance and/or operation. Several State DOTs and 
another commenter recommended that leased assets that otherwise would 
be required to be included in a TAM plan should not be included unless 
the lease is for a minimum of 5 years.
    A State DOT asked whether a non-profit agency providing specialized 
transportation service to complement a subrecipient's service would 
need to include all of its vehicles in a TAM plan or only those 
vehicles that is leases from the subrecipient.
    If the assets of a contracted service provider do fall under a 
transit agency's asset inventory for purposes of TAM plan requirements, 
a transit operator recommended that FTA allow for a transition period 
for contracted services in which existing contracts can be modified or 
new contracts can be bid and awarded to accommodate the new 
requirements. This commenter also expressed concern that the 
introduction of TAM requirements into service contracts would increase 
contract costs without meaningfully improved service, and in some cases 
could lead to service reductions as a result of contracted cost 
increases.
    An MPO suggested that, if FTA is interested in getting the full 
picture of an agency, it could require reporting of the shared, leased, 
and contracted assets that are directly used by the agency, but at a 
very basic level and that the non-owners should be exempted from the 
performance metrics for these assets. As an alternative to reporting 
leased and contracted assets, this commenter suggested that FTA could 
request that agencies meet the performance requirements of leased and 
contracted assets by including language regarding compliance with FTA's 
SGR performance standards in the agency's contracts with vendors.
    A transit operator commented that a tier I provider should not be 
required to include assets used and maintained by other tier I 
providers as part of its TAM asset inventory. An MPO requested guidance 
from FTA on how and which TAM plan(s) should incorporate capital assets 
that are collectively purchased and collectively maintained by a 
regional authority.
FTA'S RESPONSE: Applicability--Assets Maintained, Owned, or Operated by 
a Third-Party
    The applicability of the requirements proposed in the NPRM was 
consistent with FTA's analysis of the SGR backlog and with current NTD 
reporting requirements. The Nation's $85.9 billion SGR backlog is a 
value derived from FTA's TERM, which is based on a comprehensive 
assessment of the Nation's transit capital stock reported to the NTD, 
including those assets that are owned by third parties.
    FTA agrees with commenters who suggested that requiring the 
inclusion of contracted assets in a TAM plan may be difficult to 
implement and may prove to be overly burdensome and costly. However, 
the agency continues to believe that a TAM plan should, to a certain 
extent, take into account these types of assets. Thus, in this final 
rule, FTA has attempted to strike a balance between these concerns.
    This final rule requires that a transit provider include in its 
asset inventory all equipment, rolling stock, facilities, and 
infrastructure that it owns. A provider may exclude from its asset 
inventory any equipment with an acquisition value of less than $50,000, 
unless the equipment asset is a service vehicle. A transit provider 
must only include in its asset inventory third-party owned, or jointly-
procured rolling stock, passenger stations, administrative and 
exclusive-use maintenance facilities, and guideway infrastructure 
assets for which it has direct capital responsibility.
    Further, the final rule only requires a transit provider to conduct 
condition assessments, establish performance targets, and include in 
its investment prioritization, those inventoried assets for which it 
has direct capital responsibility.\8\ A transit provider has direct 
capital responsibility for any asset that it owns. A transit provider 
also has direct capital responsibility for any asset that is currently 
included in its program of capital projects or an asset that the 
provider can reasonably anticipate it will include in its program of 
capital projects during the TAM plan horizon period. Once an asset 
becomes a part of a transit provider's capital program, the transit 
provider must comply with the final rule's condition assessment, target 
setting (if applicable), and investment prioritization requirements. 
This

[[Page 48899]]

reduction of scope allows a transit provider to obtain a broad view of 
the condition of the assets within its system, but limits the majority 
of the burden of associated with other activities that may have limited 
impact due to the provider not having direct capital responsibility.
---------------------------------------------------------------------------

    \8\ See Appendix C for example tables to illustrate the 
relationship amongst TAM plan elements.
---------------------------------------------------------------------------

    FTA does not believe that it will be overly burdensome for a 
transit provider to include third-party owned vehicles, facilities, and 
guideway infrastructure in its asset inventory. Transit providers are 
already required to include detailed information on third-party 
vehicles and third-party guideway infrastructure in the NTD. FTA 
believes expanding asset inventories to include third-party passenger 
facilities and exclusive use maintenance facilities is important, as it 
will provide valuable information on the total number, size, and scope 
of facilities in the transit industry. The inclusion of a broad set of 
assets into the inventory is intended to provide funding decision 
makers with a full picture of their system and an opportunity to think 
proactively and long term about investment priorities for state of good 
repair.
FINAL RULE:
    FTA is including this section in the final rule without substantive 
change. However, FTA is revising Sec.  625.25(b)(1) to clarify which 
assets used in the provision of public transportation must be included 
in an asset inventory and to require condition assessments for those 
asset that a transit provider has direct capital responsibility for. 
FTA will issue guidance to aid transit providers in the implementation 
of the requirements of this final rule.
COMMENTS: Applicability--Other Comments
    Some public comment submissions included other comments relating to 
the scope or applicability of the proposed rule. A State DOT, a 
business association, and a tribal government suggested that the TAM 
rule should apply only to capital assets purchased (or eligible to be 
funded) with FTA funding. State DOTs and other commenters said TAM 
plans for providers that only receive Section 5310 funds should only be 
required to include ``FTA-funded'' assets, even if FTA does not apply 
this definition to all TAM plans. An MPO, a State DOT, and a State 
transit agency said Section 5310 recipients should be excluded if they 
do not own vehicles funded through FTA sources. Two State DOTs and a 
transit operator suggested that all Section 5310 subrecipients that are 
not also Section 5307 or 5311 subrecipients should be excluded from the 
FTA TAM requirements. Three State DOTs, an MPO, and other commenters 
recommended that 5310 requirements for TAM reporting should be scaled 
back to a level that is reasonable and appropriate, reasoning that most 
5310 subrecipients do not have the resources to implement a TAM or 
report to the NTD.
    A professional association and a transit operator requested that 
FTA provide an exemption from the FTA TAM requirements to 
transportation providers that have fewer than 30 or 31 vehicles 
operating during peak service, which the commenters said would include 
most Section 5310 agencies. The transit operator stated that 
subrecipients awarded Section 5310 program funds are predominantly very 
small human service agencies including disability, aging, and health 
service providers, and asserted that human services agencies performing 
as transit providers are vastly different than transportation agencies 
in size, function, investment, and target populations served. Further, 
the professional association stated that the 30-vehicle threshold is 
consistent with the definition used in NTD reporting requirements to 
differentiate small from large agencies.
    Similarly, a State DOT urged FTA to reduce the requirements for 
rural transit systems that have a minimal number of assets, including 
Section 5310 and Section 5311 subrecipients. An MPO recommended the 
creation of a tier III for Section 5311 subrecipients to ensure that 
the Group plans are manageable in scope and size. Two State DOTs and 
other commenters suggested that Section 5310 subrecipients should be 
exempt from the rule; however, if they are included, then these 
commenters recommended that Section 5310 subrecipients having less than 
ten vehicles should be exempt. Another State DOT suggested that any 
transit agency with fewer than ten vehicles should be exempt from TAM 
plan requirements. One commenter stated that the inclusion of Section 
5310 vehicles was confusing because they have a much smaller useful 
life and operate in a different area than public transportation 
vehicles. This commenter was concerned that including these vehicles 
would dilute the SGR for the program as a whole.
    An association that serves as a liaison between state departments 
of transportation and the Federal government said that 5310 
subrecipients will find the burden of accepting FTA funds to 
significantly outweigh the benefits to their organization. According to 
this association:

    ``State DOTs will find it increasingly difficult to find 
effective subrecipients with the final result being loss of 
essential transportation services. Seniors and persons with 
disabilities will lose their only means for transportation to the 
grocery store, friends and family, and medical services. Section 
5310 is an important aspect of the Rides to Wellness Initiative. One 
of the goals of the Coordinating Council on Access and Mobility is 
to ``Streamline federal rules and regulations that may impede the 
coordinated delivery of services, and improve the efficiency of 
services using existing resources.'' However, without scaling back 
the TAM plan requirements for Section 5310 subrecipients, FTA is 
adding barriers that may be impossible to overcome.''

    Other commenters also stated that the cost of complying with the 
TAM requirements may result in Section 5310 entities discontinuing the 
services they provide.
    A transit operator recommended that tier II providers that can 
demonstrate that they have effective existing asset management systems 
should be eligible for waivers from the TAM plan requirement. Several 
State DOTs and other commenters said subrecipients that receive solely 
Section 5311(f) funds should be excluded from the TAM planning process 
because intercity bus service (Section 5311(f)) is expressly excluded 
as a public transportation provider under the MAP-21 definition of 
public transportation in 49 U.S.C. 5302. If the final rule does not 
exempt the Section 5311(f) program in its entirety, one State DOT 
suggested that the rule should clarify that for the Section 5311(f) 
program, each State DOT may limit its TAM plan to just those assets 
deployed in their State and the State DOT has directly funded with 
Section 5311(f) funds, given that many States contract with national or 
regional private companies for the program.
    An anonymous commenter asked if subrecipients of 5309 grant-funded 
vehicles that serve their clients and do not provide public transit 
service must be included in the TAM plan.
    Two State DOTs said assessing the condition of and making an 
investment plan for each capital asset unit will place too large of a 
burden on subrecipients since the unit or units in question might 
represent a very small portion of the total dollar value of the 
provider's assets. Another State DOT suggested that (1) the rule should 
only focus on those assets that require long-term financial planning 
windows, (2) leased assets should not be included in the scope of the 
rule unless the lease is for a minimum of 5 years, and (3) the rule 
should expressly exclude office

[[Page 48900]]

space or other administrative support facilities or equipment.
    A representative of tribal governments commented that it interprets 
the proposal as covering every Indian tribe that receives Chapter 53 
transit funding, regardless of how small such Federal assistance may be 
or how few capital assets a tribal transit system may possess. A tribal 
government suggested that FTA consider a tier III transit provider 
classification for Indian tribal governments that would mandate much 
simpler planning and reporting requirements. This commenter reasoned 
that because Indian tribes own and operate ten vehicles or less at any 
given point in time, the man-hours burden to comply with the TAM rule 
cannot be justified for transit systems of this size and scale.
    A State DOT recommended that FTA should develop a four tiered 
approach similar to current Federal regulations, with tier requirements 
based on population (i.e., less than 50,000, 50,000-200,000, and 
greater than 200,000), with a fourth tier for specialized services. 
This commenter reasoned that the proposed two-tier framework based on a 
threshold of peak revenue vehicles would not adequately segregate 
systems with varying sizes and asset management capabilities. A trade 
association recommended that FTA revise its proposed TAM rule to 
incorporate scalable mechanisms for TAM plans appropriate to the size 
and scope of each agency.
    Two commenters suggested that FTA change proposed Sec.  625.3 
language to read: ``This part applies to all recipients or 
subrecipients of Federal financial assistance under 49 U.S.C. Chapter 
53 that own, operate, or manage capital assets used in the provision of 
all modes of public transportation.''
    A State DOT recommended that FTA provide in Sec.  625.3 a more 
comprehensive list of all FTA recipient and subrecipient types that 
would be subject to the FTA TAM regulation.
    An MPO commented that the requirements for non-public transit 
provider recipients to comply with the TAM rule potentially would 
create an undue burden for FTA and the funding recipients and the cost 
for these projects and services to comply likely outweighs their 
impacts to the transit SGR for most regions. For this reason, the 
commenter recommended that FTA should either exempt recipients that 
receive only Section 5307 or Section 5310 funds from the TAM plan 
requirements, or further reduce the requirements for those providers.
    Asserting that TAM requirements should be different for bus-only 
systems, a professional association suggested that FTA consider using 
the language and concepts developed in the voluntary bus safety program 
developed from the 2003 Memorandum of Understanding signed by FTA, 
American Association of State Highway and Transportation Officials 
(AASHTO), the American Public Transportation Association (APTA), and 
the Community Transportation Association of America (CTAA).
FTA'S RESPONSE: Applicability--Other Comments
    In order to address the SGR backlog in a meaningful way, FTA 
believes that a TAM plan must account for both those assets acquired 
with FTA funding and those that were not. In many cases, it is neither 
feasible nor does it make sense to distinguish between assets that were 
acquired with FTA funds and those that were not. Indeed, many of the 
legacy rail assets in the state of good repair backlog that are most in 
need of replacement were procured decades ago, prior to the 
establishment of a Federal financial assistance program for public 
transportation. The source of funds used to acquire the asset is of no 
consequence when making a determination regarding whether or not an 
asset is in a state of good repair and whether or not the asset needs 
to be included in the investment prioritization. FTA believes that 
accounting for all assets will provide a transit provider with 
important information that should be used to make more informed 
investment decisions for state of good repair.
    FTA believes that this final rule is sufficiently scalable and 
flexible. FTA does not agree that it should provide waivers for tier I 
providers who already have effective transit asset management systems. 
The rule does not require a transit provider to abandon existing 
effective practices. Instead, the requirements of the rule can be 
integrated into and complement existing practices. Moreover, FTA does 
not agree that some or all tier II providers should be exempted from 
the TAM requirements. Tier II providers are only required to develop a 
four element TAM plan. A tier II plan must include only (1) an asset 
inventory, (2) condition assessments, (3) a decision support tool, and 
(4) a prioritization of investments for state of good repair.\9\ A tier 
II provider also is required to set performance targets and report to 
the NTD. The fewer assets a provider has, the fewer assets would be 
included in an asset inventory, and the less time and effort would be 
required to comply with the other requirements.
---------------------------------------------------------------------------

    \9\ By contrast, a tier I plan must include these four elements 
and also these five additional elements: A TAM and SGR policy; a TAM 
plan implementation strategy; a description of key TAM activities 
that the provider intends to engage in over the TAM plan horizon 
period; a summary or list of the resources, including personnel, 
that the provider needs to develop and carry out the TAM plan; and 
an outline of how the provider will monitor, update, and evaluate, 
as needed, its TAM plan and related business practices, to ensure 
the continuous improvement of its TAM practices.
---------------------------------------------------------------------------

    In addition to the reduced requirements, tier II providers also may 
be eligible to participate in a group TAM plan that would be developed 
by a sponsor. The sponsor would be responsible for developing the TAM 
plan, setting targets, and reporting to the NTD on behalf of the group 
TAM plan participants. FTA believes that the two-tiered approach and 
group TAM plan option significantly reduce the burden of the TAM 
requirements on smaller, less sophisticated transit providers.
    To the commenter concerned that inclusion of 5310 would ``dilute 
the SGR of the program as a whole,'' under the final rule, the 
performance measure for vehicles is based on the ULB. A transit 
provider may set a ULB in consideration of the type of vehicle, type of 
service, and operating environment. The ULB option allows for a more 
accurate assessment of the useful lives of vehicles based on 
operational realities.
    This final rule only applies to recipients and subrecipients of 
chapter 53 funds who own, operate, or manage public transportation 
capital assets used in the provision of public transportation. The 
final rule does not apply to recipients of planning or research grants 
and cooperative agreements that do not provide public transportation. 
The term ``public transportation'' is defined at 49 U.S.C. 5302(14) and 
means regular, continuing shared-ride surface transportation services 
that are open to the general public or open to a segment of the general 
public defined by age, disability, or low income; and does not 
include--
    1. intercity passenger rail transportation provided by the entity 
described in chapter 243 (or a successor to such entity) of Title 49,
    2. intercity bus service,
    3. charter bus service,
    4. school bus service,
    5. sightseeing service,
    6. courtesy shuttle service for patrons of one or more specific 
establishments, or
    7. intra-terminal or intra-facility shuttle services.
    Public transportation does not include intercity bus transportation 
that may be

[[Page 48901]]

eligible for financial assistance under 49 U.S.C. 5311(f). In addition, 
public transportation does not include service that is closed to the 
general public and only available to a particular clientele. For 
example, a subrecipient under the formula program for elderly persons 
and persons with disabilities (49 U.S.C. 5310) that operates service 
that is open to a segment of the general public (e.g. elderly persons 
or persons with disabilities) must comply with this final rule. 
However, a nonprofit subrecipient under the section 5310 program that 
operates closed-door service (e.g. for members of a specific senior 
center or for participants in a specific sheltered workshop program 
only), is not a provider of public transportation and is not subject to 
the final rule.
    To clarify, recipients and subrecipients of 49 U.S.C. 5310 program 
funds that do not operate public transportation are not subject to this 
rule. FTA estimates that this rule would apply to approximately 20% of 
all recipients and subrecipients of section 5310 funds. Those 5310 
providers that are subject to the rule are eligible to participate in a 
group plan developed by a TAM plan sponsor which significantly reduces 
the impact of this rule to 5310 providers.. FTA does not believe the 
TAM provisions in this rule will result in a reduction or 
discontinuation of 5310 services, nor does FTA believe that State DOTs 
will find it difficult to find effective subrecipients to participate 
in their 5310 programs as a result of the rule.
FINAL RULE:
    FTA is including this section in the final rule without substantive 
change. However, FTA has revised Sec.  625.25(b)(1) to clarify which 
assets used in providing public transportation, including but not 
limited to all revenue vehicles, all passenger stations, all exclusive 
use maintenance facilities, all non-revenue service vehicles regardless 
of value, and owned equipment over $50,000 in acquisition value, must 
be included in an asset inventory and Sec.  625.25(b)(2) to require 
condition assessments of only those asset that a transit provider has 
direct capital responsibility for.
Section 625.5 Definitions
    This section proposed definitions for terms that would be 
applicable to the proposed part. Some of the terms were familiar to the 
transit industry, but were defined slightly differently for purposes of 
the NPRM. This final rule includes a number of non-substantive changes 
to the definitions proposed in the NPRM to provide further clarity 
regarding the meaning of terms.
COMMENTS: Definition of ``Accountable Executive''
    Several State DOTs and other commenters recommended that FTA should 
clarify the definition of Accountable Executive by adding, ``An 
official of a State may not be considered to be an Accountable 
Executive unless the State is a transit provider and, if so, only with 
respect to the State's activities as a transit provider.'' One State 
DOT requested that FTA redefine ``Accountable Executive'' for State 
DOTs or subrecipients who are in a group plan and state that the 
executive does not necessarily have the full range of responsibilities 
as defined.
    Three commenters suggested that the definition should take into 
consideration that some transit agencies may have an organizational 
structure where the listed responsibilities are divided among more than 
one executive. For such agencies, these commenters suggested that the 
agency should be allowed to identify the Accountable Executives and 
their respective roles as part of the TAM plan. For similar reasons, 
rather than defining the Accountable Executive, a transit operator 
suggested that FTA inform State and local governing bodies that whoever 
is designated as the Accountable Executive must be granted authority to 
implement the adopted capital and TAM plan. Further, this commenter 
proposed that FTA add a provision that states no liability rests on the 
Accountable Executive personally.
    An industry association commented that it may be overly burdensome 
and cause an overlap of job duties to have one Accountable Executive 
that oversees all safety and asset management requirements in planning, 
operations, maintenance, and other departments. A transit agency 
recommended that the Accountable Executive for asset management 
decisions and for the certification of agency TAM plans, be enabled to 
be separate from the decision-maker on safety because in many agencies 
the safety management decision-maker and the asset management decision-
maker are different people, reporting to the chief executive.
    Two MPOs stated that, in the case of the small, urbanized areas, it 
is unclear how the Accountable Executive at the local level can be 
responsible for approving the TAM plan if it is developed, approved, 
and implemented by the State.
    A transit operator asked FTA to clarify whether the Accountable 
Executive may be the Chief Executive Officer (CEO) or General Manager 
(GM). Stating that the proposed definition of Accountable Executive is 
not consistent with the SMS rule that was provided earlier this year, 
one commenter suggested that if the intent is to point directly at the 
GM, CEO, President, or highest ranking executive, the definition should 
be shortened to that statement.
FTA'S RESPONSE: Definition of ``Accountable Executive''
    FTA agrees with commenters who suggested that a group TAM plan 
sponsor is not the Accountable Executive for each participating transit 
provider. However, by participating in a group TAM plan, an individual 
transit provider's Accountable Executive may be required to defer to 
the decisions of the sponsor regarding prioritization of investments. 
Nonetheless, each transit provider's Accountable Executive is 
ultimately responsible for implementing TAM at their agency.
    An Accountable Executive should be a transit provider's chief 
executive; this person is often the CEO or GM. FTA understands that at 
many smaller transit providers, roles and responsibilities are more 
fluid. However, FTA does believe that, even in circumstances where 
responsibilities are either shared or delegated, there must be one 
primary decision-maker who is ultimately responsible for both transit 
asset management and safety. It is a basic management tenet that 
accountabilities flow top-down. Therefore, as a management system, 
transit asset management requires that accountability reside with an 
operator's top executive.
FINAL RULE:
    FTA is including the definition in the final rule without 
substantive change.
COMMENTS: Definitions of ``Asset Category'' and ``Asset Class''
    A transit operator commented that the grantee should have 
flexibility to establish classes that match its existing planning and/
or budgeting systems. This commenter recommended that Appendix A should 
be clearly labeled as not being definitive.
    Three commenters recommended that FTA align the proposed asset 
categories with FTA's TERM/TERM Lite programs. A transit operator 
expressed support for FTA's approach to asset categories stating that 
this flexible approach would allow the classes to mirror each 
provider's capital program more effectively.

[[Page 48902]]

FTA'S RESPONSE: Definitions of ``Asset Category'' and ``Asset Class''
    FTA proposed simple, flexible definitions for the terms ``asset 
category'' and ``asset class.'' The proposed definitions are compatible 
with most existing planning and budgetary systems, including those used 
by TERM-Lite. The asset class examples listed in appendix A do not 
represent all possible classes of assets, nor do they represent the 
only asset categories that may be used. For example, TERM-Lite uses a 
separate asset category for systems, whereas this rule includes systems 
as part of the infrastructure category. Nonetheless, the two 
definitions are compatible, and can be cross-referenced with each 
other.
    FTA has labeled Appendix A as an example, as suggested by a 
commenter. Each transit provider may define its own asset classes 
within an asset category, provided that the transit provider is able to 
meet the performance measure target-setting and NTD reporting 
requirements of the final rule.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definition of ``Asset Inventory''
    A transit provider recommended that the regulation and any guidance 
should specify that the term ``asset inventory'' refers to the required 
biennial inventory and that references to the inventory are comparable 
wherever it is required. Further, this commenter suggested that FTA 
consider adopting the FHWA Highway Economic Requirements System (HERS) 
approach, which is based on statistical sampling, and which the 
commenter asserted would improve data quality and reduce data 
collection burden.
FTA'S RESPONSE: Definition of ``Asset Inventory''
    FTA proposed a simple definition for the term ``asset inventory.'' 
A transit provider may develop an asset inventory to meet the 
requirements of the final rule by using a number of sources, including 
its existing biennial inventory. FTA did not set forth a sampling 
method for a transit provider to determine which assets it should 
include in its asset inventory. This final rule requires that a transit 
provider's asset inventory include all assets used in providing public 
transportation. However, a transit provider may satisfy the requirement 
for condition assessments by conducting a sampling of assets within an 
asset class, or use another method of their choosing.
FINAL RULE:
    FTA is including the definition in the final rule without change. 
However, FTA notes that Sec.  625.25(b)(1) has been modified to clarify 
the assets this final rule requires to be included in the TAM plan 
asset inventory.
COMMENTS: Definition of ``Capital Asset''
    Several transit operators and State DOTs requested a clearly 
defined monetary threshold for ``capital assets.'' Some commenters that 
recommended a minimal monetary threshold reasoned that it would allow 
for the collection of only useful data and eliminate the tracking of 
items of minimal value that are not critical to the provision of public 
transportation (such as trash dumpsters, office desks, copiers, fax 
machines, floor jacks, desk calculators, office chairs, coffee pots, 
clocks, battery chargers, etc.), which would impose a substantial 
burden on transit agencies. A transit operator urged FTA to decide on a 
dollar threshold based on evidence with some likely projection of 
outcome (e.g., number of assets and value of the data from the assets).
    Some commenters recommended specific monetary thresholds, including 
$100,000, $50,000, $25,000, $10,000, and $5,000.
    Other commenters suggested other criteria in addition to monetary 
thresholds for what should be considered an asset. For example, three 
State DOTs and other commenters recommended that a capital asset must 
meet all of the following criteria to be required as part of TAM plan 
asset inventory: (a) FTA-funded, including assets likely to be 
maintained, replaced, or repaired with FTA funds; (b) an initial cost 
of at least $50,000 (as determined by the provider) or any rolling 
stock; (c) a ULB of at least 5 years or greater. Two transit operators 
also suggested that only federally funded assets should be considered 
capital assets for purposes of the TAM plans. In contrast, one State 
DOT expressed support for the TAM plan covering all assets in the 
provision of public transportation and not just the ones purchased with 
Federal funding, reasoning that it would allow for more consistency in 
the TAM development, implementation, and review process.
    A business association agreed with criteria (b) and (c) of the 
above suggested capital asset definition. This commenter and an MPO 
also requested that FTA specify the assets to be included to avoid 
inconsistencies during reviews. For example, these commenters asked 
whether spare parts with a new bus should be included. These commenters 
also recommended that FTA provide a phase-in for asset classes that are 
lower priority, such as equipment with a value of less than $50,000.
    A State DOT agreed with criteria (a) of the above suggested capital 
asset definition, but for the monetary threshold (criteria (b)), it 
recommend a lower value threshold of $20,000. Similarly, to reduce the 
cost burden to transit providers, two MPOs and three other commenters 
recommended that FTA limit assets reported in the TAM plan to assets 
with a value of at least $50,000 and a ULB of five years or greater. A 
State DOT agreed with these thresholds for non-rolling stock 
transportation assets, but suggested that the scope of assets included 
in a TAM plan should include all rolling stock.
    A joint submission from regional transit organizations said FTA 
should define a cost/expected life threshold of an asset to be tracked 
and assessed. For purposes of FTA's TAM program, assets thresholds 
should be at higher levels (i.e., over $50,000 and more than a 3-year 
life) or established risk vulnerabilities. A transit operator suggested 
further defining what is considered a capital asset for purposes of the 
National TAM System by providing thresholds of a minimum cost of 
$50,000 and a useful life of 1 year.
    A professional association, a State DOT, and transit providers 
requested that FTA permit States and direct recipients to use their own 
definition of capital asset or existing industry standard best 
practices (e.g., ISO 12224 standards). Some transit operators 
recommended that each transit operator should be allowed to determine 
which assets to include in its TAM plan (e.g., only assets deemed 
critical to a transit provider's operation or service/risk model), with 
one commenter expressing concern about double counting of shared 
assets. Although commenting that the definition of asset is unique to 
each agency, an MPO requested that FTA issue broad guidance or a set of 
parameters that would clarify what FTA considers an asset.
    A transit operator made the following comments: (1) It is important 
that asset definitions are understood uniformly across the departments 
of a single organization, and across transit agencies, nationwide, (2) 
FTA should refrain from expanding the definition of capital asset 
beyond the level of detail prescribed by 49 U.S.C. 5326, and (3) the 
regulatory definition should be narrowed, rather than broadened, to 
provide clarification. The commenter also said FTA should update its 
C5010.1

[[Page 48903]]

Grants Management and C5300.1 State of Good Repair Grants Program 
guidance documents to reflect the definitions established by this 
rulemaking.
    In contrast, expressing concern that the term ``minimum level of 
granularity'' could be construed to include assets whose value is so 
minimal as to make the maintenance of the asset inventory unreasonable, 
a State public transportation system urged FTA to instead define and 
construe capital assets more broadly. Similarly, a transit agency 
recommended that FTA not restrict agencies to focus only on ``capital 
assets'' and simply use the term ``assets.'' Two commenters suggested 
that FTA revise the definition to reference an asset ``used in any mode 
of public transportation.''
    A transit operator suggested that capital assets should, at a 
minimum, include items that most agencies presently track as an asset 
due to their cost and impact on the overall asset's condition (e.g., 
bus engines, bus transmission, bus axles, rail HVAC units, and rail 
trucks). Another transit operator also expressed concern with the 
proposed definition of capital asset, commenting that systems within 
facilities or portions of infrastructure may be more realistically 
considered capital assets.
FTA'S RESPONSE: Definition of ``Capital Asset''
    FTA proposed a broad definition of ``capital asset''. The 
definition encompassed all capital assets that may be used in the 
provision of public transportation service. Commenters who suggested 
that FTA include a monetary threshold in the definition of the term 
capital asset should understand that there is a distinction between 
what a capital asset is and whether or not it must be included in an 
asset inventory. FTA clarifies that the definition of ``capital asset'' 
does not include supplies (such as trash dumpsters, office desks, 
copiers, fax machines, floor jacks, desk calculators, office chairs, 
coffee pots, clocks, battery chargers, etc.); implementation guidelines 
will provide specific alignment with other FTA program guidance, for 
example, FTA's Grant Management Requirements Circular 5010.1.D. FTA has 
revised the final rule to clarify which capital assets a transit 
provider must include in its asset inventory.
    FTA considered including a monetary threshold in the definition of 
a capital asset, and alternatively, a monetary threshold for including 
a capital asset in the TAM plan, but has decided against this approach. 
FTA wanted to propose a flexible and scalable approach to TAM that 
could apply to all different types of transit agencies. FTA believes 
the proposed definition is consistent with a scalable and flexible 
approach that can accommodate many existing capital planning practices. 
A monetary threshold could work against that interest because it would 
establish a one size fits all fiscal indicator, which may not have the 
same significance for every transit provider. Further, in order to stay 
current, FTA would need to regularly adjust a monetary threshold for 
inflation over time.
    However, FTA has identified a monetary threshold for the equipment 
category to provide structure and consistency to the types of assets 
required in this category. The equipment category could be misapplied 
depending on the size of a transit provider's portfolio, as some 
transit providers identify equipment to a level of specificity beyond 
usefulness in a TAM plan. FTA has determined that all non-revenue 
service vehicles regardless of value and any owned equipment over 
$50,000 in acquisition value must be included in a TAM plan asset 
inventory. These constraints maintain the value of including equipment 
assets in the TAM plan without introducing undue burden on transit 
providers to include items of minimal value.
    Historically, FTA has not required tracking of Federally-funded 
assets below $5,000 in value. This rule does not change that. Transit 
providers will not be required to include in their asset inventories 
any assets, regardless of funding source, that fall below the $5,000 
threshold, or whatever subsequent threshold is established by FTA 
Circular 5010 or its successors.
    In addition, FTA does not agree with the comments that recommended 
FTA phase-in requirements for assets. Each transit provider will 
determine the appropriate asset hierarchy and the level of detail based 
on the level of detail a transit provider already captures in their 
program of capital plans. The practice of transit asset management 
requires that a transit provider have a robust and complete assessment 
and understating of all of the assets within its system. To require a 
transit provider to identify ``priority'' assets would undervalue this 
fundamental aspect of TAM. Moreover, only when a transit provider has a 
complete understanding of the condition of the assets within its system 
is it able to create meaningful investment prioritization to improve or 
maintain a state of good repair.
    FTA believes that third-party assets are mission-critical to the 
provision of public transportation service, and need to be accounted 
for in an asset inventory in order to have a clear picture of which 
assets are essential to the transit provider in delivering service. In 
this final rule, a transit provider must incorporate into its inventory 
only those capital assets that either it owns or specific asset types 
owned by a third party. Specifically, transit provider is not required 
to include in its asset inventory equipment that is owned by a third-
party or third-party owned shared-use maintenance facilities. For 
example, a transit provider that uses a commercial, third-party 
maintenance facility, such as a national chain oil change company, 
attached to a commercial gas station does not need to include this 
asset in its inventory. However, a transit provider must only comply 
with the requirements in the rule for conditions assessments, targets, 
and investment prioritization for those assets for which the provider 
has direct capital responsibility, including third-party owned assets.
    This final rule does not prescribe a level of detail for the asset 
inventory hierarchy. Instead, the final rule requires that a transit 
provider disaggregate divisible capital assets in a manner that is 
consistent with how the assets are identified in the transit provider's 
program of capital projects. For example, a project for a facility, 
which is comprised of multiple components, could be programmed as a 
project for an HVAC system or as a project for condenser and duct work; 
in either case, if the provider's program of capital projects itemizes 
the project as HVAC, then the provider may report HVAC in the TAM asset 
inventory. If a capital asset is of such low value that it would not be 
included in a transit provider's program of capital projects, then that 
asset need not be identified in the asset inventory required under this 
final rule.
FINAL RULE:
    FTA is including the definition in the final rule without change. 
However, Sec.  625.25(b)(1) has been revised to clarify which assets 
used in the provision of public transportation must be included in an 
asset inventory, including but not limited to all revenue vehicles, all 
passenger stations, all exclusive use maintenance facilities, all non-
revenue service vehicles regardless of value, and owned equipment over 
$50,000 in acquisition value, must be included in an asset inventory at 
a level of detail commensurate with the level of detail used to 
describe assets in a transit provider's program of capital projects.

[[Page 48904]]

COMMENTS: Definition of ``Decision Support Tool''
    Two commenters recommended that FTA revise paragraph (1) of the 
proposed definition of ``decision support tool'' to add the phrase 
``including safety critical systems and components'' after ``condition 
data.''
FTA'S RESPONSE: Definition of ``Decision Support Tool''
    FTA proposed a broad definition of ``decision support tool.'' FTA 
does not believe that it is necessary for the definition to explicitly 
include reference to ``safety-critical systems and components'' in the 
definition of decision support tool
FINAL RULE:
    FTA is including the definition in the final rule without 
substantive change.
COMMENTS: Definition of ``Equipment''
    A State transit association said the definition of ``equipment'' 
should have a dollar threshold attached. An MPO recommended that a unit 
of equipment be defined as an FTA-funded asset with an initial cost of 
at least $50,000, or any rolling stock with a ULB of at least 5 years 
or more.
    A public transportation association said that no individual asset 
with an initial value under $50,000 or such higher value as the agency 
has established for financial statement purposes should be tracked as a 
``unit of equipment.'' Requiring agencies to assess and report TAM 
information for equipment with lesser values could capture mundane 
assets such as trash dumpsters. According to this commenter, ``even 
with a $50,000 or locally established threshold, transit agencies would 
be free to track other assets deemed critical to their operation. 
Rolling stock such as paratransit vans would continue to be captured as 
rolling stock. Both FTA and the individual agency would have useful 
data, free from the clutter of hundreds or thousands of line items of 
minimal value and not critical to the agency mission, consistent with 
the example in draft Appendix A. Additionally, this would allow 
agencies to report with an eye to risk. Without linking the reporting 
requirement to operational risk, the transit industry is simply 
counting and spending money to gather irrelevant data.''
    Several commenters stated that the proposed definition of 
``equipment'' seems to include a wide range of asset classes, while 
other parts of the proposed rule define equipment as non-revenue 
vehicles (e.g., Appendix A, Sec.  625.41, Sec.  625.43(a)). One transit 
agency recommended that non-revenue vehicles should be included in the 
vehicle asset class, not the equipment class. Similarly, another 
transit agency asserted that transit providers use the term 
``equipment'' in regards to portable tools, work machinery, or 
components, and that it is not a term reserved for non-revenue 
vehicles.
    Another commenter suggested that FTA allow the transit agency to 
define equipment, as well as other categories in the TAM plan, at a 
level that is suitable to the agency (e.g., ``equipment means an item 
that is necessary to perform the primary transit function of moving 
people in a safe efficient manner'').
    A transit operator expressed concern that the definition as 
proposed would unintentionally drive useful life to less than 1 year. 
This commenter proposed that equipment be grouped together; for 
example, overhead doors would be maintained and replaced as one group 
instead of individual assets. Asserting that a 1-year useful life 
threshold is too short, a transit operator suggested that FTA allow 
grantees to rely on State laws that determine eligibility for capital 
investments to determine what property qualifies as ``equipment.''
FTA'S RESPONSE: Definition of ``Equipment''
    The purpose of the National TAM System is to tackle the Nation's 
growing SGR backlog by improving the condition of transit assets. FTA 
does not believe that a definition of equipment should exclude assets 
that are not in a state of good repair, but don't meet a monetary 
threshold. However, FTA acknowledges that an unspecified minimum 
threshold is confusing to transit providers. The final rule allows a 
provider to exclude from its asset inventory all equipment with an 
acquisition value below $50,000. However, an asset inventory must 
include all non-revenue service vehicles regardless of value.
    This final rule does not prescribe a level of detail for the 
equipment asset category. Instead, the final rule requires that a 
transit provider identify capital assets in a manner that is consistent 
with how the assets are identified in the transit provider's program of 
capital projects. FTA conducted a review of nine transit providers, 
representing three types of transit operations, to find out the level 
of detail captured in their program of capital projects. FTA found that 
each transit provider, included varying levels of detail in their 
program of capital projects, but none so detailed as to include items 
of de minimus value, such as trash bins, pencils etc. FTA clarifies 
that ``equipment'' does not include supplies; implementation guidelines 
will provide specific alignment with other FTA program guidance, for 
example, FTA's Grant Management Requirements Circular 5010.
    FTA recognizes that the threshold in this final rule differs from 
the current definition of equipment in the 5010 Circular, which states 
a $5000 acquisition value. FTA believes that equipment assets that fall 
between the $5000 threshold of the current 5010 Circular and the 
$50,000 threshold of this final rule are likely to be limited to assets 
that do not affect the SGR backlog. However, FTA notes that transit 
providers are encouraged to include equipment assets in their TAM plan 
that will impact their safety and operations to be considered alongside 
other assets in their inventory and investment prioritization.
    FTA included Appendix A example in the NPRM to provide examples of 
asset classes. FTA did not intend for Appendix A to serve as an 
exhaustive list. A transit provider may choose how it defines asset 
classes within the equipment category for its TAM plan.
    FTA agrees with the commenter that highlights that the final rule 
allows transit providers to establish locally defined thresholds to 
track assets deemed critical to their operation, providing ``useful 
data free from clutter of hundreds of thousands of line items of 
minimal value not critical to the agency mission''. FTA notes that this 
rule does not specify a risk-based approach to asset management but 
does recognize linking reporting to operational risk is a practice some 
transit providers may undertake.
FINAL RULE:
    FTA is including the definition in the final rule without change. 
However, Sec.  625.25(b)(1) has been revised to clarify that the only 
equipment assets that must be included in a TAM plan asset inventory 
are; non-revenue service vehicles regardless of value and owned 
equipment over $50,000 in acquisition value.
COMMENTS: Definition of ``Facility''
    A transit provider commented that FTA's definition should recognize 
that not all buildings or structures used in the provision of public 
transportation are the same and asserted that the proposed definition 
does not provide an adequate description of public facing, operational, 
and administrative facilities.

[[Page 48905]]

FTA'S RESPONSE: Definition of ``Facility''
    To clarify, FTA proposed a broad definition of facility that 
encompassed any buildings or structures used in providing public 
transportation, including passenger stations, operations, maintenance, 
and administrative facilities.
FINAL RULE:
    FTA is including the proposed definition in the final rule without 
change.
COMMENTS: Definition of ``Full Level of Performance''
    Three transit operators suggested that this term should not include 
the word ``full''; rather, they suggested that the performance of the 
asset is the ability to provide the required level of service to 
customers or performance. Further, one of these commenters suggested 
the addition of the sentence, ``Generally, this can be measured in 
terms of reliability, availability, capacity, and meeting customer 
demands and needs.'' The other transit operators reasoned that a 
benchmark for legacy transit systems is subject to interpretation.
    Two commenters suggested that FTA expand the definition of ``full 
level of performance,'' reasoning that the proposed meaning is unclear 
because an asset degrades from new overtime and with use, thus, never 
again being at its ``full level'' of performance. These commenters also 
recommended that FTA add references for compliance with the Americans 
with Disabilities Act (ADA) requirements as set forth in 49 CFR parts 
37, 38, and 39, which would speak to ensuring entities are meeting 
their obligations under 49 CFR 37.161.
    A transit operator and a business association recommended that FTA 
use ``fit for intended purpose'' rather than ``full level of 
performance'' because it would still allow for reduced performance as 
long as an asset meets the required performance level and that the 
FTA's proposed SGR definition does not allow for the somewhat degraded 
performance of some assets experienced over time under even ideal 
conditions. Minimally, this commenter asserted that ``full level of 
performance'' requires additional explanation or slight modification to 
say ``acceptable level of performance'' or something similar, reasoning 
that ``full level of performance'' implies an absolute condition, which 
is not always achievable in transit. Although expressing support for 
the FTA definition of SGR because it would provide flexibility for each 
local agency to establish its own standards, a State DOT recommended 
that FTA reconsider the previously proposed definition that included 
``fit for purpose'' and similar descriptions.
    A State transit association said using safety as a component of 
``full level of performance'' without further clarification overlooks 
the reality of operating policies.
FTA'S RESPONSE: Definition of ``Full Level of Performance''
    FTA intentionally proposed an aspirational definition of ``state of 
good repair.'' FTA intended for the proposed definition to describe an 
asset at its best ideal performance condition. The term ``full'' 
describes an aspirational level of performance, which would require a 
transit provider, even those of legacy systems, to consider how far 
beyond optimal performance the system is operating. Full level of 
performance is not an absolute ``like new'' condition, but FTA proposed 
that a transit provider measure the state of good repair of its assets 
by applying the three objective standards.
    FTA recognizes that old assets and assets in deteriorated condition 
may still provide an acceptable level of performance. However, merely 
operating at an ``acceptable'' level of performance with older assets 
in need of replacement does not represent a state of good repair.
    FTA does not believe that ``fit for its intended purpose'' is 
sufficient to meet the statutory requirement that the definition of 
state of good repair include ``objective standards'' for measuring the 
condition of capital assets. For example, it is not uncommon for a 
transit provider to continue to use a railcar with limited functioning 
HVAC during high demand periods. While the rail car may be ``fit for 
the intended purpose'' of meeting revenue service demands, the 
performance of the HVAC system indicates the deteriorating condition of 
that rail car, which is not the same as full performance. This initial 
indicator of declining condition should be used to inform decisions on 
asset replacement. The purpose of the National TAM System is to improve 
the condition of the Nation's aging capital assets. In order to bring 
about meaningful change, FTA does not believe it should establish a 
system based on the status quo. Instead, FTA must establish a baseline 
that will bring about change.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definition of ``Horizon Period''
    A transit operator suggested that FTA explain how the term 
``horizon period'' compares to the term ``useful life.''
FTA'S RESPONSE: Definition of ``Horizon Period''
    The ``horizon period'' is the period of time beginning with the 
completion of a TAM plan and ending four years later. The term ``useful 
life,'' used in FTA grant programs refers to the FTA-developed 
performance period for a capital asset. In general, FTA funds may not 
be used to replace an asset until it has reached or exceeded its useful 
life.
FINAL RULE:
    FTA is including the definition in the final rule without 
substantive change.
COMMENTS: Definition of ``Infrastructure''
    Two commenters recommended that the definition for infrastructure 
should also provide itemized categories including but not limited to 
Power, Track, Ventilation, Elevators, Escalators, Detectable Warning 
Strips, PA/VMS Equipment, Rolling Stock Subsystem Elements including 
doors, ramps, bridge plates, lifts, designation signs, public address 
equipment, and securement systems, among others.
    A local government said the word ``interconnect,'' as used in the 
definition, can be interpreted tangibly or intangibly. In order to 
provide consistency across what is reported among bus and van 
providers, the commenter recommended that the final rule should either 
include applicable examples or else establish that this asset category 
may not apply to providers whose rolling stock capital assets are 
limited to buses and vans.
    A transit operator said that the definition is vague when it is 
applied to assets other than rail infrastructure. Another transit 
operator commented that this term overlaps with ``facility.''
FTA'S RESPONSE: Definition of ``Infrastructure''
    FTA proposed a broad definition of infrastructure, which 
encompassed all infrastructure classes for all modes of public 
transportation. Given this broad definition, FTA does not believe that 
more narrowly itemized categories are necessary.
FINAL RULE:
    FTA is including the definition in the final rule without 
substantive change.

[[Page 48906]]

COMMENTS: Definition of ``Investment Prioritization''
    A transit operator recommended that paragraph (2) of the definition 
should reference safety risk considerations. Expressing confusion that 
under this definition, investment prioritization must be fiscally 
constrained, a transit operator asked what needs to be reported if 
activities are not undertaken due to such constraints. Another transit 
operator suggested adding language to acknowledge other factors outside 
the prioritization criteria, such as intangibles, outside influences, 
and other defendable mitigating circumstances.
FTA'S RESPONSE: Definition of ``Investment Prioritization''
    The NPRM proposed that a transit provider consider safety needs in 
the process of developing its investment prioritization. Resilience to 
climate change and service reliability are two other risks that transit 
providers may consider in the process of prioritizing investments. FTA 
did not propose a mandatory requirement for specific risk based 
analyses. However, FTA encourages and supports the application of a 
risk based asset management approach to the development of a transit 
provider's investment priorities.
    Funding for any transit purpose is defined by Congress. FTA may 
not, through rule, establish additional sources of funding for any 
purpose that is not already eligible for such funding. A TAM plan 
should provide a transit provider with quantitative information that 
may be provided to a transit board and local funding bodies to support 
a strategic justification for the allocation of additional funds.
FINAL RULE:
    FTA is including the definition in the final rule without 
substantive change. Section 625.33 included requirements for investment 
prioritization. Investment prioritization is both the analytical 
process used to prioritize investments and the resulting list of 
capital programs and projects. Investment prioritization is temporally 
and fiscally constrained, and should be based on reasonably anticipated 
funding levels from all revenue sources. The resultant list can be 
ranked by category or order.
COMMENTS: Definition of ``Key Asset Management Activities''
    A transit operator commented that for a large grantee the size and 
complexity of this list will reflect the scale of the organization, and 
the interconnectedness of the grantee's management structure may make 
the presentation of such a list seem like an ``unwieldy organization 
chart.''
FTA'S RESPONSE: Definition of ``Key Asset Management Activities''
    FTA agrees with the commenter that the scale and complexity of key 
asset management activities will reflect the scale and complexity of 
the transit provider's system.
FINAL RULE:
    FTA is including the definition in the final rule without 
substantive change. Key asset management activities are the actions 
that a transit provider determines are necessary for implementing TAM 
practices within the organization and are critical to achieving the 
provider's transit asset management goals. These activities are not 
limited to outputs of transit asset management, but may include 
activities that support asset management, such as the purchase of 
decision-support software or a training program for key personnel.
COMMENTS: Public Transportation System
    A State DOT asked if Section 5310 fund recipients are considered 
general public transportation.
FTA'S RESPONSE: Public Transportation System
    Public transportation does not include service that is closed to 
the general public and only available for particular clientele. For 
example a subrecipient under the section 5310 program that operates 
service which is open to a segment of the general public, (e.g., all 
elderly persons or persons with disabilities) would be required to 
comply with this rule. However, a subrecipient nonprofit or community 
organization under the section 5310 program that operates closed-door 
service, (e.g., for members of senior center or work program only) 
would not be providers of public transportation and therefore are not 
required to comply with this rule.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definition of ``Rolling Stock''
    An individual commenter asked which vehicles fall under the Asset 
Category/Asset Class of Equipment/Service Vehicles and which vehicles 
fall under the Asset Category/Asset Class of Rolling Stock/Cars and 
Vans.
FTA'S RESPONSE: Rolling Stock
    Rolling stock includes vehicles used primarily to transport 
passengers. Service vehicles, which fall under the equipment category, 
are used primarily to support maintenance and repair work for a public 
transportation system, supervisory work, or for the delivery of 
materials, equipment, or tools.
FINAL RULE:
    FTA is including the definition in the final rule without change 
and is adding a definition for the term ``service vehicle.''
COMMENTS: Safety Management Systems
    A transit operator recommended that FTA consider how it will 
implement this part of the rule if there will be additional rules for 
the National Public Transportation Safety Program, suggesting that FTA 
may want to implement all of its safety related rules at the same time.
FTA'S RESPONSE: Safety Management Systems
    In the NPRM, FTA proposed that the Accountable Executive be 
responsible for the development and implementation of a TAM plan. The 
requirements of this rule related to the role and responsibilities of 
an Accountable Executive related to transit asset management may be 
implemented in the absence of rules to implement the several components 
of the National Public Transportation Safety Program.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definition of ``State of Good Repair''
    Asserting that the proposed rule followed the spirit of MAP-21, one 
commenter said that MAP-21 directed FTA to establish a nationwide 
definition for SGR and to use this definition to establish the National 
TAM System, the goal of which is to enable transit agencies to better 
use capital funding, and for decision-makers to more efficiently and 
effectively distribute grants. A transit operator supported FTA's 
definition of SGR as the condition in which a capital asset is able to 
operate at a full level of performance.
    Another commenter approved of the proposed SGR definition, as it is 
aspirational with some flexibility.
    A State DOT said the SGR definition is too limiting and creates a 
situation where SGR may only be achieved for a very limited time, or 
not at all, for most

[[Page 48907]]

assets, especially vehicles, due to the use of the phrase ``full level 
of performance.'' Another State DOT said an older asset may not be 
``able to operate at a full level of performance,'' but still be in a 
state of good repair.
    A local transit operator asked how FTA envisions tying the asset 
performance measures to the SGR definition, particularly to safety 
risk, as well as how FTA would account for asset rehabilitations and 
life extensions. A State agency said the definition should require that 
the asset be shown to operate in a safe and reliable manner in order to 
be considered in a SGR. An individual commenter said the definition may 
need to be subjective in some way to enable the individual responsible 
for measuring SGR to improve the safety of the asset.
    A transit operator proposed a definition that includes ``an asset 
that performs as designed safely and cost effectively,'' reasoning that 
the proposed definition did not address the idea of risk or cost to 
maintain full level of performance. Two commenters recommended that FTA 
revise the definition to mean ``the condition in which a capital asset 
is able to operate safely at a full level of performance,'' and define 
``operate safely'' as asset functioning within the manufacturer's 
recommended specified work limits.
    A transit operator said that the proposed definition is not 
consistent with the SGR principles (Sec.  625.19) and SGR performance 
metrics (Sec.  625.41). This commenter recommended that the definition 
be modified to ``a state of good repair means the condition in which a 
capital asset is able to operate at the required level of performance 
and is fit for its intended purpose.''
FTA'S RESPONSE: Definition of ``State of Good Repair''
    FTA appreciates commenters' agreement that the definition of SGR 
achieves the intent of the MAP-21 mandate, while providing flexibility 
and objective standards for measuring state of good repair. FTA 
intended for the proposed definition to describe an asset at its best 
ideal performance condition.
    FTA disagrees that the SGR definition is not consistent with the 
SGR principles and standards for measuring condition of capital assets. 
As proposed, if an asset meets each of the objective standards, it is 
operating at a full level of performance and is therefore in a state of 
good repair. FTA agrees that the cross-section of cost and performance 
are the basis of asset management principles. State of good repair is a 
threshold that identifies the desired performance condition. Please 
note the ``full level of performance'' definition response above 
provides a more expanded description of this term. The SGR principles 
Sec.  625.17 outline the relationship of TAM to SGR.
    FTA recognizes the critical relationship of safety and asset 
condition. The SGR definition is in part expressed by identifying the 
presence of an unacceptable safety risk. The National TAM system does 
not direct transit providers to prove the safe and reliable operation 
of their assets. FTA will define safety hazard identification and 
safety risk assessment requirements in a proposed NPRM for public 
transportation agency safety plans.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definitions of ``Tier I Provider'' and ``Tier II Provider''
    A transit operator requested that the distinction between tier I 
and tier II operators be revised for consistency with the Federal 
formula grant definition of small-to-medium transit agencies. 
Specifically, this commenter suggested that tier II should be defined 
as operators that provide service to geographic areas with populations 
under 200,000 people. A State DOT recommended the tiers be based on FTA 
program type (49 U.S.C. 5307, 5310, 5311, etc.) rather than on the 
number of vehicles a transit provider operates.
    To limit the administrative load on smaller transit agencies, 
transit providers, an industry association, and a business association 
suggested that the tier I and tier II definitions or the definition of 
vehicle in revenue service during peak operations should be 
specifically limited to buses, excluding paratransit cutaways, vans, 
and non-dedicated assets (e.g., taxis, vanpools). A transit provider 
said that the ``100 or fewer vehicles during peak operations'' criteria 
for a tier II provider should not include non-dedicated equipment 
(i.e., contractor-owned and used for other non-contract purposes) and 
vanpool vehicles.
    A business association recommended that FTA revise the definition 
of ``Tier II provider'' to include any 49 U.S.C. 5310 subrecipients. A 
transit operator said many small agencies have more than 100 revenue 
vehicles in peak service if vanpools, mobility programs, and other 
services are counted, but they may not have more than 50 motorbus 
revenue vehicles in peak revenue service. The commenter recommended 
expanding/revising the definition of tier I and tier II agencies to 
include the types of vehicles and potentially revise the vehicle 
threshold.
    An MPO requested clarity on how the TAM tier thresholds relate to 
differing service levels. For example, this commenter stated that many 
vanpool programs have vehicles operating in a single peak hour trip, 
rather than operating continuously throughout the peak hours. The 
commenter requested flexibility in how the threshold is defined, 
particularly for agencies that have limited service operations. A local 
government asked which tier it would fall under, as it operates less 
than 100 vehicles but also operates a Vehicular Inclined Plane.
FTA'S RESPONSE: Definitions of ``Tier I Provider'' and ``Tier II 
Provider''
    FTA proposed to establish separate requirements for smaller (tier 
II) and larger (tier I) transit providers. FTA agrees that the tier 
definition should parallel the calculation used to determine if a small 
operator in a large urbanized area is eligible for operating assistance 
under the 49 U.S.C. 5307 Urbanized Area formula program. FTA does not 
agree that the tier delineations should solely be based on population, 
area served or funding program. FTA notes that some of the smallest 
transit providers in the country, with just a handful of vehicles in 
operation, are sometimes actually located in some of the largest 
urbanized areas with more than one million persons in population. 
Likewise, there are some very large operators that receive some funding 
under the 49 U.S.C. 5311 Rural Area Formula Grant Program and under the 
49 U.S.C. 5310 Grant Program for special services to the elderly and 
disabled.
    FTA clarifies that a tier I provider has 101 or more fixed-route 
vehicles in peak revenue service, or has 101 or more non-fixed route 
vehicles in peak revenue service. To calculate, the fixed-route 
vehicles and non-fixed route vehicles should be considered separately. 
For example, an urbanized area transit provider with no rail service, 
80 fixed-route vehicles, and 35 non-fixed-route vehicles (for a total 
of 115 vehicles) would be considered a tier II provider. This 
clarification makes the calculation consistent with how the calculation 
for operating assistance eligibility in large urbanized areas is 
calculated.
    Therefore, FTA believes this rule limits the administrative load on 
smaller transit agencies and has clarified that tier definitions are 
based on the type of services a provider offers either, fixed route 
(e.g. busses) or non-fixed route (e.g. paratransit cutaways) peak 
revenue vehicles.

[[Page 48908]]

FINAL RULE:
    FTA has revised the definitions transit provider, tier I provider, 
and tier II provider in the final rule.
COMMENTS: Definition of ``Transit Asset Management''
    A transit operator said this definition should also include 
``disposing'' in the list of specified lifecycle stages. Two commenters 
suggested that FTA revise this definition to read in part ``. . . costs 
over their life cycle in order to provide safe, cost-effective, ADA-
compliant, and reliable service.''
FTA'S RESPONSE: Definition of ``Transit Asset Management''
    FTA proposed a comprehensive definition of the term ``transit asset 
management,'' which can be applied to a number of activities, including 
ensuring that an asset is ADA-compliant. FTA does not believe that 
adding the language proposed in the comments is necessary.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENT: Definition of ``Transit Asset Management Policy''
    One commenter suggested modifying the proposed language defining 
TAM policy to avoid implying that every agency that falls under this 
rule is out of SGR.
FTA'S RESPONSE: Definition of ``Transit Asset Management Policy''
    FTA did not intend for the proposed definition to imply that every 
agency that falls under the rule is not in a state of good repair. In 
fact, FTA purposely proposed an asset-based definition, as opposed to a 
system-based definition, in order to make achieving and maintaining a 
state of good repair an achievable goal.
FINAL RULE:
    FTA has revised the definition in the final rule to clarify that a 
TAM policy and the final rule applies to a provider whose entire 
inventory of capital assets is in a state of good repair.
COMMENTS: Definition of ``Transit Asset Management System''
    Two MPOs recommended removing ``operating, maintaining, and 
improving'' from the definition and replacing it with ``managing the 
use of.'' A transit operator recommended that FTA revise this 
definition to replace the word ``system'' with ``program,'' reasoning 
that ``system'' implies that a software package is necessary for asset 
management, which the commenter asserted is counter to other 
recommendations made by FTA. Another commenter expressed support for 
the proposed definition.
    FTA'S RESPONSE: Definition of ``Transit Asset Management System''
    The proposed definition of the term transit asset management system 
was derived from the statute, 49 U.S.C. 5326(a)(3). FTA believes that 
the statutory definition is sufficient.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definition of ``Transit Provider''
    Several State DOTs and other commenters suggested that FTA clarify 
the definition of ``transit provider'' by adding, ``A State is not 
considered to be a transit provider by virtue of passing on funds to 
subrecipients, administering the programs under 49 U.S.C 5310 and 5311, 
developing and implementing a TAM plan, or taking any other steps 
required of a State by this or other FTA rules.''
    Two commenters recommended that FTA revise the definition to 
specify ``capital assets used in the ``provision of all modes of public 
transportation.''
    A State DOT expressed concern that because the definition of 
``transit provider'' includes operators providing services under the 49 
U.S.C. 5310 and 5311 programs, there would be double reporting by the 
transit providers and the State sponsors of the group TAM plans in 
which the transit providers are included.
FTA'S RESPONSE: Definition of ``Transit Provider''
    In the NPRM, FTA proposed a definition of the term ``transit 
provider'' meaning ``a recipient or subrecipient who owns, operates, or 
manages capital assets used in the provision of public 
transportation.'' A transit provider must provide transit service, 
either directly or through a third-party, not merely pass funds through 
to a transit provider or develop a group TAM plan.
    FTA proposed that a sponsor satisfy the reporting requirements on 
behalf of its group plan participants. Alternatively, any transit 
provider that develops its own individual plan, including eligible tier 
II providers that choose to opt-out of a group TAM plan, must report 
directly to the NTD.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definition of ``Useful Life Benchmark''
    Several State DOTs recommend removing the word ``acceptable'' from 
the definition, reasoning that it could lead to arguments that 
operation past that period is ``not acceptable.'' If this term cannot 
be removed, these commenters suggested that at a minimum the final rule 
should include a statement that the use of the term ``acceptable'' in 
the definitions of ``useful life'' and ``useful life benchmark'' ``are 
solely for general asset management planning purposes.''
    A transit operator supported the establishment of a ULB as the 
proxy for the condition of revenue vehicles but recommended that FTA's 
guidance reflect that age is only one aspect that affects SGR. 
According to this commenter, other factors include usage (including 
passenger loads, service hours/miles) and operating conditions 
(including topography and stop frequency). Similarly, another transit 
operator expressed concern that the ULB assessment threshold based on 
an asset's age is problematic in that a set of rolling stock may be 
beyond its ULB yet remain roadworthy and safe as a result of the 
agency's maintenance practices. The commenter said this could 
discourage agencies from utilizing strong maintenance practices, as 
even a well-maintained bus or rail vehicle would fail the test of age-
based asset condition reporting. One transit provider suggested that 
FTA revise the definition of ULB to include both safety and cost 
effectiveness.
    Another transit operator urged FTA to allow for recognition of 
obsolescence in defining ULB by ensuring flexibility that would allow 
individual transit systems to adjust ULBs based on changing conditions 
or changes in technology lifecycles. Further, this commenter 
recommended that FTA should allow an exception for the ULB to be less 
than the minimum life in FTA's formula programs to account for impacts 
due to obsolescence if justified with proper documentation. Similarly, 
a transit operator commented that a ULB could be less than the minimum 
useful life used in FTA's formula programs and may also be different 
from agency depreciation schedules, which are set when the assets are 
placed on the agency's books.
    A transit operator stated that while ULB works well for most of the 
capital assets, it is challenging to define it based on traditional 
replacement standards for some assets, such as historic streetcars. 
This commenter recommended that FTA add language to

[[Page 48909]]

the ULB definition that includes ``or when they are considered renewed 
to a good condition.''
    A local government recommended that FTA create a ULB table specific 
to regions from which transit providers can base their performance and 
set targets to reduce the potential wide swings from one similar 
provider to the next.
    Two commenters suggested that FTA consider referencing compliance 
with ADA requirements as set forth in 49 CFR parts 37, 38, and 39.
FTA'S RESPONSE: Definition of ``Useful Life Benchmark''
    A ULB takes into consideration both the age of an asset and its 
operating environment. Consideration of the asset's operating 
environment allows transit providers to develop performance targets 
that reflect their specific operating environments. Transit providers 
operate their assets in diverse environments, where the geography, 
frequency of service, passenger loads, etc. will vary. Therefore, a 
general national standard may not adequately address asset condition. 
For example, a transit provider that operates for only 4 hours per day 
would have different vehicle conditions than a transit provider that 
offers 24-hour service, even if the vehicles for both providers are the 
same age. As a result, the estimate of a vehicle's useful life also may 
be different. The ULB framework enables a transit provider to report 
its performance and set targets for its performance on a scale that is 
tailored to it.
    The term ``acceptable'' in the proposed definition of ULB was 
intended to allow a transit provider the ability to define their own 
period of use based upon their operating environment. A transit 
provider should establish a ULB by taking into consideration the 
operating environment of its assets, historical evidence, manufacturer 
guidelines, and any other relevant factors. Transit providers may elect 
to use the default ULB for assets, which is derived from FTA's 
TERM.\10\ If an asset exceeds its ULB, then it is an indicator that it 
may not be in a state of good repair.
---------------------------------------------------------------------------

    \10\ The TERM model consists of a database of transit assets and 
deterioration schedules that express asset conditions principally as 
a function of an asset's age. Vehicle condition is based on an 
estimate of vehicle maintenance history and major rehabilitation 
expenditures in addition to vehicle age; the conditions of wayside 
control systems and track are based on an estimate of use (revenue 
miles per mile of track) in addition to age.
---------------------------------------------------------------------------

    FTA agrees that age alone is not the only aspect that affects SGR 
and will provide guidance to assist transit providers in developing 
their own ULBs to reflect their operating conditions, which may include 
the considerations provided by commenters, historical evidence, and 
manufacturer guidelines.
    FTA agrees with the commenter that suggests an asset may be 
roadworthy and safe as a result of its agency's maintenance practices. 
A transit provider may develop its own ULB which reflects its 
maintenance practices. FTA will provide default ULBs, and encourages 
providers to develop their own customized ULBs. Once a provider 
establishes its ULB, it is entirely possible that over time and changes 
in their policies and practices, the transit provider may need to 
establish a revised ULB and submit it to FTA for approval.
    FTA did not propose to change the useful life requirements for 
vehicle replacement under FTA's grant programs. A ULB is distinct from 
the term ``useful life'' or ``minimum useful life'' that applies to FTA 
grant programs. Under FTA grant programs, ``useful life'' refers to the 
Federal financial interest in a capital asset, which is based on the 
length of time in service or accumulated miles. Generally, assets are 
not eligible for replacement with FTA funds until they have met or 
exceeded their minimum useful lives. A ULB, however, takes into 
consideration operational factors, discussed above, that may impact the 
condition of a capital asset. Thus, a ULB that is less than the useful 
life for grant programs may impact a transit provider's ability to 
maintain their SGR targets.
    The proposed rule would have required a transit provider to 
consider ADA requirements in the development of its investment 
prioritization. FTA has determined that referencing ADA compliance in 
the definition of ULB is not feasible.
FINAL RULE:
    FTA is including the definition in the final rule without change.
COMMENTS: Definitions--Other Comments
    Two transit agencies and an anonymous commenter requested a 
definition for ``non-revenue vehicles''. Another transit operator 
suggested that FTA consider adding a definition for ``asset condition'' 
to mean ``reflects the physical state of the asset, which may or may 
not affect its performance.'' A transit operator suggested that the 
list of definitions should be numbered subparagraphs.
FTA'S RESPONSE: Definitions--Other Comments
    FTA did not propose definitions for ``non-revenue vehicles'' or 
``asset condition'' because both terms are commonly understood within 
the transit industry.
    The structure of the definitions section is consistent with the 
structure of the definitions sections in previous FTA regulations.
FINAL RULE:
    FTA did not make any changes to the final rule based on these 
comments. However, FTA has added a definition of ``service vehicle'' in 
the final rule. In addition FTA has modified the definition of 
``Performance Measure'' and ``Performance Target'' to match the 
definitions in the coordinated FHWA and FTA Metropolitan and Statewide 
and Non-Metropolitan Transportation Planning final rule.
625.15 Elements of the National Transit Asset Management System
    This section proposed the elements of the National TAM System as 
set forth at 49 U.S.C. 5326(b). FTA will establish performance 
measures, transit providers will set targets, and transit providers 
will report their targets to FTA's NTD. The performance management and 
reporting components of the National TAM System are important for 
assessing both the benefits of transit asset management on a National 
level and the transit industry's current SGR needs.
COMMENTS: 625.15 Elements of the National Transit Asset Management 
System
    A couple of commenters agreed with the elements of the National TAM 
System as specified in proposed Sec.  625.15. A State DOT appreciated 
the flexibility given to transit providers to develop SGR performance 
measures and performance targets.
    Regarding paragraph (d), a transit operator said FTA should allow 
industry best practices (for example ISO) to be the basis of analytical 
processes and decision tools. The commenter suggested that the 
paragraph could indicate FTA ``or equivalent'' best practices.
FTA'S RESPONSE: 625.15 Elements of the National Transit Asset 
Management System
    FTA appreciates the comments on the elements of a proposed National 
TAM System. FTA currently is developing guidance and other resources 
that will aid the industry in its implementation of the requirements of 
this final rule. FTA is aware that other organizations

[[Page 48910]]

have developed resources for asset management and encourages transit 
providers to research those options and use them, as appropriate, to 
aid in the implementation of the requirements of this final rule.
FINAL RULE:
    FTA is including this section in the final rule without substantive 
change.
625.17 State of Good Repair Principles
    FTA proposed SGR principles intended both to highlight the 
relationship of SGR to other transit priorities and to guide a transit 
provider's practice of transit asset management. SGR is related to, but 
not synonymous with, TAM and is a condition that can be achieved 
through good TAM practices. TAM practices inform the capital investment 
planning and programming processes by producing data that informs 
investment prioritization. TAM allows a transit provider to 
realistically predict the impact of its policies and investment 
decisions on the condition of its assets throughout an asset's life 
cycle. TAM enhances a transit provider's ability to maintain a state of 
good repair and proactively invest in its assets before the asset 
condition deteriorates to an unacceptable level.
    A key connection of SGR to TAM is performance management. Asset 
management is a business model that uses the condition of assets to 
determine the finances needed in order to achieve predetermined 
outcomes. In the case of TAM, and this rulemaking, the goal is to 
achieve and maintain a state of good repair. A key focus of asset 
management is cost-risk balancing to achieve performance goals through 
a transparent, organization-wide process of decision-making.
    TAM provides a framework for how to maintain a state of good repair 
by considering the condition of assets in the transit provider's 
inventory and the transit provider's local operating environment, along 
with the policies that a transit provider establishes for prevention, 
preservation, rehabilitation, disposal, and replacement. TAM allows a 
transit provider to realistically predict the impact of their TAM and 
maintenance policies on the condition of their assets and how much it 
would cost to improve asset condition at various stages of an asset's 
life cycle, while balancing prioritization of capital, operating and 
expansion needs.
COMMENTS: 625.17 State of Good Repair Principles
    Several commenters expressed concern about the use of the term 
``full level of performance'' in Sec.  625.17(a) and (b) (and elsewhere 
in the rule). Some commenters said FTA should instead use the term 
``required level of performance'' and others suggested ``fit for 
intended purpose.'' Another commenter suggested that the second 
sentence of Sec.  625.17(a) be removed because the ``state'' of an 
object is the condition at any point in time without respect to any 
previous or future conditions. A transit operator said Sec.  
625.17(a)'s emphasis on life-cycle maintenance as a determining factor 
in assessing a capital asset's SGR would amount to establishing a 
misleading ``bright line measurement tool'' based on an asset's 
maintenance schedule. A State agency said, due to increased financial 
constraints, providers may be managing the decline of assets. The 
commenter said the rule should include specific language stating that 
without additional financial resources, establishing an asset 
management plan may not in itself enable a provider or a group to reach 
a SGR.
    Several commenters provided input on Sec.  625.17(c), expressing 
concern about how this paragraph affects the role of the accountable 
executive. A professional association and several State DOTs said the 
provision for a transit provider's accountable executive to ``balance 
transit asset management, safety, operation, and expansion needs'' 
should use the word ``consider'' rather than ``balance,'' to help 
ensure, for example, that an executive does not have to put some 
funding into expansion in order to ``balance'' that factor. A State 
agency said safety should be given a higher level of consideration than 
other agency needs (e.g., expansion of service). Some of these 
commenters said this paragraph underscores the importance of a State 
not being construed as a ``transit provider'' if it is not an operator 
(directly or through operating contracts) of public transit service.
    A few commenters noted that the SGR principles (Sec.  625.17), SGR 
standards (Sec.  625.41) and SGR performance measures (Sec.  625.43) do 
not appear to be consistent. In each case, according to these 
commenters, SGR is defined or measured differently. A couple of these 
commenters said this is not a concern, as long as affected agencies and 
the departments understand the differences, and suggested that 
inserting compliance with ADA requirements as set forth in 49 CFR parts 
37, 38, and 39 may also strengthen this definition.
    Regarding the proposal that each transit provider determine whether 
they have achieved a state of good repair regarding their assets, a 
State transit association said this is too subjective and base 
perimeters need to be set, as well as having third party 
determinations. Similarly, a transit operator stated that, if an 
asset's SGR is determined by the agency without a clear definition and 
validation by FTA, there will be very little value in the 
determination.
    A couple of commenters said the SGR status of an asset should not 
be affected by the condition of the other assets in the same category.
FTA'S RESPONSE: 625.17 State of Good Repair Principles
    FTA has addressed the ``full level of performance'' comments 
previously, in the definition section.
    FTA disagrees that the term ``state'' should be removed from the 
``state of good repair'' in Sec.  625.17(a). This section describes the 
principles of SGR and removing state would be misleading. However, FTA 
does agree with the commenter that the state of an asset is a condition 
at a point in time. The intent of this section is to describe the 
principles supporting SGR and their relationship to TAM.
    FTA disagrees that elevating the importance of lifecycle 
investments would establish a misleading emphasis on an asset's 
maintenance schedule, although effective and proactive lifecycle 
investment and maintenance practices are fundamental to SGR. The 
proposed SGR definition contained three objective standards and 
maintenance schedules relate directly to just one; the lifecycle 
maintenance needs being met or recovered. While FTA recognizes that the 
maintenance of an asset is not the only relevant factor in determining 
SGR, it is critical to achieving and maintaining a state of good 
repair.
    FTA disagrees that a third-party determination is necessary to 
measure a transit provider's' SGR. FTA believes the objective standards 
are the base parameters for a transit provider to measure its SGR. FTA 
did not propose that it would validate a transit provider's SGR 
determination.
    FTA agrees that financial constraints may leave a transit provider 
in the position of managing the deterioration of assets that it can no 
longer afford to maintain and replace on a timetable that sustains the 
assets' full level of performance. The proposed SGR principles do not 
preclude the management of declining asset condition. In some 
instances, FTA expects that maintaining an asset's condition may not be 
a transit provider's highest priority, and therefore the asset's 
condition may

[[Page 48911]]

decline based on strategic and informed decisions.
    FTA agrees that a sponsor is not an accountable executive merely 
because it develops a group TAM plan. Each transit provider has its own 
accountable executive. FTA does not agree that it should change 
``balance'' to ``consider'' because the change would make no 
substantive difference. In order to balance transit asset management, 
safety, operation and expansion needs, an operator must consider a 
number of things, including financial and human capital resources.
    FTA disagrees that the proposed SGR principles (Sec.  625.17), 
standards (Sec.  625.41) and performance measures (Sec.  625.43) are 
inconsistent. These three sections described the fundamental principles 
of SGR and its relationship to TAM (Sec.  625.17); the definition and 
objective measures for a transit provider to measure their assets' SGR 
(Sec.  625.41); and the description of performance measures for which 
FTA will collect targets (Sec.  625.43). As discussed above, the SGR 
performance measures are a proxy for the SGR, nationally. The proposed 
SGR definitions were intended to standardize the term and its objective 
measures. The SGR principles are provided to describe the foundation of 
the SGR definition and its relationship to TAM. The performance 
measures are provided to describe a transit providers' obligation to 
establish and report targets.
FINAL RULE:
    FTA is including this section in the rule without substantive 
change. FTA is including an example in Appendix B to the final rule to 
illustrate the relationship amongst the measures, definition and 
principles.
Section 625.25 Transit Asset Management Plan Requirements
    Pursuant to 49 U.S.C. 5326(b)(2), the NPRM proposed all recipients 
and subrecipients of Chapter 53 funds must develop a TAM plan. FTA 
interpreted this requirement to apply only to those recipients and 
subrecipients that actually operate public transportation systems and 
own, operate, or manage capital assets for that system. Therefore, the 
TAM plan requirements do not apply to an MPO that merely receives funds 
from FTA and passes the funds along to transit operators. However, a 
pass through MPO would be required to sponsor a group TAM plan for its 
eligible tier II subrecipients. Accordingly, Sec.  625.25(a) required 
each transit provider that owns, operates, or manages public 
transportation capital assets to develop and carry out a TAM plan.
    The NPRM proposed that tier II providers have the option to 
participate in a group TAM plan. The group TAM plan concept is intended 
to reduce the burden on smaller operators associated with developing 
individual TAM plans. Under a group TAM plan, a sponsor (typically a 
State, or direct recipient) develops a single group TAM plan on behalf 
of one or more tier II providers. Each tier I provider, including group 
TAM plan sponsors, that operates or manages capital assets must develop 
its own individual TAM plan for its own system. Under all 
circumstances, it is the responsibility of the relevant State or MPO to 
integrate the TAM plans (group or individual) into the statewide and 
metropolitan transportation planning process.
    It is the responsibility of each transit provider's Accountable 
Executive to ensure that the TAM plan is carried out at his or her 
organization. For those transit providers that develop an individual 
TAM plan, the Accountable Executive is responsible for making informed 
investment decisions and ensuring that meaningful SGR targets are set. 
The Accountable Executive for a group TAM plan participant is 
responsible for coordinating development of the group TAM plan with the 
sponsor, and for implementing the TAM plan at their transit agency. 
This coordination may involve providing accurate asset inventory data, 
maintenance and repair records, or other relevant data to the sponsor. 
It may also involve participating in development of targets for the 
group and negotiations about investment priorities.
    Section 625.25(b) listed elements of a TAM plan, including:
    1. An asset inventory, which is a list of the transit provider's 
capital assets;
    2. A condition assessment, which is a rating (e.g., good/fair/poor 
or percentage of residual life) of the condition of assets in the 
inventory. The NPRM did not speak to the condition rating scale or 
process a transit provider should use;
    3. A list of the decision support tool or tools that were used to 
create the TAM plan. A decision support tool is a methodology to help 
transit providers make decisions, such as prioritizing projects based 
on condition data and objective criteria. A decision support tool can 
be software, but is not exclusively software. A decision support tool 
may be a process;
    4. An investment prioritization. The investment prioritization is a 
list of the proposed projects and programs that a transit provider 
estimates would achieve its SGR goals, and a ranking of the projects 
and programs based on priority;
    5. An identification of the transit provider's policies and 
strategies for developing an effective TAM plan, including a transit 
provider's executive-level directions to set or support the goals for 
its TAM plan;
    6. A strategy for implementation of the TAM plan, which is the 
process a transit provider identifies to follow in order to achieve its 
TAM plan. This strategy differs from the strategies identified in 
element (5) in that this is an operation-level decision;
    7. A list of the key activities or actions that are critically 
important to achieving the transit provider's asset management goals 
for the year (--e.g., management-supported activities such as 
purchasing software or training);
    8. An identification of the financial resources that a transit 
provider estimates are necessary for implementing its TAM plan and 
achieving its asset management goals. This might include internal staff 
time, technology requirements, etc.; and
    9. A continuous improvement plan that sets timelines and milestones 
that can be revisited to track the transit provider's progress towards 
meeting its asset management goals.
    The first four elements relate to identifying performance goals, 
while elements 5 through 9 relate to the implementation of TAM 
concepts. To reduce the burden on smaller transit providers, a TAM plan 
for a tier II provider or other eligible group TAM plan participant is 
required to include only elements 1 through 4. The majority of the SGR 
backlog exists in capital assets at larger transit systems, 
particularly those with rail fixed-guideway public transportation 
systems. As a result, FTA believes that these larger, complex 
operations require a more holistic and strategic process, addressed 
through elements 5 through 9, for consideration of asset conditions 
throughout the asset's life cycle, as well as institutionalization of 
TAM principles. Although not required, FTA nevertheless still 
recommends that tier II providers incorporate elements 5 through 9 as 
best practices.
    Section 625.25(b)(1) required that each TAM plan include an 
inventory of the transit provider's capital assets. The asset inventory 
is expected to cover the capital assets that a transit provider owns, 
operates or manages, including leased assets and those assets operated 
under contract by an external entity. This asset inventory may be a 
combination of other inventories a transit provider may have on hand. 
For example, the grant management

[[Page 48912]]

guidance circular 5010 requires grantees to collect, maintain, and 
report records for rolling stock and equipment. This existing inventory 
could be used to initiate or refresh the capital asset inventory to 
satisfy the requirements of the proposed rule.
    Section 625.25(b)(2) required that each TAM plan include a 
condition assessment of capital assets that generates information in a 
level of detail sufficient to monitor and predict the performance of 
each capital asset identified in the asset inventory. Condition 
assessments are required for only those capital assets in the asset 
inventory for which a transit provider has direct financial 
responsibility. This section does not prescribe how a condition 
assessment must be conducted, rather the required result of the 
assessment. It is up to the transit provider or group TAM plan sponsor 
to decide whether to conduct condition assessments at the individual or 
asset class level.
COMMENTS: TAM Plan--Role of Accountable Executive in Development of TAM 
Plan
    Several commenters addressed the proposed role of the Accountable 
Executive in the development of TAM plans at Sec.  625.25(a)(3). A 
State transit association asserted that the TAM requirements of 
Accountable Executive, decision support tools, etc. will result in more 
transit providers under the 49 U.S.C. 5310 program disengaging from 
coordination efforts and ``siloing,'' as was seen with the Community 
Development Transportation Coordination Plan requirements. A transit 
provider agreed that a responsible executive should approve the plan, 
but requested flexibility with regards to where the responsible 
executive sits within their organization.
FTA'S RESPONSE: TAM Plan--Role of Accountable Executive in Development 
of TAM Plan
    FTA estimates that approximately 80 percent of 49 U.S.C. 5310 
providers will be exempt from this rule because as providers of closed-
door service to a specific group or specific program, they are not 
considered providers of public transportation. Almost all other 49 
U.S.C. 5310 providers fall into the tier II category, eligible to 
participate in a group TAM plan with reduced requirements. The group 
TAM plan option is intended to reduce the administrative burden on 
smaller providers associated with developing a TAM plan.
    An Accountable Executive should be a transit provider's most-senior 
executive; often times this person is the CEO or GM. FTA understands 
that at many smaller transit providers, roles and responsibilities are 
more fluid. However, FTA does believe that, even in circumstances where 
responsibilities are either shared or delegated, there must be one 
primary decision-maker.
FINAL RULE:
    FTA is revising 625.25 (a)(3) to clarify the role and 
responsibilities of complying with this final rule for group plan 
sponsors and participants is a local level decision.
COMMENTS: TAM Plan--Coordination With State and Metropolitan Planning 
Organizations (MPOs)
    Some public comments addressed the proposed requirement that a TAM 
plan must be coordinated to the extent practicable with States and MPOs 
at Sec.  625.25(a)(4). A transit operator said that the role of the MPO 
should be to aggregate the transit operators targets, prioritization, 
performance and condition information, etc. to form the MPO's targets 
and priorities. This commenter stated that it should be a bottom up 
approach from the transit operators rather than top down imposition of 
goals from the MPO. A transit operator asked if the State and MPO would 
now be required to include local transit operators' asset planning in 
their TAM plan and, if so, whether the transit operator is required to 
follow the State/MPO recommendations. Another transit operator 
recommended that FTA revise Sec.  625.25(a)(4) to state that the ``TAM 
will be used to inform the grantee's portion of the MPO TIP, to the 
extent practicable.'' An industry association predicted that it is 
unlikely that States and MPOs could incorporate TAMs in their STIPs and 
TIPs within the proposed timeline. A transit provider requested 
clarification about the role of MPOs in setting investment priorities. 
A State DOT asked if the State can reject a provider's priorities if 
they do not meet the state's investment priorities.
    A State DOT and an industry association asked that FTA provide an 
example of when the MPO would have the responsibility for integrating 
group TAM plans and when it is a State responsibility. One of these 
commenters stated that it believes it is ultimately the State's 
responsibility. An MPO recommended strengthening the requirements for 
TAM plan developers to coordinate with the MPO. The specific regulatory 
language recommended by this commenter is ``A TAM plan developed under 
this part should/shall be developed cooperatively coordinated, to the 
extent practicable, with States and Metropolitan Planning 
Organizations.'' A transit operator suggested that continuous 
coordination with States and/or MPOs on TAM plans, asset data, 
finances, and strategies should be restricted to documents and 
processes where the State and MPO can directly contribute and play a 
role.
FTA'S RESPONSE: TAM Plan--Coordination With State and MPOs
    MAP-21 fundamentally shifted the focus of Federal investment in 
transit to emphasize the need to maintain, rehabilitate, and replace 
existing transit investments. The ability of FTA grant recipients, 
along with States and MPOs, to both set meaningful transit SGR 
performance targets and to achieve those targets is critically 
dependent upon the ability of all parties to work together to 
prioritize the funding of SGR projects from existing funding sources. 
How a transit provider sets its performance targets is an entirely 
local process and decision. However, FTA strongly encourages transit 
providers, States, and MPOs to set meaningful progressive SGR targets 
based on creative and strategic leveraging of all available financial 
resources.
    This rule does not prescribe requirements for how States and MPOs 
should integrate TAM plans or targets into the planning process. The 
rule requires transit providers and sponsors to coordinate with States 
and MPO's to the extent practicable in the selection of State and MPO 
SGR performance targets. However, the NPRM suggested that transit 
providers and sponsors coordinate individual and group TAM plans, 
respectively, with the relevant State or MPO to aid in the planning 
process. FTA clarifies that coordination of TAM plan development with 
States and MPOs is optional by removing regulatory language for transit 
providers to coordinate to the extent practicable. Early coordination 
with planning partners is encouraged but not required under this rule.
    The joint FHWA/FTA final planning rule prescribes requirements for 
incorporating components of the National TAM System into the planning 
processes. FTA and FHWA will develop and issue guidance to aid the 
transit industry in its implementation of the performance-based 
planning requirements.
FINAL RULE:
    FTA has removed Sec.  625.25 (a)(4) from the final rule in response 
to these comments.

[[Page 48913]]

COMMENTS: TAM Plan--Responsibilities for Development of TAM Plans
    Some public comments addressed other issues relating to 
responsibilities for the development of TAM plans. An anonymous 
commenter asked whether the following entities must develop their own 
TAM plan or whether they could be a member of a group TAM plan: (1) a 
tribal agency that receives both funding from FTA as a direct recipient 
and funding from the State DOT as a subrecipient under the 49 U.S.C. 
5310 or 5311 programs, and (2) an inter-city agency that receives 49 
U.S.C. 5310 funds and serves several States.
FTA'S RESPONSE: TAM Plan--Responsibilities for Development of TAM Plans
    All tier II providers are eligible to participate in a group TAM 
plan. Although Group Plan sponsors are not required to include those 
tier II providers that are also recipients of 49 U.S.C. 5307 funds, a 
sponsor may allow those tier II providers to participate in a group 
plan. A transit provider with only 30 vehicles operated in regular, 
peak, fixed route service that receives both Section 5307 urbanized 
area formula funds and Section 5311 rural area formula funds from 
multiple states, remains a tier II provider. A Tribe that receives 
funds directly through the Tribal Transit Program remains a tier II 
provider, regardless of other funding received. FTA notes that 
intercity bus providers are not providers of public transportation, and 
are therefore exempt from the rule.
    FTA recognizes the commenter's confusion in determining the 
appropriate tier in certain instances and has clarified the definitions 
of tier I and tier II and is providing the following examples: (1) A 
transit provider that is a subrecipient of 49 U.S.C. 5311 funds only, 
but has 150 vehicles and no rail service, is a tier II provider and 
eligible to participate in a group TAM plan sponsored by a State. (2) a 
transit provider that is a subrecipient of funds under 49 U.S.C. 5310, 
5311, or 5339 with a fleet of 30 vehicles and no rail service, is a 
tier II provider and eligible to participate in a group TAM plan 
sponsored by a sponsor. (3) a transit provider that is a subrecipient 
of funds under 49 U.S.C. 5307 and 5311 with 110 vehicles and no rail 
service, is a tier II provider, but is only eligible to participate in 
a group TAM plan through consent of sponsor.
FINAL RULE:
    FTA is revising the definition of tier II provider in the final 
rule to clarify that all American Indian tribes are considered tier II 
providers and are eligible to participate in a group TAM plan, 
regardless both of the source of funding it may receive and of its 
status as a recipient or subrecipient.
COMMENTS: TAM Plan--Asset Inventory
    Several public comments addressed the asset inventory required by 
proposed Sec.  625.25(b)(1), with several expressing concerns or 
confusion relating to the expected level of granularity at which 
transit agencies would be expected to inventory capital assets. A 
transit provider and several State DOTs asserted that ``the level at 
which a project would be identified in a provider's program of capital 
projects'' is too vague and could lead to confusion because ``program 
of capital projects'' is not a defined term.
    Two associations and several State DOTs recommended that the final 
rule include a clearly worded provision that would limit the coverage 
of the rule to important assets. At least for non-rail assets, these 
commenters recommended that FTA:
    1. Limit coverage to revenue vehicles and to assets other than 
revenue vehicles with an initial cost of at least $50,000.
    2. Limit coverage of assets other than revenue vehicles to those 
with an initial minimum ULB of at least 5 years.
    3. Limit coverage of assets other than revenue vehicles by 
excluding office space or other administrative support facilities or 
equipment (and by not including an ``administrative'' line item in 
Appendix A to part 625).
    Similarly, a transit operator stated that the proposed definition 
of ``equipment'' would include office chairs, storage cabinets, and 
other incidental ``equipment,'' that are not worth investing in data 
capture and management. The commenter recommended a risk-based approach 
to prioritize detailed data collection for more important assets (e.g., 
trackway and rail vehicles) and limited data collection for less 
important assets (e.g., office chairs).
    A transit operator requested that FTA clarify the level of detail 
required in reporting asset data, asserting that it is described 
differently in sections 625.5 and 625.25(b)(1). Another commenter asked 
whether it could simply list a bus or whether it needed an inventory 
for all equipment installed on the bus post-manufacture (e.g., Drive 
Cam, cameras, fare box, radios, CAD/AVL). This commenter also asked if 
a vehicle camera system would be classified in the rolling stock or 
equipment categories. An MPO said that the final rule should either 
confirm that the TAM plan sponsor has flexibility in defining the 
granularity of the asset inventory or FTA should provide additional 
guidance as part of the final rulemaking.
    A couple of commenters requested additional clarity on the 
definition of equipment, stating that it is different in Sec. Sec.  
625.5, this section, and 625.43.
    One of these commenters, a transit agency stated that guidance is 
necessary for consistency and suggested that FTA could have transit 
agencies report at a systems-level (i.e., electrical, plumbing, 
building envelope, roof, lifts, etc.) for facilities/stations, and by 
miles or linear feet of ROW for specific types of infrastructure 
assets. Further, the commenter suggested that substations could be 
reported both as a facility (broken out by systems) with the traction 
power equipment identified separately based on age and type. This 
transit agency asserted that by specifying a concrete approach that is 
replicable across agencies, FTA would ensure that data sets from 
various agencies can be merged at the national level and aggregated. 
Another transit operator suggested that transit agencies consider asset 
attributes in the development of an asset inventory, reasoning that 
otherwise performance targets would be difficult to establish.
    Expressing concern about the ability for transit operators to have 
completed a full asset inventory within the 2-year deadline, a transit 
operator requested clarification on whether a full inventory would need 
to be submitted with the first TAM plan.
    A regional transit operator commented that it will take all prudent 
steps to complete the data inventory for its contracted assets; 
however, some of the information may be considered proprietary and the 
private carriers may not be willing to share it due to liability 
issues.
FTA'S RESPONSE: TAM Plan--Asset Inventory
    FTA disagrees with the commenters who suggested that FTA only 
require the asset inventory to include assets above a specific monetary 
threshold. This final rule does not prescribe a level of detail for the 
asset inventory. Instead, the rule requires that the disaggregation of 
a divisible capital asset be identified in a manner that is consistent 
with the assets identified in a transit provider's program of capital 
projects. If an asset is ``large'' enough that a transit provider

[[Page 48914]]

includes it in its capital program, then it should be included in its 
asset inventory. However, FTA has added clarity for the equipment asset 
category of what to include in the asset inventory. Specifically, only 
transit provider owned equipment assets over $50,000 and all non-
revenue service vehicles regardless of value must be included in a TAM 
asset inventory. FTA encourages transit providers to include additional 
equipment assets that impact safety and operations to be considered 
alongside other equipment assets in their TAM plan elements.
    FTA does not believe that the final rule needs to include a 
definition of program of capital projects. Each transit provider 
regularly undergoes capital planning and programming activities to 
determine needs for the following year. FTA understands that each 
transit provider's planning and programming process may be unique, and 
as a result, the final rule provides the flexibility for each transit 
provider to fulfill the asset inventory requirement without imposing a 
one-size-fits-all process for identifying capital assets.
    Readers should understand that there is a distinction between the 
categorization of an asset (i.e. whether it meets the definition of 
equipment, infrastructure, rolling stock, or a facility) and whether or 
not a transit provider must include the asset in its asset inventory. 
Categorization of an asset is also distinct from whether or not a 
transit provider must set an SGR performance target for the asset 
(tabular illustration in Appendix C--Table 1). The final rule requires 
each transit provider to include in its asset inventory infrastructure, 
all non-revenue service vehicles regardless of value and owned 
equipment assets over $50,000, at a level of detail commensurate with 
its program of capital projects, and conduct a condition assessment of 
those assets for which it has capital responsibility. However, at this 
time, the performance measure for infrastructure is limited to rail 
fixed guideway assets and the performance measure for equipment is 
limited to non-revenue service vehicles. Therefore, a transit provider 
that does not operate a rail fixed guideway transit system would not 
have to set an SGR performance target for its non-rail infrastructure 
assets nor any equipment other than non-revenue service vehicles.
    FTA further clarifies the asset inventory must include all revenue 
vehicles, all passenger stations, all exclusive use maintenance 
facilities, all non-revenue service vehicles and provider owned 
equipment over $50,000, regardless of funding source. Also see FTA's 
response to definition of ``Capital Asset'' for an extended discussion.
    An illustrative example of the relationship between asset 
inventories, condition assessments and SGR performance measures is 
found in Appendix C--Table 2.
FINAL RULE:
    FTA is revising Sec.  625.25(b)(1) to clarify which assets 
(including but not limited to all revenue vehicles, all passenger 
stations, all exclusive use maintenance facilities, and provider owned 
equipment over $50,000 including all non-revenue service vehicles 
regardless of value) used in the provision of public transportation 
must be included in an asset inventory, at a level of detail 
commensurate with the level of detail used to describe assets in a 
transit provider's program of capital projects.
COMMENTS: TAM Plan--Condition Assessment
    A State DOT and an individual commenter recommended that Sec.  
625.25(b)(2) should include a universal condition rating scale. A State 
agency said it is important to develop objective methodologies to 
evaluate asset condition and to establish a link between those 
assessments and an investment prioritization plan.
    Several transit operators said the asset condition assessment must 
be more flexible. Two transit operators said FTA should allow transit 
operators to adopt a more rigorous means of condition assessment than 
age and ULB and report the results of their local assessment process. 
Two State DOTs and other commenters recommended allowing condition 
assessments to be made at the class level, rather than by individual 
projects, because targets are set at the class level. Another transit 
operator expressed support for FTA's proposal for allowing transit 
providers to choose a method or methods for conducting condition 
assessments, provided that the level of detail is sufficient to monitor 
the performance of capital assets. One transit company assumed that 
because the rule is silent with respect to how condition should be 
determined, any method is acceptable.
    Several commenters requested guidance on condition assessment. A 
transit operator asked if FTA will provide condition assessment 
guidance and what method of tracking should transit agencies follow. A 
transit agency similarly expressed concern that ``condition'' alone is 
vague, subjective, and open to individual interpretation and requested 
additional direction regarding condition assessment. An individual 
commenter requested a minimal condition assessment outline for guidance 
and to provide consistency. In particular, another transit operator 
asked to what level of detail service providers are expected to break 
down facilities and stations and their components for the purpose of 
the facilities asset category performance measure condition assessment, 
and whether the standard of condition being >=3.0 would apply to the 
whole facility (e.g., a weighted average of all its components). A 
transit agency requested additional guidance on condition assessments 
for facilities but also requested that the guidance be flexible to 
allow current assessment processes to apply. A transit agency asked if 
actual condition of the asset is required or if age would be an 
acceptable substitute. The commenter also asked if other proxies, as 
determined by the implementing agency, would be acceptable in lieu of 
physical condition.
    A State DOT said that the requirement to use a 1-5 TERM scale is 
inconsistent with the NPRM preamble, which states that transit 
providers may continue to use their own existing condition rating 
systems. This commenter requested clarification on this point, TERM 
training, and a conversion mechanism for ratings arrived through other 
assessment mechanisms. Similarly, a transit agency recommended that FTA 
develop criteria for assessing asset condition utilizing the TERM 
scale, recommending that the TERM condition of 2.5 be set as the 
minimum for which an asset is in a state of good repair, to remain 
consistent with previously published FTA guidance.
    A transit operator said that whole collection of actual asset 
condition data would be useful in the establishment of targets and 
investment prioritization, and that particular focus should be paid to 
performance of the asset relative to its designed purpose and cost 
effectiveness. This commenter asserted that using age, mileage, 
standard replacement, and maintenance schedules as a condition 
assessment does not keep to the intent of MAP-21. The commenter 
suggested that FTA define ``condition assessment'' in a manner that may 
include age and mileage information. In its own assessments, this 
transit operator explained that it also uses fluid analysis and 
corrosion inspections to determine the remaining useful life of rolling 
stock assets. This commenter suggested that condition assessments along 
with performance-based monitoring be used for measuring the condition 
of infrastructure.

[[Page 48915]]

    A transit operator stated that the text implies that that the 
condition assessment should be informed by the SMS. The commenter 
expressed concern that because this requirement ties the evaluation of 
safety risk to another proposed regulation, the application of SMS to 
the National TAM System is not definitive until the SMS rule is final.
    A transit operator said the preamble discusses the TAM requirement 
for a condition assessment that must identify a safety hazard or 
failure to meet ADA requirements related to the use of that capital 
asset. The commenter said the requirement to include this sensitive 
data and analysis in the public TAM document could potentially expose a 
transit agency to risks that could compromise the agency and its 
efforts to keep assets in a state of good repair.
FTA'S RESPONSE: TAM Plan--Condition Assessment
    FTA has provided flexibility for condition assessments so 
individual transit providers and sponsors can determine the most 
effective methodology to use for their circumstances. A universal 
condition rating scale would not support this intent. FTA agrees that 
it is important for a transit provider to develop objective 
methodologies to evaluate asset condition. FTA is developing guidance 
to assist transit providers with developing these methodologies, but 
the final rule does not establish a universal condition rating scale.
    It is important to note the differences between the TAM plan 
condition assessment requirement and performance measure development. 
For the TAM plan asset inventory, FTA only requires that ``a condition 
assessment generates information in a level of detail sufficient to 
monitor and predict the performance of capital assets.'' Conversely, 
the performance measures are not reflective of the entire asset 
inventory, only those specific asset classes related to the performance 
measures. For facilities the performance measure includes: (1) 
Administrative and maintenance facilities as well as (2) passenger and 
parking facilities. The equipment performance measure only includes 
non-revenue service vehicles. The rolling stock performance measure 
includes all revenue vehicles, by mode. Lastly, the infrastructure 
performance measure only includes rail fixed guideway. See also 
Appendix C_Table 1 and 2.
    FTA asked the industry a number of questions regarding measuring 
condition in the ANPRM and analyzed those responses in the NPRM. The 
resulting performance measures represent a range of condition 
measurement approaches from simple to complex. FTA does not require 
sophisticated condition measurement methodologies for the TAM plan 
element or for SGR performance measures, but encourages transit 
providers of sufficient experience and sophistication to pursue more 
complex condition assessments based on more than age and mileage for 
rolling stock as well as other asset categories. FTA recognizes that 
some transit providers are prepared for more sophisticated condition 
assessment requirements and some are not, therefore the final rule 
provides for flexibility. FTA agrees that condition assessments can be 
conducted at the class level. A transit provider may develop its own 
condition assessment methodologies. FTA is developing guidance for 
measuring facility and infrastructure conditions.
    The performance measure for the facility asset category is measured 
by the TERM scale. However, FTA does not require that transit providers 
use this scale in the condition assessments required under Sec.  
625.15(b)(2). FTA declines to set the performance benchmark at 2.5, 
rather than 3.0, because a benchmark of 2.5 would require all transit 
providers to use the TERM-Lite model in order to calculate the 2.5 
rating. FTA believes that this would be overly burdensome on many 
transit providers. The TERM scale is an integer based scale, thus a 
direct measure of condition 2.5 is not possible. Instead, condition 
ratings to one decimal point are produced by the TERM-Lite model as an 
estimate of condition between condition assessments. Thus, FTA is 
setting the benchmark at 3.0, as this will reflect the actual results 
being produced by transit providers carrying out their own condition 
assessments.
    FTA does not plan to produce a TERM conversion mechanism, as there 
are a number of methodologies a transit provider could use for 
condition assessment. It would not be possible for FTA to produce 
conversion mechanisms for all of them. However, FTA will provide 
technical assistance to those transit providers who require assistance 
with either determining the best condition assessment methodology or 
adapting their existing methodology to the TERM scale for the SGR 
performance measure targets.
    FTA agrees that there is a link between condition assessments and 
the investment prioritization. The condition assessment informs the 
investment prioritization and thus must collect the relevant 
information regarding the asset's ability to perform in its current 
condition. For example, if an asset fails to meet an ADA requirement 
which will increase costs associated with any program or project 
related to that asset class, this information is gathered at the 
condition assessment stage and will inform the investment 
prioritization. This final rule does not increase a transit provider's 
responsibilities under the ADA, but merely explicitly incorporates ADA 
accessibility assets into the TAM framework.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments. However the final rule does clarify that recipients and 
subrecipients are required to assess and report the condition of only 
assets inventoried for which the transit provider has direct capital 
responsibility.
COMMENTS: TAM Plan--List of Analytical Processes or Decision Support 
Tools
    Some public comments addressed the Sec.  625.25(b)(3) proposed 
requirement that a TAM plan must include the identification of which 
decision support tool or tools were used to create the TAM plan.
    A professional association and a State DOT asked for clarification 
on what decision and support tools are considered appropriate and 
sufficient. A transit operator asked if an agency's decision support 
tool should prioritize investment using the same methodology that FTA 
has previously used to report to Congress (i.e., TERM and TERM Lite). 
An individual commenter also urged FTA to provide guidance on this TAM 
plan element and asserted that requiring a description of decision 
support tools is shortsighted because the purpose of this section is to 
ask grantees to provide the method of prioritizing projects.
    A transit operator asked how FTA anticipates that analytical tools 
will assist decision-making. Another transit operator recommended that 
rather than referring to ``list of the'' following, FTA should say ``A 
description of the transit provider's analytical processes or decision-
support tools that. . .'' One transit agency said the decision support 
tool and methodology will result in more 5310 providers disengaging 
from coordination efforts and ``siloing.''
FTA'S RESPONSE: TAM Plan--List of Analytical Processes or Decision 
Support Tools
    A decision support tool must be able to support development of the 
investment prioritization. The tool may be a documented process and 
does not

[[Page 48916]]

need to be electronic. Whatever the medium, the tool should assist a 
transit provider in understanding its capital investment needs and in 
prioritizing reasonably anticipated funding towards those needs.
    FTA agrees with the commenter who suggested that FTA change 
requirements from a listing to a description of analytical processes 
and decision support tools. FTA believes that this change will make it 
clearer that the analytical process or decision support tool need not 
be electronic.
FINAL RULE:
    FTA is revising this section based on comments from NPRM to require 
that a TAM plan include a description of analytical processes or 
decision support tools.
COMMENTS: TAM Plan--TAM and SGR Policy
    A few public comments addressed the fifth proposed TAM plan element 
(Sec.  625.25(b)(5)), which was described in the NPRM as an 
identification of the transit provider's policies and strategies for 
developing an effective TAM plan, including a transit provider's 
executive level directions to set or support the goals for its TAM 
plan. A transit operator asked what needs to be reported in response to 
Sec.  625.25(b)(5) and (6) if an agency already has a TAM plan and 
policy.
FTA'S RESPONSE: TAM Plan--TAM and SGR Policy
    The NPRM did not propose to require a transit provider to report 
its TAM policy to FTA. Transit providers are required to submit to the 
NTD an annual data report that includes the SGR performance targets for 
the following year and a current assessment of the condition of the 
transit providers' public transportation system. Transit providers are 
also required to submit an annual narrative report to the NTD that 
provides a description of any change in the condition of a transit 
provider's transit system from the previous year and describes the 
progress made during the year to meet the performance targets set in 
the previous reporting year. There are no additional reporting 
requirements under this rule.
    This final rule is flexible and scalable. A transit provider may 
incorporate its existing TAM policies and practices into its TAM plan.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
COMMENT: TAM Plan--Strategy for Implementation of TAM Plan
    A few public comments addressed the sixth proposed TAM plan element 
(Sec.  625.25(b)(6)), which was described in the NPRM as a strategy for 
TAM plan implementation, i.e., the process a transit provider will 
follow in order to achieve its TAM plan. A transit agency expressed 
support for the inclusion of a TAM policy as part of a certified TAM 
plan. However, the commenter requested additional information on how to 
meet this non-statuary requirement without being duplicative of other 
TAM plan components. Without clarification, the commenter recommended 
removing this provision.
FTA'S RESPONSES: TAM Plan--Strategy for Implementation of TAM Plan
    A transit provider's TAM plan implementation strategy should 
outline a plan showing the activities necessary to achieve its asset 
management goals (including all aspects of change management). The plan 
should outline a schedule with roles, responsibilities, 
accountabilities, tasks, and dependencies. The implementation process 
should addresses dependencies, including reliance on the hiring of new 
staff, funding availability, or software development. The process also 
should reconcile asset management priorities against other agency 
initiatives. Implementing activities should be established based on an 
assessment of how well they are expected to accomplish the goal of 
achieving or maintaining a state of good repair of the provider's 
assets. To the extent possible, the implementation strategy should 
address specific problems or deficiencies that improve performance.
FINAL RULE:
    FTA is not making any revision to this section in the final rule 
related to these comments.
COMMENTS: TAM Plan--Description of Annual Key Transit Asset Management 
Activities
    Some public comments addressed the seventh proposed TAM plan 
element (Sec.  625.25(b)(7)), which was described in the NPRM as a list 
of the key activities or actions that are critically important to 
achieving the transit provider's asset management goals for the year. A 
transit operator asked if the ``key activities'' are intended to focus 
on discrete projects and actions or if it meant to document ongoing, 
routine asset management practices for each asset class (i.e., 
describing asset life-cycle procedures from specification and 
procurement, through to disposition). If the latter, the commenter 
asked how it should determine which asset classes warrant specific 
levels of detail documentation, and how much additional cost and staff 
effort would be required to prepare such a TAM plan.
    A transit operator requested that, if FTA is proposing to require a 
list of annual activities in a TAM plan, then FTA should provide an 
easy way to update the previous year's submission because anticipated 
annual changes would be minor. Another transit operator asked, in the 
case of an agency that already has a TAM plan, if this TAM plan element 
would be a list of next steps for continual improvement.
FTA'S RESPONSES: TAM Plan--Description of Annual Key Transit Asset 
Management Activities
    In the NPRM FTA proposed that a TAM plan include a description of a 
transit provider's key asset management activities that it plans to 
accomplish in the upcoming year. This final rule does not prescribe 
what the description must include or how a transit provider must 
develop it. However, examples of activities include ``combine three 
departments' asset inventories'', ``develop a lifecycle management 
template and populate it with information from three most-critical 
asset classes,'' or ``hire an asset management program manager.'' A 
description of activities also could include a list of next steps for 
continual improvement.
FINAL RULE:
    FTA is not making revisions to this section in the final rule 
related to these comments.
COMMENTS: TAM Plan--Specification of Resources Needed To Develop and 
Implement the TAM Plan
    Some public comments addressed the eighth proposed TAM plan element 
(Sec.  625.25(b)(8)), which was described in the NPRM as an 
identification of the financial resources that a transit provider 
estimates are necessary for implementing its TAM plan and achieving its 
asset management goals. A transit operator asked FTA to clarify if this 
TAM plan element should include an analysis of resources required to 
perform maintenance activities in addition to capital investment work 
or whether it is only intended to capture the costs associated with TAM 
plan preparation. Another transit operator stated that this additional 
TAM plan requirement for tier I providers as well as the one in 
proposed Sec.  625.25(b)(9) would create a reporting burden that

[[Page 48917]]

may divert time and resources from improving asset condition and system 
safety.
FTA'S RESPONSES: TAM Plan--Specification of Resources Needed To Develop 
and Implement the TAM Plan
    The NPRM proposed that a transit provider identify the resource 
needs to develop and implement a TAM plan, including those resources 
that a transit provider reasonably anticipates would be available over 
the TAM plan horizon period. In order to set achievable SGR goals and 
in order to do a meaningful investment prioritization, a transit 
provider needs to know what resources it anticipates needing and what 
is available. The resources could include financial, human, equipment, 
and software. FTA has not required a specific methodology or format in 
the final rule.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
COMMENTS: TAM Plan--Monitoring TAM Plan and Related Business Practices
    A few public comments addressed the ninth proposed TAM plan element 
(Sec.  625.25(b)(9)), which was described in the NPRM as a continuous 
improvement plan that sets timelines and milestones to track the 
transit provider's progress towards meeting its asset management goal. 
A transit operator recommended that if FTA is planning to adopt an 
oversight schedule to evaluate grantees' TAM plans then it should be 
integrated into existing FTA oversight functions instead of being a 
stand-alone requirement. Another transit operator said the requirement 
for a monitoring and evaluation plan should be better differentiated 
from other TAM plan components. An individual commenter asked for 
guidance and instruction on the continuous improvement process.
FTA'S RESPONSE: TAM Plan--Monitoring TAM Plan and Related Business 
Practices
    FTA intends to incorporate compliance with requirements of the 
final rule into its existing oversight activities. FTA will issue 
guidance to aid transit providers in their implementation of the final 
rule.
FINAL RULE:
    FTA is not making any revisions to this section in the final rule 
related to these comments.
COMMENT: TAM Plan--Tier II Providers Exempt for TAM Elements
    A business association expressed appreciation for FTA's efforts to 
create a tiered approach for the proposed National TAM System that 
acknowledges the diversity of transit systems.
    Some public commenters provided other comments on FTA's proposed 
approach to transit asset management. For example, a transit operator 
asserted that the proposed rule has not provided the necessary 
flexibility to facilitate the effective participation of small transit 
operators. A professional association urged FTA to recognize the 
inherent differences in the size of agencies by ensuring that any new 
regulations allow flexibility for small operators to more easily comply 
and by establishing minimal universal requirements that can be applied 
across all agencies to allow for greater flexibility and a scaled 
approach for implementation. Voicing similar concerns, a transit 
operator recommended that FTA finalize the rule by implementing TAM 
principles without overly burdening States, small providers, and 49 
U.S.C. 5310 subrecipients.
    Some public comments addressed the proposed special provision for 
tier II providers that would allow them to include only the first four 
proposed TAM plan elements in their TAM plans (Sec.  625.25(c)).
    Several State DOTs and other commenters expressed support for the 
reduced requirements for small operators. Three State DOTs said Section 
5310 subrecipients should be excluded from this rule. One of the State 
DOTs and another commenter recommended that, at a minimum, Section 5310 
subrecipients should be limited to only including the TAM plan elements 
at proposed Sec.  625.25(b)(1) and (2). Similarly, a transit operator 
recommended further scaling back the requirements for small operators.
    A tribal government appreciated the reduced TAM plan requirements 
for tier II providers but asserted that it is not enough of a burden 
reduction given FTA's expectations for the analytical processes, 
decision support tools, investment needs, and prioritization strategies 
for tier II providers. However, one State DOT said the non-statutory 
criteria should extend to tier II providers who are transporting the 
public.
    A transit operator supported inclusion of the non-statutory TAM 
plan requirements in proposed Sec.  625.25(b)(5) through (9) because 
they align with ISO 55000 and international best practices for asset 
management. However, the commenter said FTA must understand that 
grantees will have to dedicate significant resources to developing TAM 
plans that exceed the statutory requirement. In contrast, a private 
transit operator asserted that because the TAM plan requirements in 
proposed Sec.  625.25(b)(5) through (9) are not included in MAP-21, 
those elements should not be a requirement of the final rule.
FTA'S RESPONSE: TAM Plan--Tier II Providers Exempt for TAM Elements
    The National TAM System is a scalable and flexible framework that 
establishes terms and concepts and allows for consistency and 
standardization of formats, without being prescriptive on methods or 
application. FTA understands that smaller, rural, or less sophisticated 
transit providers may not have the expertise or resources to develop 
and implement a nine element TAM plan. FTA believes that this final 
rule imposes the least burdensome reporting requirements while still 
meeting the requirements in the law by allowing tier II providers the 
option to develop and implement a four element TAM plan and participate 
in a group TAM plan developed by a sponsor. The sponsor would be 
responsible for reporting required information to FTA on behalf of all 
group TAM plan participants, thereby reducing the burden on those small 
providers.
    FTA believes that the mechanics of the development for a group TAM 
plan is a local decision. Although sponsors are primarily responsible 
for the development of the group TAM plan, participants should 
collaborate or contribute to the development of the group TAM plan, to 
the extent practicable.
FINAL RULE:
    In the final rule FTA revises the definition of tier II provider to 
include explicitly American Indian tribes.
COMMENTS: TAM Plan--Additional Comments
    Some commenters provided other comments on the proposed TAM plan 
requirements that were not otherwise addressed above.
    Two trade associations and a transit operator urged FTA to provide 
as much flexibility in compliance as possible so that agencies can make 
use of their existing processes and documents--including TAM plans 
required by the State--without too much additional burden. Similarly, a 
transit operator said attempting to define how each TAM

[[Page 48918]]

plan should look and how each agency will perform asset management by 
means of strict regulation and use of required methodology limits all 
agencies from creating a plan that would add value to their existing 
processes while meeting the needs of the legislation. An MPO and two 
transit operators requested that the final rule clarify, that if other 
documents contain all of the required elements, such as Short Range 
Transit Plans (SRTPs), such documents may be used to satisfy the 
requirement for a TAM plan.
    Two transit operators recommended that FTA eliminate a separate 
requirement to prepare fleet management plans, stating that separate 
asset management and fleet management reporting requirements will 
create redundancy and unnecessarily burden grantees.
    Some commenters provided suggestions for additional elements to 
include in the TAM plan, including a description of QA/QC methods, 
organizational charts, and a list of asset management personnel. A 
trade association recommended that the grantees' TAM plan and project 
prioritization be made public.
    Expressing concern about the limited resources of tier II systems, 
a trade association urged FTA to not require--either stipulated or a 
functional byproduct of the rulemaking--that small urban, rural, or 
tribal providers hire additional staff to oversee compliance with new 
regulations. A transit operator recommended that FTA revise its SGR 
formula program language so that ``transit asset management practices 
inform the capital investment planning and programming processes by 
producing data that informs the investment prioritization.''
FTA'S RESPONSE: TAM Plan--Additional Comments
    When possible, FTA has remained silent on methodologies transit 
providers must use and has recognized that a strict national system 
would not be useful or effective. FTA does not want to create 
redundancy with effective practices and has established a framework and 
standard terminology the industry can follow to compare their TAM and 
SGR nationally.
    A transit provider may use any source available to it, including 
existing asset inventories, to develop a TAM plan required under the 
final rule. The fleet management plan required at the grant making 
stage of a project may differ from the TAM plan asset inventory as the 
TAM plan has a four year horizon, while the grant application primarily 
reflects current acquisitions.
    FTA encourages and supports the use of additional TAM plan elements 
such as QA/QC methods, organizational charts, etc. but does not require 
them in the final rule.
    FTA will not collect or approve TAM plans. A transit provider will 
certify compliance with the final rule through FTA's certification and 
assurances process. The role of the sponsor of a group TAM plan is to 
certify on behalf of their participants. In addition, the sponsor will 
accept certification from their subrecipients that opt-out of a group 
TAM plan.
    FTA has addressed the comments related to the role of SSO 
previously in the Implementation and Oversight section.
    FTA has attempted to minimize the compliance burden on small 
operators and has also provided an option which shifts the 
administrative and oversight burden from the small operator to the 
sponsor. However, the individual transit provider is the only entity 
capable of implementing TAM at its agency.
    Unless protected under State law, a TAM plan would be available to 
the public.
FINAL RULE:
    FTA is not making any revisions to this section in the final rule 
related to these comments.
625.27 Group Plans for Transit Asset Management
    The NPRM proposed that all recipients and subrecipients of Chapter 
53 financial assistance must develop a TAM plan. This requirement is 
met either through an individual TAM plan or through a group TAM plan. 
The statute includes other requirements for the National TAM System, 
which were proposed in the NPRM, and tied to the sponsorship of the TAM 
plan. Sponsoring a group TAM plan does not make the sponsor a transit 
provider; a sponsor must own, operate or manage capital assets in 
transit service to be a transit provider.
    This section proposed that any recipient of FTA funds with 
subrecipients must sponsor a group TAM plan for their tier II provider 
subrecipients that are not also recipients of 5307. Thus, all 
subrecipients under the 49 U.S.C. 5311 rural area formula program that 
are not also direct recipients of 49 U.S.C. 5307 urbanized area formula 
grants, regardless of size, must have the opportunity to participate in 
a group TAM plan. Sponsors would not be permitted to reject requests 
from a tier II provider to participate in a group TAM plan and must 
develop a group TAM plan for all eligible tier II providers. However, a 
group TAM plan participant may choose to opt-out of a group TAM plan by 
notifying the group TAM plan sponsor of its intent and by creating its 
own TAM plan. In addition, an eligible participant that is a 
subrecipient to more than one sponsor may select which group TAM plan 
it would like to participate in. For example, a rural area formula 
program subrecipient that operates in multiple states may be eligible 
to participate in more than one group TAM plan. The subrecipient would 
need to select which group TAM plan it wanted to participate in, and 
formally opt out of the plan that it chose not to participate in. In 
the absence of explicit notification from a tier II provider of its 
intent to opt-out, the sponsor must include that provider in the group 
TAM plan. A State or direct recipient that is also transit provider may 
only participate in a group TAM plan as the sponsor. Such a State or 
direct recipient may not include itself in the group plan it is 
sponsoring for its subrecipients; it is required to develop a separate, 
individual TAM plan for its own transit system.
    Each transit provider's Accountable Executive is required to 
coordinate, to the extent practicable, with a group TAM plan sponsor in 
the development of the group TAM plan. Accordingly, a group TAM plan 
sponsor is required to coordinate the development of the plan with each 
of the plan participants' Accountable Executive. Notably, the transit 
provider retains responsibility for implementing the group TAM plan at 
their agency.
COMMENT: Group Plans--Responsibilities for States, Tribes, and Direct 
Recipients
    Numerous public comments addressed the option for tier II providers 
to participate in a group TAM plan (proposed Sec.  625.27(a)(2)) and 
the related responsibilities for States, tribes, and direct recipients 
relating to group TAM plans (proposed Sec.  625.27(a)(1) through (3)). 
Two State DOTs opposed a mandate on the State to develop a group TAM 
plan for all of its tier II providers. One State DOT suggested that 
States should not be required to prepare a TAM plan for their tier I or 
tier II subrecipients. One State DOT requested that DOTs be allowed to 
prepare a group TAM plan that includes all transit operators in the 
State (tier I and tier II). A transit operator stated that sponsorship 
of a group TAM plan should be a voluntary choice and that the sponsor 
should serve in a coordinating and collaborative role. The commenter 
stated that any costs incurred by the group TAM plan

[[Page 48919]]

sponsor should either be allowed to be passed through to the 
participating subrecipients or else should be eligible for 
reimbursement by FTA.
    Several State DOTs and other commenters recommended that State DOTs 
be mandated only to do a group TAM plan for its subrecipients under the 
49 U.S.C. 5310 and Section 5311 programs as these subrecipients are 
already subject to State oversight and their Federal funds are already 
programmed by the State across the entire group. One of these State 
DOTs and other commenters suggested that separate group TAM plans 
should be allowed for subrecipients under the 49 U.S.C. 5310 and 5311 
programs.
    A State DOT urged FTA to establish a smaller fleet size threshold 
for urban systems to qualify for inclusion in a State plan, which the 
commenter said would recognize the urban/rural distinctions that 
already exist. Alternatively, this commenter would endorse limiting 
mandatory State plan participation for subrecipients under 49 U.S.C. 
5310 and 5311. Two State DOTs suggested that 49 U.S.C. 5310 
subrecipients with less than 10 vehicles should be excluded from the 
group TAM plan requirements. To decrease the burden further, these 
commenters recommended that FTA require reporting only on FTA-funded 
assets for 49 U.S.C. 5310 subrecipients.
    A State public transportation system also suggested that group TAM 
plans should be limited to only FTA-funded assets used in the provision 
of public transportation services, reasoning that it would be an 
inappropriate burden to apply the TAM regulations to all of 
subrecipients' assets that directly or indirectly support its 
transportation service. This commenter also urged FTA to eliminate the 
TAM plan requirements for subrecipients that only receive 49 U.S.C. 
5310 funds, reasoning that a majority of such subrecipients in the 
State have fewer than five vehicles, which are used to provide 
transportation to only program participants with specific needs, rather 
than for public transportation services.
    Some State DOTs and a professional association said that for 
subrecipients other than those that are solely subrecipients under 49 
U.S.C. 5310 or 5311, it should be a mutual decision between a group TAM 
plan sponsor and the eligible providers in the group if a group TAM 
plan will be done. One of the State DOTs and the professional 
association stated that after the mutual decision to produce a group 
plan is made, it should be the sponsor, not the individual providers, 
who determine if an individual provider may opt out. A State DOT 
requested that rather than requiring State DOTs to develop a group plan 
unless participants opt out, the FTA TAM rule should allow operators to 
develop their own plans with State DOTs developing a group TAM plan for 
remaining participants.
    A few State DOTs and a professional association said that by 
mandating the State DOT to prepare a group plan for small urban 
providers (e.g., subrecipients under 49 U.S.C. 5307 and Section 5339), 
FTA would significantly increase the role of the State DOT in planning 
and subsequent oversight of this group of providers. These commenters 
opposed the transferring of additional responsibilities for small urban 
providers from FTA to the States. A professional association requested 
additional funding for State DOTs to be able to prepare the group TAM 
plans.
    A transit operator said it is the direct recipient of 49 U.S.C. 
5307 funds, and that it also has one subrecipient of its 49 U.S.C. 5307 
funds. This commenter stated that its subrecipient is also a 
subrecipient of 49 U.S.C. 5310 and Section 5311 funding from the State, 
and asked if it would be required to complete a Group TAM plan. A 
transit operator expressed concern that while it will need to complete 
an individual TAM plan because of its Tier I status, as a 49 U.S.C. 
Section 5311 subrecipient it will also be obliged to participate in a 
State group TAM plan. The commenter said this will result in an 
additional cost that may not have been captured in the cost analysis 
performed by FTA.
    A transit operator asked if tier I agencies that have subrecipients 
will be able to combine their agency plan with those of their 
subrecipients. A State DOT and a professional association suggested 
that States that are both transit operators and sponsors of group TAM 
plans should only be required to prepare a single TAM plan inclusive of 
the statewide system, which may include all the assets of direct 
recipients, subrecipients, and transit providers if that makes sense 
for their State. Some State DOTs and a professional association 
requested clarity on the State's roles and responsibilities in 
resolving conflicts that may arise between TAM plan sponsors and a 
subrecipient.
    A State DOT requested an example of a non-State group TAM plan 
sponsor and clarification as to whether an MPO could be a group TAM 
plan sponsor. This commenter requested an example of when the MPO would 
have the responsibility for integrating group TAM plans and when it is 
a State responsibility. An MPO requested that FTA add explicit 
clarifying language to the final rule stating that an MPO that merely 
receives funds from FTA and passes the funds along to transit operators 
would not be required to develop and carry out a TAM plan or a group 
TAM plan, consistent with the analysis of Sec. Sec.  625.5 and 625.27 
in the NPRM. Another MPO requested that FTA clarify the level of 
responsibility of a group TAM plan sponsor by setting a minimum 
expectation that requires the sponsor to focus on coordination and 
collaboration while preserving local decision-making.
    A professional association supported the ability of American Indian 
tribes to develop their own TAM plans, even when they are (tier II) 
subrecipients of the State under the 49 U.S.C. 5311 program. This 
commenter also recommended that the rule should clarify that it is a 
mutual decision between the tribe and the group TAM plan sponsor if a 
tribe will be include in a group TAM plan and should clearly state 
that, if a tribe opts to be part of a group TAM plan, the tribe must to 
agree to setting targets and prioritizing investment across the entire 
group, which could result in the State DOT being involved in 
programming Federal funds available to the tribe both as a subrecipient 
and direct recipient.
    A State transit association recommended that FTA should eliminate 
the lead agency model and not implement a requirement that ``designated 
recipients [must] review TAM plans for subrecipients.'' The commenter 
asserted that many transit agencies the DOT has approached to be lead 
agency have refused based on unwarranted liability, lack of staffing to 
monitor sub-grantees, and lack of additional administrative funding to 
cover oversight.
FTA'S RESPONSE: Group Plans--Responsibilities for States, Tribes, and 
Direct Recipients
    FTA has established a two-tier approach to TAM plan development to 
reduce the burden on smaller transit providers. The NPRM proposal was 
consistent with other FTA programs whereby a State, direct or 
designated recipient oversees subrecipients and certifies to FTA on 
their behalf. The costs associated with developing a group TAM plan are 
eligible under many grant programs (e.g., Urban area formula program, 
rural area formula program, state of good repair formula), and the 
Sponsor is in a better position to determine the future funding for 
investment prioritization.
    The feasibility of the group TAM plan assumes that the funding 
relationship between recipients and subrecipients

[[Page 48920]]

naturally lends itself to this type of arrangement because the process 
of prioritizing investments is already occurring at the sponsor level. 
As a result, it is logical to require States and direct recipients (or 
designated recipients of 49 U.S.C. 5310 funds) to take a leadership 
role in developing group TAM plans for their subrecipients. However, if 
this relationship is not appropriate for a particular tier II provider, 
then that tier II provider can opt out of the group TAM plan and 
develop its own TAM plan.
    The sponsor may determine that multiple group TAM plans are 
necessary for their subrecipients. For example, a State DOT may decide 
to establish separate group TAM plans for its 49 U.S.C. 5310 and 5311 
subrecipients. Or a State DOT may decide to establish a single group 
plan for all of its subrecipients. The final rule provides flexibility 
to sponsors to decide the number of group plans that it should develop.
    FTA agrees that the group TAM plan should include those 
subrecipients already subject to the sponsor's oversight and does not 
intend to create new relationship of oversight not already in practice. 
Thus, FTA has revised the final rule to clarify that sponsors are not 
required to offer a group TAM plan to those subrecipients that are also 
direct recipients of 49 U.S.C. 5307 funds. However, any direct 
recipient of 49 U.S.C. 5307 funds that is a tier II provider remains 
eligible to participate in a group plan by mutual agreement of the 
sponsor and the transit provider. For example, a tier II transit 
provider that is a direct recipient of 49 U.S.C. 5307 funds, and is a 
subrecipient of 49 U.S.C. 5311 funds from the State may participate in 
the State's group plan by mutual agreement, but the State is not 
required to include this subrecipient in a group TAM plan.
    FTA recognizes that subrecipients with very small fleets of less 
than ten vehicles have unique circumstances, and FTA has sought to 
minimize the burden on these providers as much as possible.
    As noted earlier, the intention of the asset inventory is to 
provide a strategic perspective capital assets used in the provision of 
public transit. As such all assets, regardless of funding source, are 
parts of the landscape and subject to these provisions.
    FTA wishes to clarify that there are three types of TAM plans (1) a 
nine element individual tier I plan, (2) a four element individual tier 
II plan, and (3) a four element group TAM plan. A transit provider that 
is a recipient under one program and subrecipient under another is not 
required to do two TAM plans, but must determine which is most 
appropriate.
    The role of a sponsor in the development of the TAM plan is that of 
the leader--the sponsor determines the asset inventory level of detail, 
the condition assessment methodology, and the criteria and weighting 
for investment priorities as well as which tools to use to support 
these efforts. As the leader, the sponsor is responsible to the extent 
practicable, for coordination and collaboration with all participants, 
while preserving local decision making. The participant is an active 
partner in the development of the TAM plan providing information 
necessary to conduct the analyses and providing feedback to the 
sponsor. The tier II participant maintains the autonomy to opt-out of a 
group plan if it is not effective.
    An example of a non-State sponsor is an MPO or transit provider who 
may be the designated recipient of 49 U.S.C. 5310 funds for their 
urbanized area and distributes those funds to subrecipients. Another 
example would be an MPO or transit provider that distributes some of 
the 49 U.S.C. 5307 funds for their urbanized area to subrecipients.
    FTA agrees that Native America tribes preserve the autonomy to 
develop their own TAM plan even if they are tier II provider 
subrecipients of the State. A tribe also may choose to participate in a 
group TAM plan sponsored by the State. Each participant must provide 
the sponsor with information necessary for the development of the group 
TAM plan.
    FTA disagrees that it should eliminate the lead agency model. The 
lead agency model reduces the burden on smaller providers, which FTA 
believes justifies the additional coordination burden placed on the 
sponsor. The lead agency approach seeks to use existing oversight 
relationships to reduce additional oversight burden to the sponsor.
FINAL RULE:
    FTA has made revisions to the final rule to clarify eligibility for 
participation in a group TAM plan and the responsibilities of a 
sponsor.
COMMENTS: Group Plan--Opting Out of Group TAM Plan
    Some public comments addressed the proposed option for a tier II 
provider subrecipient to ``opt-out'' of a group TAM plan and create its 
own TAM plan at proposed Sec.  625.27(a)(4). An MPO requested 
clarification on the requirements for a State to develop a group TAM 
plan for all tier II recipients and the ability of a participating 
accountable executive to opt-out of the State plan. A professional 
association expressed support for the provision that tier II agencies 
can elect to complete their own TAM plan.
FTA'S RESPONSES: Group Plan--Opting Out of Group TAM Plan
    The NPRM proposed that all sponsors develop a group TAM plan for 
their tier II provider subrecipients. A tier II provider's accountable 
executive may choose to opt-out of a group TAM plan for a number of 
reasons, including if the provider will develop its own individual TAM 
plan.
FINAL RULE:
    FTA is not making any substantive revisions in the final rule 
related to these comments.
COMMENTS: Group Plan--Plan Requirements
    Several commenters provided input on the group plan requirements 
proposed in Sec.  625.27(b). A State DOT said the group TAM plan 
requirements seem reasonable.
    Several commenters requested clarification on investment 
prioritization under group plans. Several State DOTs and other 
commenters said that the sponsor of a group TAM plan should establish 
targets and investment prioritization for all members of the group, as 
a whole. An MPO said FTA should clarify that the group investment 
prioritization should be based on the priorities of the individual tier 
II providers rather than those of the agency responsible for the 
development of the group TAM plan. A State DOT said language should be 
included to specify that policy guidelines by group TAM plan sponsors 
can guide asset investment prioritization at a high level. A State DOT 
said investment priorities for group TAM plans should only be advisory 
since they are set across the entire group.
    An individual commenter asked if all assets in a group TAM plan 
must be prioritized as if it were one transit agency, and if so, how 
this would affect grant decision-making.
    One commenter questioned whether it would then be advantageous or 
disadvantageous for a small operator to opt-out of the group plan and 
create its own plan in order to compete separately for State grant 
funding.
    A State DOT said it is unclear whether the proposed rule would 
require group TAM plan sponsors to develop ULBs for all providers

[[Page 48921]]

regardless of the providers' unique operating environments.
    A transit operator asked for guidance on asset planning, 
management, and inventory in a group TAM plan where a transit agency 
operates and maintains assets owned by another transit agency.
FTA'S RESPONSES: Group Plan--Plan Requirements
    In the NPRM, FTA proposed that sponsors develop unified targets for 
group TAM plans. This means that a sponsor would develop performance 
targets for each asset class in the group plan, for the entire group. 
While some participants may not have assets in every asset class 
included in the group plan, they are responsible for the programs and 
projects identified in the group plan investment prioritization that 
relate to their asset inventory. For example, a group plan participant 
that has ten cutaway vans, but no buses would have its assets included 
in the cutaway van mode SGR target, but the group plan may also include 
a target for buses. This participant is only responsible for 
implementing the TAM plan as it relates to their vans. They would not 
however, be involved in the attainment of the bus target.
    FTA agrees that a sponsor should establish the investment 
prioritization based on the priorities of the whole group, to the 
extent practicable. The methodology and practice for developing the 
group TAM plan are a local decision. FTA will provide guidance and 
technical assistance for sponsors and participants to assist in 
developing TAM group plans.
    A benefit of participating in a group TAM plan is the reduced 
administrative burden. A potential drawback is the lack of 
individuality in the TAM plan, as the TAM group plan is developed as if 
the group were one transit operator, pooling asset inventories and 
ultimately developing unified targets across the group as a whole.
    FTA clarifies that a ULB is not transit operator specific, but may 
be specific to a particular number of vehicles within the asset 
inventory. Group TAM plan sponsors will be able to specify different 
ULBs for different participants, or even for different fleets operated 
by a single group plan participant.
    FTA disagrees with the commenter that asserts the two tiered 
approach would lead to tier I Accountable Executives being responsible 
for tier II providers. The group TAM plan approach uses existing 
relationships between recipients. A tier II provider always reserves 
the option to opt-out of a group plan. A group TAM plan sponsor that is 
also a tier I provider must develop its own separate individual TAM 
plan.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
COMMENTS: Group Plan--Role of the Accountable Executive in Development 
of Group TAM Plans
    Several public comments addressed the role of the Accountable 
Executive in the development of group TAM plans as proposed in Sec.  
625.27(c)(2) and (3).
    Several commenters, including transit operators and professional 
associations, requested clarification on whether the Accountable 
Executive responsibilities remain with each tier II agency or whether 
the responsibility ``rolls up'' to the group TAM plan sponsor's 
Accountable Executive, with most generally expressing that each 
participating transit agency should have its own Accountable Executive. 
Some commenters requested FTA to clarity that tier II reporting 
agencies are not required to cede the role of Accountable Executive (or 
management of their agency) to their respective States or other direct 
recipients. A State DOT stated that, if States are required to include 
tier II 49 U.S.C. 5307 recipients, then it does not wish to assume the 
responsibility of the group's Accountable Executive. Another commenter 
asserted that the group TAM plan sponsor's designated Accountable 
Executive, if necessary under the rule, would have limited authority in 
making progress towards the targets. If the responsibility ``rolls up'' 
to the group TAM plan sponsor's Accountable Executive, a transit 
operator asked if such responsibility would provide the commenter with 
the authority to establish the capital program priorities for each of 
the tier II subrecipients.
    Some State DOTs and a professional association recommended that FTA 
clarify that just because the State DOT (as a group TAM plan sponsor) 
coordinates a group TAM plan, it does not mean that the State is 
responsible for implementation of the group TAM plan. Additionally, 
these commenters suggested that the State should not be considered a 
transit provider and not be required to have an Accountable Executive 
solely as a result of sponsoring a group TAM plan.
    A transit operator asserted that since tier I providers do not 
control the funding of the tier II providers, tier I should not be 
dictating how tier II providers manage their assets. This commenter 
said that this would force greater centralization of decision-making 
and tier I would need to have control over tier II funding decisions. 
Thus, according to this commenter, the Accountable Executive would end 
up being responsible for both the primary agency and the roll-up 
agencies managing their assets.
FTA'S RESPONSES: Group Plan--Role of the Accountable Executive in 
Development of Group TAM Plans
    In this final rule, FTA clarifies that a sponsor for a group TAM 
plan is not the Accountable Executive for each participating transit 
provider. By participating in a group TAM plan, an Accountable 
Executive may be required to defer to the decisions of the sponsor 
regarding prioritization of investments. However, each Accountable 
Executive is ultimately responsible for implementing a TAM plan. The 
Accountable Executive responsibilities do not ``roll-up'' to the 
sponsor.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
COMMENT: Group Plan--Providing Sponsors With Necessary Information 
(Role of Sponsor and Participant)
    A few public comment submissions addressed the proposed requirement 
that group TAM plan participants must provide group TAM plan sponsors 
with all relevant and necessary information for the development of the 
group TAM plan as proposed in Sec.  625.27(c)(4). An MPO suggested that 
the rule clarify the consequences of a group TAM plan participant not 
providing the required information, and provide the group TAM plan 
sponsor with a remedy or methodology to proceed without the missing 
information.
FTA'S RESPONSES: Group Plan--Providing Sponsors With Necessary 
Information (Role of Sponsor and Participant)
    The ultimate responsibility for development of a group TAM plan 
lies with the sponsor. However, participants should collaborate with 
sponsors and contribute to the development of the group TAM plan, to 
the extent practicable. FTA believes that the mechanics of the 
development for a group TAM plan are a local decision.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
COMMENTS: Group Plan--Other Comments
    Some commenters provided other comments on group TAM plans. For 
example, a transit operator asked how

[[Page 48922]]

SGR measures for several different agencies within a region can be 
rolled up if each service provider can define its own approach to 
quantify SGR. This commenter also asked what the role of a regional 
oversight board would be in the TAM effort if it oversees providers 
that would develop individual TAM plans due to the tier I level 
designation. An individual commenter stated that the group TAM plan 
provider cannot guarantee that they will be able to meet the plan's SGR 
goals because they cannot allocate the local funding that is required 
for capital grants.
    A trade association requested additional guidance on group TAM 
plans, including ongoing participation of grantees and subrecipients, 
in order to ensure consistency.
    Several State DOTs and other commenters urged FTA to clarify that a 
group TAM plan is not to be a collection of individual subrecipient 
plans into a single document; rather, it should provide group-level 
information. A State DOT requested that the group TAM plan approach 
provide increased flexibility.
    An MPO requested clarification on the relationship between the 
Coordinated Plan and the group TAM plan process requesting confirmation 
that the TAM plan investment prioritization does not supplant the 
Coordinated Plan.
    A State DOT requested guidance on the approval or certification 
process of a TAM plan. The commenter suggested that group TAM plans 
should be approved by the plan's sponsor, in coordination with each 
member of the group. However, the commenter said that formal approval 
by each Accountable Executive who is in a group TAM plan should not be 
mandated because the Accountable Executive for an individual member may 
not be fully supportive of the investment priorities made for the group 
as a whole.
FTA'S RESPONSES: Group Plan--Other Comments
    This final rule establishes the SGR performance measures in Sec.  
625.43. Each provider or sponsor must set performance targets based on 
the measures.
    Each transit provider can make its own SGR determinations taking 
into consideration the three objective standards.
    FTA agrees that a sponsor cannot guarantee results of their TAM 
plan because the responsibility for implementing the TAM plan resides 
with each transit provider. However, each participant should support 
the group's investment priorities. There are no financial rewards or 
penalties associated with target attainment.
    The group TAM plan is most effective if the group remains 
consistent over time. However, the tier II participants maintain the 
option to opt-out of the group TAM plan and create their own. In 
addition, a group TAM plan approach will be most effective where the 
required activities and analyses are conducted in consideration of the 
group as a whole, as opposed to a compilation of individual analyses, 
in order to develop unified targets. Nevertheless, the mechanics of the 
group TAM plan are a local decision. Additionally, FTA agrees that the 
group TAM plan process does not supplant existing decision making 
practices, such as the Coordinated Plan for Human Service 
Transportation.
    FTA will not routinely collect or approve TAM plans. Each transit 
provider or sponsor will certify compliance with the final rule through 
FTAs certification and assurances process.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
625.29 Transit Asset Management Plan: Horizon Period, Amendments and 
Updates
    This section proposed timeframes for developing and updating a TAM 
plan. A TAM plan is required to be forward looking, and is required to 
forecast projects, targets, and activities for at least four fiscal 
years. Some transit providers may desire a longer analysis period, 
however, the analysis period must be at least four years. Ideally, the 
TAM plan cycle should coincide, to the extent practicable, with the 
State and metropolitan planning cycle for development of the STIP and 
the TIP.
    This section also provided that a TAM plan should be updated in its 
entirety at least every four years, and again, this should ideally, 
coincide, to the extent practicable with the update cycle for the STIP 
and the TIP. The requirement to update the TAM plan means that a 
transit provider must revisit every element of its TAM plan and make 
any necessary changes for a subsequent version, at least once every 
four years. Additionally, during the course of the horizon period, a 
transit provider may choose to amend its TAM plan to reflect changes to 
investment priorities, targets, or other unforeseen occurrences (like a 
natural disaster) that impact the relevance of the TAM plan.
    FTA recommends that transit providers should consider current and 
future climate and weather-related hazards as part of their 
prioritization of investments. For example, the frequency and severity 
of potential hazards such as heavy rainfalls, coastal and riverine 
flooding, heat waves, extreme cold, and wind events may directly impact 
assets located in vulnerable areas. These potential hazards affect how 
a provider identifies and prioritizes necessary hazard mitigations, 
asset-replacement schedules, or the expected useful service duration of 
capital assets. A transit provider should have knowledge of the 
vulnerability of its system to natural hazards and prioritize 
protecting their assets from those hazards and improve the resilience 
of the system; however, FTA is not requiring a formal climate 
resiliency analysis as part of this rule.
COMMMENTS: Horizon Period
    Several commenters suggested that the TAM plans allow agencies to 
better align other plans, such as their capital plan. Accordingly, a 
few of these commenters suggested that the plan should be valid for 
four to eight years. Another commenter suggested that the TAM plan and 
targets should be valid for five years.
    A business association expressed support for proposed section 
625.29 because it would align TAM plans on a cycle that coincides with 
TIP and STIP development. In contrast, one transit operator commented 
that the metropolitan planning process (LRTPs, STIPs, and TIPs) is 
every five years and the FTA triennial review process is every three 
years, and asked why the TAM plan does not match one of these 
timeframes.
    A State transit association supported the peer recommendation that 
investment prioritization time periods should reflect a provider's 
short-term capital plans and be closely coordinated with TIP and STIP 
processes. However, this commenter recommended that FTA provide some 
guidance to DOT staff responsible for procurement regarding purchasing 
timelines, explaining that from the time an agency receives an award 
confirmation letter from the DOT, it typically takes up to 3 years to 
receive the vehicle.
    A transit operator asked in which instances, if any, would FTA 
allow investment prioritization to exceed the four-year target. If 
none, this commenter asked if FTA would provide a method in which 
agencies could request an extension of time to set forth the 
``sufficient investment'' that must be directed to projects that pose 
safety risks. Another transit operator said that the rule is unclear 
about how to reflect evolving priorities from year-to-year in

[[Page 48923]]

a TAM plan that requires project planning and prioritization to occur 
for a four year period.
FTA'S RESPONSE: Horizon Period
    FTA established the horizon period for TAM plans of four years to 
align with the Federal metropolitan and statewide planning processes. 
FTA recognizes that priorities and funding may shift over a four year 
horizon and has provided the option to update or amend the TAM plan 
during the horizon period.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
COMMENTS: Amendments and Updates
    Some transit operators and an MPO stated that developing a fixed 4-
year investment plan would be in conflict with their shorter capital 
budget cycles. These commenters suggested that the updates to the 
capital budgets should not require updates to the TAM plan. Also, two 
of the commenters suggested that agencies should be enabled to deviate 
from the project list in the TAM plan without alerting FTA in order to 
respond appropriately to changes in risk, financial conditions, service 
levels, or other considerations of asset management.
    A transit operator recommended that FTA allow agencies to update 
projects included in the TAM plan annually, reasoning that it may be 
difficult for agencies to forecast all projects to be included in the 
4-year timeframe, particularly in the early stages of implementing the 
TAM System.
    Two commenters recommended that the final rule state that annual 
target setting should adjust the prior year's targets only if 
significant asset changes occurred. Another commenter asserted that 
requiring updates each time the prioritization of projects changes 
equates to a yearly update, which is unnecessarily burdensome. This 
commenter suggested that updates should only be required concurrent 
with production of the STIP or TIP as written by the governing MPO. A 
transit operator asked FTA to clarify how it would define a 
``significant change'' that would warrant an annual update to the TAM 
plan.
FTA'S RESPONSE: Amendments and Updates
    FTA agrees that an update to a transit providers' capital budget 
does not by itself require a TAM plan update. However, depending on the 
magnitude of funding differential initially expected, a transit 
provider may determine an amendment or update is necessary to align the 
TAM approach with the current funding conditions. The investment 
prioritization and program of projects are a strategic projection for 
the four year horizon period. Using the best data and analysis 
available, the transit provider should be able to determine the 
priorities of investments. However, if deviations occur due to change 
in condition, risk, or other considerations, a transit provider may 
update or amend its TAM plan to reflect those deviations.
    The difference between a TAM plan update and a TAM plan amendment 
is the degree of the unexpected change. For example, a transit provider 
may update its TAM plan if it receives discretionary program funds that 
it did not anticipate receiving when it developed its investment 
prioritization.
FINAL RULE:
    FTA is not making any revisions to the final rule related to these 
comments.
COMMENTS: TAM Plan Process
    A professional association and three State DOTs said that FTA 
should clarify in the final rule how individual and group plans will be 
approved.
    A transit operator commented that the NPRM is unclear on how 
transit agencies will report TAM plans and updates to those plans. This 
commenter also asked to what extent reviewers during the FTA triennial 
review process will be empowered to reject performance targets in TAM 
plans.
    A transit operator said FTA should delay finalization of the 
present rulemaking to coincide with promulgation of final safety 
performance criteria for all modes of public transportation; and 
minimum safety performance standards for vehicles in revenue 
operations, as prescribed by 49 U.S.C. 5329(b)(2)(A) and (C).
FTA'S RESPONSE: TAM Plan Process
    FTA will not routinely collect or approve all TAM plans. Individual 
plans will be certified by a transit provider and group TAM plans will 
be certified by a sponsor as part of the other certifications and 
assurances that must be provided to FTA as part of any grant. The 
development and implementation of a TAM plan should not be merely an 
exercise to comply with the requirements of the final rule. The TAM 
plan is supposed to be a tool that a transit provider can use to assess 
the condition of its assets and make decisions on how to best 
prioritize funding for those assets in order to achieve and maintain a 
state of good repair. FTA intends to verify compliance with todays' 
final rule through its existing oversight activities. Performance 
targets are a local decision, and are neither approved nor rejected by 
FTA.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
625.31 Implementation Deadline
    This section proposed that all TAM plan development should be 
completed no more than two years after the effective date of the final 
rule. If the rule becomes effective at any time after the first day of 
the transit provider's or sponsor's fiscal year, the initial TAM plan 
should cover the remaining portion of that year plus a four-year time 
horizon. FTA will allow transit providers to extend the TAM plan 
implementation deadline by submitting a written request. A written 
request would need to include documentation which shows that the 
transit provider has made a good faith effort to meet the deadline, an 
explanation of why the transit provider could not meet the deadline, 
and a proposed new deadline, subject to FTA approval. FTA reserves the 
right to deny a request to extend the deadline.
COMMENT: 625.31 Implementation Deadline
    Some public comments addressed the proposed implementation deadline 
in Sec.  625.31. Several State DOTs supported FTA's recognition that 
the requirement to develop a TAM plan must have a delayed effective 
date. A State DOT and a transit operator expressed support for the two-
year implementation period to develop a TAM plan. Another transit 
operator expressed support for the proposal to allow transit providers 
extra time to develop a TAM plan with a written request.
    Several commenters recommended that FTA phase-in implementation of 
the TAM plan requirements. Four State DOTs and other commenters 
recommended that (1) the initial TAM plan (due after two years) only be 
required to include revenue vehicles, (2) within one year of TERM 
training in the State, facilities should be included in the plan and 
(3) all other assets should be included within four years from the 
final rule date. However, some of these commenters suggested that the 
third and final phase should only require FTA-funded assets and should 
occur four years after the initial TAM plan, versus four years from the 
final rule date. Similarly, a transit operator said two

[[Page 48924]]

years may be sufficient for some categories of assets (i.e., rolling 
stock), but asked that FTA consider phasing in categories where 
guidance is not currently available, such as facilities. A professional 
association and a State DOT recommended that facilities be exempted 
from target setting and from inclusion in a TAM plan until training is 
provided (preferably State-by-State) on the use of the TERM for the 
State DOT and its subrecipients. One State DOT explained that it will 
need a significant amount of time to complete physical inspections on 
all its facilities.
    A business association and an MPO recommended phasing in TAM 
requirements as follows: (1) begin with rail systems only (reasoning 
that these systems account for the greatest amount of capital assets 
and have the greatest safety risk exposure); (2) phase in transit 
systems with 100 vehicles or more between 2 and 4 years after phase 1; 
(3) consider phasing in transit systems with less than 100 vehicles in 
revenue service no more than two years after phase 2.
    An industry association and three State DOTs said the TAM plan 
should be required no sooner than 2 years after FTA has issued a TAM 
plan manual and template. A State DOT requested that FTA extend the 
proposed implementation deadline from two years to three years, 
reasoning that the additional time would result in sponsored plans and 
asset management regimes nationwide that will better meet FTA's 
objectives. Similarly, two transit operators and a State DOT expressed 
concern that the two-year time frame is not sufficient to develop a TAM 
plan, inventory and assess the conditions of assets, and meet all the 
requirements stated in subpart C, particularly given the number of 
agencies and partners that must be involved in the TAM development 
process. A transit operator recommended that the two-year deadline 
should be for development of the TAM plan, not implementation.
    Several commenters suggested that, while a two-year deadline for 
tier I transit agencies to develop an initial individual TAM plan is 
reasonable, the development of a group TAM plan and tier II plans 
should be extended to three years to allow adequate time for 
coordination between agencies. A State DOT said FTA should delay the 
implementation deadline until after all comments have been received for 
all performance management-related NPRMs in order to ensure cross-
functionality for each individual performance management area. Two MPOs 
urged that the implementation of the FTA TAM rule must be coordinated 
with the implementation of other planning and safety rulemakings 
mandated by the authorization statutes and requested a single effective 
date that starts a phase-in process.
FTA'S RESPONSE: 625.31 Implementation Deadline
    FTA believes that the two year statutory timeline is sufficient 
time for a transit provider to develop and implement a TAM plan. 
Moreover, the final rule includes an option for a transit provider to 
submit a written request to FTA for an extension of the implementation 
deadline.
    The final rule provides each transit provider with the opportunity 
to develop and implement a TAM plan that is tailored to its public 
transportation system. Todays' final rule does not require a transit 
provider to conduct a condition assessment on all of its facilities 
within the two year initial TAM plan development timeframe. Each 
transit provider may adopt a condition assessment method that is 
appropriate for its particular operating environment and within its 
available resources. For example, one commenter suggested and FTA 
agrees that a transit provider may measure the condition of its assets 
by measuring the condition of a sampling of like assets.
    It is not necessary for FTA to wait to issue a final rule for 
transit asset management until it issues final rules for safety or 
planning. Todays' final rule may be implemented in its entirety before 
the aforementioned rules become effective. FTA and FHWA are aware that 
transit providers, States, and MPOs will have to comply with the 
requirements of several rules. FTA will ensure that there is sufficient 
time for States, transit agencies, and planning agencies to implement 
the requirements of all related rules.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
625.33 Investment Prioritization
    This section proposed requirements for investment prioritization. 
The investment prioritization provides strategic guidance for improving 
the condition of assets through both consideration of life-cycle costs 
and itemization of the actions necessary to achieve desired asset 
conditions. Each transit provider determines its own approach to 
investment prioritization and project selection. However, the transit 
provider is required to base its approach on the policies, goals, 
objectives, and strategies identified in their TAM plan and ensure that 
safety is given due consideration. A transit provider's approach to 
investment prioritization must reflect the balancing considerations of 
competing priorities in order to maximize a return on investment and 
achieve a desired state of good repair.
    The investment prioritization needs to reflect adequate 
consideration of safety concerns previously identified within a public 
transportation system. Moreover, when a transit provider plans for the 
replacement of an asset, it should ensure that it is complying with all 
relevant regulatory requirements, including the ADA, which requires 
that accessibility features be maintained in operating order and are 
promptly repaired if they are out of service. Certain SGR projects may 
also be regarded as ``alterations'' under DOT ADA regulations, and may 
require additional resources. See generally, 49 CFR part 37.
    Safety and minimizing life-cycle costs are the most common 
objectives in prioritizing projects. However, a transit provider may 
identify additional criteria and factors and weigh them according to 
local needs. Another criterion that a transit provider may consider is 
the resiliency of its assets and systems to natural disasters, as 
described in the NIST National Disaster Resilience Framework \11\. The 
impact that local concerns may have on condition-improvement costs 
should be reflected in the investment-prioritization list.
---------------------------------------------------------------------------

    \11\ For more information on the NIST National Disaster 
Resilience Framework, please visit http://www.nist.gov/el/resilience/
---------------------------------------------------------------------------

    Investment prioritization uses the transit provider's selected 
prioritization approach and predetermined importance factors to 
determine rankings. The ability of a project or program to meet the 
objectives established by the transit provider in its TAM plan should 
be reflected by a rating. Based on the relative weight a transit 
provider assigns to each objective, a transit provider can establish a 
prioritized list of programs and projects. For example, a transit 
provider may identify track maintenance as the highest priority based 
on the condition of the track or its maintenance approach as part of 
its TAM policy. This may result in assigning a higher score to track-
asset projects over facility-maintenance projects, even if the facility 
is in a worse condition, objectively. The costs associated with each 
project can be assessed and then compared with the transit provider's 
estimated funding (from all revenue sources) over the TAM plan horizon 
for each year. The output

[[Page 48925]]

of the process is a list of ranked projects by asset class that 
identify assets from the asset inventory required under Sec.  
625.25(b)(1) that would be funded over the TAM plan horizon period. A 
provider should only include programs and projects in its ranked list 
that it expects to undertake during the time horizon and identify the 
project year.
COMMENTS: 625.33 Investment Prioritization
    Numerous public comments addressed the proposed requirements for 
TAM plan investment prioritization, specified in Sec. Sec.  
625.25(b)(4) (as an element of the TAM plan) and 625.33 (as proposed 
requirements for investment prioritization process).
    Several State DOTs and other commenters said any ranking of 
projects under Sec.  625.33(b) should be a categorical ranking (High, 
Medium, Low) and not a sequential ranking (First, Second, Third, Fourth 
etc.). Several State DOTs and a professional association said this 
approach is preferred if the investment prioritization must include 
individual projects rather than keeping the prioritization at the asset 
class level or program level; however, they would prefer there be no 
requirement to go below the asset class or program level. Specifically, 
two of these State DOTs said TAM plans and investment prioritization 
should focus on ``asset class'' to avoid conflicts between the TIP and 
TAM plans and to allow transit agencies of all sizes to advocate for 
Federal, State, and regional funding. A transit operator said an agency 
should be able to ``bundle'' less critical asset renewal and 
replacement projects to make improvements in a concentrated geographic 
area and achieve cost savings. An individual commenter suggested that 
it may be more practical to rank investment priorities within specific 
asset categories rather than across categories.
    A regional commission requested that investment prioritization 
include categorical ranking (High, Medium, Low) of the projects in 
addition to the sequential numerical ranking (1, 2, 3, etc.). A transit 
operator recommended allowing agencies to define their own investment 
prioritization methodology or allowing the grouping of investment 
projects using qualitative levels of priority (i.e. most critical, 
critical, less critical) rather than age-based assessments. Similarly, 
some commenters suggested that assets should be weighted to reflect the 
criticality of a given asset on system operations.
    Several State DOTs and a professional association said an asset 
management plan should be able to show assets in declining conditions, 
not just improving and maintaining. Specifically, one of the State DOTs 
requested that Sec.  625.33(a) be revised to read ``A TAM plan must 
include an investment prioritization that identifies projects to 
improve or maintain or manage the decline in the state of good repair 
of capital assets over the horizon period of the TAM plan. 
Alternatively, an MPO suggested changing the phrase ``projects to 
improve or maintain the state of good repair'' to ``projects to manage 
or maintain the state of good repair.''
    Two State DOTs requested clarification regarding the NPRM statement 
that ``transit providers should consider current and future climate and 
weather-related hazards as part of their prioritization of 
investment,'' asserting that it is unclear which future hazards should 
be included and which should be excluded from consideration. Two other 
commenters stated that, without further clarification, this requirement 
seems unrealistic. A professional association asked if the reference to 
including ``current and future climate and weather-related hazards'' 
meant that an all-hazards approach should be taken to investment 
prioritization. If so, the commenter asked for an enhanced description 
of what hazards should be included or excluded.
    A State DOT, some transit operators, and a local utility, said that 
the safety of any asset should be the determining factor in 
prioritization of asset replacement, rather than the ULB. A State DOT 
recommended that FTA should reinforce this concept by clarifying the 
interaction between TAM and safety. A State transit operator proposed 
that each asset should receive a fixed safety rating based on how 
important that asset is to safety and funding should be prioritized for 
assets rated higher on the safety scale.
    Several commenters took issue with the phrase ``pose an identified 
unacceptable safety risk'' in Sec.  625.33(d). A professional 
association asserted that by identifying an opportunity to improve 
safety, a State has not indicated an unsafe condition. Several 
commenters proposed that FTA strike the reference to projects that are 
needed to address circumstances that ``pose an identified unacceptable 
safety risk.'' One of these commenters offered an alternative phrases: 
``provide opportunities to improve safety or reduction in the frequency 
and severity of some undesirable events.'' Other commenters said the 
rule should state that investment prioritization ``must give due 
consideration to those projects for state of good repair that address 
safety risk.'' A transit operator and a private citizen requested that 
FTA explain how an unacceptable safety risk is to be incorporated in 
the investment prioritization, and how unacceptable safety risks should 
be mitigated, financially, if the investment money is not afforded.
    One commenter also asked whether there is a requirement to follow 
the project rankings to address all non-SGR capital assets prior to 
funding other projects.
    Regarding the NPRM preamble statement that a transit provider may 
identify additional criteria and factors for prioritizing projects (in 
addition to safety and minimizing life-cycle costs) and weigh them 
according to local needs, a State public transportation system 
suggested that FTA clarify that such additional criteria should not 
take priority over considerations of SGR or system safety. A transit 
operator asked if FTA is recommending any standardized approach for 
criteria weighting or whether the weighting of criteria is left to the 
discretion of the transit provider. A State DOT requested guidance on 
expected investment prioritization criteria and weighting. A transit 
operator recommended adding language to acknowledge other factors 
outside the prioritization criteria (e.g., regional needs, non-asset 
based priorities, and funding mechanisms/constraints) so there is room 
for intangibles, outside influences, and other mitigating circumstances 
that are defendable.
    A local transit operator asked whether future acquisitions and 
construction projects (e.g., system expansion) should be included in 
the project prioritization. This commenter also asked if projects that 
prevent assets from falling out of a state of good repair should be 
given higher ranking if they provide a better return on investment. A 
State DOT and a local transit agency asked if the investment 
prioritization should be based on the available budget or the needs. If 
the prioritization must be constrained then the State DOT commenter 
said it may not be able to meet the SGR principal of ``full level of 
performance.'' A transit operator asked how an agency can account for 
projects/assets for which it would like to apply for grant funding if 
investment prioritization is fiscally constrained.
    A State DOT asked if the investment ranking is binding (that is, if 
investments must be made in the specific order in the TAM plan).
    An MPO and a transit operator requested that FTA provide an 
opportunity to use alternative approaches to prioritizing projects that

[[Page 48926]]

matches such grantee characteristics as organizational size and 
maturity. A transit operator supported the FTA in allowing transit 
providers to use a selected prioritization approach and predetermined 
importance factors for determining project rankings. A trade 
association requested that the final rule not specify the value/
capitalization levels, but instead allow each agency the flexibility to 
form their own capitalization policies.
    Regarding the proposed Sec.  625.33(f) requirement that investment 
prioritization must take into consideration requirements concerning 
maintenance of accessible features (at 49 CFR 37.161 and 37.163), a 
transit operator said that other processes should be the basis for 
complying with ADA requirements and the TAM prioritization process 
should not include an expansion of the ADA mandate.
    A transit operator suggested that existing documents (Metropolitan 
Transportation Plan (MTP), Regional Transportation Plan (RTP), 
Statewide Transportation Improvement Plan (STIP, Transportation 
Improvement Plan (TIP), and Capital Improvement Plan (CIP)) should 
continue to be the location for documenting specific project listings.
FTA'S RESPONSE: 625.33 Investment Prioritization
    The ranking of investment prioritization programs and projects can 
be categorical (high, medium, low), sequential (first, second, third), 
or another method that is appropriate for the transit provider. It 
must, however, indicate which year the transit provider intends to 
carry out the program or project. The output of the process is a list 
of ranked projects at the asset class level that identify assets from 
the asset inventory. FTA will issue guidance on methodologies for 
investment prioritization and TAM plan development.
    FTA notes that the requirement to develop an investment 
prioritization does not necessarily require a transit provider to 
invest in that plan. With the exception of 49 U.S.C. 5337 program 
recipients who are required to identify their projects are included in 
their TAM plans. However, FTA believes the TAM approach will result in 
a useable and effective investment prioritization that transit 
providers are encouraged to use to achieve or maintain a state of good 
repair for their assets.
    FTA disagrees that investment prioritization itemized at the asset 
level could conflict with the TIP process. FTA believes that it is a 
best practice for transit providers to first prioritize their own 
projects based on their own needs, before engaging in larger planning 
processes in conjunction with the State, the MPO, and other transit 
providers to establish a prioritized over-arching program of projects 
for the larger area.
    FTA understands that performance targets, and by extension, asset 
condition, may decline even with good asset management practices in 
place. The purpose of the final rule is to provide a proactive 
strategic framework for transit providers to balance competing needs 
and limited funds in an informed decision making process to reduce the 
SGR backlog. FTA agrees that'' improve or maintain SGR'' limits the 
options available and has modified Sec.  625.33(a) to read ``improve or 
manage the state of good repair''.
    FTA recommends that transit providers consider climate resiliency 
and reliability in their investment prioritization by identifying 
capital investment and other strategies to preserve the existing and 
projected future metropolitan transportation infrastructure, provide 
for multimodal capacity increases based on regional priorities and 
needs, and reduce the vulnerability of the existing transportation 
infrastructure to natural disasters.\12\ For example, severe rainfall 
events may cause flooding that shuts down operations at a transit 
maintenance facility. In this case, the continued availability of the 
asset during such events may require the installation of a watertight 
perimeter around the facility, which will both protect the condition of 
the asset and ensure its availability for continued transit operations. 
FTA is aware of publicly available tools to assist in the 
identification of vulnerabilities for specific systems or assets, and 
encourages transit providers to conduct a vulnerability analysis as 
part of their overall asset management approach. For a TAM plan, FTA 
recommends that transit providers identify any fixed assets that are 
located within the current FEMA-published flood hazard area (100-year 
floodplain), and the degree to which these assets have been built to 
withstand projected hazards that may occur over the assets anticipated 
useful life.
---------------------------------------------------------------------------

    \12\ Fixing America's Surface Transportation Act (``FAST'') 
(Pub. L. 114-94),
---------------------------------------------------------------------------

    FTA agrees that safety is a critical factor in determining the 
prioritization of asset investments; however it is not the only factor. 
FTA does not propose a specific methodology for investment 
prioritization. Safety needs are fluid and any fixed assessment limits 
a transit provider's ability to respond to the changing environment,
    FTA agrees that identifying an opportunity to improve safety does 
not indicate an unsafe condition. If a transit provider identifies an 
unacceptable safety risk associated with its asset, it should place 
that asset higher up in its investment prioritization, to the extent 
practicable. However, this rule does not establish selection criteria 
for a transit providers' investment prioritization.
    FTA supports the proactive strategic approach of identifying future 
projects and ranking preventative projects with better return on 
investment higher in the investment prioritization. The final rule 
establishes that an investment prioritization is a fiscally constrained 
list of needed projects, ranked or grouped in order of priority. 
Therefore, a transit provider has discretion in prioritizing projects 
and programs over the TAM plan horizon period.
    FTA recognizes that no funding is guaranteed but most resources can 
be realistically estimated. For example, for FTA formula grant funds, a 
transit provider may not know the exact amount of funds it may receive 
two years hence, but it can make a reasonable determination of the 
projects it wants to pursue if it does receive the funding. Other 
funding that may be less estimable, such as discretionary funding, may 
require a TAM update.
    FTA reiterates that the NPRM did not propose that a transit 
provider abandon its existing project listing documentation processes 
nor are these requirements intended to supplant existing decision 
making practices.
    FTA disagrees that consideration of the costs associated with 
maintaining accessible features is an expansion of the existing 
mandate.
    FTA further clarifies that the ULB is used for performance measure 
metrics not for investment prioritization.
FINAL RULE:
    FTA is revising this section to reflect that programs or projects 
within an investment prioritization can be for either improving or 
managing state of good repair. FTA also has revised this section to 
require that investment prioritization only apply to assets for which a 
provider has direct capital responsibility.
625.41 Standards for Measuring the Condition of Capital Assets
    Pursuant to 49 U.S.C. 5326(b)(1), the definition of state of good 
repair must contain objective standards for measuring the condition of 
capital assets. FTA proposed to define state of good repair for public 
transportation

[[Page 48927]]

capital assets as ``the condition in which an asset is able to operate 
at a full level of performance.'' This section proposed objective 
standards for equipment, rolling stock, facilities and infrastructure 
that are intended to further define ``full level of performance,'' and 
clearly indicate when an asset is in a state of good repair.
    The objective standards allow transit providers to operationalize 
and quantify state of good repair to audit their SGR performance. To 
accomplish this, FTA proposed three objective standards, detailed in 
section 625.41. The proposed objective standards are: (1) the asset is 
able to perform its manufactured design function; (2) the use of the 
asset in its current condition does not pose an identified unacceptable 
safety risk; and (3) the asset's life-cycle investment needs have been 
met or recovered, including all scheduled maintenance, rehabilitation 
and replacements. The objective standards allow for an auditable SGR 
definition that is high-level and broad enough to incorporate existing 
transit asset management practices at transit providers of different 
modes, different sizes, and different operating environments.
    An asset is in a state of good repair when each objective standard 
is met. The first objective standard in Sec.  625.41(b)(1) requires 
that an asset is able to perform its manufactured design function. This 
objective standard takes into consideration that an asset may be in 
poor condition, but is still able to operate. For example, a transit 
provider may institute a slow zone to allow a rail car to operate on 
deteriorated track that can no longer support rail cars traveling over 
it at the original design speed, but can support rail cars traveling at 
slower speeds. In this case, the infrastructure track segment would not 
meet this SGR standard because it was designed to carry railcars at a 
speed that its current condition will not support. Achieving state of 
good repair means not accepting compromised performance from assets 
that are over age or of deteriorated condition.
    The next objective standard in Sec.  625.41(b)(2) requires that an 
asset not pose an unacceptable identified safety risk. Going back to 
the previous example, track deterioration can lead to derailments and 
other safety hazards and, depending on the condition, may not meet this 
standard. If the asset is operating according to its designed function, 
but is introducing a safety risk to the system that the Accountable 
Executive considers to be unacceptable, then the asset is not in a 
state of good repair. A safety risk may be identified through a number 
of ways, including through a transit provider's practice of Safety 
Management Systems (SMS) as proposed under FTA's notice of proposed 
rulemaking for public transportation agency safety plans. Achieving 
state of good repair means not compromising designed performance to 
mitigate safety risks or otherwise accepting safety risks from assets 
that are over age or in deteriorated condition.
    Lastly, the third objective standard proposed in Sec.  625.41(b)(3) 
requires that the life-cycle investment needs of the asset be met. This 
means that the inspection, maintenance, rehabilitation, and replacement 
schedules have been met or recovered for the asset. Deferring 
maintenance on an asset may not have immediate consequences for an 
asset's safety, reliability, or performance. However, deferred 
maintenance leads to these long-term consequences in the future. Thus, 
it cannot be said that an asset is in a state of good repair, when the 
maintenance practices that will maintain the asset's full performance 
level are being deferred.
    An asset that meets all three objective standards is in a state of 
good repair.
COMMENTS: Objective Standard--``Capital Asset Is Able To Perform Its 
Designed Function''
    A few commenters provided input on the SGR standard that an asset 
must be able to perform its designed function, as specified in Sec.  
625.41(b)(1). A transit operator said FTA should add the word 
``constructed'' to the term ``manufactured design function'' since many 
facilities and infrastructure assets are constructed on-site rather 
than manufactured. A couple of transit operators said the inclusion of 
the term ``designed function'' in the SGR standard neglects to include 
the assets' performance and operating conditions. In the case of legacy 
transit operators, these commenters said the designed function of an 
asset may be different than the required performance function.
    Another commenter asserted that this proposed SGR standard is not 
objective because the rule provides no definitions for ``perform'' and 
``design standards,'' which will make it impossible for FTA and other 
stakeholders to accurately compare agencies against each other. This 
commenter recommended that FTA define each of these terms, provide 
transit agencies with additional guidance beyond the definitions that 
is applicable to varying vehicles and infrastructure, and request 
comment on the inclusion of specific, measurable statistics (e.g., 
requiring a vehicle to have fewer than a certain number of maintenance-
related breakdowns or fewer than a certain number of maintenance-
related passenger injuries per 100,000 revenue miles) to increase the 
objectivity of this standard.
FTA'S RESPONSE: Objective Standard--``Capital Asset Is Able To Perform 
Its Designed Function''
    This final rule clarifies that the term ``designed function'' is 
intended to include facilities that are constructed on-site rather than 
manufactured. FTA agrees that the designed function objective standard 
does not explicitly include assets' performance and operating 
conditions. When used in concert with the other objective standards, 
specifically, the lifecycle investment needs standard, a representation 
of the asset is more fully fleshed out. In addition, a SGR 
determination is aspirational and should reflect the absence of 
compromises accepted due to over age and deteriorated assets. With 
regard to comments about legacy assets, FTA recognizes that the 
designed function may be outdated. However, this standard is intended 
to identify the extent of those potential discrepancies.
    FTA disagrees that this standard is not objective. The intention of 
the SGR determination and objective standards is to provide agencies 
with a method to measure their assets' SGR based on standard 
principles, as provided by FTA. The final rule also establishes 
national performance measures to allow for comparisons across similarly 
situated providers. The metrics proposed by commenters, such as 
maintenance-related injuries per 100,000 revenue vehicles, are not 
asset-based measures, but are an output metric of a process that, prior 
to this final rule, has not been standardized.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
COMMENTS: Objective Standard--``Use in Current Condition Does Not Pose 
an Unacceptable Safety Risk''
    Some public comments provided input on the SGR standard that use of 
the asset in its current condition does not pose a identified 
unacceptable safety risk, as specified in Sec.  625.41(b)(2).
    Several State DOTs said the final rule should delete the phrase 
``[assets that] pose an identified unacceptable safety risk'' and use a 
different formulation, possibly such as to projects that ``provide 
opportunities to improve the safety of an already safe system.'' These 
commenters also said the rule should specify that, ``by identifying an

[[Page 48928]]

opportunity to improve safety, a State has not indicated an unsafe 
condition.''
    A professional association and a couple of State DOTs supported the 
rule's language in Sec.  625.41(b)(2) as a measure for SGR, but said 
FTA needs to ensure that a provider or plan sponsor is not required to 
maintain records and report to the FTA that a specific asset has an 
``identified unacceptable risk.''
    A trade association and two transit operators stated that 
identifying ``unacceptable safety risks'' cannot be defined or 
addressed until FTA has established safety performance criteria, 
through notice and comment, for all modes and minimum safety 
performance standards for vehicles in revenue service.
    A transit operator said ``unacceptable risk'' should not apply in 
an asset management planning context because such risks will be 
immediately addressed through safety initiatives or safety planning 
prior to adoption measures through a TAM plan.
    Stating that ``unacceptable safety risks'' seems subjective, a 
transit operator suggested that transit agencies should use procedures 
under their SMS program to determine unacceptable safety risk and that 
FTA require transparency on what a provider defines as unacceptable 
safety risks. Another commenter similarly asserted that this proposed 
SGR standard is not objective because the rule provides no definitions 
for ``known,'' ``unacceptable,'' and ``safety risk,'' each of which 
could be interpreted differently by agencies, which would make it 
impossible for FTA and other stakeholders to compare transit agencies 
to each other accurately. This commenter recommended that FTA define 
each of these terms, provide transit agencies with additional guidance 
beyond the definitions that is applicable to varying vehicles and 
infrastructure, and request comment on the inclusion of specific, 
measurable statistics (e.g., requiring a vehicle to have fewer than a 
certain number of maintenance-related breakdowns or fewer than a 
certain number of maintenance-related passenger injuries per 100,000 
revenue miles) to increase the objectivity of this standard.
FTA'S RESPONSE: Objective Standard--``Use in Current Condition Does Not 
Pose an Unacceptable Safety Risk''
    FTA understands the uncertainty expressed in some comments 
regarding compliance with the requirements of this final rule that are 
related to safety, in the absence of a final National Public 
Transportation Safety Plan and a final rule for public transportation 
agency safety plans. However, FTA believes that the requirements of 
this final rule can be implemented in the absence of the two 
aforementioned components of the National Safety Program because they 
are not dependent on the requirements under a final National Safety 
Plan or a final rule for Public Transportation Agency Safety Plans. 
Operators are already making decisions about what risks and level of 
risks are unacceptable within their system. Again, the final rule is 
scalable and flexible.
    This proposed standard has both an objective and subjective 
component. Whether or not the condition of an asset poses a particular 
risk is an objective determination--it either does or does not pose a 
risk. Whether or not that risk is unacceptable is a subjective 
determination. The final rule neither defines nor prescribes standards 
for ``unacceptable safety risk.'' To the contrary, intentionally, the 
rule leaves the determination of what constitutes an ``unacceptable 
safety risk'' to the individual transit provider. FTA believes that 
each provider, not FTA, is in the best position to make a 
determination, based on knowledge of both its unique operating 
environment and availability of resources, regarding the categorization 
and mitigation of risks, to include managing risks arising from an 
asset not being in state of good repair. Therefore, it would be up to 
the individual provider to determine what investments should be made to 
improve the performance of its transit system. The rule does not 
require that a transit provider rely on performance target as the 
primary driver in setting its investment priorities. Instead, the rule 
final requires a transit provider to give due consideration to those 
assets that pose an identified unacceptable safety risk when setting 
its investment priorities.
    FTA's approach to TAM is consistent with its proposed SMS approach 
to safety. A fundamental aspect of transit asset management is the 
monitoring of asset condition data as an indicator of system 
performance. Similarly, SMS is a formal data-driven approach to 
managing safety risk and assuring the effectiveness of safety risk 
mitigations. SMS does not require that an organization take a specific 
action to address a specific safety risk. Identification, analysis and 
mitigation of safety risks, and any other risks that exist within a 
transit system, are activities that a transit provider should already 
be engaging in.
    FTA does not agree with the commenter who suggested that public 
access to safety risks that may be identified in a TAM plan or safety 
plan may increase safety risks for the rail system. The NPRM did not 
propose that a transit provider document safety risks in its TAM plan. 
In making a determination regarding the state of good repair of an 
asset, the provider must consider whether or not an asset poses an 
identified unacceptable safety risk. Where the condition of an asset 
may pose an unacceptable safety risk, the final rule requires a 
provider to apply an appropriate level of consideration to those assets 
when making investment prioritization decisions.
FINAL RULE:
    FTA is not making any changes in the final rule related to these 
comments.
COMMENTS: Objective Measure--``Lifecycle Investment Needs of the Asset 
Have Been Met or Recovered''
    Several public comments provided input on the SGR standard that 
life-cycle investment needs of the asset have been met or recovered, as 
specified in Sec.  625.41(b)(3).
    Several commenters said the life-cycle maintenance condition must 
be flexible and fluid. For example, some of these commenters said a bus 
that is due for maintenance would not be rendered out of good repair 
because the oil change was delayed. One transit operator urged that 
maintenance schedules should not be so rigid as to incorrectly label a 
vehicle out of good repair based on minor deviations from the regular 
maintenance schedule. A transit operator stated that the maintenance 
life-cycle can be impacted by major overhauls and repairs, but not 
minor maintenance tasks. This commenter recommended the phrase ``meets 
required level of service performance, and whether major maintenance 
and rehabilitation have been completed.'' One commenter said there are 
times when certain assets do not meet the life-cycle expectations, and 
the agency must weigh the cost of continuous maintenance with the cost 
of replacement, regardless of the lifecycle. A couple of commenters 
said FTA should recognize that regulatory and technology changes could 
render assets obsolete prior to reaching their ULB ages and FTA's 
minimum life requirements.
    A State DOT said FTA should clarify the term ``all scheduled 
maintenance,'' asking if it is just those items tied to safe operation 
of service or inclusive of oil changes and auxiliary systems 
maintenance. A couple of transit operators stated that the standard 
should be clarified to show that the

[[Page 48929]]

rehabilitation and replacement elements are ``as necessary'' rather 
than ``scheduled.'' One of those commenters stated that the proposed 
wording may lead agencies to prioritize meeting the SGR definition at 
the expense of making maintenance or replacement decisions based on 
condition or risk assessments. According to this commenter, it could 
also incentivize agencies to specify less aggressive maintenance plans 
in order to achieve greater compliance with the SGR definition. The 
other commenter noted that ``scheduled'' rehabilitation and replacement 
are not always necessary and can reasonably be postponed or cancelled 
without any notable effect on an asset due to varying usage and wear 
patterns. A couple of commenters suggested that FTA remove the term 
``scheduled maintenance'' in order to limit the SGR standard to meeting 
all capital investment needs through an asset's life-cycle, as opposed 
to day-to-day operating expenditures.
    A transit operator asked if, by including this SGR standard, FTA is 
asking if asset maintenance plans are being followed.
    Another transit operator said that the addition of this SGR 
standard is not required under the authorization statute, 49 U.S.C. 
5326. The commenter asked, unless FTA is willing to define the life-
cycle investment needs of each asset, how will it be determined if they 
have been met? Another transit operator requested clarity and 
additional information on the exact meaning of ``recovered'' in terms 
of life-cycle investments being met or recovered, and how to make such 
a determination. A different commenter also expressed concerns that 
life-cycle needs are identified by the transit agencies and are not 
standardized where needs are equal, and that this standards does not 
take into account the quality of maintenance. To remedy this flaw, the 
commenter recommended that FTA develop standard guidelines for 
maintenance requirements, with variations permitted for factors such as 
climate conditions and operating conditions.
    An individual commenter asked a number of questions about this 
provision: 1-What about unscheduled maintenance and repair needs such 
as a bus engine or transmission that needs to be replaced? 2-What are 
``rehabilitation'' schedules when applied to buses? 3-How should assets 
such as engines and transmissions be tracked, reported, and prioritized 
as compared to buses? 4-How should ULBs be determined for buses as 
compared to major components such as engines and transmissions?
FTA'S RESPONSE: Objective Measure--``Lifecycle Investment Needs of the 
Asset Have Been Met or Recovered''
    This final rule establishes three objective standards for the SGR 
determination. Each of the standards will be evaluated at the transit 
provider level, which is where the SGR determination occurs. FTA does 
not define an asset's life-cycle investment needs, which may include 
its maintenance schedules, rehabilitation policies and other 
operational decisions. A transit provider is in the best position to 
determine the life-cycle needs of its assets.
    Each transit provider must define its assets' life-cycle investment 
needs, and thus must determine if the needs have been met or recovered. 
Meeting the life-cycle investment needs of an asset means that the 
maintenance, preventative and responsive, major and minor, has occurred 
on a schedule and as needed. Recovering the life-cycle investment needs 
means that the asset may have not strictly adhered to its schedule, but 
it has received all of the maintenance established for a particular 
point on its life-cycle.
    FTA recognizes that some maintenance activities are more impactful 
to condition, costly, and time dependent. However, FTA also notes that 
long term delay of relatively minor maintenance has an impact on 
condition over time. Thus, FTA did not propose a minimum maintenance 
level for consideration in an asset's life-cycle investment needs. 
Further, FTA recognizes that unscheduled maintenance often is more 
impactful initially, but posits that scheduled maintenance can help to 
reduce unscheduled maintenance and provide valuable information to the 
local decision making process.
    FTA disagrees with the commenter who states that the SGR standard 
is not required under MAP-21. The law explicitly requires FTA to 
develop a definition of state of good repair which includes objective 
standards.
    FTA is developing guidance and technical assistance to assist 
transit providers in how to establish life-cycle investment needs. The 
guidance will address the questions posed by commenters regarding how 
to develop ULBs for assets and subsystems, how to apply rehabilitation 
schedules, and more.
    FINAL RULE: FTA is not making any revisions in the final rule 
related to these comments.
COMMENTS: Objective Standards--Other Comments
    A couple of commenters said Sec.  625.41(b) should read ``. . . 
condition sufficient to enable the asset to operate safely at a full 
level of performance.''
    A few commenters raised other general concerns with the SGR 
standards. A transit operator said FTA should promulgate final safety 
performance criteria for all modes of public transportation and minimum 
safety performance standards for vehicles in revenue operations. A 
tribal government expressed concern that, while the SGR standards make 
sense from a maintenance and depreciation standpoint, they do not make 
sense if funding is not available for capital replacement. This 
commenter asserted that there will be times when services will shut 
down in order to comply with these standards.
    A transit operator said the SGR standards in this section are 
inconsistent with the definition provided in Sec.  625.5 and the 
principles provided in Sec.  625.17. The commenter said the final rule 
should align these three components of the regulation. A transit 
operator noted that condition by itself is not even a factor in 
considering whether an asset is in SGR (per the proposed SGR definition 
and Sec.  625.41 standards).
    One commenter asserted that none of the three proposed SGR 
standards are sufficiently objective to comply with the requirement of 
MAP-21. A transit operator asked how agencies could determine if assets 
are in SGR if agencies are not required to collect and report uniform 
objective measurements of safety performance, reliability performance, 
efficiency performance, and quality performance. Another transit 
operator suggested that limiting the designation of asset condition as 
a binary response of ``Yes'' or ``No'' in terms of whether the asset in 
in a state of good repair would be simpler.
    One commenter requested guidance on measuring asset conditions. A 
couple of commenters requested guidance on calculating SGR backlog. 
Expressing concern that the proposed SGR criteria do now allow for 
sufficient flexibility in determining whether an asset is in an SGR or 
not, a transit operator recommended that the proposed SGR criteria be 
provided as guidelines, rather than mandatory criteria for determining 
SGR.
FTA'S RESPONSE: Objective Standards--Other Comments
    FTA proposed an aspirational SGR definition which identifies an 
asset at

[[Page 48930]]

its best operation performance condition. Full level of performance is 
not an absolute condition, but it can be measured objectively by the 
three standards identified in Sec.  625.41 (b) (1) through (3).
    FTA recognizes that there are more SGR needs than funding available 
for state of good repair projects. The National TAM System provides a 
strategic, proactive framework for decision making.
    FTA disagrees that the proposed SGR definition (Sec.  625.5), SGR 
principles (Sec.  625.17), and SGR standards (Sec.  625.41) are 
inconsistent with one another. Please refer to FTA's response to the 
comments on the state of good repair definition in Sec.  625.5.
    FTA disagrees that the condition of an asset is not a factor in SGR 
determination. Each of the objective standards is a measure of an 
asset's condition. FTA also disagrees that the standards are not 
sufficiently objective. Each transit provider can use the standards 
established in the final rule to determine if its assets are or are not 
in a condition to meet each standard, and thus operating at a full 
level of performance, which indicates a state of good repair.
    FTA agrees that a binary (yes or no) determination of SGR would be 
simpler, but it would not meet the statutory requirement for objective 
standards for SGR.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
625.43 SGR Performance Measures for Capital Assets
    In accordance with 49 U.S.C. 5326(c)(1), this section proposed four 
SGR performance measures based on the SGR objective standards proposed 
in Sec.  625.41. FTA proposed one measure for each asset class. Each 
SGR performance measure is based on using calculable quantities of 
asset conditions to assess state of good repair. FTA's priority in 
selecting performance measures were to minimize reporting burden, 
especially on small operators, and to provide a meaningful and 
consistent basis for transit providers to compare their own state of 
good repair performance over time. In some cases, this means that FTA 
selected a proxy for measuring state of good repair, rather than 
measuring asset condition directly. Although FTA only proposed four 
performance measures in this rule, one per asset category, a transit 
provider may still apply its asset management systems to its entire 
inventory of capital assets, including those assets for which no 
performance measure has been established.
    Performance Measures for each asset class might include several SGR 
measures within each asset category (rolling stock, infrastructure, 
equipment and facilities). For example, a transit provider that has a 
fleet of 40' buses, light rail vehicles and paratransit vans would have 
3 rolling stock performance measures: percent of 40' buses that have 
met or exceeded their ULB, percent of light rail vehicles that have met 
or exceeded their ULB, and percent of paratransit vans that have met or 
exceeded their ULB.
COMMENTS: Performance Measures--General
    Several commenters recommended flexibility in the use of 
performance measures. A few transit operators and a State DOT said that 
FTA should allow transit providers the flexibility to right-size their 
own performance measures and provide flexibility in the classification 
of certain assets. One commenter recommended replacing the entirety of 
Sec.  625.43 with a simple statement that ``performance measures for 
each asset class must be set and approved by the responsible executive 
at each agency.''
    Other commenters provided other suggestions for modification of the 
proposed performance measures. A couple of commenters recommended 
weighting (or allowing agencies to weight) the performance measures 
because some assets are of higher value or are more critical than 
others. A few commenters recommended a phase-in period for asset 
classes. Specifically, some of these commenters said FTA's focus should 
be on rolling stock and infrastructure; equipment and facilities should 
be phased in three to four years later. A transit operator proposed a 
comprehensive approach to measuring the condition of all transit 
assets, including age, physical condition, and performance 
measurements. Further, this commenter suggested that when grouping 
assets and measuring condition and performance, FTA should consider the 
idea that utilization impacts measures of performance at the asset 
category level. The commenter also cautioned that care must be taken 
when ``averaging'' or rolling assets into categories where variability 
in condition and performance can be hidden. A State DOT said asset 
performance measures should account for risk. A transit operator stated 
that FTA should consider permitting the terms ``systems,'' ``guideway 
elements,'' ``vehicles,'' and ``stations'' to be used as asset 
categories for rail transit properties.
    Several commenters discussed ULBs. A State DOT said, for equipment 
and rolling stock, the ULB described in the proposed rule does not 
provide a useful overview of the asset's actual condition or a 
practical measure on which to base investment decisions. The commenter 
requested the flexibility to use its own life-cycle analysis to 
determine the appropriate useful life. One commenter recommended adding 
a requirement for RTAs to provide ULBs to State Safety Oversight 
Agencies (SSOAs) for review and comment. A transit operator said if FTA 
wishes to use a different ULB for a TAM plan than for grant 
authorization, the TAM plan useful life should not be shorter than 
grant useful life. In reference to FTA's statement that it anticipates 
publishing ``a default ULB based on TERM data that may be used in lieu 
of a local condition-based calculation of ULB,'' several commenters 
said FTA should cite where and when this default ULB will be published, 
provide an explanation of how the ULB measure will be calculated, and 
ensure that the default ULB is available to transit providers before 
initial targets will need to be set. A tribal government requested 
clarification regarding the NPRM statement that providers may use FTA-
established default ULB in lieu of a local condition-based calculation 
of ULB.
    Asserting that ULB of agency revenue vehicles is not alone a 
sufficient metric for measuring progress on improving SGR, one 
commenter recommended that FTA consider including additional 
performance metrics, such as measures relating to mechanical failures, 
effects on safety (e.g., passenger injuries per 100,000 revenue miles 
attributable to maintenance failures). This commenter also discussed 
the potential costs and benefits associated with implementing this 
recommendation.
    A couple of commenters stated that none of the proposed performance 
measures are tied directly to the proposed definition of SGR, which 
effectively requires that all three standards outlined in Sec.  625.41 
are met. The commenters said FTA should clarify that performance 
measures serve only as a ``proxy'' for measuring SGR--they cannot be 
used alone to calculate the SGR backlog.
    A trade association urged FTA to issue guidance on performance 
measures. A transit operator requested more guidance on how to 
categorize assets such as tunnels, which the commenter said could fall 
under facilities or infrastructure.

[[Page 48931]]

    Regarding the NPRM statement that FTA would support transit 
providers that elect to use more sophisticated performance measures, a 
transit operator asked how FTA intends to collect this data in the NTD 
if every agency uses a different measure for each asset class/category. 
This commenter also asked if FTA is open to using different measures 
across all three of the major asset categories, reasoning that in some 
instances, (e.g., rolling stock) assets can and should be measured 
using condition and/or performance.
FTA'S RESPONSE: Performance Measures--General
    FTA has developed a combination of performance measures using a 
variety of approaches, including age, condition, and performance. The 
measures are actionable and scalable. FTA encourages transit providers 
with sophisticated TAM practices to pursue more advanced approaches, in 
addition to setting targets for the performance measures in Sec.  
625.43.
    FTA believes the industry is prepared to use SGR performance 
measures and a phased-in approach is not necessary. Minimizing 
reporting burden was a major consideration in FTA's selection of each 
measure. FTA believes that the relatively simple and straight-forward 
approach it selected for each measure will lend itself to immediate 
implementation.
    FTA proposed the ULB option to allow a transit provider to 
incorporate consideration of its operating environment into its 
performance targets. FTA will publish default ULBs on its asset 
management Web page concurrent with publication of the final rule, and 
as suggested, will document the date of publication. FTA is also 
developing guidance for transit providers to use in calculating local-
condition based ULBs.
    FTA agrees with the comment that the SGR performance measures are a 
``proxy'' for measuring SGR and they cannot be used to calculate the 
total SGR backlog. Further, the performance measures serve as a 
``proxy'' for SGR and cannot necessarily be used to determine an 
assets' SGR. Similarly, the TERM Scale is calibrated such that the 
number of cases where a facility is below condition 3.0, but still 
meets all three objective standards for SGR in 625.41, and vice versa, 
should be relatively small. As discussed earlier, however, FTA believes 
that the lower burden on the industry of using a 3.0 condition 
threshold on the TERM Scale, rather than a 2.5 threshold, merits using 
this in the performance measure. However, almost all rail guideway 
infrastructure that has a slow zone in place will, by definition, not 
meet the three objective standards for SGR in 625.41.
    FTA clarifies that each transit provider or sponsor is required to 
report their performance measure targets to the NTD as per Sec.  
625.43, regardless of the approach used to determine them.
    FTA will develop guidance and technical assistance for transit 
providers to assist transit providers in applying each of the 
performance measures.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
625.43(a) Equipment- (non-revenue) service vehicles
    This section proposed the performance measure for non-revenue, 
support-service and maintenance vehicles is the percentage of vehicles 
that have met or exceeded their useful life benchmark. To determine the 
ULB, a transit provider may either use the default ULB established by 
FTA or a ULB established by the transit provider in consideration of 
local conditions and usage and approved by FTA.
COMMENT: Performance Measure--Equipment
    Several transit operators noted that the definition provided for 
equipment in Sec.  625.43(a) is significantly different than the 
definition provided in Sec.  625.5. One commenter said this provision 
implies that equipment is only non-revenue vehicles, while the 
definition states something more burdensome. A transit operator 
recommended that non-revenue vehicles be included in the vehicle asset 
class. Another transit operator said equipment that impacts operations 
should be defined as ``equipment,'' and non-revenue vehicles are not 
always considered equipment, but usually are grouped as part of a 
fleet. Several commenters concluded that the transit agency should be 
allowed to define and track ``equipment'' that is relevant to their 
service or risk model.
    A State DOT recommended the following additional criteria for 
equipment (and rolling stock): Average ULB, measured as a percentage.
    A transit operator said the term ``equipment'' is typically 
employed in regards to portable tools, work machinery, or components 
and not reserved for non-revenue vehicles.
FTA'S RESPONSE: Performance Measure--Equipment
    FTA agrees that the definition of equipment (Sec.  625.5) and the 
equipment performance measure (Sec.  625.43) differ. Example 1 in 
Appendix B to the final rule explains the differences. Specifically, 
the SGR performance measure for equipment only applies to non-revenue 
service vehicles; the Asset Category equipment includes all ``articles 
of expendable, tangible property having a useful life of at least one 
year;'' and the TAM plan requires all non-revenue service vehicles and 
owned equipment over $50,000 in acquisition value. Non-service vehicles 
are an easily understood and readily identifiable category of 
equipment, and the age-based performance measure is the most-simple and 
straight-forward performance measure available. Thus, FTA believes that 
transit systems of all sizes will be reasonably able to implement this 
measure.
    FTA did consider establishing other performance measures for 
different types of equipment, but ultimately declined to do so based on 
a desire to minimize reporting burden and there being relatively few 
ready-to-implement candidate performance measures for other types of 
equipment at a national level. For example, FTA's existing TERM Model 
does not have particularly robust treatment of equipment. Further, FTA 
did not receive any comments suggesting another performance measure for 
equipment. FTA, though, is considering conducting additional research 
in this area.
    FTA recognizes that non-revenue service vehicles are not always 
labeled as equipment at every transit provider. However, FTA believes 
this is a minor burden to align the transit provider asset category for 
the required SGR performance measure calculation.
    A transit provider should conduct its performance measure 
calculation by mode, which means a ULB cannot be averaged across modes. 
A transit provider may define, calculate, and track additional 
performance measures and targets.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
625.43(b) Rolling stock
    This section proposed the performance measure for rolling stock is 
the percentage of revenue vehicles within a particular asset class that 
have either met or exceeded their ULB. To determine the ULB, a transit 
provider may either use the default ULB established by FTA or a ULB 
established by the transit provider in consideration of local 
conditions and usage and approved by FTA.

[[Page 48932]]

COMMENTS: Performance Measures--Rolling Stock
    Many public comments provided input on the performance measure for 
rolling stock, as specified in Sec.  625.43(b).
    Several transit operators noted the deficiencies of an age-based 
performance measure and requested flexibility in determining ULB for 
rolling stock. Several commenters expressed concern that for many 
agencies (notably smaller and rural agencies), age-based ULB reporting 
for rolling stock may be inadequate and provide a skewed view of the 
condition of a particular agency's assets. Several of these commenters 
suggested that individual agencies should have the option of utilizing 
an age-based reporting format and also be allowed to adopt additional 
or alternative means of condition assessments (e.g., by vehicle type as 
well as asset class). These commenters also said a strict age-based 
reporting system would discourage agencies from strong maintenance 
practices, since even a well-maintained, fully functional bus would 
fail the test of age based asset condition reporting. A few commenters 
said SGR for rolling stock should be based on mileage or maintenance 
history, rather than only age. Another commenter said FTA should 
consider a condition-based evaluation of vehicles. A transit operator 
recommended that FTA specify that age-based performance measures are a 
proxy and not a direct measure of condition when used to evaluate state 
of good repair.
    Asserting that many electric vehicles have a useful life that may 
be largely independent from a strict age-based assessment of the SGR, a 
transit operator urged FTA to provide clarity regarding how ULB and the 
standard useful life requirement would apply to electric vehicles. A 
couple of commenters said this section should reference the standards 
at 49 CFR part 38.
FTA'S RESPONSE: Performance Measures--Rolling Stock
    FTA proposed an age based performance measure for rolling stock. 
This measure is simple, well understood, and accessible to all transit 
providers. FTA believes that this performance measure is appropriate to 
address the national TAM system goals.
    FTA notes that transit providers will be able to account for 
variations in maintenance practices and operating conditions by 
adjusting the useful life benchmark for particular fleets of vehicles. 
That is, a well-maintained vehicle may have a longer ULB and thus would 
not meet or exceed their ULB until a later date with regard to a less 
well-maintained vehicle. FTA encourages transit providers to develop 
performance measures for rolling stock, in addition to those required 
in Sec.  625.43, that are more sophisticated and use advanced methods 
of calculation such as condition, performance, or a risk based models 
for use at their agency. FTA recognizes that age is not necessarily the 
most accurate performance measure available. However, age is a simple 
and widely-used performance measure for vehicles that can approximate 
the condition of rolling stock assets for capital investment planning.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments. Section 625.43(b) requires a measure for rolling stock that 
is based on the percentage of rolling stock that have met or exceeded 
their ULB. This performance measure is applicable to all asset classes 
of revenue vehicles. For example, a transit provider operating buses, 
replica trolleys, paratransit vans, and light rail vehicles would 
establish a performance target for each asset class. Each performance 
target would quantify the percentage of rolling stock in each class 
that is over the transit provider's ULB for that asset class.
    Both the equipment and rolling stock measure assume that most 
vehicles provide reliable service for a predictable period of time 
(adjusted by level of usage for some types of assets), after which they 
should be replaced. Since there is typically a long lead time for 
replacing transit vehicles, this measure reflects the best practice of 
planning for the replacement of transit vehicles as they reach a 
certain age.
625.43(c) Infrastructure-rail fixed-guideway track, signals, and 
systems
    This section proposed the performance measure for rail fixed-
guideway track, signals, and systems is the percentage of track 
segments, signal, and systems with performance restrictions.
COMMENTS: Performance Measures--Infrastructure
    A couple of commenters expressed concern with using performance 
restrictions (i.e., slow zones or slow orders) as an indicator of asset 
condition. A State DOT said a slow zone may be imposed to address 
maintenance of a rail bridge, but has no connection to the state of 
good repair of the catenary, track or signal system. A transit operator 
said slow zones can be temporarily alleviated by short-term fixes to 
track, which do not resolve the underlying problems or create an asset 
that is truly in a state of good repair, and the connection is more 
tenuous for other asset types. The commenter said ULB may be more 
useful for these assets. However, this commenter also acknowledged that 
the performance restriction metric as applied broadly to this asset 
category may be an incremental step toward capturing more complete 
information by asset type, and that agencies may be asked to supply 
additional information as the industry develops more sophisticated 
asset tracking capabilities. A State agency said the infrastructure 
performance measure may discourage RTAs from issuing restrictions when 
needed, which could reduce safety.
    A few commenters requested clarification about the parameters for 
developing performance measures for infrastructure assets. A transit 
operator specifically asked what standards would apply to calculating 
the percentage of a system subject to performance restrictions in 
response to a single defective track component. The commenter also 
asked if the measure would be calculated be based on the length of the 
signal blocks affected; the relative share of the defective component 
among all components of the same asset class; or by some other method. 
Another transit operator asked how bus systems that do not have 
guideway should report on assets within the infrastructure asset class 
(e.g., systems).
    A transit operator recommended that FTA align the components of the 
infrastructure asset class with the previously published asset 
management guidelines. This commenter also recommended utilizing a 
performance metric of age as a percentage of remaining useful life to 
assess the performance of infrastructure.
    A transit operator said this provision should be subdivided to into 
three separate parts: Track, signals, and systems. However, another 
commenter said systems and signals be an element of their own and not 
included in the heavy rail element of infrastructure. A State DOT 
opposed any requirements that might conflict with the well-established, 
industry wide National Bridge Inventory (NBI) Rating Scale.
FTA'S RESPONSE: Performance Measures--Infrastructure
    FTA recognizes that slow orders may be issued for bridge 
maintenance. The infrastructure measure is a proxy for both track 
condition and underlying guideway condition. However, FTA neither 
intends nor anticipates conflict

[[Page 48933]]

with the National Bridge Inventory (NBI) rating scale or other 
established structural policy and procedures.
    Transit providers should use the data gathered to comply with the 
final rule to improve their decision making. There is no penalty or 
reward for target attainment.
    The asset category for infrastructure includes more asset classes 
than the SGR performance measure, which only includes rail transit 
infrastructure. FTA encourages transit providers to develop additional 
performance measures for infrastructure assets such as signals and 
systems.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments. Section 625.43(c) requires a measure for infrastructure based 
on the percentage of guideway directional route miles with performance 
restrictions. This performance measure would be applicable to all rail 
fixed guideway infrastructure. Most transit providers already collect 
data on slow zones--this performance measure would standardize their 
reporting.
    The performance-based approach is based on a regular, comprehensive 
assessment of a system's performance and relies upon the assumption 
that as assets age, they become less durable and reliable, resulting in 
decreased operational performance. The ability of an asset to safely 
and reliably perform its assigned function at a full-performance level 
is at the heart of state of good repair. The performance-based approach 
requires integration of operations and capital maintenance activities 
and is particularly beneficial because it focuses on the actual 
outcomes of capital assets being in a state of good repair.
625.43(d) Facilities
    This section proposed the performance measure for facilities is the 
percentage of facilities within an asset class, rated below condition 3 
on the TERM scale.
COMMENTS: Performance Measures--Facilities
    Most of the commenters on this topic either requested clarification 
on or else proposed modifications to FTA's use of the TERM scale. 
Several commenters suggested that FTA should not alter its approach to 
the TERM scale and revert back to a threshold rating of 2.5 under the 
existing TERM system. For example, two transit operators expressed 
concern with the TERM scale defined in the proposed rule because FTA's 
Asset Management Guide sets 2.5 as the asset condition threshold for 
``adequate,'' while the NPRM proposed 3.0 as ``adequate.'' One of these 
commenters asserted that this change would be problematic for agencies 
that have already begun working on transit asset management. Similarly, 
another commenter stated that the proposed SGR level of 3.0 is a move 
in the wrong direction and suggested that the adequate level be moved 
to level 1 or level 2.
    Other commenters said use of TERM and the TERM scale should be 
optional, not required. A transit operator proposed using an industry-
established system like the Facilities Condition Assessments and the 
Facilities Condition Index for buildings and facilities. Another 
transit operator said FTA should consider extending the ULB and asset 
age to all asset types, which will be more attainable for agencies than 
the condition assessment metric prescribed for facilities. The 
commenter said requiring all assets in this category to have a full 
condition assessment with a 1-5 ranking based on the TERM scale will be 
extraordinarily expensive for larger agencies and may also be cost-
prohibitive for smaller agencies with fewer assets and less funding. A 
transit operator recommended using a performance metric of age as a 
percentage of remaining useful life to assess the performance of 
facilities. An MPO supported the condition-based approach proposed for 
measuring the condition of facilities and encouraged FTA to consider 
the inclusion of similar measures, in addition to the age-based 
approach, that were proposed to measure rolling stock and equipment 
conditions.
    A State DOT said it currently performs a condition assessment for 
stations using a similar 0-9 scale as the rail bridges, and it is not 
familiar with the 1-5 TERM rating system. A transit operator requested 
clarification about the characteristics of a facility that would be 
determinate of specific ratings on the TERM scale and also about the 
parameters for defining facilities asset classes for purposes of 
grouping and reporting. The commenter stated that use of the TERM 
scale, in the absence of uniform standards for assessing the SGR of 
facilities, risks fostering an illusion of precision and comparability 
across properties. Absent such parameters, the commenter suggested 
revising the proposed performance measure for facilities to read: 
``Percentage of Facilities within an asset class in marginal or poor 
condition,'' which would afford grantees with the flexibility they will 
need to define evaluation criteria based on their current practices.
    A transit operator said this provision may benefit from measuring 
ADA compliance with the 49 CFR part 37 standards, at least with respect 
to sidewalks, walkways, lobbies, vertical circulation, signage, and 
platforms.
    Another transit operator stated that FTA has included equipment 
that is located in the facilities, but some equipment does not lend 
itself to a condition-based evaluation and should instead be an age-
based evaluation.
FTA'S RESPONSE: Performance Measures--Facilities
    FTA proposed a condition based performance measure for the 
facilities asset category using the TERM scale. As previously 
mentioned, FTA did not set the performance benchmark at 2.5, because a 
benchmark of 2.5 would require all transit providers subject to the 
final rule to use the TERM-Lite model to calculate a 2.5 rating. The 
TERM scale is an integer based scale, thus a direct measure of 
condition rating 2.5 is not possible. In contrast, condition ratings to 
one decimal point are produced by the TERM-Lite model as an estimate of 
condition between condition assessments. Thus, FTA is setting the 
benchmark at 3.0, as this will reflect the actual results being 
produced by transit providers carrying out their own condition 
assessments.
    FTA does not agree that TERM scale should be optional, but does 
agree that using the TERM-Lite model is optional. The TERM scale 
effectively acts as a standard for reporting facility condition and is 
already a well-known tool within the transit industry.
    The condition-based SGR performance measure for the facility asset 
category is not equivalent to the condition assessment element of TAM 
plan Sec.  625.25(b)(2). The facility grouping and reporting asset 
class are determined by the asset inventory asset classes. The asset 
inventory level of detail is commensurate to the level of detail 
provided in the transit providers' program of capital projects. 
Further, the subsystems and components of each asset category are 
determined by the transit provider, in their asset inventory. FTA 
recognizes that the subdivision of component asset classes within the 
facility asset category may differ from provider to provider.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments. Section 625.43(d) requires a condition-based performance 
measure for facilities based on the percentage of facilities

[[Page 48934]]

with a condition rating of less than 3.0 on the TERM). The TERM Scale 
rates asset condition on a 1 (poor) to 5 (excellent) scale. This 
condition-based approach would require a transit provider to conduct 
periodic condition assessments of its assets using a set of 
standardized procedures and criteria. This approach directly identifies 
the condition of each asset based upon its actual usage and maintenance 
history.
625.45 Setting Performance Targets for Capital Assets
    In accordance with the statutory mandate at 49 U.S.C. 5326(c)(2), 
this section proposed that transit providers establish quantifiable 
targets for each performance measure identified in Sec.  625.43. FTA 
recognizes that in its determination of targets, a transit provider 
would need to consider a wide range of factors that may either 
constrain its ability to impact outcomes or may adversely impact 
outcomes (such as the population growth of an area). Transit providers 
should consider these factors along with the expected revenue sources 
from all sources in establishing targets and should explain in the 
annual report to FTA how the factors were addressed in setting their 
targets.
    Under this section, the NPRM proposed group TAM plan sponsors to 
set one unified performance target for each asset class in the group 
TAM plan asset inventory. FTA recognizes that the condition of assets 
may vary significantly among group TAM plan participants. Therefore, 
each unified target should reflect the anticipated progress in asset 
performance for a fiscal year for the entire group. For example, group 
TAM plan participants are responsible for meeting a target. Thus, each 
transit provider's asset inventory and condition assessment results are 
combined to determine the unified targets in the group TAM plan.
    The group TAM plan sponsor is responsible for coordinating 
development of the targets with participating transit providers' 
Accountable Executives, to the extent practicable. In addition, transit 
providers are required to coordinate with States and MPOs, to the 
maximum extent practicable, in the selection of State and MPO TAM 
performance targets to ensure consistency.
COMMENT: Performance Targets--Three-Month Deadline
    Several commenters expressed concern about the 3-month deadline for 
target setting specified in Sec.  625.45(a)(1). Some commenters 
generally requested more time to develop targets, some recommended 
revising the target-setting deadline to a minimum of 6-months, and 
others recommended that FTA allow a year to develop the targets. One 
transit operator recommended that the two-year implementation period 
for TAM plans should apply to all aspects of the plan, including the 
performance targets. A trade association said FTA should require the 
initial setting of targets six months after the completion of the first 
TAM and annually after that. A State DOT said the three-month target 
setting process may be sufficient for an individual TAM plan, but a 
group TAM plan may require more time to build consensus for the 
targets. Several commenters said until FTA promulgates prerequisite 
performance criteria and standards, the 3-month turn-around deadline 
cannot be expected to produce meaningful results.
    Multiple commenters recommended a phased-in approach for target 
setting where the initial target setting (those due in three months) 
are classified as preliminary, with some commenters reasoning that 
targets set within three months will not be useful in guiding 
investment decisions. A State DOT said the rule should clarify that 
recipients and subrecipients will not be held accountable to the 
initial targets, but rather to the targets that are included in the 
more formalized asset management plans.
    Several commenters argued that the establishment of performance 
targets for capital assets should not need to be accomplished prior to 
the development of the TAM plan. Most of these commenters said the TAM 
plan should direct the process and criteria for performance targets 
and, therefore, must be developed in conjunction with, or prior to, the 
development performance targets.
    A few commenters requested that FTA publish the rule but set an 
effective date several months in the future (consistent with all other 
U.S. DOT performance rules). A transit operator asked if FTA would 
consider adjusting the target setting timeframe based on the size of 
the transit agency.
FTA'S RESPONSE: Performance Targets--Three-Month Deadline
    Pursuant to 49 U.S.C. 5326(c)(2), recipients must set targets 
within 3 months after the effective date of a final rule to establish 
performance measures. In many cases, the effective date of a final rule 
is several months after the publication of the final rule, in which 
case a transit provider would actually have more than three months to 
establish performance targets. FTA believes that three months is 
sufficient time to complete initial target-setting. Sponsors are 
responsible for setting initial and subsequent targets for small and 
rural operators that are eligible to participate in a group TAM plan.
    FTA recognizes the transit industry will be engaged in a learning 
process as it implements the principles and practices of transit asset 
management, including those requirements contained in this final rule. 
FTA understands that as transit providers gather more information, the 
initial targets will be revised and refined in successive rounds of 
target-setting. However, the purpose of the initial targets is to 
establish a performance baseline. That baseline will change as a 
provider matures in its practice of transit asset management.
FINAL RULE:
    FTA is not making any changes to the final rule related to these 
comments.
COMMENTS: Performance Targets--Annual Performance Targets
    Some commenters provided input on the requirement to set SGR 
performance targets annually, as specified in Sec.  625.45(a)(2). 
Several commenters said the annual target setting should be limited to 
revisiting the prior year's target based on prior year investments and 
updating if significant changes are needed. These commenters said a 
full re-evaluation of targets should only be required every 4 to 8 
years as determined by the provider (for an individual plan) or a 
sponsor (for a group plan).
    However, these commenters suggested that new target setting should 
be done more frequently if a TAM plan is amended prior to the 
established full reevaluation deadline. A State transit association did 
not support progressive SGR targets, unless they can be tied to 
increased levels of funding. A transit operator stated that requiring 
SGR performance targets to be set each year does not fit with generally 
accepted methods for developing multi-year capital programs.
FTA'S RESPONSE: Performance Targets--Annual Performance Targets
    49 U.S.C. 5326 requires recipients of FTA funding to establish 
performance targets annually. The proposed rule did not prescribe a 
process for how a transit provider would establish a target, however. A 
transit provider may establish performance targets by updating the 
prior year's target based on the prior year's investment, or by another 
approach.

[[Page 48935]]

FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
COMMENTS: Performance Targets--Realistic Expectations
    Several commenters provided input on the requirement that an SGR 
performance target must be set based on realistic expectations, as 
specified in Sec.  625.45(a)(4). Several commenters requested 
clarification of the term ``realistic expectations.'' Multiple 
commenters recommended that FTA specify in that an ``SGR performance 
target must be set on realistic expectations, which could mean that 
targets are set based on managing a decline in asset condition,'' 
rather than just improving or maintaining conditions as proposed. A 
commenter said this requirement is prescriptive and not required as 
part of the MAP-21 legislation.
    One of the State DOT requested that Sec.  625.45(a)(4) be revised 
to read, ``An SGR performance target must be set on realistic 
expectations, which could require that targets be established to manage 
a decline in asset condition.''
FTA'S RESPONSE: Performance Targets--Realistic Expectations
    Each transit provider should be setting its performance targets in 
consideration of the condition of its assets and the funding that it 
anticipates will be available to it from all available resources. For 
example, if 30 percent of a transit providers buses are beyond their 
useful life benchmark, it is not realistic for that provider to set a 
target of 100 percent to bring all of its buses under the ULB, if it 
will likely only have funding to renew a portion of those buses through 
either major life enhancing rehabilitation or replacement.
    FTA understands that there may be instances where a transit 
provider may choose to set a negative target. A negative target would 
indicate a declining asset condition; the target itself is not a 
negative value, but represents a lack of improvement. For example, a 
transit provider with a fleet of 100 busses, 15 of which are beyond the 
default ULB, the current metric for their rolling stock performance 
measure: Bus metric is equal to 15 percent. If the provider plans to 
replace 3 vehicles and overhaul 2 in the next fiscal year its projected 
bus metric would be 10 percent-the target for the performance measure 
rolling stock, asset class: Bus. If 10 of the busses exceed the ULB 
this fiscal year, the current year metric is the same at 15 percent, 
but the projected bus metric is now 20 percent, which indicates a 
declining asset condition (older vehicle fleet) and a negative target. 
In this example, for rolling stock, asset class: Bus, a target of 20 
percent represents a negative improvement over a target of 10 percent.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
COMMENTS: Performance Targets--Recent Data and Available Resources
    Several commenters addressed the requirement in Sec.  625.45(a)(5) 
to base the SGR target on recent data and available financial 
resources. A couple of commenters expressed concern that transit 
providers may unilaterally identify competitive (or flexed) financial 
resources and thus could potentially over-count available resources at 
the regional level. One commenter said this requires a financial 
measure, rather than a performance measure. The commenter said the 
definition of SGR as proposed is not compatible with this statement.
FTA'S RESPONSE: Performance Targets--Recent Data and Available 
Resources
    In the NPRM, FTA proposed that a transit provider set performance 
targets based on recent data and resources that the provider could 
reasonably anticipate would be available. This final rule does not 
prescribe a method for setting performance targets and FTA understands 
that target-setting is not an exact science. However, FTA believes that 
the most accurate targets can be established based on recent data and 
reasonably anticipated funding. FTA understands that effective target-
setting and effective development of investment prioritizations will 
require coordination and communication among funding partners and 
stakeholders to produce the best results.
FINAL RULE:
    FTA is not making revisions to the final rule related to these 
comments.
COMMENTS: Performance Targets--Other Comments
    A State DOT supported FTA's proposed requirement that performance 
targets be set for each asset class, as specified in Sec.  
625.45(a)(3). A transit operator agreed that agencies should have the 
ability to set their own performance targets, asserting that this would 
result in targets that are more aligned with each operating 
environment.
    Asserting that the empirical basis for believing that TAM improves 
efficiency of transit operations is very limited, one commenter 
suggested that because the proposed National TAM System includes 
explicit blocks on funding decisions being tied directly to performance 
metrics, transit agencies may have little incentive to actually set or 
achieve a reasonable target.
FTA'S RESPONSE: Performance Targets--Other Comments
    FTA does not have the authority to award or penalize a transit 
provider for achieving or missing a target. However, FTA encourages 
transit providers to be aggressive about setting targets, both to 
support making the case for additional funds to meet state of good 
repair goals, and to encourage finding innovative methods for using 
existing funding levels to meet state of good repair goals.
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
COMMENTS: Performance Targets--Role of Accountable Executive
    A transit operator asked if the Accountable Executive would be 
required to establish and approve each SGR performance target for the 
subrecipients.
FTA'S RESPONSE: Performance Targets--Role of Accountable Executive
    The Accountable Executive for a transit provider that develops an 
individual TAM plan must approve the provider's performance targets. If 
a transit operator is also a group TAM plan sponsor, it must establish 
performance targets for the plan participants in coordination with each 
participant's Accountable Executive. In its responses to the comments 
regarding the definition of Accountable Executive, above, FTA clarified 
that a group TAM plan sponsor is not the Accountable Executive for each 
participating transit provider. However, by participating in a group 
TAM plan, a transit provider's Accountable Executive may be required to 
defer to the decisions of the sponsor regarding prioritization of 
investments.
FINAL RULE:
    FTA is not making any changes to the final rule related to these 
comments.
COMMENTS: Performance Targets--Setting Targets for Participants
    Some public comments addressed the requirement for setting targets 
for group plan participants in Sec.  625.45(c). Several commenters said 
the rule should clarify that the plan sponsor for a group plan may 
establish targets and investment

[[Page 48936]]

prioritization across the entire group (i.e., for all members of the 
group).
    However, several commenters expressed concern that setting a single 
SGR target at the asset class level would not be useful. An MPO 
recommended that FTA devise a methodology that recognizes the array of 
operations and provides a means for setting meaningful performance 
targets within the group. Similarly, another MPO recommended that 
within a group plan that multiple performance targets be set depending 
on a transit agencies size, service type and service levels. A State 
DOT said setting a single target could be difficult if a group TAM 
includes rural and smaller urban transit providers from across the 
State, which may operate within quite different geographic and local 
conditions.
FTA'S RESPONSE: Performance Targets--Setting Targets for Participants
    The sponsor is responsible for setting unified performance targets 
for plan participants based on the investment priorities established in 
the group TAM plan. FTA believes that target-setting approaches and 
methodologies are local decisions. The sponsor should coordinate with 
plan participants to develop an approach for setting unified targets. 
FTA agrees that it may be difficult to set a unified target for both 
rural and urban providers. This final rule does not prohibit a sponsor 
from establishing separate group plans and targets for its 
subrecipients under the urban and rural formula programs.
FINAL RULE:
    FTA is revising the final rule to clarify that a sponsor must set 
one unified target per asset class, but may set more.
COMMENT: Performance Targets--Coordination
    Some public comments provided input on the requirement in Sec.  
625.45(d) to coordinate with States and MPOs in the selection of 
performance targets.
    Several commenters requested clarification regarding the role of 
the State and MPOs in target setting. Some commenters requested general 
guidance on how States and MPOs would be responsible for the targets 
being set or achieved. Some commenters sought clarification on the 
distinction between performance targets set at the State and MPO level 
and those established by the transit agencies themselves. A transit 
operator said it is unclear how transit agencies will report TAM plans 
and updates to MPOs and States, and it is also unclear how the State 
and MPO performance targets will impact individual transit agency TAM 
plans and performance goals.
    A couple of commenters requested confirmation that the MPO would 
aggregate targets and measures, prioritization, performance and 
condition information from the local transit agency in order to set 
regional measure and targets. A transit operator said FTA should ensure 
that this section is not interpreted as giving MPOs mandate for 
developing parallel standards or targets that agencies must meet in 
addition to what is required by FTA. A State transit association 
supported the peer recommendation that FTA should not require MPOs to 
set a region-wide target or incorporate both the safety and transit SGR 
targets from each transit system within their jurisdictions into the 
performance-based planning process
    A State DOT agreed that coordination with regional planning 
organizations supports the goals of effective transit asset management, 
but said the State should have the flexibility to develop the 
appropriate processes to achieve this coordination. However, a transit 
operator said there should be no requirements for agencies that are not 
State-funded to involve State agencies in target setting, project 
prioritization, or strategic leveraging of resources.
    An MPO said that the requirement for coordination with the MPO 
should be strengthened by deleting ``to the maximum extent 
practicable.'' However, a couple of commenters expressed concern that 
the rule indicates significant additional work will be required of MPOs 
and all transit-related partners that may produce speculative results 
with few tangible benefits. A transit operator said FTA should clarify 
whether the coordination suggested with the MPO is required for asset 
management or for service performance.
FTA'S RESPONSE: Performance Targets--Coordination
    Pursuant to the requirements at 49 U.S.C. 5303 and 5304, States and 
MPOs must coordinate with transit providers to the maximum extent 
practicable in selecting State and MPO TAM performance targets.\13\ The 
performance targets set by transit providers, along with other 
performance targets set pursuant to other statutes, are an essential 
component of the planning process. The planning provisions at 49 U.S.C. 
5303 and 5304 require States and MPOs to establish performance targets 
for transit that are based on the national measures for state of good 
repair and safety established by FTA and to coordinate the selection of 
those performance targets, to the maximum extent practicable, with 
performance targets set by transit providers to ensure consistency. 
See, specifically, 49 U.S.C. 5303(h)(2)(B)(ii), 5304(d)(2)(B)(ii).
---------------------------------------------------------------------------

    \13\ See 49 U.S.C. 5303(h)(2)(B)(ii), 49 U.S.C. 
5304(d)(2)(B)(ii).
---------------------------------------------------------------------------

    This final rule does not require a transit provider to coordinate 
with its planning partners in the selection of its own performance 
targets. The rule requires transit providers to coordinate with States 
and MPOs in the selection of State and MPO performance targets. 
However, FTA would strongly encourage transit providers, States, and 
MPOs to coordinate in the establishment of meaningful, progressive 
local and regional targets.
    FTA believes that target-setting approaches and methodologies are 
local decisions. Transit providers should work with their planning 
partners to integrate their TAM plans into the statewide and 
metropolitan transportation planning processes. See 49 U.S.C. 
5303(h)(2)(D), 5304(d)(2)(B)(ii). To support this integration, transit 
providers must share information regarding transit system condition, 
targets, investment priorities and strategies, which are parts of its 
TAM plan, in accordance with Sec.  625.53(b).
    The final rule on Metropolitan and Statewide Planning and Non 
Metropolitan published May 27, 2016 \14\ FTA and FHWA issued e guidance 
to aid the industry in the implementation of the performance-based 
planning requirements.
---------------------------------------------------------------------------

    \14\ https://www.federalregister.gov/articles/2016/05/27/2016-11964/statewide-and-nonmetropolitan-transportation-planning-metropolitan-transportation-planning.
---------------------------------------------------------------------------

FINAL RULE:
    FTA is not making any substantive changes to the final rule related 
to these comments.
COMMENTS: Performance Targets--Setting Performance Targets
    Some public comments provided other comments on performance target 
setting that were not otherwise addressed above. A couple of commenters 
said additional guidance is needed from FTA to ensure consistent 
calculation and application of targets.
    A couple of commenters recommended that facilities be exempted from 
target setting until training is provided on the use of TERM for the 
State DOT and its subrecipients. Specifically, commenters recommended 
that facilities be included in a TAM plan a year after the training has 
been provided in the region.

[[Page 48937]]

    An MPO said the use of the term ``transit provider'' in this 
section is inconsistent with the use of tier I and tier II providers in 
the previous sections. The commenter said it is not intended that the 
TIP projects be constantly updated to make minor changes to projects 
that do not represent TIP amendments.
    One commenter noted that the preamble states that performance 
targets are required ``for each performance measure identified in Sec.  
625.43.'' If this is the expectation, the commenter said this should be 
made clearer within the language of Sec.  625.45.
    A transit operator said FTA should clarify that having and meeting 
performance targets set at 100 percent is not a prerequisite to meeting 
the state of good repair standard under Sec.  625.41. Without this 
clarification, the commenter said some transit agencies may be led to 
believe only agencies meeting 100 percent performance targets have 
assets in a state of good repair.
    A transit operator said agencies need to have flexibility to 
determine performance targets and how best to establish their 
definition of a state of good repair. Another transit operator asked to 
what extent will reviewers during the triennial review process be 
empowered to reject these targets, and if a transit agency has self-
certified its TAM plan, to what extent will the reviewers be empowered 
to reject the certification if they believe it does not meet the 
standards.
    A transit operator said the NPRM includes discussion about the lack 
of authority for FTA to reward or penalize transit agencies whether or 
not they meet SGR performance targets. The commenter expressed concern 
that there is a reasonable expectation that funding, through FTA, MPOs, 
or States, may in the future be directed to performance areas where 
transit agencies fell short of SGR performance targets.
FTA'S RESPONSE: Performance Targets--Setting Performance Targets
    FTA is preparing two guidebooks to aid in the calculation and 
application of the Facility and Infrastructure performance measures. 
The National Transit Institute offers training on TERM-Lite.\15\
---------------------------------------------------------------------------

    \15\ National Transit Institute (NTI) Using the Transit Economic 
Requirements Model (TERM-Lite) Computer Lab (http://www.ntionline.com/courses/courseinfo.php?id=271.)
---------------------------------------------------------------------------

    FTA disagrees that the term transit provider is inconsistent with 
the definition of tier I and tier II.
FINAL RULE:
    FTA is not making any substantive changes to the final rule related 
to these comments.
625.53 Recordkeeping for Transit Asset Management
    This section proposed that a transit provider keep records of the 
documents it develops to meet the requirements of this part for at 
least four years. Excel spreadsheets, agreements, or policies that were 
used to develop a TAM plan may prove useful in the next iteration, as 
well as assist in certification and review. This section proposed also 
that a transit provider or group TAM sponsor share its records with its 
State and MPO to aid in the planning process.
COMMENTS: 625.53 Recordkeeping for Transit Asset Management
    Some public comments addressed the proposed recordkeeping 
requirements in Sec.  625.53. A few commenters expressed support for 
proposed Sec.  625.53.
    One commenter stated that the information in proposed Sec.  
625.53(b) is public and readily shared with partners, including MPOs 
and, therefore, unnecessary to include in the rule. A transit operator 
recommended that tier I agencies only be required to share performance 
targets and progress with States and MPOs. Another transit operator 
said the documentation required to be provided to States and MPOs 
should be limited as such agencies may not provide funding to the 
transit agency.
    Expressing concern that the use of supporting records by the MPO 
would increase the staff burden for some MPOs, a transit operator 
recommended that FTA revise Sec.  625.53 to only say that the grantee 
should use its TAM plan to inform its proposal of projects to the MPO 
for inclusion in the TIP.
    A business association expressed support for State-level 
maintenance of records and documents for tier II TAM group plans along 
with NTD data, as it would lessen the administrative burdens on smaller 
systems.
FTA'S RESPONSE: 625.53 Recordkeeping for Transit Asset Management
    Through the enactment of MAP-21 in 2012, the Congress fundamentally 
shifted the focus of Federal investment in transit to emphasize the 
need to maintain, rehabilitate, and replace existing transit 
investments. The ability of FTA grant recipients, along with States and 
MPOs, to both set meaningful transit SGR performance targets and to 
achieve those targets is critically dependent upon the ability of all 
parties to work together to prioritize the funding of SGR projects from 
existing funding sources. In order to work together, all parties, 
including tier II providers, must share information openly.
    This final rule requires that a transit provider or group TAM 
sponsor make its TAM plan and supporting documents available to a State 
or MPO that provides funding to a transit provider. It will be up to 
the State or MPO to prescribe how it wants to receive the information.
FINAL RULE:
    FTA has revised this section in the final rule to clarify that a 
transit provider must make its TAM plan available to a State or MPO 
that provides funding to it.
625.55 Annual Reporting for Transit Asset Management
    This section proposed a description of the annual report a transit 
provider or group TAM plan sponsor would have to submit to NTD. The 
annual report would include a data report and a narrative report. The 
data report would need to include performance targets for the next 
fiscal year and the condition of the system, at minimum. In the case of 
a group TAM plan, the report would need to include the uniform 
performance targets and the condition of the amalgamated system. The 
narrative report would include a description of the change in condition 
of the transit system, and the progress toward achieving the 
performance targets set for the previous fiscal year. A report for 
group TAM plan participants should include the amalgamated system and 
progress toward the uniform performance targets.
    Both reports would allow FTA to customize triennial reviews to the 
transit provider. In addition, the data will be used by FTA to estimate 
and predict the national SGR backlog and the default ULB for rolling 
stock assets.
COMMENT: 625.55 Annual Reporting for Transit Asset Management
    Many public comments addressed the proposed annual NTD reporting 
required by a transit provider or a group TAM plan sponsor in Sec.  
625.55.
    A State transit association supported the peer recommendation that 
FTA should build upon the existing NTD Safety Event Reporting data 
collection effort and leverage historical data collection to identify 
safety trends, rather than establishing a new data collection and 
reporting system. Similarly, a transit operator expressed support for 
using the NTD to submit the

[[Page 48938]]

annual data reports, performance target reporting, narrative changes in 
the condition of the transit system, and progress to meet SGR targets. 
Two State DOTs and other commenters urged FTA to keep the amount of 
reporting and target setting to a minimum of only what is required for 
the NTD.
    A transit operator asked why the data report and the narrative 
report would not be due at the same time covering the same year. 
Another transit operator recommended that the deadline for the annual 
NTD data and narrative reports should be four months after the Federal 
Fiscal Year (FY) for the data report and six months after for the 
narrative report, asserting that four months after the end of the 
standard FY in June would be too short for agencies to collect 
necessary data and conduct analysis. A few commenters urged FTA to sync 
up NTD reporting and target setting with TAM plan reporting and target 
setting, as well as FHWA reporting cycles. A business association urged 
FTA to allow agencies to report asset condition consistently with their 
established internal asset management practices, reasoning that forcing 
agencies to report in what would normally be off years would be 
expensive and disruptive to agencies, without adding quality to the 
national view obtained by FTA.
    A State agency suggested that rail fixed guideway transit systems 
be required to provide the annual data report and annual narrative 
report to State Safety Oversight Agencies (SSOAs) simultaneously with 
their delivery to FTA.
    Several commenters expressed concern about the data collection 
resources that would be needed for transit providers to assess and 
submit performance conditions for all assets annually. A State DOT 
commented that requiring both annual data and narrative reports 
describing any changes and requiring TAM plan reassessment every four 
years is onerous and burdensome. A transit operator stated that annual 
reporting and annual target setting may be excessive and labor 
intensive since their own experience indicates that there are not 
significant changes over the course of a year. A transit operator 
stated asserted that annual reporting did not make ``good business 
sense'' from a risk perspective of a transit agency and that the volume 
of data in the annual assessment would overwhelm the database system.
    Absent a change in funding or an unanticipated change in assets 
condition, an MPO commented that it would be more appropriate to report 
the SGR targets on a consistent basis with changes in the targets set 
as part of a new TIP/STIP development every four years.
    A transit operator commented that it is difficult to comment on 
proposed reporting requirements without reviewing the forthcoming 
guidance proposal on the NTD Reporting Manual that would describe the 
content of the new data report. This commenter recommended that the 
final rule should include more guidance on the new reporting 
requirements and that FTA provide a template for the new data and 
narrative report requirements for NTD.
    A local transit provider asked if service providers would have to 
report SGR for each asset in their inventory or whether this would be 
done at a higher, aggregated asset category level. This commenter also 
expressed concern about proposed Appendix A to part 625, asserting that 
FTA should endorse the TERM asset hierarchy throughout the rulemaking 
rather than changing to a different classification hierarchy.
    Commenting that the NPRM did not provide guidance on the level of 
reporting that would be required when submitting NTD required reports, 
a State public transportation system urged FTA to ensure that the 
transit provider determine the level of detail in its asset inventory 
and that the NTD input requirements are structured so that the 
providers could have one database that could feed both NTD and asset 
management reporting requirements.
    An MPO urged FTA to acknowledge in the final rule that it needs to 
expand the NTD to accommodate the additional reporting and that the 
scheme for reporting this data has not yet been developed. This 
commenter suggested that FTA should have a public comment request for 
its proposal to amend the NTD. A State DOT suggested that because the 
rule would require annual reporting of asset condition using the NTD, 
the NTD should include a function that automatically compares a 
currently reported condition to the most recent previously reported 
condition in order to meet the requirement for assessing the change in 
asset condition at Sec.  625.55. The commenter reasoned that this 
function would help smaller agencies, which typically do not have staff 
resources to evaluate and document changes in asset condition.
    A transit operator said capital asset inventories should be 
afforded the protections of Federal laws prohibiting the public 
disclosure of sensitive information. Similarly, two other operators 
said FTA should safeguard sensitive information related to condition 
and risk, stating that any compromise of data is almost certain to 
limit any agency's motivation to fully embrace this strong self-
analysis. A transit operator asked to what extent assembled data could 
be protected from discovery in litigation or disclosure through the 
Freedom of Information Act (FOIA).
    A State DOT recommended that the reporting requirement should be 
for a single annual report that includes both the asset condition 
report and performance target progress and milestones, rather than 
requiring both separately.
    Two commenters noted that, although it seems like a good practice, 
the proposed rule would not require an agency to report the percentage 
of assets in SGR or the SGR backlog amount. A State DOT asked FTA to 
clarify whether annual reporting to NTD will be required for transit 
agencies receiving 49 U.S.C. 5307 funds. Another transit operator asked 
several detailed technical questions about the mechanics of National 
Transit Database Reporting.
FTA'S RESPONSE: 625.55 Annual Reporting for Transit Asset Management
    The NPRM proposed that a transit provider submit two annual reports 
to the NTD. The reporting requirements for TAM do not conflict other 
NTD reporting requirements.
    FTA did not propose that SSOAs review and approve TAM plans. 
However, a rail transit system may coordinate and collaborate with its 
SSOA to develop and carry out its TAM plan.
    FTA believes the reporting and target setting requirements in this 
final rule are appropriate. FTA recognizes that for many transit 
providers there will be minimal changes to the asset inventory and 
condition information reported to the NTD from year to year. The online 
reporting system of the NTD will pre-populate asset inventory and 
condition information from the previous year, thus minimizing the 
annual reporting burden on transit providers when there are few 
changes. Interested parties can consult the existing NTD Reporting 
Manuals for technical questions about the logistics of NTD reporting.
    The NTD data report will not include an exhaustive inventory of all 
of a provider's assets, nor an exhaustive deposit of all its condition 
information available. Transit providers can organize the asset 
inventory and condition assessment in their own TAM plan according to 
any asset hierarchy that still allows them to meet the relevant NTD 
reporting requirements.
    FTA recognizes that the annual change in targets may be minimal. A 
transit provider may report targets that are either identical, or only

[[Page 48939]]

incrementally different from the targets it reported in the previous 
year. If there is little change from one year to the next, then a 
transit provider may have the same numerical target for more than one 
year. In addition, a transit provider may decide to set a longer range 
target and divide it incrementally to report as annual targets.
    FTA does not have the statutory authority to exempt the reports 
required under the final rule from the Freedom of Information Act 
(FOIA).
FINAL RULE:
    FTA is not making any revisions in the final rule related to these 
comments.
Part 630--National Transit Database
    FTA proposed to revise Sec. Sec.  630.3, 630.4, and 630.5 of 
subpart A of 49 CFR part 630 to conform to the reporting requirements 
set forth in proposed part 625. The proposed reporting requirements for 
National TAM System apply to all chapter 53 recipients or subrecipients 
who own, operate, or manage public transportation capital assets. FTA's 
National Transit Database (NTD) currently requires reports from 
recipients or beneficiaries of the Urbanized Area Formula Program (49 
U.S.C. 5307) and the Rural Area Formula Program (49 U.S.C. 5311). FTA 
proposed to replace references to 49 U.S.C. 5307 and 5311 recipients 
with references to recipients and subrecipients of chapter 53 funds. 
This change will require recipients and subrecipients of other FTA 
grant programs, such as the 49 U.S.C. 5310 formula program for the 
enhanced mobility of seniors and individuals with disabilities who are 
not also receiving funds under 49 U.S.C. 5307 or 5311, to start 
reporting TAM required performance data to the NTD. FTA will not apply 
existing NTD reporting requirements to all recipients of chapter 53 
funds. FTA will only apply the reporting requirements proposed under 
the National TAM System to those transit providers that do not 
currently report.
COMMENT:
    A couple commenters expressed support for FTA's proposed changes to 
the NTD regulations at 49 CFR part 630.
FTA'S RESPONSE:
    FTA appreciates the comments in support of its proposed amendments 
to the NTD.
    On November 8, 2015, FTA published a notice in the Federal Register 
which responded to comments on a previous proposed expansion of the 
NTD; requested comments on additional proposed reporting; and requested 
comments on updating the NTD's approval to collect information under 
the Paperwork Reduction Act. 80 FR 72137. Some of the proposed 
reporting requirements in that notice relate to the contents of this 
rule. The comment period for the notice on NTD reporting closed on 
January 19, 2016 comments relevant to this final rule made to the 
docket for NTD reporting requirements are summarized below. The 
complete list of comments and responses including burden estimates can 
be found in the NTD Reporting Manual Federal Register notice.
NTD Reporting Manual Background
    The proposed changes to the NTD Reporting Manual stem from 
amendments to Federal transit law made by the Moving Ahead for Progress 
in the 21st Century Act (MAP-21) (Pub. L. 112-141, July 6, 2012), which 
require recipients of Chapter 53 funds to report to the NTD any 
information relating to a transit asset inventory of condition 
assessment conducted by the recipient. (59 U.S.C. 5335(c)) Currently, 
the NTD only collects asset inventory information on revenue vehicles 
and summary counts for other asset categories, such as maintenance 
facilities and fixed guideway. There are some assets, such as signal or 
communications systems, for which NTD collects no data. In both the 
initial and second notice, FTA proposed to collect additional asset 
inventory data to meet the asset inventory and condition reporting 
requirements at 49 U.S.C. 5335(c).
Comments Relevant to National TAM System Final Rule From the NTD 
Reporting Manual Notice Docket
    FTA received comments related to 1- Asset inventory burden, 2- 
Reporting requirements for 5310 recipients, 3- Reporting of service 
equipment, and 4- Guidance for useful life benchmark (ULB). In 
addition, the NTD Reporting Manual notice received duplicative comments 
to those addressed in this final rule on third party asset reporting 
and dollar thresholds for asset inventory. FTAs responses to the 
duplicative comments are addressed previously in this final rule.
NTD Notice Comments: Asset Inventory Burden
    FTA received a number of comments expressing concern over the 
additional burden imposed by expanding the asset inventory. Twenty (20) 
commenters stated that the proposal was too burdensome. Thirteen (13) 
commenters expressed the concern that the additional reporting burden 
may divert resources away from transit service provision. Eight (8) 
commenters felt the burden estimates provided by FTA were 
`understated'.
FTA's Response: Asset Inventory Burden
    The NTD burden estimate, which will be more fully described in the 
separate Federal Register Notice responding to comments on FTA seeking 
approval under the Paperwork Reduction Act for updated NTD Reporting 
Manual guidance, assumes that an agency will already have an asset 
inventory in place as part of their compliance with the TAM rule and, 
therefore, only includes the time and costs estimated to enter existing 
asset inventory information into the NTD reporting system. In some 
cases, modifications to existing data may be necessary to enter this 
information into the NTD. The burden estimates provided in the second 
NTD notice take into account small modifications of existing 
information in the asset inventories required by the TAM Rule for 
reporting in the standard formats established by the NTD.
    In calculating the burden estimate for NTD reporting, FTA asked 
several agencies to enter their existing asset inventory information 
into the proposed format and report the time necessary to complete this 
task. Three agencies completed an entire report and their experience 
with the new reporting requirements served as the foundation for the 
final estimates. A `per field' reporting time was calculated and then 
multiplied out over the estimated data fields expected nationally to 
create a final burden estimate. Because the numbers presented are 
averages, some agencies may expect to spend more time and some agencies 
will spend considerably less than the estimated average.
    FTA remains committed to implementing reasonable data reporting 
requirements, while also meeting the requirements in the law for 
reporting asset condition information. In response to the first round 
of comments on the asset inventory, FTA made several modifications to 
reduce the overall reporting burden including removing replacement cost 
information for all asset types and also eliminating the proposal for 
reporting details of individual components within facilities. FTA 
believes that this revised proposal for asset inventory reporting 
fulfills the MAP-21 update to 49 U.S.C. 4335(c) that recipients report 
asset inventory and condition assessment information to the NTD. These 
data will support better state of good repair estimates from

[[Page 48940]]

FTA's Transit Equipment Requirements Model and will support the 
calculation of performance results under the performance measures 
established in this rule. While FTA recognizes that the proposed 
changes would result in an increase over the current reporting 
requirements, the highest burden would exist in the first year of 
start-up reporting. Once an asset has been entered into the inventory 
module, the information would be pre-populated for each subsequent 
year. Reporters only would be responsible for providing annual updates 
to new or retired asset inventory items in subsequent years.
NTD Notice Comments: Reporting Requirements for 5310 Recipients
    An additional area of concern was related to the new reporting 
requirements for 5310 recipients. Commenters stated that reporting for 
5310 recipients should be limited or eliminated entirely. In addition, 
commenters felt that any reporting done on behalf of 5310 recipients 
should be done at the designated recipient level rather than the 
subrecipient level to minimize the burden of this new reporting. This 
same group of commenters suggested that only vehicles used in public 
transit and, preferably only vehicles purchased with federal money, 
should be reported. Some commenters requested that performance targets 
and reporting should be removed for 5310 recipients.
FTA's Response: Reporting Requirements for 5310 Recipients
    FTA is committed to developing requirements that are mindful of the 
burden for small transit providers. FTA understands that direct 
reporting may prove to be a difficulty for small section 5310 
recipients. In order to minimize this burden, FTA concurs with the 
comment that reporting on the assets for 5310 recipients should be done 
at the designated recipient or State level. The reporting guidance will 
be updated to reflect this change.
    In response to the applicability of reporting for 5310 reporters: 
the NTD asset inventory requirements will mirror the reporting 
requirements established by the Transit Asset Management rule. The 
final reporting requirements for National TAM System apply to all 
chapter 53 recipients or subrecipients who own, operate, or manage 
public transportation capital assets. FTA currently requires NTD 
reports from recipients of funds under the Urbanized Area Formula 
Program (49 U.S.C. 5307) and the Rural Area Formula Program (49 U.S.C. 
5311). As such, this new rule replaces references to 49 U.S.C. 5307 and 
5311 recipients with references to recipients and subrecipients of 
chapter 53 funds. This change will require recipients and subrecipients 
of other FTA grant programs, such as the 49 U.S.C. 5310 formula program 
for the enhanced mobility of seniors and individuals with disabilities, 
who are not also receiving funds under 49 U.S.C. 5307 or 5311, to start 
reporting to the NTD. FTA will not apply existing NTD reporting 
requirements to all recipients of chapter 53 funds. FTA will apply only 
the reporting requirements mandated under the National TAM System final 
rule to those transit providers that do not currently report.
NTD Notice Comments: Reporting of Service Equipment
    Some commenters requested the removal of service equipment from the 
NTD Asset Inventory.
FTA's Response: Reporting of Service Equipment
    In order to best align the NTD asset inventory with the TAM rule 
reporting requirements, FTA believes it is appropriate to keep an 
inventory of `service equipment' in the NTD. This information will 
provide verification of the TAM performance targets and performance 
against those targets. In addition, non-service vehicles and equipment 
represent a large capital expense for some agencies. Including a basic 
inventory of these vehicles and equipment in the NTD will provide 
additional clarity on the state of good repair backlog for the transit 
industry.
    The final TAM rule requires transit providers to report the 
percentage of on non-revenue, support-service and maintenance vehicles 
that have met or exceeded their useful life benchmark. This is the 
identified SGR performance measure for equipment. FTA feels that non-
service vehicles are an easily understood and readily identifiable 
category of equipment, and the age-based performance measure is the 
most-simple and straight-forward performance measure available.
NTD Notice Comment: Guidance for Useful Life Benchmark (ULB)
    One commenter requested guidance on calculating a useful life 
benchmark (ULB) that is not based on accounting depreciation standards.
FTA's Response: Guidance for Useful Life Benchmark (ULB)
    The calculation of a useful life benchmark may vary considerably 
between transit operators based on original equipment specifications, 
operating environment and maintenance or capital replacement schedules. 
Due to these variations, the FTA intends to leave the calculation of 
such a metric up to the individual providers. To facilitate reporting, 
FTA will provide a ULB default estimate based on the Transit Economic 
Requirements Model (TERM) depreciation curves in the NTD reporting 
system. These default estimates will also be available in the reporting 
manual. The ULB default estimate provided by NTD will be the point at 
which a vehicle reaches 2.5 in TERM.
FINAL RULE:
    FTA is including the proposed amendments to the NTD in the final 
rule without change.

III. Regulatory Analyses and Notices

A. Regulatory Analyses and Notices NPRM Comments and FTA's Responses

COMMENTS: Funding for Transit Asset Management
    A transit operator argued that because the TAM rule requirements 
will come with significant costs, there should be a dedicated funding 
source that does not diminish other programs. A business association 
similarly expressed concerns that the current investment from 
government is insufficient to meet both the capital and operating needs 
of the nation's mobility providers and is unlikely to change in the 
foreseeable future.
    After expressing concern about the increased resources that would 
be required to comply with the rule, several commenters requested that 
funding be allocated to assist transit providers in developing and 
implementing TAM. A transit agency said dedicated funding should be 
made available with specific eligibility for TAM business processes 
needed to comply with the rulemaking requirements that does not include 
competing eligibilities with capital replacement projects. A transit 
operator requested that FTA identify a source of funding, in addition 
to formula funding, to help agencies comply with this new mandate. A 
State DOT said it is unclear if FTA will provide financial support for 
training of maintenance and reporting agency staff and for purchasing 
software to manage TAM systems. A transit operator requested 
clarification on how a service provider can request funding under 
specific grant programs.
    A State transit association noted that the NPRM stated that ``on 
average, fare revenue cover only one-third of total operating expenses, 
and do not cover any capital expenses,'' but there is no discussion 
about the systems that do not

[[Page 48941]]

charge fares, thus allowing them to qualify for more Federal funding 
than the systems charging fares. The commenter said FTA should consider 
allowing at least 10 percent of fare collection to be set aside for 
capital purchases or major repairs as local match. The commenter 
asserted that this would result in an incentive to agencies to seek 
user financial support in achieving SGR goals.
    Several commenters said FTA should recognize the lack of funding 
available to assure state of good repair. An MPO said it is not 
appropriate to place the burden of SGR on the transit operators' 
management practices when Congress has stepped away from the 
traditional partnership role in funding transit capital needs. Another 
commenter asked if national and local funding prioritization will be in 
alignment with SGR targets, as the Secretary is required to establish 
SGR performance measures and recipients are required to set performance 
targets based on these measures. This commenter also asked what 
portions of funding would the FTA consider reasonable to be allocated 
to achieving these targets and what level of confidence needs to be 
established that funding of projects will impact measures in reaching 
targets. A State DOT encouraged FTA to make the case for dedicated 
Federal funding for the TAM plan initiative, and/or consider clarifying 
which existing Chapter 53 planning and technical assistance funds may 
be applied to TAM plan development.
FTA'S RESPONSE: Funding for Transit Asset Management
    In its 2013 Conditions and Performance Report, FTA estimated that 
the Nation's SGR backlog is $85.9 billion. FTA recognizes that 
addressing this backlog will require multiple approaches, including 
increased funding for asset management activities and state of good 
repair projects. However, FTA does believe that the National TAM System 
will support the transit provider's strategic allocation of available 
funds towards reducing the SGR backlog. FTA grant recipients, along 
with States and Metropolitan Planning Organizations (MPOs) will need to 
coordinate in order to set meaningful SGR targets and to prioritize 
funding from all sources towards reducing the SGR backlog.
    There is specific funding available for transit asset management 
and state of good repair purposes. In MAP-21, Congress created the 
State of Good Repair Formula Program at 49 U.S.C. 5337. Funding for the 
SGR Program was reauthorized in the FAST Act at approximately $2.5 
billion for fiscal years 2016-2020, a significant increase over MAP-
21's authorized funding levels. Eligible projects include TAM plan 
development and implementation, and Capital projects to maintain a 
system in a state of good repair. Upon the effective date of this final 
rule, projects eligible for funding under the SGR Formula Program must 
be identified within the investment prioritization of a transit 
provider's TAM plan.\16\
---------------------------------------------------------------------------

    \16\ For more guidance on the SGR Formula Program, please review 
the program guidance available on FTA's Web site at http://www.fta.dot.gov/legislation_law/12349_16262.html.
---------------------------------------------------------------------------

    Funds from other FTA grant programs may also be used to cover costs 
related to TAM plans. In general, costs associated with capital 
projects to purchase new capital assets or to rehabilitate or maintain 
existing assets are available for state of good repair purposes. The 
software costs for an asset inventory system, for estimating capital 
investment needs over time, or for a decision support tool for 
investment prioritization are all eligible capital costs. Costs related 
to assembling and maintaining an asset inventory, or related to 
condition inspections, are generally eligible preventive maintenance 
costs that can be funded by capital assistance. Finally, costs related 
to creating a TAM plan itself are an eligible expense under the section 
5307 Urbanized Area Formula Program and the section 5311 Rural Area 
Formula Program.
    Although fare revenues that are program income are not currently an 
eligible source of local match for FTA's grant programs, FTA does not 
have the statutory authority under current law to change this approach. 
Whether or not a transit provider charges a fare does not impact the 
amount of funding it may receive from FTA.
COMMENTS: Other Funding for TAM
    An MPO said more recordkeeping without additional funding 
accomplishes nothing other than demonstrate the unmet need. This 
commenter asserted that a systematic approach to manage existing 
resources will not fully address the financial need to replace assets. 
Another commenter suggested that while the TAM rule may provide data 
and systemization for agencies as they assess their SGR, it is unclear 
if this will result in a better funding outlook.
    One commenter expressed concern that requiring service providers to 
publicly document asset safety shortcomings while possibly not having 
sufficient funding to address all needs would increase legal liability 
risk for agencies.
    A State transit association suggested that FTA (1) consider setting 
guidance to allow for local agencies to have fare set-asides to 
establish ``sinking funds'' to pay for new rolling stock purchases or 
major vehicle repairs, and (2) allow agencies be able to make loan 
payments from fares, reporting balance of fares less loan payments on 
quarterly DOT reports. A State DOT recommended that the rule should 
include specific language stating that, without additional financial 
resources, establishing an asset management plan may not in itself 
enable a provider or a group to reach a state of good repair.
    Expressing concern that the rule would not allow legacy transit 
providers to work towards improvements in their facilities performance 
measure without diverting funds from other, potentially more critical 
needs, a local transit operator asked what the consequences would be of 
reporting declining performance measures for facilities to ensure 
maintaining or improving performance targets for fleet and 
infrastructure.
FTA'S RESPONSE: Other Funding for TAM
    FTA believes recordkeeping and reporting will create a database 
that can be used to better identify the unmet needs. In many States, 
data-driven performance management practices have resulted in increased 
funding for transportation programs from state and local governments. 
Being able to demonstrate transportation needs, based on sound 
quantitative analysis, lends credibility to the funding requests and 
makes it easier for legislatures to support increased funding.
    FTA acknowledges that the efficiencies realized through improved 
data-driven decision-making may not be adequate to meet all of the 
financial needs to address SGR, and that TAM plan development costs may 
divert funds from the current capital programs and that this may affect 
system performance. However, FTA anticipates that improved asset 
management practices will result in decisions that reduce maintenance 
and rehabilitation costs overtime. These cost savings might offset the 
costs of the TAM plan.
    The TAM final rule does not include penalties for agencies that 
demonstrate declining performance of assets. The goal of the final rule 
is for transit service providers to develop or improve on existing 
asset management processes to provide and use data to make better 
decisions. Making trade-offs among

[[Page 48942]]

competing investments is part of the process. A goal of the TAM plan is 
to help agencies improve their current asset management practices to 
better manage assets over the whole life of an asset and to identify 
what can be achieved with current funding in order to meet desired 
performance goals.
    This rule does not require agencies to list or document assets that 
pose an unacceptable safety risk.
FINAL RULE:
    No change has been made in the final rule due to these comments.
COMMENTS: NPRM Regulatory Impact Analysis--Total Cost
    Many comments were made on the costs associated with the proposed 
rule. Many commenters said FTA's estimated costs of compliance with the 
rule (coordination, data collection, reporting, etc.) are 
underestimated. One commenter said the rule's activities could require 
more than three times the number of hours estimated by FTA, and 
approximately five times the estimated cost. A State DOT said its 
current cost estimate for the initial phase of asset management 
planning (performance gap analysis) is about $300,000 in upfront costs, 
including project staff labor, training and consultant services for one 
year, which is significantly higher than the tier I annual cost of 
$33,451 per provider estimated by FTA. Some commenters provided 
specific estimated costs of complying with the rule, which ranged 
between $20,000 and $500,000 per transit agency. Another commenter 
stated that it uses two full-time equivalents (FTEs) just to update the 
asset inventory and the contracted costs for its recently completed TAM 
plan was three times the average cost from the FTA analysis for all TAM 
activities. Further, this commenter asserted that there would be 
further costs to bring it into compliance with the final rulemaking.
    A transit operator said requiring all assets in the facilities 
category to have a full condition assessment with a 1-5 ranking based 
on the TERM scale would be extraordinarily expensive for larger 
agencies and may also be cost-prohibitive for smaller agencies with 
fewer assets and less funding. The commenter stated that, given the 
geographic breadth of the rail system and the number of stations, it 
would not be unrealistic to assume a $4-5 million undertaking to 
produce something of value. The commenter stated that because FTA has 
been supplied with the budget updates for this project on a monthly 
basis for several years, it was surprising that the estimates and 
approach did not reflect any of this information, but rather relied on 
the feedback from four newer and smaller agencies.
FTA'S RESPONSE: NPRM Regulatory Impact Analysis--Total Cost
    FTA appreciates the comments on the cost estimates and the 
assumptions used. FTA acknowledges that the general consensus of the 
comments was that the estimated costs were lower than would be 
expected. FTA agrees that this may be the case in some instances for 
various reasons. However, it can be misleading to compare individual 
agency costs with an average for an industry that is very diverse in 
size, such that a few large agencies provide a large share of transit 
services. For example, among agencies receiving 5307 formula funds, 3 
percent of the agencies own nearly 50 percent of the revenue vehicles. 
Since the average cost estimates in NPRM are the average cost per 
transit provider, they are more representative of the costs for the 
smaller providers, who are much more numerous, than for the large-
medium to large providers. Thus, FTA agrees that costs for particular 
larger agencies may be higher, while, costs to smaller agencies may be 
lower, than the estimated average.
    Tier I agencies range in size from agencies with revenue vehicles 
of over 101 to 10,000. Out of the 284 agencies in tier I, only twenty 
three have revenue vehicles greater than one thousand. As mentioned 
above, the average costs for tier I providers are more representative 
of the costs to the smaller tier I agencies. To illustrate this point, 
estimates are made for a large tier I agency, with 2500 vehicles and 
one with 500 vehicles. The quantified costs of implementing the rule 
are $234,477 for the larger agency and $109,312 for the smaller agency. 
The costs would approximately double if most of the tasks were 
contracted out.
    However, for a more realistic comparison between the final rule's 
costs and the estimates cited by the commenters, FTA compared the costs 
for the specific agency providing the comment against the costs that 
would be predicted by FTA's model as used in the NPRM. For example, a 
State DOT commented that it has incurred $300,000 in upfront costs for 
asset management planning (performance gap analysis), significantly 
more than the average for tier I. FTA's cost estimate for this agency 
to implement the TAM rule is $99,000 in upfront costs. Many other 
agencies provided cost estimates ranging from $20,000 to $500,000. For 
these agencies, the NPRM upfront cost estimates ranged from $41,000 to 
$161,000. Another commenter noted that it could cost an agency between 
$4-5 million to undertake a full condition assessment based on TERM 
scales and other TAM requirements. For this agency the NPRM cost 
estimate is about $240,000 in upfront costs.
    There are a number of reasons why the cost estimates in the NPRM 
are lower than the estimates provided by the commenters. First, the 
cost estimates in the NPRM were for the additional or incremental 
activities resulting from implementing the final rule. Adopting the 
requirements of the TAM rule will replace some existing practices and 
create new ones to better manage assets in a systematic way. In some 
instances, the TAM provisions may not add any new burden at all. 
Because the baseline compliance level is different across agencies, the 
final analysis does not estimate that every agency--or even every 
agency that is similar in size to the commenter's agency--will incur 
the same costs as identified by a particular commenter.
    For instance, it is known that for the project with estimated costs 
of $4-5 million, a large component of the cost was for updating asset 
condition data that had been done previously using a new method. The 
cost estimate provided is therefore not an incremental cost of the 
rule. Also, it is noted elsewhere in this rule that FTA has not 
prescribed any specific condition assessment approaches or other 
analytical tools. So, if an organization decides to adopt an approach 
that is more expensive, it is their decision based on their need.
    Second, the scope of the efforts for which commenters provided 
costs may be beyond what is required by this rule. For example, the 
document referenced by the State DOT commenter is referred to as 
`performance gap analysis.' Performance management is generally more 
encompassing than asset management and particularly more than what is 
required in the TAM rule. Without additional information, it is hard to 
provide a realistic validation of these numbers.
    Third, FTA acknowledges that its estimates are based on the data 
available in the NTD. It does not include all the assets owned or 
operated by an agency or even the ones required to be included in the 
TAM plan. Fourthly, FTA estimates assume the work is being done in-
house with qualified staff available with the appropriate skills. This 
would result in significant underestimation if most of the work was 
contracted out. To address this issue the final rule includes a 
scenario for contracting out work tasks. The costs roughly double under

[[Page 48943]]

this scenario. This is presented as an upper bound cost (high case) and 
in-house as a lower bound cost (low case). The estimates presented 
above are for the in-house scenario (low case).
FINAL RULE:
    No changes were made to the rule based on these comments. However, 
in consideration of other comments summarized below, changes have been 
made to the assumptions upon which the costs are estimated. These 
changes include additional asset inventory costs; the presentation of a 
high-cost case that assumes contractor support; modified personnel 
category, update of wage rates and additional IT costs.
COMMENTS: Regulatory Impact Analysis--Specific Task Costs
    A commenter said FTA has underestimated the amount of labor hours 
needed for the continuous tracking and annual reporting process, 
particularly in the areas of vehicles and facilities. A transit 
operator said FTA underestimated the effort required for tier I 
providers in keeping large asset management datasets useful and 
coordinated. The commenter said FTA's estimate of 80 hours every 4 
years should be at least 4 times that amount, equating to 80 hours per 
year. A transit operator also commented that creating a prioritized 
project list would require more time both initially and on an on-going 
basis to set criteria and score assets. A transit operator said an 
estimated 520 person-hours may be sufficient to update or enhance an 
existing decision support tool but not nearly enough for an agency that 
is implementing a new decision support tool. Several commenters said 
FTA should take into consideration that not all agencies have basic 
asset management software in place and, thus, will need additional time 
and resources to procure software. An individual commenter said 
software costs may be eligible for capital costs but the availability 
of capital costs are so limited that those funds are already allocated 
to the capital needs of the agency.
    Several transit operators said it is not accurate to assume that a 
complete asset inventory (in the correct format) already exists as a 
baseline for every agency. These commenters explained that FTA's 
assumption that financial or property accounting systems may be used as 
asset inventories for TAM purposes is overstated. The commenters 
explained that the way this information is captured and reported would 
need to be modified to support TAM implementation and additional data 
elements would need to be collected. A transit operator said FTA's 
assumption that no incremental costs would result due to completion of 
asset inventories is not valid for commuter rail operators because 
currently only vehicle assets are included in the NTD report.
    Another transit operator said using wage rates based on May 2013 
Bureau of Labor Statistics data for urban transit systems significantly 
understates the cost associated with TAM implementation for services. A 
couple of commenters said FTA's average estimated cost for a tier I 
agency is understated. A State transit association said the assumption 
that an administrative support worker would develop the prioritized 
project list is probably incorrect. Similarly, a transit operator did 
not agree with the level of personnel that the FTA has assumed work on 
the prioritization of projects that is required of tier I providers. A 
medium to large size transit operator said the assumption of two staff 
members with the expertise necessary to assess the condition of all the 
equipment and subcomponents in one day seems optimistic.
    A professional association and several State DOTs stated that the 
rule should take into consideration that transit agencies will likely 
be unable to implement the TAM requirements in-house, and would likely 
hire consultants. Similarly, several other commenters stated the rule 
would require transit agencies to add resources to comply with the new 
rules. A joint submission from several State DOTs said the regulations 
could divert scarce financial and personnel resources from investments 
that support transit service to regulatory compliance.
FTA'S RESPONSE: Regulatory Impact Analysis--Specific Task Costs
    FTA agrees that existing inventory data may not be in the format 
required for the TAM provisions and may be dispersed in different 
databases. Therefore, additional costs for creating a single usable 
database are included in the final rule. Additional labor hours are 
added for the asset inventory task, which was previously assumed to be 
zero, to develop a TAM inventory database from disparate existing data 
systems. In response to comments received about employee 
responsibilities, FTA has also included costs for IT investments such 
as new software or other devices for recording information.
    FTA agrees that some transit providers may use contract support 
versus in-house resources to develop their TAM plans and compliance. 
The final rule presents two sets of total costs, one assuming in-house 
plan development and another with contractor support. It is unknown 
what percentage of the plans would be in-house and what percent 
contracted out, so the cost of the rule is presented as a range. The 
results indicate the costs to contract development of the TAM plan are 
assumed to be double that of work performed in-house. FTA has updated 
the labor rates to use the latest year of data available in this final 
rule, which is the 2015 Bureau of Labor Statistics. In response to 
comments on the skill level of staff assumed for investment 
prioritization, FTA is using higher skilled personnel for the 
investment prioritization task in the final rule cost estimate.
FINAL RULE:
    FTA made revisions to the Regulatory Impact Analysis and the 
Paperwork Reduction Act analysis of the final rule in response to these 
comments.
    The following revisions are made to the final rule costs: The 
number of hours for asset inventory task is increased by 96 hours for 
the first 2 years and 36 hours thereafter for both tier I and tier II 
agencies; an additional cost of $5,000 per plan is now included for 
information technology to support TAM plan development; and the wage 
rate for the analytical processes and project prioritization task for 
tier II providers is increased from $23.04 to $41.98 to address the low 
personnel skill level comment. The average wage rate for the staff 
categories used in this rule has increased by about 2% on average since 
2013, and costs estimates have been adjusted to account for the changes 
in wages in the final rule.
COMMENTS: Regulatory Impact Analysis--Other Assumptions
    Regarding FTA's assumptions used for quantifying costs and 
benefits, a State DOT asserted that, while theory suggests best 
practices may yield cost benefits if employed, until the final rules 
are published, the cost and benefits will be unknown. Several 
commenters suggested that another non-quantifiable cost will be the 
time dedicated by managers who will need to attend asset management 
meetings as part of the coordination efforts throughout the year. 
Additionally, several commenters asserted that mechanics will need to 
be trained, which will improve efficiency for the agency, but will 
affect operating expenses. Another commenter stated that closer 
scrutiny should result in cost saving benefits but may require more 
staff time/resources in order to

[[Page 48944]]

implement the plan. Therefore, the commenter said any cost savings may 
be offset by a better state of good repair and less down time.
    Several commenters responded about additional costs for States and 
MPOs in target setting beyond the coordination costs included in the 
planning rule. A State DOT said compliance with this rule may result in 
the need for additional staff or higher level of certification for 
mechanics. An MPO stated that targets are dependent on financial 
resources available during a particular time period, and that it is a 
challenging task for MPOs to coordinate transportation targets with 
fluctuating funding sources. Another MPO said MPOs, large and small, 
will need continued support and resources from Federal and State 
government to implement the new rules regarding transportation 
planning.
    A transit operator said the rule does very little to mention or 
address operating costs which, over time, typically exceed original 
capital purchase cost. The commenter said this issue must be addressed 
along with capital asset investments.
    A transit operator stated that if FTA provides the latitude that 
has been represented over the last few years in many presentations, 
then the cost has the potential to be within the limits proposed. 
However, if FTA mandates specific means of compliance, this commenter 
asserted that the cost would increase for those agencies that will need 
to modify existing processes that currently meet the intent of the 
legislation.
    One commenter urged FTA to identify and seriously consider 
plausible alternatives, asserting that FTA did not provide any in the 
NPRM and where ANPRM commenters proposed alternatives, FTA's responses 
were inadequate. For example, this commenter asserted that there are 
conceivable ways to disaggregate safety and SGR from the way they were 
presented in the NPRM that would still be consistent with the statute.
    A transit operator suggested that the analytical processes estimate 
may increase with implementation of a new SMS.
    In response to FTA's request for any data that could assist in 
quantifying the costs or benefits of the rule, a State DOT said it 
could analyze rolling stock preventative maintenance costs of the past 
2 years, beginning with baseline year of 2015 to determine a baseline 
and then adjust for inflation. However, these would all be projections 
and estimates, at best.
FTA'S RESPONSE: Regulatory Impact Analysis--Other Assumptions
    FTA agrees that additional training for specialists, including 
mechanics, may be required to perform some of the tasks outlined in the 
final rule. Instead of adding additional resources for training, the 
revised cost estimates below include an estimate for contracting out 
the tasks for the TAM plan. So, rather than training agency staff, a 
transit agency can contract the services of a trained mechanic, or 
other skilled services, whichever is more cost effective. Since it is 
unknown which tasks may require skills unavailable at a transit agency, 
this rule presents a range of costs. The low cost case assumes in-house 
work and the higher cost case assumes that all tasks are contracted 
out.
    FTA appreciates commenters who stated that the cost estimates are 
reasonable, providing the agencies latitude under TAM to develop their 
own practices, rather than being prescriptive. The goal of the TAM rule 
is not to be prescriptive, but allow agencies to develop practices that 
meet agency needs. Also, another commenter notes that the agencies will 
incur additional costs in implementing the TAM rule, but acknowledged 
that the benefits from improved asset management practice may cover 
these additional costs.
    FTA believes that addressing operating costs is a separate issue 
from managing the assets and is not the subject of this rule. Operating 
costs are an optional consideration that transit providers may consider 
when developing their investment prioritization.
    FTA agrees that the NPRM did not quantify other alternative 
approaches. However, alternative approaches were considered in 
developing the rule. As discussed in the NPRM, FTA developed a tiered 
approach that allows smaller operators to shift certain burdens of this 
rule to States. The TAM rule has not expanded on the requirements of 
the MAP-21 mandate, so an alternative was not considered to be 
essential. The TAM rule provides agencies significant discretion in 
choosing methods for data analysis, target setting and project 
selection.
    The cost of applying SMS principles for the safety programs will be 
included in the appropriate rules--if such principles are adopted--and 
is not accounted for under this rule. The TAM NPRM assumed additional 
costs for coordination of group plans above what was estimated in the 
planning rule.
FINAL RULE:
    There are no changes to the final rule as a result of these 
comments. However, other revisions were made to the analysis to conform 
with changes made to the final rule.
    For example, the number of 49 U.S.C. 5310 subrecipients required to 
comply with the requirements of this rule is significantly reduced. 
Applicability changes that only public transportation providers must 
follow requirements led FTA to use information from a 2006 study from 
the University of Montana\17\ in order to estimate the number of 5310 
recipients likely to be effected by this rule. FTA reduced its estimate 
from 1700 affected in NPRM to 700 in the final rule. This change 
reduces the cost of inventory and asset condition assessment for the 
rule.
---------------------------------------------------------------------------

    \17\ Allocation and Use of Section 5310 Funds in Urban and Rural 
America, Tom Seekins, Alexandra Enders, Alison Pepper, and Stephen 
Sticka, Research and Training Center on Disability in Rural 
Communities of the Rural Institute, University of Montana
---------------------------------------------------------------------------

COMMENTS: Regulatory Flexibility Act
    Some commenters provided input on the impacts of the rule to small 
entities. Several commenters stated that the rule's asset management 
requirements would be a burden to smaller transit providers and urged 
FTA to minimize the financial burden and allow flexibility so small 
operators can more easily comply (e.g., minimal universal requirements 
that can be applied across all agencies). A tribal government expressed 
concern that the TAM rule requirements would have a profound effect on 
its transit program, which consists of only seven buses and no access 
to additional funding sources. An individual commenter suggested that 
FTA should define small entities as those entities that are not the 
certain large entities (which the commenter went on to list by name). A 
transit operator predicted that the additional cost of setup and 
continued maintenance would cost an additional 416 hours per year (8 
hours per week) of staff time in order to meet the requirements set out 
by FTA.
    Another commenter supported FTA's recognition of the disparate 
needs of the country's transit agencies and asserted that the 
proposal's accommodations for smaller agencies are practical and 
appropriate.
FTA'S RESPONSE: Regulatory Flexibility Act
    The FTA accommodates the needs of the small providers by 
establishing a two-tiered approach that limits the number of TAM plan 
elements and

[[Page 48945]]

allows participation in group plans to leverage the administrative 
burden on small providers.
FINAL RULE:
    No change has been made in the final rule in response to this 
comment.
COMMENTS: Paperwork Reduction Act
    A transit operator agreed that performance targets are helpful for 
gauging progress, but expressed concern about the reporting burden FTA 
proposes to impose on transit agencies, and having this information be 
used to customize the focus of triennial reviews for individual 
agencies.
FTA'S RESPONSE: Paperwork Reduction Act
    FTA agrees there is a reporting burden on transit agencies; these 
estimates of burden were included in the PRA section of the NPRM and 
are also included in this final rule estimates.
FINAL RULE:
    No change has been made in the final rule due to these comments.
COMMENTS: Other Regulatory Analyses
    A law firm on behalf of a tribal government stated that meaningful 
tribal consultation is required for this rulemaking and failure to do 
so can lead to arbitrary and capricious rulemaking. The commenter 
disagreed with the Administration's conclusion that the proposed rule 
will ``not have substantial direct effects'' on one or more Indian 
tribes or will not impose ``substantial direct compliance costs on 
Indian tribal governments.'' The commenter asserted that FTA has not 
yet engaged in any consultation specifically with tribal governments 
regarding the impact of the rule on tribal transit programs, the vast 
majority of which do not operate rail systems and receive only modest 
funding from the FTA. The commenter recommended that the final rule 
exempt Federally recognized Indian tribes and their transportation 
agencies from the definition of ``recipient'' under Sec.  625.5 until 
such time as the FTA has undertaken meaningful consultation with tribes 
on this issue.
    Asserting that the structure of the proposed TAM rule makes it 
impossible to review retrospectively due to a lack of defined baseline, 
a commenter recommended that FTA establish a baseline for the rule, 
i.e., a current snapshot of asset management practices and the 
corresponding SGR of assets, which could take the form of an overall 
survey of asset quality sufficiently representative of transit 
agencies.
FTA'S RESPONSE: Other Regulatory Analyses
    FTA appreciates the comments from tribal representatives and agrees 
that the final rule will have a substantial impact on tribes.
    FTA believes that each of the four elements in a tier II plan is 
already a part of each transit provider's capital program. For example, 
in accordance with FTA's Grants Management Requirements Circular 
5010.1D, those tribes that are direct recipients of FTA grants must 
demonstrate procedures for asset management and adequate maintenance of 
equipment and facilities and maintain an inventory of project property. 
In addition, FTA anticipates that tribes will coordinate with their 
State partners in the development of a group TAM plan. This rule does 
not impose a substantial direct effect on one or more Indian tribes, 
but merely establishes a framework to achieve and maintain a state of 
good repair by streamlining existing requirements and practices and 
supporting informed decision making.
    Please also see the analyses of Executive Order 13175 for more 
specific information about FTAs approach to tribal outreach. FTA 
recognizes that developing an individual TAM plan, maintaining 
documentation and reporting requires that a TAM rule be flexible and 
scalable. This rule is scalable and flexible and provides several 
options to reduce the burden on small providers, including American 
Indian tribes.
    The baseline for the analysis was developed using current reports 
published by GAO, FTA and TCRP, and input from five transit agencies 
interviewed by FTA. SGR baseline is based on current data submitted to 
NTD. Given the large number of transit agencies, it would be a 
challenge to develop an exact baseline for the industry to be covered 
by the rule under the current PRA regulations.

B. Final Rule Analyses and Notices

Executive Order 12866 and 13563; USDOT Regulatory Policies and 
Procedures
    Executive Orders 12866 and 13563 direct Federal agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits--including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity. Also, 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, reducing costs, harmonizing rules, and promoting 
flexibility.
    FTA has examined the potential economic impacts of this rulemaking 
and has determined that this rulemaking is likely to be economically 
significant, in that it may lead to transit providers making investment 
and prioritization decisions that would result in economic impacts that 
could exceed $100 million in a year. However, as discussed in greater 
detail below, FTA was unable to quantify the potential impacts of this 
rule beyond the costs for transit agencies to assess their assets, 
develop TAM plans, and report certain information to FTA. Most 
significantly, due to lack of information about how and the extent to 
which agencies will change their asset maintenance, rehabilitation and 
replacement plans and practices in response to this rule, FTA was 
unable to estimate costs or benefits for additional asset maintenance, 
rehabilitation or replacement.
The Need for Federal Regulatory Action
    In 2014, the number of transit trips exceeded 10 billion for the 
8th year in a row. APTA,\18\ the 10.7 billion public transportation 
trips taken in 2014 represented the highest ridership level for transit 
since 1956. There is reason to believe that this is just the beginning 
of a sustained period of growing demand for public transportation. 
Moreover, factors such as the migration of people to urban areas, an 
aging population that will rely heavily on public transportation and a 
retiring transit maintenance workforce will further increase demands on 
existing public transportation systems. While this will increase 
revenues for the transit agencies, there will be an increased need for 
funds for maintenance and expansion of the system to meet the growth in 
demand. Given existing fiscal constraints, it is unlikely that the 
Nation's SGR backlog can be addressed through increased spending alone. 
Rather, a systematic approach is needed to ensure that existing funding 
resources are strategically managed to target the SGR backlog and meet 
the increased demand for transit.
---------------------------------------------------------------------------

    \18\ http://www.apta.com/resources/statistics/Documents/FactBook/2016-APTA-Fact-Book-Appendix-A.pdf.
---------------------------------------------------------------------------

    MAP-21 fundamentally shifted the focus of Federal investment in 
transit to emphasize the need to maintain, rehabilitate, and replace 
existing transit investments. The ability of FTA grant recipients, 
along with States and MPOs, to both set meaningful transit SGR 
performance targets and to achieve

[[Page 48946]]

those targets is critically dependent upon the ability of all parties 
to work together to prioritize the funding of SGR projects from 
existing funding sources. Although the new SGR Grant Program for fixed-
guideway systems and for fixed-route bus systems operating on high-
occupancy vehicle (HOV) lanes will also be an essential component of 
this process, the SGR grants alone will not be enough to address the 
backlog. The FAST Act increased appropriations to this program, but 
funding increases by any one source to any one program will not be 
enough to fully address the financial needs. In these financially 
constrained times, transit agencies will need to be more strategic in 
the use of all available funds. The various components of this new 
National TAM System would work together to ensure that state of good 
repair becomes and remains a top priority for transit providers, as 
well as States and MPOs. Together, these elements will assist FTA and 
the transit industry in justifying SGR investments, both for securing 
new funding resources and for prioritizing SGR investments with 
existing funding sources.
Congressional Mandate and Legal Authority
    Section 20019 of MAP-21, amended Federal transit law by adding a 
new section 5326 to Chapter 53 of title 49 of the United States Code 
(section 5326). The provisions of section 5326 require the Secretary of 
Transportation to establish and implement a National TAM System which 
defines the term ``state of good repair;'' requires that all recipients 
and subrecipients under Chapter 53 develop a TAM plan, which would 
include an asset inventory, an assessment of the condition of those 
assets, decision support tools, and investment prioritization; 
establishes annual reporting requirements; and mandates that FTA 
provide technical assistance to Chapter 53 recipients and sub-
recipients, including an analytical process or decision support tool 
that allows for the estimation of capital asset needs and assists with 
investment prioritization. 49 U.S.C. 5326(b). In addition, section 5326 
requires the Secretary to establish SGR performance measures, and 
recipients are required to set performance targets based on the 
measures. 49 U.S.C. 5326(c)(1) and (2). Furthermore, each designated 
recipient must submit an annual report to the Secretary on the 
condition of their recipients' public transportation systems and 
include a description of any change in condition since the last report. 
(49 U.S.C. 5326(b)(3). Each designated recipient must submit also an 
annual report to the Secretary which describes its recipients' progress 
towards meeting performance targets established during that fiscal year 
and a description of the recipients' performance targets for the 
subsequent fiscal year. (49 U.S.C. 5326(c)(3)).\19\
---------------------------------------------------------------------------

    \19\ The term ``designated recipient'' is defined in statute as 
``(A) an entity designated, in accordance with the planning process 
under sections 5303 and 5304, by the Governor of a State, 
responsible local officials, and publicly owned operators of public 
transportation, to receive and apportion amounts under section 5336 
to urbanized areas of $200,000 or more in population; or (B) a State 
or regional authority, if the authority is responsible under the 
laws of a State for a capital project and for financing and directly 
providing public transportation.'' 49 U.S.C. 5302(4).
---------------------------------------------------------------------------

Identification of Available Alternative Approaches
    For the purposes of the analysis below, the costs and benefits of 
the rule are compared against the base case of existing practice. 
During the development of the rule, FTA considered various alternative 
approaches to ensure that the rule remained scalable and flexible 
enough for different types of transit modes and operating environments. 
As detailed in Section II of this document, FTA issued an advance 
notice of proposed rulemaking (ANPRM) and a notice of proposed 
rulemaking (NPRM) to get feedback from the transit industry and other 
stakeholders on specific questions relevant to developing the final 
rule.
    For instance, transit providers are classified into two tiers, 
based on the number of vehicles operated in revenue service and the 
mode. A tier I provider owns, operates, or manages (1) a rail transit 
mode or (2) more than one hundred one revenue vehicles. A tier II 
provider owns, operates, or manages less than one hundred revenue 
vehicles, or is a rural subrecipient under 49 U.S.C. 5311, or is an 
American Indian tribe, and is a provider that has no rail fixed-
guideway. A tier II provider's TAM plan would be required to include 
only elements 1 through 4 outlined in Sec.  625.25(b), instead of all 
nine elements required for tier I providers. Moreover, most tier II 
providers are eligible to participate in a group TAM plan which would 
reduce the burden on the provider of developing an individual TAM plan.
    FTA considered several definitions for state of good repair before 
selecting the definition in the rule. FTA believes that the proposed 
performance measures have the most potential for use by transit 
providers in estimating the performance of their system, while imposing 
the least burden for extensive data collection and calculation of 
measures. Transit providers have the option of using additional 
performance measures, in particular, for assets for which FTA did not 
establish performance measures.
    As discussed in the NPRM, for example, FTA considered alternatives 
submitted by commenters that would have limited the asset inventory to 
rolling stock; however, FTA elected to include rolling stock, 
equipment, infrastructure and facilities because these other asset 
categories are important components of transit service and were 
specifically included in the MAP-21 mandate (49 U.S.C. 5326(b)(1)).
    In response to the comments to the NPRM, FTA further reconsidered 
the choice of which assets to include in the TAM plan, considering the 
potential costs and benefits. Many commenters expressed concern about 
the inclusion of third party assets in the TAM plan, arguing that it 
would be difficult to implement and may prove to be overly burdensome 
and costly. In consideration of these comments, this final rule 
requires that only those vehicles, passenger stations, exclusive use 
maintenance facilities, and guideway infrastructure used in the 
provision of transit service be included in a transit providers asset 
inventory, including those vehicles, facilities, and guideway 
infrastructure that are owned, operated, or maintained by a third-party 
or were procured jointly. Equipment owned, operated, or maintained by a 
third-party need not be inventoried under this final rule.
    FTA does not believe that it will be overly burdensome for a 
transit provider to include third-party owned vehicles, facilities, and 
guideway infrastructure in its asset inventory. Transit providers are 
already required to include detailed information on third-party 
vehicles and third-party guideway infrastructure in the NTD, and so 
already have access to this information for their asset inventory. 
Expanding asset inventories to include third-party passenger facilities 
is important, as it will provide valuable information on the total 
number, size, and scope of facilities in the transit industry, which is 
an important contributor to state of good repair needs. The inclusion 
of a broad set of assets into the inventory is intended to provide 
funding decision makers with a full picture of their system and an 
opportunity to think proactively and long term about investment 
priorities for state of good repair.
    FTA recognizes the challenge of providing asset condition for 
assets the agencies have no capital responsibility for. This could be 
burdensome and of

[[Page 48947]]

little value to FTA or the transit agencies as they are not responsible 
for the capital expenditures for these assets. So, the final rule only 
requires a transit provider to conduct condition assessments, establish 
performance targets, and include in its investment prioritization, 
those capital assets (vehicles, passenger facilities, exclusive-use 
maintenance facilities and guideway infrastructure) that it has direct 
capital responsibility for.
Estimated Costs and Benefits
    FTA's estimates of the costs of the rule are based on current 
industry practices, and responses to the NPRM from the industry. There 
is no data on the cost of the current practice in the industry. The 
section below outlines the current practice based on studies available. 
FTA used information from the studies to estimate the incremental costs 
that transit providers likely would incur to implement the rule. FTA 
did not estimate the benefits of this rule. Instead, FTA conducted a 
threshold analysis based on a portion of the rule's costs--specifically 
those that FTA was able to monetize.
Baseline
    There is no single comprehensive source of information on the 
existing level of compliance with this rule. Most of the roughly two 
dozen transit providers that have been profiled in existing reports 
already conduct some or all of the transit asset management activities 
that would be required under the rule, and this analysis attempts to 
consider that baseline as the starting point for identifying the 
incremental costs and benefits of the rule. The transit providers that 
were profiled in the reports, though, are not a representative sample 
of the whole transit industry. In general, they represent the large and 
medium sized urban transit agencies that would fall into tier I.
     The Government Accountability Office (GAO), Transit Asset 
Management (GAO-13-571) \20\ studied nine agencies, which had transit 
asset management practices with varying levels of sophistication, along 
with a group of ``leaders'' in asset management. Overall, GAO found in 
its case study discussions that all agencies had at least some process 
for tracking assets and making investment decisions, but many faced 
challenges with collecting asset-condition data, analyzing performance, 
and making prioritization decisions in a systematic way. These 
challenges included a lack of funding, managing staff resources and 
change in general, and integrating processes such as ranking capital 
projects with established criteria. In addition, only two of these nine 
agencies specifically tracked the impact of their capital investment 
projects on their assets' conditions. However, at least four agencies 
did track the impacts on service reliability and on-time performance.
---------------------------------------------------------------------------

    \20\ http://www.gao.gov/assets/660/655837.pdf.
---------------------------------------------------------------------------

     FTA's 2009 Rail Modernization Study \21\ Report to 
Congress examined seven of the nation's largest rail systems. The study 
found that of the seven agencies examined, all had asset inventory 
data, but only three had comprehensively updated asset condition data 
(namely, New York City Transit, Metro-North Railroad, and Long Island 
Rail Road). Experience with using decision support tools and objective 
investment prioritization was limited. Only one transit provider, the 
Massachusetts Bay Transportation Authority, used a decision tool. 
Prioritization decisions were based on mission critical, safety, 
coordination on line segment maintenance and maintenance of historical 
funding levels.
---------------------------------------------------------------------------

    \21\ http://www.fta.dot.gov/documents/Rail_Mod_Final_Report_4-27-09.pdf.
---------------------------------------------------------------------------

     A 2010 report from FTA, ``Transit Asset Management 
Practices: A National and International Review,'' \22\ presents case 
studies from around the United States. In this report, FTA found that 
all fourteen of the US agencies studied had asset inventory data and an 
inspection program, although this was not always systematic; for 
example, information on asset condition or defects was not typically 
rolled up into an overall asset condition metric. Vehicles and track 
tended to have the best coverage. Most agencies had at least some 
strategies, performance measures, and maintenance policies, though 
agencies' project selection and other decision support tools were often 
separate from the system used to track asset inventory and condition.
---------------------------------------------------------------------------

    \22\ https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/TAM_A_National_and_International_Review_-_6.10_FINAL_0.pdf.
---------------------------------------------------------------------------

     Transit Cooperative Research Program Report 92, Transit 
Asset Condition Report: A Synthesis of Transit Practice,\23\ notes that 
large agencies generally have asset-tracking databases, but that many 
agencies maintain separate equipment rosters that are independent from 
the mainstream planning, programming and budgeting processes. Most 
large agencies determine asset condition through age and inspection, 
and generally do not use asset-condition data to set investment 
priorities for capital programming.
---------------------------------------------------------------------------

    \23\ http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_syn_92.pdf.
---------------------------------------------------------------------------

     FTA's Report to Congress on the State of Good Repair 
Initiative (2011) \24\ stated that only two of the twenty-three 
agencies contacted were using an objective, multi-factor project- 
scoring process to help rank and prioritize their investment needs. The 
report also provided information on FTA's programs in this area, 
including SGR grants made to transit agencies to implement or enhance a 
transit asset management system.
---------------------------------------------------------------------------

    \24\ http://www.fta.dot.gov/documents/SGR_Report_to_Congress_12-12-11_Final.pdf.
---------------------------------------------------------------------------

    Overall, the available literature on current practices suggests 
that there is room for improvement in transit providers' asset 
management practices. A handful of leaders in the field, including 
roughly a dozen agencies that have been profiled by FTA or GAO reports, 
have implemented sophisticated decision-support systems and integrated 
transit asset management principles into their planning and operations, 
with associated ``agency culture'' changes to encourage collaboration 
across departments.\25\ However, at most other agencies, both large and 
small, some elements of transit asset management are in place, such as 
asset inventories, periodic condition assessments, and/or performance 
measures, but they have not been integrated into a comprehensive system 
to support data-driven decision-making and project prioritization, much 
less to trace impacts on ridership, service quality, life-cycle costs, 
safety and other outcomes. This rulemaking attempts to address that gap 
by establishing a framework for a National TAM System.
---------------------------------------------------------------------------

    \25\ These initiatives are described as cost-effective in the 
literature, but there is very little quantitative information about 
the outcomes associated with these programs, because they have 
generally not had independent evaluation.
---------------------------------------------------------------------------

Definition and Evaluation of the Benefits and Costs
    For estimating the incremental costs, FTA assumes that most 
agencies have already incorporated some elements of asset management 
into their practice. FTA made this assumption using findings from the 
literature on the state of the practice, comments received on the ANPRM 
and NPRM, and a limited number of case study interviews. As such, the 
incremental cost of some activities is likely to be minimal, as 
agencies move away from their old practices and adopt new ones. Smaller 
agencies are less likely to have full-fledged asset management systems, 
but

[[Page 48948]]

many of their TAM requirements are already standard practice, such as 
keeping an inventory of assets and tracking vehicle ages.
    Costs are estimated for an average transit provider or asset-type. 
This is a challenge since it is hard to define an average for an 
industry that is very diverse, ranging from agencies with thousands of 
vehicles, multiple modes and many facilities to an operator with a few 
buses. Some of this has been addressed by estimating costs by tiers 
defined above. In addition, agencies may be at different stages of 
asset management practice. The estimates presented below are therefore 
very difficult to apply to any particular provider.
    Costs are estimated using both FTA records such as NTD data and 
Bureau of Labor Statistics wage data as detailed more specifically in 
the sections below. To supplement the information available from 
existing studies, follow-up telephone interviews were conducted with 
four agencies that received funding through FTA-sponsored pilot 
programs for TAM initiatives.\26\ Although the interviews did not 
directly address the proposed rule, interviewees' experiences with 
transit asset management programs provided background on transit 
provider impacts and helped to gauge the reasonableness of FTA's 
assumptions for development of a TAM plan and related activities. This 
very limited set must be regarded as a non-representative sample and 
merely illustrative of the types of impacts that TAM programs can have.
---------------------------------------------------------------------------

    \26\ North Dakota DOT, Long Beach Transit (CA), Sound Transit 
(WA), and Valley Regional Transit (ID).
---------------------------------------------------------------------------

    FTA has limited data on current practices and the costs associated 
with asset management activities, such as condition assessment, because 
TAM is a relatively new practice and requirement for transit agencies. 
FTA made assumptions in order to estimate costs based on the 
information available. There is also little in the academic literature 
on quantified benefits or costs for asset management programs for 
transit agencies.
    Another key limitation of the analysis is that FTA has data only on 
certain asset categories, such as revenue vehicles, stations, 
maintenance facilities, and guideway miles. As a result, FTA's cost 
estimation process could not include non-revenue vehicles, or parking 
facilities and equipment that are not associated with a station or 
facility.
    The analysis takes a societal perspective, including benefits and 
costs regardless of to whom they accrue. FTA estimates the initial 
costs (i.e. ``upfront'' or ``non-recurring'') and recurring costs at 
different intervals. Future costs are estimated to reflect the time 
value of money, using a 7% discount rate (with 3% sensitivity case) and 
a base year of 2015.
Costs to Transit Providers To Implement the Requirements of the 
National TAM System
    The costs of the rule are estimated using an incremental approach. 
The costs of the rule are defined as the costs of the required asset 
management activities over and above the baseline of current industry 
practices. Cost items include: the development and implementation of 
the TAM plan; coordination with group TAM plan sponsors; documentation, 
recordkeeping and reporting. While no specific training is required for 
most transit employees, at least one commenter noted that there may be 
additional training costs, or alternatively that contractor support 
would be needed. In the analysis below, that is presented as a high-
cost case with contractor cost rates.
    TAM implementation could also help agencies make more cost-
effective investment choices with respect to asset maintenance, 
rehabilitation, and replacement, but FTA was not able to estimate the 
benefits and costs of those follow-on actions due to limited 
information. Of the cost items that were monetized, the specific cost 
estimates primarily reflect staff labor hours in the lower cost 
scenario and contractor support in the higher cost scenario. The costs 
of the TAM plan are estimated based on the costs of each component, 
including asset inventories, condition assessments, project lists, 
performance metrics, and targets.
    The TAM final rule does not require transit providers to use any 
particular technology or software system. FTA has emphasized that 
transit agencies could use something as simple as an Excel spreadsheet 
to comply with the requirement for a multi-factor prioritization 
process. Some transit agencies may choose to engage consultants, 
purchase commercial software, or pursue other approaches that they find 
more cost-effective. In addition, some commercial software packages 
provide more sophisticated systems that integrate transit asset 
information with other modules, such as scheduling and crew assignment, 
or provide other functionalities. These packages go beyond what is 
required by the rule, so their costs are not necessarily indicative of 
the actual costs of the rule.
    The overall approach in the subsections below is to estimate the 
labor-hours required for each TAM task and to multiply by an 
appropriate wage rate to generate the total cost. The labor-hour 
estimates are based on findings from the limited literature on transit 
asset management, expert judgment from FTA staff on the approximate 
level-of-effort required, the information from the four transit 
provider interviews, and information from public comments to the NPRM. 
In some cases, it was possible to cross-check the totals that would 
result from these assumed cost levels against agencies' actual 
expenditures on asset management programs, such as those funded through 
the SGR grant amounts or recent contract awards. These comparisons are 
discussed in more detail below.
    Wage rates for transit provider labor hours are based on May 2015 
Bureau of Labor Statistics (BLS) data for urban transit systems and 
interurban and rural bus transportation.\27\ In response to comment, 
FTA adjusted the hourly wage rates to account for employee 
benefits.\28\ Table 2 below describes the wage rates used and the TAM 
plan activities to which they relate. For simplicity, FTA applied the 
urban wage rates to tier I providers and rural rates to tier II 
providers. FTA received several comments in response to the NPRM noting 
that transit providers may be more likely to use contractor support to 
develop their TAM systems than in-house labor, and that costs would be 
higher in those cases. To address this comment, FTA developed a higher-
cost case that assumes contractor support at costs that were roughly 
two times the fully loaded in-house costs as detailed above.\29\ The 
number of hours per task

[[Page 48949]]

was assumed to be constant, as were IT costs.
---------------------------------------------------------------------------

    \27\ http://www.bls.gov/oes/current/naics3_485000.htm. http://www.bls.gov/oes/current/naics3_485000.htm.
    \28\ Bureau of Labor Statistics News Release. Employer Costs for 
Employee Compensation--September 2014. Table 3, Service-providing 
industry group. http://www.bls.gov/news.release/pdf/ecec.pdf. BLS 
data show wages as 64.1% of total compensation, with benefits at 
35.9%. Therefore, employees' wages are factored by 1.56 (100/64.1) 
to account for employer provided benefits.
    \29\ This cost factor was based on two sources of information. 
Federal Highway Administration collected data on the cost of 
developing highway asset management plans from 9 States, with 
preliminary findings showing the contractor support to cost in the 
range of 1.5 to 1.6 times as much as in-house efforts. A 2013 
research report from the Project on Government Oversight study, 
while focused on the Federal government rather than state and local 
agencies, found that contractors were paid 1.8 times more than 
federal employees for similar work. www.pogo.org/our-work/reports/2011/co-gp-20110913.html#Executive Summary.

             Table 2--Summary of Transit Industry Wage Rates and Fringe Benefits for TAM Activities
----------------------------------------------------------------------------------------------------------------
                                                               Loaded wage
                   Title                        Wage rate         rate             Relevant TAM activities
----------------------------------------------------------------------------------------------------------------
                                      Urban Transit Systems (NAICS 485100)
----------------------------------------------------------------------------------------------------------------
General and Operations Manager.............          $55.86          $87.14  Plan Strategy, Performance Measures
                                                                              and Targets, Data and Narrative
                                                                              Reporting to NTD.
Operations Specialties Manager.............           44.64           69.64  Asset Condition Assessment.
Business Operations Specialists............           30.74           47.95  Data and Narrative Reporting to
                                                                              NTD.
Buyers and Purchasing Agents...............           28.94           45.15  Asset Condition Assessment,
                                                                              Analytical Processes, Prioritized
                                                                              Project List.
Installation, Maintenance, and Repair                 24.14           37.66  Asset Condition Assessment.
 Occupations.
----------------------------------------------------------------------------------------------------------------
                         Interurban and Rural Bus Transportation Systems (NAICS 485200)
----------------------------------------------------------------------------------------------------------------
General and Operations Manager.............           49.35           76.99  Performance Measures and Targets,
                                                                              Data and Narrative Reporting to
                                                                              NTD.
Business Operations Specialists............           26.91           41.98  Data and Narrative Reporting to
                                                                              NTD.
Other Office and Administrative Support               13.85           21.61  Asset Condition Assessment,
 Workers.                                                                     Analytical Processes, Prioritized
                                                                              Project List.
Installation, Maintenance, and Repair                 22.82           35.60  Asset Condition Assessment.
 Occupations.
----------------------------------------------------------------------------------------------------------------

    Using NTD submissions and other information, FTA estimated that 
there are approximately 284 tier I providers and 2,714 tier II 
providers. These totals include subrecipients, as well as public 
transportation providers that are receiving 49 U.S.C. 5310 formula 
grant funding, and subject to this rule, but that do not currently 
report to the NTD.
    For calculation purposes, FTA assumes, based on knowledge of the 
industry and the requirements of this final rule, that tier I providers 
and tier II direct recipient providers would develop their own TAM 
plans, while tier II subrecipient providers, which tend to be much 
smaller organizations, would participate in a group TAM plan. 
Participating in a group plan minimizes the burden and costs to small 
providers of transit services and transfers it to States.
    FTA estimated the number of group TAM plans that would be developed 
for these subrecipients based on existing funding and reporting 
relationships. Specifically, it was assumed: That the 120 recipients of 
section 5307 funding would be covered by 10 group TAM plans; that the 
estimated 700 subrecipients of section 5310 funding would be covered by 
200 group TAM plans; and that the 1,300 rural subrecipients of section 
5311 funding and 104 American Indian tribes would be covered by 54 
Group TAM plans by State DOTs or an equivalent entity. This yields an 
estimated total of 264 group TAM plans.
    The table below shows the number of agencies impacted by the rule 
and also provides other relevant figures by tier based on our estimates 
and the 2013 NTD data.
---------------------------------------------------------------------------

    \30\ Source: National Transit Database, FTA, 2013 (This is the 
latest year for which data is available).


                        Table 3--Number of Agencies, Plans and Assets by Tier (2013) \30\
----------------------------------------------------------------------------------------------------------------
                                                                 Tier I agencies            Tier II agencies
----------------------------------------------------------------------------------------------------------------
                                    Number of Agencies...  284.......................  2,714
----------------------------------------------------------------------------------------------------------------
                                                                 Number of TAM Plans
----------------------------------------------------------------------------------------------------------------
                                    Individual...........  284.......................  490
                                    Group Plans..........  0.........................  264
----------------------------------------------------------------------------------------------------------------
       MAP-21 Asset Category                                  Number of Assets by Type
----------------------------------------------------------------------------------------------------------------
Rolling Stock.....................  Revenue Vehicles.....  116,472...................  62,858
Infrastructure....................  Way Mileage (Track)..  12,746....................  0
                                    Bridges, Tunnels, &    2,563.....................  0
                                     Transitions.
Facilities........................  Rail & Bus Stations..  4,195.....................  822
                                    Maintenance            1,068.....................  1,367
                                     Facilities.
                                    Administrative         Unknown...................  Unknown
                                     Buildings and
                                     Parking Facilities
                                     (not part of a
                                     Station or
                                     Maintenance
                                     Facility).

[[Page 48950]]

 
Equipment.........................  Non-Revenue Vehicles   Unknown...................  Unknown
                                     \31\.
                                    Equipment............  Unknown...................  Unknown
----------------------------------------------------------------------------------------------------------------

(1) Asset Inventory
    Under the final rule, transit providers are required to complete an 
inventory of their capital assets. The inventory needs to provide 
accessible, consistent, and comprehensive information about the state 
of good repair of a transit provider's capital assets. Depending on the 
provider's size, this information includes number of revenue vehicles, 
number of stations, number of facilities, number of equipment, and 
mileage of track as shown in appendix C.\32\
---------------------------------------------------------------------------

    \31\ The table only includes assets reported to the NTD; 
therefore, it does not does not include non-revenue vehicles or 
equipment assets.
    \32\ http://www.ntdprogram.gov/ntdprogram/assetInventory.htm.
---------------------------------------------------------------------------

    Based on knowledge of the transit industry and information from the 
transit provider interviews, FTA understands that almost all agencies 
have a basic inventory of assets that is used for accounting and audit 
purposes. This supports the intuitive conclusion that transit agencies 
know what assets they have. These inventories will likely be updated as 
new assets are purchased and others are depreciated or retired, even in 
the absence of the rule. Therefore, incremental costs for the asset 
inventory should be relatively minor. However, several agencies noted 
in response to the NPRM that existing asset inventories may not be in a 
format this is usable for TAM, and that there may be staff time and 
costs required for converting the inventory data to the new format and/
or gathering information on non-owned assets (to the extent that they 
are covered by TAM).\33\ For cost estimation purposes, it is assumed 
that each TAM plan (tier I plan, tier II individual plan, and tier II 
group plan) will require 96 hours of staff time in the first year, and 
36 hours of staff time each year thereafter, to re-format agency asset 
data into a format that is usable for TAM. For tier I agencies, this 
labor is estimated at the rate for a purchasing agent ($45.15 per hour 
including benefits). For tier II agencies, labor costs are estimated 
using a business operations specialist ($41.98 per hour including 
benefits). Total costs for the asset inventory are summarized below.
---------------------------------------------------------------------------

    \33\ Non-owned assets would need to be included in the asset 
inventory if the agency uses them for providing transit service. 
Asset condition assessment is only required for assets that an 
agency has direct capital responsibility.
---------------------------------------------------------------------------

    The table below represents the calculations described above for 
tiers I and II as the low case. The high case was calculated in the 
same manner with the exception that labor costs were doubled as 
described above.

                            Table 4--Initial and Recurring Costs for Asset Inventory
----------------------------------------------------------------------------------------------------------------
                                                             Low case                        High case
                                                 ---------------------------------------------------------------
                   Agency size                    Initial 2-year     Annually     Initial 2-year     Annually
                                                      period         recurring        period         recurring
----------------------------------------------------------------------------------------------------------------
Tier I..........................................      $1,229,246        $460,967      $2,458,492        $921,935
Tier II.........................................       3,038,651       1,139,494       6,077,303       2,278,989
                                                 ---------------------------------------------------------------
    Total.......................................       4,267,898       1,600,462       8,535,795       3,200,923
----------------------------------------------------------------------------------------------------------------

(2) Asset Condition Assessment
    Under the final rule, transit providers are required to complete an 
assessment of capital assets for which they have direct financial 
responsibility. The assessment must include sufficient information to 
monitor and predict the performance of each capital asset identified in 
the asset inventory. Additionally, the process must identify 
unacceptable safety risks related to the condition of the capital 
assets. The assessment should also be used when prioritizing 
investments for transit asset management. While many transit providers 
already perform these assessments, at least for certain asset types, it 
is likely that additional effort will be required to meet the standards 
of the rule.
    Estimates of the time required for assessment will vary by asset 
category. FTA's estimates of the time to assess particular assets are 
listed below. These estimates are based on FTA's experience with the 
asset assessment in the transit industry, including unpublished results 
from a pilot study.
    For revenue and service vehicles, the rule calls for an age-based 
assessment for purposes of setting performance targets. Transit 
providers generally already have records of their vehicles' ages and 
many are already required to report this information to the NTD. To be 
conservative, however, FTA assumes that this information may be in a 
different format or database and/or require additional effort to be 
brought into the asset management system. For estimation purposes, FTA 
assumes that approximately 30 minutes per vehicle would be required. As 
noted above, one data limitation is that no information was available 
through NTD on non-revenue vehicles, but FTA does not expect this to 
have much impact on the overall total, as the number of service 
vehicles is presumed to be much smaller than the number of revenue 
vehicles, which is known. Nonetheless, FTA is including non-revenue 
vehicles in TAM because they are capital assets that can affect transit 
service quality, for example through maintenance calls and incident 
response.
    For facilities, the rule calls for a condition-based assessment for 
purposes of setting performance targets. Costs per passenger station 
are estimated based on two staff members, each working a half day, for 
a total of eight hours per station. For maintenance facilities, costs 
are estimated based on two staff members working a full day, for a 
total of 16 hours per facility. FTA assumes that equipment and parking 
facilities that are part of stations or maintenance facilities would be 
part of the assessment for that station or maintenance facility. FTA 
does not have separate data on equipment,

[[Page 48951]]

administrative buildings or parking facilities. These are rough 
averages that reflect the wide range of assets in this category. For 
example, a downtown subway station may contain multiple platforms, 
exits, and passageways, whereas an outlying commuter railroad station 
may consist of little more than a platform and a shelter. It is also 
possible for equipment to be located at administrative facilities or 
parking facilities that are not reflected in these totals, though FTA 
believes that to constitute a small share of transit agency equipment 
or total facilities.
    For infrastructure way mileage (e.g., railroad tracks or separated 
BRT guideways), the rule calls for a performance-based assessment for 
purposes of setting performance targets. Transit providers already have 
some performance-related information such as speed restrictions, but 
again FTA assumes that some additional effort would be required to 
prepare this information in a way that is consistent with the rule. For 
estimation purposes, FTA assumes that this would require roughly 30 
minutes per mile of way. However, under special circumstances such as 
for subway tunnels, elevated structures, and the transitions from 
ground level to these areas, additional time may be necessary to assess 
the performance and also determine the structural or tunnel integrity. 
In these cases, FTA assumes that this would require roughly 1 hour per 
mile of way.
    For equipment, the rule calls for an age-based assessment for 
purposes of setting performance targets. Equipment is defined as an 
article of nonexpendable, tangible property having a useful life of at 
least one year. FTA lacks specific information about transit providers' 
ownership of equipment, this final rule clarifies that asset equipment 
inventory does not include third party equipment, or owned equipment 
under $50,000. As a result, the total size of this asset class is not 
known, and the cost estimates do not include TAM costs associated with 
equipment. In addition, FTA does not have data on the extent to which 
condition assessments are already routinely undertaken for these 
equipment assets. However, FTA believes that most equipment will be 
located within maintenance facilities and passenger stations, or along 
rail guideways, and thus the costs of condition assessments for 
equipment would often be included in the condition assessments for 
those facilities, stations, or guideways. Even in cases where they are 
not, the condition assessment for these assets should be relatively 
simple, as the rule requires only a simple, age-based assessment.
    FTA assumes that the asset condition assessment would need to be 
performed as part of the initial plan development, and would also need 
to be repeated periodically in order to fully implement the other 
provisions, notably investment prioritization, performance measures, 
and reporting requirements. FTA assumes that assessments for revenue 
vehicles, equipment and guideway infrastructure are repeated on an 
annual basis, while passenger stations and exclusive use maintenance 
facilities are assessed every three years.
    Following, is a detailed accounting of incremental costs by 
provider type.
Tier I Providers
    Based on 2013 NTD data, tier I providers operate a total of 116,472 
revenue vehicles, 4,195 stations, 1,068 maintenance facilities, 12,746 
miles of standard track, and 2,563 miles of track within subway tunnels 
or on elevated structures (including transitions). These assets would 
be tracked or inspected by various employees at the transit provider. 
It is likely that the age-based assessment of the vehicles would be 
conducted by a buying or purchasing agent at a loaded wage rate of 
$45.15, the condition-based station and maintenance facility assessment 
would be conducted by an installation or maintenance repair worker at a 
loaded wage rate of $37.66, and the performance-based way mileage, 
elevated structure, and tunnel assessment would be conducted by an 
operations specialties manager at a loaded wage rate of $69.64. 
Multiplying the number of assets, by the corresponding time requirement 
described above, and by the corresponding wage rate leads to a total 
initial cost of $5.16 million. Thus, FTA's analysis finds that, on 
average, each tier I agency would incur an initial cost of just over 
$18,000 (low case) to just over $36,000 (high case) to comply with this 
rule's requirements for asset condition assessments.
    FTA assumes that the vehicles and way mileage, elevated structures, 
and tunnels would be assessed annually at a total annual cost of 
approximately $3.25 million and the stations and maintenance facilities 
would be assessed triennially at a tri-annual cost of approximately 
$1.91 million.
Tier II Providers
    Based on 2013 NTD data and our approximations for non-reporting 
providers, the tier II providers operate a total of 62,858 
vehicles,\34\ 822 stations, 1,367 maintenance facilities, and 0 miles 
of way mileage.\35\ These assets would be tracked or inspected by 
various different employees of the transit provider. It is likely that 
the age-based assessment of the vehicles would be conducted by an 
office or administrative support worker at a loaded wage rate of 
$21.61, and the condition-based station and maintenance facility 
assessment would be conducted by an installation or maintenance repair 
worker at a loaded wage rate of $35.60. Multiplying the number of 
assets, by the corresponding time requirement described above, and by 
the corresponding wage rate leads to a total initial cost of $1.70 
million.
---------------------------------------------------------------------------

    \34\ This includes the vehicle count from NTD, plus an estimated 
21,000 vehicles for the roughly 700 section 5310 subrecipients who 
do not submit any vehicle counts or other asset data to NTD.
    \35\ Rural transit agencies do not submit annual reporting on 
their miles of right-of-way. These rural agencies typically operate 
buses and paratransit vehicles on public streets and generally do 
not own any rail systems or other transit rights-of-way. There may 
be a small number of exceptions that are not accounted for in this 
section due to the data limitation.
---------------------------------------------------------------------------

    FTA assumes that vehicles' age-based assessments would be updated 
annually at a total annual cost of approximately $0.68 million and the 
stations and maintenance facilitates would be assessed triennially at a 
tri-annual cost of approximately $1.01 million.
    The table below represents the calculations described above for 
tiers I and II as the low case. The high case was calculated in the 
same manner with the exception that labor costs were doubled as 
described above. Thus, FTA's analysis finds that, on average, each tier 
II agency would incur an initial cost of just over $623 (low case) to 
$1,247 (high case) to comply with this rule's requirements for asset 
condition assessments.

[[Page 48952]]



                                              Table 5--Initial and Recurring Costs for the Asset Assessment
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Low case                                        High case
                                                         -----------------------------------------------------------------------------------------------
                                                          Initial 2-year      Annual         Triennial    Initial 2-year      Annual         Triennial
                                                              period         recurring       recurring        period         recurring       recurring
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tier I..................................................      $5,158,711      $3,251,448      $1,907,262     $10,317,422      $6,502,897      $3,814,525
Tier II.................................................       1,691,781         679,055       1,012,726       3,383,562       1,358,110       2,025,452
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................       6,850,492       3,930,503       2,919,988      13,700,984       7,861,007       5,839,977
--------------------------------------------------------------------------------------------------------------------------------------------------------

(3) Analytical Processes
    Under the final rule, transit providers are required to present a 
list of analytical processes or decision-support tools that allow for 
capital investment needs to be estimated over time and to assist with 
capital asset investment prioritization. No specific format or software 
is mandated, but certain capabilities are required. The investment 
prioritization plan must identify each asset within the asset inventory 
that is included within an investment project over the timeframe of the 
TAM plan. Projects must be ranked in order of priority and the year in 
which they are expected to be carried out. The prioritization must 
account for SGR policies and strategies, as well as funding levels and 
the value of needed investments.
    GAO's review of existing practices indicated that, at least among 
larger transit providers, staff already conduct some form of this 
analysis when making investment decisions, but to varying degrees and 
not necessarily in a way that conforms to the proposed requirements. 
Smaller transit providers may have less in the way of formal analytical 
tools for prioritizing projects and for incorporating asset condition 
information into this process. Estimates for this component generally 
assume that larger agencies would be expanding and strengthening their 
existing activities, while smaller agencies may be essentially starting 
from scratch or from more informal processes.
    Transit providers have a number of options for developing a system 
that would satisfy the proposed requirements of the TAM plan. Some may 
choose to purchase commercial software specifically designed for 
enterprise asset management; these can include packages that combine 
asset management with software tools for other functions, such as 
maintenance and scheduling. Others may develop their own tools in-
house, for example using a custom Excel workbook to incorporate asset-
condition information and other asset-management considerations into 
project prioritization. The in-house development option is used here 
for cost-estimation purposes, though some providers may find it more 
cost-effective to purchase software.
    There are also free and low-cost software packages available for 
agencies to adapt to their needs, including the TERM-Lite tool from 
FTA, available free of charge. The TCRP also has a free tool composed 
of four spreadsheet models entitled the Transit Asset Prioritization 
Tool (TAPT). This tool ``is designed to assist transit agencies in 
predicting the future conditions of their assets, and in prioritizing 
asset rehabilitation and replacement.'' \36\ Such a tool would be 
particularly useful for smaller providers.
---------------------------------------------------------------------------

    \36\ Schwager, Dianne. Transit Cooperative Research Program 
Report 172: Guidance for Developing a Transit Asset Management 
Program. Sponsored by the Federal Transit Administration. 2014. 
http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_rpt_172.pdf.
---------------------------------------------------------------------------

    The following, is a detailed accounting of incremental costs by 
provider type.
Tier I Providers
    The resources required to implement the analytical processes would 
vary significantly across transit providers, based on the size and 
complexity of their asset portfolios and the strength of their current 
practices. As an overall average based on interviews and past pilot 
projects, FTA estimates that a transit provider would spend the 
equivalent of 520 person-hours for strengthening its analytical and 
decision-support tools and processes (or alternatively, purchasing or 
learning a ready-made software tool for an equivalent sum). FTA assumes 
that this task would be completed by the aforementioned buyer or 
purchasing agent at a loaded wage rate of $45.15. Multiplying the hours 
required, by the number of transit providers, by the wage rate leads to 
a total initial cost of $6.66 million.
    Once the initial investment is made in the analytical and decision-
support tools and processes, maintaining and updating those processes 
is estimated to take the equivalent of 208 hours per year on average. 
The same buyer or purchasing agent is assumed to conduct these 
recurring updates at the $45.15 wage rate. Multiplying the recurring 
hours required, by the number of agencies, by the wage rate leads to a 
total recurring cost of $2.66 million.
Tier II Providers
    Tier II providers have smaller vehicle fleets and no rail fixed-
guideway service, removing some of the complexities in project 
prioritization that tier I providers face, but they also tend to have 
fewer existing formal processes in this area. In order to implement the 
analytical processes, FTA estimates that providers would spend the 
equivalent of 520 person-hours on average developing their analytical 
and decision-support tools or processes (or alternatively, purchasing 
or learning a ready-made software tool for an equivalent sum) for each 
individual TAM plan or group TAM plan. FTA assumes this task would be 
completed by a business operations specialist at a loaded wage rate of 
$41.98. Multiplying the hours required, by the estimated number of 
individual and group plans created, by the wage rate leads to a total 
initial cost of $16.46 million.
    Once the initial system investment is made, maintaining and 
updating the analytical processes is estimated to take the equivalent 
of 104 hours per year. This is half of the assumed time needed for tier 
I providers because of the comparative simplicity of the systems 
overseen by tier II providers. The same business operations specialist 
is assumed to conduct these recurring updates at the $41.98 wage rate. 
Multiplying the recurring hours required, by the estimated number of 
individual and group plans created, by the wage rate leads to a total 
recurring cost of $3.29 million.
    The table below represents the calculations described above for 
tiers I and II as the low case. The high case was calculated in the 
same manner with the exception that labor costs were doubled as 
described above.

[[Page 48953]]



                        Table 6--Initial and Recurring Costs for the Analytical Processes
----------------------------------------------------------------------------------------------------------------
                                                             Low case                        High case