Freight Car Safety Standards Implementing the Infrastructure Investment and Jobs Act, 85561-85577 [2023-26133]

Download as PDF Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules station and space station sides must engage in potentially duplicative coordination can be streamlined. The Commission also considered whether or not to expand timeframes for filing license renewal applications in efforts to provide small and other entities flexibility, and further streamline the application process. The Commission considers whether or not to expand the renewal filing window of the existing term for earth and space station operators. 39. The Commission also considers the possibility of allowing applicants to file STAs concurrently with an initial application, which may reduce filing burdens on small entities in particular. And the Commission is considering several possibilities for expanding the universe of operators who could access a streamlined process for adding satellite points of communication, which could also provide a benefit to a greater number of entities. And in considering timelines for taking action, including possible shot clocks, the Commission asks several questions to consider whether timeframes, and which timeframes are appropriate. 40. The Commission projects that the changes considered in the FNPRM will be cost-neutral or result in lower costs for small entities and other operators. Additionally, while the Commission believes the possible rule changes considered in the FNPRM will generally reduce costs and burdens for the regulated community, the Commission seeks comment on whether any of the costs associated with any possible rule changes would have a significant negative economic impact on small entities. The Commission expects to more fully consider the economic impact and alternatives for small entities based on its review of the record and any comments filed in response to the FNPRM and this IRFA. khammond on DSKJM1Z7X2PROD with PROPOSALS F. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules 41. None. V. Ordering Clauses 42. It is ordered, pursuant to Sections 4(i), 7(a), 301, 303, 307, 309, 310, and 332 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 157(a), 301, 303, 307, 309, 310, 332, that this Further Notice of Proposed Rulemaking is adopted. 43. It is further ordered that the Office of the Secretary, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 Business Administration, in accordance with Section 603(a) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. Federal Communications Commission. Marlene Dortch, Secretary. For the reasons discussed in the document, the Federal Communications Commission proposes to amend 47 CFR parts 1 and 25 as follows: PART 1—PRACTICE AND PROCEDURE 1. The authority citation for part 1 continues to read as follows: ■ Authority: 47 U.S.C. chs. 2, 5, 9, 13; 28 U.S.C. 2461. 2. Amend § 1.1206 by adding paragraph (a)(14) to read as follows: ■ § 1.1206 Permit-but-disclose proceedings. (a) * * * (14) Applications for space and earth station authorizations, including requests for U.S. market access through non-U.S. licensed space stations. * * * * * PART 25—SATELLITE COMMUNICATIONS 3. The authority citation for part 25 continues to read as follows: ■ Authority: 47 U.S.C. 154, 301, 302, 303, 307, 309, 310, 319, 332, 605, and 721, unless otherwise noted. § 25.110 [Amended] 4. Amend § 25.110 by removing and reserving paragraph (e). ■ [FR Doc. 2023–26700 Filed 12–7–23; 8:45 am] BILLING CODE P DEPARTMENT OF TRANSPORTATION Federal Railroad Administration 49 CFR Part 215 [Docket No. FRA–2023–0021, Notice No. 1] Freight Car Safety Standards Implementing the Infrastructure Investment and Jobs Act Federal Railroad Administration (FRA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). AGENCY: FRA is proposing to amend the Freight Car Safety Standards (FCSS) to implement section 22425 of the Infrastructure Investment and Jobs Act SUMMARY: Frm 00043 Fmt 4702 (Act). The Act places certain restrictions on newly built freight cars placed into service in the United States (U.S.) including limiting content that originates from a country of concern (COC) or is sourced from a state-owned enterprise (SOE) and prohibiting the use of sensitive technology that originates from a COC or SOE. The Act mandates that FRA issue a regulation to monitor and enforce industry’s compliance with the standards of the Act. DATES: Comments on the proposed rule must be received by February 6, 2024. Comments received after that date will be considered to the extent practicable. ADDRESSES: Comments: Comments related to Docket No. FRA–2023–21 may be submitted by going to https:// www.regulations.gov and following the online instructions for submitting comments. Instructions: All submissions must include the agency name and docket number or Regulatory Identification Number (RIN) for this rulemaking. Note that all comments received will be posted without change to https:// www.regulation.gov; this includes any personal information. Please see the Privacy Act heading in the SUPPLEMENTARY INFORMATION section of this document for Privacy Act information related to any submitted comments or materials. Docket: For access to the docket to read background documents or comments received, go to https:// www.regulations.gov and follow the online instructions for accessing the docket. FOR FURTHER INFORMATION CONTACT: Check Kam, Mechanical Engineer, Office of Railroad Safety at (202) 366– 2139, email: check.kam@dot.gov; or Michael Masci, Senior Attorney, Office of the Chief Counsel, telephone: (202) 302–7117, email: michael.masci@ dot.gov. SUPPLEMENTARY INFORMATION: Abbreviations and Terms Used in This Document RIN 2130–AC94 PO 00000 85561 Sfmt 4702 CBP—Customs and Border Protection CE—Categorical Exclusion CFR—Code of Federal Regulations COC—Country of Concern DOT—Department of Transportation EA—Environmental Assessment EIS—Environmental Impact Statement FCSS—Freight Car Safety Standards FR—Federal Register FRA—Federal Railroad Administration FTA—Federal Transit Administration GS—General Schedule IIJA Infrastructure Investment and Jobs Act IP—Intellectual Property IRFA—Initial Regulatory Flexibility Analysis E:\FR\FM\08DEP1.SGM 08DEP1 85562 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules NAFTA—North American Free Trade Agreement NEPA—National Environmental Policy Act NPRM—Notice of Proposed Rulemaking OMB—Office of Management and Budget PRA—The Paperwork Reduction Act RSA—Rail Security Alliance SOE—State-owned enterprise Umler—Universal Machine Language Equipment Register U.S.—United States U.S. DOC—United States Department of Commerce U.S.C.—United States Code USITC—U.S. International Trade Commission USMCA—United States-Mexico-Canada Agreement USTR—U.S. Trade Representative Table of Contents for Supplementary Information I. Executive Summary II. Infrastructure Investment and Jobs Act Background III. Application of the Infrastructure Investment and Jobs Act to Railroad Freight Car Manufacturers Including Discussions With RSA A. The Infrastructure Investment and Jobs Act Content Limitations Apply Only at the Time of Manufacture B. After-Manufacture Changes Are Not Covered by the Infrastructure Investment and Jobs Act C. Railroad Freight Cars Already Placed in Service in the U.S. Are Not Subject to the Infrastructure Investment and Jobs Act D. The Infrastructure Investment and Jobs Act Requirements Apply Only to Manufacturers, Not Railroads IV. Overview of the Proposal To Implement the Infrastructure Investment and Jobs Act Requirement for Freight Car Compliance Certification V. Section-by-Section Analysis VI. Regulatory Impact and Notices A. Executive Order 12866 as Amended by Executive Order 14094 B. Regulatory Flexibility Act and Executive Order 13272 C. Paperwork Reduction Act D. Federalism Implications E. International Trade Impact Assessment F. Environmental Impact G. Environmental Justice H. Unfunded Mandates Reform Act of 1995 I. Energy Impact J. Privacy Act Statement I. Executive Summary Purpose of the Regulatory Action FRA is issuing this rulemaking as required by the Act.1 The Act provides that a railroad freight car, wholly manufactured on or after the date that is 1 year after the date of issuance of regulations, may only operate on the U.S. general railroad system if: (1) the railroad freight car is manufactured, assembled, and substantially transformed, as applicable, by a qualified manufacturer in a qualified facility; (2) none of the sensitive technology located on the railroad freight car, including components necessary to the functionality of the sensitive technology, originates from a COC or is sourced from a SOE; and (3) none of the content of the railroad freight car, excluding sensitive technology, originates from a COC or is sourced from a SOE that has been determined by a recognized court or administrative agency of competent jurisdiction and legal authority to have violated or infringed valid United States intellectual property rights of another including such a finding by a Federal district court under title 35 or the U.S. International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337).2 The Act further provides percentage limitations on freight car contents so that not later than one year after the date of issuance of regulations, a railroad freight car, even if complying with the requirements in the preceding paragraph, may not operate on the U.S. general railroad system if more than 20 percent of the content of the railroad freight car, calculated by the net cost of all components of the car and excluding the cost of sensitive technology, originates from a COC or is sourced from a SOE. After three years from the date of issuance of regulations, the percentage may not be more than 15 percent.3 Summary of the Regulatory Action The Act requires regulations to be issued to implement its mandate and for freight car manufacturers to certify that freight cars covered by the Act are in compliance.4 This regulation would codify a process for FRA to monitor and enforce compliance with the Act. To carry out the Act’s certification requirement, FRA is proposing to require railroad freight car manufacturers to electronically certify to FRA that each freight car complies with the Act before it operates on the U.S. general railroad system of transportation. The certification would be required to identify each car being offered for operation, and include the manufacturer’s name and the name of the individual responsible for certifying compliance with the Act. In addition, the manufacturers would be required to maintain all records showing information to support certification, including content calculations, and such records would be made available to FRA upon request. Costs and Benefits of the Proposed Regulatory Action This proposed rule would fulfill FRA’s obligation to issue a rulemaking that would implement the Act. In section ‘‘VI. A. Executive Order 12866 as Amended by Executive Order 14094’’ of this proposed rule, FRA describes the benefits and costs that would come from issuing this regulation. Over a 10-year period of analysis, FRA quantifies the following costs to the freight car manufacturing industry and FRA that would come from issuing this proposed rule: (1) limiting content sourced from COCs or SOEs; (2) prohibiting the use of sensitive technology from these sources; (3) industry compliance costs; and (4) government administrative monitoring and enforcement costs. As shown in table 1, the cost from issuing the proposed rule is approximately $143,300 (undiscounted), $123,600 (present value (PV), 3%), and $89,500 (PV, 7%). The annualized net costs are approximately $14,500 (PV, 3%) and $12,800 (PV, 7%).5 TABLE 1—INDUSTRY AND FRA BURDEN FROM ISSUING THE PROPOSED RULE, TOTAL COST, ROUNDED ($100) Total cost ($) Annualized ($) khammond on DSKJM1Z7X2PROD with PROPOSALS Entity Undiscounted Industry costs ....................................................................... FRA costs ............................................................................ 1 The Infrastructure Investment and Jobs Act (IIJA), Sec. 22425, Public Law 117–58, 135 Stat. 752 (Nov. 15, 2021) (codified at 49 U.S.C. 20171) and generally referred to in this proposed rule as the Act, or section 20171). VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 PV 3% 40,100 103,200 2 49 34,000 89,600 U.S.C. 20171(b)(1). at (b)(2). 4 The Act requires certification to the ‘‘Secretary of Transportation.’’ Pursuant to 49 CFR 1.89(a), the Secretary has delegated that authority to FRA. 3 Id. PO 00000 Frm 00044 Fmt 4702 Sfmt 4702 PV 7% 23,800 65,700 PV 3% PV 7% 4,000 10,500 5 All cost and benefits estimates are in 2022 dollars. E:\FR\FM\08DEP1.SGM 08DEP1 3,400 9,400 85563 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules TABLE 1—INDUSTRY AND FRA BURDEN FROM ISSUING THE PROPOSED RULE, TOTAL COST, ROUNDED ($100)— Continued Total cost ($) Annualized ($) Entity Undiscounted Total cost ...................................................................... In the economic analysis section, FRA qualitatively explains the potential benefits that may result from implementing the proposed rule. Issuing the proposed rule would protect the U.S. rail system from risks that come from manufacturing freight cars with sensitive technology and technological components, necessary to the functionality of the sensitive technology, from a COC or SOE such as potential vulnerabilities in information security. As such, this proposed rule would mitigate potential issues related to compromised national security and corporate espionage. Issuing the proposed rule would also fulfill FRA’s duties as required by the Act. As mentioned in the economic analysis section, FRA welcomes public comment to assess the potential costs and benefits associated with implementing this proposed rule. II. Infrastructure Investment and Jobs Act Background khammond on DSKJM1Z7X2PROD with PROPOSALS On November 15, 2021, President Biden signed the Act,6 which includes a mandate that FRA issue regulations to implement it.7 In general, the Act allows freight cars, wholly manufactured after a certain date, to operate in the U.S. only if the cars are manufactured by a ‘‘qualified manufacturer’’ in a ‘‘qualified facility.’’ 8 The Act defines ‘‘qualified manufacturer’’ as a ‘‘freight car manufacturer that is not owned or under the control of a state-owned enterprise.’’ 9 Similarly, the Act defines ‘‘qualified facility’’ as ‘‘a facility that is not owned or under the control of a state-owned enterprise.’’ 10 The Act defines ‘‘state-owned enterprise’’ as an entity that is owned by, or under the control of, a government or agency of a COC or an individual acting under the direction or influence of a government or agency of a COC.11 6 49 U.S.C. 20171. See https:// www.whitehouse.gov/briefing-room/presidentialactions/2021/11/15/executive-order-onimplementation-of-the-infrastructure-investmentand-jobs-act/. 7 Id. at (c)(1). 8 Id. at (b)(1)(A). 9 Id. at (a)(7). 10 Id. at (a)(6). 11 Id. at (a)(10). VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 PV 3% 143,300 123,600 The Act provides a three-pronged definition of a COC. First, to be a COC under the Act, a country must have been identified by the U.S. Department of Commerce as a nonmarket economy country as of the date of enactment of the Passenger Rail Expansion and Rail Safety Act of 2021 (i.e., as of November 15, 2021).12 Second, a country must have been identified by the USTR in the most recent report under section 182 of the Trade Act of 1974 (Section 301 Report) as a foreign country included on the ‘‘priority watch list.’’ 13 Finally, a country must also be subject to USTR monitoring under section 306 of the Trade Act. In recent years, Congress has taken action concerning rail equipment and components manufactured by or sourced from COCs or SOEs.14 Generally, these laws limit the availability of Federal funds for certain equipment or projects funded or controlled by foreign entities. For example, the National Defense Authorization Act limits the use of FTA funds, and in some circumstances, local funds, to procure rolling stock from certain transit vehicle manufacturers who ‘‘are owned or controlled by, is a subsidiary of, or is otherwise related legally or financially to a corporation based in’’ certain foreign countries.15 However, because the freight rail car sector and its equipment are privately owned, those laws do not apply to the freight rail car industry. Congress has now extended similar limitations on rail equipment and components manufactured by or sourced from COCs 12 Id. at (a)(4)(A). at (a)(4)(B). Section 182 of the Trade Act of 1974 (19 U.S.C. 2242), commonly known as the ‘‘Special 301 provisions,’’ requires the U.S. Trade Representative (USTR) to identify countries that deny adequate and effective IP protections or fair and equitable market access to U.S. persons who rely on IP protection. The Trade Act requires the USTR to determine which, if any, of these countries to identify as Priority Foreign Countries. Such a designation can subject those countries to particular processes under the Trade Act. 14 See, e.g., the National Defense Authorization Act (49 U.S.C. 5323(u)). 15 Section 7613 of the National Defense Authorization Act for Fiscal Year 2020 (NDAA 2020), Public Law 116–92 (Dec. 20, 2019), which added a new subsection, 49 U.S.C. 5323(u), to Federal public transportation law. 13 Id. PO 00000 Frm 00045 Fmt 4702 Sfmt 4702 PV 7% 89,500 PV 3% 14,500 PV 7% 12,800 or SOEs to the freight rail car industry by issuing the Act. Similarly, President Biden issued Executive Order 14005 of January 25, 2021 ‘‘Ensuring the Future Is Made in All of America by All of America’s Workers,’’ 16 stating ‘‘the United States Government should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.’’ 17 The President also issued Executive Order 14028 of May 12, 2021 ‘‘Improving the Nation’s Cybersecurity’’ 18 stating that ‘‘prevention, detection, assessment, and remediation of cyber incidents is a top priority and essential to national and economic security.’’ 19 While the Act is consistent with those Executive orders, the Act has more stringent content limitations than those provided in the Executive orders. The Act has a similar legal framework as the United States-Mexico-Canada Agreement (USMCA),20 which replaced the North American Free Trade Agreement (NAFTA). The USMCA contains a certification process for certifying the origin of materials used in products.21 The Act builds on the certification process of the USMCA, by requiring manufacturers to certify the origins and sources of railroad freight car components.22 The Act also directly borrows many terms from the USMCA, including the definitions for ‘‘net cost’’ and ‘‘substantially transformed,’’ two key terms that help set parameters for the limitations built into the Act and help instruct manufacturers how to comply with it.23 These similarities have helped inform FRA’s understanding of the requirements of the Act. The similarities also help eliminate certain potential burdens 16 86 FR 7475. 17 Id. 18 86 FR 26633. 19 Id. 20 USMCA, July 1, 2020, https://ustr.gov/tradeagreements/free-trade-agreements/united-statesmexico-canada-agreement. 21 USMCA chapters 4 and 5, July 1, 2020, https:// ustr.gov/trade-agreements/free-trade-agreements/ united-states-mexico-canada-agreement. 22 49 U.S.C. 20171(c)(2). 23 Id. at (a). E:\FR\FM\08DEP1.SGM 08DEP1 85564 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules arising from this proposed rulemaking. As such, FRA expects that the steps involved certifying compliance under the USMCA will be substantially the same as those needed to certify compliance with the Act. FRA welcomes comments to this NPRM to help further develop its understanding of the issues. khammond on DSKJM1Z7X2PROD with PROPOSALS III. Application of the Infrastructure Investment and Jobs Act to Railroad Freight Car Manufacturers Including Discussions With RSA To understand how railroad industry manufacturers were complying with other Congressional requirements concerning equipment and components manufactured by or sourced from COCs or SOEs and the certification requirements of the USMCA, FRA conducted a series of listening sessions with RSA, including two in person meetings on September 26, 2022, and March 3, 2023. While the proposals in this NPRM are FRA’s alone, based on its independent assessments of the issues, the meetings with RSA helped FRA analyze the requirements of the Act. A summary of the meetings is in the public docket for this rulemaking (Docket Number FRA–2023–21). A. The Infrastructure Investment and Jobs Act Content Limitations Apply Only at the Time of Manufacture Section 20171(b)(2) of the Act sets forth certain content limitations that must be met for ‘‘railroad freight cars’’ (as defined in the statute) ‘‘wholly’’ manufactured after a certain date to operate on the U.S. general railroad system of transportation. Understanding this subsection within the context of the Act as a whole (49 U.S.C. 20171), FRA concluded that the Act regulates railroad freight cars by imposing such requirements at the time of initial manufacture but does not require FRA to ensure that the content limitations set forth in section 20171(b)(2) are met throughout the useful life of the equipment or at each re-entry into service following any changes to the railroad freight car including, repair, alteration, modification, rebuild, refurbishment, restoration, or reconstruction. First, in the Act’s definitions, Congress explicitly defined who would be qualified to manufacture railroad freight cars eligible to operate on the general railroad system of transportation by limiting the manufacturing process to ‘‘qualified manufacturers’’ in ‘‘qualified facilities.’’ 24 The statute does not define those who would be qualified to 24 Id. at (a)(7) and (6). VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 perform repairs or maintenance or otherwise address such ‘‘aftermarket’’ activities. References to the manufacturing process are also found in the definition of ‘‘substantially transformed,’’ which is a trade term of art used to describe a ‘‘change in tariff classification as a result of the manufacturing process.’’ 25 Second, the Act requires manufacturers to provide an annual certification that any railroad freight cars they provide for operation on the U.S. general railroad system of transportation meet the Act’s requirements.26 Manufacturers are capable of making such a certification, particularly with respect to the content limitations, only in connection with the initial manufacturing process. Third, the Act requires manufacturers to have a valid certification at the time a railroad freight car begins operation.27 Given the emphasis on manufacturers and the manufacturing process, it is reasonable to interpret this phrase to mean at the time a railroad freight car first begins operation, but not every time the car is returned to service. Accordingly, reading the Act as a whole, content limitations imposed by Congress apply to only newlymanufactured railroad freight cars at the point when cars first enter the U.S. general railroad system of transportation.28 The Act does not impose a continuing obligation on the manufacturer to certify to the content limitations throughout the useful life of the assets and does not require FRA to enforce section 20171(b)(2)’s content limitations at all times a railcar is in service. 25 This term refers to the manufacturing process and is generally used to help determine the country of origin for a product in international trade. Generally, substantial transformation means that the good underwent a fundamental change (normally as a result of processing or manufacturing in the country claiming origin) in form, appearance, nature, or character, which adds to its value an amount or percentage that is significant in comparison to the value which the good (or its components or materials) had when exported from the country in which it was first made or grown. Usually a new article of commerce—normally one with a different name—is found to result from any process that Customs decides has brought about a ‘‘substantial transformation’’ in the pre-existing components. Thus, leading to a change in the tariff classification of the substantially transformed item. See https://www.trade.gov/rules-origin-substantialtransformation. 26 49 U.S.C. 20171(c)(2). 27 Id. at (c)(3). 28 Id. at (b)(2). PO 00000 Frm 00046 Fmt 4702 Sfmt 4702 B. After-Manufacture Changes to a Railroad Freight Car Are Not Covered by the Infrastructure Investment and Jobs Act Because the Act regulates railroad freight cars at the time a railcar first begins operation, the content limitations set forth in section 20171(b)(2) do not apply at the time of repair. As a result, the statute does not contemplate FRA enforcing the content limitations at the time of repair. The Act limits by whom and where a railroad freight car is ‘‘manufactured, assembled, or substantially transformed.’’ 29 As noted above, Congress focused on who may perform the manufacturing or assembly of a railroad freight car and sought to ensure such activity was not carried out in a facility that is owned or controlled by a state-owned enterprise. Congress also sought to regulate who may ‘‘substantially transform’’ a component of a railroad freight car during the manufacturing process. ‘‘Substantially transformed’’ is a defined term of art, borrowed from trade law, that relates to tariff classification as a result of the manufacturing process. Requiring enforcement of the content limitations for the railroad freight car’s entire useful life—including repairs— would be a departure from the compliance scheme dictated by the statute, which is tied to manufacturer certifications. If Congress intended FRA to enforce content limitations in section 20171(b)(2) throughout the life of the railcar, including upon repair, it would have explicitly said so.30 Moreover, Congress does not define or reference any type of repair or aftermarket component replacement within the scope of the Act at any place. Because terms like ‘‘for the life of the asset,’’ ‘‘at all times,’’ or ‘‘at the time of repair’’ are absent from the text of the Act, FRA has concluded that its enforcement obligation does not extend beyond the time of manufacture for the content limitations in section 20171(b)(2). C. Railroad Freight Cars Already Placed in Service in the U.S. Are Not Subject to the Infrastructure Investment and Jobs Act The Act requires FRA to issue regulations to implement the requirements set forth in the Act.31 For purposes of this analysis, FRA has 29 Id. at (b)(1)(A). v. American Trucking Ass’n, 531 U.S. 457, 468 (2001) (‘‘Congress, we have held, does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.’’). 31 49 U.S.C. 20171(c)(1). 30 Whitman E:\FR\FM\08DEP1.SGM 08DEP1 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules proposed to define the date on which FRA promulgates regulations as the ‘‘Issuance Date.’’ With respect to applicability, the plain language of section 20171 states that only railroad freight cars that are wholly manufactured on or after a date that is one year after the Issuance Date are subject to Act’s requirements.32 Thus, if FRA promulgates regulations on June 1, 2023, the only railroad freight cars that are wholly manufactured on or after June 1, 2024, are subject to the Act’s requirements. Using this hypothetical issuance date of June 1, 2023, as an example, existing railroad freight cars manufactured prior to June 1, 2024, and new railroad freight cars that were partially manufactured prior to June 1, 2024, are not subject to the Act. Thus, railroad freight cars that are currently in-use are not subject to the Act, including when parts are replaced during maintenance or repair; because the Act only imposes forward-looking requirements. D. The Act’s Requirements Apply Only to Manufacturers, Not Railroads The Act imposes certification and compliance obligations on manufacturers, not railroads. Specifically, the certification requirement set forth in section 20171(c)(2) and the prohibition on false registration in Umler 33 both attach to a railroad freight car manufacturer.34 Further, FRA is permitted to prohibit a railroad freight car manufacturer from providing additional railroad freight cars for operation in the U.S. if the manufacturer is a repeat violator of section 20171.35 The statute does not impose obligations on a railroad to ensure the railroad freight cars meet content limitations nor does the statute require FRA to hold railroads accountable for compliance with the Act. FRA requests comments on whether a railroad should be responsible for the operation of freight cars known to be in noncompliance with the Act. 32 Id. at (b)(1) and (2). Corp.’s Umler system is an electronic resource that contains critical data for the North American rail fleet, such as internal and external dimensions, cubic or gallon capacity, and weight information for each unit. See Association of American Railroads Rule 93 and UMLER Data Specification Manual; see also The Umler® System at https://public.railinc.com/products-services/ umler-system#:∼:text= Umler%C2%AE%20is%20the%20 source,to%20logistics%20partners%20 and%20customers. 34 49 U.S.C. 20171(c)(2) and 20171(c)(3). 35 Id. at (c)(4). khammond on DSKJM1Z7X2PROD with PROPOSALS 33 Railinc VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 IV. Overview of the Proposal To Implement the Infrastructure Investment and Jobs Act Requirement for Freight Car Compliance Certification The Act requires manufacturers to annually certify to FRA, as delegated by the Secretary, that any railroad freight cars it offers for operation on the U.S. general railroad system of transportation meet the requirements of the Act.36 This rulemaking proposes to incorporate the certification requirement into the FCSS 37 and establish a process for FRA to access necessary information to determine compliance with the Act. FRA proposes to require manufacturers’ certifications to be submitted electronically to FRA’s Office of Railroad Safety. The certifications would include the manufacturer’s name and address, the name, signature and contact information for the person responsible for certifying compliance, and a car identification number for each car being certified. Manufacturers would be required to maintain records to support their compliance and FRA would be able to access those records upon request. FRA expects freight car manufacturers to certify groups of cars together coinciding with bulk orders for equipment. For convenience, manufacturers may submit the certification to FRA at the same time as they request a safety appliance drawing review and/or courtesy sample base car inspection for the same build order.38 At its discretion, FRA may request the percentage break down on the content for a specific car, as needed, to determine compliance for that car.39 FRA is also proposing that manufacturers maintain records showing the calculations made to 36 Id. at (c)(3). 37 49 CFR part 215. 38 FRA performs sample car inspections as a courtesy to the manufacturers, to better ensure equipment is built in accordance with all applicable Federal railroad safety laws. Generally, manufacturers that desire to have FRA review their equipment for compliance with safety appliance standards are to submit their safety appliance arrangement drawings, prints, etc., to FRA’s Office of Railroad Safety, Office of Railroad Infrastructure and Mechanical Equipment for review, at least 60 days prior to construction. FRA reviews the documents submitted and advises the manufacturer if any specifications laid out in the drawings do not conform with the applicable regulation(s). The sample base car inspection generally provides the manufacturer an opportunity to make any necessary changes in the design or manufacturing process to meet compliance before building the remaining cars of that order. See https://railroads.dot.gov/sites/ fra.dot.gov/files/2020-05/MPECompliance Manual2013.pdf. 39 The percentage breakdown for evaluating content is the net cost of materials (excluding the cost of sensitive technology) compared to total cost of the freight car. PO 00000 Frm 00047 Fmt 4702 Sfmt 4702 85565 support certification under this section and such records shall be made available to FRA upon request. This would provide FRA access to the information necessary to determine the percentage of components originating form COCs and SOE for each freight car. FRA understands that manufacturers currently generate such a break down for their cars to comply with the USMCA and does not anticipate that assembling the information will result in an additional burden to the industry. FRA anticipates that certain documents submitted by manufacturers pursuant to 49 U.S.C. 20171(c)(3) may contain proprietary or other confidential business information. Manufacturers should follow the procedures in 49 CFR 209.11 to ensure proper handling of such information, and manufacturers may redact portions of submitted information so long as FRA is able to accurately ascertain the manufacturer’s compliance with the Act. However, FRA retains the right to make its own determinations regarding disclosure of submitted information. In making these determinations, FRA will consider all exemptions to Freedom of Information Act disclosure, including the exemption on disclosure of commercial or financial information and privileged or confidential information.40 V. Section-by-Section Analysis This section-by-section analysis is intended to explain the rationale for each revised or new provision FRA is proposing to incorporate into the FCSS. The proposed regulatory changes are organized by section number. FRA seeks comments on all proposals in this NPRM. Section 215.5 Definitions FRA proposes to incorporate several new, defined terms into the FCSS, most pulled directly from the Act and some proposed as necessary to effectively implement the Act. FRA also proposes to organize the existing FCSS definitions along with the newly proposed definitions in alphabetical order to conform with FRA’s other regulations. The Act’s definition for the term ‘‘railroad freight car’’ mirrors the definition for the same term in the current FCSS. Accordingly, this rulemaking would keep the definition in the FCSS unchanged. The new definitions FRA proposes to add are discussed below: Component is defined by the Act,41 and FRA is proposing to adopt it in the 40 5 U.S.C. 552(b)(4). U.S.C. 20171(a)(1). 41 49 E:\FR\FM\08DEP1.SGM 08DEP1 85566 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules FCSS. Although the proposed definition does not identify specific parts and subassemblies of freight cars as ‘‘components,’’ FRA believes Congress intends this definition to include the major components of freight cars (e.g., trucks, wheel sets, center sills, draft gears, couplers, walkways, running boards) when calculating content limitations under proposed section 49 CFR 215.401(b)(1). FRA does not intend the definition of ‘‘component’’ to include smaller parts that do not significantly impact manufacturing costs (e.g., wear plates, roof liners, or small pieces of hardware such as screws). FRA welcomes comment on how freight car items fit into this definition. Control is defined by the Act,42 and FRA is proposing to adopt it in the FCSS. This definition relates to the definitions of ‘‘qualified facility’’ and ‘‘qualified manufacturer’’ discussed below. Cost of sensitive technology is defined by the Act,43 and FRA is proposing to adopt it in the FCSS. Country of concern is defined by the Act 44 and FRA is proposing to adopt it in the FCSS.45 As noted in the Infrastructure Investment and Jobs Act Background section above a country must meet all three criteria to qualify as a ‘‘country of concern.’’ Each of the criteria within the definition of ‘‘country of concern’’ are separated by ‘‘and’’ instead of ‘‘or,’’ meaning a country must meet all three criteria to meet the definition. First, to qualify as a ‘‘country of concern’’ under section 20171, the U.S. DOC must have identified that country as a nonmarket economy country pursuant to the Tariff Act of 1930 at the date of enactment (i.e., as of Nov. 15, 2021).46 In 2021, when the Act became law, the U.S. DOC had named eleven countries as nonmarket economy countries: Armenia, Azerbaijan, Belarus, China, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.47 FRA notes that this 42 Id. at (a)(2). at (a)(3). 44 Id. at (a)(4). 45 These same criteria are used to define ‘‘country of concern’’ in 49 U.S.C. 5323(u) (placing limitations on certain rolling stock procurements for public transportation that qualify for financial assistance), and the FTA has published Frequently Asked Questions Regarding Section 7613 of the National Defense Authorization Act for Fiscal Year 2020 that discusses the criteria and the definition of ‘‘country of concern.’’ https:// www.transit.dot.gov/funding/procurement/ frequently-asked-questions-regarding-section-7613national-defense. 46 49 U.S.C. 20171(a)(4)(A). 47 Int’l Trade Admin, Countries Currently Designated by Commerce as Non-Market Economy khammond on DSKJM1Z7X2PROD with PROPOSALS 43 Id. VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 criterion is tied to the Passenger Rail Expansion and Rail Safety Act of 2021 enactment date and accordingly, the countries that meet this first prong of the definition will not change. Second, to constitute a ‘‘country of concern,’’ the USTR must also name that country on the priority watch list in the most recent report required by the Trade Act of 1974.48 In the most recently required report, the USTR identified seven countries on the priority watch list: Argentina, Chile, China, India, Indonesia, Russia, and Venezuela.49 Third, a country is deemed a ‘‘country of concern’’ only if it is subject to monitoring by the USTR under section 306 of the Trade Act of 1974.50 In the 2022 Special 301 Report, the USTR identifies seven countries that are on the priority watch list: Argentina, Chile, China, India, Indonesia, Russia, and Venezuela. Of these seven, only China is monitored pursuant to section 306. Accordingly, China is currently the only country that meets all three criteria and therefore is the only ‘‘country of concern’’ as defined in the Act. Net cost is defined by the Act,51 52 and FRA is proposing to adopt it in the FCSS. Currently, chapter 4 of the USMCA defines net cost.53 Qualified facility is defined by the Act,54 and FRA is proposing to adopt it in the FCSS. When read in combination with the definition of the term control the Act provides, FRA finds that the Act intends for general corporate law principles to apply to determine whether a particular railroad freight car or component manufacturer is ‘‘owned or controlled by, is a subsidiary of, or is otherwise related legally or Countries, https://www.trade.gov/nme-countries-list (identifying the Federal Register notices wherein a country was designated as a non-market economy country). 48 49 U.S.C. 20171(a)(4)(B). 49 Office of the U.S. Trade Rep., 2022 Special 301 Report, 5 (2022), (2022 Special 301 Report.pdf (ustr.gov)). 50 49 U.S.C. 20171(a)(4)(C). See Office of the U.S. Trade Rep., 2022 Special 301 Report, 44 (2022), https://ustr.gov/issue-areas/intellectual-property/ special-301/2022-special-301-review, (listing countries included on the priority watch list and whether such countries are subject to monitoring under section 306 of the Trade Act of 1974). 51 USMCA chapter 4, July 1, 2020, https:// ustr.gov/trade-agreements/free-trade-agreements/ united-states-mexico-canada-agreement. 52 49 U.S.C. 20171(a)(5). 53 Uniform Regulations Regarding the Interpretation, Application, and Administration of Chapter 4 (Rules or Origin) and Related Provisions in Chapter 6 (Textile and Apparel Goods) of the Agreement Between the United States of America, The United Mexican States, and Canada. https:// ustr.gov/sites/default/files/files/agreements/usmca/ UniformROO.pdf. 54 49 U.S.C. 20171(a)(6). PO 00000 Frm 00048 Fmt 4702 Sfmt 4702 financially to a corporation based in’’ a country that meets the statutory criteria. Qualified manufacturer is defined by the Act,55 and FRA is proposing to adopt it in the FCSS. For the purpose of this definition, a supplier, component and repair part manufacturer, or other entity may be a railroad freight car manufacturer, if it manufactures, assembles, of substantially transforms a freight car, as described in proposed 49 CFR 215.401(a)(1). Like the definition of qualified facility, when read in combination with the Act’s definition of the term control, FRA again finds that the Act intends for general corporate law principles to apply to determine whether a particular railroad freight car or component manufacturer is ‘‘owned or controlled by, is a subsidiary of, or is otherwise related legally or financially to a corporation based in’’ a country that meets the statutory criteria. Sensitive technology is defined by the Act,56 and FRA is proposing to adopt it in the FCSS. While FRA understands the list of devices included in this definition to be examples that can be considered sensitive technology, FRA is not currently aware of any additional devices that should be included in the list. State-owned enterprise is defined by the Act,57 and FRA is proposing to adopt it in the FCSS. Substantially transformed is defined by the Act,58 and FRA is proposing to adopt it in the FCSS. FRA understands that a manufacturing process which changes an article’s name, character, or use will often result in a change in the article’s tariff classification. Accordingly, FRA understands the Act’s definition of substantially transformed to mean a manufacturing process that changes an article’s name, character, or use. FRA notes that the U.S. Customs and Border Protection (CBP) is an implementing agency for USMCA and although CBP uses a slightly different definition of substantially transformed than that provided in the Act, CBP explains that substantial transformation ‘‘occurs when, as a result of manufacturing processes, a new and different article emerges, having a distinctive name, character, or use, which is different from that originally possessed by the article or material before being subject to the manufacturing process.’’ 59 FRA finds that the definition of substantially 55 Id. at (a)(7). at (a)(9). 57 Id. at (a)(10). 58 Id. at (a)(11). 59 https://www.trade.gov/rules-origin-substantialtransformation. 56 Id. E:\FR\FM\08DEP1.SGM 08DEP1 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules transformed provided in the Act and CBP’s definition of the same term are compatible in that a manufacturing process which changes an article’s name, character, or use will often also result in a change in the article’s tariff classification. USMCA is defined by the Act,60 and FRA is proposing to adopt it in the FCSS. khammond on DSKJM1Z7X2PROD with PROPOSALS Section 215.401 Requirements for Railroad Freight Cars Placed Into Service in the United States This section proposes to incorporate the requirements of paragraph (b)(1) of the Act into the FCSS. Paragraph (b)(1) of the Act provides that for a railroad freight car to operate on the U.S. general railroad system of transportation: (1) any car wholly manufactured after a certain date must be manufactured, assembled, and substantially transformed by a qualified manufacturer in a qualified facility; (2) none of the sensitive technology located on the car may originate from a COC or be sourced from a SOE; and (3) none of the content of the car (except sensitive technology) may originate from a COC or be sourced from a SOE with a history of problematic trade practices or respect for IP rights. Proposed paragraph (a)(1) mirrors paragraph (b)(1)(A) of the Act and mandates that any railroad freight car to be operated on the U.S. general railroad system of transportation and wholly constructed one year from a final rule in this proceeding, must be manufactured, assembled, and substantially transformed by a qualified manufacturer or a qualified facility. Sensitive Technology Prohibition Proposed paragraph (a)(2) mirrors paragraph (b)(1)(B) of the Act and addresses sensitive technology. This paragraph proposes to incorporate the Act’s general prohibition on operating a freight car on the U.S. general railroad system of transportation, if any of its ‘‘sensitive technology’’ or ‘‘components necessary to the functionality of the sensitive technology’’ originates from a COC or is sourced from a SOE. As noted above, the Act defines ‘‘sensitive technology,’’ but does not define or provide any guidance on what constitutes ‘‘components necessary to the functionality of the sensitive technology.’’ FRA understands this phrase to generally include the active components that work with the sensitive technology, because they may also be able to collect and transmit data. Passive components are excluded from 60 49 U.S.C. 20171(a)(12). VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 this phrase because they cannot collect or transmit data. Examples of active components include, but are not limited to, any type of processor, transmitter, receiver, or data storage device. While the passive components are still necessary for the device to function as a whole, these components do not play a vital role in the storage, collection, exchange, transmittal, or manipulation of any data. Examples of passive components include, but are not limited to, printed circuit boards, power supplies, temperature sensors, pressure gauges, resistors, capacitors, etc. FRA welcomes comments to this NPRM about what constitutes ‘‘components necessary to the functionality of the sensitive technology’’ under the Act. Intellectual Property Infringement Prohibition Proposed paragraph (a)(3) mirrors paragraph (b)(1)(C) of the Act and addresses IP infringement. This language forbids the inclusion in any railroad freight car of any content from a COC or SOE ‘‘that has been determined by a recognized court or administrative agency of competent jurisdiction and legal authority to have violated or infringed valid U.S. intellectual property rights of another.’’ The Act includes both ‘‘a finding by a Federal district court under title 35’’ and a finding by the U.S. International Trade Commission (ITC) under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) as determinations sufficient to trigger the prohibition. For the purposes of this requirement, the ITC makes a finding that an entity has violated or infringed valid U.S. IP rights when the ITC issues a final determination under section 337. Under ITC procedure, an administrative law judge, who concludes that an entity violated section 337 of the Tariff Act, first files an initial determination.61 This initial determination becomes a final determination of the ITC 60 days after it is filed, unless the ITC orders review of the initial determination, in which case the ITC’s ultimate finding would be the final determination.62 These determinations are available on the ITC’s website.63 FRA does not anticipate tracking determinations on an ongoing basis; manufacturers seeking certification are responsible for researching determinations against their own suppliers. As an example, in October 2009, the ITC issued a 10-year Limited Exclusion 61 19 CFR 210.42(a)(1)(i). at (h)(2). 63 https://usitc.gov/intellectual_property/337_ determinations.htm. 62 Id. PO 00000 Frm 00049 Fmt 4702 Sfmt 4702 85567 Order against two Chinese companies (Tianrui Group Company Limited and Tianrui Group Foundry Company Limited) and two U.S. companies (Standard Car Truck Company, Inc. and Barber Tianrui Railway Supply, LLC) that an administrative law judge determined had violated section 337.64 The U.S. Court of Appeals for the Federal Circuit upheld the ITC’s decision on October 11, 2021.65 Furthermore, FRA finds that section 20171(b)(1)(C)’s prohibition applies not only to the entity determined to be the IP infringer, but to the content of that infringement as well. For example, in 2009, the ITC determined that four respondents violated section 337 of the Tariff Act by misappropriating numerous Amsted trade secrets relating to the manufacture of cast steel railway wheels, importing into the U.S. cast steel railway wheels and substantially injuring, and threatening substantial injury to, Amsted’s domestic cast steel railway wheel operations, which manufacture Amsted’s Griffin® wheels.66 The ITC determination excluded any such steel railway wheels from entering into the U.S. for ten years. On appeal, the Federal Circuit upheld the ITC’s decision.67 FRA understands that section 20171(b)(1)(C) would prohibit a railroad freight car to be equipped with steel wheels that were manufactured using the stolen IP that was the subject of this case. The Act does not expressly provide a timeframe for the prohibitions under this section or connect it to the length of the ITC exclusion or any other time limitations. As such, FRA understands the prohibition to be permanent. Content Limitations Proposed paragraph (b) mirrors section 20171(b)(2) of the Act and addresses content limitations from COCs and SOEs generally. Consistent with the Act, beginning 1 year after this regulation is issued, proposed paragraph (b)(1)(i) would initially prohibit newly manufactured freight cars from operating on the U.S. general railroad system of transportation if more than 20 percent of the car’s content originates from a COC or is sourced from a SOE. After 3 years, proposed paragraph (b)(1)(ii) would reduce that threshold to 64 See In the matter of Certain Cast Steel Railway Wheels, et al. USITC Inv. No. 337–TA–655 (U.S. Intern. Trade Com’n), 2009 WL 10693128. 65 Tianrui Group Co. Ltd. v. Intl. Trade Comm’n, 661 F.3d 1322 (Fed. Cir. 2011). 66 In the matter of Certain Cast Steel Railway Wheels, et al. USITC Inv. No. 337–TA–655 (U.S. Intern. Trade Com’n), 2009 WL 4261206. 67 Tianrui Group Co. Ltd. v. Intl. Trade Comm’n, 661 F.3d 1322 (Fed. Cir. 2011). E:\FR\FM\08DEP1.SGM 08DEP1 85568 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules no more than 15 percent. Cars not meeting these thresholds would be noncompliant and the manufacturer would be subject to civil penalties under proposed § 215.407. Consistent with the Act, as proposed, the percent of content is measured by the net cost of materials (excluding the cost of sensitive technology).68 Proposed paragraph (b)(2) mirrors paragraph (b)(2)(B) of the Act and explains that the content limitations provided in the Act shall apply notwithstanding any apparent conflict with provisions of chapter 4 of the USMCA. Chapter 4 of the USMCA and the Act both establish rules for the country of origin for a product in international trade. This paragraph clarifies that compliance with chapter 4 of the USMCA does not constitute, or in any way affect, the content limitations in the Act, which apply independently. khammond on DSKJM1Z7X2PROD with PROPOSALS Section 215.403 Compliance Certification of This proposed section incorporates the requirements of paragraph (c) of the Act and includes requirements designed to help FRA monitor and enforce the Act’s standards. Consistent with paragraph (c)(2) of section 20171, proposed paragraph (a) requires railroad freight car manufacturers to annually certify to FRA, as delegated by the Secretary of Transportation, that any railroad freight car it provides for operation in the United States, meets the requirements of section 20171. Proposed paragraph (a)(1) would require railroad freight car manufacturers to submit a certification report to FRA, identifying and certifying compliance for, each freight car before it can operate on the U.S. general railroad system of transportation. Each certification report submitted to FRA may identify a single freight car or multiple freight cars based on the manufacturer’s preference. For convenience, a manufacturer may submit its certification report directly to the Office of Railroad Safety along with any customary request to FRA for a sample base car inspection or safety appliance arrangement drawing review. Paragraph (a)(1)(i) would require the report to include a statement certifying compliance, the manufacturer’s name, the individual responsible for certifying compliance with the Act and this rule, and the car identification number for each car being certified. Paragraph 68 The proposed definition of ‘‘net cost’’ is provided in section 215.5 of this proposed rule. For a discussion of ‘‘net cost,’’ see the section-bysection analysis above. VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 (a)(1)(ii) would require the freight car manufacturer to maintain all records showing the information, including calculations, made to support certification under this section and such records shall be made available to FRA upon request. Section 215.405 Prohibition on Registering Noncompliant Railroad Freight Cars This section proposes to incorporate the requirements in 49 U.S.C. 20171(c)(3)(B) into the FCSS. FRA will review registration records when there is evidence of noncompliance with the Act. For example, when FRA determines a railroad freight car manufacturer is not in compliance with the Act’s substantive requirements (e.g., it is equipped with sensitive technology, or 20 percent or 15% of its components, sourced from an SOE and operating on the U.S. general railroad system of transportation), FRA would request documentation to determine whether the freight car was registered with the Umler system. If the freight car was so registered, the freight car would also be in noncompliance with this section. Section 215.407 Civil Penalties This section proposes to incorporate the requirements in 49 U.S.C. 20171(c)(4) into the FCSS. The Act specifies penalty amounts for violations of its substantive requirements and specifies that the unit of violation is the freight car. FRA anticipates utilizing the Railroad Safety Enforcement Procedures to enforce these penalties in the same manner as other civil penalties enforced by FRA.69 VI. Regulatory Impact and Notices A. Executive Orders 12866 as Amended by Executive Order 14094 This proposed rule is not a significant regulatory action within the meaning of Executive Order (E.O.) 12866 (‘‘Regulatory Planning and Review’’), as amended by Executive Order 14094, Modernizing Regulatory Review,70 and DOT Order 2100.6A (‘‘Rulemaking and Guidance Procedures’’). This proposed rule aims to enforce the Act’s restrictions on content and technology originating from COCs and SOEs in newly built freight cars entering service on the U.S. general railroad system of transportation. Issuing this proposed rulemaking would authorize FRA to monitor and enforce industry compliance with the Act. This section 69 49 CFR part 209. FR 21879 (April 6, 2023) located at https:// www.federalregister.gov/documents/2023/04/11/ 2023-07760/modernizing-regulatory-review. qualitatively explains benefits and quantitatively explains costs for the freight car industry and FRA associated with implementing this proposed rule over a 10-year period, considering discount rates of 7 percent and 3 percent.71 FRA has concluded that the Act does not impose a continuing obligation on manufacturers or railcar owners related to certifying content and technology limitations throughout the useful life of each freight car. As such, the proposed rule would not require FRA to enforce the requirements set forth in the Act at all times a freight railcar is in service on the U.S. general railroad system of transportation. Therefore, this proposed rule would only impact original freight car manufacturers related to the initial entry of freight cars into service in the U.S. general railroad system of transportation. Based on discussions with FRA subject matter experts in the Office of Motive Power and Equipment, this analysis estimates that the proposed rule would impact six freight car manufacturers that have manufacturing facilities within North America. This proposed rule would not significantly impact any other entity. Over a 10-year period, this analysis estimates the impact of issuing this proposed rule on freight car manufacturing industry and FRA related to: (1) limiting content sourced from COCs or SOEs; (2) prohibiting the use of sensitive technology and components necessary to the functionality of the sensitive technology from a COC or SOE; (3) compliance costs; and (4) government administrative costs associated with enforcing this proposed rule. Additionally, this analysis provides a summary of the regulatory impact and describes some alternative regulatory options that FRA considered. (1) Limit Content Sourced From COCs or SOEs Based on conversations with RSA and FRA subject matter experts, all six freight car manufacturers currently comply with the 15 percent content limitation, which would be required three years after this proposed rule’s implementation date. Also, absent FRA issuing this proposed rule, over the next 10 years, this analysis forecasts that no freight car manufacturer plans to change its materials sourcing whereby a freight car manufacturer would not be in compliance with the content limitation set forth in this proposed rule. Lastly, this analysis does not anticipate any 70 88 PO 00000 Frm 00050 Fmt 4702 Sfmt 4702 71 All costs are expressed in 2022 base year dollars. E:\FR\FM\08DEP1.SGM 08DEP1 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules new freight car manufacturers entering the North American freight car industry over the next 10 years (during the period of analysis). Therefore, related to complying with content limitation, issuing this proposed rule would not result in any costs or benefits. FRA welcomes public comment related to this conclusion. khammond on DSKJM1Z7X2PROD with PROPOSALS (2) Prohibit the Use of Sensitive Technology From COCs or SOEs As explained earlier in this NPRM, FRA understands the prohibition on the use of sensitive technology that originates from a COC or SOE to also include any active technological components necessary to the functionality of the sensitive technology (excluding passive technological components) that originates from a COC or SOE. Based on this understanding and input from the RSA and FRA subject matter experts, all six freight car manufacturers currently comply with the limitations on use of sensitive technological components as set forth in this proposed rule. Also, absent FRA issuing this proposed rule, over the next 10 years, this analysis forecasts that no freight car manufacturer plans to change its materials sourcing whereby a freight car manufacturer would not comply with the sensitive technology limitation set forth in this proposed rule. Further, over the next 10 years (during the period of analysis), this analysis does not anticipate any new freight car manufacturer entering the North American freight car industry. Therefore, the provision that would prohibit the use of sensitive technology, or active technological components necessary to the functionality of the sensitive technology that originates from a COC or SOE for freight cars entering service in the U.S. general railroad system of transportation would not result in any costs. FRA welcomes public comment related to this conclusion. However, issuing this provision (prohibiting the use of sensitive technology from COCs or SOEs) may provide benefit. That is, issuing this proposed rule would mitigate concerns related to compromised national security and potential corporate espionage that exists if newly built freight cars with sensitive technology and active technological components necessary to the functionality of the sensitive technology from COC or SOE enter service into the U.S. general railroad system of transportation. FRA VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 welcomes public comment related to these conclusions. (3) Compliance Costs Issuing the proposed rule would create a few compliance burdens for freight car manufacturers including affirming compliance with this proposed rule, submitting an annual certification, and participating in periodic audits. Manufacturers Affirm Compliance Prior to a Freight Car Entering Service Prior to a manufacturer providing a freight car for operation on the U.S. general railroad system of transportation, a manufacturer would affirm that the freight car is compliant with this regulation. Currently, FRA provides a courtesy safety appliance drawing review and/or sample car inspection to freight car manufacturers that request it for all freight cars that they intend to manufacture for operation on the U.S. general system. FRA anticipates that manufacturers would affirm compliance with the Act by certifying at the time of their safety appliance drawing review and/or sample car inspection.72 Based on input from FRA subject matter experts, this analysis estimates that each year manufacturers introduce approximately 35 freight car orders. Based on FRA subject matter expert input, this analysis assumes that an administrative professional in the freight car’s contract office would draft the document affirming compliance with the Act (1 hour) and a vicepresident of engineering would review and sign the letter (15 minutes).73 Each year, the burden on manufacturers to affirm compliance with the Act for all 72 A freight car manufacture may also certify compliance with Act by submitting an independent document to FRA for any build order (e.g., for subsequent orders of the same car builds utilizing the same safety appliance arrangement that have already been reviewed and/or inspected by FRA). This analysis concluded that the cost to submit an independent document to affirm compliance with the Act follows similarly to including such affirmation along with safety appliance review and/ or sample car inspection request package. 73 U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, National Industry-Specific Occupational Employment and Wage Statistics, May 2023 NAICS 336500 Railroad Rolling Stock Manufacturing ‘‘Sales and Related Occupations’’ $40.45 (mean wage), ‘‘Top Executives’’ ($62.74) [May 2023] https:// www.bls.gov/oes/current/naics4_336500.htm. When estimating labor burden, this analysis added a compensation factor of 1.75, so the administrative employee’s hourly burden rate is $70.79 and the VP of engineering’s hourly burden rate is $109.80. PO 00000 Frm 00051 Fmt 4702 Sfmt 4702 85569 newly built freight cars intended for operation on the U.S. general railroad system of transportation is $3,438.74 Over the 10-year period of analysis, the industry burden is approximately, $34,400 (undiscounted), $29,200 (present value (PV), 3%), and $20,400 (PV, 7%). Periodic Audit of Freight Car Manufacturers As part of FRA’s enforcement of the proposed rule, FRA expects to randomly audit freight car manufacturers to ensure compliance with the Act. Based on input from FRA subject matter experts, FRA would likely randomly audit one-third of the freight car manufacturers each year (approximately two freight car manufacturers each year). Based on FRA subject matter expert input, the likely audit process would compromise of FRA selecting one freight car order from the manufacturer’s product line and have the freight car manufacturer provide evidence of compliance. FRA would audit the bill of materials to determine if the manufacturer complied with this regulation. If the freight car manufacturer provides sufficient evidence to show its freight car is complaint with the rule, FRA would take no further action. Based on FRA subject matter expert input, FRA anticipates that the results of FRA’s random audit is that FRA will find all freight car manufacturers compliant with the proposed rule. Based on input from FRA subject matter experts, this analysis estimates that it would take four hours for a freight car manufacturer to retrieve existing information that shows compliance with this proposed rule and provide it to an FRA inspector. This analysis placed a relatively low hourly burden for the periodic audit because this proposed rule requires freight railroads to maintain records that show compliance. Thus, other than retrieving records that should already exist, freight car manufacturers would have no additional burden. With an estimated two audits per year, the audit burden for all freight car manufacturers is 8 hours 74 Industry burden for affirming compliance, annual = Number of freight cars introduced (35) * [time to write the document affirming compliance with the Act (1 hour) * administrative professional’s hour compensation rate ($70.79) + time to review and sign the document (15 minutes) * VP of engineering compensation rate ($109.80)] = $3,438. E:\FR\FM\08DEP1.SGM 08DEP1 85570 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules or $566.75 Over the 10-year period of analysis, the burden periodic audits of freight car manufacturers is approximately $5,700 (undiscounted), $4,800 (PV, 3%), and $3,400 (PV, 7%). Total Cost and Benefit for Industry As shown, in table 2, over the 10-year period of analysis, the industry burden is approximately $44,800 (undiscounted), $38,200 (PV, 3%), and $30,900 (PV, 7%). TABLE 2—FREIGHT CAR INDUSTRY, TOTAL COST, ROUND ($100) Total cost ($) Annualized ($) Type of cost Undiscounted PV 7% PV 3% PV 7% Compliance certification ....................................................... Periodic audit ....................................................................... 34,400 5,700 29,200 4,800 20,400 3,400 3,400 600 2,900 500 Total .............................................................................. 40,100 34,000 23,800 4,000 3,400 FRA is issuing this regulation as required by the Act. In this economic analysis, FRA qualitatively explains the potential benefits that may result from implementing the proposed rule. FRA requests public comment regarding these cost estimates and the benefit that would come from issuing the proposed rule. (4) Governmental Administrative Costs Issuing the proposed rule would create enforcement costs for FRA, including the review of freight car manufacturers certifying compliance, periodic audits of freight car manufacturers, and creating an annual report to Congress. Review of Certification of Compliance Reports Based on input from FRA subject matter experts, this analysis estimates that each year manufacturers introduce approximately 35 freight car orders and certify to FRA that their freight cars comply with this Act. FRA staff would spend approximately 30 minutes to review each of the 35 submissions. Therefore, FRA’s annual burden related to reviewing the manufacturer’s is $2,201.76 77 Over the 10-year period of analysis, the total burden is approximately $22,00 (undiscounted), khammond on DSKJM1Z7X2PROD with PROPOSALS PV 3% 75 Freight car manufacturers, participating in an audit, annual = Number of annual audits (2) * hours to prepare and participate in an audit (4 hours) * freight car administrative employee compensation rate ($70.78) = $566. 76 FRA headquarters staff salary estimated at the GS–14 step 5 rate Washington, DC) of $71.88 with a burden rate of 1.75 for an hourly burden rate of $125.79. See https://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/2023/generalschedule/. VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 $18,700 (present value (PV), 3%), and $13,000 (PV, 7%). FRA Periodic Audit of Freight Car Manufacturers As explained in the above section that describes industry burden, each year FRA expects to audit approximately two freight car manufacturers as part of FRA’s enforcement efforts. To minimize compliance costs, FRA would use FRA field staff who have duty stations in close proximity to the freight car manufacturing facility. However, based on subject matter expert input, in the first five years of implementation of the proposed rule, FRA expects that it would send both an FRA field inspector and FRA headquarters employee to conduct the audit. Beginning with the sixth year, FRA expects that only FRA field inspectors would conduct audits. Based on FRA subject matter expert input, FRA’s burden related to periodic audits of freight car manufacturers is 20 hours for FRA headquarters staff (4 hours to prepare for audit, 4 hours to conduct audit, and 12 hours of travel time) and 12 hours for FRA field staff (4 hours to prepare for audit, 4 hours to conduct audit, and 4 hours travel time). In addition, FRA will incur travel expenses of $500 for FRA headquarters staff and $100 for FRA field staff per audit. In the first year of analysis, the 77 FRA burden for affirming compliance, annual = Number of freight cars introduced (35) * [time to review affirmation (0.5 hour) * FRA headquarters employee compensation rate ($125.79) = $2,201. 78 FRA headquarters staff salary estimated at the GS–14 step 5 rate Washington DC) of $71.88 with a burden rate of 1.75 for an hourly burden rate of $125.79. FRA field staff salary estimated at the GS– 12 step 5 rate (Rest of United States) of $44.98 with a burden rate of 1.75 for an hourly burden rate of $78.72. See https://www.opm.gov/policy-dataoversight/pay-leave/salaries-wages/2023/generalschedule/. PO 00000 Frm 00052 Fmt 4702 Sfmt 4702 cost related to conducting two audit is $8,121.78 79 Over the 10-year period of analysis, FRA’s burden for conducting periodic audits is $51,000 (undiscounted), $45,300 (PV, 3%), and $34,800 (PV, 7%). Preparing an Annual Report to Congress After the final rule becomes effective, FRA expects that it will prepare and submit an annual report to Congress that would summarize all certification submissions that FRA received from all the manufacturers during the calendar year. FRA anticipates that it may include this report within its existing Fiscal Year Enforcement Report to Congress. Based on input from subject matter experts, it would take FRA staff approximately 24 hours to prepare and submit an annual report with an associated cost of $3,019.80 Over the 10year period of analysis, the costs of preparing and submitting annual reports to Congress is $30,200 (undiscounted), $25,600 (present value (PV), 3%), and $17,900 (PV, 7%). Total FRA Burden As shown, in table 3, over the 10-year period of analysis, FRA’s enforcement burden is approximately $103,200 (undiscounted), $89,600 (PV, 3%), and $65,700 (PV, 7%). 79 FRA audit burden, annual = number of audits per year (2 audits) * [FRA headquarters staff time per audit (20 hours) * FRA headquarters staff compensation rate ($125.79) + FRA headquarters staff travel expense ($500) + FRA field staff time per audit (12 hours) * FRA field staff compensation rate ($78.72) + FRA field staff travel expense ($100)] = 2 * $4,060 = $8,121. 80 Prepare and submit annual report to Congress, annual = FRA staff hourly labor burden rate ($125.79) * hours to complete and submit report (24 hours) = $3,019. E:\FR\FM\08DEP1.SGM 08DEP1 85571 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules TABLE 3—FRA ENFORCEMENT BURDEN FROM ISSUING THE PROPOSED RULE, TOTAL COST, ROUND ($100) Total cost ($) Annualized ($) Type of cost Undiscounted PV 3% PV 7% PV 3% PV 7% Review affirmations .............................................................. Periodic audit ....................................................................... Annual report to Congress ................................................... 22,000 51,000 30,200 18,700 45,300 25,600 13,000 34,800 17,900 2,200 5,300 3,000 1,900 5,000 2,500 Total cost ...................................................................... 103,200 89,600 65,700 10,500 9,400 (5) Summary of Regulatory Impact As shown below in table 4, the total impact that would come from issuing the proposed rule including the impact on industry and FRA is approximately $143,300 (undiscounted), $123,600 (PV, 3%), and $89,500 (PV, 7%). In this economic analysis, FRA qualitatively explains the potential benefits that may result from implementing the proposed rule, including addressing concerns related to compromised national security and potential corporate espionage if newly built freight cars with sensitive technology and active technological components necessary to the functionality of the sensitive technology from COC or SOE enter service into the U.S. general railroad system of transportation. FRA welcomes public comment related to the potential costs and benefits associated with implementing this proposed rule. TABLE 4—INDUSTRY COMPLIANCE BURDEN AND FRA’S ENFORCEMENT BURDEN, TOTAL COST, ROUND ($100) Total cost ($) Annualized ($) Entity Undiscounted PV 7% PV 3% PV 7% Industry costs ....................................................................... FRA costs ............................................................................ 40,100 103,200 34,000 89,600 23,800 65,700 4,000 10,500 3,400 9,400 Total cost ...................................................................... 143,300 123,600 89,500 14,500 12,800 (6) Alternatives Considered FRA considered different ways to interpret the Act related to satisfying its duties of issuing a rule. The following alternatives, the baseline alternative and reoccurring annual certification alternatives, provide insight into FRA’s decision-making process related to issuing this proposed rule pursuant to implementing the Act. Baseline Alternative The core of a regulatory impact analysis is an assessment of the benefits and costs of regulation in comparison to a ‘‘without regulation’’ (or ‘‘no action’’) baseline. If FRA did not issue this proposed rule, FRA would not implement the Act and would not codify a process for FRA to monitor and enforce industry compliance with the Act. If FRA failed to follow the statutory requirement of the Act, the Act may not be binding and FRA would not meet its statutory obligations. khammond on DSKJM1Z7X2PROD with PROPOSALS PV 3% Reoccurring Annual Certification Alternative FRA considered alternative interpretations of the statutory requirement in the Act, with the aim of ensuring that freight cars on the U.S. general railroad system of transportation comply with the Act. The first interpretation would require that freight VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 car owners submit annual certifications for each of the approximately 1.6 million freight cars in service on the U.S. general railroad system of transportation. The second interpretation would grandfather in existing freight cars and only require owners of freight cars built after the rule’s implementation date to submit annual certifications. The third interpretation would grandfather in existing freight cars but require any freight car owner that adds or replaces sensitive technology (including the active components within) on a freight car to submit an annual certification that the sensitive technology in each augmented freight car complies with the sensitive technology provision of the proposed rule. Under the first interpretation, each year freight car owners would need to ensure that all their freight cars comply with the Act. Not only would this interpretation not comport with FRA’s understanding that the Act applies to freight car manufacturers and not freight car owners, but it would also be problematic because existing freight car owners are unlikely to know the percentage of content of each freight car that comes from COCs or SOEs and whether the existing sensitive technology in each freight car was sourced from a COC or SOE. FRA determined that car owners lacked PO 00000 Frm 00053 Fmt 4702 Sfmt 4702 sufficient information to comply with this alternative. Under the second interpretation, owners of freight cars entering service after the implementation date would need to ensure that all aftermarket reconfigurations and repairs comply with the Act (both the content limitation and the sensitive technology sourcing provisions). Owners of freight cars would need to maintain records of the source origin for all parts in each augmented freight car. This alternative might help ensure that aftermarket reconfigurations of freight cars entering service after the implementation date would not use sensitive technology (including the active technological components within) that originate from a COC or SOE, this alternative would impose a significantly greater burden on both the industry (railroads and private car owners) and FRA as compared to the proposed rule. FRA is also concerned about how such an interpretation would impact Class III railroads and small private car owners. FRA welcomes public comment on this alternative. Under a third alternative, FRA would require that any freight car owner that adds or replaces sensitive technology (including the active technological components within) on a freight car submit an annual certification to affirm that the freight car maintained compliance with the sensitive E:\FR\FM\08DEP1.SGM 08DEP1 85572 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules technology limitations of the proposed rule. While this alternative may help protect the U.S. general railroad system of transportation from safety risks and data breaches, this alternative would impose a significantly greater burden on both the industry (railroads and private car owners) and FRA as compared to the proposed rule. Moreover, this alternative would not comport with FRA’s understanding that the Act applies to freight car manufacturers and not freight car owners. FRA welcomes public comment on this alternative. FRA concluded that the proposed rule strikes an appropriate balance between enhancing the safety and security of the U.S. general railroad system of transportation while minimizing the burden. B. Regulatory Flexibility Act and Executive Order 13272 The Regulatory Flexibility Act of 1980 81 and E.O. 13272 82 require agency review of proposed and final rules to assess their impacts on small entities. An agency must prepare an Initial Regulatory Flexibility Analysis (IRFA) unless it determines and certifies that a rule, if promulgated, would not have a significant economic impact on a substantial number of small entities. FRA has not determined whether this proposed rule would have a significant economic impact on a substantial number of small entities and provides the following IRFA. khammond on DSKJM1Z7X2PROD with PROPOSALS 1. Reasons for Considering Agency Action The Act mandates that FRA issue a regulation to monitor and enforce freight car manufacturers’’ compliance with the standards of the Act. FRA’s implementation of this regulation would carry out the Act’s mandate. 2. A Succinct Statement of the Objectives of, and the Legal Basis for, the Proposed Rule On November 15, 2021, President Biden signed the Act,83 which includes a mandate that FRA issue regulations to implement the statute.84 The Act provides that freight cars wholly manufactured after a certain date may only operate on the U.S. general railroad system of transportation if the cars are manufactured by a ‘‘qualified manufacturer’’ in a ‘‘qualified facility.’’ 81 5 U.S.C. 601 et seq. FR 53461 (Aug. 16, 2002). 83 49 U.S.C. 20171. See https:// www.whitehouse.gov/briefing-room/presidentialactions/2021/11/15/executive-order-onimplementation-of-the-infrastructure-investmentand-jobs-act/. 84 Id. at (c)(1). 82 67 VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 Further the Act prohibits newly built freight cars from being operated on the U.S. general railroad system of transportation, if they are manufactured: (1) with sensitive technology originating from a COC or sourced from a SOE; (2) with any components originating from a COC or sourced from a SOE with a history of problematic trade practices or respect for IP rights; or, (3) with components originating from a COC or sourced from a SOE exceeding 20 percent of the freight car after 1 year from the date of issuance of regulations or 15 percent of the freight car after 3 years from the date of issuance of regulations. The Act requires manufacturers to annually certify that they meet the requirements of the Act.85 3. A Description of, and Where Feasible, an Estimate of the Number of Small Entities to Which the Proposed Rule Would Apply Freight car manufacturers are classified within NAICS 336510 Railroad rolling stock manufacturing.86 The SBA size standard for NAICS 336510 is 1,500 employees.87 Based on FRA subject matter expert input, three of the six freight car manufacturers are considered small entities. Census data shows that there are 153 establishments 88 classified within NAICS 336510. Therefore, because freight car manufacturers that produce newly built freight railcars compromise of about four percent (6 of 153 establishments) of establishments classified within NAICS 336510, a breakdown of small entities using Census data for NAICS 336510 would not yield a reliable distribution of small firms by firm size (number of employees). Based on input from FRA subject matter experts, this analysis concludes that the three small freight car manufacturers currently comply with the proposed requirements in this rule related to content and sensitive 85 Id. at (c)(2). NAICS classification compromises establishments primarily engaged in one or more of the following: (1) manufacturing and/or rebuilding locomotives, locomotive frames, and parts; (2) manufacturing railroad, street, and rapid transit cars and car equipment for operation on rails for freight and passenger service; and (3) manufacturing rail layers, ballast distributors, rail tamping equipment, and other railway track maintenance equipment. https://www.census.gov/naics/ ?input=336510&year=2022&details=336510. 87 ‘‘Table of Small Business Size Standard’’, U.S. Small Business Administration, Size Standards effective as of March 17, 2023, p. 16 of 41 https:// www.sba.gov/document/support-table-sizestandards. 88 An establishment is a fixed physical location or permanent structure where some form of business activity is conducted. 86 This PO 00000 Frm 00054 Fmt 4702 Sfmt 4702 technology limitations. Therefore, this analysis concludes that the provisions related to content and sensitive technology limitations would not create a cost or benefit that would be borne by the three small freight car manufacturers. With respect to the three small freight car manufacturers, the proposed rule would create compliance costs 89 related to: (1) affirming newly designed freight cars comply with the Act; (2) annual certification of compliance letter; and (3) participation in a periodic audit of freight car manufacturers. Based on input from FRA subject matter experts, this analysis estimates that each year small manufacturers introduce approximately six unique freight car design builds. For each of these introductions, the small manufacturer would need to inform FRA that the new designs are compliant with the Act. Based on FRA subject matter expert input, this analysis assumes that an administrative professional in the freight car’s contract office would draft a document certifying compliance with the Act (1 hour) and a vice-president of engineering would review and sign the letter (15 minutes).90 Each year, the industry burden for small entities is $589,91 or approximately $200 per small manufacturer. Over the 10-year period of analysis, the industry burden is approximately $5,900 (undiscounted), $5,000 (present value (PV), 3%), and $4,000 (PV, 7%). Based on input from FRA subject matter experts, FRA expects to audit approximately one small freight car manufacturer each year, which would result in an annual burden on small manufacturers of 4 hours or $283,92 or approximately $90 per small freight car 89 These compliance cost estimates follow from the estimates in ‘‘VI. A. Executive Orders 12866.’’ 90 U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, National Industry-Specific Occupational Employment and Wage Statistics, May 2023 NAICS 336500 Railroad Rolling Stock Manufacturing ‘‘Sales and Related Occupations’’ $40.45 (mean wage), ‘‘Top Executives’’ ($62.74) [May 2023] https:// www.bls.gov/oes/current/naics4_336500.htm. When estimating labor burden, this analysis added a compensation factor of 1.75, so the administrative employee’s hourly burden rate is $70.79 and the VP of engineering’s hourly burden rate is $109.80. 91 Industry burden for affirming compliance, annual = Number of freight car designs introduced (6) * [time to write the document affirming compliance with the Act (1 hour) * administrative professional’s hour compensation rate ($70.79) + time to review and sign the document (15 minutes) * VP of engineering compensation rate ($109.80)] = $589. 92 Freight car manufacturers, participating in an audit, annual (undiscounted) = Number of annual audits (1) * hours to prepare and participate in an audit (4 hours) * freight car employee compensation rate ($70.79) = $283. E:\FR\FM\08DEP1.SGM 08DEP1 85573 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules manufacturer. Over the 10-year period of analysis, the burden of periodic audits on small manufacturers is $2,800 (undiscounted), $2,400 (PV, 3%), and $1,900 (PV, 7%). The total cost for small freight car manufacturers is approximately $8,700 (undiscounted),93 $7,400 (PV, 3%), and $5,200 (PV, 7%). The annualized burden for small freight cars related to participating in an FRA audit is approximately $900 (PV, 3%), or approximately $300 per small freight car manufacturer. Based on subject matter expert input, each of the three small freight car manufacturers have annual revenue exceeding $1 million. Therefore, issuing the proposed rule would result in an annual burden for each of the small freight car manufacturers of less than one-tenth of one-percent of its annual revenue. FRA has not determined whether this proposed rule would have a significant economic impact on a substantial number of small entities. FRA welcomes public comment on these findings and conclusion. 4. A Description of the Projected Reporting, Recordkeeping, and Other Compliance Requirements of the Rule, Including an Estimate of the Class of Small Entities That Would Be Subject to the Requirements and the Type of Professional Skill Necessary for Preparation of the Report or Record The proposed rule would create three reporting, recordkeeping, and other compliance requirements. The three affected freight car manufacturers would need to make a dedicated service notification to FRA, submit an annual certification of compliance to FRA, and maintain and make available to FRA records that affirm compliance with the Act. The types of professional skills necessary for preparing and maintaining these reports include administrative professional skills (basic accounting, writing, organizing) and clerical skills. 5. Identification, to the Extent Practicable, of All Relevant Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rule For a list of all Federal rules that may duplicate, overlap, or conflict with this proposed rule, please see the rules described in section II. above. 6. A Description of Significant Alternatives to the Rule FRA considered three significant alternative interpretations to the proposed rule with the aim of ensuring that freight cars on the U.S. general CFR section Respondent universe 215.5(d)(6)—Dedicated Service—Notification to FRA. 215.403(a)(1)—Certification of Compliance—Manufacturers to electronically certify to FRA that the cars comply with the requirements of this subpart (New requirement). —(a)(1)(ii) Records and such records shall be made available to FRA upon request (New requirement). khammond on DSKJM1Z7X2PROD with PROPOSALS Total 97 ................................................... railroad system of transportation comply with the Act. The first interpretation would require that all freight car owners submit annual certifications for each of the approximately 1.6 million freight cars in service on U.S. general railroad system of transportation. The second interpretation would grandfather in existing freight cars and only require owners of freight cars built after the rule’s implementation date to submit annual certifications with the Act. The third interpretation would grandfather in existing freight cars, but require any freight car owner that adds or replaces sensitive technology (including the active components within) on a freight car to submit an annual certification with the Act; specifying that the sensitive technology in each augmented freight car complies with the sensitive technology provision of the proposed rule. As explained in section VI. Regulatory Impact and Notices A. Executive Order 12866, FRA concluded that the primary alternative is preferred to each of these significant alternatives. C. Paperwork Reduction Act The information collection requirements in this proposed rule are being submitted for approval to OMB 94 under the Paperwork Reduction Act of 1995.95 The information collection requirements and the estimated time to fulfill each requirement are as follows: Total annual responses Average time per response (hours) Total annual burden hours Total cost equivalent in U.S. dollars (A) (B) (C) = (A * B) (D) = (C * wage rates) 96 784 railroads ............. 4 notifications ............ 1 4.00 $311.64 6 manufacturers ........ 35 Affirmations .......... 1.25 43.75 2,786.00 6 manufacturers ........ 0.33 report ................ 6 1.98 126.09 784 railroads + 6 manufacturers. 39.33 notifications ..... N/A 49.73 3,223.73 All estimates include the time for reviewing instructions; searching existing data sources; gathering or maintaining the needed data; and reviewing the information. Pursuant to 44 U.S.C. 3506(c)(2)(B), FRA solicits comments concerning: whether these information collection requirements are necessary for the proper performance of 93 Total cost, small manufacturers (undiscounted) = affirming newly built cars comply with Act ($5,900) + participation in periodic audit ($2,800) = $8,700. 94 FRA will be using the OMB control number (OMB No. 2130–0502) that was issued with when the previous NPRM was issued in 1979 for this information collection. 95 44 U.S.C. 3501 et seq. 96 The dollar equivalent cost is derived from U.S. Bureau of Labor Statistics, 2021 NAICS 336500— Railroad Rolling Stock Manufacturing; 13–1000 Business Operations Specialist median wage $63.68 ($36.39 + 1.75 overhead costs. The one exception is section 215.5(d)(6), which is derived from the Surface Transportation Board’s Full Year Wage 2021, group 200 Professional and Administrative. 97 Totals may not add due to rounding. VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 PO 00000 Frm 00055 Fmt 4702 Sfmt 4702 E:\FR\FM\08DEP1.SGM 08DEP1 85574 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS the functions of FRA, including whether the information has practical utility; the accuracy of FRA’s estimates of the burden of the information collection requirements; the quality, utility, and clarity of the information to be collected; and whether the burden of collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology, may be minimized. Organizations and individuals desiring to submit comments on the collection of information requirements or to request a copy of the paperwork package submitted to OMB should contact Ms. Arlette Mussington, Information Collection Clearance Officer, at email: arlette.mussington@dot.gov or telephone: (571) 609–1285 or Ms. Joanne Swafford, Information Collection Clearance Officer, at email: joanne.swafford@dot.gov or telephone: (757) 897–9908. OMB is required to make a decision concerning the collection of information requirements contained in this proposed rule between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. The final rule will respond to any OMB or public comments on the information collection requirements contained in this proposal. FRA is not authorized to impose a penalty on persons for violating information collection requirements that do not display a current OMB control number, if required. D. Federalism Implications Executive Order 13132, Federalism,98 requires FRA to develop an accountable process to ensure ‘‘meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.’’ ‘‘Policies that have federalism implications’’ are defined in the Executive order to include regulations that have ‘‘substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.’’ Under Executive Order 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal Government provides the funds necessary to pay the direct compliance costs incurred by State and local 98 64 FR 43255 (Aug. 10, 1999). VerDate Sep<11>2014 17:24 Dec 07, 2023 governments or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation. FRA has analyzed this proposed rule in accordance with the principles and criteria contained in Executive Order 13132. FRA has determined that this proposed rule has no federalism implications, other than the possible preemption of State laws under 49 U.S.C. 20106. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply, and preparation of a federalism summary impact statement for the proposed rule is not required. E. International Trade Impact Assessment The Trade Agreements Act of 1979 prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. This proposed rule is not expected to affect trade opportunities for U.S. firms doing business overseas or for foreign firms doing business in the United States. F. Environmental Impact FRA has evaluated this proposed rule consistent with the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq.), the Council of Environmental Quality’s NEPA implementing regulations at 40 CFR parts 1500 through 1508, and FRA’s NEPA implementing regulations at 23 CFR part 771 and determined that it is categorically excluded from environmental review and therefore does not require the preparation of an environmental assessment (EA) or environmental impact statement (EIS). Categorical exclusions (CEs) are actions identified in an agency’s NEPA implementing regulations that do not normally have a significant impact on the environment and therefore do not require either an EA or EIS.99 Specifically, FRA has determined that this proposed rule is categorically excluded from detailed environmental review pursuant to 23 CFR 99 40 Jkt 262001 PO 00000 CFR 1508.4. Frm 00056 Fmt 4702 Sfmt 4702 771.116(c)(15), ‘‘[p]romulgation of rules, the issuance of policy statements, the waiver or modification of existing regulatory requirements, or discretionary approvals that do not result in significantly increased emissions of air or water pollutants or noise.’’ The main purpose of this rulemaking is to revise FRA’s FCSS to reduce unnecessary costs and provide regulatory flexibility while maintaining safety. This rulemaking would not directly or indirectly impact any environmental resources and would not result in significantly increased emissions of air or water pollutants or noise. In analyzing the applicability of a CE, FRA must also consider whether unusual circumstances are present that would warrant a more detailed environmental review.100 FRA has concluded that no such unusual circumstances exist with respect to this proposed rule and it meets the requirements for categorical exclusion under 23 CFR 771.116(c)(15). Pursuant to section 106 of the National Historic Preservation Act and its implementing regulations, FRA has determined this undertaking has no potential to affect historic properties.101 FRA has also determined that this rulemaking does not approve a project resulting in a use of a resource protected by section 4(f).102 G. Environmental Justice Executive Order 12898, ‘‘Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations’’ require DOT agencies to achieve environmental justice 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 populations and low-income populations. DOT Order 5610.2C (‘‘U.S. Department of Transportation Actions to Address Environmental Justice in Minority Populations and Low-Income Populations’’) instructs DOT agencies to address compliance with Executive Order 12898 and requirements within DOT Order 5610.2C in rulemaking activities, as appropriate, and also requires consideration of the benefits of transportation programs, policies, and 100 23 CFR 771.116(b). 16 U.S.C. 470. 102 See Department of Transportation Act of 1966, as amended (Pub. L. 89–670, 80 Stat. 931); 49 U.S.C. 303. 101 See E:\FR\FM\08DEP1.SGM 08DEP1 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules other activities where minority populations and low-income populations benefit, at a minimum, to the same level as the general population as a whole when determining impacts on minority and low-income populations.103 FRA has evaluated this proposed rule under Executive Orders 12898, 14096 and DOT Order 5610.2C and has determined it would not cause disproportionate and adverse human health and environmental effects on communities with environmental justice concerns. H. Unfunded Mandates Reform Act of 1995 Under section 201 of the Unfunded Mandates Reform Act of 1995,104 each Federal agency ‘‘shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).’’ Section 202 of the Act (2 U.S.C. 1532) further requires that ‘‘before promulgating any general notice of proposed rulemaking that is likely to result in promulgation of any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement’’ detailing the effect on State, local, and tribal governments and the private sector. This proposed rule would not result in the expenditure, in the aggregate, of $100,000,000 or more (as adjusted annually for inflation) in any one year, and thus preparation of such a statement is not required. khammond on DSKJM1Z7X2PROD with PROPOSALS I. Energy Impact Executive Order 13211, ‘‘Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,’’ requires Federal agencies to prepare a Statement of Energy Effects for any ‘‘significant energy action.’’ 105 FRA evaluated this proposed rule under Executive Order 13211 and determined that this regulatory action is not a ‘‘significant 103 Executive Order 14096 ‘‘Revitalizing Our Nation’s Commitment to Environmental Justice,’’ issued on April 26, 2023, supplements Executive Order 12898, but is not currently referenced in DOT Order 5610.2C. 104 Public Law 104–4, 2 U.S.C. 1531. 105 66 FR 28355 (May 22, 2001). VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 energy action’’ within the meaning of Executive Order 13211. J. Privacy Act Statement In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to www.regulations.gov, as described in the system of records notice, DOT/ALL–14 FDMS, accessible through www.dot.gov/privacy. To facilitate comment tracking and response, we encourage commenters to provide their name, or the name of their organization; however, submission of names is completely optional. Whether or not commenters identify themselves, all timely comments will be fully considered. If you wish to provide comments containing proprietary or confidential information, please contact the agency for alternate submission instructions. List of Subjects in 49 CFR Part 215 Freight cars, Infrastructure Investment and Jobs Act. The Proposed Rule For the reasons discussed in the preamble, FRA proposes to amend part 215 of chapter II, subtitle B of title 49, Code of Federal Regulations, as follows: PART 215—RAILROAD FREIGHT CAR SAFETY STANDARDS 1. The authority citation for part 215 is revised to read as follows: ■ Authority: 49 U.S.C. 20171(c)(1), 49 U.S.C. 20102–03, 20107, 20133, 20137–38, 20143, 20701–03, 21301–02, 21304; 28 U.S.C. 2401, note; and 49 CFR 1.49. ■ 2. Revise § 215.5 to read as follows: § 215.5 Definitions. As used in this part: Break means a fracture resulting in complete separation into parts; Component means a part or subassembly of a railroad freight car; Control means the power, whether direct or indirect and whether or not exercised, through the ownership of a majority or a dominant minority of the total outstanding voting interest in an entity; representation on the board of directors of an entity; proxy voting on the board of directors of an entity; a special share in the entity; a contractual arrangement with the entity; a formal or informal arrangement to act in concert with an entity; or any other means, to determine, direct, make decisions, or cause decisions to be made for the entity; Cost of sensitive technology means the aggregate cost of the sensitive PO 00000 Frm 00057 Fmt 4702 Sfmt 4702 85575 technology located on a railroad freight car. Country of concern means a country that— (1) Was identified by the Department of Commerce as a nonmarket economy country (as defined in section 771(18) of the Tariff Act of 1930 (19 U.S.C. 1677(18))) as of November 15, 2021; (2) Was identified by the United States Trade Representative in the most recent report required by section 182 of the Trade Act of 1974 (19 U.S.C. 2242) as a foreign country included on the priority watch list (as defined in subsection (g)(3) of such section); and (3) Is subject to monitoring by the Trade Representative under section 306 of the Trade Act of 1974 (19 U.S.C. 2416). Dedicated service means the exclusive assignment of cars to the transportation of freight between specified points under the following conditions: (1) The cars are operated— (i) Primarily on track that is inside an industrial or other non-railroad installation; and (ii) Only occasionally over track of a railroad; (2) The cars are not operated— (i) At speeds of more than 15 miles per hour; and (ii) Over track of a railroad— (A) For more than 30 miles in one direction; or (B) On a round trip of more than 60 miles; (3) The cars are not freely interchanged among railroads; (4) The words ‘‘Dedicated Service’’ are stenciled, or otherwise displayed, in clearly legible letters on each side of the car body; (5) The cars have been examined and found safe to operate in dedicated service; and (6) The railroad must— (i) Notify FRA in writing that the cars are to be operated in dedicated service; (ii) Identify in that notice— (A) The railroads affected; (B) The number and type of cars involved; (C) The commodities being carried; and (D) The territorial and speed limits within which the cars will be operated; and (iii) File the notice required by this paragraph (6)(iii) of the definition not less than 30 days before the cars operate in dedicated service; In service when used in connection with a railroad freight car, means each railroad freight car subject to this part unless the car: (1) Has a ‘‘bad order’’ or ‘‘home shop for repairs’’ tag or card containing the E:\FR\FM\08DEP1.SGM 08DEP1 khammond on DSKJM1Z7X2PROD with PROPOSALS 85576 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules prescribed information attached to each side of the car and is being handled in accordance with § 215.9; (2) Is in a repair shop or on a repair track; (3) Is on a storage track and is empty; or (4) Has been delivered in interchange but has not been accepted by the receiving carrier. Net cost has the meaning given such term in chapter 4 of the USMCA or any subsequent free trade agreement between the United States, Mexico, and Canada. Qualified facility means a facility that is not owned or under the control of a state-owned enterprise. Qualified manufacturer means a railroad freight car manufacturer that is not owned or under the control of a state-owned enterprise. Railroad means all forms of nonhighway ground transportation that run on rails or electromagnetic guideways, including: (1) Commuter or other short-haul rail passenger service in a metropolitan or suburban area, and (2) High speed ground transportation systems that connect metropolitan areas, without regard to whether they use new technologies not associated with traditional railroads. Such term does not include rapid transit operations within an urban area that are not connected to the general railroad system of transportation. Railroad freight car means a car designed to carry freight or railroad personnel by rail, including— (1) A box car; (2) A refrigerator car; (3) A ventilator car; (4) An intermodal well car; (5) A gondola car; (6) A hopper car; (7) An auto rack car; (8) A flat car; (9) A special car; (10) A caboose car; (11) A tank car; and (12) A yard car. Sensitive technology means any device embedded with electronics, software, sensors, or other connectivity, that enables the device to connect to, collect data from, or exchange data with another device, including— (1) Onboard telematics; (2) Remote monitoring software; (3) Firmware; (4) Analytics; (5) Global positioning system satellite and cellular location tracking systems; (6) Event status sensors; (7) Predictive component condition and performance monitoring sensors; and VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 (8) Similar sensitive technologies embedded into freight railcar components and sub-assemblies. State inspector means an inspector who is participating in investigative and surveillance activities under section 206 of the Federal Railroad Safety Act of 1970 (45 U.S.C. 435). State-owned enterprise means— (1) An entity that is owned by, or under the control of, a national, provincial, or local government of a country of concern, or an agency of such government; or (2) An individual acting under the direction or influence of a government or agency described in paragraph (1) of this definition. Substantially transformed means a component of a railroad freight car that undergoes an applicable change in tariff classification as a result of the manufacturing process, as described in chapter 4 and related annexes of the USMCA or any subsequent free trade agreement between the United States, Mexico, and Canada. USMCA. The acronym ‘USMCA’ has the meaning given the term in section 3 of the United States-Mexico-Canada Agreement Implementation Act (19 U.S.C. 4502). ■ 3. Add subpart E to part 215 to read as follows: Subpart E—Manufacturing Sec. 215.401 Requirements for railroad freight cars placed into service in the United States. 215.403 Certification of compliance. 215.405 Prohibition on registering noncompliant railroad freight cars. 215.407 Civil penalties. Subpart E—Manufacturing § 215.401 Requirements for railroad freight cars placed into service in the United States. (a) Limitation on railroad freight cars. A railroad freight car wholly manufactured on or after [DATE 365 DAYS AFTER DATE OF PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER] may only operate on the United States general railroad system of transportation if: (1) The railroad freight car is manufactured, assembled, and substantially transformed, as applicable, by a qualified manufacturer in a qualified facility; (2) None of the sensitive technology located on the railroad freight car, including components necessary to the functionality of the sensitive technology, originates from a country of concern or is sourced from a stateowned enterprise; and PO 00000 Frm 00058 Fmt 4702 Sfmt 4702 (3) None of the content of the railroad freight car, excluding sensitive technology, originates from a country of concern or is sourced from a stateowned enterprise that has been determined by a recognized court or administrative agency of competent jurisdiction and legal authority to have violated or infringed valid United States intellectual property rights of another including such a finding by a Federal district court under title 35 or the U.S. International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337). (b) Limitation on railroad freight car content. (1) Percentage limitation— (i) Initial limitation. Not later than [DATE 365 DAYS AFTER DATE THE FINAL RULE IS ISSUED], a railroad freight car described in paragraph (a) of this section may operate on the United States general railroad system of transportation only if not more than 20 percent of the content of the railroad freight car, calculated by the net cost of all components of the car and excluding the cost of sensitive technology, originates from a country of concern or is sourced from a state-owned enterprise. (ii) Subsequent limitation. Effective beginning on [DATE 1461 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], a railroad freight car described in paragraph (a) of this section may operate on the United States general railroad system of transportation only if not more than 15 percent of the content of the railroad freight car, calculated by the net cost of all components of the car and excluding the cost of sensitive technology, originates from a country of concern or is sourced from a state-owned enterprise. (2) Conflict. The percentages specified in the clauses in paragraphs (b)(1)(i) and (ii) of this section, as applicable, shall apply notwithstanding any apparent conflict with provisions of chapter 4 of the USMCA. § 215.403 Certification of compliance. (a) Certification required. To be eligible to provide a railroad freight car for operation on the United States general railroad system of transportation, the manufacturer of such car shall certify, at least annually, to the Railroad Administrator that any railroad freight cars to be so provided comply with the 49 U.S.C. 20171. (1) Certification procedure. Prior to providing any cars for operation on the United States general railroad system of transportation, each freight car manufacturer shall certify to FRA that the cars comply with the 49 U.S.C. E:\FR\FM\08DEP1.SGM 08DEP1 Federal Register / Vol. 88, No. 235 / Friday, December 8, 2023 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS 20171. Such certification shall be submitted via electronic mail by an authorized representative of the manufacturer to FRAMP&E@dot.gov. A manufacturer may submit this certification to FRA annually provided it covers all cars to be provided in the relevant year, or a manufacturer may submit separate certifications throughout the year. (i) The certification shall include the statement ‘‘I certify that all freight cars that will be provided for operation on the United States general railroad system of transportation will comply with the 49 U.S.C. 20171, and the implementing regulations at 49 CFR part 215’’ and contain: (A) The manufacturer’s name and address; (B) The name, signature, and contact information for the person designated to certify compliance with this subpart; and (C) A car identification number for each car being certified. (ii) Manufacturers shall maintain records showing the information, including the calculations, made to VerDate Sep<11>2014 17:24 Dec 07, 2023 Jkt 262001 support certification under this section and such records shall be made available to FRA upon request. (2) Valid certification required. At the time a railroad freight car begins operation on the United States general railroad system of transportation, the manufacturer of such railroad freight car shall have valid certification described in paragraph (a) of this section for the year in which such car begins operation. (b) [Reserved] § 215.405 Prohibition on registering noncompliant railroad freight cars. (a) Cars prohibited. A railroad freight car manufacturer may not register, or cause to be registered, a railroad freight car that does not comply with the requirements under this subpart in the Umler system. (b) [Reserved] § 215.407 Civil penalties. (a) In general. A railroad freight car manufacturer that has manufactured a railroad freight car for operation on the United States freight railroad interchange system that the Secretary of PO 00000 Frm 00059 Fmt 4702 Sfmt 9990 85577 Transportation determines, after written notice and an opportunity for a hearing, has violated this subpart is liable to the United States Government for a civil penalty of at least $100,000, but not more than $250,000, for each such violation for each railroad freight car. (b) Prohibition for violations. The Secretary of Transportation may prohibit a railroad freight car manufacturer with respect to which the Secretary has assessed more than 3 violations under this section from providing additional railroad freight cars for operation on the United States freight railroad interchange system until the Secretary determines: (1) Such manufacturer is in compliance with this section; and (2) All civil penalties assessed to such manufacturer pursuant to this section have been paid in full. Issued in Washington, DC. Amitabha Bose, Administrator. [FR Doc. 2023–26133 Filed 12–7–23; 8:45 am] BILLING CODE 4910–06–P E:\FR\FM\08DEP1.SGM 08DEP1

Agencies

[Federal Register Volume 88, Number 235 (Friday, December 8, 2023)]
[Proposed Rules]
[Pages 85561-85577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26133]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 215

[Docket No. FRA-2023-0021, Notice No. 1]
RIN 2130-AC94


Freight Car Safety Standards Implementing the Infrastructure 
Investment and Jobs Act

AGENCY: Federal Railroad Administration (FRA), Department of 
Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

-----------------------------------------------------------------------

SUMMARY: FRA is proposing to amend the Freight Car Safety Standards 
(FCSS) to implement section 22425 of the Infrastructure Investment and 
Jobs Act (Act). The Act places certain restrictions on newly built 
freight cars placed into service in the United States (U.S.) including 
limiting content that originates from a country of concern (COC) or is 
sourced from a state-owned enterprise (SOE) and prohibiting the use of 
sensitive technology that originates from a COC or SOE. The Act 
mandates that FRA issue a regulation to monitor and enforce industry's 
compliance with the standards of the Act.

DATES: Comments on the proposed rule must be received by February 6, 
2024. Comments received after that date will be considered to the 
extent practicable.

ADDRESSES: 
    Comments: Comments related to Docket No. FRA-2023-21 may be 
submitted by going to https://www.regulations.gov and following the 
online instructions for submitting comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to https://www.regulation.gov; this includes any personal 
information. Please see the Privacy Act heading in the SUPPLEMENTARY 
INFORMATION section of this document for Privacy Act information 
related to any submitted comments or materials.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov and follow the 
online instructions for accessing the docket.

FOR FURTHER INFORMATION CONTACT: Check Kam, Mechanical Engineer, Office 
of Railroad Safety at (202) 366-2139, email: [email protected]; or 
Michael Masci, Senior Attorney, Office of the Chief Counsel, telephone: 
(202) 302-7117, email: [email protected].

SUPPLEMENTARY INFORMATION:

Abbreviations and Terms Used in This Document

CBP--Customs and Border Protection
CE--Categorical Exclusion
CFR--Code of Federal Regulations
COC--Country of Concern
DOT--Department of Transportation
EA--Environmental Assessment
EIS--Environmental Impact Statement
FCSS--Freight Car Safety Standards
FR--Federal Register
FRA--Federal Railroad Administration
FTA--Federal Transit Administration
GS--General Schedule
IIJA Infrastructure Investment and Jobs Act
IP--Intellectual Property
IRFA--Initial Regulatory Flexibility Analysis

[[Page 85562]]

NAFTA--North American Free Trade Agreement
NEPA--National Environmental Policy Act
NPRM--Notice of Proposed Rulemaking
OMB--Office of Management and Budget
PRA--The Paperwork Reduction Act
RSA--Rail Security Alliance
SOE--State-owned enterprise
Umler--Universal Machine Language Equipment Register
U.S.--United States
U.S. DOC--United States Department of Commerce
U.S.C.--United States Code
USITC--U.S. International Trade Commission
USMCA--United States-Mexico-Canada Agreement
USTR--U.S. Trade Representative

Table of Contents for Supplementary Information

I. Executive Summary
II. Infrastructure Investment and Jobs Act Background
III. Application of the Infrastructure Investment and Jobs Act to 
Railroad Freight Car Manufacturers Including Discussions With RSA
    A. The Infrastructure Investment and Jobs Act Content 
Limitations Apply Only at the Time of Manufacture
    B. After-Manufacture Changes Are Not Covered by the 
Infrastructure Investment and Jobs Act
    C. Railroad Freight Cars Already Placed in Service in the U.S. 
Are Not Subject to the Infrastructure Investment and Jobs Act
    D. The Infrastructure Investment and Jobs Act Requirements Apply 
Only to Manufacturers, Not Railroads
IV. Overview of the Proposal To Implement the Infrastructure 
Investment and Jobs Act Requirement for Freight Car Compliance 
Certification
V. Section-by-Section Analysis
VI. Regulatory Impact and Notices
    A. Executive Order 12866 as Amended by Executive Order 14094
    B. Regulatory Flexibility Act and Executive Order 13272
    C. Paperwork Reduction Act
    D. Federalism Implications
    E. International Trade Impact Assessment
    F. Environmental Impact
    G. Environmental Justice
    H. Unfunded Mandates Reform Act of 1995
    I. Energy Impact
    J. Privacy Act Statement

I. Executive Summary

Purpose of the Regulatory Action

    FRA is issuing this rulemaking as required by the Act.\1\ The Act 
provides that a railroad freight car, wholly manufactured on or after 
the date that is 1 year after the date of issuance of regulations, may 
only operate on the U.S. general railroad system if: (1) the railroad 
freight car is manufactured, assembled, and substantially transformed, 
as applicable, by a qualified manufacturer in a qualified facility; (2) 
none of the sensitive technology located on the railroad freight car, 
including components necessary to the functionality of the sensitive 
technology, originates from a COC or is sourced from a SOE; and (3) 
none of the content of the railroad freight car, excluding sensitive 
technology, originates from a COC or is sourced from a SOE that has 
been determined by a recognized court or administrative agency of 
competent jurisdiction and legal authority to have violated or 
infringed valid United States intellectual property rights of another 
including such a finding by a Federal district court under title 35 or 
the U.S. International Trade Commission under section 337 of the Tariff 
Act of 1930 (19 U.S.C. 1337).\2\
---------------------------------------------------------------------------

    \1\ The Infrastructure Investment and Jobs Act (IIJA), Sec. 
22425, Public Law 117-58, 135 Stat. 752 (Nov. 15, 2021) (codified at 
49 U.S.C. 20171) and generally referred to in this proposed rule as 
the Act, or section 20171).
    \2\ 49 U.S.C. 20171(b)(1).
---------------------------------------------------------------------------

    The Act further provides percentage limitations on freight car 
contents so that not later than one year after the date of issuance of 
regulations, a railroad freight car, even if complying with the 
requirements in the preceding paragraph, may not operate on the U.S. 
general railroad system if more than 20 percent of the content of the 
railroad freight car, calculated by the net cost of all components of 
the car and excluding the cost of sensitive technology, originates from 
a COC or is sourced from a SOE. After three years from the date of 
issuance of regulations, the percentage may not be more than 15 
percent.\3\
---------------------------------------------------------------------------

    \3\ Id. at (b)(2).
---------------------------------------------------------------------------

Summary of the Regulatory Action

    The Act requires regulations to be issued to implement its mandate 
and for freight car manufacturers to certify that freight cars covered 
by the Act are in compliance.\4\ This regulation would codify a process 
for FRA to monitor and enforce compliance with the Act. To carry out 
the Act's certification requirement, FRA is proposing to require 
railroad freight car manufacturers to electronically certify to FRA 
that each freight car complies with the Act before it operates on the 
U.S. general railroad system of transportation. The certification would 
be required to identify each car being offered for operation, and 
include the manufacturer's name and the name of the individual 
responsible for certifying compliance with the Act. In addition, the 
manufacturers would be required to maintain all records showing 
information to support certification, including content calculations, 
and such records would be made available to FRA upon request.
---------------------------------------------------------------------------

    \4\ The Act requires certification to the ``Secretary of 
Transportation.'' Pursuant to 49 CFR 1.89(a), the Secretary has 
delegated that authority to FRA.
---------------------------------------------------------------------------

Costs and Benefits of the Proposed Regulatory Action

    This proposed rule would fulfill FRA's obligation to issue a 
rulemaking that would implement the Act. In section ``VI. A. Executive 
Order 12866 as Amended by Executive Order 14094'' of this proposed 
rule, FRA describes the benefits and costs that would come from issuing 
this regulation.
    Over a 10-year period of analysis, FRA quantifies the following 
costs to the freight car manufacturing industry and FRA that would come 
from issuing this proposed rule: (1) limiting content sourced from COCs 
or SOEs; (2) prohibiting the use of sensitive technology from these 
sources; (3) industry compliance costs; and (4) government 
administrative monitoring and enforcement costs. As shown in table 1, 
the cost from issuing the proposed rule is approximately $143,300 
(undiscounted), $123,600 (present value (PV), 3%), and $89,500 (PV, 
7%). The annualized net costs are approximately $14,500 (PV, 3%) and 
$12,800 (PV, 7%).\5\
---------------------------------------------------------------------------

    \5\ All cost and benefits estimates are in 2022 dollars.

           Table 1--Industry and FRA Burden From Issuing the Proposed Rule, Total Cost, Rounded ($100)
----------------------------------------------------------------------------------------------------------------
                                                  Total cost ($)                          Annualized ($)
             Entity              -------------------------------------------------------------------------------
                                   Undiscounted        PV 3%           PV 7%           PV 3%           PV 7%
----------------------------------------------------------------------------------------------------------------
Industry costs..................          40,100          34,000          23,800           4,000           3,400
FRA costs.......................         103,200          89,600          65,700          10,500           9,400
                                 -------------------------------------------------------------------------------

[[Page 85563]]

 
    Total cost..................         143,300         123,600          89,500          14,500          12,800
----------------------------------------------------------------------------------------------------------------

    In the economic analysis section, FRA qualitatively explains the 
potential benefits that may result from implementing the proposed rule. 
Issuing the proposed rule would protect the U.S. rail system from risks 
that come from manufacturing freight cars with sensitive technology and 
technological components, necessary to the functionality of the 
sensitive technology, from a COC or SOE such as potential 
vulnerabilities in information security. As such, this proposed rule 
would mitigate potential issues related to compromised national 
security and corporate espionage. Issuing the proposed rule would also 
fulfill FRA's duties as required by the Act. As mentioned in the 
economic analysis section, FRA welcomes public comment to assess the 
potential costs and benefits associated with implementing this proposed 
rule.

II. Infrastructure Investment and Jobs Act Background

    On November 15, 2021, President Biden signed the Act,\6\ which 
includes a mandate that FRA issue regulations to implement it.\7\ In 
general, the Act allows freight cars, wholly manufactured after a 
certain date, to operate in the U.S. only if the cars are manufactured 
by a ``qualified manufacturer'' in a ``qualified facility.'' \8\ The 
Act defines ``qualified manufacturer'' as a ``freight car manufacturer 
that is not owned or under the control of a state-owned enterprise.'' 
\9\ Similarly, the Act defines ``qualified facility'' as ``a facility 
that is not owned or under the control of a state-owned enterprise.'' 
\10\ The Act defines ``state-owned enterprise'' as an entity that is 
owned by, or under the control of, a government or agency of a COC or 
an individual acting under the direction or influence of a government 
or agency of a COC.\11\
---------------------------------------------------------------------------

    \6\ 49 U.S.C. 20171. See https://www.whitehouse.gov/briefing-room/presidential-actions/2021/11/15/executive-order-on-implementation-of-the-infrastructure-investment-and-jobs-act/.
    \7\ Id. at (c)(1).
    \8\ Id. at (b)(1)(A).
    \9\ Id. at (a)(7).
    \10\ Id. at (a)(6).
    \11\ Id. at (a)(10).
---------------------------------------------------------------------------

    The Act provides a three-pronged definition of a COC. First, to be 
a COC under the Act, a country must have been identified by the U.S. 
Department of Commerce as a nonmarket economy country as of the date of 
enactment of the Passenger Rail Expansion and Rail Safety Act of 2021 
(i.e., as of November 15, 2021).\12\ Second, a country must have been 
identified by the USTR in the most recent report under section 182 of 
the Trade Act of 1974 (Section 301 Report) as a foreign country 
included on the ``priority watch list.'' \13\ Finally, a country must 
also be subject to USTR monitoring under section 306 of the Trade Act.
---------------------------------------------------------------------------

    \12\ Id. at (a)(4)(A).
    \13\ Id. at (a)(4)(B). Section 182 of the Trade Act of 1974 (19 
U.S.C. 2242), commonly known as the ``Special 301 provisions,'' 
requires the U.S. Trade Representative (USTR) to identify countries 
that deny adequate and effective IP protections or fair and 
equitable market access to U.S. persons who rely on IP protection. 
The Trade Act requires the USTR to determine which, if any, of these 
countries to identify as Priority Foreign Countries. Such a 
designation can subject those countries to particular processes 
under the Trade Act.
---------------------------------------------------------------------------

    In recent years, Congress has taken action concerning rail 
equipment and components manufactured by or sourced from COCs or 
SOEs.\14\ Generally, these laws limit the availability of Federal funds 
for certain equipment or projects funded or controlled by foreign 
entities. For example, the National Defense Authorization Act limits 
the use of FTA funds, and in some circumstances, local funds, to 
procure rolling stock from certain transit vehicle manufacturers who 
``are owned or controlled by, is a subsidiary of, or is otherwise 
related legally or financially to a corporation based in'' certain 
foreign countries.\15\ However, because the freight rail car sector and 
its equipment are privately owned, those laws do not apply to the 
freight rail car industry. Congress has now extended similar 
limitations on rail equipment and components manufactured by or sourced 
from COCs or SOEs to the freight rail car industry by issuing the Act.
---------------------------------------------------------------------------

    \14\ See, e.g., the National Defense Authorization Act (49 
U.S.C. 5323(u)).
    \15\ Section 7613 of the National Defense Authorization Act for 
Fiscal Year 2020 (NDAA 2020), Public Law 116-92 (Dec. 20, 2019), 
which added a new subsection, 49 U.S.C. 5323(u), to Federal public 
transportation law.
---------------------------------------------------------------------------

    Similarly, President Biden issued Executive Order 14005 of January 
25, 2021 ``Ensuring the Future Is Made in All of America by All of 
America's Workers,'' \16\ stating ``the United States Government 
should, whenever possible, procure goods, products, materials, and 
services from sources that will help American businesses compete in 
strategic industries and help America's workers thrive.'' \17\ The 
President also issued Executive Order 14028 of May 12, 2021 ``Improving 
the Nation's Cybersecurity'' \18\ stating that ``prevention, detection, 
assessment, and remediation of cyber incidents is a top priority and 
essential to national and economic security.'' \19\ While the Act is 
consistent with those Executive orders, the Act has more stringent 
content limitations than those provided in the Executive orders.
---------------------------------------------------------------------------

    \16\ 86 FR 7475.
    \17\ Id.
    \18\ 86 FR 26633.
    \19\ Id.
---------------------------------------------------------------------------

    The Act has a similar legal framework as the United States-Mexico-
Canada Agreement (USMCA),\20\ which replaced the North American Free 
Trade Agreement (NAFTA). The USMCA contains a certification process for 
certifying the origin of materials used in products.\21\ The Act builds 
on the certification process of the USMCA, by requiring manufacturers 
to certify the origins and sources of railroad freight car 
components.\22\ The Act also directly borrows many terms from the 
USMCA, including the definitions for ``net cost'' and ``substantially 
transformed,'' two key terms that help set parameters for the 
limitations built into the Act and help instruct manufacturers how to 
comply with it.\23\ These similarities have helped inform FRA's 
understanding of the requirements of the Act. The similarities also 
help eliminate certain potential burdens

[[Page 85564]]

arising from this proposed rulemaking. As such, FRA expects that the 
steps involved certifying compliance under the USMCA will be 
substantially the same as those needed to certify compliance with the 
Act. FRA welcomes comments to this NPRM to help further develop its 
understanding of the issues.
---------------------------------------------------------------------------

    \20\ USMCA, July 1, 2020, https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement.
    \21\ USMCA chapters 4 and 5, July 1, 2020, https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement.
    \22\ 49 U.S.C. 20171(c)(2).
    \23\ Id. at (a).
---------------------------------------------------------------------------

III. Application of the Infrastructure Investment and Jobs Act to 
Railroad Freight Car Manufacturers Including Discussions With RSA

    To understand how railroad industry manufacturers were complying 
with other Congressional requirements concerning equipment and 
components manufactured by or sourced from COCs or SOEs and the 
certification requirements of the USMCA, FRA conducted a series of 
listening sessions with RSA, including two in person meetings on 
September 26, 2022, and March 3, 2023. While the proposals in this NPRM 
are FRA's alone, based on its independent assessments of the issues, 
the meetings with RSA helped FRA analyze the requirements of the Act. A 
summary of the meetings is in the public docket for this rulemaking 
(Docket Number FRA-2023-21).

A. The Infrastructure Investment and Jobs Act Content Limitations Apply 
Only at the Time of Manufacture

    Section 20171(b)(2) of the Act sets forth certain content 
limitations that must be met for ``railroad freight cars'' (as defined 
in the statute) ``wholly'' manufactured after a certain date to operate 
on the U.S. general railroad system of transportation. Understanding 
this subsection within the context of the Act as a whole (49 U.S.C. 
20171), FRA concluded that the Act regulates railroad freight cars by 
imposing such requirements at the time of initial manufacture but does 
not require FRA to ensure that the content limitations set forth in 
section 20171(b)(2) are met throughout the useful life of the equipment 
or at each re-entry into service following any changes to the railroad 
freight car including, repair, alteration, modification, rebuild, 
refurbishment, restoration, or reconstruction.
    First, in the Act's definitions, Congress explicitly defined who 
would be qualified to manufacture railroad freight cars eligible to 
operate on the general railroad system of transportation by limiting 
the manufacturing process to ``qualified manufacturers'' in ``qualified 
facilities.'' \24\ The statute does not define those who would be 
qualified to perform repairs or maintenance or otherwise address such 
``aftermarket'' activities. References to the manufacturing process are 
also found in the definition of ``substantially transformed,'' which is 
a trade term of art used to describe a ``change in tariff 
classification as a result of the manufacturing process.'' \25\
---------------------------------------------------------------------------

    \24\ Id. at (a)(7) and (6).
    \25\ This term refers to the manufacturing process and is 
generally used to help determine the country of origin for a product 
in international trade. Generally, substantial transformation means 
that the good underwent a fundamental change (normally as a result 
of processing or manufacturing in the country claiming origin) in 
form, appearance, nature, or character, which adds to its value an 
amount or percentage that is significant in comparison to the value 
which the good (or its components or materials) had when exported 
from the country in which it was first made or grown. Usually a new 
article of commerce--normally one with a different name--is found to 
result from any process that Customs decides has brought about a 
``substantial transformation'' in the pre-existing components. Thus, 
leading to a change in the tariff classification of the 
substantially transformed item. See https://www.trade.gov/rules-origin-substantial-transformation.
---------------------------------------------------------------------------

    Second, the Act requires manufacturers to provide an annual 
certification that any railroad freight cars they provide for operation 
on the U.S. general railroad system of transportation meet the Act's 
requirements.\26\ Manufacturers are capable of making such a 
certification, particularly with respect to the content limitations, 
only in connection with the initial manufacturing process.
---------------------------------------------------------------------------

    \26\ 49 U.S.C. 20171(c)(2).
---------------------------------------------------------------------------

    Third, the Act requires manufacturers to have a valid certification 
at the time a railroad freight car begins operation.\27\ Given the 
emphasis on manufacturers and the manufacturing process, it is 
reasonable to interpret this phrase to mean at the time a railroad 
freight car first begins operation, but not every time the car is 
returned to service.
---------------------------------------------------------------------------

    \27\ Id. at (c)(3).
---------------------------------------------------------------------------

    Accordingly, reading the Act as a whole, content limitations 
imposed by Congress apply to only newly-manufactured railroad freight 
cars at the point when cars first enter the U.S. general railroad 
system of transportation.\28\ The Act does not impose a continuing 
obligation on the manufacturer to certify to the content limitations 
throughout the useful life of the assets and does not require FRA to 
enforce section 20171(b)(2)'s content limitations at all times a 
railcar is in service.
---------------------------------------------------------------------------

    \28\ Id. at (b)(2).
---------------------------------------------------------------------------

B. After-Manufacture Changes to a Railroad Freight Car Are Not Covered 
by the Infrastructure Investment and Jobs Act

    Because the Act regulates railroad freight cars at the time a 
railcar first begins operation, the content limitations set forth in 
section 20171(b)(2) do not apply at the time of repair. As a result, 
the statute does not contemplate FRA enforcing the content limitations 
at the time of repair.
    The Act limits by whom and where a railroad freight car is 
``manufactured, assembled, or substantially transformed.'' \29\ As 
noted above, Congress focused on who may perform the manufacturing or 
assembly of a railroad freight car and sought to ensure such activity 
was not carried out in a facility that is owned or controlled by a 
state-owned enterprise. Congress also sought to regulate who may 
``substantially transform'' a component of a railroad freight car 
during the manufacturing process. ``Substantially transformed'' is a 
defined term of art, borrowed from trade law, that relates to tariff 
classification as a result of the manufacturing process.
---------------------------------------------------------------------------

    \29\ Id. at (b)(1)(A).
---------------------------------------------------------------------------

    Requiring enforcement of the content limitations for the railroad 
freight car's entire useful life--including repairs--would be a 
departure from the compliance scheme dictated by the statute, which is 
tied to manufacturer certifications. If Congress intended FRA to 
enforce content limitations in section 20171(b)(2) throughout the life 
of the railcar, including upon repair, it would have explicitly said 
so.\30\ Moreover, Congress does not define or reference any type of 
repair or aftermarket component replacement within the scope of the Act 
at any place. Because terms like ``for the life of the asset,'' ``at 
all times,'' or ``at the time of repair'' are absent from the text of 
the Act, FRA has concluded that its enforcement obligation does not 
extend beyond the time of manufacture for the content limitations in 
section 20171(b)(2).
---------------------------------------------------------------------------

    \30\ Whitman v. American Trucking Ass'n, 531 U.S. 457, 468 
(2001) (``Congress, we have held, does not alter the fundamental 
details of a regulatory scheme in vague terms or ancillary 
provisions--it does not, one might say, hide elephants in 
mouseholes.'').
---------------------------------------------------------------------------

C. Railroad Freight Cars Already Placed in Service in the U.S. Are Not 
Subject to the Infrastructure Investment and Jobs Act

    The Act requires FRA to issue regulations to implement the 
requirements set forth in the Act.\31\ For purposes of this analysis, 
FRA has

[[Page 85565]]

proposed to define the date on which FRA promulgates regulations as the 
``Issuance Date.'' With respect to applicability, the plain language of 
section 20171 states that only railroad freight cars that are wholly 
manufactured on or after a date that is one year after the Issuance 
Date are subject to Act's requirements.\32\ Thus, if FRA promulgates 
regulations on June 1, 2023, the only railroad freight cars that are 
wholly manufactured on or after June 1, 2024, are subject to the Act's 
requirements. Using this hypothetical issuance date of June 1, 2023, as 
an example, existing railroad freight cars manufactured prior to June 
1, 2024, and new railroad freight cars that were partially manufactured 
prior to June 1, 2024, are not subject to the Act. Thus, railroad 
freight cars that are currently in-use are not subject to the Act, 
including when parts are replaced during maintenance or repair; because 
the Act only imposes forward-looking requirements.
---------------------------------------------------------------------------

    \31\ 49 U.S.C. 20171(c)(1).
    \32\ Id. at (b)(1) and (2).
---------------------------------------------------------------------------

D. The Act's Requirements Apply Only to Manufacturers, Not Railroads

    The Act imposes certification and compliance obligations on 
manufacturers, not railroads. Specifically, the certification 
requirement set forth in section 20171(c)(2) and the prohibition on 
false registration in Umler \33\ both attach to a railroad freight car 
manufacturer.\34\ Further, FRA is permitted to prohibit a railroad 
freight car manufacturer from providing additional railroad freight 
cars for operation in the U.S. if the manufacturer is a repeat violator 
of section 20171.\35\ The statute does not impose obligations on a 
railroad to ensure the railroad freight cars meet content limitations 
nor does the statute require FRA to hold railroads accountable for 
compliance with the Act. FRA requests comments on whether a railroad 
should be responsible for the operation of freight cars known to be in 
noncompliance with the Act.
---------------------------------------------------------------------------

    \33\ Railinc Corp.'s Umler system is an electronic resource that 
contains critical data for the North American rail fleet, such as 
internal and external dimensions, cubic or gallon capacity, and 
weight information for each unit. See Association of American 
Railroads Rule 93 and UMLER Data Specification Manual; see also The 
Umler[supreg] System at https://public.railinc.com/products-
services/umler-
system#:~:text=Umler%C2%AE%20is%20the%20source,to%20logistics%20partn
ers%20and%20customers.
    \34\ 49 U.S.C. 20171(c)(2) and 20171(c)(3).
    \35\ Id. at (c)(4).
---------------------------------------------------------------------------

IV. Overview of the Proposal To Implement the Infrastructure Investment 
and Jobs Act Requirement for Freight Car Compliance Certification

    The Act requires manufacturers to annually certify to FRA, as 
delegated by the Secretary, that any railroad freight cars it offers 
for operation on the U.S. general railroad system of transportation 
meet the requirements of the Act.\36\ This rulemaking proposes to 
incorporate the certification requirement into the FCSS \37\ and 
establish a process for FRA to access necessary information to 
determine compliance with the Act.
---------------------------------------------------------------------------

    \36\ Id. at (c)(3).
    \37\ 49 CFR part 215.
---------------------------------------------------------------------------

    FRA proposes to require manufacturers' certifications to be 
submitted electronically to FRA's Office of Railroad Safety. The 
certifications would include the manufacturer's name and address, the 
name, signature and contact information for the person responsible for 
certifying compliance, and a car identification number for each car 
being certified. Manufacturers would be required to maintain records to 
support their compliance and FRA would be able to access those records 
upon request. FRA expects freight car manufacturers to certify groups 
of cars together coinciding with bulk orders for equipment. For 
convenience, manufacturers may submit the certification to FRA at the 
same time as they request a safety appliance drawing review and/or 
courtesy sample base car inspection for the same build order.\38\ At 
its discretion, FRA may request the percentage break down on the 
content for a specific car, as needed, to determine compliance for that 
car.\39\
---------------------------------------------------------------------------

    \38\ FRA performs sample car inspections as a courtesy to the 
manufacturers, to better ensure equipment is built in accordance 
with all applicable Federal railroad safety laws. Generally, 
manufacturers that desire to have FRA review their equipment for 
compliance with safety appliance standards are to submit their 
safety appliance arrangement drawings, prints, etc., to FRA's Office 
of Railroad Safety, Office of Railroad Infrastructure and Mechanical 
Equipment for review, at least 60 days prior to construction. FRA 
reviews the documents submitted and advises the manufacturer if any 
specifications laid out in the drawings do not conform with the 
applicable regulation(s). The sample base car inspection generally 
provides the manufacturer an opportunity to make any necessary 
changes in the design or manufacturing process to meet compliance 
before building the remaining cars of that order. See https://railroads.dot.gov/sites/fra.dot.gov/files/2020-05/MPEComplianceManual2013.pdf.
    \39\ The percentage breakdown for evaluating content is the net 
cost of materials (excluding the cost of sensitive technology) 
compared to total cost of the freight car.
---------------------------------------------------------------------------

    FRA is also proposing that manufacturers maintain records showing 
the calculations made to support certification under this section and 
such records shall be made available to FRA upon request. This would 
provide FRA access to the information necessary to determine the 
percentage of components originating form COCs and SOE for each freight 
car. FRA understands that manufacturers currently generate such a break 
down for their cars to comply with the USMCA and does not anticipate 
that assembling the information will result in an additional burden to 
the industry.
    FRA anticipates that certain documents submitted by manufacturers 
pursuant to 49 U.S.C. 20171(c)(3) may contain proprietary or other 
confidential business information. Manufacturers should follow the 
procedures in 49 CFR 209.11 to ensure proper handling of such 
information, and manufacturers may redact portions of submitted 
information so long as FRA is able to accurately ascertain the 
manufacturer's compliance with the Act. However, FRA retains the right 
to make its own determinations regarding disclosure of submitted 
information. In making these determinations, FRA will consider all 
exemptions to Freedom of Information Act disclosure, including the 
exemption on disclosure of commercial or financial information and 
privileged or confidential information.\40\
---------------------------------------------------------------------------

    \40\ 5 U.S.C. 552(b)(4).
---------------------------------------------------------------------------

V. Section-by-Section Analysis

    This section-by-section analysis is intended to explain the 
rationale for each revised or new provision FRA is proposing to 
incorporate into the FCSS. The proposed regulatory changes are 
organized by section number. FRA seeks comments on all proposals in 
this NPRM.

Section 215.5 Definitions

    FRA proposes to incorporate several new, defined terms into the 
FCSS, most pulled directly from the Act and some proposed as necessary 
to effectively implement the Act. FRA also proposes to organize the 
existing FCSS definitions along with the newly proposed definitions in 
alphabetical order to conform with FRA's other regulations. The Act's 
definition for the term ``railroad freight car'' mirrors the definition 
for the same term in the current FCSS. Accordingly, this rulemaking 
would keep the definition in the FCSS unchanged. The new definitions 
FRA proposes to add are discussed below:
    Component is defined by the Act,\41\ and FRA is proposing to adopt 
it in the

[[Page 85566]]

FCSS. Although the proposed definition does not identify specific parts 
and subassemblies of freight cars as ``components,'' FRA believes 
Congress intends this definition to include the major components of 
freight cars (e.g., trucks, wheel sets, center sills, draft gears, 
couplers, walkways, running boards) when calculating content 
limitations under proposed section 49 CFR 215.401(b)(1). FRA does not 
intend the definition of ``component'' to include smaller parts that do 
not significantly impact manufacturing costs (e.g., wear plates, roof 
liners, or small pieces of hardware such as screws). FRA welcomes 
comment on how freight car items fit into this definition.
---------------------------------------------------------------------------

    \41\ 49 U.S.C. 20171(a)(1).
---------------------------------------------------------------------------

    Control is defined by the Act,\42\ and FRA is proposing to adopt it 
in the FCSS. This definition relates to the definitions of ``qualified 
facility'' and ``qualified manufacturer'' discussed below.
---------------------------------------------------------------------------

    \42\ Id. at (a)(2).
---------------------------------------------------------------------------

    Cost of sensitive technology is defined by the Act,\43\ and FRA is 
proposing to adopt it in the FCSS.
---------------------------------------------------------------------------

    \43\ Id. at (a)(3).
---------------------------------------------------------------------------

    Country of concern is defined by the Act \44\ and FRA is proposing 
to adopt it in the FCSS.\45\ As noted in the Infrastructure Investment 
and Jobs Act Background section above a country must meet all three 
criteria to qualify as a ``country of concern.'' Each of the criteria 
within the definition of ``country of concern'' are separated by 
``and'' instead of ``or,'' meaning a country must meet all three 
criteria to meet the definition.
---------------------------------------------------------------------------

    \44\ Id. at (a)(4).
    \45\ These same criteria are used to define ``country of 
concern'' in 49 U.S.C. 5323(u) (placing limitations on certain 
rolling stock procurements for public transportation that qualify 
for financial assistance), and the FTA has published Frequently 
Asked Questions Regarding Section 7613 of the National Defense 
Authorization Act for Fiscal Year 2020 that discusses the criteria 
and the definition of ``country of concern.'' https://www.transit.dot.gov/funding/procurement/frequently-asked-questions-regarding-section-7613-national-defense.
---------------------------------------------------------------------------

    First, to qualify as a ``country of concern'' under section 20171, 
the U.S. DOC must have identified that country as a nonmarket economy 
country pursuant to the Tariff Act of 1930 at the date of enactment 
(i.e., as of Nov. 15, 2021).\46\ In 2021, when the Act became law, the 
U.S. DOC had named eleven countries as nonmarket economy countries: 
Armenia, Azerbaijan, Belarus, China, Georgia, Kyrgyzstan, Moldova, 
Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.\47\ FRA notes that 
this criterion is tied to the Passenger Rail Expansion and Rail Safety 
Act of 2021 enactment date and accordingly, the countries that meet 
this first prong of the definition will not change.
---------------------------------------------------------------------------

    \46\ 49 U.S.C. 20171(a)(4)(A).
    \47\ Int'l Trade Admin, Countries Currently Designated by 
Commerce as Non-Market Economy Countries, https://www.trade.gov/nme-countries-list (identifying the Federal Register notices wherein a 
country was designated as a non-market economy country).
---------------------------------------------------------------------------

    Second, to constitute a ``country of concern,'' the USTR must also 
name that country on the priority watch list in the most recent report 
required by the Trade Act of 1974.\48\ In the most recently required 
report, the USTR identified seven countries on the priority watch list: 
Argentina, Chile, China, India, Indonesia, Russia, and Venezuela.\49\
---------------------------------------------------------------------------

    \48\ 49 U.S.C. 20171(a)(4)(B).
    \49\ Office of the U.S. Trade Rep., 2022 Special 301 Report, 5 
(2022), (2022 Special 301 Report.pdf (ustr.gov)).
---------------------------------------------------------------------------

    Third, a country is deemed a ``country of concern'' only if it is 
subject to monitoring by the USTR under section 306 of the Trade Act of 
1974.\50\ In the 2022 Special 301 Report, the USTR identifies seven 
countries that are on the priority watch list: Argentina, Chile, China, 
India, Indonesia, Russia, and Venezuela. Of these seven, only China is 
monitored pursuant to section 306.
---------------------------------------------------------------------------

    \50\ 49 U.S.C. 20171(a)(4)(C). See Office of the U.S. Trade 
Rep., 2022 Special 301 Report, 44 (2022), https://ustr.gov/issue-areas/intellectual-property/special-301/2022-special-301-review, 
(listing countries included on the priority watch list and whether 
such countries are subject to monitoring under section 306 of the 
Trade Act of 1974).
---------------------------------------------------------------------------

    Accordingly, China is currently the only country that meets all 
three criteria and therefore is the only ``country of concern'' as 
defined in the Act.
    Net cost is defined by the Act,51 52 and FRA is 
proposing to adopt it in the FCSS. Currently, chapter 4 of the USMCA 
defines net cost.\53\
---------------------------------------------------------------------------

    \51\ USMCA chapter 4, July 1, 2020, https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement.
    \52\ 49 U.S.C. 20171(a)(5).
    \53\ Uniform Regulations Regarding the Interpretation, 
Application, and Administration of Chapter 4 (Rules or Origin) and 
Related Provisions in Chapter 6 (Textile and Apparel Goods) of the 
Agreement Between the United States of America, The United Mexican 
States, and Canada. https://ustr.gov/sites/default/files/files/agreements/usmca/UniformROO.pdf.
---------------------------------------------------------------------------

    Qualified facility is defined by the Act,\54\ and FRA is proposing 
to adopt it in the FCSS. When read in combination with the definition 
of the term control the Act provides, FRA finds that the Act intends 
for general corporate law principles to apply to determine whether a 
particular railroad freight car or component manufacturer is ``owned or 
controlled by, is a subsidiary of, or is otherwise related legally or 
financially to a corporation based in'' a country that meets the 
statutory criteria.
---------------------------------------------------------------------------

    \54\ 49 U.S.C. 20171(a)(6).
---------------------------------------------------------------------------

    Qualified manufacturer is defined by the Act,\55\ and FRA is 
proposing to adopt it in the FCSS. For the purpose of this definition, 
a supplier, component and repair part manufacturer, or other entity may 
be a railroad freight car manufacturer, if it manufactures, assembles, 
of substantially transforms a freight car, as described in proposed 49 
CFR 215.401(a)(1). Like the definition of qualified facility, when read 
in combination with the Act's definition of the term control, FRA again 
finds that the Act intends for general corporate law principles to 
apply to determine whether a particular railroad freight car or 
component manufacturer is ``owned or controlled by, is a subsidiary of, 
or is otherwise related legally or financially to a corporation based 
in'' a country that meets the statutory criteria.
---------------------------------------------------------------------------

    \55\ Id. at (a)(7).
---------------------------------------------------------------------------

    Sensitive technology is defined by the Act,\56\ and FRA is 
proposing to adopt it in the FCSS. While FRA understands the list of 
devices included in this definition to be examples that can be 
considered sensitive technology, FRA is not currently aware of any 
additional devices that should be included in the list.
---------------------------------------------------------------------------

    \56\ Id. at (a)(9).
---------------------------------------------------------------------------

    State-owned enterprise is defined by the Act,\57\ and FRA is 
proposing to adopt it in the FCSS.
---------------------------------------------------------------------------

    \57\ Id. at (a)(10).
---------------------------------------------------------------------------

    Substantially transformed is defined by the Act,\58\ and FRA is 
proposing to adopt it in the FCSS. FRA understands that a manufacturing 
process which changes an article's name, character, or use will often 
result in a change in the article's tariff classification. Accordingly, 
FRA understands the Act's definition of substantially transformed to 
mean a manufacturing process that changes an article's name, character, 
or use. FRA notes that the U.S. Customs and Border Protection (CBP) is 
an implementing agency for USMCA and although CBP uses a slightly 
different definition of substantially transformed than that provided in 
the Act, CBP explains that substantial transformation ``occurs when, as 
a result of manufacturing processes, a new and different article 
emerges, having a distinctive name, character, or use, which is 
different from that originally possessed by the article or material 
before being subject to the manufacturing process.'' \59\ FRA finds 
that the definition of substantially

[[Page 85567]]

transformed provided in the Act and CBP's definition of the same term 
are compatible in that a manufacturing process which changes an 
article's name, character, or use will often also result in a change in 
the article's tariff classification.
---------------------------------------------------------------------------

    \58\ Id. at (a)(11).
    \59\ https://www.trade.gov/rules-origin-substantial-transformation.
---------------------------------------------------------------------------

    USMCA is defined by the Act,\60\ and FRA is proposing to adopt it 
in the FCSS.
---------------------------------------------------------------------------

    \60\ 49 U.S.C. 20171(a)(12).
---------------------------------------------------------------------------

Section 215.401 Requirements for Railroad Freight Cars Placed Into 
Service in the United States

    This section proposes to incorporate the requirements of paragraph 
(b)(1) of the Act into the FCSS. Paragraph (b)(1) of the Act provides 
that for a railroad freight car to operate on the U.S. general railroad 
system of transportation: (1) any car wholly manufactured after a 
certain date must be manufactured, assembled, and substantially 
transformed by a qualified manufacturer in a qualified facility; (2) 
none of the sensitive technology located on the car may originate from 
a COC or be sourced from a SOE; and (3) none of the content of the car 
(except sensitive technology) may originate from a COC or be sourced 
from a SOE with a history of problematic trade practices or respect for 
IP rights.
    Proposed paragraph (a)(1) mirrors paragraph (b)(1)(A) of the Act 
and mandates that any railroad freight car to be operated on the U.S. 
general railroad system of transportation and wholly constructed one 
year from a final rule in this proceeding, must be manufactured, 
assembled, and substantially transformed by a qualified manufacturer or 
a qualified facility.
Sensitive Technology Prohibition
    Proposed paragraph (a)(2) mirrors paragraph (b)(1)(B) of the Act 
and addresses sensitive technology. This paragraph proposes to 
incorporate the Act's general prohibition on operating a freight car on 
the U.S. general railroad system of transportation, if any of its 
``sensitive technology'' or ``components necessary to the functionality 
of the sensitive technology'' originates from a COC or is sourced from 
a SOE.
    As noted above, the Act defines ``sensitive technology,'' but does 
not define or provide any guidance on what constitutes ``components 
necessary to the functionality of the sensitive technology.'' FRA 
understands this phrase to generally include the active components that 
work with the sensitive technology, because they may also be able to 
collect and transmit data. Passive components are excluded from this 
phrase because they cannot collect or transmit data. Examples of active 
components include, but are not limited to, any type of processor, 
transmitter, receiver, or data storage device. While the passive 
components are still necessary for the device to function as a whole, 
these components do not play a vital role in the storage, collection, 
exchange, transmittal, or manipulation of any data. Examples of passive 
components include, but are not limited to, printed circuit boards, 
power supplies, temperature sensors, pressure gauges, resistors, 
capacitors, etc. FRA welcomes comments to this NPRM about what 
constitutes ``components necessary to the functionality of the 
sensitive technology'' under the Act.
Intellectual Property Infringement Prohibition
    Proposed paragraph (a)(3) mirrors paragraph (b)(1)(C) of the Act 
and addresses IP infringement. This language forbids the inclusion in 
any railroad freight car of any content from a COC or SOE ``that has 
been determined by a recognized court or administrative agency of 
competent jurisdiction and legal authority to have violated or 
infringed valid U.S. intellectual property rights of another.'' The Act 
includes both ``a finding by a Federal district court under title 35'' 
and a finding by the U.S. International Trade Commission (ITC) under 
section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) as 
determinations sufficient to trigger the prohibition.
    For the purposes of this requirement, the ITC makes a finding that 
an entity has violated or infringed valid U.S. IP rights when the ITC 
issues a final determination under section 337. Under ITC procedure, an 
administrative law judge, who concludes that an entity violated section 
337 of the Tariff Act, first files an initial determination.\61\ This 
initial determination becomes a final determination of the ITC 60 days 
after it is filed, unless the ITC orders review of the initial 
determination, in which case the ITC's ultimate finding would be the 
final determination.\62\ These determinations are available on the 
ITC's website.\63\ FRA does not anticipate tracking determinations on 
an ongoing basis; manufacturers seeking certification are responsible 
for researching determinations against their own suppliers.
---------------------------------------------------------------------------

    \61\ 19 CFR 210.42(a)(1)(i).
    \62\ Id. at (h)(2).
    \63\ https://usitc.gov/intellectual_property/337_determinations.htm.
---------------------------------------------------------------------------

    As an example, in October 2009, the ITC issued a 10-year Limited 
Exclusion Order against two Chinese companies (Tianrui Group Company 
Limited and Tianrui Group Foundry Company Limited) and two U.S. 
companies (Standard Car Truck Company, Inc. and Barber Tianrui Railway 
Supply, LLC) that an administrative law judge determined had violated 
section 337.\64\ The U.S. Court of Appeals for the Federal Circuit 
upheld the ITC's decision on October 11, 2021.\65\
---------------------------------------------------------------------------

    \64\ See In the matter of Certain Cast Steel Railway Wheels, et 
al. USITC Inv. No. 337-TA-655 (U.S. Intern. Trade Com'n), 2009 WL 
10693128.
    \65\ Tianrui Group Co. Ltd. v. Intl. Trade Comm'n, 661 F.3d 1322 
(Fed. Cir. 2011).
---------------------------------------------------------------------------

    Furthermore, FRA finds that section 20171(b)(1)(C)'s prohibition 
applies not only to the entity determined to be the IP infringer, but 
to the content of that infringement as well. For example, in 2009, the 
ITC determined that four respondents violated section 337 of the Tariff 
Act by misappropriating numerous Amsted trade secrets relating to the 
manufacture of cast steel railway wheels, importing into the U.S. cast 
steel railway wheels and substantially injuring, and threatening 
substantial injury to, Amsted's domestic cast steel railway wheel 
operations, which manufacture Amsted's Griffin[supreg] wheels.\66\ The 
ITC determination excluded any such steel railway wheels from entering 
into the U.S. for ten years. On appeal, the Federal Circuit upheld the 
ITC's decision.\67\ FRA understands that section 20171(b)(1)(C) would 
prohibit a railroad freight car to be equipped with steel wheels that 
were manufactured using the stolen IP that was the subject of this 
case. The Act does not expressly provide a timeframe for the 
prohibitions under this section or connect it to the length of the ITC 
exclusion or any other time limitations. As such, FRA understands the 
prohibition to be permanent.
---------------------------------------------------------------------------

    \66\ In the matter of Certain Cast Steel Railway Wheels, et al. 
USITC Inv. No. 337-TA-655 (U.S. Intern. Trade Com'n), 2009 WL 
4261206.
    \67\ Tianrui Group Co. Ltd. v. Intl. Trade Comm'n, 661 F.3d 1322 
(Fed. Cir. 2011).
---------------------------------------------------------------------------

Content Limitations
    Proposed paragraph (b) mirrors section 20171(b)(2) of the Act and 
addresses content limitations from COCs and SOEs generally. Consistent 
with the Act, beginning 1 year after this regulation is issued, 
proposed paragraph (b)(1)(i) would initially prohibit newly 
manufactured freight cars from operating on the U.S. general railroad 
system of transportation if more than 20 percent of the car's content 
originates from a COC or is sourced from a SOE. After 3 years, proposed 
paragraph (b)(1)(ii) would reduce that threshold to

[[Page 85568]]

no more than 15 percent. Cars not meeting these thresholds would be 
noncompliant and the manufacturer would be subject to civil penalties 
under proposed Sec.  215.407. Consistent with the Act, as proposed, the 
percent of content is measured by the net cost of materials (excluding 
the cost of sensitive technology).\68\ Proposed paragraph (b)(2) 
mirrors paragraph (b)(2)(B) of the Act and explains that the content 
limitations provided in the Act shall apply notwithstanding any 
apparent conflict with provisions of chapter 4 of the USMCA. Chapter 4 
of the USMCA and the Act both establish rules for the country of origin 
for a product in international trade. This paragraph clarifies that 
compliance with chapter 4 of the USMCA does not constitute, or in any 
way affect, the content limitations in the Act, which apply 
independently.
---------------------------------------------------------------------------

    \68\ The proposed definition of ``net cost'' is provided in 
section 215.5 of this proposed rule. For a discussion of ``net 
cost,'' see the section-by-section analysis above.
---------------------------------------------------------------------------

Section 215.403 Certification of Compliance

    This proposed section incorporates the requirements of paragraph 
(c) of the Act and includes requirements designed to help FRA monitor 
and enforce the Act's standards.
    Consistent with paragraph (c)(2) of section 20171, proposed 
paragraph (a) requires railroad freight car manufacturers to annually 
certify to FRA, as delegated by the Secretary of Transportation, that 
any railroad freight car it provides for operation in the United 
States, meets the requirements of section 20171.
    Proposed paragraph (a)(1) would require railroad freight car 
manufacturers to submit a certification report to FRA, identifying and 
certifying compliance for, each freight car before it can operate on 
the U.S. general railroad system of transportation. Each certification 
report submitted to FRA may identify a single freight car or multiple 
freight cars based on the manufacturer's preference. For convenience, a 
manufacturer may submit its certification report directly to the Office 
of Railroad Safety along with any customary request to FRA for a sample 
base car inspection or safety appliance arrangement drawing review. 
Paragraph (a)(1)(i) would require the report to include a statement 
certifying compliance, the manufacturer's name, the individual 
responsible for certifying compliance with the Act and this rule, and 
the car identification number for each car being certified. Paragraph 
(a)(1)(ii) would require the freight car manufacturer to maintain all 
records showing the information, including calculations, made to 
support certification under this section and such records shall be made 
available to FRA upon request.

Section 215.405 Prohibition on Registering Noncompliant Railroad 
Freight Cars

    This section proposes to incorporate the requirements in 49 U.S.C. 
20171(c)(3)(B) into the FCSS. FRA will review registration records when 
there is evidence of noncompliance with the Act. For example, when FRA 
determines a railroad freight car manufacturer is not in compliance 
with the Act's substantive requirements (e.g., it is equipped with 
sensitive technology, or 20 percent or 15% of its components, sourced 
from an SOE and operating on the U.S. general railroad system of 
transportation), FRA would request documentation to determine whether 
the freight car was registered with the Umler system. If the freight 
car was so registered, the freight car would also be in noncompliance 
with this section.

Section 215.407 Civil Penalties

    This section proposes to incorporate the requirements in 49 U.S.C. 
20171(c)(4) into the FCSS. The Act specifies penalty amounts for 
violations of its substantive requirements and specifies that the unit 
of violation is the freight car. FRA anticipates utilizing the Railroad 
Safety Enforcement Procedures to enforce these penalties in the same 
manner as other civil penalties enforced by FRA.\69\
---------------------------------------------------------------------------

    \69\ 49 CFR part 209.
---------------------------------------------------------------------------

VI. Regulatory Impact and Notices

A. Executive Orders 12866 as Amended by Executive Order 14094

    This proposed rule is not a significant regulatory action within 
the meaning of Executive Order (E.O.) 12866 (``Regulatory Planning and 
Review''), as amended by Executive Order 14094, Modernizing Regulatory 
Review,\70\ and DOT Order 2100.6A (``Rulemaking and Guidance 
Procedures''). This proposed rule aims to enforce the Act's 
restrictions on content and technology originating from COCs and SOEs 
in newly built freight cars entering service on the U.S. general 
railroad system of transportation. Issuing this proposed rulemaking 
would authorize FRA to monitor and enforce industry compliance with the 
Act. This section qualitatively explains benefits and quantitatively 
explains costs for the freight car industry and FRA associated with 
implementing this proposed rule over a 10-year period, considering 
discount rates of 7 percent and 3 percent.\71\
---------------------------------------------------------------------------

    \70\ 88 FR 21879 (April 6, 2023) located at https://www.federalregister.gov/documents/2023/04/11/2023-07760/modernizing-regulatory-review.
    \71\ All costs are expressed in 2022 base year dollars.
---------------------------------------------------------------------------

    FRA has concluded that the Act does not impose a continuing 
obligation on manufacturers or railcar owners related to certifying 
content and technology limitations throughout the useful life of each 
freight car. As such, the proposed rule would not require FRA to 
enforce the requirements set forth in the Act at all times a freight 
railcar is in service on the U.S. general railroad system of 
transportation. Therefore, this proposed rule would only impact 
original freight car manufacturers related to the initial entry of 
freight cars into service in the U.S. general railroad system of 
transportation.
    Based on discussions with FRA subject matter experts in the Office 
of Motive Power and Equipment, this analysis estimates that the 
proposed rule would impact six freight car manufacturers that have 
manufacturing facilities within North America. This proposed rule would 
not significantly impact any other entity. Over a 10-year period, this 
analysis estimates the impact of issuing this proposed rule on freight 
car manufacturing industry and FRA related to: (1) limiting content 
sourced from COCs or SOEs; (2) prohibiting the use of sensitive 
technology and components necessary to the functionality of the 
sensitive technology from a COC or SOE; (3) compliance costs; and (4) 
government administrative costs associated with enforcing this proposed 
rule. Additionally, this analysis provides a summary of the regulatory 
impact and describes some alternative regulatory options that FRA 
considered.
(1) Limit Content Sourced From COCs or SOEs
    Based on conversations with RSA and FRA subject matter experts, all 
six freight car manufacturers currently comply with the 15 percent 
content limitation, which would be required three years after this 
proposed rule's implementation date. Also, absent FRA issuing this 
proposed rule, over the next 10 years, this analysis forecasts that no 
freight car manufacturer plans to change its materials sourcing whereby 
a freight car manufacturer would not be in compliance with the content 
limitation set forth in this proposed rule. Lastly, this analysis does 
not anticipate any

[[Page 85569]]

new freight car manufacturers entering the North American freight car 
industry over the next 10 years (during the period of analysis). 
Therefore, related to complying with content limitation, issuing this 
proposed rule would not result in any costs or benefits. FRA welcomes 
public comment related to this conclusion.
(2) Prohibit the Use of Sensitive Technology From COCs or SOEs
    As explained earlier in this NPRM, FRA understands the prohibition 
on the use of sensitive technology that originates from a COC or SOE to 
also include any active technological components necessary to the 
functionality of the sensitive technology (excluding passive 
technological components) that originates from a COC or SOE. Based on 
this understanding and input from the RSA and FRA subject matter 
experts, all six freight car manufacturers currently comply with the 
limitations on use of sensitive technological components as set forth 
in this proposed rule. Also, absent FRA issuing this proposed rule, 
over the next 10 years, this analysis forecasts that no freight car 
manufacturer plans to change its materials sourcing whereby a freight 
car manufacturer would not comply with the sensitive technology 
limitation set forth in this proposed rule. Further, over the next 10 
years (during the period of analysis), this analysis does not 
anticipate any new freight car manufacturer entering the North American 
freight car industry. Therefore, the provision that would prohibit the 
use of sensitive technology, or active technological components 
necessary to the functionality of the sensitive technology that 
originates from a COC or SOE for freight cars entering service in the 
U.S. general railroad system of transportation would not result in any 
costs. FRA welcomes public comment related to this conclusion.
    However, issuing this provision (prohibiting the use of sensitive 
technology from COCs or SOEs) may provide benefit. That is, issuing 
this proposed rule would mitigate concerns related to compromised 
national security and potential corporate espionage that exists if 
newly built freight cars with sensitive technology and active 
technological components necessary to the functionality of the 
sensitive technology from COC or SOE enter service into the U.S. 
general railroad system of transportation. FRA welcomes public comment 
related to these conclusions.
(3) Compliance Costs
    Issuing the proposed rule would create a few compliance burdens for 
freight car manufacturers including affirming compliance with this 
proposed rule, submitting an annual certification, and participating in 
periodic audits.
Manufacturers Affirm Compliance Prior to a Freight Car Entering Service
    Prior to a manufacturer providing a freight car for operation on 
the U.S. general railroad system of transportation, a manufacturer 
would affirm that the freight car is compliant with this regulation. 
Currently, FRA provides a courtesy safety appliance drawing review and/
or sample car inspection to freight car manufacturers that request it 
for all freight cars that they intend to manufacture for operation on 
the U.S. general system. FRA anticipates that manufacturers would 
affirm compliance with the Act by certifying at the time of their 
safety appliance drawing review and/or sample car inspection.\72\
---------------------------------------------------------------------------

    \72\ A freight car manufacture may also certify compliance with 
Act by submitting an independent document to FRA for any build order 
(e.g., for subsequent orders of the same car builds utilizing the 
same safety appliance arrangement that have already been reviewed 
and/or inspected by FRA). This analysis concluded that the cost to 
submit an independent document to affirm compliance with the Act 
follows similarly to including such affirmation along with safety 
appliance review and/or sample car inspection request package.
---------------------------------------------------------------------------

    Based on input from FRA subject matter experts, this analysis 
estimates that each year manufacturers introduce approximately 35 
freight car orders. Based on FRA subject matter expert input, this 
analysis assumes that an administrative professional in the freight 
car's contract office would draft the document affirming compliance 
with the Act (1 hour) and a vice-president of engineering would review 
and sign the letter (15 minutes).\73\ Each year, the burden on 
manufacturers to affirm compliance with the Act for all newly built 
freight cars intended for operation on the U.S. general railroad system 
of transportation is $3,438.\74\ Over the 10-year period of analysis, 
the industry burden is approximately, $34,400 (undiscounted), $29,200 
(present value (PV), 3%), and $20,400 (PV, 7%).
---------------------------------------------------------------------------

    \73\ U.S. Bureau of Labor Statistics, Occupational Employment 
and Wage Statistics, National Industry-Specific Occupational 
Employment and Wage Statistics, May 2023 NAICS 336500 Railroad 
Rolling Stock Manufacturing ``Sales and Related Occupations'' $40.45 
(mean wage), ``Top Executives'' ($62.74) [May 2023] https://www.bls.gov/oes/current/naics4_336500.htm. When estimating labor 
burden, this analysis added a compensation factor of 1.75, so the 
administrative employee's hourly burden rate is $70.79 and the VP of 
engineering's hourly burden rate is $109.80.
    \74\ Industry burden for affirming compliance, annual = Number 
of freight cars introduced (35) * [time to write the document 
affirming compliance with the Act (1 hour) * administrative 
professional's hour compensation rate ($70.79) + time to review and 
sign the document (15 minutes) * VP of engineering compensation rate 
($109.80)] = $3,438.
---------------------------------------------------------------------------

Periodic Audit of Freight Car Manufacturers
    As part of FRA's enforcement of the proposed rule, FRA expects to 
randomly audit freight car manufacturers to ensure compliance with the 
Act. Based on input from FRA subject matter experts, FRA would likely 
randomly audit one-third of the freight car manufacturers each year 
(approximately two freight car manufacturers each year). Based on FRA 
subject matter expert input, the likely audit process would compromise 
of FRA selecting one freight car order from the manufacturer's product 
line and have the freight car manufacturer provide evidence of 
compliance. FRA would audit the bill of materials to determine if the 
manufacturer complied with this regulation. If the freight car 
manufacturer provides sufficient evidence to show its freight car is 
complaint with the rule, FRA would take no further action. Based on FRA 
subject matter expert input, FRA anticipates that the results of FRA's 
random audit is that FRA will find all freight car manufacturers 
compliant with the proposed rule.
    Based on input from FRA subject matter experts, this analysis 
estimates that it would take four hours for a freight car manufacturer 
to retrieve existing information that shows compliance with this 
proposed rule and provide it to an FRA inspector. This analysis placed 
a relatively low hourly burden for the periodic audit because this 
proposed rule requires freight railroads to maintain records that show 
compliance. Thus, other than retrieving records that should already 
exist, freight car manufacturers would have no additional burden. With 
an estimated two audits per year, the audit burden for all freight car 
manufacturers is 8 hours

[[Page 85570]]

or $566.\75\ Over the 10-year period of analysis, the burden periodic 
audits of freight car manufacturers is approximately $5,700 
(undiscounted), $4,800 (PV, 3%), and $3,400 (PV, 7%).
---------------------------------------------------------------------------

    \75\ Freight car manufacturers, participating in an audit, 
annual = Number of annual audits (2) * hours to prepare and 
participate in an audit (4 hours) * freight car administrative 
employee compensation rate ($70.78) = $566.
---------------------------------------------------------------------------

Total Cost and Benefit for Industry
    As shown, in table 2, over the 10-year period of analysis, the 
industry burden is approximately $44,800 (undiscounted), $38,200 (PV, 
3%), and $30,900 (PV, 7%).

                             Table 2--Freight Car Industry, Total Cost, Round ($100)
----------------------------------------------------------------------------------------------------------------
                                                  Total cost ($)                          Annualized ($)
          Type of cost           -------------------------------------------------------------------------------
                                   Undiscounted        PV 3%           PV 7%           PV 3%           PV 7%
----------------------------------------------------------------------------------------------------------------
Compliance certification........          34,400          29,200          20,400           3,400           2,900
Periodic audit..................           5,700           4,800           3,400             600             500
                                 -------------------------------------------------------------------------------
    Total.......................          40,100          34,000          23,800           4,000           3,400
----------------------------------------------------------------------------------------------------------------

    FRA is issuing this regulation as required by the Act. In this 
economic analysis, FRA qualitatively explains the potential benefits 
that may result from implementing the proposed rule. FRA requests 
public comment regarding these cost estimates and the benefit that 
would come from issuing the proposed rule.
(4) Governmental Administrative Costs
    Issuing the proposed rule would create enforcement costs for FRA, 
including the review of freight car manufacturers certifying 
compliance, periodic audits of freight car manufacturers, and creating 
an annual report to Congress.
Review of Certification of Compliance Reports
    Based on input from FRA subject matter experts, this analysis 
estimates that each year manufacturers introduce approximately 35 
freight car orders and certify to FRA that their freight cars comply 
with this Act. FRA staff would spend approximately 30 minutes to review 
each of the 35 submissions. Therefore, FRA's annual burden related to 
reviewing the manufacturer's is $2,201.76 77 Over the 10-
year period of analysis, the total burden is approximately $22,00 
(undiscounted), $18,700 (present value (PV), 3%), and $13,000 (PV, 7%).
---------------------------------------------------------------------------

    \76\ FRA headquarters staff salary estimated at the GS-14 step 5 
rate Washington, DC) of $71.88 with a burden rate of 1.75 for an 
hourly burden rate of $125.79. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/.
    \77\ FRA burden for affirming compliance, annual = Number of 
freight cars introduced (35) * [time to review affirmation (0.5 
hour) * FRA headquarters employee compensation rate ($125.79) = 
$2,201.
---------------------------------------------------------------------------

FRA Periodic Audit of Freight Car Manufacturers
    As explained in the above section that describes industry burden, 
each year FRA expects to audit approximately two freight car 
manufacturers as part of FRA's enforcement efforts. To minimize 
compliance costs, FRA would use FRA field staff who have duty stations 
in close proximity to the freight car manufacturing facility. However, 
based on subject matter expert input, in the first five years of 
implementation of the proposed rule, FRA expects that it would send 
both an FRA field inspector and FRA headquarters employee to conduct 
the audit. Beginning with the sixth year, FRA expects that only FRA 
field inspectors would conduct audits.
    Based on FRA subject matter expert input, FRA's burden related to 
periodic audits of freight car manufacturers is 20 hours for FRA 
headquarters staff (4 hours to prepare for audit, 4 hours to conduct 
audit, and 12 hours of travel time) and 12 hours for FRA field staff (4 
hours to prepare for audit, 4 hours to conduct audit, and 4 hours 
travel time). In addition, FRA will incur travel expenses of $500 for 
FRA headquarters staff and $100 for FRA field staff per audit. In the 
first year of analysis, the cost related to conducting two audit is 
$8,121.78 79 Over the 10-year period of analysis, FRA's 
burden for conducting periodic audits is $51,000 (undiscounted), 
$45,300 (PV, 3%), and $34,800 (PV, 7%).
---------------------------------------------------------------------------

    \78\ FRA headquarters staff salary estimated at the GS-14 step 5 
rate Washington DC) of $71.88 with a burden rate of 1.75 for an 
hourly burden rate of $125.79. FRA field staff salary estimated at 
the GS-12 step 5 rate (Rest of United States) of $44.98 with a 
burden rate of 1.75 for an hourly burden rate of $78.72. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/.
    \79\ FRA audit burden, annual = number of audits per year (2 
audits) * [FRA headquarters staff time per audit (20 hours) * FRA 
headquarters staff compensation rate ($125.79) + FRA headquarters 
staff travel expense ($500) + FRA field staff time per audit (12 
hours) * FRA field staff compensation rate ($78.72) + FRA field 
staff travel expense ($100)] = 2 * $4,060 = $8,121.
---------------------------------------------------------------------------

Preparing an Annual Report to Congress
    After the final rule becomes effective, FRA expects that it will 
prepare and submit an annual report to Congress that would summarize 
all certification submissions that FRA received from all the 
manufacturers during the calendar year. FRA anticipates that it may 
include this report within its existing Fiscal Year Enforcement Report 
to Congress. Based on input from subject matter experts, it would take 
FRA staff approximately 24 hours to prepare and submit an annual report 
with an associated cost of $3,019.\80\ Over the 10-year period of 
analysis, the costs of preparing and submitting annual reports to 
Congress is $30,200 (undiscounted), $25,600 (present value (PV), 3%), 
and $17,900 (PV, 7%).
---------------------------------------------------------------------------

    \80\ Prepare and submit annual report to Congress, annual = FRA 
staff hourly labor burden rate ($125.79) * hours to complete and 
submit report (24 hours) = $3,019.
---------------------------------------------------------------------------

Total FRA Burden
    As shown, in table 3, over the 10-year period of analysis, FRA's 
enforcement burden is approximately $103,200 (undiscounted), $89,600 
(PV, 3%), and $65,700 (PV, 7%).

[[Page 85571]]



            Table 3--FRA Enforcement Burden From Issuing the Proposed Rule, Total Cost, Round ($100)
----------------------------------------------------------------------------------------------------------------
                                                  Total cost ($)                          Annualized ($)
          Type of cost           -------------------------------------------------------------------------------
                                   Undiscounted        PV 3%           PV 7%           PV 3%           PV 7%
----------------------------------------------------------------------------------------------------------------
Review affirmations.............          22,000          18,700          13,000           2,200           1,900
Periodic audit..................          51,000          45,300          34,800           5,300           5,000
Annual report to Congress.......          30,200          25,600          17,900           3,000           2,500
                                 -------------------------------------------------------------------------------
    Total cost..................         103,200          89,600          65,700          10,500           9,400
----------------------------------------------------------------------------------------------------------------

(5) Summary of Regulatory Impact
    As shown below in table 4, the total impact that would come from 
issuing the proposed rule including the impact on industry and FRA is 
approximately $143,300 (undiscounted), $123,600 (PV, 3%), and $89,500 
(PV, 7%). In this economic analysis, FRA qualitatively explains the 
potential benefits that may result from implementing the proposed rule, 
including addressing concerns related to compromised national security 
and potential corporate espionage if newly built freight cars with 
sensitive technology and active technological components necessary to 
the functionality of the sensitive technology from COC or SOE enter 
service into the U.S. general railroad system of transportation. FRA 
welcomes public comment related to the potential costs and benefits 
associated with implementing this proposed rule.

           Table 4--Industry Compliance Burden and FRA's Enforcement Burden, Total Cost, Round ($100)
----------------------------------------------------------------------------------------------------------------
                                                  Total cost ($)                          Annualized ($)
             Entity              -------------------------------------------------------------------------------
                                   Undiscounted        PV 3%           PV 7%           PV 3%           PV 7%
----------------------------------------------------------------------------------------------------------------
Industry costs..................          40,100          34,000          23,800           4,000           3,400
FRA costs.......................         103,200          89,600          65,700          10,500           9,400
                                 -------------------------------------------------------------------------------
    Total cost..................         143,300         123,600          89,500          14,500          12,800
----------------------------------------------------------------------------------------------------------------

(6) Alternatives Considered
    FRA considered different ways to interpret the Act related to 
satisfying its duties of issuing a rule. The following alternatives, 
the baseline alternative and reoccurring annual certification 
alternatives, provide insight into FRA's decision-making process 
related to issuing this proposed rule pursuant to implementing the Act.
Baseline Alternative
    The core of a regulatory impact analysis is an assessment of the 
benefits and costs of regulation in comparison to a ``without 
regulation'' (or ``no action'') baseline. If FRA did not issue this 
proposed rule, FRA would not implement the Act and would not codify a 
process for FRA to monitor and enforce industry compliance with the 
Act.
    If FRA failed to follow the statutory requirement of the Act, the 
Act may not be binding and FRA would not meet its statutory 
obligations.
Reoccurring Annual Certification Alternative
    FRA considered alternative interpretations of the statutory 
requirement in the Act, with the aim of ensuring that freight cars on 
the U.S. general railroad system of transportation comply with the Act. 
The first interpretation would require that freight car owners submit 
annual certifications for each of the approximately 1.6 million freight 
cars in service on the U.S. general railroad system of transportation. 
The second interpretation would grandfather in existing freight cars 
and only require owners of freight cars built after the rule's 
implementation date to submit annual certifications. The third 
interpretation would grandfather in existing freight cars but require 
any freight car owner that adds or replaces sensitive technology 
(including the active components within) on a freight car to submit an 
annual certification that the sensitive technology in each augmented 
freight car complies with the sensitive technology provision of the 
proposed rule.
    Under the first interpretation, each year freight car owners would 
need to ensure that all their freight cars comply with the Act. Not 
only would this interpretation not comport with FRA's understanding 
that the Act applies to freight car manufacturers and not freight car 
owners, but it would also be problematic because existing freight car 
owners are unlikely to know the percentage of content of each freight 
car that comes from COCs or SOEs and whether the existing sensitive 
technology in each freight car was sourced from a COC or SOE. FRA 
determined that car owners lacked sufficient information to comply with 
this alternative.
    Under the second interpretation, owners of freight cars entering 
service after the implementation date would need to ensure that all 
aftermarket reconfigurations and repairs comply with the Act (both the 
content limitation and the sensitive technology sourcing provisions). 
Owners of freight cars would need to maintain records of the source 
origin for all parts in each augmented freight car. This alternative 
might help ensure that aftermarket reconfigurations of freight cars 
entering service after the implementation date would not use sensitive 
technology (including the active technological components within) that 
originate from a COC or SOE, this alternative would impose a 
significantly greater burden on both the industry (railroads and 
private car owners) and FRA as compared to the proposed rule. FRA is 
also concerned about how such an interpretation would impact Class III 
railroads and small private car owners. FRA welcomes public comment on 
this alternative.
    Under a third alternative, FRA would require that any freight car 
owner that adds or replaces sensitive technology (including the active 
technological components within) on a freight car submit an annual 
certification to affirm that the freight car maintained compliance with 
the sensitive

[[Page 85572]]

technology limitations of the proposed rule. While this alternative may 
help protect the U.S. general railroad system of transportation from 
safety risks and data breaches, this alternative would impose a 
significantly greater burden on both the industry (railroads and 
private car owners) and FRA as compared to the proposed rule. Moreover, 
this alternative would not comport with FRA's understanding that the 
Act applies to freight car manufacturers and not freight car owners. 
FRA welcomes public comment on this alternative.
    FRA concluded that the proposed rule strikes an appropriate balance 
between enhancing the safety and security of the U.S. general railroad 
system of transportation while minimizing the burden.

B. Regulatory Flexibility Act and Executive Order 13272

    The Regulatory Flexibility Act of 1980 \81\ and E.O. 13272 \82\ 
require agency review of proposed and final rules to assess their 
impacts on small entities. An agency must prepare an Initial Regulatory 
Flexibility Analysis (IRFA) unless it determines and certifies that a 
rule, if promulgated, would not have a significant economic impact on a 
substantial number of small entities. FRA has not determined whether 
this proposed rule would have a significant economic impact on a 
substantial number of small entities and provides the following IRFA.
---------------------------------------------------------------------------

    \81\ 5 U.S.C. 601 et seq.
    \82\ 67 FR 53461 (Aug. 16, 2002).
---------------------------------------------------------------------------

1. Reasons for Considering Agency Action
    The Act mandates that FRA issue a regulation to monitor and enforce 
freight car manufacturers'' compliance with the standards of the Act. 
FRA's implementation of this regulation would carry out the Act's 
mandate.
2. A Succinct Statement of the Objectives of, and the Legal Basis for, 
the Proposed Rule
    On November 15, 2021, President Biden signed the Act,\83\ which 
includes a mandate that FRA issue regulations to implement the 
statute.\84\ The Act provides that freight cars wholly manufactured 
after a certain date may only operate on the U.S. general railroad 
system of transportation if the cars are manufactured by a ``qualified 
manufacturer'' in a ``qualified facility.'' Further the Act prohibits 
newly built freight cars from being operated on the U.S. general 
railroad system of transportation, if they are manufactured: (1) with 
sensitive technology originating from a COC or sourced from a SOE; (2) 
with any components originating from a COC or sourced from a SOE with a 
history of problematic trade practices or respect for IP rights; or, 
(3) with components originating from a COC or sourced from a SOE 
exceeding 20 percent of the freight car after 1 year from the date of 
issuance of regulations or 15 percent of the freight car after 3 years 
from the date of issuance of regulations. The Act requires 
manufacturers to annually certify that they meet the requirements of 
the Act.\85\
---------------------------------------------------------------------------

    \83\ 49 U.S.C. 20171. See https://www.whitehouse.gov/briefing-room/presidential-actions/2021/11/15/executive-order-on-implementation-of-the-infrastructure-investment-and-jobs-act/.
    \84\ Id. at (c)(1).
    \85\ Id. at (c)(2).
---------------------------------------------------------------------------

3. A Description of, and Where Feasible, an Estimate of the Number of 
Small Entities to Which the Proposed Rule Would Apply
    Freight car manufacturers are classified within NAICS 336510 
Railroad rolling stock manufacturing.\86\ The SBA size standard for 
NAICS 336510 is 1,500 employees.\87\ Based on FRA subject matter expert 
input, three of the six freight car manufacturers are considered small 
entities.
---------------------------------------------------------------------------

    \86\ This NAICS classification compromises establishments 
primarily engaged in one or more of the following: (1) manufacturing 
and/or rebuilding locomotives, locomotive frames, and parts; (2) 
manufacturing railroad, street, and rapid transit cars and car 
equipment for operation on rails for freight and passenger service; 
and (3) manufacturing rail layers, ballast distributors, rail 
tamping equipment, and other railway track maintenance equipment. 
https://www.census.gov/naics/?input=336510&year=2022&details=336510.
    \87\ ``Table of Small Business Size Standard'', U.S. Small 
Business Administration, Size Standards effective as of March 17, 
2023, p. 16 of 41 https://www.sba.gov/document/support-table-size-standards.
---------------------------------------------------------------------------

    Census data shows that there are 153 establishments \88\ classified 
within NAICS 336510. Therefore, because freight car manufacturers that 
produce newly built freight railcars compromise of about four percent 
(6 of 153 establishments) of establishments classified within NAICS 
336510, a breakdown of small entities using Census data for NAICS 
336510 would not yield a reliable distribution of small firms by firm 
size (number of employees).
---------------------------------------------------------------------------

    \88\ An establishment is a fixed physical location or permanent 
structure where some form of business activity is conducted.
---------------------------------------------------------------------------

    Based on input from FRA subject matter experts, this analysis 
concludes that the three small freight car manufacturers currently 
comply with the proposed requirements in this rule related to content 
and sensitive technology limitations. Therefore, this analysis 
concludes that the provisions related to content and sensitive 
technology limitations would not create a cost or benefit that would be 
borne by the three small freight car manufacturers.
    With respect to the three small freight car manufacturers, the 
proposed rule would create compliance costs \89\ related to: (1) 
affirming newly designed freight cars comply with the Act; (2) annual 
certification of compliance letter; and (3) participation in a periodic 
audit of freight car manufacturers.
---------------------------------------------------------------------------

    \89\ These compliance cost estimates follow from the estimates 
in ``VI. A. Executive Orders 12866.''
---------------------------------------------------------------------------

    Based on input from FRA subject matter experts, this analysis 
estimates that each year small manufacturers introduce approximately 
six unique freight car design builds. For each of these introductions, 
the small manufacturer would need to inform FRA that the new designs 
are compliant with the Act. Based on FRA subject matter expert input, 
this analysis assumes that an administrative professional in the 
freight car's contract office would draft a document certifying 
compliance with the Act (1 hour) and a vice-president of engineering 
would review and sign the letter (15 minutes).\90\ Each year, the 
industry burden for small entities is $589,\91\ or approximately $200 
per small manufacturer. Over the 10-year period of analysis, the 
industry burden is approximately $5,900 (undiscounted), $5,000 (present 
value (PV), 3%), and $4,000 (PV, 7%).
---------------------------------------------------------------------------

    \90\ U.S. Bureau of Labor Statistics, Occupational Employment 
and Wage Statistics, National Industry-Specific Occupational 
Employment and Wage Statistics, May 2023 NAICS 336500 Railroad 
Rolling Stock Manufacturing ``Sales and Related Occupations'' $40.45 
(mean wage), ``Top Executives'' ($62.74) [May 2023] https://www.bls.gov/oes/current/naics4_336500.htm. When estimating labor 
burden, this analysis added a compensation factor of 1.75, so the 
administrative employee's hourly burden rate is $70.79 and the VP of 
engineering's hourly burden rate is $109.80.
    \91\ Industry burden for affirming compliance, annual = Number 
of freight car designs introduced (6) * [time to write the document 
affirming compliance with the Act (1 hour) * administrative 
professional's hour compensation rate ($70.79) + time to review and 
sign the document (15 minutes) * VP of engineering compensation rate 
($109.80)] = $589.
---------------------------------------------------------------------------

    Based on input from FRA subject matter experts, FRA expects to 
audit approximately one small freight car manufacturer each year, which 
would result in an annual burden on small manufacturers of 4 hours or 
$283,\92\ or approximately $90 per small freight car

[[Page 85573]]

manufacturer. Over the 10-year period of analysis, the burden of 
periodic audits on small manufacturers is $2,800 (undiscounted), $2,400 
(PV, 3%), and $1,900 (PV, 7%).
---------------------------------------------------------------------------

    \92\ Freight car manufacturers, participating in an audit, 
annual (undiscounted) = Number of annual audits (1) * hours to 
prepare and participate in an audit (4 hours) * freight car employee 
compensation rate ($70.79) = $283.
---------------------------------------------------------------------------

    The total cost for small freight car manufacturers is approximately 
$8,700 (undiscounted),\93\ $7,400 (PV, 3%), and $5,200 (PV, 7%). The 
annualized burden for small freight cars related to participating in an 
FRA audit is approximately $900 (PV, 3%), or approximately $300 per 
small freight car manufacturer. Based on subject matter expert input, 
each of the three small freight car manufacturers have annual revenue 
exceeding $1 million. Therefore, issuing the proposed rule would result 
in an annual burden for each of the small freight car manufacturers of 
less than one-tenth of one-percent of its annual revenue. FRA has not 
determined whether this proposed rule would have a significant economic 
impact on a substantial number of small entities. FRA welcomes public 
comment on these findings and conclusion.
---------------------------------------------------------------------------

    \93\ Total cost, small manufacturers (undiscounted) = affirming 
newly built cars comply with Act ($5,900) + participation in 
periodic audit ($2,800) = $8,700.
---------------------------------------------------------------------------

4. A Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Rule, Including an Estimate of the Class 
of Small Entities That Would Be Subject to the Requirements and the 
Type of Professional Skill Necessary for Preparation of the Report or 
Record
    The proposed rule would create three reporting, recordkeeping, and 
other compliance requirements. The three affected freight car 
manufacturers would need to make a dedicated service notification to 
FRA, submit an annual certification of compliance to FRA, and maintain 
and make available to FRA records that affirm compliance with the Act. 
The types of professional skills necessary for preparing and 
maintaining these reports include administrative professional skills 
(basic accounting, writing, organizing) and clerical skills.
5. Identification, to the Extent Practicable, of All Relevant Federal 
Rules That May Duplicate, Overlap, or Conflict With the Proposed Rule
    For a list of all Federal rules that may duplicate, overlap, or 
conflict with this proposed rule, please see the rules described in 
section II. above.
6. A Description of Significant Alternatives to the Rule
    FRA considered three significant alternative interpretations to the 
proposed rule with the aim of ensuring that freight cars on the U.S. 
general railroad system of transportation comply with the Act. The 
first interpretation would require that all freight car owners submit 
annual certifications for each of the approximately 1.6 million freight 
cars in service on U.S. general railroad system of transportation. The 
second interpretation would grandfather in existing freight cars and 
only require owners of freight cars built after the rule's 
implementation date to submit annual certifications with the Act. The 
third interpretation would grandfather in existing freight cars, but 
require any freight car owner that adds or replaces sensitive 
technology (including the active components within) on a freight car to 
submit an annual certification with the Act; specifying that the 
sensitive technology in each augmented freight car complies with the 
sensitive technology provision of the proposed rule. As explained in 
section VI. Regulatory Impact and Notices A. Executive Order 12866, FRA 
concluded that the primary alternative is preferred to each of these 
significant alternatives.

C. Paperwork Reduction Act

    The information collection requirements in this proposed rule are 
being submitted for approval to OMB \94\ under the Paperwork Reduction 
Act of 1995.\95\ The information collection requirements and the 
estimated time to fulfill each requirement are as follows:
---------------------------------------------------------------------------

    \94\ FRA will be using the OMB control number (OMB No. 2130-
0502) that was issued with when the previous NPRM was issued in 1979 
for this information collection.
    \95\ 44 U.S.C. 3501 et seq.

----------------------------------------------------------------------------------------------------------------
                                                                   Average time                     Total cost
         CFR section              Respondent       Total annual    per response    Total annual    equivalent in
                                   universe         responses         (hours)      burden hours    U.S. dollars
                                                 (A)                         (B)   (C) = (A * B)      (D) = (C *
                                                                                                     wage rates)
                                                                                                            \96\
----------------------------------------------------------------------------------------------------------------
215.5(d)(6)--Dedicated         784 railroads...  4 notifications               1            4.00         $311.64
 Service--Notification to FRA.
215.403(a)(1)--Certification   6 manufacturers.  35 Affirmations            1.25           43.75        2,786.00
 of Compliance--Manufacturers
 to electronically certify to
 FRA that the cars comply
 with the requirements of
 this subpart (New
 requirement).
--(a)(1)(ii) Records and such  6 manufacturers.  0.33 report....               6            1.98          126.09
 records shall be made
 available to FRA upon
 request (New requirement).
                              ----------------------------------------------------------------------------------
    Total \97\...............  784 railroads +   39.33                       N/A           49.73        3,223.73
                                6 manufacturers.  notifications.
----------------------------------------------------------------------------------------------------------------

    All estimates include the time for reviewing instructions; 
searching existing data sources; gathering or maintaining the needed 
data; and reviewing the information. Pursuant to 44 U.S.C. 
3506(c)(2)(B), FRA solicits comments concerning: whether these 
information collection requirements are necessary for the proper 
performance of

[[Page 85574]]

the functions of FRA, including whether the information has practical 
utility; the accuracy of FRA's estimates of the burden of the 
information collection requirements; the quality, utility, and clarity 
of the information to be collected; and whether the burden of 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information technology, may be minimized. Organizations and individuals 
desiring to submit comments on the collection of information 
requirements or to request a copy of the paperwork package submitted to 
OMB should contact Ms. Arlette Mussington, Information Collection 
Clearance Officer, at email: [email protected] or telephone: 
(571) 609-1285 or Ms. Joanne Swafford, Information Collection Clearance 
Officer, at email: [email protected] or telephone: (757) 897-
9908.
---------------------------------------------------------------------------

    \96\ The dollar equivalent cost is derived from U.S. Bureau of 
Labor Statistics, 2021 NAICS 336500--Railroad Rolling Stock 
Manufacturing; 13-1000 Business Operations Specialist median wage 
$63.68 ($36.39 + 1.75 overhead costs. The one exception is section 
215.5(d)(6), which is derived from the Surface Transportation 
Board's Full Year Wage 2021, group 200 Professional and 
Administrative.
    \97\ Totals may not add due to rounding.
---------------------------------------------------------------------------

    OMB is required to make a decision concerning the collection of 
information requirements contained in this proposed rule between 30 and 
60 days after publication of this document in the Federal Register. 
Therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days of publication. The final rule will 
respond to any OMB or public comments on the information collection 
requirements contained in this proposal. FRA is not authorized to 
impose a penalty on persons for violating information collection 
requirements that do not display a current OMB control number, if 
required.

D. Federalism Implications

    Executive Order 13132, Federalism,\98\ requires FRA to develop an 
accountable process to ensure ``meaningful and timely input by State 
and local officials in the development of regulatory policies that have 
federalism implications.'' ``Policies that have federalism 
implications'' are defined in the Executive order to include 
regulations that have ``substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.'' Under Executive Order 13132, the agency may not issue 
a regulation with federalism implications that imposes substantial 
direct compliance costs and that is not required by statute, unless the 
Federal Government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments or the agency 
consults with State and local government officials early in the process 
of developing the regulation. Where a regulation has federalism 
implications and preempts State law, the agency seeks to consult with 
State and local officials in the process of developing the regulation.
---------------------------------------------------------------------------

    \98\ 64 FR 43255 (Aug. 10, 1999).
---------------------------------------------------------------------------

    FRA has analyzed this proposed rule in accordance with the 
principles and criteria contained in Executive Order 13132. FRA has 
determined that this proposed rule has no federalism implications, 
other than the possible preemption of State laws under 49 U.S.C. 20106. 
Therefore, the consultation and funding requirements of Executive Order 
13132 do not apply, and preparation of a federalism summary impact 
statement for the proposed rule is not required.

E. International Trade Impact Assessment

    The Trade Agreements Act of 1979 prohibits Federal agencies from 
engaging in any standards or related activities that create unnecessary 
obstacles to the foreign commerce of the United States. Legitimate 
domestic objectives, such as safety, are not considered unnecessary 
obstacles. The statute also requires consideration of international 
standards and, where appropriate, that they be the basis for U.S. 
standards. This proposed rule is not expected to affect trade 
opportunities for U.S. firms doing business overseas or for foreign 
firms doing business in the United States.

F. Environmental Impact

    FRA has evaluated this proposed rule consistent with the National 
Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq.), the Council of 
Environmental Quality's NEPA implementing regulations at 40 CFR parts 
1500 through 1508, and FRA's NEPA implementing regulations at 23 CFR 
part 771 and determined that it is categorically excluded from 
environmental review and therefore does not require the preparation of 
an environmental assessment (EA) or environmental impact statement 
(EIS). Categorical exclusions (CEs) are actions identified in an 
agency's NEPA implementing regulations that do not normally have a 
significant impact on the environment and therefore do not require 
either an EA or EIS.\99\ Specifically, FRA has determined that this 
proposed rule is categorically excluded from detailed environmental 
review pursuant to 23 CFR 771.116(c)(15), ``[p]romulgation of rules, 
the issuance of policy statements, the waiver or modification of 
existing regulatory requirements, or discretionary approvals that do 
not result in significantly increased emissions of air or water 
pollutants or noise.''
---------------------------------------------------------------------------

    \99\ 40 CFR 1508.4.
---------------------------------------------------------------------------

    The main purpose of this rulemaking is to revise FRA's FCSS to 
reduce unnecessary costs and provide regulatory flexibility while 
maintaining safety. This rulemaking would not directly or indirectly 
impact any environmental resources and would not result in 
significantly increased emissions of air or water pollutants or noise. 
In analyzing the applicability of a CE, FRA must also consider whether 
unusual circumstances are present that would warrant a more detailed 
environmental review.\100\ FRA has concluded that no such unusual 
circumstances exist with respect to this proposed rule and it meets the 
requirements for categorical exclusion under 23 CFR 771.116(c)(15).
---------------------------------------------------------------------------

    \100\ 23 CFR 771.116(b).
---------------------------------------------------------------------------

    Pursuant to section 106 of the National Historic Preservation Act 
and its implementing regulations, FRA has determined this undertaking 
has no potential to affect historic properties.\101\ FRA has also 
determined that this rulemaking does not approve a project resulting in 
a use of a resource protected by section 4(f).\102\
---------------------------------------------------------------------------

    \101\ See 16 U.S.C. 470.
    \102\ See Department of Transportation Act of 1966, as amended 
(Pub. L. 89-670, 80 Stat. 931); 49 U.S.C. 303.
---------------------------------------------------------------------------

G. Environmental Justice

    Executive Order 12898, ``Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations'' require 
DOT agencies to achieve environmental justice 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 populations and low-income populations. DOT 
Order 5610.2C (``U.S. Department of Transportation Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations'') instructs DOT agencies to address compliance with 
Executive Order 12898 and requirements within DOT Order 5610.2C in 
rulemaking activities, as appropriate, and also requires consideration 
of the benefits of transportation programs, policies, and

[[Page 85575]]

other activities where minority populations and low-income populations 
benefit, at a minimum, to the same level as the general population as a 
whole when determining impacts on minority and low-income 
populations.\103\ FRA has evaluated this proposed rule under Executive 
Orders 12898, 14096 and DOT Order 5610.2C and has determined it would 
not cause disproportionate and adverse human health and environmental 
effects on communities with environmental justice concerns.
---------------------------------------------------------------------------

    \103\ Executive Order 14096 ``Revitalizing Our Nation's 
Commitment to Environmental Justice,'' issued on April 26, 2023, 
supplements Executive Order 12898, but is not currently referenced 
in DOT Order 5610.2C.
---------------------------------------------------------------------------

H. Unfunded Mandates Reform Act of 1995

    Under section 201 of the Unfunded Mandates Reform Act of 1995,\104\ 
each Federal agency ``shall, unless otherwise prohibited by law, assess 
the effects of Federal regulatory actions on State, local, and tribal 
governments, and the private sector (other than to the extent that such 
regulations incorporate requirements specifically set forth in law).'' 
Section 202 of the Act (2 U.S.C. 1532) further requires that ``before 
promulgating any general notice of proposed rulemaking that is likely 
to result in promulgation of any rule that includes any Federal mandate 
that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of 
$100,000,000 or more (adjusted annually for inflation) in any 1 year, 
and before promulgating any final rule for which a general notice of 
proposed rulemaking was published, the agency shall prepare a written 
statement'' detailing the effect on State, local, and tribal 
governments and the private sector. This proposed rule would not result 
in the expenditure, in the aggregate, of $100,000,000 or more (as 
adjusted annually for inflation) in any one year, and thus preparation 
of such a statement is not required.
---------------------------------------------------------------------------

    \104\ Public Law 104-4, 2 U.S.C. 1531.
---------------------------------------------------------------------------

I. Energy Impact

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' requires 
Federal agencies to prepare a Statement of Energy Effects for any 
``significant energy action.'' \105\ FRA evaluated this proposed rule 
under Executive Order 13211 and determined that this regulatory action 
is not a ``significant energy action'' within the meaning of Executive 
Order 13211.
---------------------------------------------------------------------------

    \105\ 66 FR 28355 (May 22, 2001).
---------------------------------------------------------------------------

J. Privacy Act Statement

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the 
public to better inform its rulemaking process. DOT posts these 
comments, without edit, to www.regulations.gov, as described in the 
system of records notice, DOT/ALL-14 FDMS, accessible through 
www.dot.gov/privacy. To facilitate comment tracking and response, we 
encourage commenters to provide their name, or the name of their 
organization; however, submission of names is completely optional. 
Whether or not commenters identify themselves, all timely comments will 
be fully considered. If you wish to provide comments containing 
proprietary or confidential information, please contact the agency for 
alternate submission instructions.

List of Subjects in 49 CFR Part 215

    Freight cars, Infrastructure Investment and Jobs Act.

The Proposed Rule

    For the reasons discussed in the preamble, FRA proposes to amend 
part 215 of chapter II, subtitle B of title 49, Code of Federal 
Regulations, as follows:

PART 215--RAILROAD FREIGHT CAR SAFETY STANDARDS

0
1. The authority citation for part 215 is revised to read as follows:

    Authority: 49 U.S.C. 20171(c)(1), 49 U.S.C. 20102-03, 20107, 
20133, 20137-38, 20143, 20701-03, 21301-02, 21304; 28 U.S.C. 2401, 
note; and 49 CFR 1.49.

0
2. Revise Sec.  215.5 to read as follows:


Sec.  215.5   Definitions.

    As used in this part:
    Break means a fracture resulting in complete separation into parts;
    Component means a part or subassembly of a railroad freight car;
    Control means the power, whether direct or indirect and whether or 
not exercised, through the ownership of a majority or a dominant 
minority of the total outstanding voting interest in an entity; 
representation on the board of directors of an entity; proxy voting on 
the board of directors of an entity; a special share in the entity; a 
contractual arrangement with the entity; a formal or informal 
arrangement to act in concert with an entity; or any other means, to 
determine, direct, make decisions, or cause decisions to be made for 
the entity;
    Cost of sensitive technology means the aggregate cost of the 
sensitive technology located on a railroad freight car.
    Country of concern means a country that--
    (1) Was identified by the Department of Commerce as a nonmarket 
economy country (as defined in section 771(18) of the Tariff Act of 
1930 (19 U.S.C. 1677(18))) as of November 15, 2021;
    (2) Was identified by the United States Trade Representative in the 
most recent report required by section 182 of the Trade Act of 1974 (19 
U.S.C. 2242) as a foreign country included on the priority watch list 
(as defined in subsection (g)(3) of such section); and
    (3) Is subject to monitoring by the Trade Representative under 
section 306 of the Trade Act of 1974 (19 U.S.C. 2416).
    Dedicated service means the exclusive assignment of cars to the 
transportation of freight between specified points under the following 
conditions:
    (1) The cars are operated--
    (i) Primarily on track that is inside an industrial or other non-
railroad installation; and
    (ii) Only occasionally over track of a railroad;
    (2) The cars are not operated--
    (i) At speeds of more than 15 miles per hour; and
    (ii) Over track of a railroad--
    (A) For more than 30 miles in one direction; or
    (B) On a round trip of more than 60 miles;
    (3) The cars are not freely interchanged among railroads;
    (4) The words ``Dedicated Service'' are stenciled, or otherwise 
displayed, in clearly legible letters on each side of the car body;
    (5) The cars have been examined and found safe to operate in 
dedicated service; and
    (6) The railroad must--
    (i) Notify FRA in writing that the cars are to be operated in 
dedicated service;
    (ii) Identify in that notice--
    (A) The railroads affected;
    (B) The number and type of cars involved;
    (C) The commodities being carried; and
    (D) The territorial and speed limits within which the cars will be 
operated; and
    (iii) File the notice required by this paragraph (6)(iii) of the 
definition not less than 30 days before the cars operate in dedicated 
service;
    In service when used in connection with a railroad freight car, 
means each railroad freight car subject to this part unless the car:
    (1) Has a ``bad order'' or ``home shop for repairs'' tag or card 
containing the

[[Page 85576]]

prescribed information attached to each side of the car and is being 
handled in accordance with Sec.  215.9;
    (2) Is in a repair shop or on a repair track;
    (3) Is on a storage track and is empty; or
    (4) Has been delivered in interchange but has not been accepted by 
the receiving carrier.
    Net cost has the meaning given such term in chapter 4 of the USMCA 
or any subsequent free trade agreement between the United States, 
Mexico, and Canada.
    Qualified facility means a facility that is not owned or under the 
control of a state-owned enterprise.
    Qualified manufacturer means a railroad freight car manufacturer 
that is not owned or under the control of a state-owned enterprise.
    Railroad means all forms of non-highway ground transportation that 
run on rails or electromagnetic guideways, including:
    (1) Commuter or other short-haul rail passenger service in a 
metropolitan or suburban area, and
    (2) High speed ground transportation systems that connect 
metropolitan areas, without regard to whether they use new technologies 
not associated with traditional railroads. Such term does not include 
rapid transit operations within an urban area that are not connected to 
the general railroad system of transportation.
    Railroad freight car means a car designed to carry freight or 
railroad personnel by rail, including--
    (1) A box car;
    (2) A refrigerator car;
    (3) A ventilator car;
    (4) An intermodal well car;
    (5) A gondola car;
    (6) A hopper car;
    (7) An auto rack car;
    (8) A flat car;
    (9) A special car;
    (10) A caboose car;
    (11) A tank car; and
    (12) A yard car.
    Sensitive technology means any device embedded with electronics, 
software, sensors, or other connectivity, that enables the device to 
connect to, collect data from, or exchange data with another device, 
including--
    (1) Onboard telematics;
    (2) Remote monitoring software;
    (3) Firmware;
    (4) Analytics;
    (5) Global positioning system satellite and cellular location 
tracking systems;
    (6) Event status sensors;
    (7) Predictive component condition and performance monitoring 
sensors; and
    (8) Similar sensitive technologies embedded into freight railcar 
components and sub-assemblies.
    State inspector means an inspector who is participating in 
investigative and surveillance activities under section 206 of the 
Federal Railroad Safety Act of 1970 (45 U.S.C. 435).
    State-owned enterprise means--
    (1) An entity that is owned by, or under the control of, a 
national, provincial, or local government of a country of concern, or 
an agency of such government; or
    (2) An individual acting under the direction or influence of a 
government or agency described in paragraph (1) of this definition.
    Substantially transformed means a component of a railroad freight 
car that undergoes an applicable change in tariff classification as a 
result of the manufacturing process, as described in chapter 4 and 
related annexes of the USMCA or any subsequent free trade agreement 
between the United States, Mexico, and Canada.
    USMCA. The acronym `USMCA' has the meaning given the term in 
section 3 of the United States-Mexico-Canada Agreement Implementation 
Act (19 U.S.C. 4502).
0
3. Add subpart E to part 215 to read as follows:
Subpart E--Manufacturing
Sec.
215.401 Requirements for railroad freight cars placed into service 
in the United States.
215.403 Certification of compliance.
215.405 Prohibition on registering noncompliant railroad freight 
cars.
215.407 Civil penalties.

Subpart E--Manufacturing


Sec.  215.401   Requirements for railroad freight cars placed into 
service in the United States.

    (a) Limitation on railroad freight cars. A railroad freight car 
wholly manufactured on or after [DATE 365 DAYS AFTER DATE OF 
PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER] may only operate 
on the United States general railroad system of transportation if:
    (1) The railroad freight car is manufactured, assembled, and 
substantially transformed, as applicable, by a qualified manufacturer 
in a qualified facility;
    (2) None of the sensitive technology located on the railroad 
freight car, including components necessary to the functionality of the 
sensitive technology, originates from a country of concern or is 
sourced from a state-owned enterprise; and
    (3) None of the content of the railroad freight car, excluding 
sensitive technology, originates from a country of concern or is 
sourced from a state-owned enterprise that has been determined by a 
recognized court or administrative agency of competent jurisdiction and 
legal authority to have violated or infringed valid United States 
intellectual property rights of another including such a finding by a 
Federal district court under title 35 or the U.S. International Trade 
Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 
1337).
    (b) Limitation on railroad freight car content. (1) Percentage 
limitation--
    (i) Initial limitation. Not later than [DATE 365 DAYS AFTER DATE 
THE FINAL RULE IS ISSUED], a railroad freight car described in 
paragraph (a) of this section may operate on the United States general 
railroad system of transportation only if not more than 20 percent of 
the content of the railroad freight car, calculated by the net cost of 
all components of the car and excluding the cost of sensitive 
technology, originates from a country of concern or is sourced from a 
state-owned enterprise.
    (ii) Subsequent limitation. Effective beginning on [DATE 1461 DAYS 
AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER], a railroad freight 
car described in paragraph (a) of this section may operate on the 
United States general railroad system of transportation only if not 
more than 15 percent of the content of the railroad freight car, 
calculated by the net cost of all components of the car and excluding 
the cost of sensitive technology, originates from a country of concern 
or is sourced from a state-owned enterprise.
    (2) Conflict. The percentages specified in the clauses in 
paragraphs (b)(1)(i) and (ii) of this section, as applicable, shall 
apply notwithstanding any apparent conflict with provisions of chapter 
4 of the USMCA.


Sec.  215.403   Certification of compliance.

    (a) Certification required. To be eligible to provide a railroad 
freight car for operation on the United States general railroad system 
of transportation, the manufacturer of such car shall certify, at least 
annually, to the Railroad Administrator that any railroad freight cars 
to be so provided comply with the 49 U.S.C. 20171.
    (1) Certification procedure. Prior to providing any cars for 
operation on the United States general railroad system of 
transportation, each freight car manufacturer shall certify to FRA that 
the cars comply with the 49 U.S.C.

[[Page 85577]]

20171. Such certification shall be submitted via electronic mail by an 
authorized representative of the manufacturer to [email protected]. A 
manufacturer may submit this certification to FRA annually provided it 
covers all cars to be provided in the relevant year, or a manufacturer 
may submit separate certifications throughout the year.
    (i) The certification shall include the statement ``I certify that 
all freight cars that will be provided for operation on the United 
States general railroad system of transportation will comply with the 
49 U.S.C. 20171, and the implementing regulations at 49 CFR part 215'' 
and contain:
    (A) The manufacturer's name and address;
    (B) The name, signature, and contact information for the person 
designated to certify compliance with this subpart; and
    (C) A car identification number for each car being certified.
    (ii) Manufacturers shall maintain records showing the information, 
including the calculations, made to support certification under this 
section and such records shall be made available to FRA upon request.
    (2) Valid certification required. At the time a railroad freight 
car begins operation on the United States general railroad system of 
transportation, the manufacturer of such railroad freight car shall 
have valid certification described in paragraph (a) of this section for 
the year in which such car begins operation.
    (b) [Reserved]


Sec.  215.405   Prohibition on registering noncompliant railroad 
freight cars.

    (a) Cars prohibited. A railroad freight car manufacturer may not 
register, or cause to be registered, a railroad freight car that does 
not comply with the requirements under this subpart in the Umler 
system.
    (b) [Reserved]


Sec.  215.407  Civil penalties.

    (a) In general. A railroad freight car manufacturer that has 
manufactured a railroad freight car for operation on the United States 
freight railroad interchange system that the Secretary of 
Transportation determines, after written notice and an opportunity for 
a hearing, has violated this subpart is liable to the United States 
Government for a civil penalty of at least $100,000, but not more than 
$250,000, for each such violation for each railroad freight car.
    (b) Prohibition for violations. The Secretary of Transportation may 
prohibit a railroad freight car manufacturer with respect to which the 
Secretary has assessed more than 3 violations under this section from 
providing additional railroad freight cars for operation on the United 
States freight railroad interchange system until the Secretary 
determines:
    (1) Such manufacturer is in compliance with this section; and
    (2) All civil penalties assessed to such manufacturer pursuant to 
this section have been paid in full.

    Issued in Washington, DC.
Amitabha Bose,
Administrator.
[FR Doc. 2023-26133 Filed 12-7-23; 8:45 am]
BILLING CODE 4910-06-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.