[Federal Register Volume 64, Number 66 (Wednesday, April 7, 1999)]
[Proposed Rules]
[Pages 17062-17071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8477]



[[Page 17061]]

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Part II





Department of Transportation





_______________________________________________________________________



Federal Transit Administration



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49 CFR Part 611



Major Capital Investment Projects; Proposed Rule

  Federal Register / Vol. 64, No. 66 / Wednesday, April 7, 1999 / 
Proposed Rules  

[[Page 17062]]



DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 611

[Docket No. FTA-99-5474]
RIN 2132-AA63


Major Capital Investment Projects

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Transportation Equity Act for the 21st Century (TEA-21) 
requires the Federal Transit Administration (FTA) to issue regulations 
on the manner in which candidate projects for capital investment grants 
and loans for new fixed guideway systems and extensions to existing 
systems (``new starts'') will be evaluated and rated. This Notice of 
Proposed Rulemaking (NPRM) describes the procedures that FTA proposes 
to use in the project evaluation and rating process. When finalized, 
this rule will enable FTA and Congress to identify those new starts 
projects that should be funded, in part, by the Federal government.

DATES: Comments on this proposed rule must be submitted by July 6, 
1999. Late-filed comments will be considered to the extent practicable.

ADDRESSES: Written comments must refer to the docket number appearing 
above and must be submitted to the United States Department of 
Transportation, Central Dockets Office, PL-401, 400 Seventh Street SW, 
Washington, DC 20590. All comments received will be available for 
inspection at the above address from 10:00 a.m. to 5:00 p.m., Monday 
through Friday, except Federal holidays. Those desiring the agency to 
acknowledge receipt of their comments should include a stamped, self-
addressed postcard with their comments.

FOR FURTHER INFORMATION CONTACT: For program issues, John Day, Office 
of Policy Development, FTA, (202) 366-4060. For legal issues, Scott A. 
Biehl, Assistant Chief Counsel, FTA, (202) 366-4063.

SUPPLEMENTARY INFORMATION:

Electronic Access

    Electronic access to this and other documents is available through 
FTA's home page on the World Wide Web, at http://www.fta.dot.gov.
    Internet users can access all comments received by the U.S. DOT 
Dockets, Room PL-401, via the Docket Management System (DMS) on the DOT 
home page, at http://dms.dot.gov. The DMS is available 24 hours each 
day, 365 days each year. Please follow the instructions online for more 
information and help.
    An electronic copy of this document may be downloaded using a modem 
and suitable communications software from the Government Printing 
Office's (GPO) Electronic Bulletin Board Service at (202) 512-1661. 
Internet users may reach the Federal Register's home page, at http://
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www.access.gpo.gov/nara.

Table of Contents

I. Background
II. History
    A. The First Policy Statement (1976)
    B. Policy on Rail Transit (1978)
    C. Statement of Policy on Major Urban Mass Transportation 
Capital Investments (1984)
    D. Surface Transportation and Uniform Relocation Assistance Act 
of 1987 (STURAA)
    E. Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA)
    F. Executive Order 12893 (1994)
    G. Policy Discussion Paper (1994)
    H. The 1996 Statement of Policy
III. Transportation Equity Act for the 21st Century (TEA-21)
    A. Significant Changes
    B. Other Changes
IV. Government Performance and Results Act of 1993
V. Outreach
VI. Today's Proposed Rule
VII. Section-By-Section Analysis
VIII. Request for Comments on Particular Issues
IX. Regulatory Evaluation
X. Regulatory Process Matters

I. Background

    The Federal Transit Administration (FTA) is issuing this NPRM to 
carry out the requirements of Section 3009(e)(5) of TEA-21. The 
proposed regulation defines the process FTA will use to evaluate 
candidate new starts under 49 USC 5309.
    These procedures will replace those in force since the December 19, 
1996 Federal Register Notice [61 FR 67093-106], and the November 12, 
1997 amendments to this Notice [62 FR 60756-58], which described the 
measures then used by FTA to evaluate candidate projects for 
discretionary new starts funding under the statutory criteria at that 
time.
    This rule, together with the FTA/Federal Highway Administration 
(FHWA) planning and environmental regulations at 23 CFR Parts 450 and 
771, will flesh out the requirements of 49 U.S.C. 5309(e). The statute 
now requires candidate projects to be ``(A) based on the results of an 
alternatives analysis and preliminary engineering, (B) justified based 
on a comprehensive review of its mobility improvements, environmental 
benefits, cost effectiveness, and operating efficiencies, and (C) 
supported by an acceptable degree of local financial commitment, 
including evidence of stable and dependable financing sources to 
construct, maintain, and operate the system or extension.'' This rule 
sets forth the approach FTA proposes to use to evaluate candidate 
projects in terms of their justification and local financial 
commitment. Consistent with 49 U.S.C. 5309(e)(6), as amended by Section 
3009(e) of TEA-21, these procedures will be used to approve candidate 
projects for entry into preliminary engineering and final design. These 
procedures will also be used to evaluate projects in order to make 
recommendations for funding in the annual report to Congress required 
by 49 U.S.C. 5309(o)(1).

II. History

    Since the early 1970's, the Federal government has provided a large 
share of the Nation's capital investment in urban mass transportation, 
particularly for ``new starts'' (major new fixed guideway transit 
systems or extensions to existing fixed guideway systems). By the mid-
1970's, because of the magnitude of the New Start commitments being 
proposed, the Department found it useful to publish a statement of 
Federal policy to ensure that the available resources would be used in 
the most prudent and effective manner.

A. The First Policy Statement (1976)

    The first policy statement was issued in 1976 [41 FR 41512-14 (9/
22/76)]. It introduced a process-oriented approach with the requirement 
that New Start projects be subjected to an analysis of alternatives, 
including a Transportation System Management (TSM) alternative that 
used no-capital and low-capital measures to make the best use of the 
existing transportation system. The Statement also required projects to 
be ``cost-effective.''

B. Policy on Rail Transit (1978)

    The original policy was supplemented in 1978 by a ``Policy on Rail 
Transit'' [43 FR 9428-30 (3/7/78)]. This Statement reiterated the 
requirement for Alternatives Analysis, established requirements for 
local financial commitments to the project, established the concept of 
a contract providing for a multi-year commitment of Federal funds, with 
a maximum limit of Federal participation (the Full Funding Grant

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Agreement--FFGA), and required that local governments undertake 
supporting local land use actions. This was supplemented by a 1980 
policy statement that linked the Alternatives Analysis requirement to 
the Environmental Impact Statement development process [45 FR 71986-87 
(10/30/80)].

C. Statement of Policy on Major Urban Mass Transportation Capital 
Investments (1984)

    These principles were reiterated and refined in a May 18, 1984, 
Statement of Policy on Major Urban Mass Transportation Capital 
Investments [49 FR 21284-91]. The major feature of this Policy 
Statement was the introduction of an approach for making comparisons 
between competing projects. To do so, a rating system was established 
under which projects were evaluated in terms of a cost effectiveness 
index of forecast incremental cost per incremental rider for the build 
alternative, compared with the TSM alternative as the base. Further, 
index threshold values were established which projects had to pass in 
order to be considered for funding. In addition, the criteria to be 
used to judge local financial commitment were spelled out.

D. Surface Transportation and Uniform Relocation Assistance Act of 1987 
(STURAA)

    The principles of the 1984 policy statement were later incorporated 
into law with enactment by Congress of the Surface Transportation and 
Uniform Relocation Assistance Act of 1987 (STURAA) (Pub. L. 100-17). 
This act established in law a set of criteria which new starts projects 
had to meet in order to be eligible for Federal discretionary grants. 
Specifically, projects had to be ``cost-effective'' and ``supported by 
an adequate degree of local financial commitment.'' STURAA also added a 
requirement for an annual report to Congress laying out the 
Department's recommendations for discretionary funding for new starts 
for the subsequent fiscal year.
    To effectuate the requirements set forth in STURAA, on April 25, 
1989 FTA (then the Urban Mass Transportation Administration) issued a 
Notice of Proposed Rulemaking [54 FR 17878-92]. This Proposed Rule 
would have codified the requirements of the 1984 Policy Statement and 
made the ``Cost Per New Rider'' Index and threshold values regulatory. 
However, in the FY 1990 and FY 1991 Appropriations Acts, Congress 
directed that this rulemaking not be advanced [See the Department of 
Transportation and Related Agencies Appropriations Act, 1990 (Pub. L. 
101-164) and Department of Transportation and Related Agencies 
Appropriations Act, 1991 (Pub. L. 101-516)]. Thus, on February 3, 1993, 
this rulemaking was withdrawn [58 FR 6948].

E. Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA)

    The Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) made substantial changes to the legislative basis for the 
criteria used to evaluate candidate projects. Specifically, the 
original requirement that a project be ``cost-effective'' was expanded; 
the new requirement specified that projects be ``justified, based on a 
comprehensive review of its mobility improvements, environmental 
benefits, cost-effectiveness, and operating efficiencies.'' In 
addition, certain ``considerations'' and ``guidelines'' were 
established that were to be taken into account in determining how well 
the project meets the criteria.

F. Executive Order 12893 (1994)

    On January 26, 1994, the President issued Executive Order 12893 [59 
FR 4233-5], describing the principles which Federal agencies are to 
apply in determining how to invest in all forms of infrastructure, 
including transportation. The Order requires a systematic analysis of 
the costs and benefits of proposed investments, and sets out the 
parameters for such analysis. It calls for efficient management of 
infrastructure, including a focus on the operation and maintenance of 
facilities, as well as the use of pricing to manage demand, and calls 
for comparison of a comprehensive set of options and consideration of 
quantifiable and qualitative measures of benefits for all programs.

G. Policy Discussion Paper (1994)

    Thereafter, in September 1994, FTA circulated a ``policy discussion 
paper'' to the transit industry and other stakeholders for comment. 
This paper detailed various approaches for evaluating proposed projects 
under the ISTEA criteria, and requested comment on nine specific 
issues. Interest was extensive, and a period of public comment, further 
analysis, additional industry input, and additional analysis ensued.

H. The 1996 Statement of Policy

    On December 19, 1996, FTA issued a Notice in the Federal Register 
that formally adopted the ISTEA project justification criteria [61 FR 
67093-106]. This Notice defined the criteria, established the process, 
and described the measures that would be used to evaluate candidate 
projects for discretionary new starts funding. This Notice also 
established a multiple-measure method of project evaluation, in a 
manner consistent with Executive Order 12893.
    This Statement of Policy was amended on November 12, 1997, to 
incorporate Departmental guidance establishing a Department-wide 
standard for valuing travel time, and make other technical corrections 
[62 FR 60756-58].

III. Transportation Equity Act for the 21st Century (TEA-21)

    On June 9, 1998, the Transportation Equity Act for the 21st Century 
(TEA-21) (Pub. L. 105-178) was enacted. TEA-21 leaves much of past law 
and policy regarding new starts intact, including the basic project 
justification criteria and the multiple-measure method of project 
evaluation. However, a number of significant changes were introduced.

A. Significant Changes

     Integration of the Major Investment Study (MIS) 
requirement into the FTA/FHWA planning and environmental regulations 
(23 CFR Part 450 and 23 CFR Part 771), elimination of the MIS as a 
separate requirement (see Section 1308 of TEA-21), and required 
streamlining of the environmental process (see Section 1309 of TEA-21);
     The requirement for FTA to establish overall project 
ratings of ``highly recommended,'' ``recommended,'' or ``not 
recommended;''
     The requirement for FTA approval for a project to advance 
to the final design stage of the project development process; and
     The requirement that FTA publish regulations on the manner 
in which proposed projects will be evaluated and rated (the purpose of 
this rule).

B. Other Changes

     Several additional statutory ``considerations'' have been 
added to the project evaluation process, including the cost of sprawl, 
infrastructure cost savings due to compact land use, population density 
and current transit ridership in a corridor, and the technical capacity 
of the grantee to undertake the project.
     TEA-21 expressly prohibits FTA from considering the dollar 
value of mobility improvements (see Section 3010).
     The ISTEA exemptions from the FTA statutory project 
evaluation process, for proposed projects that

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require less than one-third of the project funding from 49 U.S.C. 5309 
or are part of a State Improvement Plan for air quality, were 
eliminated. The exemption remains for projects requiring less than $25 
million in 49 U.S.C. 5309 funding.
     For evaluating local financial commitment, the 
consideration for local funding beyond the required non-Federal share 
has been incorporated into statute.
     A second annual report to Congress, in addition to the 
existing Report on Funding Levels and Allocations of Funds, is now 
required. This new ``Supplemental New Starts Report,'' due each August, 
will include updated ratings for projects that have completed the 
alternatives analysis and preliminary engineering stages of development 
since the date of the last Report on Funding Levels and Allocations of 
Funds.

IV. Government Performance and Results Act of 1993

    The Government Performance and Results Act (GPRA) was enacted in 
1993 to provide for the establishment of strategic planning and 
performance measurement in the Federal Government. It is primarily 
intended to improve Federal program effectiveness and public 
accountability by promoting a new focus on results, service quality, 
and customer satisfaction.
    In recognition of the GPRA's results-oriented focus, FTA intends to 
develop performance measures to evaluate our administration of the new 
starts program, and to measure the performance of Federal new starts 
investments. Both of these measures would be incorporated into FTA's 
management of new starts projects.
    To evaluate FTA's own performance in the administration of the new 
starts program, we plan to develop indicators to measure the progress 
and cost of projects at the time they open for revenue service against 
the schedule and cost estimated in the FFGA (accounting for the fact 
that the actual project funding stream is dependent on Congressional 
appropriations). FTA invites comment on what indicators may be 
appropriate for this evaluation.
    FTA is also interested in measuring the actual benefits of new 
starts once they have opened for revenue service. Toward that end, we 
plan to incorporate a ``follow-up'' mechanism into the new starts 
project development process to monitor the actual performance of a new 
starts project after it opens for revenue service. Measures should 
address the full range of benefits of new starts investments, such as 
those embodied in the statutory project justification criteria, while 
not imposing a large reporting burden on project sponsors. FTA invites 
comment on appropriate measures and timeframes for evaluation.

V. Outreach

    The development of this proposed rule began with a series of 
outreach sessions conducted during the months of September and October 
1998. Three workshops were held around the country: one in Portland, 
Oregon, in conjunction with the RailVolution Conference on September 
14; one in Washington, DC on September 25; and one in New York City, in 
conjunction with the Annual Meeting of the American Public Transit 
Association (APTA) on October 8.
    The purpose of these outreach sessions was to describe the changes 
made by TEA-21 to the new starts program, discuss how we plan to 
implement them, and solicit general comment on FTA's policies and 
procedures in managing the new starts program.
    The comments received during this outreach process were generally 
supportive of our proposed approach to this rule, including the 
retention of the basic principles of the 1996 Statement of Policy.

VI. Today's Proposed Rule

    This rule defines the process FTA proposes to use to make the 
statutory evaluation of project justification under 49 U.S.C. 5309(e) 
(1)-(4), and to approve entry into the preliminary engineering and 
final design stages of project development as required by 49 U.S.C. 
5309(e)(6), for new starts projects proposed for funding under 49 
U.S.C. 5309.
    To a large degree, this proposed rule builds upon the December 19, 
1996 Notice (as amended). The project justification criteria and the 
evaluation measures are largely unchanged by TEA-21. However, there are 
a number of important changes to the new starts program that are 
reflected in this rule. Major elements of the proposed rule are 
discussed below.

Major Elements of This Proposed Rule

     Establishment of overall project ratings of ``highly 
recommended,'' ``recommended,'' or ``not recommended'' to determine the 
eligibility of proposed projects for funding.
     Requirement for FTA approval before a proposed project can 
advance into preliminary engineering or final design, based on the 
evaluation and rating of the project.
     Incorporation of additional factors for consideration in 
FTA project evaluations, including reductions in infrastructure cost 
achieved through compact land use development, the cost of urban 
sprawl, population density, current transit ridership in the corridor, 
and the technical capacity of the grant recipient to construct the 
proposed project.
     Elimination of the exemption from the 49 U.S.C. 5309(e) 
project evaluation process for proposed projects with a Federal share 
of less than one-third, or that are part of State Implementation Plans 
for air quality.

VII. Section-by-Section Analysis

A. Section 611.1: Purpose and Contents

    This section states that this rule is issued to meet the statutory 
requirement of Title 49, United States Code, Section 5309(e)(5).
    This rule establishes the methodology by which FTA will evaluate 
proposed new starts projects as required by 49 U.S.C. 5309(e). The data 
collected as part of the planning and project development processes and 
related regulations, conducted under 23 CFR 450 and 23 CFR 771, will 
provide the basis for this evaluation. Applicants must follow these 
rules to be considered eligible for capital investment grants and loans 
for new fixed guideway systems or extensions (``new starts'').
    The results of this evaluation will be used by FTA to make the 
findings required by statute for proposed projects to advance into the 
preliminary engineering and final design stages of project development, 
and to develop funding recommendations for the President's annual 
budget request. They will also be used to determine which projects are 
eligible for funding commitments under Full Funding Grant Agreements.
    The information collected and ratings developed under this rule 
will form the basis for the annual Report on Funding Levels and 
Allocations of Funds, as required under 49 U.S.C. 5309(o)(1), and the 
``Supplemental New Starts Report,'' as required by 49 U.S.C. 
5309(o)(2). To ensure timely publication of these reports, this rule 
establishes cutoff dates for submission of project-specific information 
to be included in these reports.

B. Section 611.3: Applicability

    This section states that this rule applies only to the evaluation 
of projects seeking Federal capital investment funds for new transit 
fixed guideway and extension projects (``new starts'') under 49 U.S.C. 
5309.

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    It also states that proposed projects are exempt from evaluation 
under this rule if the total amount of funding under 49 U.S.C. 5309 is 
less than $25,000,000, or if they are specifically exempt by statute. 
Such projects must still meet the requirements under 23 CFR 450 and 23 
CFR 771, and the project development process described in this rule. 
Further, FTA must still have a basis to approve entry into preliminary 
engineering and final design, and make decisions regarding funding 
commitments--even for exempt projects. Sponsors of proposed projects 
that they believe to be exempt are therefore strongly urged to submit 
project evaluation information to FTA.
    Finally, this section notes that projects for which a Federal 
funding commitment (FFGA) has been issued are not subject to 
reevaluation under this rule.

C. Section 611.5: Definitions

    This section defines key terms used in this Part.

D. Section 611.7: Relation to Planning and Project Development 
Processes

    New start projects, like all transportation investments in 
metropolitan areas, must emerge from a regional multimodal 
transportation planning process in order to be eligible for Federal 
funding. In addition, 49 U.S.C. 5309(e)(1) specifies that discretionary 
grants or loans for new starts may only be approved if a proposed 
project is based on the results of alternatives analysis and 
preliminary engineering, and that certain project justification and 
financial criteria have been met. To be eligible for FTA capital 
investment funds for a new start project, the proposed project must 
emerge from the metropolitan and/or Statewide planning process. Local 
officials must perform a corridor-level analysis of mode and alignment 
alternatives. This alternatives analysis will provide information on 
the benefits, costs, and impacts of alternative strategies, leading to 
the selection of a locally-preferred solution to the community's 
mobility needs. The FTA/FHWA planning and environmental regulations (23 
CFR Parts 450 and 771), which required a Major Investment Study (MIS) 
that fulfilled the requirement for alternatives analysis, are being 
revised in accordance with TEA-21.
    The approach taken in this regulation envisions alternatives 
analysis as a key planning tool, supplemented by subsequent project 
development analyses, for determining appropriate solutions to 
transportation issues. As FTA and FHWA approach modification of their 
joint planning and environmental regulations, this rule may have 
implications for that effort and vice versa. FTA is particularly 
interested in comments about the relationship between the alternatives 
analysis requirement and its relationship to the planning and project 
development processes. The agency also welcomes comments regarding 
appropriate strategies for considering management and operation 
strategies, including the TSM and no build options, in the context of 
planning and project development.
    Federal financial support for the planning process is derived from 
a number of sources, including the Metropolitan Planning Program under 
49 U.S.C. 5303, the State National Planning and Research Program under 
49 U.S.C. 5313, and planning programs administered by the Federal 
Highway Administration. FTA Urbanized Area Formula funds under 49 
U.S.C. 5307 and flexible funds under the Surface Transportation Program 
(STP) and the Congestion Mitigation and Air Quality (CMAQ) Program may 
also be used to support certain planning activities. Given the 
significant demands placed on the new start program, FTA does not 
support the use of 49 U.S.C. 5309 funds for initial planning 
activities. Moreover, as amended by TEA-21, 49 U.S.C. 5309(m)(2) limits 
the amount of new starts funding that can be used for purposes other 
than final design and construction to not more than 8 percent of funds 
appropriated. In evaluating the local financial commitment to a 
proposed project, FTA will therefore consider the degree to which 
initial planning activities are conducted without funding from section 
5309.
    When the sponsoring agency for a new start project desires to 
initiate the preliminary engineering phase of project development, it 
must submit a request to the FTA regional office. The request must 
provide information on the metropolitan and/or Statewide plan that 
identifies the project, including the adoption of the project into the 
metropolitan transportation plan and the programming of the preliminary 
engineering study in the TIP. The request must also address the project 
justification and local financial commitment criteria outlined below. 
(This information is normally developed as part of an alternatives 
analysis.) FTA will then evaluate the proposed project as required by 
49 U.S.C. 5309(e)(6) and determine whether or not to advance the 
project into preliminary engineering. FTA approval to initiate 
preliminary engineering is not a commitment to fund final design or 
construction.
    Where the sponsoring agency believes that a proposed project is 
exempt from evaluation under this rule, submission of project 
justification and financial commitment information to FTA is not 
required. However, without such information FTA will have no basis for 
approving an exempt project for entry into preliminary engineering and 
final design, and will be unable to make decisions on whether to 
recommend Federal funding commitments. Therefore, sponsors of exempt 
projects are strongly encouraged to submit information on project 
justification and financial commitment.
    During the preliminary engineering phase, local project sponsors 
refine the design of the proposal, taking into consideration all 
reasonable design alternatives. The process results in estimates of 
project costs, benefits and impacts in which there is a higher degree 
of confidence. In addition, NEPA requirements are completed (for new 
starts, this will normally entail the completion of an environmental 
impact statement), project management concepts are finalized, any 
required funding sources are put in place, and safety matters are 
addressed. Information on project justification and the degree of local 
financial commitment will be continually updated and reported as 
appropriate. As part of their preliminary engineering activities, 
localities are encouraged to consider policies and actions designed to 
enhance the benefits of the project and its financial feasibility.
    Project sponsors should ensure that safety considerations are 
weighed during the preliminary engineering phase. With regard to rail 
projects that will be subjected to Federal Railroad (FRA) safety 
jurisdiction, FTA will notify FRA of pending new starts because 
important decisions impacting rail safety should be made early in the 
planning and grant development process. FRA will forward any 
recommendations it has to FTA, which will forward them to the project 
sponsor.
    A comprehensive preliminary engineering effort should address the 
evaluation criteria described in this rule.
    Preliminary engineering is typically financed with 49 U.S.C. 5303 
and 5307 funds, local revenues, and flexible funds under the STP and 
CMAQ programs.
    Final Design is the last phase of project development, and includes 
right-of-way acquisition, utility relocation, and the preparation of 
final construction plans (including construction management plans), 
detailed specifications, construction

[[Page 17066]]

cost estimates, and bid documents. The final design stage cannot be 
initiated until environmental requirements have been satisfied, as 
evidenced by a Record of Decision (ROD) or a Finding of No Significant 
Impact (FONSI). Consistent with 49 U.S.C. 5309(e)(6), FTA will approve 
entry into final design based on the results of the project evaluation 
process. Final design is typically eligible for 49 U.S.C. 5309 new 
start funds.

E. Section 611.9: Project Justification Criteria

    To make the statutory approvals required for a project to enter 
preliminary engineering and final design; for execution of an FFGA; and 
annual project funding recommendations, FTA will evaluate information 
developed through the planning and project development processes. The 
method used to make these determinations is a multiple measure approach 
in which the merits of candidate projects will be evaluated against a 
set of measures. These measures will also be used to determine which 
projects to recommend for funding in the report required by 49 U.S.C. 
5309(o)(1). The ratings for each measure will be updated throughout the 
preliminary engineering and final design processes, as costs, benefits 
and impacts are more precisely defined. As a candidate project proceeds 
through the stages of the project development process, a greater degree 
of certainty is expected with respect to these measures. Measures have 
been established for each of the following criteria:
    1. Mobility improvements;
    2. Environmental benefits;
    3. Operating efficiencies;
    4. Cost effectiveness;
    5. Transit-supportive existing land use policies and future 
patterns; and
    6. Other factors, including:
    (a) the degree to which the policies and programs (local 
transportation planning, programming and parking policies, etc.) are in 
place as assumed in the forecasts;
    (b) project management capability; and
    (c) additional factors relevant to local and national priorities 
and relevant to the success of the project.
    In all cases, the proposed new start will be evaluated against both 
a no-build and TSM alternative. For each proposed project, FTA will 
assign one of five descriptive ratings (``high,'' ``medium-high,'' 
``medium,'' ``low-medium,'' or ``low'') for each of these six criteria.
    The measures for these criteria are described in Appendix A to this 
proposed rule. FTA may amend or modify these measures in response to 
the results of ongoing research into methods for evaluating the 
benefits of transit investments.
    ``Transit-supportive land use policies and future patterns'' is not 
listed among the project justification criteria contained in 49 U.S.C. 
5309(e)(1)(B), but is listed as one of the ``considerations'' under 49 
U.S.C. 5309(e)(3) that FTA must take into account when determining a 
proposed project's ``justification.'' Consistent with past practice, we 
have included land use among the project justification criteria for a 
number of reasons. Transit-supportive local land use policies, which 
target development around the Federally-assisted project, have been an 
important indicator of future project success. Additionally, TEA-21 
added two new land-use-related considerations to the project evaluation 
process: the reduction in local infrastructure costs achieved through 
compact land use development (49 U.S.C. 5309(e)(3)(B)), and the cost of 
suburban sprawl (49 U.S.C. 5309(e)(3)(C)). This appears to be a clear 
intent by Congress to give additional attention to this issue. In 
making the determination of project justification, 49 U.S.C. 5309(e)(3) 
requires the FTA to consider a variety of factors, as follows:
    1. The direct and indirect costs of relevant alternatives;
    2. Factors such as congestion relief, improved mobility, air 
pollution, noise pollution, energy consumption, and all associated 
ancillary and mitigation costs necessary to carry out each alternative 
analyzed and to recognize reductions in local infrastructure costs 
achieved through compact land use development;
    3. Mass transportation-supportive existing land use policies and 
future patterns, and the cost of suburban sprawl;
    4. The degree to which the project increases the mobility of the 
mass transportation dependent population or promotes economic 
development;
    5. Population density and current transit ridership in the 
corridor;
    6. The technical capability of the grant recipient to construct the 
project;
    7. Differences in local land, construction, and operating costs; 
and
    8. Other factors that the Secretary determines appropriate.
    This represents a modest expansion of the ``considerations'' 
established by ISTEA. Specifically, Section 3009(e) of TEA-21 added the 
consideration for the cost of suburban sprawl noted in (3) above; for 
population density and current transit ridership in the corridor in (5) 
above; and for the technical capacity of the grantee to carry out the 
proposed project in (6) above. The ``considerations'' serve to 
illustrate the project justification criteria, providing further detail 
on specific information that should be collected and how the criteria 
should be evaluated. Much of the data required to consider these 
factors is already developed as part of the existing planning and 
project development processes, however, as required under 23 CFR 450 
and 23 CFR 771.
    When evaluating proposed new starts projects, FTA will apply these 
criteria to the project as proposed for Federal funding under 49 U.S.C. 
5309. This means that if local project sponsors are seeking new starts 
funding at this time for a segment of a larger planned transit 
investment, only that specific segment will be evaluated.

F. Section 611.11: Local Financial Commitment

    Section 5309(e)(1)(C) requires that proposed projects also be 
supported by an acceptable degree of local financial commitment, 
including evidence of stable and dependable financing sources to 
construct, maintain and operate the system or extension. This proposed 
rule retains the following criteria for evaluation of the local 
financial commitment to a proposed project:
    1. The proposed share of total project costs from sources other 
than Section 5309, including Federal formula and flexible funds, the 
local match required by Federal law, any additional capital funding 
(``overmatch''), and the degree to which initial planning activities 
have been carried out without relying on funds from section 5309.
    2. The strength of the proposed capital financing plan (rated 
``high,'' ``medium-high,'' ``medium,'' ``low-medium,'' or ``low'').
    3. The ability of the sponsoring agency to fund operation and 
maintenance of the entire system as planned once the guideway project 
is built. Ratings of ``high,'' ``medium-high,'' ``medium,'' ``low-
medium,'' or ``low'' will be used to describe stability and reliability 
of operating revenue.
    The measures for these criteria are carried over intact from those 
used previously, and are more fully explained in Appendix A. The only 
change is that ``overmatch'' was added as a statutory consideration by 
TEA-21.

G. Section 611.13: Overall Project Ratings

    Perhaps the most significant change to this process brought by TEA 
21 is the

[[Page 17067]]

requirement that FTA establish summary recommendations for each 
project, in addition to the ratings for each of the project 
justification criteria. Section 5309(e)(6) requires FTA to ``evaluate 
and rate [each] project as 'highly recommended,' 'recommended,' or 'not 
recommended,''' based on the results of the project evaluation process. 
It also requires that ratings be assigned to each of the individual 
evaluation criteria.
    FTA will combine the ratings for each of the financial rating 
factors and project justification criteria into overall ``finance'' and 
``justification'' ratings. These ratings will then be combined into the 
single, overall project ratings required by TEA-21. For a proposed 
project to be rated as ``recommended,'' it must be rated at least 
``medium'' in terms of both finance and justification. To be ``highly 
recommended,'' a proposed project must be rated at least ``medium-
high'' for both finance and at justification. Proposed projects not 
rated at least ``medium'' in both finance and justification will be 
rated as ``not recommended.''
    These ratings will be used both to approve entry into preliminary 
engineering and final design, and to recommend proposed projects for 
Federal funding commitments. A proposed project must receive a rating 
of at least ``recommended'' in order to be approved for any of these 
purposes.
    It is important to note that a rating of ``recommended'' does not 
translate directly into a funding recommendation in any given fiscal 
year. Rather, the overall project ratings are intended by this proposed 
rule to reflect overall project merit. Proposed projects that are rated 
``recommended'' or ``highly recommended,'' and have been sufficiently 
developed for consideration of a Federal funding commitment (i.e., 
FFGA), will be eligible for funding recommendations in the 
Administration's proposed budget for a given fiscal year.

VIII. Request for Comments on Particular Issues

    FTA seeks comment on the following issues, in particular:
    1. Consistent with FTA's 1996 Statement of Policy and prior 
practice, this proposed rule does not establish ``threshold'' values 
for the statutory project justification criteria. Instead, we rate each 
project as ``high,'' ``medium-high,'' ``medium,'' ``low-medium,'' or 
``low'' according to its individual merits under each of the measures. 
Should FTA establish ``threshold'' or ``pass/fail'' values for 
evaluating each of these criteria? If so, what thresholds are 
appropriate for each criterion?
    2. FTA has historically relied on the measure of ``cost per new 
rider'' (more precisely, incremental cost per incremental rider) to 
indicate cost effectiveness, an approach retained in this proposed 
rule. Are there other means for measuring the cost effectiveness of a 
proposed new starts project?
    3. 49 U.S.C. 5309(e)(3) establishes a number of ``factors'' that 
FTA must consider when evaluating proposed projects under the 
justification criteria. In particular, 49 U.S.C. 5309(e)(3)(F) directs 
us to ``consider the technical capability of the grant recipient to 
construct the project,'' and 49 U.S.C. 5309(e)(3)(H) directs FTA to 
consider ``other factors'' as ``appropriate.'' How should FTA evaluate 
the ``technical capability'' of project sponsors? What ``other 
factors'' might be appropriate?
    4. FTA also seeks comment on how much relative attention should be 
given to each of the project justification criteria (mobility 
improvements, environmental benefits, operating efficiencies, cost 
effectiveness, land use and other factors) to establish the overall 
project ratings.

IX. Regulatory Evaluation

    The Federal Transit Administration (FTA) has evaluated the 
industry-wide costs and benefits of the rule, Major Capital Investment 
Projects, which is required by section 3009(e) of the TEA-21. This rule 
will determine the process that FTA will use to evaluate and rate major 
capital investments under the statutory criteria in 49 U.S.C. 5309(e), 
which requires FTA to establish overall project ratings of ``highly 
recommended,'' ``recommended,'' or ``not recommended,'' and to consider 
new criteria elements. The changes required by TEA-21 to FTA's pre-
existing statutory criteria are relatively minor and affect FTA program 
management operations more than a recipient's operations. The 
preliminary regulatory evaluation is available for public inspection in 
the docket established for this rulemaking.

X. Regulatory Process Matters

A. Executive Order 12688

    The FTA has evaluated the industry costs and benefits of the major 
capital investments rule and has determined that it is a significant 
rule under E.O. 12688 because of the significant policy issues involved 
in federally funding major capital investments. This rule will not, 
however, have an impact on the economy of $100 million or more.

B. Departmental Significance

    This rule is a ``significant regulation'' as defined by the 
Department's Regulatory Policies and Procedures, because it involves an 
important departmental policy and will probably generate a great deal 
of public interest. The purpose of this rule is to establish how the 
Secretary will rate various major capital investment projects.

C. Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., the FTA has evaluated the effects of this rule on small entities. 
Based on this evaluation, the FTA hereby certifies that this action 
will not have a significant economic impact on a substantial number of 
small entities because this rule concerns only major capital 
investments, which are not usually undertaken by small entities.

D. Paperwork Reduction Act

    This rule includes information collection requirements subject to 
the Paperwork Reduction Act; however, due to the fact that TEA-21 
eliminated the MIS as a stand-alone requirement, the agency believes 
that a reduction in the paperwork burden is the likeliest outcome. 
Because the rule is related to two other proposed rulemakings, 
Environmental Procedures (currently codified at 49 CFR 622 and 23 CFR 
771) and Planning (49 CFR 613 and 23 CFR 450) concerning similar 
issues, the agency is unable to determine the actual reduction in the 
paperwork burden. The NPRMs for these rules are expected to be issued 
later this year. The agency will submit a request for a Paperwork 
Reduction Act approval with the proposed Environmental and Planning 
rules. FTA currently collects information under an approved Paperwork 
Reduction Act request (control #2132-0529).

E. Executive Order 12612

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 12612 and it has been determined 
that the proposed rule does not have sufficient Federalism implications 
to warrant the preparation of a Federalism Assessment.

F. National Environmental Policy Act

    The agency has determined that this proposed rule, if adopted, will 
have positive effects on the environment by encouraging the use of mass 
transit, which may reduce the use of single occupancy vehicles.

[[Page 17068]]

G. Energy Act Implications

    This regulation should have a positive effect on energy consumption 
because, through the Federal investment mass transit projects, it would 
increase the use of mass transit.

H. Effects on the Year 2000 Computer Problem

    This rule does not mandate business process changes or require 
modifications to computer systems that will detract recipients from 
using resources to address any possible year 2000 computer problems.

I. Unfunded Mandates Reform Act

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, of $100,000,000 or more in any 
one year.

List of Subjects in 49 CFR Part 611

    Government Contracts, Grant programs--Transportation, Mass 
transportation.

    Accordingly, for the reasons set out in the preamble, the Federal 
Transit Administration proposes to add 49 CFR part 611, reading as 
follows:

PART 611--MAJOR CAPITAL INVESTMENT PROJECTS

Sec.
611.1  Purpose and contents
611.3  Applicability
611.5  Definitions
611.7  Relation to Planning and Project Development Processes
611.9  Project Justification Criteria for Grants and Loans for Fixed 
Guideway Systems
611.11  Local financial commitment criteria
611.13  Overall Project Ratings

Appendix A to Part 611--Description of Measures Used for Project 
Evaluation

    Authority: 49 U.S.C. 5309; 49 CFR 1.51


Sec. 611.1  Purpose and contents.

    (a) This part prescribes the process that applicants must follow to 
be considered eligible for capital investment grants and loans for new 
fixed guideway systems or extensions to existing systems (``new 
starts''). Also, this part prescribes the procedures used by FTA to 
evaluate proposed new starts projects as required by 49 U.S.C. 5309(e), 
and the scheduling of project reviews required by 49 U.S.C. 5328(a).
    (b) This part defines how the results of the evaluation described 
in paragraph (a) of this section will be used to:
    (1) Approve entry into preliminary engineering and final design, as 
required by 49 U.S.C. 5309(e)(6);
    (2) Rate projects as ``highly recommended,'' ``recommended,'' or 
``not recommended,'' as required by 49 U.S.C. 5309(e)(6);
    (3) Assign individual ratings for each of the project justification 
criteria specified in 49 U.S.C. 5309(e)(1)(B) and (C);
    (4) Determine project eligibility for Federal funding commitments, 
in the form of Full Funding Grant Agreements; and
    (5) Determine funding recommendations for this program for the 
Administration's annual budget request.
    (c) The information collected and ratings developed under this part 
will form the basis for the annual reports to Congress, required by 49 
U.S.C. 5309(o)(1) and (2). For purposes of these reports, project 
information will be considered current as of the following dates:
    (1) December 1 of each year, for the annual Report on Funding 
Levels and Allocations of Funds required by 49 U.S.C. 5309(o)(1) and 
due not later than the first Monday of each February; and
    (2) July 1 of each year, for the annual Supplemental New Starts 
Report required by 49 U.S.C. 5309(o)(2) and due on the 31st day of 
August of each year.


Sec. 611.3  Applicability.

    (a) This part applies to all proposals for Federal capital 
investment funds under 49 U.S.C. 5309 for new transit fixed guideway 
systems and extensions to existing systems.
    (b) Projects described in paragraph (a) of this section are not 
subject to evaluation under this part if the total amount of funding 
from 49 U.S.C. 5309 will be less than $25 million, or if such projects 
are otherwise exempt from evaluation by statute.
    (1) Exempt projects must still be rated by FTA for purposes of 
approving entry into preliminary engineering or final design, as 
required by 49 U.S.C. 5309(e)(6), or entering into a Federal funding 
commitment as required by 49 U.S.C. 5309(e)(7). Sponsors who believe 
their projects to be exempt are strongly encouraged to submit data for 
project evaluation as described in this part.
    (2) Such projects are still subject to the requirements of 23 CFR 
part 450 and 23 CFR part 771.
    (3) This part does not apply to projects for which a Federal 
funding commitment (FFGA) has already been issued.
    (c) Consistent with 49 U.S.C. 5309(e)(8)(B), FTA will make 
decisions on the justification of proposed projects using expedited 
procedures as appropriate, for proposed projects that are:
    (1) Located in a nonattainment area;
    (2) Transportation control measures as defined by the Clean Air Act 
(42 U.S.C. 7401 et. seq.); and
    (3) Required to carry out a State Implementation Plan.
    (4) For such projects, FTA will complete action on approving entry 
into preliminary engineering and final design in less than the normal 
time.


Sec. 611.5  Definitions.

    The definitions established by Titles 12 and 49 of the United 
States Code, the Council on Environmental Quality's regulation at 40 
CFR parts 1500 through 1508, and FHWA-FTA regulations at 23 CFR parts 
450 and 771 are applicable. In addition, the following definitions 
apply:
    Alternatives analysis is a corridor level analysis which evaluates 
all reasonable mode and alignment alternatives for addressing a 
transportation problem, and results in the adoption of a locally 
preferred alternative by the appropriate State and local agencies and 
official boards.
    Extension to existing fixed-guideway system means a newly-
constructed extension to an existing fixed guideway system.
    FFGA means a Full Funding Grant Agreement.
    Final design is the final phase of project development, and 
includes the preparation of final construction plans (including 
construction management plans), detailed specifications, construction 
cost estimates, and bid documents.
    Fixed guideway system means a mass transportation facility which 
utilizes and occupies a separate right-of-way, or rail line, for the 
exclusive use of mass transportation and other high occupancy vehicles, 
or uses a fixed catenary system and a right of way usable by other 
forms of transportation. This includes, but is not limited to, rapid 
rail, light rail, commuter rail, automated guideway transit, people 
movers, and exclusive facilities for buses and other high occupancy 
vehicles.
    FTA means the Federal Transit Administration.
    Full Funding Grant Agreement means an instrument that defines the 
scope of a project, the Federal financial contribution, and other terms 
and conditions.
    Major transit investment means any project that involves the 
construction of a new fixed guideway system or extension of an existing 
fixed guideway system for use by mass transit vehicles.
    New fixed guideway system means a newly-constructed fixed guideway 
system where no such system exists.

[[Page 17069]]

    New start means a new fixed guideway system, or an extension to an 
existing fixed guideway system.
    NEPA process means those procedures necessary to meet the 
requirements of the National Environmental Policy Act of 1969, as 
amended (NEPA), at 23 CFR part 771; the NEPA process is completed when 
a Record of Decision (ROD) or Findings of No Significant Impact (FONSI) 
is issued.
    No-build alternative means a baseline case consisting of those 
elements in a region's transportation plan excluding the proposed new 
start.
    Preliminary Engineering is the process by which the design of the 
proposed project is refined, estimates of project costs, benefits and 
impacts are developed, NEPA requirements are completed (for new starts, 
this will normally entail the completion of an environmental impact 
statement), project management concepts are finalized, and required 
funding sources are put in place.
    Secretary means the Secretary of Transportation.
    TEA-21 means the Transportation Equity Act for the 21st Century.
    Transportation system management (TSM) alternative means a package 
of low to moderate cost improvements designed to make more efficient 
use of an existing transportation system. TSM alternatives typically 
include elements such as traffic engineering and signalization, transit 
operational changes, and modest capital.


Sec. 611.7  Relation to planning and project development processes.

    To be eligible for FTA capital investment funding, a proposed 
project must be based on the results of alternatives analysis and 
preliminary engineering. The selected strategy must be included in the 
metropolitan transportation plan.
    (a) Planning considerations. All new start projects proposed for 
funding assistance under 49 U.S.C. 5309 must emerge from the 
metropolitan and Statewide planning process, consistent with 23 CFR 
part 450.
    (b) Alternatives analysis. (1) To be eligible for FTA capital 
investment funding for a major fixed guideway transit project, local 
project sponsors must perform an alternatives analysis.
    (2) The alternatives analysis develops information on the benefits, 
costs, and impacts of alternative strategies, leading to the adoption 
of a locally preferred alternative.
    (3) The alternative strategies evaluated in an alternatives 
analysis must include a TSM and no-build alternative, as well as the 
proposed new start.
    (4) Exceptions:
    (i) The requirement for an alternatives analysis shall not apply to 
certain new start projects that, by statute, are exempt from evaluation 
under this part.
    (ii) Consistent with 49 U.S.C. 5309(e)(8), proposed projects are 
exempt from the project rating process if the amount of Section 5309 
assistance being sought for the project is less than $25 million.
    (iii) Projects for which FFGAs have been issued prior to [the 
effective date of the final rule] shall not be re-evaluated under this 
part.
    (c) Preliminary engineering. Consistent with 49 U.S.C. 5309(e)(6) 
and 5328(a)(2), FTA will approve entry of a proposed project into 
preliminary engineering within 30 days of receipt of a formal request 
from the project sponsor(s).
    (1) FTA's approval will be based on the results of its evaluation 
as described in this part.
    (2) At a minimum, a proposed project must receive an overall rating 
of ``recommended'' to be approved for entry into preliminary 
engineering.
    (d) Final design. (1) The final design stage cannot be initiated 
until environmental requirements have been satisfied, as evidenced by 
completion of the NEPA process.
    (2) Consistent with 49 U.S.C. 5309(e)(6) and 5328(a)(3), FTA will 
approve entry of a proposed project into final design within 120 days 
of receipt of a formal request from the project sponsor(s).
    (i) FTA's approval will be based on the results of the project 
evaluation described in this part.
    (ii) At a minimum, a proposed project must receive an overall 
rating of ``recommended'' to be approved for entry into final design.
    (e) Full Funding Grant Agreements. (1) FTA will determine whether 
to execute an FFGA based on the evaluations and ratings established by 
this part.
    (2) An FFGA shall not be executed for a project that is not 
authorized for final design and construction by Federal law.
    (3) FFGAs will be executed only for those projects which are rated 
as ``recommended'' or ``highly recommended'' and which are ready to 
utilize Federal new starts funds, consistent with available program 
authorization.
    (4) In any instance in which FTA decides to provide financial 
assistance for construction of a new start project, FTA will negotiate 
an FFGA with the grantee during final design of that project. Pursuant 
to the terms and conditions of the FFGA:
    (i) A maximum level of Federal financial contribution will be 
fixed;
    (ii) The grantee will be required to complete construction of the 
project, as defined, to the point of initiation of revenue operations, 
and to absorb any additional costs incurred or necessitated;
    (iii) FTA and the grantee will set a mutually agreeable schedule 
for anticipating Federal contributions during the final design and 
construction period; and
    (iv) Specific annual contributions under the FFGA will be subject 
to the availability of budget authority and the ability of the grantee 
to use the funds effectively.
    (5) The total amount of Federal obligations under Full Funding 
Grant Agreements and potential obligations under Letters of Intent will 
not exceed the amount authorized for new starts under 49 U.S.C. 5309.
    (6) FTA may also make a ``contingent commitment,'' which is subject 
to future congressional authorizations and appropriations, pursuant to 
49 U.S.C. 5309(g), 5338(b), and 5338(h).


Sec. 611.9  Project justification criteria for grants and loans for 
fixed guideway systems.

    In order to approve a grant or loan under 49 U.S.C. 5309, FTA must 
find that the proposed project is justified as described in section 
5309(e)(1)(B).
    (a) To make the statutory evaluations and assign ratings for 
proposed projects, as required by section 5309(e)(6), FTA will evaluate 
information developed locally through alternatives analyses and refined 
through preliminary engineering and final design.
    (1) The method used to make this determination will be a Multiple 
Measure approach in which the merits of candidate projects will be 
evaluated against each of the criteria specified by section 
5309(e)(1)(B).
    (2) The measures for these criteria are specified in Appendix A to 
this part.
    (3) The measures for these criteria will also be used to determine 
which projects to recommend for funding in the report required by 
section 5309(o)(1).
    (4) The measures will be applied to the project as it has been 
proposed to FTA for funding under 49 U.S.C. 5309.
    (5) The ratings for each of the criteria will be expressed in terms 
of descriptive indicators, as follows: ``high,'' ``medium-high,'' 
``medium,'' ``low-medium,'' or ``low.''
    (6) The ratings for each criterion will be updated throughout the 
preliminary

[[Page 17070]]

engineering and final design stages of project development, as costs, 
benefits and impacts are more precisely defined.
    (7) As a candidate project proceeds through preliminary engineering 
and final design, a greater degree of certainty is expected with 
respect to these criteria.
    (8) The proposed new start will be compared to both the TSM and no-
build alternatives.
    (b) The criteria are as follows:
    (1) Mobility improvements.
    (2) Environmental benefits.
    (3) Operating efficiencies.
    (4) Cost-effectiveness.
    (5) Transit supportive existing land use policies and future 
patterns.
    (6) Other factors. Additional factors, including but not limited 
to:
    (i) The degree to which the programs and policies (local 
transportation planning, programming and parking policies, etc.) are in 
place as assumed in the forecasts,
    (ii) Project management capability, including the technical 
capability of the grant recipient to construct the project, and
    (iii) Additional factors relevant to local and national priorities 
and relevant to the success of the project.
    (c) In evaluating proposed new starts projects under these criteria 
in paragraph (b) of the section, the following factors shall be 
considered:
    (1) The direct and indirect costs of relevant alternatives;
    (2) Factors such as congestion relief, improved mobility, air 
pollution, noise pollution, energy consumption, and all associated 
ancillary and mitigation costs necessary to carry out each alternative 
analyzed, and recognize reductions in local infrastructure costs 
achieved through compact land use development;
    (3) Mass transportation-supportive existing land use policies and 
future patterns, and the cost of urban sprawl;
    (4) The degree to which the project increases the mobility of the 
mass transportation dependent population or promotes economic 
development;
    (5) Population density and current transit ridership in the 
corridor;
    (6) The technical capability of the grant recipient to construct 
the project;
    (7) Differences in local land, construction, and operating costs; 
and
    (8) Other factors as appropriate.
    (d) FTA may amend the measures for the criteria in paragraph (b) of 
this section, pending the results of ongoing studies regarding transit 
benefit evaluation methods.
    (e) The individual ratings for each of the criteria in paragraph 
(b) of this section will be combined into a summary rating for project 
justification. ``Other factors'' will be considered as appropriate.


Sec. 611.11  Local financial commitment criteria.

    In order to approve a grant or loan under 49 U.S.C. 5309, FTA must 
find that the proposed project is supported by an acceptable degree of 
local financial commitment, as required by section 5309(e)(1)(C). The 
local financial commitment to a proposed project will be evaluated 
according to the following measures:
    (a) The proposed local share of project costs, defined as the 
percentage of capital costs to be met using funds from sources other 
than 49 U.S.C. 5309, including both the local match required by Federal 
law and any additional capital funding (``overmatch''), and the degree 
to which initial planning activities have been carried out without 
funding from section 5309;
    (b) The strength of the proposed capital financing plan; and
    (c) The ability of the local transit agency to fund operation of 
the system as planned once the guideway project is built.
    (d) For each proposed project, ratings for paragraphs (b) and (c) 
of this section will be reported in terms of descriptive indicators, as 
follows: ``high,'' ``medium-high,'' ``medium,'' ``low-medium,'' or 
``low.'' For paragraph (a), of this section the percentage of Federal 
funding sought from 49 U.S.C. 5309 will be reported.
    (e) The individual ratings for each measure described in this 
section will be combined into a summary rating for local financial 
commitment.


Sec. 611.13  Overall project ratings.

    (a) The ratings developed for each of the project justification 
criteria and for local financial commitment (Secs. 611.9 and 611.11) 
will form the basis for the overall rating for each project.
    (b) Overall ratings of ``highly recommended,'' ``recommended,'' and 
``not recommended,'' as required by 49 U.S.C. 5309(e)(6), will be 
assigned to each proposed project.
    (c) These ratings will be used to:
    (1) Approve advancement of a proposed project into preliminary 
engineering and final design;
    (2) Approve projects for FFGAs; and
    (3) Make annual funding recommendations to Congress in the annual 
report on funding levels and allocations of funds required by 49 U.S.C. 
5309(o)(1).
    (d) Projects will receive overall ratings based on the following 
conditions:
    (1) Projects will be rated as ``recommended'' if they receive a 
rating of ``medium'' or higher for both project justification 
(Sec. 611.9) and local financial commitment (Sec. 611.11)
    (2) Projects will be rated as ``highly recommended'' if they 
receive a rating higher than ``medium'' for both local financial 
commitment and project justification.
    (3) Projects will be rated as ``not recommended'' if they do not 
receive a rating of at least ``medium'' for both project justification 
and local financial commitment.

Appendix A to Part 611--Description of Measures Used for Project 
Evaluation

Project Justification

    1. FTA will use several measures to evaluate candidate new 
starts projects according to the criteria established by 49 U.S.C. 
5309(e)(1)(B). These measures have been developed according to the 
considerations identified at 49 U.S.C. 5309(e)(3) (``Project 
Justification''), consistent with Executive Order 12893. From time 
to time, FTA has published technical guidance on the application of 
these measures, and the agency expects it will continue to do so. 
Moreover, FTA may well choose to amend these measures, pending the 
results of ongoing studies regarding transit benefit evaluation 
methods.
    2. The first four criteria listed in paragraphs (a) through (d) 
represent the benefits of proposed new start projects by comparing 
the new start project to either the TSM or no-build alternative. In 
order for this comparison to fairly reflect the benefit of the new 
start project, it is mandatory that planning factors external to the 
new start project and its supporting corridor bus service be the 
same among the TSM, no-build and new start project alternatives. For 
these alternatives, this means that highway and transit networks 
should be the same outside the corridor of the new start project, 
and the policies affecting travel demand and cost such as parking 
costs and land use, should also be the same.
    3. The fifth criterion, ``transit supportive existing land use 
policies and future patterns,'' reflects the importance of transit-
supportive local land use policies as an indicator of ultimate 
project success.
    (a) Mobility Improvements.
    (1) The aggregate travel time savings per year (forecast year) 
anticipated from the new investment, compared to both the no-build 
and TSM alternatives. This aggregate includes the travel time 
savings of people using competitive modes, along with those on the 
trips made by transit. Travel time savings for those switching from 
highways to transit will be calculated using a consumer surplus 
approach, taking one-half of the total travel time savings for those 
riders assumed in the no-build or TSM alternatives. The net figure 
will be expressed in terms of the total projected travel time 
savings for the region.
    (2) The net figure of travel time savings for low income 
households affected by the new start alternative, in comparison with 
the no-build and TSM alternatives.
    (3) The absolute number of low income households located within 
\1/2\ mile of

[[Page 17071]]

boarding points associated with the proposed system increment.
    (b) Environmental Benefits.
    (1) The annual forecast change in criteria pollutant emissions 
and in greenhouse gas emissions, ascribable to the proposed new 
investment, calculated in terms of tons for each criteria pollutant 
or gas;
    (2) The forecast net change per year (forecast year) in the 
regional consumption of energy, ascribable to the proposed new 
investment, expressed in British Thermal Units (BTU);
    (3) Current Environmental Protection Agency designations for the 
region's compliance with National Ambient Air Quality Standards.
    (4) The new start alternative will be compared to both the no-
build and TSM alternatives.
    (c) Operating Efficiencies. The forecast change in operating 
cost per passenger-mile (forecast year), for the entire transit 
system. The new start will be compared to both the TSM and no-build 
alternatives.
    (d) Cost-Effectiveness. The cost effectiveness of a proposed 
project shall be evaluated according to the incremental change in 
total capital and operating cost per incremental passenger, based on 
the forecast change in annual transit ridership (forecast year) and 
the annualized total (Federal and local) capital investment and 
operating cost. The new start will be compared to the no-build and 
TSM alternatives.
    (e) Transit supportive existing land use policies and future 
patterns. Transit-supportive land use policies and patterns shall be 
evaluated according to the degree to which local land use policies 
are likely to foster transit supportive land use, measured in terms 
of the kinds of policies in place, and the commitment to these 
policies. The following seven factors will form the basis for this 
evaluation:
    (1) Existing land use;
    (2) Containment of sprawl;
    (3) Transit-supportive corridor policies;
    (4) Supportive zoning regulations near transit stations;
    (5) Tools to implement land use policies;
    (6) The performance of land use policies; and
    (7) The value of any reductions in local infrastructure costs 
achieved through compact land use development.
    (f) Other factors. Other factors that will be considered when 
evaluating projects for funding commitments include:
    (1) The degree to which the policies and programs (local 
transportation planning, programming and parking policies, etc.) are 
in place as assumed in the forecasts;
    (2) Project management capability, including the technical 
capability of the grant recipient to construct the project;
    (3) Population and employment density in the corridor within \1/
2\ mile of the transit stops of the new start project, for current 
and forecast years;
    (4) Current ridership potential for the new start project, 
determined by forecasting ridership for the new start project using 
today's land use and modifying the current transit network by 
inserting the new start project and necessary feeder bus service; 
and
    (5) Additional factors relevant to local and national priorities 
and to the success of the project.

Local Financial Commitment

    FTA will use the following measures to evaluate the local 
financial commitment to a proposed project:
    (a) The proposed local share of project costs, defined as the 
percentage of capital costs to be met using funds from sources other 
than 49 U.S.C. 5309, including both the local match required by 
Federal law and any additional capital funding (``overmatch''). 
Consideration will be given to:
    (1) The use of innovative financing techniques, as described in 
the May 9, 1995, Federal Register notice on FTA's Innovative 
Financing Initiative (60 FR 24682);
    (2) The use of ``flexible funds'' as provided under the CMAQ and 
STP programs;
    (3) The degree to which alternatives analysis and preliminary 
engineering activities were carried out without funding from section 
5309; and
    (4) The actual local share of the cost of recently-completed or 
simultaneously undertaken fixed guideway systems and extensions that 
are related to the proposed project under review (FTA's intent is to 
recognize that a region's local financial commitment to fixed 
guideway systems and extensions may not be limited to a single 
project).
    (b) The strength of the proposed capital financing plan, 
according to:
    (1) The stability and reliability of each proposed source of 
local match, including inter-governmental grants, tax sources, and 
debt obligations, with an emphasis on availability within the 
project development timetable;
    (2) Whether adequate provisions have been made to cover 
unanticipated cost overruns; and
    (c) The ability of the local transit agency to fund operation of 
the system as planned once the guideway project is built, according 
to:
    (1) An evaluation of the operating revenue base; and
    (2) Its ability to expand to meet the incremental operating 
costs associated with a new fixed guideway investment and any other 
new services and facilities.

    Issued: April 1, 1999.
Gordon J. Linton,
Administrator.
[FR Doc. 99-8477 Filed 4-6-99; 8:45 am]
BILLING CODE 4910-57-P