[Federal Register Volume 72, Number 106 (Monday, June 4, 2007)]
[Notices]
[Pages 30907-30914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-2774]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket Number: FTA-2007-27172]


Final Guidance on New Starts/Small Starts Policies and Procedures 
and Notice of Availability of Updated Reporting Instructions

AGENCY: Federal Transit Administration, DOT.

ACTION: Notice of Availability of Final Guidance on New Starts/Small 
Starts Policies and Procedures and Updated Reporting Instructions.

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SUMMARY: This notice conveys the Federal Transit Administration's (FTA) 
Final Guidance on New Starts/Small Starts Policies and Procedures. This 
Policy Guidance complements FTA's previous Guidance on New Starts 
Policies and Procedures, dated May 22, 2006, by providing further 
updates and enhancements to the procedures for project planning and 
development necessary to receive New or Small Starts funding. This 
notice also announces the availability of FTA's Reporting Instructions 
for the Section 5309 New Starts Criteria, which must be followed when 
reporting New Starts information for evaluation during the FY 2009 
project evaluation cycle, as well as for any requests to enter into 
preliminary engineering, final design, or a full funding grant 
agreement until further notice. Finally, this notice provides the 
schedule for reporting of information for FTA's FY 2009 New Starts 
budget evaluations.

EFFECTIVE DATE: These policies and procedures will take effect on June 
4, 2007.

FOR FURTHER INFORMATION CONTACT: Ron Fisher, Office of Planning and 
Environment, telephone (202) 366-4033, Federal Transit Administration, 
U.S. Department of Transportation, 1200 New Jersey Avenue, SE., East 
Building, Washington, DC 20590 or [email protected].

Availability of Comments Considered in the Development of this 
Guidance, and of the New Starts Reporting Instructions

    A copy of the notice of availability of the proposed Guidance, 
issued on February 12, 2007, and comments and material received from 
the public as a part of its review of the proposed Guidance, are part 
of docket FTA-2007-27172 and are available for inspection or copying at 
the Docket Management Facility, U.S. Department of Transportation, West 
Building, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 
20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays. You may retrieve the Guidance and comments online through the 
Document Management System (DMS) at: http://dms.dot.gov. Enter docket 
number 27172 in the search field. The DMS is available 24 hours each 
day, 365 days each year. Electronic submission and retrieval help and 
guidelines are available under the help section of the Web site. An 
electronic copy of this document may also be downloaded by using a 
computer, modem and suitable communications software from the 
Government Printing Office's Electronic Bulletin Board Service at (202) 
512-1661. Internet users may also reach the

[[Page 30908]]

Office of the Federal Register's home page at: http://www.nara.gov/fedreg and the Government Printing Office's Web page at: http://www.gpoaccess.gov/fr/index.html. FTA's Reporting Instructions for the 
Section 5309 New Starts Criteria is available on FTA's Web site for New 
Starts planning and project development at http://www.fta.dot.gov/planning/planning_environment_5221.html.

Schedule for Reporting the new Starts Project Justification and Local 
Financial Commitment Criteria for Evaluation in the FY 2009 Annual 
Report on Funding Recommendations

    The formal deadline for reporting information on the New Starts and 
Small Starts project justification and local financial commitment 
criteria--i.e., the New and Small Starts templates and supporting land 
use and financial information--for evaluation in the FY 2009 Annual 
Report on Funding Recommendations is September 7, 2007. In addition, 
FTA requests, for projects already in the New Starts or Small Starts 
``pipeline'' (projects in preliminary engineering, final design, or 
Small Starts project development), that information related to travel 
forecasts, operating and maintenance cost methodologies, and service 
annualization factors as appropriate be submitted by July 30, 2007 if 
this information is different from what was submitted last year. This 
advanced submission of information helps FTA staff to understand the 
information underlying the New or Small Starts project justification 
criteria, and helps to ensure that the information reported in the 
formal New or Small Starts templates is sufficient for FTA's evaluation 
and rating of candidate projects. Both the ``advanced'' and formal 
submission of information should be sent to the FTA Office of Planning 
and Environment (TPE), 1200 New Jersey Avenue, SE., East Building, 
Washington, DC, 20590. In addition, FTA's consultants for financial and 
land use reviews will be contacting sponsors of projects in the 
pipeline in late-August 2007 to provide additional direction on 
transmitting specific information to them for these reviews.
    As conveyed in the Policy Guidance, which follows, only projects 
that are candidates for a funding recommendation (i.e., seeking either 
an FFGA or PCGA), or which have undergone significant scope, cost, or 
financial changes, need submit information for evaluation.
    FTA considers requests for project entry into preliminary 
engineering, final design, or Small Starts project development at any 
time of the year. For sponsors who hope to have their proposed New 
Starts project approved into preliminary engineering or Small Starts 
project approved into project development in time for inclusion in the 
FY 2009 Annual Report, a complete request (with previously FTA-accepted 
travel forecasts, baseline alternative, build and baseline capital 
costs, and achievement of other project readiness requirements, as 
appropriate) must be submitted to FTA no later than September 7, 2007. 
FTA encourages sponsors of such projects to contact FTA as soon as 
possible to assess their readiness for preliminary engineering and 
project development and to prepare their request for advancement. 
Projects supported by incomplete or premature requests will not be 
considered for inclusion in the FY 2009 Annual Report.
    FTA encourages sponsors of candidate New Starts projects to follow 
the Reporting Instructions closely, and to submit complete information 
according to the deadlines established above. FTA's period for 
completing its FY 2009 budget evaluations is very short. FTA staff is 
committed to working closely with project sponsors to resolve any 
questions or issues with their submittals, but cannot guarantee the 
acceptance and inclusion of any revised or updated information after 
September 30, 2007 in time for the FY 2009 evaluation. Project sponsors 
should contact the FTA Office of Planning and Environment, or their FTA 
Regional Office, if they have any questions regarding the submission of 
information for evaluation, or the process for developing such 
information.

Response to Comments and New and Small Starts Program Changes

    The purpose of this notice is to convey the Final Guidance on New 
Starts/Small Starts Policies and Procedures, reflecting the changes 
implemented as a result of comments received on the February 12, 2007 
notice of availability. FTA finds that there is good cause to make this 
guidance effective upon publication of this notice because sponsors of 
projects seeking New and Small Starts funding must have adequate time 
to prepare information that FTA will use to evaluate projects for 
inclusion in the President's FY 2009 budget request to Congress.

1. Information Required of Grantee

a. Operating Efficiencies and Environmental Benefits
    FTA adopts as final its proposal to no longer require the 
submission by New Starts project sponsors of information on FTA's 
measures for operating efficiencies and environmental benefits.
    The elimination of these two requirements is intended to reduce the 
reporting effort of New Starts project sponsors. FTA has not found that 
current measures for these two evaluation criteria distinguish, in any 
meaningful way, the differences between projects. Moreover, FTA 
believes that the operating efficiencies of New Starts projects are 
essentially captured under FTA's current measure for cost 
effectiveness. Until measures can be developed that provide salient 
information for the environmental benefits criterion that better 
differentiates the characteristics of projects, grantee submission of 
the information is not required. FTA's Reporting Instructions for the 
Section 5309 New Starts Criteria have been updated to reflect this 
change.
    Comments: Nearly all of the respondents agreed with this proposal, 
although many expressed support for the eventual development by FTA of 
a more effective measure for environmental benefits.
    Response: FTA agrees that New Starts projects can make important 
and meaningful contributions to an improved environment, and believes 
that their environmental benefits ought to be better captured in the 
evaluation and rating process. To that end, FTA has been studying a 
number of potential environmental benefits measures which better 
distinguish New Starts projects from each other. These measures will be 
proposed some time in the future and FTA will seek comment on them at 
that time. At this time, however, FTA will continue to use its current 
evaluation measure of the Environmental Protection Agency's ambient air 
quality rating.
b. Transit Supportive Land Use Patterns and Policies
    FTA adopts as final its proposal that the resubmission of 
information on transit supportive land use patterns and policies for 
the purposes of the Annual Report on Funding Recommendations be 
optional for both New Starts and Small Starts.
    While land use ratings rarely change over the course of a project's 
development, project sponsors have the option of submitting information 
for this criterion should they believe that the new information would 
improve their project's rating.
    Comments: Most respondents agreed with the proposal, with some 
additional suggestions. Several respondents felt that in the absence of 
an annual

[[Page 30909]]

requirement FTA should make clear that land use remains an important 
part of FTA's evaluation and continue to encourage local governments, 
with transit agency support, to take supportive land use actions during 
the course of project development. Others suggested that FTA should 
continue to raise the standard for land use ratings as a project 
advances, and require that a project sponsor submit land use 
information prior to being permitted entry into final design. Finally, 
a few respondents requested that FTA consider new information for re-
evaluation at any time if a sponsor believes that this information will 
result in improving its project's land use rating.
    Response: FTA's proposal to no longer require annual land use 
reporting should not be construed in any way as a diminishment of its 
support for good transit-oriented land use planning. Indeed, FTA will 
re-evaluate a project's transit-supportive land use plans and policies 
annually if its sponsor desires to submit significant new information. 
While annual re-evaluations will be at the discretion of project 
sponsors, FTA will continue to evaluate and rate transit-supportive 
land use at the time of a request to enter preliminary engineering, and 
will require a formal re-evaluation and rating of transit-supportive 
land use at the time of a sponsor's request to advance a project into 
final design.
c. Annual Report on Funding Recommendations
    FTA adopts as final its proposal to no longer require New Starts 
and Small Starts project sponsors to submit information for evaluation 
for the Annual Report on Funding Recommendations if their project is 
not likely to be ready for a funding recommendation. Such information 
is required, however, for New Starts projects in or near final design, 
or for projects which have experienced a significant change since its 
last evaluation.
    This policy change is intended to reduce the reporting burden for 
candidate New and Small Starts projects in their earlier stages of 
development while at the same time better align FTA's annual project 
evaluation responsibilities with its statutorily-required Annual Report 
on Funding Recommendations.
    Comments: Most of those commenting on this proposal agreed with it. 
A few respondents suggested that FTA should make reporting optional in 
cases where local funding processes and conditions would make a new 
rating necessary or desirable. A few others expressed concern about 
what FTA would report in the absence of a formal resubmission of the 
information supporting the New Starts criteria. Questions on the 
proposal included what would constitute a ``significant'' change 
requiring a new evaluation and rating for projects not being considered 
for funding; how far in advance FTA would notify sponsors of the need 
to resubmit updated information; and what criteria FTA would use to 
determine if a project is a candidate for a funding recommendation.
    Response: FTA views its Annual Report on Funding Recommendations as 
a complementary document to the Administration's annual budget request. 
FTA's proposal was intended to reduce the annual reporting burden on 
candidate New Starts project sponsors which have not yet reached a 
level of development necessary to warrant consideration for a funding 
recommendation. So long as a project sponsor submits information when 
requesting approval into preliminary engineering and final design (or, 
for Small Starts, project development) and the project continues to 
advance on schedule with insignificant changes to its scope, cost, and/
or financial plan, additional submissions and a formal re-evaluation 
(until the time of its consideration by FTA for funding), strikes FTA 
as unnecessary. However, when a project experiences a significant event 
e.g., a loss of local revenues that brings into question its local 
financial commitment; a change in project scope that would have a 
significant impact on its operation and hence transportation benefits; 
or an increase in its cost estimate that requires a re-examination of 
its financial plan and/or threatens the project's cost effectiveness--a 
formal re-evaluation and re-rating will be required. The examples above 
serve as general guidelines that might trigger a re-evaluation; the 
decision on the need for such an evaluation will be made by FTA on a 
case-by-case basis. The decision to re-rate a project would be made and 
transmitted by FTA in the previous year's Annual Report on Funding 
Recommendations or by letter no later than April 30 prior to the Fall 
preparation of the next Annual Report, thus providing the sponsor ample 
time to address any causes of concern and prepare updated information 
for evaluation.
    On the other hand, and at the discretion of project sponsors, FTA 
will re-evaluate projects that have taken positive steps since 
preliminary engineering, such as gaining additional funding commitments 
or reducing project costs that are expected to improve the project's 
rating for the Annual Report on Funding Recommendations.
    In the case where a re-evaluation is not necessary, FTA will report 
all recent relevant and validated information on a candidate project 
for the Annual Report. The primary focus will be placed on reporting 
the progress demonstrated by the project sponsor in terms of meeting 
its schedule, addressing NEPA requirements and design uncertainties, 
and garnering local funding commitments. For projects advancing under a 
project development agreement (PDA) with FTA, adherence to the 
milestones included in the PDA will be noted. Modest changes to the 
project scope and cost estimate will also be reported (as noted above, 
major changes would require a formal re-evaluation and rating). It is 
anticipated that most of this information will be collected over the 
course of the year as part of FTA's normal project oversight 
responsibilities. In limited cases it may be necessary for project 
sponsors to submit supporting documentation on changes in the local 
financial commitment for their project, although it is not expected 
that a full financial plan would need to be submitted.
    Projects that demonstrate readiness for a funding recommendation 
will be required to submit updated New Starts criteria and be evaluated 
and rated, thus ensuring complete information for decision-making. In 
the absence of any comments on the criteria proposed by FTA to 
determine when a project will be considered for funding, FTA will 
continue to utilize the threshold it currently follows: That is, 
projects expected to be approved into final design by the Spring after 
the Fall preparation of Annual Report on Funding Recommendations. Small 
Starts projects that have completed NEPA by the Fall preparation of the 
Annual Report would also be considered to be a funding candidate and 
would be subject to reporting and evaluation.

2. FTA Review of Key Documents

    FTA will not adopt at this time the proposed requirement that 
potential New Starts and Small Starts project sponsors in alternatives 
analysis provide a timely opportunity for FTA comment on documents 
describing the alternatives at their conceptual, detailed, and final 
stages of development. FTA is inclined, however, to establish this 
requirement at such time that it has the resources and systems in place 
to address stakeholder concerns with the proposal. In addition,

[[Page 30910]]

FTA may propose as a requirement at some time in the future the review 
of, and comment upon, other key products of the alternatives analysis 
study process.
    The intent of this proposal was to ensure that FTA be involved 
early in a corridor planning study that might result in the selection 
of a candidate New or Small Starts project. FTA believes that such 
involvement produces a number of benefits to the study effort, 
including the provision of technical assistance for improving the 
information available to support local decision-making and the 
management of both FTA and local expectations for advancement of the 
study and the resulting locally-preferred alternative. This proposed 
requirement supports FTA's goal of working closely with sponsors of 
alternatives analysis studies to ensure that communication of Federal 
and local concerns occurs at the appropriate time so that they can be 
resolved quickly and avoid negative impact of the study's progress and 
cost.
    Comments: Comments received on this proposal generally recognized 
the benefit of engaging FTA early in the project development process, 
but expressed significant concerns about making such engagement a 
formal requirement whereby FTA would officially review and approve the 
documents mentioned. Concerns expressed by the majority of commenters 
included the perceived insertion of FTA into the local decision-making 
process, the timeliness of FTA's review of the materials, and the 
potential time and costs these requirements could add to the project 
development process.
    Response: SAFETEA-LU gives FTA the responsibility to ensure that 
reasonable alternatives are considered in alternative analyses for a 
project to be eligible for New Starts funding, and that these 
alternatives are developed in such a way that their costs, benefits, 
and impacts can be properly presented to decision makers and 
stakeholders. Documentation and submission to FTA of the descriptions 
of alternatives at the conceptual, detailed, and final level of 
definition assists FTA in carrying out this responsibility. FTA 
believes that such a Federal-local partnership better protects the 
public interest, which FTA places as its over-arching goal for the New 
and Small Starts program. FTA's proposal was not intended to undermine 
local decision-making authority, which FTA holds to be a core principle 
of alternatives analysis studies.
    Furthermore, FTA's proposal never contemplated an approval of the 
alternatives (except for FTA's long-standing approval of the New Starts 
``baseline'' alternative). Rather, FTA's reviews would simply highlight 
for study sponsors the issues surrounding the development of the 
alternatives that must be addressed in order for a locally preferred 
alternative to advance into preliminary engineering as quickly as 
possible.
    Nevertheless, FTA is concerned that enforcing this requirement 
without being able to commit to a timeframe for its review would fail 
to give project sponsors important information for their project 
schedules. Therefore, over the next several months, FTA will collect 
information on existing review times that will help inform us of a 
reasonable period for the reviews of various products of alternatives 
analysis studies. Moreover, FTA is currently researching the use of 
enhanced, technology-based information management systems to improve 
the efficiency, accountability, and transparency of FTA reviews. In the 
meantime, FTA will continue to strongly encourage project sponsors to 
submit documents to FTA for review on the descriptions of alternatives 
and technical methods and results, as described in FTA guidance and 
workshops. FTA assures study sponsors that the timely review of these 
documents is an agency priority.

3. Travel Forecasts

a. Validation Against Travel Patterns
    FTA adopts as final the proposal--for implementation in May 2009--
that travel forecasts for both New and Small Starts submitted in 
support of a request to enter preliminary engineering (PE) or project 
development (PD) be based on travel models that have been validated 
against data sufficient to describe current ridership patterns.
    The purpose of this policy is to ensure that sufficient data on 
current ridership patterns are available to understand the key markets 
served by the existing transit system and to check the grasp of those 
markets by the local travel forecasting procedures. Without adequate 
data, the identification of purpose and need for a major transit 
project is substantially limited by the absence of insight into the 
functions and limitations of the existing transit system. Further, the 
inability to test the travel forecasting procedures for their 
understanding of those functions and limitations reduces the 
credibility of forecasts for transit alternatives in the future.
    Comments: Comments reflected a variety of topics ranging from 
funding to survey bias, with no topic receiving more than one-third of 
the nineteen total responses. There was concern that collecting data 
and then calibrating travel models every five years was costly; that 
five years was an arbitrary timeline; and that by the time the travel 
models were calibrated, it would be time to begin data collection 
efforts again. Other comments indicated that alternative methods of 
data collection such as automated counts, farebox counts, vehicle 
location systems and/or telephone surveys should substitute for or 
supplement system-wide ridership surveys. Comments also noted the 
difficulty of eliminating survey bias and the need to provide survey 
requirements to ensure that data is collected uniformly by project 
sponsors.
    Response: During the past five years, a large number of project 
sponsors have proceeded through alternatives analysis without any 
useful data on current ridership patterns. The locally preferred 
alternatives emerging from those analyses have included guideway-
expansion projects whose forecasts were prepared without any insight 
into the ridership patterns on recently opened initial guideway 
projects in the metropolitan area. Other project sponsors have 
proceeded with forecasts for initial projects that would depend heavily 
on park-ride access but without any data on park-ride facilities and 
express-bus services opened relatively recently in the area. In these 
circumstances, the forecasting procedures are uninformed by readily 
available information on travel markets that are key to understanding 
the benefits of proposed major investments in transit facilities. 
Consequently, the uncertainties in the forecasts are large and the 
risks are significant that the forecasts--and therefore the project 
evaluation and ratings--will be substantially in error.
    In these circumstances, any unexpected characteristics in the 
forecasts become cause for concern and potential delay as project 
sponsors struggle--without data--to document the reasonableness of the 
unusual characteristics or to correct the forecasting tools. Therefore, 
FTA thinks it in the best interest of all parties to have sufficient 
data on key travel markets, travel forecasting procedures that are 
tested with those data, and a clear understanding of current ridership 
patterns as they inform the purpose and need for a major transit 
project. Further, FTA views the costs of such data collection as very 
small relative to the value of the information obtained, to the costs 
of other tasks (engineering, environmental, and others) necessary to

[[Page 30911]]

project development, and to the costs of the projects proposed for 
funding.
    FTA agrees that a 5-year horizon--or any fixed point in time--is 
arbitrary and potentially not useful in many cases. In metropolitan 
areas with relatively slow growth in population and employment, and 
with a relatively stable transit system and transit ridership, a 10-
year-old on-board survey plus current on-off counts may well be 
sufficient to prepare useful information on current ridership patterns. 
Conversely, in rapidly growing areas that have opened the initial 
guideway facility in the past three years, a 4-year-old survey of bus 
riders may well be an insufficient basis for understanding the 
potential performance of a second guideway line. Therefore, FTA will 
consider the adequacy of data on existing ridership patterns on a case-
by-case basis. Project sponsors are advised to discuss with FTA--well 
in advance of a planned alternatives analysis--the nature, extent, 
timing, and quality of local data sources on current transit ridership 
patterns.
    Finally, this policy requires the availability of sufficient data 
on current travel patterns but not the specific method(s) for obtaining 
that data. Methods for obtaining information from individual riders 
might include personal interviews with a very limited number of 
questions, phone surveys, intercepts of riders at stations/stops rather 
than on board, and other emerging methods. Further, advances in 
automated passenger counters, farecard systems, automatic vehicle 
locator systems, and other data-collection methods may reduce the need 
for information from individual riders. Detailed on-off passenger 
counts, for example, might be used to update the sample expansion of an 
older on-board survey. In other circumstances, those counts might be 
used to estimate station-to-station trip tables, informed by a limited 
amount of rider-specific information. In general, FTA anticipates that 
project sponsors will tailor the strategy for data assembly to their 
individual circumstances to ensure that sufficient useful information 
is available as efficiently as possible.
b. Mode-Specific Effects
    FTA adopts as final its proposal to allow project sponsors that 
seek to introduce a new transit mode to an area to claim credits 
(implemented through what is commonly called a mode-specific constant) 
for the user benefits caused by attributes of that mode beyond the 
travel time and cost measures currently available in the local travel 
model. FTA will continue to work closely with sponsors of projects that 
have calibrated mode-specific constants to ensure that they are using 
constants that are generally consistent with the methods and values 
permitted for sponsors of projects which are new to an area.
    This policy establishes a reasonable approach to crediting 
alternatives that represent new transit modes locally with the mobility 
benefits caused by changes in transit service characteristics that are 
universally omitted from current travel forecasting methods. The policy 
applies to both the transit guideways identified as locally preferred 
alternatives and to guideway-like elements of baseline alternatives 
used to evaluate proposed projects. The approach gives credit--and 
additional user benefits--based on the specific attributes of the 
alternative as they are perceived by travelers. FTA will assign credits 
for characteristics in three categories: (1) Guideway-like 
characteristics (equivalent to a maximum of eight minutes of travel-
time savings); (2) span of good service (up to three minutes); and (3) 
passenger amenities (up to four minutes). Further, FTA will define a 
discount of up to 20 percent on the weight applied to time spent on the 
transit vehicle. These credits and discount are applied to the 
calculation of user benefits only; ridership forecasts will not be 
affected. This policy is effective immediately except in the case of 
baseline alternatives in areas that are considering expansion of 
existing guideway systems. The policy will apply to those alternatives 
beginning in May 2008 so that project sponsors have sufficient time to 
modify their travel forecasting procedures.
    FTA will issue technical guidance on the application of this policy 
in the May 2007 Reporting Instructions.
    Comments: The most frequent comment was a request that walk access 
be given a similar user benefit credit as park and ride access trips. 
Other comments expressed the concern that these credits would penalize 
both transit agencies seeking to expand an existing mode as well as 
those agencies with an already well validated travel model. Respondents 
requested greater transparency on the process of calculating user 
benefit credits. In addition, respondents would like to utilize local 
information to supplement the calculation of credits to user benefits 
in their region.
    Response: Because of the large size of the ``transportation 
analysis zones'' used in travel models to represent the geography of 
metropolitan areas, nearly all current travel models overestimate the 
potential walk access market for fixed guideways. Many of the walk-to-
guideway and walk-from-guideway trips represented in these models would 
actually require a bus connection. Because a walk-guideway-walk trip is 
subject to this error at both ends of the guideway trip--and the errors 
are multiplicative--FTA cannot grant credits for walk-only travel on 
guideways where the size of that travel market is inevitably and 
grossly overstated. However, in an effort to capture all credible 
benefits and reward good practice in local travel models, FTA will 
consider the full crediting of these benefits for walk-access as well 
as drive-access transit trips when the local travel models support 
accurate accounting of walk to guideway walk trips. Therefore, project 
sponsors may propose the full set of credits where they believe that 
the local travel models handle walk-access to fixed guideways with 
sufficient accuracy.
    This policy in no way penalizes areas that have existing guideway 
transit systems and have calibrated forecasting procedures with 
transit-mode-specific constants and coefficient discounts for guideway 
transit. The policy remedies a large disadvantage previously faced by 
sponsors of an initial guideway project in a given metropolitan area.
    Technical assistance in the application of the constants can be 
requested of FTA by contacting the FTA Office of Planning and 
Environment at (202) 366-4033.

4. Evaluation Criteria

a. Overall Project Justification Rating
    FTA adopts as final its proposal to replace the current three-
tiered overall project rating scale of ``low,'' ``medium,'' and 
``high'' with a five-tiered rating scale of ``low,'' ``medium-low,'' 
``medium,'' ``medium-high,'' and ``high'' as directed in SAFETEA-LU.
    This policy was intended to modify the current overall ratings to 
be consistent with the ratings specified in SAFETEA-LU, which requires 
that projects be given an overall rating based on a five-tier scale of 
``high,'' ``medium-high,'' ``medium,'' ``medium-low,'' and ``low.'' The 
application of this modest change will be documented in a separate 
summary document on the FY 2009 New Starts Evaluation and Rating 
Process, to be issued by June 30, 2007.
    Comments: Almost all comments received were supportive of the 
proposed change to the five-tiered rating scale. A few commenters asked 
for clarification on the decision rules.
    Response: The overall rating is determined by the average of the 
rating for project justification and for local

[[Page 30912]]

financial commitment. When the average of these ratings is unclear 
(e.g., project justification rating of ``medium-high'' and local 
financial commitment rating of ``medium''), FTA will round up the 
overall rating to the higher rating (e.g., project justification rating 
of ``medium-high'' and local financial commitment rating of ``medium'' 
yields an overall rating of ``medium-high'') except in the following 
circumstances:
     A ``medium'' overall rating requires a rating of at least 
``medium'' for both project justification and local financial 
commitment.
     A ``medium-low'' overall rating requires a rating of at 
least ``medium-low'' for both project justification and local financial 
commitment.
b. Simplified Rating of Local Financial Commitment
    FTA adopts as final its policy to add a decision rule that Small 
Starts and Very Small Starts projects that meet the conditions for a 
simplified financial rating be given a rating of ``high'' if their 
sponsors request no more than a 50% Small Starts share, while those 
requesting between 50% and 80% share receive no less than a ``medium'' 
rating.
    Agencies currently receive a simplified financial rating of 
``medium'' if they can demonstrate they have a reasonable plan to 
secure funding for the local share of capital costs; that the 
additional operating and maintenance costs of the project are less than 
5% of the agency's operating budget; and that the agency is in good 
operating condition. By giving higher ratings to projects seeking less 
Small Starts funding, FTA is providing an incentive for a project to 
request a lower percentage of Small Starts funding, thus allowing for 
the program to benefit more localities.
    Comments: Nearly half of the respondents supported this proposal. 
Of those who did not, comments cited this incentive would make it 
difficult to put together entry level projects; it would dilute other 
financial considerations of a project sponsor and it may disadvantage 
high quality projects as measured by other criteria. In addition, other 
comments requested greater flexibility in the amount of local match or 
the ability to consider the economic health of the area while still 
competing for a ``high'' financial rating.
    Response: Projects which meet the aforementioned conditions for 
streamlined evaluation and rating will in every case receive a rating 
sufficient to advance in development and be considered for Small Starts 
funding, regardless of the local share. FTA believes that the ability 
of project sponsors to contribute a higher non-Small Starts funding 
share represents a measure of local commitment to a project that should 
be recognized in the ratings. FTA further believes that providing 
higher ratings for requests of less Small Starts funding is entirely 
consistent with SAFETEA-LU provisions that specify local share as an 
evaluation consideration. Finally, by specifying that projects seeking 
Small Starts funding must be under $250 million in total cost and $75 
million in Small Starts funding, SAFETEA-LU constrains higher cost 
projects to less than 50 percent in Small Starts funding.
c. Mobility Measures for Transit Dependents
    FTA adopts as final its proposal to replace the current measure of 
mobility benefits for transit dependents with three easily computed 
measures: (1) The share of user benefits that accrue to transit 
dependents; (2) user benefits per project passenger mile for transit 
dependents; and (3) the number of project riders who are transit 
dependent.
    This policy addresses the dimensions of a project's improvements to 
mobility: (1) The extent that it benefits transit dependents compared 
to their representation in the metropolitan area; (2) the magnitude of 
the increase in mobility for each traveler normalized by the length of 
their journey on the project; and (3) the number of travelers affected. 
The overall rating for mobility for transit dependents will be based on 
the ratings of each of these three dimensions of mobility. The 
procedures for developing these measures are provided in FTA's updated 
Reporting Instructions for the Section 5309 New Starts Criteria, 
available simultaneously with this notice.
    Comments: Three-quarters of the respondents were concerned that 
these measures do not take into account the evolving definition of a 
transit dependent. Thus, project sponsors who attempt to improve 
service to those who choose to be transit dependent may not be able to 
capture this segment by income or employment data. Further, respondents 
noted that measuring benefits per passenger mile may skew the results 
to favor long haul transit. In addition, several respondents cited that 
the NEPA documentation assesses the project benefits to low income and 
minority populations and may be a more meaningful tool in addressing 
overall transit equity.
    Response: Because travel models stratify the metropolitan 
population by either auto ownership or income, the current state of the 
practice can ascertain the mobility impacts of a project on carless 
households or the lowest income group used in a travel model. Carless 
and lower income households are reasonable surrogates for transit 
dependents. Forecasts of benefits for some other definition would 
require a new methodology to be implemented for every area seeking 
Small Starts funding, instead of relying on existing travel models. As 
noted, long haul transit with infrequent stops may rate well for the 
user-benefit-per-mile measure. Finally, using NEPA documents to address 
transit dependent mobility improvements is problematic given that there 
is no standardized approach for reporting project benefits in NEPA 
documentation.
d. Subfactors for Local Financial Commitment
    FTA adopts as final the three proposed changes to the evaluation 
and rating of local financial commitment for both New and Small Starts, 
all of which are related to the sub-factors used to develop the ratings 
for the stability and reliability of the capital and operating finance 
plans. These changes include for both the capital and operating plans: 
(1) Eliminating the completeness sub-factor; (2) merging the existing 
capacity and cost estimates and planning assumptions sub-factors 
together; and (3) re-weighting the remaining sub-factors.
    This policy is intended to both simplify FTA's evaluations of local 
financial commitment and better align considerations of the uncertainty 
associated with financial planning assumptions with the factor they 
affect. The application of this modest change will be documented in a 
separate summary document on the FY 2009 New Starts Evaluation and 
Rating Process, and FTA's Guidelines and Standards for Assessing Local 
Financial Commitment. Both documents will be available no later than 
June 30, 2007.
    Comments: All comments received were supportive of the proposed 
changes to the evaluation and rating of local financial commitment.
    Response: FTA will reduce the number of subfactors used to develop 
the ratings for the stability and reliability of the capital and 
operating finance plans from five to three. The three subfactors will 
be weighted as follows to arrive at a summary capital/operating rating: 
(1) Current capital/operating condition (25%); (2) commitment of 
capital/operating funds (25%); and (3) cost estimates/planning 
assumptions/capacity (50%).
    The three measures used to determine the overall local financial 
commitment

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rating and their weights will be maintained at: (1) The share of non-
New Starts funding (20%); (2) the stability and reliability of the 
capital finance plan (50%); and (3) the stability and reliability of 
the operating finance plan (30%). All FTA decision rules for 
determining a rating for local financial commitment will remain in 
place as well.
e. Innovative Contractual Agreements for Operations
    FTA adopts as final its policy that the degree to which a project 
employs innovative contractual agreements will be considered in the 
evaluation and rating of the operating finance plan for both New and 
Small Starts.
    This policy is intended to encourage project sponsors to examine 
innovative operating arrangements that might result in cost savings. 
FTA will increase the operating plan rating one level from ``medium'' 
to ``medium-high'' or from ``medium-high'' to ``high'' if the project 
sponsor can demonstrate it has provided the opportunity for the 
operation and maintenance of the project to be contracted out. The 
operating plan rating will not increase if the operating finance plan 
rating is below a medium. FTA will revise its guidance documents, 
including the Guidelines and Standards for Addressing Local Financial 
Commitment, to reflect this change.
    Comments: Nearly half of the respondents requested that similar 
considerations be made for transit agencies that have studied such 
innovative arrangements, regardless of whether the arrangement was 
implemented or not. Other comments cited the concern that this proposal 
could disrupt existing labor union contracts. The last set of comments 
cited the lack of statutory basis to provide an additional weight for 
this consideration.
    Response: The operating plan rating will be increased for project 
sponsors that can provide evidence that the operations and maintenance 
of the project will be contracted out or that simply an opportunity has 
been given for contracting out but that there were substantive reasons 
for not doing so. FTA believes that current statutes do not prohibit 
the implementation of this proposal.
f. Rating Information in Planning Studies
    FTA adopts as final its proposal that alternatives analysis (AA) 
final reports and AA/Draft Environmental Impact Statements (Draft EISs) 
must present--for all alternatives--the information used by FTA to 
assign New or Small Starts ratings if that information has been vetted 
by FTA. If the information has not been vetted with FTA, then the 
absence of the information must be highlighted in the document.
    The intent of this policy is to comply with FTA requirements for 
AAs and the Council on Environmental Quality for DEISs by identifying 
information relevant and important to a decision on a locally preferred 
alternative. If this requirement cannot be met, publication of the AA 
or AA/DEIS would not be delayed; rather, the absence of the information 
and its relevance must be explained in the AA or AA/DEIS.
    Comments: Many opposed the proposal stating that the NEPA and New 
Starts process should be independent. Others opposed the proposal 
because of potential project delays citing the lack of FTA staff to 
review the information. Others agreed that FTA should allow that a 
disclosure statement be used in alternatives analysis documents when 
fully vetted information is not available, which would summarize the 
New Starts process and explain that information addressing the criteria 
has not yet been completed.
    Response: It has been FTA's long standing policy to integrate the 
NEPA and New Starts processes because they share common goals. The 
Council on Environmental Quality regulations state that ``an 
environmental impact statement should at least indicate those 
considerations, including factors not related to environmental quality, 
which are likely to be relevant and important to a decision.'' For 
projects seeking New or Small Starts funding, rating information that 
determines whether the project can qualify for funding is ``relevant 
and important to a decision.'' Regarding concerns over project delays, 
this policy will not delay a document/project if information on the New 
Starts criteria has not been vetted with FTA. In such cases, the 
absence of such information would simply be acknowledged without 
prejudice with a statement that it has not yet been fully vetted with 
FTA and therefore no assurances can be given that the alternatives 
considered, including the locally preferred alternative, would be 
eligible or competitive for New or Small Starts funding. The inclusion 
of such a statement simply provides the public and local decision 
makers full disclosure of the actions necessary to advance the 
preferred alternative into the New or Small Starts project development 
process.
g. Other Factors
    FTA adopts as final its proposal to incorporate under ``other 
factors'' two specific considerations. First, if a proposed New or 
Small Starts project is a principal element of a congestion management 
strategy, in general, and an auto pricing strategy, in particular, the 
project justification rating could be increased. Second, if a New or 
Small Starts project addresses significant transportation problems or 
opportunities in a corridor and the appropriateness of the preferred 
alternative as a response, FTA will consider the contents of the 
``make-the-case document'' as a standard criterion under ``other 
factors.'' A ``high'' make-the-case rating could increase the project's 
overall rating and a ``low'' make-the-case rating could decrease the 
overall rating. FTA further continues to encourage the reporting, under 
``other factors,'' of information on a project's economic development 
impacts. Particularly compelling information may be used by FTA to 
increase a project's ``project justification'' rating.
    Each of the considerations has the potential of changing the 
overall project justification rating. The first consideration can only 
increase the rating while the second can either increase or decrease 
the rating. The details of how these factors will be applied, along 
with consideration of the economic development factor will be described 
in an update to its summary document on the New Starts Evaluation and 
Rating Process, available no later than June 30, 2007.
    Comments: In response to the first consideration, comments 
indicated that a congestion pricing strategy is not effective except in 
large cities with substantial investment in transit infrastructure. The 
second consideration was largely supported with just over half of the 
respondents citing their support. Of those who opposed the 
consideration, the reason cited was that FTA would be evaluating a 
document and not the project itself.
    Response: The first consideration supports the Department's 
initiative to address congestion using pricing strategies. Successful 
pricing strategies have been introduced in medium-sized cities. The 
purpose of the second consideration, the make-the-case document, is 
intended to marshal the best available arguments for the proposed 
project based on the analytical results of planning and project 
development findings. As such, FTA believes that it provides important 
information in assessing project merit that complements the mechanical 
application of ratings and numbers. FTA will base its rating on the 
extent to which a compelling case is made that addresses this purpose.


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    Issued on: May 30, 2007.
James S. Simpson,
Administrator.
[FR Doc. 07-2774 Filed 5-31-07; 11:09 am]
BILLING CODE 4910-57-P