[Federal Register Volume 73, Number 33 (Tuesday, February 19, 2008)]
[Proposed Rules]
[Pages 9075-9078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3025]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 612

[Docket FTA-2008-0005]
RIN 2132-AA96


Contractor Performance Incentives for the Capital Investment 
Program

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: This notice of proposed rulemaking provides interested parties 
with the opportunity to comment on the Federal Transit Administration's 
(FTA) proposal to establish a new part 612 of Title 49 of the Code of 
Federal Regulations to establish procedures for 49 U.S.C. 5309 capital 
investment (New Starts) project sponsors to apply for incentive awards 
if their projects meet eligibility criteria for both cost and ridership 
estimates. This proposed rule would carry out certain provisions of the 
Safe, Accountable, Flexible, Efficient Transportation Equity Act: a 
Legacy for Users (SAFETEA-LU) (Pub. L. 109-59, August 10, 2005). 
Interested parties are invited to send comments on all facets of this 
proposal.

DATES: Comments must be submitted by April 21, 2008. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments identified by the docket number 
[FTA-2008-0005] by any of the following methods:
    Federal eRulemaking Portal: Go to http://http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Mail: U.S. Department of Transportation, Docket Operations, West 
Building Ground Floor, Room W12-140, 1200 New Jersey Ave SE., 
Washington, DC 20590.
    Hand Delivery: The West Building of the U.S. Department of 
Transportation, 1200 New Jersey Ave SE., Washington, DC, between 9 a.m. 
and 5 p.m., Monday through Friday, except Federal holidays.
    Fax: 202-493-2251.
    Instructions: You must include the agency name (Federal Transit 
Administration) and Docket number (FTA-2008-0005) or the Regulatory 
Identification Number (RIN) for this rulemaking at the beginning of 
your comments. You should submit two copies of your comments if you 
submit them by mail. If you wish to receive confirmation that FTA 
received your comments, you must include a self-

[[Page 9076]]

addressed stamped postcard. Note that all comments received will be 
posted, without change, to http://www.regulations.gov including any 
personal information provided and will be available to internet users. 
Please see the Privacy Act section of this document.
    Docket: For access to the docket to read background documents and 
comments received, go to http://www.regulations.gov at any time or to 
the U.S. Department of Transportation, West Building, Ground Floor, 
Room W12-140, 1200 New Jersey Ave SE., Washington, DC 20590 between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Sherry Riklin, Deputy Associate 
Administrator for Planning and Environment, 1200 New Jersey Avenue, 
SE., East Building, Washington, DC 20590, phone: (202) 366-4033, fax: 
(202) 493-2478 or e-mail, [email protected]. For legal questions, 
please contact Bonnie L. Graves, Attorney-Advisor, Legislation and 
Regulations Division, Office of Chief Counsel, Federal Transit 
Administration, 1200 New Jersey Avenue, SE., East Building, Washington, 
DC, 20590, phone: (202) 366-0944, fax: (202) 366-3809, or e-mail, 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    On August 10, 2005, President Bush signed the Safe, Accountable, 
Flexible, and Efficient Transportation Equity Act--A Legacy for Users 
(SAFETEA-LU). Section 3011 of SAFETEA-LU made a number of changes to 49 
U.S.C. 5309 (``Section 5309''), which authorizes the Federal Transit 
Administration's (FTA's) capital investment grant program. SAFETEA-LU 
emphasized the need to improve the accuracy of the estimates of 
ridership and costs used to support the selection of a capital 
investment project (``New Start'') as a locally preferred alternative 
(LPA) for Section 5309 funds. Section 5309(d)(4)(B)(i) and Section 
5309(e)(4)(D) add ``the reliability of forecasting methods'' as a new 
evaluation consideration; Section 5309(g)(2)(C) codifies the ``before 
and after'' study requirement; and Section 5309(l)(2) requires FTA to 
produce an annual report on contractor performance in the development 
of ridership forecasts and cost estimates for New Starts projects.
    Incentive Awards: Federal transit law supports the use of 
incentives to encourage the development of more reliable cost and 
ridership estimates for New Starts funded under Section 5309. Section 
5309(h)(2) authorizes FTA to adjust the final net project cost of a new 
fixed guideway capital project to include the cost of eligible 
activities not included in the originally defined project if FTA 
determines that the originally defined project has been completed at a 
cost that is significantly below the original estimate. Section 
5309(h)(3) accords FTA the discretion to provide a higher percentage of 
New Starts funding than that requested by the project sponsor as an 
incentive to producing reliable ridership forecasts and cost estimates.
    Contractor Incentives: A number of provisions in Section 5309 
recognize that contractors to grant recipients play an important role 
in increasing the reliability of forecasting methods to estimate costs 
and utilization of New Starts projects. Section 5309(d)(4)(B)(i) 
requires FTA to consider the reliability of the forecasting methods 
used to estimate costs and utilization made by the recipient and 
contractors to the recipient. Section 5309(l)(2) requires FTA to report 
to Congress annually on the consistency and accuracy of cost and 
ridership estimates made by each contractor to public transportation 
agencies developing New Starts projects. Further, Section 5309(l)(3) 
directs FTA to report to Congress on the suitability of allowing 
contractors to public transportation agencies that undertake New Starts 
projects to receive performance incentive awards if a project is 
completed for less than the original estimated cost. FTA completed this 
report on November 20, 2006; it is available for review on our web 
site: http://www.fta.dot.gov/documents/ContractorPerformanceIncentiveReport102006.pdf.
    This NPRM would further encourage accurate cost and ridership 
estimates through the award of additional New Starts funds to project 
sponsors, which they can choose to pass along to their contractors. The 
NPRM would complement the Contractor Performance Assessment Report 
(CPAR) referenced in section 5309(l)(2), which publicizes the 
identities of contractors with proven records of performing accurate 
cost and ridership estimation.
    Incentive Award Standards: Consistent with section 5309(h)(3), FTA 
proposes that a New Starts project sponsor would be eligible for an 
incentive award if actual opening year ridership is not less than 90 
percent of that forecast and actual capital costs, adjusted for 
inflation, are not more than 110 percent of those estimated, at the 
time the project entered Preliminary Engineering (PE). The rulemaking 
proposes to determine whether to provide the incentive only after the 
project is complete and operating, when actual costs and ridership can 
be determined. FTA believes the incentive should only be provided for 
actual performance, not for projected performance.
    FTA proposes that the amount of the performance incentive award be 
based on the size and complexity of the project, and that the award be 
as high as an additional five percent of the New Starts funding under 
the Full Funding Grant Agreement (FFGA) or Project Construction Grant 
Agreement (PCGA). FTA is particularly interested in public comment on 
the criteria FTA should use to determine the percentage for the award. 
For example, are more complicated and larger projects more deserving of 
a full five percent? Should the size or complexity of a project be the 
only general considerations? Are certain modes inherently more 
difficult for purposes of cost or ridership estimation (e.g., heavy 
rail as compared to light rail)? Should a project alignment with 
tunnels, bridges, or other special features receive more of an 
incentive award than a project without those features? Should FTA take 
the project sponsor's experience into account? If so, how? What other 
factors might FTA consider in determining the percentage of a 
performance incentive award?
    Incentive Award Procedures: Consistent with the intent and 
provisions of Section 5309, FTA proposes to include an incentive clause 
in the standard terms and conditions of an FFGA and a PCGA that would 
allow for an amendment to the grant to award additional New Starts 
funds for any one of three purposes: (1) To increase the Federal 
funding contribution to a project; (2) to allow for the addition of 
project scope; or (3) to provide a financial reward to contractors that 
have performed sufficiently accurate cost and ridership estimates. The 
change or addition to project scope could include capital items 
designed to improve passengers' ridership experience, such as transit 
enhancements as defined in 49 U.S.C. 5302(a)(15), additional safety or 
security measures, or new rail rolling stock. Based on the requirements 
for the ``Before and After'' Study, FTA proposes that the project 
sponsor would submit the data collected on the transit system two years 
after the beginning of revenue operations. The data would include 
ridership patterns and information on the as-built scope and capital 
costs of the project.



[[Page 9077]]


    Note: An FFGA is the form of grant award whereby FTA provides 
$75 million or more in Federal financial assistance under 49 U.S.C. 
5309(d) for construction of a New Starts project. A PCGA is the form 
of grant award whereby FTA provides less than $75 million in Federal 
financial assistance under 49 U.S.C. 5309(e) for construction of a 
``Small Starts'' project. The regulations governing New Starts 
projects seeking FFGAs are codified at 49 CFR part 611. FTA has not 
yet promulgated regulations for Small Starts projects, but guidance 
on the development of Small Starts projects is available through the 
agency's Web site, http://www.fta.dot.gov.


    FTA seeks comments on the proposal to provide incentives to New 
Start project sponsors and their contractors who provide reliable cost 
and utilization estimates. FTA is particularly interested in comments 
on how it might implement incentives for contractors to public 
transportation agencies. Based on comments received on this NPRM, FTA 
plans to issue a final rule that will establish procedures for project 
sponsors to apply for incentive awards of Section 5309 New Starts funds 
if their project meets eligibility criteria for both cost and ridership 
estimates, and to share those awards with contractors that produce 
reliable cost and ridership estimates.
    We note, moreover, that the award of additional Federal financial 
assistance for a New Starts or Small Starts project to reward a grantee 
or its contractors for accurate cost and ridership estimates would be 
strictly limited to New Starts funds under 49 U.S.C. 5309(d) or 
5309(e). Occasionally, New Starts and Small Starts projects are 
financed with additional sources of Federal assistance, such as Section 
5309 Fixed Guideway Modernization and Bus & Bus Facilities funding, 
Section 5307 Urbanized Area Formula funding, or funding under the 
Surface Transportation Program and Congestion Mitigation and Air 
Quality program, but none of these other sources of Federal funding 
will be available for these incentive awards.

II. Rulemaking Analysis And Notices

Executive Order 12866

    This NPRM is significant for purposes of Executive Order 12866 and 
the Department of Transportation's Regulatory Policies and Practices. 
The NPRM proposes to establish procedures for Section 5309 capital 
investment project sponsors to apply for incentive awards if their 
project meets eligibility criteria for both cost and ridership 
estimates and is a Departmental priority. These proposals are not 
expected to have noteworthy cost impacts on regulated parties. FTA 
requests comment on whether this rulemaking may have unintended cost 
impacts.

Federalism Assessment

    This proposed rule has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132 
(``Federalism''). FTA believes this rule does not impose any 
requirements that would have substantial direct effects on the States, 
the relationship between the national government and the States, or the 
distribution of power and responsibilities among the various levels of 
government.

Executive Order 13175

    This proposed rule has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13175 
(``Consultation and Coordination with Indian Tribal Governments''). 
Because this proposed rule does not have tribal implications and does 
not impose direct compliance costs, the funding and consultation 
requirements of Executive Order 13175 do not apply.

Regulatory Flexibility Act and Executive Order 13272

    Section 603 of the Regulatory Flexibility Act (RFA) requires an 
agency to prepare an initial regulatory flexibility analysis describing 
impacts on small entities whenever an agency is required by 5 U.S.C. 
553 to publish a general notice of proposed rulemaking for any proposed 
rule. Similarly, section 604 of the RFA requires an agency to prepare a 
final regulatory flexibility analysis when an agency issues a final 
rule under 5 U.S.C. 553 after being required to publish a general 
notice of proposed rulemaking. Because this proposed rulemaking 
establishes a process by which entities may seek increased funding as 
an incentive for accurate ridership and cost estimates, FTA does not 
believe this NPRM will have a significant economic impact on a 
substantial number of small entities. FTA requests public comment on 
whether this rulemaking may have unintended impacts on small entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule does not impose unfunded mandates under the 
Unfunded Mandates Reform Act of 1995. It does not result in costs of 
$120.7 million or more, in the aggregate, to any of the following: 
State, local, or Native American tribal governments, or the private 
sector.

Paperwork Reduction Act

    There are no new information collection requirements in this NPRM.

Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN number contained in the heading 
of this document may be used to cross-reference this action with the 
Unified Agenda.

Environmental Assessment

    The National Environmental Policy Act of 1969 (NEPA), as amended 
(42 U.S.C. 4321-4347), requires Federal agencies to consider the 
consequences of major Federal actions and prepare a detailed statement 
on actions significantly affecting the quality of the human 
environment. We find that there are no significant environmental 
impacts associated with this NPRM, but ask for public comment on this 
issue.

Privacy Act

    Anyone is able to search the electronic form for all comments 
received into any of our dockets by the name of the individual 
submitting the comments (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78).

List of Subjects in 49 CFR Part 612

    Grant Programs--Transportation; Mass Transportation.

    For the reasons set forth in the preamble, we propose to amend 
title 49, chapter VI of the Code of Federal Regulations by adding a new 
part as follows:

PART 612--CONTRACTOR PERFORMANCE INCENTIVES FOR THE CAPITAL 
INVESTMENT PROGRAM

Sec.
612.1 Purpose.
612.3 Definitions.
612.5 Eligible candidates.
612.7 Payment mechanism.
612.9 Incentive award standards.
612.11 Incentive amount.
612.13 Funding source.
612.15 Eligible uses of award.

    Authority: 49 U.S.C. 5309; 49 U.S.C. 5334; 49 CFR 1.51


Sec.  612.1  Purpose.

    To improve the accuracy of the estimates of ridership and costs 
used to support the selection of a fixed guideway capital project as a 
locally preferred alternative (LPA), this rule

[[Page 9078]]

establishes procedures for 49 U.S.C. 5309 (``Section 5309'') capital 
investment project sponsors to apply for and receive incentive awards 
if their project meets eligibility criteria for both cost and ridership 
estimates.


Sec.  612.3  Definitions.

    As used in this part, the following definitions apply:
    Before and After Study refers to the project sponsor's comparison 
and analysis of planning assumptions, forecast results, and existing 
transit system characteristics ``before'' implementation of a New 
Starts project with the project costs and benefits realized ``after'' 
two years of revenue service.
    Contractor Performance Assessment Report refers to an annual report 
to Congress, in which FTA reports the accuracy of contractor 
projections for cost and ridership from entry into Preliminary 
Engineering (PE) through two years after the system is open for 
service.
    Full Funding Grant Agreement (FFGA) refers to an instrument that 
defines the scope of a project, the Federal financial contribution, and 
other terms and conditions for funding New Starts projects as required 
by 49 U.S.C. 5309(d)(1) and (g)(2).
    Project Construction Grant Agreement (PCGA) refers to an instrument 
that defines the scope of a project, the Federal financial 
contribution, and other terms and conditions for funding Small Starts 
projects as required by 49 U.S.C. 5309(e)(7).
    Section 5309 capital investment project refers to a new fixed 
guideway system or an extension to an existing fixed guideway system, 
but does not include rail modernization or non-corridor bus capital 
projects funded under 49 U.S.C. 5309.


Sec.  612.5  Eligible candidates.

    All Section 5309 capital investment project sponsors who will or 
have receive(d) a Full Funding Grant Agreement (FFGA) or a Project 
Construction Grant Agreement (PCGA) after August 10, 2005, are eligible 
to receive incentive awards.


Sec.  612.7  Payment mechanism.

    (a) Full Funding Grant Agreements (FFGA) and Project Construction 
Grant Agreements (PCGA) for Section 5309 capital investment projects 
will include an incentive clause that will allow for an amendment to 
either increase the Federal funding contribution, allow for the 
addition of scope, or provide a financial award, when the criteria of 
Sec.  612.9 have been met.
    (b) Upon submission of its ``before and after'' data documenting 
that the project meets the cost and ridership criteria, the project 
sponsor may request that FTA award the project sponsor a performance 
incentive.


Sec.  612.9  Incentive award standards.

    (a) For a project sponsor to be eligible to receive a performance 
incentive award, the project must meet criteria for both cost and 
ridership estimates.
    (1) Actual opening year ridership shall be not less than 90 percent 
of that forecast; and
    (2) Actual capital costs, adjusted for inflation, shall be not more 
than 110 percent of those estimated; at the time the project entered 
Preliminary Engineering (PE).
    (b) FTA will base its incentive award eligibility determination on 
the cost and ridership information provided by the project sponsor to 
FTA for the purposes of the ``Before and After Study'' and the 
``Contractor Performance Assessment Report.''


Sec.  612.11  Incentive amount.

    FTA will determine the amount of the performance incentive award 
based on the size and complexity of the project and may award up to an 
additional five percent of the federal grant amount identified in the 
FFGA or PCGA.


Sec.  612.13  Funding source.

    Incentive funds will be available from New Starts funds available 
under 49 U.S.C. 5309(d) or 5309(e).


Sec.  612.15  Eligible uses of award.

    The performance incentive award may be:
    (a) used to fund any item eligible under 49 U.S.C. 5309(b)(1) or 
(b)(4); or
    (b) shared with contractors that prepared reliable cost and 
ridership estimates for the project.

    Issued in Washington, DC, this 12th day of February 2008.
James S. Simpson,
Administrator.
 [FR Doc. E8-3025 Filed 2-15-08; 8:45 am]
BILLING CODE 4910-57-P