[Federal Register Volume 77, Number 154 (Thursday, August 9, 2012)]
[Notices]
[Pages 47692-47693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19584]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary of Transportation

[Docket No. DOT-OST-2012-0124]


Notice of Transportation Services' Transition From Paper to 
Electronic Fare Media Comments, Response to Public Comments, and Final 
Notification

AGENCY: Office of the Secretary, DOT.

ACTION: Notice.

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SUMMARY: On March 29, 2011, and April 2, 2012, U.S. Department of 
Transportation's Office of Transportation Services (TRANServe), located 
within the Office of the Assistant Secretary for Administration, 
published for public comment Notices of the adoption of a new program 
distribution methodology for transit benefits. To date, TRANServe has 
implemented its plan in three of the eight TRANServe Services Areas and 
continues to implement electronic fare media across the United States, 
ensuring that the implementation in the remaining five TRANServe 
Service Areas is consistent with applicable statutes and regulations. 
TRANServe's plan is a two-year initiative designed to be responsive to 
industry changes and technological advances. Over time, many State and 
local transit authorities are transitioning, or have already 
transitioned, to electronic fare media, compelling the shift from a 
paper based system (vouchers) to an electronic fare media structure. 
Now that the Federal Register notification process is final, TRANServe 
will continue to engage all appropriate stakeholders through outreach 
and communication for assistance and advice.

FOR FURTHER INFORMATION CONTACT: Ms. Denise P. Wright, Business Office 
Manager, 1200 New Jersey Avenue SE., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

I. Background

    On March 29, 2011, and April 2, 2012, TRANServe published for 
public comment Notices of its intent to adopt a new program 
distribution methodology for transit benefits. TRANServe provides 
service to over 250,000 transit benefit participants employed by over 
100 federal organizations nationwide. Since the program's inception, 
TRANServe has distributed the qualified transportation fringe benefit 
to participating Federal employees via a paper voucher process. In 
addition to a growing number of participants, many State and local 
transit authorities are transitioning, or have already transitioned, to 
electronic fare media, compelling the shift from a paper based system 
(vouchers) to an electronic fare media structure. TRANServe has also 
experienced rising program costs related to inventory, travel, and 
infrastructure support, requiring that TRANServe adopt a new 
distribution method from paper to electronic fare media. As a result, 
TRANServe is implementing an efficient and effective electronic fare 
media transition to its participating transit benefit agencies, 
consistent with statutory requirements in 49 U.S.C. 327, Administrative 
Working Capital Fund; 26 U.S.C. 132(f), Qualified Transportation 
Fringe; 31 U.S.C. 3302, Custodians of Money; Federal Employees Clean 
Air Incentives Act (Pub. L. 103-172); and Executive Order 13150, 
Federal Workforce Transportation. To date, for instance, TRANServe has 
shifted to electronic fare media in the following three of the eight 
TRANServe Service Areas:
    Service Area 1--Washington, DC, Maryland, and Virginia.
    Service Area 2 (Southeast)--Tennessee, North Carolina, South 
Carolina, Georgia, Florida, Alabama, and Louisiana.
    Service Area 3 (Upper Midwest)--Minnesota, Wisconsin, Michigan, 
Illinois, Indiana, Ohio, West Virginia, Kentucky, Virgin Islands, and 
Puerto Rico.
    TRANServe intends to continue the implementation of electronic fare 
media across the United States within the five remaining areas, 
ensuring that such implementation is consistent with applicable 
statutes and regulations.

II. Discussion of Public Comments Received on TRANServe's Adoption of a 
New Program Distribution Methodology for Transit Benefits

    This section presents a summary of the significant comments 
submitted regarding the Federal Register Notices published on March 29, 
2011, and April 2, 2012 on TRANServe's adoption of a new program 
distribution methodology for transit benefits and TRANServe's responses 
to those comments. TRANServe had received comments from interested 
individuals prior to this opportunity to comment. To provide a level 
playing field, TRANServe addresses all stakeholders' comments, if 
applicable, via these overarching responses.
    Comment: TRANServe should develop a method to allow federal 
employees to add funds to their benefit cards, possibly through a 
credit or debit card transaction, so the TRANServe benefit card could 
be used to pay for monthly passes that cost over $125.
    Response: The U.S. Department of Treasury is the Administrator of 
the US Debit Card (USDC) Program, under which TRANServe has established 
the TRANServe Debit Card. Currently, the Treasury USDC Program does not 
offer a card product that delivers federal payments via a card with the 
capability of adding personal funds.
    Comment: Suggest that TRANServe advise transit agencies of any 
changes or additions to their Bank Identification Number (BIN).
    Response: TRANServe does not anticipate changes to the BIN number. 
But if there are any changes, TRANServe will continue to work with 
transit agencies for a smooth transition.
    Comment: Commenters remarked that they would be willing to assist 
TRANServe in the adoption of an electronic distribution system through 
consultation and outreach.
    Response: This Federal Register Notice comment period has provided 
an opportunity for stakeholders to assist and advise TRANServe as it 
transitions to electronic fare media for its participating agencies. 
However, TRANServe notes that there is no overarching Federal Agency 
responsible for Policy regarding the Transit Benefit Program.
    Comment: Define Electronic Fare Media.
    Response: TRANServe intends that the term ``Electronic Fare Media'' 
means electronic media that are excluded from gross income Section 
132(a)(5) and 132(f) of the Internal Revenue Code and may encompass 
smartcards, debit or credit cards, or other electronic media that meet 
the applicable requirements.''
    Comment: Does TRANServe intend to load smart cards for any transit 
agencies other than WMATA? If so, which ones?
    Response: At this time, TRANServe does not plan to load smart cards 
for any transit agency other than WMATA. However, TRANServe will take 
whatever steps are necessary to ensure that its new program 
distribution methodology for transit benefits is consistent with 
applicable legal requirements.

[[Page 47693]]

    Comment: Commenters inquired whether the TRANServe debit card is 
compliant with IRS Revenue Ruling 2006-57, as modified, which requires 
the cards to be restricted to sales terminals selling fare media only?
    Response: The TRANServe debit card continues to be compliant with 
Internal Revenue Code Section 132(f) and the applicable regulations, 
and is consistent with how those requirements are applied in IRS 
Revenue Ruling 2006-57 to certain factual situations.
    Comment: Commenters asked about transaction monitoring, the 
restriction process developed for monitoring compliance, and how the 
TRANServe card would be protected to reduce fraudulent use.
    Response: The restriction process was developed through 
comprehensive analysis of IRS Revenue Ruling 2006-57, which provides 
guidance on the use of smartcards, debit or credit cards, or other 
electronic media under various situations to provide qualified 
transportation fringes, as well as analysis of other governing 
statutes, regulations, and policies. Consistent with the Office of 
Management and Budget Circular A-123, Management's Responsibility for 
Internal Control, TRANServe and participating agencies have the 
responsibility for monitoring compliance. Additionally, transaction 
monitoring takes place through various means, to include but not 
limited to, system activity monitoring, data mining, anomaly reporting, 
etc. In order to reduce or mitigate fraudulent activity, the TRANServe 
debit card is issued with the participant's name, is restricted to use 
with transit providers, returns unused funds to the Federal government 
at the end of each period, and provides detailed reporting of anomalies 
to permit follow-up action and system adjustments.
    Comment: Will nationwide rollout of this card, and corresponding 
monthly sweeping, create additional administrative issues at a time 
when DOT is seeking to reduce admin costs?
    Response: No. There are different administrative tasks with the 
introduction and use of the TRANServe debit card; however, TRANServe 
anticipates a decrease in administrative costs and better efficiencies 
in the long run.
    Comment: How will TRANServe administer its bicycle benefit program 
using ``Electronic Fare Media?
    Response: TRANServe does not administer its bicycle benefit program 
using electronic fare media.
    Comment: Please indicate how 49 U.S.C. 327, Administrative Working 
Capital Fund; 26 U.S.C. 132(f), Qualified Transportation Fringe; 31 
U.S.C. 3302, Custodians of Money; Federal Employees Clean Air 
Incentives Act (Pub. L. 103-172); and Executive Order 13150, Federal 
Workforce Transportation require DOT to switch to ``Electronic Fare 
Media''?
    Response: The statutes and regulations mentioned do not require DOT 
to switch to Electronic Fare Media. In order to better serve its 
customers, TRANServe is responding to transit authority changes and 
technological advances, which are expected to reduce administrative 
costs and aid in the monitoring of the appropriate use of transit 
benefits.
    Comment: How will employees using vanpools, buses, etc. be able to 
access their transit benefits?
    Response: A growing number of State and local transit authorities 
are transitioning to electronic methods of payment. As explained above, 
the TRANServe Debit Card is now being used to distribute the transit 
benefit to federal employees in several geographic service areas. 
TRANServe recognizes that some transit providers have not yet 
implemented technologies that permit electronic payments. In each 
instance, TRANServe will continue to provide a limited paper voucher 
process while working with the transit provider towards acceptance of 
electronic payments, when appropriate.
    Comment: Commenters asked about the cost to administer the 
TRANServe program; how it compares with, or whether it is duplicate of, 
similar programs in the private sector; and whether TRANServe has 
investigated contracting its transit benefit program to a third party 
vendor to reduce its administrative costs and overhead.
    Response: The TRANServe Program is a fee-for service organization, 
which operates on a breakeven basis. TRANServe along with other Federal 
government agencies operate under specific statutory restrictions and 
authorities that only reside with and apply to the Federal government. 
Thus, TRANServe does not duplicate private sector services. When it is 
cost effective and programmatically feasible, TRANServe contracts out 
services that are not inherently governmental. In terms of the 
transition to electronic fare media, TRANServe is taking advantage of 
technological advances in the industry that are expected to reduce 
administrative costs, while assisting in the monitoring of the 
appropriate use of transit benefits.

    Issue date August 6, 2012.
Marie Petrosino-Woolverton,
Director, Office of Financial Management & Transit Benefit Programs.
[FR Doc. 2012-19584 Filed 8-8-12; 8:45 am]
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