[Federal Register Volume 78, Number 51 (Friday, March 15, 2013)]
[Proposed Rules]
[Pages 16460-16462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-06082]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 633

[Docket No. FTA-2009-0030]
RIN 2132-AA92


Capital Project Management

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of withdrawal of proposed rulemaking.

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SUMMARY: The Federal Transit Administration is withdrawing its 
September 13, 2011, Notice of Proposed Rulemaking to revise the 
agency's project management oversight regulations, in light of the 
recent, fundamental changes to the statutes that authorize the 
discretionary and formula capital programs at 49 U.S.C. Chapter 53. 
Given the repeal of the Fixed Guideway Modernization program, the 
creation of the Core Capacity Improvement and State of Good Repair 
programs, and the streamlining of the New Starts and Small Starts 
project development process, FTA must re-examine its proposed 
definition of major capital project and its policy and procedure for 
risk assessment. Also, the agency must develop policy and regulatory 
proposals for addressing several explicit directives in the new surface 
transportation authorization statute, the Moving Ahead for Progress in 
the 21st Century Act (``MAP-21''). FTA will reinitiate a rulemaking for 
project management oversight in the near future. Additionally, FTA may 
seek to set policy on major capital projects through public notice-and-
comment, and provide technical assistance through guidance.

FOR FURTHER INFORMATION CONTACT: For program matters, Carlos M. Garay 
at (202) 366-6471 or [email protected]. For legal matters, Scott A. 
Biehl at (202) 366-0826 or [email protected].

SUPPLEMENTARY INFORMATION: 
    The NPRM on Capital Project Management and the Dear Colleague 
Letters on Risk Assessment: On September 13, 2011, FTA published a 
Notice of Proposed Rulemaking (NPRM) to transform the current 
regulation for project management oversight at 49 CFR part 633 into a 
discrete set of managerial principles for sponsors of major capital 
projects. (76 FR 56363-56381). The NPRM was designed to enable FTA to 
more clearly identify the necessary management capacity and capability 
of a sponsor of a major capital project; spell out the many facets of 
project management that must be addressed in a project management plan; 
tailor the level of FTA oversight to the costs, complexities, and risks 
of a major capital project; set forth the means and objectives of risk 
assessments for major capital projects; and articulate the roles and 
responsibilities of FTA's project management oversight contractors.
    A critical component of the NPRM was the proposed definition of 
major capital project. Under the current regulation, 49 CFR 633.5, a 
major capital project is defined in pertinent part as any project 
funded with any amount of discretionary New Starts funds, or any Fixed 
Guideway Modernization (FGM) project, of a total cost of $100 million 
or more, receiving funds under the formula FGM program. In the 
September 2011 NPRM, FTA proposed that a major capital project be 
redefined as either of the following: Any New Starts or FGM project for 
which the sponsor sought $100 million or more under the New Starts or 
FGM programs, or any capital project the Federal Transit Administrator 
found would benefit from the FTA project management oversight program, 
given the size or complexity of the project, the uniqueness of the 
technology, the previous project management experience of the sponsor, 
or any other risks inherent in the project. Thus, in the NPRM, the 
agency suggested that the level of Federal investment in a project is a 
more appropriate benchmark than the total capital costs of a project, 
and that $100 million in Federal grant funds is an appropriate number 
for that purpose. Also, FTA proposed that in his or her discretion, the 
Administrator could designate any capital project seeking funds under 
the discretionary Small Starts program as a major capital project 
subject to the 49 CFR part 633 regulations. See generally, 76 FR 56365-
56368.
    Another key element of the NPRM was the proposed rule and guidance 
on risk assessment. Specifically, under proposed Section 633.23, FTA 
would have been vested with the discretion to perform or allow a 
project sponsor to perform a risk assessment at a level commensurate 
with the size, cost, or complexity of a major capital project at any 
point during project development. Also, under proposed Section 633.23,

[[Page 16461]]

FTA would have had explicit authority to require a sponsor to develop 
explicit plans and tools for risk and contingency mitigation, measures 
for additional management capacity and capability, or financial 
mechanisms to accommodate the unfunded risks. In an appendix to the 
proposed rule FTA set forth the agency's basic methodology for 
conducting risk assessments, at that time. See, 76 FR 56378-56380.
    Shortly after the issuance of the NPRM, on September 30, 2011, the 
Federal Transit Administrator and his Associate Administrators for 
Planning & Environment and Program Management issued Dear Colleague 
letters to the transit industry which announced a more streamlined 
process for conducting risk assessments for New Starts projects. http://www.fta.dot.gov/newsroom/12910_13883.html. In brief, the Dear 
Colleague letters announced an approach whereby the risk assessment for 
a New Starts project would be tailored to the unique capabilities of 
the project sponsor, the sponsor's experience in construction of 
transit infrastructure, the size and complexity of the project, and the 
total amount of New Starts funding requested for the project, and that, 
in some instances, a sponsor would be allowed to conduct its own risk 
assessment, in lieu of an assessment by FTA. It must be emphasized, 
however, that the Dear Colleague letters of September 30, 2011, were 
based on the New Starts project development process under the Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (``SAFETEA-LU''), the authorization statute that preceded 
MAP-21. Under MAP-21, the New Starts project development process is 
designed to be considerably quicker and less onerous for the project 
sponsor.
    Changes to the FTA Capital Programs Under MAP-21: MAP-21 took 
effect on October 1, 2012. Of the many changes to the FTA capital 
programs under MAP-21, two of the most important are the repeal of the 
longstanding formula program for Fixed Guideway Modernization (FGM) and 
the creation of the State of Good Repair (SGR) program. In one respect, 
the SGR program, now codified at 49 U.S.C. 5337, is the successor to 
the FGM program, in that the SGR program will support many of the same 
types of projects that were funded under the FGM program. It is clear, 
however, that in establishing the new SGR program under MAP-21, the 
Congress has raised its expectations of both FTA and the public 
transportation industry as compared to the previous FGM program. 
Specifically, through the mandate of a national Transit Asset 
Management (``TAM'') system at 49 U.S.C. 5326, the Congress is 
requiring FTA to establish systematic means for transit asset 
management by all operators of public transportation, for all modes of 
public transportation, throughout the United States. This national 
system of TAM will be based on a definition of the term State of Good 
Repair--to be developed through rulemaking--and performance measures 
for making improvements in the condition of transit agencies' 
facilities and equipment. Moreover, through the tiered formula of the 
SGR program at Section 5337, the Congress is targeting the largest 
amounts of Federal financial assistance to the operators of public 
transportation most in need of that assistance, for the express purpose 
of improving the condition of those operators' existing assets. In 
light of these fundamental changes to the principal formula program for 
capital assistance, FTA must consider whether, and if so, under what 
circumstances an SGR project should be defined as a major capital 
project subject to the oversight rules at 49 CFR part 633.
    Another change of upmost importance under MAP-21 is the 
establishment of the new competitive, discretionary Core Capacity 
Improvement (``CCI'') program, codified at 49 U.S.C. 5309(e). The 
single purpose of the CCI program is to provide Federal financial 
assistance for capital projects that will increase the capacities of 
existing fixed guideway systems in discrete corridors by at least ten 
percent--but explicitly, the statute excludes any elements of a project 
designed to maintain the State of Good Repair of the existing fixed 
guideway system. Here again, FTA must consider whether, and if so, 
under what circumstances a CCI project should be defined as a major 
capital project subject to the oversight rules at 49 CFR part 633.
    Yet another change of upmost importance is the streamlining of the 
New Starts project development process. Under the authorization 
statutes that preceded MAP-21, the New Starts process entailed the 
discrete, sequential phases of ``alternatives analysis,'' ``preliminary 
engineering,'' and final design,'' prior to the construction of a 
project under a Full Funding Grant Agreement (FFGA). Under MAP-21, 
however, there are now only two sequential steps that preceded the 
construction of a project under an FFGA: The phases of ``project 
development'' and ``engineering.'' See, 49 U.S.C. 5309(d)(1), (2). No 
longer will there be an analysis of alternatives other than the 
evaluation of alternatives necessary for compliance with the National 
Environmental Policy Act. No longer will there be a requirement that 
FTA approve a New Starts project for entry into project development, as 
there was, for example, during SAFETEA-LU, when FTA had to approve a 
project for entry into preliminary engineering. Under MAP-21, a project 
sponsor must complete all activities required to obtain a rating and 
evaluation against the New Starts criteria for project justification, 
supportive land use policy and patterns, and local financial 
commitment, within two years from the date the sponsor's project enters 
``project development,'' absent a waiver from the deadline. All of 
these changes to the New Starts program will affect FTA's project 
management oversight, and in particular, the agency's policy and 
procedure for risk assessment.
    Also, under MAP-21, there are a number of explicit directives for 
FTA's management of the New Starts, Small Starts, and Core Capacity 
Improvement programs that will affect FTA's oversight of major capital 
projects under the rules at 49 CFR part 633. Among them are the 
following:
     In accordance with 49 U.S.C. 5309(c)(3), FTA is obliged to 
``use an expedited technical capacity review process'' for any sponsor 
that has ``recently and successfully completed'' a New Start or CCI 
project, provided the budget, cost, and ridership outcomes for the 
previous project were consistent with or better than the projections, 
and the sponsor demonstrates that it ``continues to have the staff 
expertise and other resources necessary to implement'' the New Start or 
CCI project.
     In accordance with 49 U.S.C. 5309(g)(3), ``to the maximum 
extent practicable'' FTA is obliged to use ``warrants'' in making a 
determination of project justification for a New Start or CCI project 
for which the Federal share will be less than $100 million or 50 
percent of the total project costs, and the sponsor has certified that 
its existing public transportation system is in a State of Good Repair.
     In accordance with 49 U.S.C. 5309(g)(4), ``to the maximum 
extent practicable'' FTA is obliged to issue Letters of Intent and 
enter into Early Systems Work Agreements to ``expedite'' a New Start or 
CCI project towards construction.
     In accordance with 49 U.S.C. 5309(f)(2)(F), in assessing 
the stability, reliability, and availability of proposed sources of 
local financing for a New Start or CCI project, FTA must consider 
``private contributions to the project, including cost-effective 
project delivery, management or transfer of project risks,

[[Page 16462]]

expedited project schedule, financial partnering, and other public-
private partnership strategies.''
     In accordance with 49 U.S.C. 5309(h), in rating and 
evaluating a Small Start project, FTA must assess ``the benefits of the 
project as compared to the Federal assistance to be provided and the 
degree of local financial commitment.''
     In accordance with 49 U.S.C. 5309(i), a federally funded 
New Start or CCI project in a ``program of interrelated projects'' may 
advance through the New Start or CCI process provided the entire 
program of interrelated projects, as a whole, meets the requirements 
for project justification and local financial commitment; each project 
within the entire program of interrelated projects enters construction 
``within a reasonable time frame''; and the entire program of 
interrelated projects ``is supported by an acceptable degree of local 
financial commitment.''
    Next Steps: FTA intends to reinitiate the rulemaking proposed on 
September 11, 2011, at 76 FR 56363-56381, for the same purposes as 
stated in that NPRM. There is no change in the objective to attain 
stronger capital project management by project sponsors. Moreover, the 
agency is committed to developing more effective means of overseeing 
the major capital projects in which it invests taxpayer funds. 
Currently, FTA expects to issue a new Notice of Proposed Rulemaking to 
transform the project management oversight regulations at 49 CFR part 
633 into rules for Capital Project Management in fall 2013. In the 
interim, FTA will issue guidance to the public transportation industry 
on the use of risk assessments for major capital projects.
    Additionally, over the next several months, FTA will propose a 
number of policies and rulemakings on the New Starts, Small Starts, 
Core Capacity Improvement, and State of Good Repair programs, and a 
rulemaking on Transit Asset Management, all of which, as noted above, 
have implications for the future rulemaking on Capital Project 
Management. The agency must carefully coordinate these various policy 
and regulatory initiatives, in balance with the agency's obligation to 
stand up the new Public Transportation Safety Program authorized at 49 
U.S.C. Section 5329, which the agency's single highest priority. 
Accordingly, the Notice of Proposed Rulemaking to amend the regulations 
at 49 CFR part 633 is hereby withdrawn.

Regulatory Impact

    Since this action is a withdrawal of a proposed rulemaking it is 
neither a proposed nor a final rule, therefore, it is not subject to 
Executive Order 12866, Executive Order 13563, the Regulatory 
Flexibility Act, or the U.S. Department of Transportation's Regulatory 
Policies and Procedures (44 FR 11034; February 26, 1979).

List of Subjects in 49 CFR Part 633

    Transportation, Mass transportation, Project management oversight, 
Major capital projects, Fixed guideway projects, Risk assessment, 
Project management plans.

    Accordingly, the Notice of Proposed Rulemaking, Docket No. FTA-
2009-0030, published in the Federal Register on September 13, 2011 (76 
FR 56363) is withdrawn.

    Issued in Washington, DC on March 8, 2013.
Peter Rogoff,
Administrator.
[FR Doc. 2013-06082 Filed 3-14-13; 8:45 am]
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