# Transit Asset Management; National Transit Database

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2016-16883

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** July 26, 2016
- **Citation:** 81 FR 48890

## Text

DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
49 CFR Parts 625 and 630
[Docket No. FTA-2014-0020]
RIN 2132-AB07
Transit Asset Management; National Transit Database

AGENCY:

Federal Transit Administration (FTA), Department of Transportation (DOT).

ACTION:

Final rule.

SUMMARY:

The Federal Transit Administration is publishing a final rule to define the term
state of good repair
and to establish minimum Federal requirements for transit asset management that will apply to all recipients and subrecipients of chapter 53 funds that own, operate, or manage public transportation capital assets. This final rule requires public transportation providers to develop and implement out transit asset management (TAM) plans. TAM plans must include an asset inventory, condition assessments of inventoried assets, and a prioritized list of investments to improve the state of good repair of their capital assets. This final rule also establishes state good repair standards and four state of good repair (SGR) performance measures. Transit providers are required to set performance targets for their capital assets based on the SGR measures and report their targets, as well as information related to the condition of their capital assets, to the National Transit Database.

DATES:

Effective October 1, 2016.

FOR FURTHER INFORMATION CONTACT:

For program matters, Mshadoni Smith, Office of Budget and Policy, (202) 366-4050 or
Mshadoni.Smith@dot.gov
. For legal matters, Candace Key, Office of Chief Counsel, (202) 366-4011 or
Candace.Key@dot.gov
.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary

A. Purpose of Regulatory Action

B. Statutory Authority

C. Summary of Major Provisions

1. Transit Asset Management

2. National Transit Database

D. Summary of Costs and Benefits

II. Summary of Notice of Proposed Rulemaking (NPRM) Comments and Responses

A. Rulemaking Background

B. General NPRM Comments and FTA's Responses

C. Section by Section NPRM Comments and FTA's Responses

III. Regulatory Analyses and Notices

A. Regulatory Analyses and Notices NPRM Comments and FTA's Responses

B. Final Rule Analyses and Notices

I. Executive Summary

A. Purpose of Regulatory Action

This final rule establishes a National Transit Asset Management (TAM) System in accordance with section 20019 of the Moving Ahead for Progress in the 21st Century Act (MAP-21; Pub. L. 112-141 (2012), codified at 49 U.S.C. 5326).
1

A transit asset management system is “a strategic and systematic process of operating, maintaining, and improving public transportation capital assets effectively through the life cycle of such assets.” 49 U.S.C. 5326(a)(3).

1
On December 4, 2015, the President signed into law the Fixing America's Surface Transportation (“FAST”) Act (Pub. L. 114-94), which supersedes MAP-21; however, FAST made no amendments to the transit asset management statute at 49 U.S.C. 5326. This notice will refer to MAP-21 throughout the preamble.

Critical to the safety and performance of a public transportation system is the condition of its capital assets—most notably, its equipment, rolling stock, infrastructure, and facilities. When transit assets are not in a state of good repair, the consequences include increased safety risks, decreased system reliability, higher maintenance costs, and lower system performance.

Comprehensive quantitative information about the consequences of capital assets not being in a state of good repair is unavailable. However, insufficient funding combined with inadequate transit asset management practices have contributed to an estimated $85.9 billion transit state of good repair (SGR) backlog—a value derived from FTA's Transit Economic Requirements Model (TERM).
2

The SGR backlog is representative of the reinvestment cost to replace any transit assets whose condition is below the midpoint on TERM's 1 (poor) to 5 (excellent) scale, or 2.5. The SGR backlog poses a significant challenge during these fiscally constrained times, given FTA's estimates that an additional $2.5 billion per year above current funding levels from all levels of government is needed just to prevent the SGR backlog from growing.

2
Individual transit agencies were not involved in developing the assessment of the $85.9 billion state of good repair backlog. FTA developed the estimate by feeding combined data into TERM. TERM produces national-level estimates of the national state of good repair backlog, based on an underlying set of models relating the expected average true condition of an asset to the asset's age. Currently, FTA does not collect the systematic data necessary to do a detailed time-series analysis on whether the SGR backlog is growing in real terms. The $2.5 billion estimate is based on the 2013 Conditions and Performance Report, which uses a combination of National Transit Database, systematic and ad hoc data collections in combination with estimates produced by TERM. Under this final rule, FTA will collect additional data which will improve future estimates. The 2013 Conditions and Performance Report is available at
http://www.fhwa.dot.gov/policy/2013cpr/.

The National TAM System is a scalable and flexible framework. The components of the National TAM System will work together to ensure that achieving and maintaining a state of good repair becomes, and remains, a top priority for transit providers, as well as States and Metropolitan Planning Organizations (MPOs).

B. Statutory Authority

Section 20019 of MAP-21 amended Federal transit law by adding a new section 5326 to Chapter 53 of title 49 of the United States Code. The provisions of 49 U.S.C. 5326 require the Secretary of Transportation to establish and implement a National TAM System which (1) defines the term state of good repair, (2) requires that all Chapter 53 recipients and subrecipients develop a TAM plan, (3) establishes annual reporting requirements, and (4) includes technical assistance. 49 U.S.C. 5326(b).

The Secretary also must establish SGR performance measures, and recipients must set performance targets based on the measures. 49 U.S.C. 5326(c)(1) and (2). Each designated recipient must submit two annual reports to the Secretary—one report on the condition of their recipients' public transportation systems, including a description of any change in condition since the last report, and another describing its recipients' progress towards meeting performance targets established during that fiscal year and a description of the recipients' performance targets for the subsequent fiscal year. 49 U.S.C. 5326 (b)(3) and 49 U.S.C. 5326(c)(3).
3

3
The term “designated recipient” is defined in statute as “(A) an entity designated, in accordance with the planning process under sections 5303and 5304, by the Governor of a State, responsible local officials, and publicly owned operators of public transportation, to receive and apportion amounts under section 5336 to urbanized areas of $200,000 or more in population; or (B) a State or regional authority, if the authority is responsible under the laws of a State for a capital project and for financing and directly providing public transportation.” 49 U.S.C. 5302(4).

C. Summary of Major Provisions

1. Transit Asset Management

This final rule adds a new part 625, “Transit Asset Management,” to title 49 of the Code of Federal Regulations (part 625). This rule implements the several statutory requirements of 49 U.S.C. 5326(b) and (c), referenced in the previous section, by coalescing them into a comprehensive National TAM

System. The National TAM System is comprised of the following five pillars: (1) The definition of “state of good repair,” 49 U.S.C. 5326(b)(1); (2) a requirement that recipients and subrecipients develop TAM plans, 49 U.S.C. 5326(b)(2); (3) SGR performance measures, and a requirement that recipients and subrecipients set performance targets based on the measures, 49 U.S.C. 5326(c)(1) and (2); (4) annual reporting requirements for recipients and subrecipients, 49 U.S.C. 5326(c)(3); and (5) technical assistance from FTA. 49 U.S.C. 5326(b)(4) and (5). The elements of the National TAM System are listed in § 625.15.

Section 625.17 establishes basic principles of transit asset management and requires a transit provider to balance competing needs when considering the life-cycle investment needs of its assets. The disrepair of any particular asset within a public transportation system does not necessarily mean that other assets are in disrepair; whether an asset has achieved a state of good repair is an independent determination that would be made by each transit provider.

Sections 625.25 through 625.33 set forth specific requirements for TAM plans. Each transit provider that receives Chapter 53 funds as a recipient or subrecipient and either owns, operates, or manages capital assets used in the provision of public transportation, is required to develop and implement a TAM plan. A TAM plan is a tool that will aide transit providers in: (1) Assessing the current condition of its capital assets; (2) determining what the condition and performance of its assets should be (if they are not already in a state of good repair); (3) identifying the unacceptable risks, including safety risks, in continuing to use an asset that is not in a state of good repair; and (4) deciding how to best balance and prioritize reasonably anticipated funds (revenues from all sources) towards improving asset condition and achieving a sufficient level of performance within those means.

Section 625.25 lists the TAM plan requirements, including an asset inventory, condition assessments, a description of analytical processes or decision-support tools used to estimate and prioritize capital investment needs over time, and a project-based prioritization of investments. In general, an asset inventory must include all equipment, rolling stock, facilities and infrastructure that a provider owns. A provider may exclude from its asset inventory any equipment with an acquisition value of less than $50,000, unless the asset is service vehicle equipment. The inventory also must include all rolling stock (revenue vehicles), passenger stations, administrative and exclusive use maintenance facilities, and guideway infrastructure owned by a third-party and used by the provider in the provision of public transportation. The level of detail in a provider's asset inventory should be commensurate with the level of detail in its program of capital projects. A transit provider is required to conduct a condition assessment on all inventoried assets for which the provider has direct capital responsibility, and also set targets and develop a project-based prioritization of investments for those assets.

Section 625.27 requires States to develop a group TAM plan for all subrecipients under the Rural Area Formula Program, authorized under 49 U.S.C. 5311, including American Indian tribes. TAM plan sponsors, which include States, and designated and direct recipients, must develop group TAM plans for their tier II provider subrecipients, except those subrecipients that also are direct recipients under the Urbanized Area Formula Program authorized at 49 U.S.C. 5307. Tier II providers are those transit operators that do not operate rail fixed-guideway public transportation systems and have either one hundred (100) or fewer vehicles in fixed-route revenue service during peak regular service or have one hundred (100) or fewer vehicles in general demand response service during peak regular service hours. Tier I providers are those operators with one hundred and one (101) or more vehicles in revenue service during peak regular service or operators of rail fixed-guideway public transportation systems. Tier I providers must develop their own, individual TAM plan.

The group TAM plan approach is intended to reduce the burden on smaller transit providers of developing their own TAM plans and reporting to FTA's National Transit Database (NTD). A group TAM plan is subject to the same requirements for individual TAM plans. However, sponsors and participants should coordinate to determine their specific roles and responsibilities in complying with this rule.

Section 625.33 implements requirements for investment prioritization. Transit providers are required to rate state of good repair projects in order of priority. The investment prioritization requirements aid a transit provider in making more informed investment decisions to improve the state of good repair of its capital assets.

Sections 625.41 through 625.45 implement specific performance management requirements. Section 625.41 lists the objective standards for measuring the condition of capital assets. Section 625.43 establishes SGR performance measures based on the SGR standards. Section 625.45 requires recipients and subrecipients to set one or more performance targets per asset class based on the SGR measures and also requires transit providers to coordinate with States and with Metropolitan Planning Organizations (MPOs), to the maximum extent practicable, in the selection of State and MPO performance targets.

Together, these requirements allow transit providers to better assess their SGR needs, and in turn make more informed investment decisions. The coordination amongst transit providers, States and MPOs should influence MPO and State transportation funding investment decisions and is intended to increase the likelihood that transit SGR needs are programmed, committed to, and funded as part of the planning process.

Section 625.55 requires transit providers to report their targets and the condition of their capital assets annually to FTA's NTD. This data both helps FTA better estimate the Nation's SGR backlog and supports the need for additional funding at all levels of government to maintain, improve, and replace the Nation's aging transit capital assets.

2. National Transit Database

This final rule amends the regulations for FTA's National Transit Database (NTD) at 49 CFR part 630, to conform to the reporting requirements for the National TAM System. Previously, the scope of 49 CFR part 630 was limited to implementing the reporting mandate at 49 U.S.C. 5335(b) for recipients and beneficiaries of section 5307 urban formula funds and section 5311 rural formula funds to report to the NTD. Under this rule, FTA has aligned 49 CFR part 630 with the requirements found at 49 U.S.C. 5326(c)(3) that require recipients of Federal financial assistance under 49 U.S.C. Chapter 53 that own, operate, or manage capital assets used in the provision of public transportation to report their performance targets and their progress towards meeting those targets to the NTD. Under this rule, recipients that receive neither Urbanized Area Formula funds (49 U.S.C. 5307) nor Rural Area Formula funds (49 U.S.C. 5311) remain excluded from other NTD reporting

requirements that are unrelated to transit asset management.

D. Summary of Costs and Benefits

4
Cost estimates are sensitive to the extent agencies use in-house or contractor staff to conduct compliance activities. If all compliance activities are contracted out by the transit agencies or States, rather than performed in-house, the cost of the final rule will be roughly double the estimated in-house cost.

Table 1—Summary of the Final Rule's Benefits and Costs

[$ Millions]
4

Low cost case
Undiscounted dollars
Discounted at 7% discount rate
Discounted at 3% discount rate
High cost case
Undiscounted dollars
Discounted at 7% discount rate
Discounted at 3% discount rate

Quantified Costs (20 years)
449
246
338
868
471
652

Quantified Costs Annualized
22.5
23.2
22.8
43.4
44.5
43.8

Unquantified Costs
• Additional asset maintenance, rehabilitation and replacement.

• Costs of inventory and assessment for non-revenue vehicles and for equipment, administrative buildings, and parking facilities that are not part of a station or maintenance facility.

• Other third party assets not reported to NTD.

Qualitative Benefits
• Reduced operation and maintenance costs and/or reduced lifecycle costs of asset ownership.

• Reduced mechanical breakdowns and other improvements to transit system performance, reliability and safety.

The costs benefits analysis includes both qualitative and quantitative components and is designed to provide information about the likely impacts of the final rule at the societal level. FTA estimated the costs and benefits of the final rule by using Bureau of Labor Statistics studies and through dialogue with transit providers. Due to the limited number of quantitative resources, many of the estimated impacts are based on explicit assumptions that are outlined in section III of this notice. As described in section III, both low case and high case estimates were calculated based on in-house versus contractor estimated costs.

According to Government Accountability Office (GAO) reports and other studies, existing practices in transit asset management vary widely from transit provider to transit provider, though most providers already perform at least some of the functions required under the final rule. FTA estimated the costs of the final rule based on the incremental time that it will take a transit provider's staff to fulfill each of the National TAM System requirements, deducting the costs of the transit industry's current practices. Where relevant, the estimates are associated with the size of a transit provider's asset portfolio, as reported in the NTD. FTA monetized the time requirements using average wage rates from relevant job categories, as reported by the Bureau of Labor Statistics in 2015, and adjusted for employee fringe benefits.

Table 1 includes a summary of the estimated costs of the National TAM System. The quantified costs are for transit providers to assess their assets, develop TAM plans, and report certain information to the NTD. They do not include any incremental costs related to asset replacement, rehabilitation or maintenance—those costs are presented in the table as unquantified costs. FTA was also unable to estimate costs for assessing the condition of equipment that is not located at maintenance facilities or passenger stations or facilities not reported to NTD. The analysis covers a period of twenty years following the effective date of the final rule. Under the low cost case, the total undiscounted costs for the twenty years are $449 million. Using a discount rate of 7% (with 3% sensitivity case) for future values, the final rule has annualized costs of $23.2 million.

Under the high cost case, if all the tasks are contracted out by the transit agencies or States, rather than performed in-house, the cost of the final rule will be roughly double the estimated in-house cost. The total undiscounted costs for the twenty years are $868 million. Using a discount rate of 7% (with 3% sensitivity case) for future values, the final rule has annualized costs of $44.5 million.

The initial costs for collecting data and developing new methodologies will be just over $62 million spread over the first two years, followed by reduced amounts in subsequent years under the low cost case. Under the high cost case, initial costs will be approximately $115 million over two years. FTA expects that the benefits of the final rule will stem from improved maintenance practices and from improved decision-making in capital asset maintenance and replacement. By identifying and prioritizing state of good repair needs, a transit provider could reduce costs for mechanical breakdowns of transit vehicles, reduce travel delays for passengers, and yield potential safety improvements. For some providers, this may be feasible by shifting priorities within their maintenance budgets. For example, by identifying slow zones where deteriorated asset conditions have reduced system travel speeds, transit systems may assign maintenance efforts towards repairs that will eliminate the slow zone and ensure consistent and reliable travel times for passengers. For other providers, this may be accomplished through proactive replacement of capital assets. For example, rather than operating buses until they become unreliable in old age, some transit providers will now establish a consistent replacement age for their buses that will prevent costly in-service breakdowns.

Some providers may need additional funding to more effectively maintain their capital assets. To increase funding for maintenance, providers may, need to reduce expenditures for system expansion, particularly if the agencies' goal is to reduce the SGR backlog. Additionally, assembling a quantitative asset inventory and condition assessments will better equip transit providers to make the case to funding stakeholders for how much money is needed to bring their systems into a state of good repair. However, it is difficult to predict accurately how each provider is likely to respond.

The final rule's benefits could not be quantified due to the lack of available information on the impacts of asset

management programs on transit systems. Instead, FTA conducted a breakeven analysis based on the incidence of transit vehicle mechanical breakdowns reported to NTD and their associated costs. For instance, in 2013, 524,629 mechanical failures of vehicles in service were reported to the NTD, and a total of $2.2 billion in vehicle maintenance costs were reported to the NTD. Assuming that in the absence of the rule, vehicle maintenance costs in each of the next 20 years are the same as they were in 2013, the final rule would need to avoid 1.02% or 1.95% of the mechanical failure breakdowns each year to yield savings that are equal to the portion of the rule's costs that FTA was able to monetize, in the low and high cost cases, respectively. For the rule's benefits to equal all of its costs, it would need to prevent a larger but unknown amount of vehicle maintenance costs. The full methodology for the low and high cost cases are described in the Regulatory Analysis section.

Current management practices may delay maintenance of vehicles due to various reasons. For instance, some providers may keep vehicles in operation to meet the current demand, delaying regular maintenance of vehicles, resulting in mechanical failure of vehicles in service. Others may shortchange maintenance budgets to expand their systems. In each case, providers struggle to meet system demands with limited resources.

Implementing a TAM system will require a provider to collect and use asset condition data, set targets, and develop strategies to prioritize investments to meet the provider's goals. One strategy may be to ensure that assets are maintained on a regular schedule to avoid failure of vehicles in service, which are expensive to manage and cause delays on the system. Based on limited findings on transit asset management-related cost savings from transit provider initiatives and from the literature in other transportation fields, notably highways, this level of improvement appears readily achievable. Additionally, there will be important non-quantifiable benefits in areas such as improved transparency and accountability.

II. Summary of Notice of Proposed Rulemaking (NPRM) Comments and Responses

A. Rulemaking Background

On October 3, 2013, FTA published a consolidated advance notice of proposed rulemaking (ANPRM) requesting public comment on a wide range of topics pertaining to the Public Transportation Safety Program and the TAM program authorized by MAP 21. 78 FR. 61251 (Oct. 3, 2013). Throughout the ANPRM, FTA expressed its intention to adopt a scalable and flexible approach to transit asset management and safety and highlighted the inherent linkages between asset condition and safety performance.

On September 30, 2015, FTA published a Notice of Proposed Rulemaking (NPRM) for Transit Asset Management and the National Transit Database (80 FR 58911). The NPRM provided a summary of the status of the Nation's state of good repair backlog and the history behind FTA's proposals for the National TAM System. FTA took into consideration public comments it received in response to the ANPRM and NPRM during the development of this final rule.

FTA received a total of 119 public comments on the NPRM. In general, FTA has not responded to those comments that related specifically to other rulemakings. Several commenters requested an extension to the comment period. FTA did not extend the comment period, but did accept late filed comments. A couple of comments suggested that FTA provide an opportunity for States and others to offer additional comments after FHWA and FTA issue all of the performance management-related NPRMs. FTA will continue to engage with the States, transit agencies and other members of the public on the implementation of its programs and requirements. The public can also submit questions or comments at any time to FTA's Web site at
http://ftawebprod.fta.dot.gov/ContactUsTool/Public/NewRequest.aspx.

A number of comments requested guidance from FTA on how to implement the requirements of the proposed rule. The Transit Asset Management page on FTA's Web site at
www.transit.dot.gov/regulations-and-guidance/asset-management/transit-asset-management
contains a number of useful guidance documents and resources. For example, FTA has developed an Asset Management Guide for Small Providers
5

to assist small providers and States' Department of Transportations in developing TAM plans. FTA encourages transit providers and sponsors to visit the page regularly to access the most up-to-date resources.

5

https://www.transit.dot.gov/research-innovation/asset-management-guide-small-providers-fta-report-no0092.

Following is a summary of the public comments on the NPRM and FTA's responses.

B. General Comments and FTA's Responses

This section provides summarized comments that are not specifically related to a section of the NPRM. This section is organized around common themes found in the responses to the NPRM such as, FTA's approach to implementing the TAM requirements, Nexus between state of good repair and safety, Nexus between transit asset management and planning, responses to the NPRM appendix that provided examples of asset classes and individual assets, Implementation and Oversight, and Technical assistance needs.

COMMENTS: FTA's Approach to Implementing the TAM Requirements

Some commenters expressed general support for FTA's efforts to use transit asset management to help transit providers maintain bus and rail systems in a state of good repair (SGR). A State agency expressed support for FTA's efforts to increase safety through the NRPM. A transit operator emphasized that investments to resolve the SGR backlog must be guided by a plan that emphasizes the goals stated for the TAM program.

However, a few commenters expressed general concern about the proposal. For example, although supporting the idea of a National TAM System, one commenter urged that the implementation be directed towards bringing the nation's transit system into a state of good repair, rather than creating reporting and oversight requirements that have no relation to this goal. A transit operator expressed concern that the guidance prescribed in the NPRM could require transit providers already mature in TAM best practices to alter their programs, which could result in compliant but less optimal TAM programs. An anonymous commenter said the rule must be kept as simple as possible.

FTA'S RESPONSE: FTA's Approach to Implementing the TAM Requirements

FTA appreciates those comments in support of its efforts to implement a National TAM System to achieve and maintain a state of good repair for the Nation's transit assets, improving transit safety, and increasing service reliability and performance. FTA agrees that transit providers should be guided by the goals of the National TAM System in using their funding from all sources for state of good repair.

Throughout the NPRM, FTA expressed its intention to adopt a scalable and flexible approach to transit asset management and safety. This final

rule sets minimum Federal requirements that can be adopted by any transit provider and tailored to any transit system.

COMMENTS: Nexus Between State of Good Repair and Safety

Several transit operators, a business association, and other commenters recommended that FTA clarify the interaction between TAM and safety, expressing concern that failure to do so could subject transit agencies to unnecessary litigation risk. These commenters suggested that Useful Life Benchmarks (ULBs) should not drive replacement cycles to the exclusion of safe operations and asserted that the safety of any asset should be the determining factor in prioritization of asset replacement. For similar reasons, a professional association argued that SGR and safety should not be tied together and urged FTA not to use SGR and safety reporting as a methodology for awarding or not awarding funding to transportation agencies. A transit operator stated that operator experience, training, and prudence play a more critical role in life safety than asset condition. This commenter suggested that it would be more prudent to have a separate safety flag that identifies any asset that poses an “imminent danger” to an operator or passenger with specific guidelines for the management of such assets.

Although acknowledging that consideration for safety in asset management decisions is important, one transit operator stated that there should not be a direct measurable link to safety performance because that determination would require greater innovation in integrating safety and asset management systems. Further, this commenter stated that it is difficult to assess the link between safety and asset management because it is not a direct relationship.

A local transit operator suggested that FTA provide documentation and guidance on how to integrate SMS directly into TAM plans. Further, this commenter suggested that FTA allow each individual transit provider to make their own determinations about the safety of their assets.

A State transit association expressed concerns about the viability of a top-down approach, stating that it may conflict with already-negotiated union contracts or hinder future negotiations. The commenter stated that, rather than the overly burdensome SMS and TAM plan requirements, a National Transit Institute (NTI) course with appropriate certification(s) could achieve the same goals and outcomes. In contrast, one transit operator concurred with FTA that MAP-21 requirements for a National TAM System can best be implemented within the context of an SMS framework imposed by the overarching Public Transportation Safety Program.

Another transit operator and an individual commenter expressed concern that because FTA has not published a final National Public Transportation Safety Plan, it is difficult to address issues in the TAM NPRM that pertain to the linkage between the two documents. A transit operator expressed concerns about the identification of unacceptable safety risks in safety plans and TAM plans, reasoning that public access to this information may increase safety risks for the rail system.

An individual commenter said a National TAM System will significantly affect the efficiency and cost-effectiveness of capital asset management and maintenance. The commenter said it also will help to improve transit safety. A State agency and a transit operator also agreed with FTA's statements on the linkages between SGR and safety.

A transit operator recommended that part 625 should reference part 670 and “prioritize” the significance that safety plays in determining SGR.

FTA'S RESPONSE: Nexus Between State of Good Repair and Safety

FTA believes that Congress intended for it to establish a National TAM System that not only increases the performance and reliability of capital assets, but also “improve[s] safety.”
6

For example, pursuant to 49 U.S.C. 5329(b)(2)(B), FTA must develop and implement a new National Public Transportation Safety Plan that includes the definition of state of good repair developed under this final rule. Additionally, pursuant to 49 U.S.C. 5329(d)(1)(E), a transit agency safety plan must include performance targets based on the SGR measures that will be included in a National Safety Plan.

6
H.R. Rep. No. 112-557 at 603 (2012) (Conf. Rep.). In addition, the text of the Public Transportation Safety Act of 2010 was incorporated into both the transit asset management and safety provisions of MAP-21.
See
S. 3638, 111th Cong. (2010). In the report accompanying the 2010 Act, Congress stated that “state of good repair directly relates to the safety of a public transportation system, as the likelihood of accidents increases as the condition of equipment and infrastructure worsens.” S. Rept. 112-232 at 10 (2010). The requirements proposed under the Act were intended to establish a “monitoring system for the safety and condition of the nation's public transportation assets.”
Id.
at 1.

The final rule reflects FTA's recognition of the nexus between transit asset management and safety. While asset condition is not always a contributing factor in safety events, FTA believes that there is a relationship between the condition of an asset and safety performance. FTA acknowledges that a transit asset that is in a state of good repair may be operated unsafely; conversely, a transit asset that is not in a state of good repair may be operated safely through appropriate safety risk mitigation strategies.

FTA's approach to TAM is consistent with its proposed SMS approach to safety. A fundamental aspect of transit asset management is the monitoring of asset condition data as an indicator of system performance. Similarly, SMS is a formal data-driven approach to managing safety risk and assuring the effectiveness of safety risk mitigations. SMS does not require a provider to take a specific action be taken to address a specific safety risk. Implementing SMS merely provides an organization with a systematic way to identify and understand safety risks, and subsequently make a determination about how to mitigate those risks.

The requirements of this final rule can be implemented in the absence of the components of the National Safety Program referenced in the comments. Again, this final rule is scalable and flexible. The final rule neither defines nor prescribes standards for “unacceptable safety risk.” FTA believes that each provider is in the best position, based on knowledge of both its unique operating environment and availability of resources, to make determinations regarding categorization and mitigation of risks. The final rule merely requires that a transit provider give due consideration in its investment prioritization to those assets that pose an identified unacceptable safety risk.

FTA does not agree with the commenter who suggested that public access to those safety risks that may be identified in a TAM plan or safety plan, may increase safety risks for the rail system. FTA did not propose in the NPRM that a transit provider document its safety risks in its TAM plan. In determining the state of good repair of an asset, FTA proposed that a provider consider whether or not the asset poses an identified unacceptable safety risk and that a provider considers those risks in the development of its investment prioritization.

This final rule allows a transit provider to determine its own ULBs, based on knowledge of its operating environment and the performance of its individual assets. Each transit provider will need to determine what investments should be made in order to improve the performance of its transit system.

FTA understands the uncertainty expressed by some commenters regarding the nexus between transit asset management and safety. FTA also understands the uncertainty expressed in those comments regarding compliance with the requirements of the final rule that are related to safety, in the absence of a final National Public Transportation Safety Plan and a final rule for public transportation agency safety plans.

On February 5, 2016, FTA issued a proposed National Public Transportation Safety Plan (81 FR 6372-3) and a notice of proposed rulemaking (NPRM) for Public Transportation Agency Safety Plans (Agency Safety Plans). 81 FR 6344-71. The proposed rule for Agency Safety Plans would require transit agencies to set performance targets based on the safety performance criteria under the National Safety Plan. FTA proposed one criterion to measure the relationship between asset condition and safety performance. The proposed Agency Safety Plan rule also would require a transit operator to establish methods for identifying and evaluating safety risks throughout all elements of its public transportation system, including its capital assets. In the coming months, FTA plans to issue both a final National Safety Plan and a final rule for Agency Safety Plans and accompanying guidance, technical assistance and other tools for both safety and TAM.

COMMENTS: Nexus Between Transit Asset Management and Planning

A Metropolitan Planning Organization (MPO) commented that States and MPOs must consider and integrate transit providers' TAM plans and targets, as well as Transit Agency Safety Plans and targets, into the planning process, including decision-making on funding allocations and prioritization of investment strategies. A State DOT stated that consistency between FTA's and Federal Highway Administration's (FHWA's) TAM final rules is necessary and that State DOTs should be given flexibility to choose a phase-in option for the development of its first initial asset management plan and targets.

Several State DOTs said FTA should promote more definitive language for how TAM plans will feed into long- and short-range transportation planning and programming. Some commenters said the investment prioritization approach must be relevant to the existing planning and programming process without supplanting the statewide transportation improvement program (STIP) project selection process and capital programming processes.

One commenter requested clarification on the relationship between TAM plans and their future impacts on the development of Regional Transportation Plans. A transit operator said the proposed rule is written as if the National TAM System and TAM Program start at procurement and there is little to no mention of planning, requirements gathering, concept of operations, and hazard avoidance, which are central to true whole life-cycle management and SMS concepts.

FTA'S RESPONSE: Nexus Between Transit Asset Management and Planning

The NPRM did not propose that a transit provider abandon its existing capital planning program and the TAM requirements are not intended to supplant the capital planning process. This final rule is a baseline. The TAM requirements are intended to produce information critical to informed, sound decision-making for capital asset lifecycle investment needs. FTA understands that there may be other processes, considerations, or concepts that are not explicitly referenced in the rule, but may be central to a transit provider's implementation of a comprehensive TAM program. FTA believes that a transit provider could incorporate these other elements into its TAM plan through several of the requirements at § 625.25(b), specifically:

1. The SGR policy;

2. The TAM plan implementation strategy; and

3. An outline of how the TAM plan and related business practices will be monitored, evaluated and updated, as needed, to ensure the continuous improvement of transit asset management practices.

FTA acknowledges that compliance with the requirements for metropolitan planning will not become effective until the publication of the final TAM rule that establishes the SGR performance measures. Therefore, in the final rule on metropolitan and statewide and nonmetropolitan planning, FTA and FHWA have provided a phase-in of certain requirements to support States, MPOs and transit providers as they transition into performance-based planning and programming. FTA directs commenters to the Final Rule on Metropolitan and Statewide Planning and Non Metropolitan Planning
7

where State and MPO integration of transit providers' TAM plans, targets, and investment priorities into the performance-based planning and programming process are addressed.

7

https://www.federalregister.gov/articles/2016/05/27/2016-11964/statewide-and-nonmetropolitan-transportation-planning-metropolitan-transportation-planning.

COMMENTS: Appendix A: Examples of Asset Categories, Asset Classes, and Individual Assets

One commenter supported FTA's approach in Appendix A. However, a professional association and several State DOTs recommend that either Appendix A be removed from the final rule, or that the content included in Appendix A be replaced with asset categories and asset classes required for reporting to the NTD in order to align the two processes and keep reporting to a minimum. If Appendix A is retained, several of these commenters recommended that FTA either remove “Administration” assets from Appendix A or amend its definition to clarify what falls under the class of assets known as “Administration.”

A professional association and a couple of State DOTs asked if the asset category infrastructure is only applicable to fixed guideway. Based on Appendix A, a couple of State DOTs said it is unclear whether FTA envisions that office equipment and vehicle related equipment (such as bus cameras) or shop equipment (
e.g.,
vehicle lifts, fueling and lubricating fuel dispensers, test equipment, etc.) would be included in a TAM plan.

A local government recommended that FTA delineate furniture and fixtures as an asset class or individual asset that is not applicable when categorizing under TAM. The commenter also suggested that FTA clarify that TAM is not a replacement for, nor should be confused with, the standard generally accepted accounting principle fixed asset categories such as Buildings, Leasehold Improvements, Land, Furniture and Fixtures, Technology, etc. Rather it is an extension or categorization of transit capital assets within the limited scope of TAM in improving safety, reliability, and performance of our nation's public transportation; thereby reducing the SGR backlog.

An individual commenter asked if FTA will provide a cross reference from Appendix A—Asset Classification in the TERM Lite Quick Start User Guide—to the Asset Category/Asset Class in Appendix A in the rule.

A transit operator stated that, in lieu of the categorizations as proposed for Appendix A, and associated definitions throughout the rule, it would support a system of asset categories and classes that is consistent with the one described in Table 2.9 in Transit Cooperative Research Program (TCRP) Report 172, “Guidance for Developing a Transit

Asset Management Plan,” which also aligns more closely with the asset aggregations used in the TERM model. Another transit operator suggested that Appendix A should align with the corresponding table in FTA's 2012 Asset Management Guide because proposed Appendix A deviates from past FTA sanctioned practices and would likely disrupt systems already in use without improving the quality of data obtained. An MPO asked FTA to clarify the detail expected in Appendix A when a TAM plan is prepared as part of a group TAM plan by a State versus when prepared by the individual transit provider.

FTA'S RESPONSE: Appendix A: Examples of Asset Categories, Asset Classes, and Individual Assets

FTA included Appendix A in the NPRM to provide an illustrative example of an asset hierarchy. FTA did not intend for Appendix A to serve as an exhaustive list of asset classes and individual assets. Appendix A did not include systems as a separate asset category because systems would fall under the infrastructure category. Each asset category in the final rule is broad enough for a transit provider to incorporate its existing defined categories. Components of an asset, such as bus cameras or shop equipment, would be itemized in the asset inventory at the level of detail found in a transit providers program of capital projects. Specifically, with regard to the equipment asset category, the only assets that a provider must include in its inventory are non-revenue service vehicles and owned equipment over $50,000 in acquisition value. Additionally, equipment assets considered under the SGR performance measure and reported to NTD are exclusively non-revenue service vehicles. The equipment asset category does not include supplies, such as trash bins or pencils. A transit provider is not required to include any third-party equipment in its asset inventory. Also, see FTA's response to comments on “Capital Asset” and “Equipment” in § 625.25 Definitions.

The infrastructure asset category includes infrastructure assets for all modes. However, FTA proposed that the performance measure for infrastructure be limited to rail fixed-guideway assets. Therefore, a transit provider that does not operate a rail system would not have to set a performance target for its non-rail infrastructure assets. Similarly, the performance measure for equipment is limited to non-revenue service vehicles, and a transit provider is only required to set an equipment target for service vehicles. However, all other owned equipment over $50,000 must be included in a TAM plan. The asset inventory compiled for a transit provider's own TAM plan, particularly a rail transit provider's TAM plan, may have a greater level of detail than the inventory information reported to the NTD.

COMMENTS: Implementation and Oversight

Two commenters suggested that the oversight of the asset management reporting requirements should occur as part of a regularly scheduled oversight activity and existing programs, such as the triennial oversight program. One of these commenters encouraged FTA to set forth criteria that would prompt an as-needed asset management review, ensuring that reviews are triggered based on quantifiable criteria and defined risk, rather than on an arbitrary basis. Another commenter assumed that audit and compliance checks will be done during the triennial review because it was stated at the FTA webinars supporting the issuance of the NPRM that the TAM plans would not be submitted to FTA. The commenter requested that FTA clarify the audit and compliance verification of TAM plans in the final rule. One commenter expressed concern about FTA's assertion that it reserves the right to conduct additional oversight of TAM plans outside the triennial review process. A State DOT asked for FTA's determination of whether the National TAM System will be part of Satisfactory Continuing Control or Maintenance as it relates to the triennial review.

Several commenters said the rule should state how individual and group TAM plans will be reviewed and approved. A professional association said FTA should explicitly state that for rail fixed guideway systems, the State Safety Oversight Agency has a review and approval role.

Some commenters recommended that FTA further engage stakeholders with regard to implementing the rule. A State DOT suggested that FTA conduct a survey of all data requirements from the user level to determine if there is a way to coordinate and consolidate the process. A transit operator said FTA should consider providing an opportunity for a small delegation of transit providers to have a face-to-face dialogue to discuss concerns with the NPRM. A transit operator said there should be no additional changes to add more specific requirements in the final rule beyond those included in the NPRM, without another opportunity for the transit industry to review and comment.

FTA'S RESPONSE: Implementation and Oversight

FTA will not routinely collect or approve TAM plans. Individual transit providers, and sponsors on behalf of group TAM plan participants, must self-certify their compliance with the requirements of the final rule. FTA will consider developing a self-assessment tool as part of its technical assistance efforts. FTA intends to oversee self-certifications of TAM plans through the existing Triennial Review and State Management Review (SMR) processes, likely through the addition of a TAM module. FTA continues to reserve the right to conduct additional oversight of any of its requirements, including those related to TAM, outside of the Triennial Review and SMR processes.

FTA fully appreciates the role that State Safety Oversight (SSO) Agencies play in the safety of rail fixed guideway transit systems. FTA supports a rail transit provider's decisions to further align its safety program with its TAM program by seeking review and approval of its TAM plan by its SSO Agency. However, the final rule does not require SSO Agencies to review and approve the TAM plans of the rail transit systems that they oversee.

FTA has provided a number of opportunities for the public to comment on its approach and proposals on transit asset management. In addition to the ANPRM and NPRM, FTA sponsored several SGR roundtables, conducted an online dialogue, and issued a Transit Asset Management Guide. FTA will continue to engage with the industry on the implementation of both the TAM and safety requirements.

COMMENTS: Technical Assistance Needs

Several commenters provided statements concerning a potential template for TAM plans. A transit operator asked if FTA will issue a template that service providers can use to assure they are providing all required information FTA requires in an acceptable format. One commenter said FTA should offer technical assistance for tier II providers, or work with tier II stakeholders, to create TAM plan templates for smaller agencies and/or group TAM plans. Another commenter supported the idea that the State DOT and other sponsoring agencies develop one TAM plan template, but expressed concern about DOT's lack of adequate resources to develop a template, provide oversight, track assets and provide NTD reports on SGR and asset management.

Several commenters said FTA should provide training on the use of TERM

and the TERM scale for State DOTs and subrecipients prior to inclusion of facilities in the TAM plan.

A couple of commenters said FTA could provide assistance to those transit agencies that are new to asset management by publishing a sample definition of an asset. One of these commenters also said FTA should provide a toolkit as part of the final rule.

Some commenters asked for technical assistance from FTA on the following specific topics:

1. Decision processes and tools for assessing probability of risks.

2. SGR backlog calculation.

3. Developing quality and cost-effective condition assessments.

4. The new reporting requirements.

One commenter requested that FTA engage in a comprehensive asset management technical assistance effort as soon as the final rule has been published.

FTA'S RESPONSE: Technical Assistance Needs

FTA appreciates the recommendations for technical assistance tools. FTA's suite of TAM technical assistance tools will include one or more TAM plan templates, guidance or training for TERM, and guidance for performance measurement. Currently, the 2012 TAM Guide is FTA's primary guidance on transit asset management. It combines previous research, case studies, lessons learned from other FTA initiatives, and best practices.

COMMENTS: Additional Comments

A couple of commenters said FTA should ensure consistency between FTA and FHWA transportation asset management rulemakings.

One commenter said FTA should clarify to what degree the new asset management framework is potentially displacing local agency decision-making. The commenter said it has been a long-standing understanding that FTA will not substitute its judgment for that of its grantees, and final decisions on the allocation of both Federal and local funds should still rest with the implementing agency, not an entity operating at the national level.

Another commenter urged FTA to consider and request comments on adding governance metrics to the TAM rule that would permit external stakeholders to understand the challenges faced by individual agencies in balancing their capital and operating needs, and to identify agencies exerting insufficient effort in prioritizing SGR projects. For example, the commenter suggested that the following metrics might be appropriate: Available capital funding per transit asset; available capital funding per cumulative annual passenger trip; and proportion of capital budget appropriate to SGR projects.

An individual commenter asserted that the proposed rule's failure to address public transportation's human capital assets is a missed opportunity to address the high risks to both safety and performance that have resulted from the sector's failure to take a more strategic and systematic approach to acquiring, developing, and retaining individuals with needed skills. This commenter urged FTA to incorporate into the National TAM System requirements that would ensure the collection and reporting of basic workforce data, and provided specific suggestions of human resources performance data to collect.

FTA'S RESPONSE: Additional Comments

The FHWA and FTA asset management statutes are not identical; therefore the requirements under each agency's asset management rule will be different. However, the purpose of both rulemakings is to improve the condition of the Nation's transportation assets. Another rulemaking effort, the coordinated FHWA and FTA Metropolitan and Statewide and Non-Metropolitan Transportation Planning, will implement a performance-based approach to planning and programming (PBPP). This final rule supports the PBPP framework by requiring transit providers to share their TAM plans with their State and MPO planning partners and to coordinate with States and MPOs in the selection of State and MPO targets.

The requirements of the final rule do not displace local agency decision-making. The requirements of the final rule do not limit a transit provider from implementing additional TAM provisions, activities, and metrics. The final rule's information gathering, analysis, and prioritization requirements are intended to inform the local decision-making process.

FTA recognizes that human capital assets are an essential component of implementing a TAM plan; however they do not meet the statutory definition of “capital asset.” In the NPRM, FTA proposed that a tier I provider develop a nine element TAM plan, and has maintained this requirement in the final rule. One of the nine elements was a specification of resources, including personnel needed to develop and implement the TAM plan.

C. Section by Section NPRM Comments and FTA's Responses

This section provides summarized comments by NPRM section, FTA's responses, and changes made in the final rule.

Section 625.1 Purpose

This section proposed that the purpose of these regulations is to carry out the mandate of 49 U.S.C. 5326 for transit asset management.

COMMENTS:

A few commenters expressed support for the Federal objectives for the National TAM System laid out in proposed § 625.1. A transit operator asked if FTA has considered using the ISO 55000 framework to accomplish this mandate.

FTA'S RESPONSE:

Prior to MAP-21, FTA began researching transit asset management and developing TAM policies and best practices for the transit industry. FTA reviewed a number of resources prior to developing the NPRM, including the international asset management standard established by ISO. FTA believes that this final rule sets forth a flexible approach to implementing transit asset management that is consistent with current best practices.

FINAL RULE:

FTA is including this section in the final rule without change.

Section 625.3 Applicability

This section proposed that the regulations would apply to all transit providers that: (1) Are recipients or subrecipients of Federal financial assistance under 49 U.S.C. Chapter 53; and (2) own, operate, or manage transit capital assets.

COMMENTS: Applicability—Assets Maintained, Owned, or Operated by a Third-Party

Many public comments addressed the applicability of the rule to contractor assets. Numerous local transit operators, several State DOTs, and other commenters asserted that a third party contractor's assets should not be required to be included in a provider's TAM plan. Some of these commenters suggested that this is a matter of contract administration and a transit provider should determine how they will approach the issue of the condition of a contractor's assets based on the nature of each individual contract. A private company in supply of transit assets recommended that assets other than rolling stock that are fully owned

by a private contractor (
e.g.,
tools and diagnostic equipment) should not be incorporated into TAM asset inventory. In contrast, one State DOT expressed support for the applicability of TAM performance targets to a transit provider's leased assets and assets operated under a service contract.

Two transit operators and an MPO pointed out that in some instances a contractor may be providing services to several transit agencies using the same assets or multiple transit agencies may share an intermodal terminal, and it is unclear which agency would be responsible for collecting condition information and reporting of those shared assets. For this reason, the MPO commented that overlapping reporting of the same assets by different agencies would cause reconciliation issues, unnecessary data collection costs, and unnecessary coordination issues to ensure consistency in asset representation. Also relating to shared assets, a transit operator expressed concern that the transit provider has no control over the maintenance schedule; repair or replacement of contractor owned assets and suggested that each transit provider should be allowed to determine which assets to include in its TAM plan. For similar reasons, two transit operators and a business association recommended that capital assets outside a transit operator's control—such as passenger stations maintained by station cities, track owned and maintained by freight railroads used under shared-use agreements, or a building for which a transit agency is leasing a portion—should not be included in the agency's TAM plan.

Some commenters asked whether assets owned by a third party contractor and used in the provision of public transportation service (
e.g.,
vehicles owned by third party paratransit provider, maintenance facilities where contractor-owned buses are stored and maintained) must be included in a recipient's asset inventory. A transit operator asked if space it leases for its administrative offices needs to be included in its TAM asset inventory. Two transit operators asked if taxicabs and other vehicles occasionally used to provide paratransit service pursuant to the Americans with Disabilities Act (ADA) should be included in the TAM asset inventory. If so, one of these commenters requested that FTA provide an explanation in the final rule as to how an agency would decide which vehicles to include. Commenting that a transit provider has little control over which assets are used by a third-party provider, a transit operator asked if rolling stock that is used intermittently through third-party providers would be included in the TAM plan.

A transit operator expressed concern that condition assessments for assets maintained by its contractual partners may be considered proprietary information that the private carriers are not willing to share due to liability issues. A local transit provider asked how FTA would suggest an agency impose and monitor more stringent safety/SGR investment standards to third party providers that have a service contract for asset maintenance and/or operation. Several State DOTs and another commenter recommended that leased assets that otherwise would be required to be included in a TAM plan should not be included unless the lease is for a minimum of 5 years.

A State DOT asked whether a non-profit agency providing specialized transportation service to complement a subrecipient's service would need to include all of its vehicles in a TAM plan or only those vehicles that is leases from the subrecipient.

If the assets of a contracted service provider do fall under a transit agency's asset inventory for purposes of TAM plan requirements, a transit operator recommended that FTA allow for a transition period for contracted services in which existing contracts can be modified or new contracts can be bid and awarded to accommodate the new requirements. This commenter also expressed concern that the introduction of TAM requirements into service contracts would increase contract costs without meaningfully improved service, and in some cases could lead to service reductions as a result of contracted cost increases.

An MPO suggested that, if FTA is interested in getting the full picture of an agency, it could require reporting of the shared, leased, and contracted assets that are directly used by the agency, but at a very basic level and that the non-owners should be exempted from the performance metrics for these assets. As an alternative to reporting leased and contracted assets, this commenter suggested that FTA could request that agencies meet the performance requirements of leased and contracted assets by including language regarding compliance with FTA's SGR performance standards in the agency's contracts with vendors.

A transit operator commented that a tier I provider should not be required to include assets used and maintained by other tier I providers as part of its TAM asset inventory. An MPO requested guidance from FTA on how and which TAM plan(s) should incorporate capital assets that are collectively purchased and collectively maintained by a regional authority.

FTA'S RESPONSE: Applicability—Assets Maintained, Owned, or Operated by a Third-Party

The applicability of the requirements proposed in the NPRM was consistent with FTA's analysis of the SGR backlog and with current NTD reporting requirements. The Nation's $85.9 billion SGR backlog is a value derived from FTA's TERM, which is based on a comprehensive assessment of the Nation's transit capital stock reported to the NTD, including those assets that are owned by third parties.

FTA agrees with commenters who suggested that requiring the inclusion of contracted assets in a TAM plan may be difficult to implement and may prove to be overly burdensome and costly. However, the agency continues to believe that a TAM plan should, to a certain extent, take into account these types of assets. Thus, in this final rule, FTA has attempted to strike a balance between these concerns.

This final rule requires that a transit provider include in its asset inventory all equipment, rolling stock, facilities, and infrastructure that it owns. A provider may exclude from its asset inventory any equipment with an acquisition value of less than $50,000, unless the equipment asset is a service vehicle. A transit provider must only include in its asset inventory third-party owned, or jointly-procured rolling stock, passenger stations, administrative and exclusive-use maintenance facilities, and guideway infrastructure assets for which it has direct capital responsibility.

Further, the final rule only requires a transit provider to conduct condition assessments, establish performance targets, and include in its investment prioritization, those inventoried assets for which it has direct capital responsibility.
8

A transit provider has direct capital responsibility for any asset that it owns. A transit provider also has direct capital responsibility for any asset that is currently included in its program of capital projects or an asset that the provider can reasonably anticipate it will include in its program of capital projects during the TAM plan horizon period. Once an asset becomes a part of a transit provider's capital program, the transit provider must comply with the final rule's condition assessment, target setting (if applicable), and investment prioritization requirements. This

reduction of scope allows a transit provider to obtain a broad view of the condition of the assets within its system, but limits the majority of the burden of associated with other activities that may have limited impact due to the provider not having direct capital responsibility.

8
See Appendix C for example tables to illustrate the relationship amongst TAM plan elements.

FTA does not believe that it will be overly burdensome for a transit provider to include third-party owned vehicles, facilities, and guideway infrastructure in its asset inventory. Transit providers are already required to include detailed information on third-party vehicles and third-party guideway infrastructure in the NTD. FTA believes expanding asset inventories to include third-party passenger facilities and exclusive use maintenance facilities is important, as it will provide valuable information on the total number, size, and scope of facilities in the transit industry. The inclusion of a broad set of assets into the inventory is intended to provide funding decision makers with a full picture of their system and an opportunity to think proactively and long term about investment priorities for state of good repair.

FINAL RULE:

FTA is including this section in the final rule without substantive change. However, FTA is revising § 625.25(b)(1) to clarify which assets used in the provision of public transportation must be included in an asset inventory and to require condition assessments for those asset that a transit provider has direct capital responsibility for. FTA will issue guidance to aid transit providers in the implementation of the requirements of this final rule.

COMMENTS: Applicability—Other Comments

Some public comment submissions included other comments relating to the scope or applicability of the proposed rule. A State DOT, a business association, and a tribal government suggested that the TAM rule should apply only to capital assets purchased (or eligible to be funded) with FTA funding. State DOTs and other commenters said TAM plans for providers that only receive Section 5310 funds should only be required to include “FTA-funded” assets, even if FTA does not apply this definition to all TAM plans. An MPO, a State DOT, and a State transit agency said Section 5310 recipients should be excluded if they do not own vehicles funded through FTA sources. Two State DOTs and a transit operator suggested that all Section 5310 subrecipients that are not also Section 5307 or 5311 subrecipients should be excluded from the FTA TAM requirements. Three State DOTs, an MPO, and other commenters recommended that 5310 requirements for TAM reporting should be scaled back to a level that is reasonable and appropriate, reasoning that most 5310 subrecipients do not have the resources to implement a TAM or report to the NTD.

A professional association and a transit operator requested that FTA provide an exemption from the FTA TAM requirements to transportation providers that have fewer than 30 or 31 vehicles operating during peak service, which the commenters said would include most Section 5310 agencies. The transit operator stated that subrecipients awarded Section 5310 program funds are predominantly very small human service agencies including disability, aging, and health service providers, and asserted that human services agencies performing as transit providers are vastly different than transportation agencies in size, function, investment, and target populations served. Further, the professional association stated that the 30-vehicle threshold is consistent with the definition used in NTD reporting requirements to differentiate small from large agencies.

Similarly, a State DOT urged FTA to reduce the requirements for rural transit systems that have a minimal number of assets, including Section 5310 and Section 5311 subrecipients. An MPO recommended the creation of a tier III for Section 5311 subrecipients to ensure that the Group plans are manageable in scope and size. Two State DOTs and other commenters suggested that Section 5310 subrecipients should be exempt from the rule; however, if they are included, then these commenters recommended that Section 5310 subrecipients having less than ten vehicles should be exempt. Another State DOT suggested that any transit agency with fewer than ten vehicles should be exempt from TAM plan requirements. One commenter stated that the inclusion of Section 5310 vehicles was confusing because they have a much smaller useful life and operate in a different area than public transportation vehicles. This commenter was concerned that including these vehicles would dilute the SGR for the program as a whole.

An association that serves as a liaison between state departments of transportation and the Federal government said that 5310 subrecipients will find the burden of accepting FTA funds to significantly outweigh the benefits to their organization. According to this association:

“State DOTs will find it increasingly difficult to find effective subrecipients with the final result being loss of essential transportation services. Seniors and persons with disabilities will lose their only means for transportation to the grocery store, friends and family, and medical services. Section 5310 is an important aspect of the Rides to Wellness Initiative. One of the goals of the Coordinating Council on Access and Mobility is to “Streamline federal rules and regulations that may impede the coordinated delivery of services, and improve the efficiency of services using existing resources.” However, without scaling back the TAM plan requirements for Section 5310 subrecipients, FTA is adding barriers that may be impossible to overcome.”

Other commenters also stated that the cost of complying with the TAM requirements may result in Section 5310 entities discontinuing the services they provide.

A transit operator recommended that tier II providers that can demonstrate that they have effective existing asset management systems should be eligible for waivers from the TAM plan requirement. Several State DOTs and other commenters said subrecipients that receive solely Section 5311(f) funds should be excluded from the TAM planning process because intercity bus service (Section 5311(f)) is expressly excluded as a public transportation provider under the MAP-21 definition of public transportation in 49 U.S.C. 5302. If the final rule does not exempt the Section 5311(f) program in its entirety, one State DOT suggested that the rule should clarify that for the Section 5311(f) program, each State DOT may limit its TAM plan to just those assets deployed in their State and the State DOT has directly funded with Section 5311(f) funds, given that many States contract with national or regional private companies for the program.

An anonymous commenter asked if subrecipients of 5309 grant-funded vehicles that serve their clients and do not provide public transit service must be included in the TAM plan.

Two State DOTs said assessing the condition of and making an investment plan for each capital asset unit will place too large of a burden on subrecipients since the unit or units in question might represent a very small portion of the total dollar value of the provider's assets. Another State DOT suggested that (1) the rule should only focus on those assets that require long-term financial planning windows, (2) leased assets should not be included in the scope of the rule unless the lease is for a minimum of 5 years, and (3) the rule should expressly exclude office

space or other administrative support facilities or equipment.

A representative of tribal governments commented that it interprets the proposal as covering every Indian tribe that receives Chapter 53 transit funding, regardless of how small such Federal assistance may be or how few capital assets a tribal transit system may possess. A tribal government suggested that FTA consider a tier III transit provider classification for Indian tribal governments that would mandate much simpler planning and reporting requirements. This commenter reasoned that because Indian tribes own and operate ten vehicles or less at any given point in time, the man-hours burden to comply with the TAM rule cannot be justified for transit systems of this size and scale.

A State DOT recommended that FTA should develop a four tiered approach similar to current Federal regulations, with tier requirements based on population (
i.e.,
less than 50,000, 50,000-200,000, and greater than 200,000), with a fourth tier for specialized services. This commenter reasoned that the proposed two-tier framework based on a threshold of peak revenue vehicles would not adequately segregate systems with varying sizes and asset management capabilities. A trade association recommended that FTA revise its proposed TAM rule to incorporate scalable mechanisms for TAM plans appropriate to the size and scope of each agency.

Two commenters suggested that FTA change proposed § 625.3 language to read: “This part applies to all recipients or subrecipients of Federal financial assistance under 49 U.S.C. Chapter 53 that own, operate, or manage capital assets used in the provision of all modes of public transportation.”

A State DOT recommended that FTA provide in § 625.3 a more comprehensive list of all FTA recipient and subrecipient types that would be subject to the FTA TAM regulation.

An MPO commented that the requirements for non-public transit provider recipients to comply with the TAM rule potentially would create an undue burden for FTA and the funding recipients and the cost for these projects and services to comply likely outweighs their impacts to the transit SGR for most regions. For this reason, the commenter recommended that FTA should either exempt recipients that receive only Section 5307 or Section 5310 funds from the TAM plan requirements, or further reduce the requirements for those providers.

Asserting that TAM requirements should be different for bus-only systems, a professional association suggested that FTA consider using the language and concepts developed in the voluntary bus safety program developed from the 2003 Memorandum of Understanding signed by FTA, American Association of State Highway and Transportation Officials (AASHTO), the American Public Transportation Association (APTA), and the Community Transportation Association of America (CTAA).

FTA'S RESPONSE: Applicability—Other Comments

In order to address the SGR backlog in a meaningful way, FTA believes that a TAM plan must account for both those assets acquired with FTA funding and those that were not. In many cases, it is neither feasible nor does it make sense to distinguish between assets that were acquired with FTA funds and those that were not. Indeed, many of the legacy rail assets in the state of good repair backlog that are most in need of replacement were procured decades ago, prior to the establishment of a Federal financial assistance program for public transportation. The source of funds used to acquire the asset is of no consequence when making a determination regarding whether or not an asset is in a state of good repair and whether or not the asset needs to be included in the investment prioritization. FTA believes that accounting for all assets will provide a transit provider with important information that should be used to make more informed investment decisions for state of good repair.

FTA believes that this final rule is sufficiently scalable and flexible. FTA does not agree that it should provide waivers for tier I providers who already have effective transit asset management systems. The rule does not require a transit provider to abandon existing effective practices. Instead, the requirements of the rule can be integrated into and complement existing practices. Moreover, FTA does not agree that some or all tier II providers should be exempted from the TAM requirements. Tier II providers are only required to develop a four element TAM plan. A tier II plan must include only (1) an asset inventory, (2) condition assessments, (3) a decision support tool, and (4) a prioritization of investments for state of good repair.
9

A tier II provider also is required to set performance targets and report to the NTD. The fewer assets a provider has, the fewer assets would be included in an asset inventory, and the less time and effort would be required to comply with the other requirements.

9
By contrast, a tier I plan must include these four elements and also these five additional elements: A TAM and SGR policy; a TAM plan implementation strategy; a description of key TAM activities that the provider intends to engage in over the TAM plan horizon period; a summary or list of the resources, including personnel, that the provider needs to develop and carry out the TAM plan; and an outline of how the provider will monitor, update, and evaluate, as needed, its TAM plan and related business practices, to ensure the continuous improvement of its TAM practices.

In addition to the reduced requirements, tier II providers also may be eligible to participate in a group TAM plan that would be developed by a sponsor. The sponsor would be responsible for developing the TAM plan, setting targets, and reporting to the NTD on behalf of the group TAM plan participants. FTA believes that the two-tiered approach and group TAM plan option significantly reduce the burden of the TAM requirements on smaller, less sophisticated transit providers.

To the commenter concerned that inclusion of 5310 would “dilute the SGR of the program as a whole,” under the final rule, the performance measure for vehicles is based on the ULB. A transit provider may set a ULB in consideration of the type of vehicle, type of service, and operating environment. The ULB option allows for a more accurate assessment of the useful lives of vehicles based on operational realities.

This final rule only applies to recipients and subrecipients of chapter 53 funds who own, operate, or manage public transportation capital assets used in the provision of public transportation. The final rule does not apply to recipients of planning or research grants and cooperative agreements that do not provide public transportation. The term “public transportation” is defined at 49 U.S.C. 5302(14) and means regular, continuing shared-ride surface transportation services that are open to the general public or open to a segment of the general public defined by age, disability, or low income; and does not include—

1. intercity passenger rail transportation provided by the entity described in chapter 243 (or a successor to such entity) of Title 49,

2. intercity bus service,

3. charter bus service,

4. school bus service,

5. sightseeing service,

6. courtesy shuttle service for patrons of one or more specific establishments, or

7. intra-terminal or intra-facility shuttle services.

Public transportation does not include intercity bus transportation that may be

eligible for financial assistance under 49 U.S.C. 5311(f). In addition, public transportation does not include service that is closed to the general public and only available to a particular clientele. For example, a subrecipient under the formula program for elderly persons and persons with disabilities (49 U.S.C. 5310) that operates service that is open to a segment of the general public (
e.g.
elderly persons or persons with disabilities) must comply with this final rule. However, a nonprofit subrecipient under the section 5310 program that operates closed-door service (
e.g.
for members of a specific senior center or for participants in a specific sheltered workshop program only), is not a provider of public transportation and is not subject to the final rule.

To clarify, recipients and subrecipients of 49 U.S.C. 5310 program funds that do not operate public transportation are not subject to this rule. FTA estimates that this rule would apply to approximately 20% of all recipients and subrecipients of section 5310 funds. Those 5310 providers that are subject to the rule are eligible to participate in a group plan developed by a TAM plan sponsor which significantly reduces the impact of this rule to 5310 providers.. FTA does not believe the TAM provisions in this rule will result in a reduction or discontinuation of 5310 services, nor does FTA believe that State DOTs will find it difficult to find effective subrecipients to participate in their 5310 programs as a result of the rule.

FINAL RULE:

FTA is including this section in the final rule without substantive change. However, FTA has revised § 625.25(b)(1) to clarify which assets used in providing public transportation, including but not limited to all revenue vehicles, all passenger stations, all exclusive use maintenance facilities, all non-revenue service vehicles regardless of value, and owned equipment over $50,000 in acquisition value, must be included in an asset inventory and § 625.25(b)(2) to require condition assessments of only those asset that a transit provider has direct capital responsibility for.

Section 625.5 Definitions

This section proposed definitions for terms that would be applicable to the proposed part. Some of the terms were familiar to the transit industry, but were defined slightly differently for purposes of the NPRM. This final rule includes a number of non-substantive changes to the definitions proposed in the NPRM to provide further clarity regarding the meaning of terms.

COMMENTS: Definition of “Accountable Executive”

Several State DOTs and other commenters recommended that FTA should clarify the definition of Accountable Executive by adding, “An official of a State may not be considered to be an Accountable Executive unless the State is a transit provider and, if so, only with respect to the State's activities as a transit provider.” One State DOT requested that FTA redefine “Accountable Executive” for State DOTs or subrecipients who are in a group plan and state that the executive does not necessarily have the full range of responsibilities as defined.

Three commenters suggested that the definition should take into consideration that some transit agencies may have an organizational structure where the listed responsibilities are divided among more than one executive. For such agencies, these commenters suggested that the agency should be allowed to identify the Accountable Executives and their respective roles as part of the TAM plan. For similar reasons, rather than defining the Accountable Executive, a transit operator suggested that FTA inform State and local governing bodies that whoever is designated as the Accountable Executive must be granted authority to implement the adopted capital and TAM plan. Further, this commenter proposed that FTA add a provision that states no liability rests on the Accountable Executive personally.

An industry association commented that it may be overly burdensome and cause an overlap of job duties to have one Accountable Executive that oversees all safety and asset management requirements in planning, operations, maintenance, and other departments. A transit agency recommended that the Accountable Executive for asset management decisions and for the certification of agency TAM plans, be enabled to be separate from the decision-maker on safety because in many agencies the safety management decision-maker and the asset management decision-maker are different people, reporting to the chief executive.

Two MPOs stated that, in the case of the small, urbanized areas, it is unclear how the Accountable Executive at the local level can be responsible for approving the TAM plan if it is developed, approved, and implemented by the State.

A transit operator asked FTA to clarify whether the Accountable Executive may be the Chief Executive Officer (CEO) or General Manager (GM). Stating that the proposed definition of Accountable Executive is not consistent with the SMS rule that was provided earlier this year, one commenter suggested that if the intent is to point directly at the GM, CEO, President, or highest ranking executive, the definition should be shortened to that statement.

FTA'S RESPONSE: Definition of “Accountable Executive”

FTA agrees with commenters who suggested that a group TAM plan sponsor is not the Accountable Executive for each participating transit provider. However, by participating in a group TAM plan, an individual transit provider's Accountable Executive may be required to defer to the decisions of the sponsor regarding prioritization of investments. Nonetheless, each transit provider's Accountable Executive is ultimately responsible for implementing TAM at their agency.

An Accountable Executive should be a transit provider's chief executive; this person is often the CEO or GM. FTA understands that at many smaller transit providers, roles and responsibilities are more fluid. However, FTA does believe that, even in circumstances where responsibilities are either shared or delegated, there must be one primary decision-maker who is ultimately responsible for both transit asset management and safety. It is a basic management tenet that accountabilities flow top-down. Therefore, as a management system, transit asset management requires that accountability reside with an operator's top executive.

FINAL RULE:

FTA is including the definition in the final rule without substantive change.

COMMENTS: Definitions of “Asset Category” and “Asset Class”

A transit operator commented that the grantee should have flexibility to establish classes that match its existing planning and/or budgeting systems. This commenter recommended that Appendix A should be clearly labeled as not being definitive.

Three commenters recommended that FTA align the proposed asset categories with FTA's TERM/TERM Lite programs. A transit operator expressed support for FTA's approach to asset categories stating that this flexible approach would allow the classes to mirror each provider's capital program more effectively.

FTA'S RESPONSE: Definitions of “Asset Category” and “Asset Class”

FTA proposed simple, flexible definitions for the terms “asset category” and “asset class.” The proposed definitions are compatible with most existing planning and budgetary systems, including those used by TERM-Lite. The asset class examples listed in appendix A do not represent all possible classes of assets, nor do they represent the only asset categories that may be used. For example, TERM-Lite uses a separate asset category for systems, whereas this rule includes systems as part of the infrastructure category. Nonetheless, the two definitions are compatible, and can be cross-referenced with each other.

FTA has labeled Appendix A as an example, as suggested by a commenter. Each transit provider may define its own asset classes within an asset category, provided that the transit provider is able to meet the performance measure target-setting and NTD reporting requirements of the final rule.

FINAL RULE:

FTA is including the definition in the final rule without change.

COMMENTS: Definition of “Asset Inventory”

A transit provider recommended that the regulation and any guidance should specify that the term “asset inventory” refers to the required biennial inventory and that references to the inventory are comparable wherever it is required. Further, this commenter suggested that FTA consider adopting the FHWA Highway Economic Requirements System (HERS) approach, which is based on statistical sampling, and which the commenter asserted would improve data quality and reduce data collection burden.

FTA'S RESPONSE: Definition of “Asset Inventory”

FTA proposed a simple definition for the term “asset inventory.” A transit provider may develop an asset inventory to meet the requirements of the final rule by using a number of sources, including its existing biennial inventory. FTA did not set forth a sampling method for a transit provider to determine which assets it should include in its asset inventory. This final rule requires that a transit provider's asset inventory include all assets used in providing public transportation. However, a transit provider may satisfy the requirement for condition assessments by conducting a sampling of assets within an asset class, or use another method of their choosing.

FINAL RULE:

FTA is including the definition in the final rule without change. However, FTA notes that § 625.25(b)(1) has been modified to clarify the assets this final rule requires to be included in the TAM plan asset inventory.

COMMENTS: Definition of “Capital Asset”

Several transit operators and State DOTs requested a clearly defined monetary threshold for “capital assets.” Some commenters that recommended a minimal monetary threshold reasoned that it would allow for the collection of only useful data and eliminate the tracking of items of minimal value that are not critical to the provision of public transportation (such as trash dumpsters, office desks, copiers, fax machines, floor jacks, desk calculators, office chairs, coffee pots, clocks, battery chargers, etc.), which would impose a substantial burden on transit agencies. A transit operator urged FTA to decide on a dollar threshold based on evidence with some likely projection of outcome (
e.g.,
number of assets and value of the data from the assets).

Some commenters recommended specific monetary thresholds, including $100,000, $50,000, $25,000, $10,000, and $5,000.

Other commenters suggested other criteria in addition to monetary thresholds for what should be considered an asset. For example, three State DOTs and other commenters recommended that a capital asset must meet all of the following criteria to be required as part of TAM plan asset inventory: (a) FTA-funded, including assets likely to be maintained, replaced, or repaired with FTA funds; (b) an initial cost of at least $50,000 (as determined by the provider) or any rolling stock; (c) a ULB of at least 5 years or greater. Two transit operators also suggested that only federally funded assets should be considered capital assets for purposes of the TAM plans. In contrast, one State DOT expressed support for the TAM plan covering all assets in the provision of public transportation and not just the ones purchased with Federal funding, reasoning that it would allow for more consistency in the TAM development, implementation, and review process.

A business association agreed with criteria (b) and (c) of the above suggested capital asset definition. This commenter and an MPO also requested that FTA specify the assets to be included to avoid inconsistencies during reviews. For example, these commenters asked whether spare parts with a new bus should be included. These commenters also recommended that FTA provide a phase-in for asset classes that are lower priority, such as equipment with a value of less than $50,000.

A State DOT agreed with criteria (a) of the above suggested capital asset definition, but for the monetary threshold (criteria (b)), it recommend a lower value threshold of $20,000. Similarly, to reduce the cost burden to transit providers, two MPOs and three other commenters recommended that FTA limit assets reported in the TAM plan to assets with a value of at least $50,000 and a ULB of five years or greater. A State DOT agreed with these thresholds for non-rolling stock transportation assets, but suggested that the scope of assets included in a TAM plan should include all rolling stock.

A joint submission from regional transit organizations said FTA should define a cost/expected life threshold of an asset to be tracked and assessed. For purposes of FTA's TAM program, assets thresholds should be at higher levels (
i.e.,
over $50,000 and more than a 3-year life) or established risk vulnerabilities. A transit operator suggested further defining what is considered a capital asset for purposes of the National TAM System by providing thresholds of a minimum cost of $50,000 and a useful life of 1 year.

A professional association, a State DOT, and transit providers requested that FTA permit States and direct recipients to use their own definition of capital asset or existing industry standard best practices (
e.g.,
ISO 12224 standards). Some transit operators recommended that each transit operator should be allowed to determine which assets to include in its TAM plan (
e.g.,
only assets deemed critical to a transit provider's operation or service/risk model), with one commenter expressing concern about double counting of shared assets. Although commenting that the definition of asset is unique to each agency, an MPO requested that FTA issue broad guidance or a set of parameters that would clarify what FTA considers an asset.

A transit operator made the following comments: (1) It is important that asset definitions are understood uniformly across the departments of a single organization, and across transit agencies, nationwide, (2) FTA should refrain from expanding the definition of capital asset beyond the level of detail prescribed by 49 U.S.C. 5326, and (3) the regulatory definition should be narrowed, rather than broadened, to provide clarification. The commenter also said FTA should update its C5010.1

Grants Management and C5300.1 State of Good Repair Grants Program guidance documents to reflect the definitions established by this rulemaking.

In contrast, expressing concern that the term “minimum level of granularity” could be construed to include assets whose value is so minimal as to make the maintenance of the asset inventory unreasonable, a State public transportation system urged FTA to instead define and construe capital assets more broadly. Similarly, a transit agency recommended that FTA not restrict agencies to focus only on “capital assets” and simply use the term “assets.” Two commenters suggested that FTA revise the definition to reference an asset “used in any mode of public transportation.”

A transit operator suggested that capital assets should, at a minimum, include items that most agencies presently track as an asset due to their cost and impact on the overall asset's condition (
e.g.,
bus engines, bus transmission, bus axles, rail HVAC units, and rail trucks). Another transit operator also expressed concern with the proposed definition of capital asset, commenting that systems within facilities or portions of infrastructure may be more realistically considered capital assets.

FTA'S RESPONSE: Definition of “Capital Asset”

FTA proposed a broad definition of “capital asset”. The definition encompassed all capital assets that may be used in the provision of public transportation service. Commenters who suggested that FTA include a monetary threshold in the definition of the term capital asset should understand that there is a distinction between what a capital asset is and whether or not it must be included in an asset inventory. FTA clarifies that the definition of “capital asset” does not include supplies (such as trash dumpsters, office desks, copiers, fax machines, floor jacks, desk calculators, office chairs, coffee pots, clocks, battery chargers, etc.); implementation guidelines will provide specific alignment with other FTA program guidance, for example, FTA's Grant Management Requirements Circular 5010.1.D. FTA has revised the final rule to clarify which capital assets a transit provider must include in its asset inventory.

FTA considered including a monetary threshold in the definition of a capital asset, and alternatively, a monetary threshold for including a capital asset in the TAM plan, but has decided against this approach. FTA wanted to propose a flexible and scalable approach to TAM that could apply to all different types of transit agencies. FTA believes the proposed definition is consistent with a scalable and flexible approach that can accommodate many existing capital planning practices. A monetary threshold could work against that interest because it would establish a one size fits all fiscal indicator, which may not have the same significance for every transit provider. Further, in order to stay current, FTA would need to regularly adjust a monetary threshold for inflation over time.

However, FTA has identified a monetary threshold for the equipment category to provide structure and consistency to the types of assets required in this category. The equipment category could be misapplied depending on the size of a transit provider's portfolio, as some transit providers identify equipment to a level of specificity beyond usefulness in a TAM plan. FTA has determined that all non-revenue service vehicles regardless of value and any owned equipment over $50,000 in acquisition value must be included in a TAM plan asset inventory. These constraints maintain the value of including equipment assets in the TAM plan without introducing undue burden on transit providers to include items of minimal value.

Historically, FTA has not required tracking of Federally-funded assets below $5,000 in value. This rule does not change that. Transit providers will not be required to include in their asset inventories any assets, regardless of funding source, that fall below the $5,000 threshold, or whatever subsequent threshold is established by FTA Circular 5010 or its successors.

In addition, FTA does not agree with the comments that recommended FTA phase-in requirements for assets. Each transit provider will determine the appropriate asset hierarchy and the level of detail based on the level of detail a transit provider already captures in their program of capital plans. The practice of transit asset management requires that a transit provider have a robust and complete assessment and understating of all of the assets within its system. To require a transit provider to identify “priority” assets would undervalue this fundamental aspect of TAM. Moreover, only when a transit provider has a complete understanding of the condition of the assets within its system is it able to create meaningful investment prioritization to improve or maintain a state of good repair.

FTA believes that third-party assets are mission-critical to the provision of public transportation service, and need to be accounted for in an asset inventory in order to have a clear picture of which assets are essential to the transit provider in delivering service. In this final rule, a transit provider must incorporate into its inventory only those capital assets that either it owns or specific asset types owned by a third party. Specifically, transit provider is not required to include in its asset inventory equipment that is owned by a third-party or third-party owned shared-use maintenance facilities. For example, a transit provider that uses a commercial, third-party maintenance facility, such as a national chain oil change company, attached to a commercial gas station does not need to include this asset in its inventory. However, a transit provider must only comply with the requirements in the rule for conditions assessments, targets, and investment prioritization for those assets for which the provider has direct capital responsibility, including third-party owned assets.

This final rule does not prescribe a level of detail for the asset inventory hierarchy. Instead, the final rule requires that a transit provider disaggregate divisible capital assets in a manner that is consistent with how the assets are identified in the transit provider's program of capital projects. For example, a project for a facility, which is comprised of multiple components, could be programmed as a project for an HVAC system or as a project for condenser and duct work; in either case, if the provider's program of capital projects itemizes the project as HVAC, then the provider may report HVAC in the TAM asset inventory. If a capital asset is of such low value that it would not be included in a transit provider's program of capital projects, then that asset need not be identified in the asset inventory required under this final rule.

FINAL RULE:

FTA is including the definition in the final rule without change. However, § 625.25(b)(1) has been revised to clarify which assets used in the provision of public transportation must be included in an asset inventory, including but not limited to all revenue vehicles, all passenger stations, all exclusive use maintenance facilities, all non-revenue service vehicles regardless of value, and owned equipment over $50,000 in acquisition value, must be included in an asset inventory at a level of detail commensurate with the level of detail used to describe assets in a transit provider's program of capital projects.

COMMENTS: Definition of “Decision Support Tool”

Two commenters recommended that FTA revise paragraph (1) of the proposed definition of “decision support tool” to add the phrase “including safety critical systems and components” after “condition data.”

FTA'S RESPONSE: Definition of “Decision Support Tool”

FTA proposed a broad definition of “decision support tool.” FTA does not believe that it is necessary for the definition to explicitly include reference to “safety-critical systems and components” in the definition of decision support tool

FINAL RULE:

FTA is including the definition in the final rule without substantive change.

COMMENTS: Definition of “Equipment”

A State transit association said the definition of “equipment” should have a dollar threshold attached. An MPO recommended that a unit of equipment be defined as an FTA-funded asset with an initial cost of at least $50,000, or any rolling stock with a ULB of at least 5 years or more.

A public transportation association said that no individual asset with an initial value under $50,000 or such higher value as the agency has established for financial statement purposes should be tracked as a “unit of equipment.” Requiring agencies to assess and report TAM information for equipment with lesser values could capture mundane assets such as trash dumpsters. According to this commenter, “even with a $50,000 or locally established threshold, transit agencies would be free to track other assets deemed critical to their operation. Rolling stock such as paratransit vans would continue to be captured as rolling stock. Both FTA and the individual agency would have useful data, free from the clutter of hundreds or thousands of line items of minimal value and not critical to the agency mission, consistent with the example in draft Appendix A. Additionally, this would allow agencies to report with an eye to risk. Without linking the reporting requirement to operational risk, the transit industry is simply counting and spending money to gather irrelevant data.”

Several commenters stated that the proposed definition of “equipment” seems to include a wide range of asset classes, while other parts of the proposed rule define equipment as non-revenue vehicles (
e.g.,
Appendix A, § 625.41, § 625.43(a)). One transit agency recommended that non-revenue vehicles should be included in the vehicle asset class, not the equipment class. Similarly, another transit agency asserted that transit providers use the term “equipment” in regards to portable tools, work machinery, or components, and that it is not a term reserved for non-revenue vehicles.

Another commenter suggested that FTA allow the transit agency to define equipment, as well as other categories in the TAM plan, at a level that is suitable to the agency (
e.g.,
“equipment means an item that is necessary to perform the primary transit function of moving people in a safe efficient manner”).

A transit operator expressed concern that the definition as proposed would unintentionally drive useful life to less than 1 year. This commenter proposed that equipment be grouped together; for example, overhead doors would be maintained and replaced as one group instead of individual assets. Asserting that a 1-year useful life threshold is too short, a transit operator suggested that FTA allow grantees to rely on State laws that determine eligibility for capital investments to determine what property qualifies as “equipment.”

FTA'S RESPONSE: Definition of “Equipment”

The purpose of the National TAM System is to tackle the Nation's growing SGR backlog by improving the condition of transit assets. FTA does not believe that a definition of equipment should exclude assets that are not in a state of good repair, but don't meet a monetary threshold. However, FTA acknowledges that an unspecified minimum threshold is confusing to transit providers. The final rule allows a provider to exclude from its asset inventory all equipment with an acquisition value below $50,000. However, an asset inventory must include all non-revenue service vehicles regardless of value.

This final rule does not prescribe a level of detail for the equipment asset category. Instead, the final rule requires that a transit provider identify capital assets in a manner that is consistent with how the assets are identified in the transit provider's program of capital projects. FTA conducted a review of nine transit providers, representing three types of transit operations, to find out the level of detail captured in their program of capital projects. FTA found that each transit provider, included varying levels of detail in their program of capital projects, but none so detailed as to include items of de minimus value, such as trash bins, pencils etc. FTA clarifies that “equipment” does not include supplies; implementation guidelines will provide specific alignment with other FTA program guidance, for example, FTA's Grant Management Requirements Circular 5010.

FTA recognizes that the threshold in this final rule differs from the current definition of equipment in the 5010 Circular, which states a $5000 acquisition value. FTA believes that equipment assets that fall between the $5000 threshold of the current 5010 Circular and the $50,000 threshold of this final rule are likely to be limited to assets that do not affect the SGR backlog. However, FTA notes that transit providers are encouraged to include equipment assets in their TAM plan that will impact their safety and operations to be considered alongside other assets in their inventory and investment prioritization.

FTA included Appendix A example in the NPRM to provide examples of asset classes. FTA did not intend for Appendix A to serve as an exhaustive list. A transit provider may choose how it defines asset classes within the equipment category for its TAM plan.

FTA agrees with the commenter that highlights that the final rule allows transit providers to establish locally defined thresholds to track assets deemed critical to their operation, providing “useful data free from clutter of hundreds of thousands of line items of minimal value not critical to the agency mission”. FTA notes that this rule does not specify a risk-based approach to asset management but does recognize linking reporting to operational risk is a practice some transit providers may undertake.

FINAL RULE:

FTA is including the definition in the final rule without change. However, § 625.25(b)(1) has been revised to clarify that the only equipment assets that must be included in a TAM plan asset inventory are; non-revenue service vehicles regardless of value and owned equipment over $50,000 in acquisition value.

COMMENTS: Definition of “Facility”

A transit provider commented that FTA's definition should recognize that not all buildings or structures used in the provision of public transportation are the same and asserted that the proposed definition does not provide an adequate description of public facing, operational, and administrative facilities.

FTA'S RESPONSE: Definition of “Facility”

To clarify, FTA proposed a broad definition of facility that encompassed any buildings or structures used in providing public transportation, including passenger stations, operations, maintenance, and administrative facilities.

FINAL RULE:

FTA is including the proposed definition in the final rule without change.

COMMENTS: Definition of “Full Level of Performance”

Three transit operators suggested that this term should not include the word “full”; rather, they suggested that the performance of the asset is the ability to provide the required level of service to customers or performance. Further, one of these commenters suggested the addition of the sentence, “Generally, this can be measured in terms of reliability, availability, capacity, and meeting customer demands and needs.” The other transit operators reasoned that a benchmark for legacy transit systems is subject to interpretation.

Two commenters suggested that FTA expand the definition of “full level of performance,” reasoning that the proposed meaning is unclear because an asset degrades from new overtime and with use, thus, never again being at its “full level” of performance. These commenters also recommended that FTA add references for compliance with the Americans with Disabilities Act (ADA) requirements as set forth in 49 CFR parts 37, 38, and 39, which would speak to ensuring entities are meeting their obligations under 49 CFR 37.161.

A transit operator and a business association recommended that FTA use “fit for intended purpose” rather than “full level of performance” because it would still allow for reduced performance as long as an asset meets the required performance level and that the FTA's proposed SGR definition does not allow for the somewhat degraded performance of some assets experienced over time under even ideal conditions. Minimally, this commenter asserted that “full level of performance” requires additional explanation or slight modification to say “acceptable level of performance” or something similar, reasoning that “full level of performance” implies an absolute condition, which is not always achievable in transit. Although expressing support for the FTA definition of SGR because it would provide flexibility for each local agency to establish its own standards, a State DOT recommended that FTA reconsider the previously proposed definition that included “fit for purpose” and similar descriptions.

A State transit association said using safety as a component of “full level of performance” without further clarification overlooks the reality of operating policies.

FTA'S RESPONSE: Definition of “Full Level of Performance”

FTA intentionally proposed an aspirational definition of “state of good repair.” FTA intended for the proposed definition to describe an asset at its best ideal performance condition. The term “full” describes an aspirational level of performance, which would require a transit provider, even those of legacy systems, to consider how far beyond optimal performance the system is operating. Full level of performance is not an absolute “like new” condition, but FTA proposed that a transit provider measure the state of good repair of its assets by applying the three objective standards.

FTA recognizes that old assets and assets in deteriorated condition may still provide an acceptable level of performance. However, merely operating at an “acceptable” level of performance with older assets in need of replacement does not represent a state of good repair.

FTA does not believe that “fit for its intended purpose” is sufficient to meet the statutory requirement that the definition of state of good repair include “objective standards” for measuring the condition of capital assets. For example, it is not uncommon for a transit provider to continue to use a railcar with limited functioning HVAC during high demand periods. While the rail car may be “fit for the intended purpose” of meeting revenue service demands, the performance of the HVAC system indicates the deteriorating condition of that rail car, which is not the same as full performance. This initial indicator of declining condition should be used to inform decisions on asset replacement. The purpose of the National TAM System is to improve the condition of the Nation's aging capital assets. In order to bring about meaningful change, FTA does not believe it should establish a system based on the status quo. Instead, FTA must establish a baseline that will bring about change.

FINAL RULE:

FTA is including the definition in the final rule without change.

COMMENTS: Definition of “Horizon Period”

A transit operator suggested that FTA explain how the term “horizon period” compares to the term “useful life.”

FTA'S RESPONSE: Definition of “Horizon Period”

The “horizon period” is the period of time beginning with the completion of a TAM plan and ending four years later. The term “useful life,” used in FTA grant programs refers to the FTA-developed performance period for a capital asset. In general, FTA funds may not be used to replace an asset until it has reached or exceeded its useful life.

FINAL RULE:

FTA is including the definition in the final rule without substantive change.

COMMENTS: Definition of “Infrastructure”

Two commenters recommended that the definition for infrastructure should also provide itemized categories including but not limited to Power, Track, Ventilation, Elevators, Escalators, Detectable Warning Strips, PA/VMS Equipment, Rolling Stock Subsystem Elements including doors, ramps, bridge plates, lifts, designation signs, public address equipment, and securement systems, among others.

A local government said the word “interconnect,” as used in the definition, can be interpreted tangibly or intangibly. In order to provide consistency across what is reported among bus and van providers, the commenter recommended that the final rule should either include applicable examples or else establish that this asset category may not apply to providers whose rolling stock capital assets are limited to buses and vans.

A transit operator said that the definition is vague when it is applied to assets other than rail infrastructure. Another transit operator commented that this term overlaps with “facility.”

FTA'S RESPONSE: Definition of “Infrastructure”

FTA proposed a broad definition of infrastructure, which encompassed all infrastructure classes for all modes of public transportation. Given this broad definition, FTA does not believe that more narrowly itemized categories are necessary.

FINAL RULE:

FTA is including the definition in the final rule without substantive change.

COMMENTS: Definition of “Investment Prioritization”

A transit operator recommended that paragraph (2) of the definition should reference safety risk considerations. Expressing confusion that under this definition, investment prioritization must be fiscally constrained, a transit operator asked what needs to be reported if activities are not undertaken due to such constraints. Another transit operator suggested adding language to acknowledge other factors outside the prioritization criteria, such as intangibles, outside influences, and other defendable mitigating circumstances.

FTA'S RESPONSE: Definition of “Investment Prioritization”

The NPRM proposed that a transit provider consider safety needs in the process of developing its investment prioritization. Resilience to climate change and service reliability are two other risks that transit providers may consider in the process of prioritizing investments. FTA did not propose a mandatory requirement for specific risk based analyses. However, FTA encourages and supports the application of a risk based asset management approach to the development of a transit provider's investment priorities.

Funding for any transit purpose is defined by Congress. FTA may not, through rule, establish additional sources of funding for any purpose that is not already eligible for such funding. A TAM plan should provide a transit provider with quantitative information that may be provided to a transit board and local funding bodies to support a strategic justification for the allocation of additional funds.

FINAL RULE:

FTA is including the definition in the final rule without substantive change. Section 625.33 included requirements for investment prioritization. Investment prioritization is both the analytical process used to prioritize investments and the resulting list of capital programs and projects. Investment prioritization is temporally and fiscally constrained, and should be based on reasonably anticipated funding levels from all revenue sources. The resultant list can be ranked by category or order.

COMMENTS: Definition of “Key Asset Management Activities”

A transit operator commented that for a large grantee the size and complexity of this list will reflect the scale of the organization, and the interconnectedness of the grantee's management structure may make the presentation of such a list seem like an “unwieldy organization chart.”

FTA'S RESPONSE: Definition of “Key Asset Management Activities”

FTA agrees with the commenter that the scale and complexity of key asset management activities will reflect the scale and complexity of the transit provider's system.

FINAL RULE:

FTA is including the definition in the final rule without substantive change. Key asset management activities are the actions that a transit provider determines are necessary for implementing TAM practices within the organization and are critical to achieving the provider's transit asset management goals. These activities are not limited to outputs of transit asset management, but may include activities that support asset management, such as the purchase of decision-support software or a training program for key personnel.

COMMENTS: Public Transportation System

A State DOT asked if Section 5310 fund recipients are considered general public transportation.

FTA'S RESPONSE: Public Transportation System

Public transportation does not include service that is closed to the general public and only available for particular clientele. For example a subrecipient under the section 5310 program that operates service which is open to a segment of the general public, (
e.g.,
all elderly persons or persons with disabilities) would be required to comply with this rule. However, a subrecipient nonprofit or community organization under the section 5310 program that operates closed-door service, (
e.g.,
for members of senior center or work program only) would not be providers of public transportation and therefore are not required to comply with this rule.

FINAL RULE:

FTA is including the definition in the final rule without change.

COMMENTS: Definition of “Rolling Stock”

An individual commenter asked which vehicles fall under the Asset Category/Asset Class of Equipment/Service Vehicles and which vehicles fall under the Asset Category/Asset Class of Rolling Stock/Cars and Vans.

FTA'S RESPONSE: Rolling Stock

Rolling stock includes vehicles used primarily to transport passengers. Service vehicles, which fall under the equipment category, are used primarily to support maintenance and repair work for a public transportation system, supervisory work, or for the delivery of materials, equipment, or tools.

FINAL RULE:

FTA is including the definition in the final rule without change and is adding a definition for the term “service vehicle.”

COMMENTS: Safety Management Systems

A transit operator recommended that FTA consider how it will implement this part of the rule if there will b

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2016-16883. Public record. Not legal advice.