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[Federal Register Volume 89, Number 244 (Thursday, December 19, 2024)]
[Rules and Regulations]
[Pages 103677-103695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30030]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 215

[Docket No. FRA-2023-0021, Notice No. 2]
RIN 2130-AC94

Freight Car Safety Standards Implementing the Infrastructure 
Investment and Jobs Act

AGENCY: Federal Railroad Administration (FRA), Department of 
Transportation (DOT).

ACTION: Final rule.

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SUMMARY: FRA is amending the Freight Car Safety Standards (FCSS) to 
implement section 22425 of the Infrastructure Investment and Jobs Act 
(Act). The Act places certain restrictions on newly built freight cars 
placed into service in the United States (U.S.) including limiting 
content that originates from a country of concern (COC) or is sourced 
from a state-owned enterprise (SOE) and prohibiting sensitive 
technology that originates from a COC or is sourced from a SOE. The Act 
mandates that FRA issue a regulation to monitor and enforce industry's 
compliance with the Act's standards.

DATES: The Final Rule is effective January 21, 2025.

ADDRESSES: Docket: For access to the docket to read background 
documents or comments received, go to https://www.regulations.gov and 
follow the online instructions for accessing the docket.

FOR FURTHER INFORMATION CONTACT: Check Kam, Mechanical Engineer, Office 
of Railroad Safety at (202) 366-2139, email: [email protected]; or 
Michael Masci, Senior Attorney Adviser, Office of the Chief Counsel, 
telephone: (202) 302-7117, email: [email protected].

SUPPLEMENTARY INFORMATION:

Abbreviations and Terms Used in This Document

CBP--Customs and Border Protection
CE--Categorical Exclusion
CFR--Code of Federal Regulations
COC--Country of Concern
DOT--Department of Transportation
EA--Environmental Assessment
EIS--Environmental Impact Statement
FCSS--Freight Car Safety Standards
FR--Federal Register
FRA--Federal Railroad Administration
FTA--Federal Transit Administration
GS--General Schedule
IIJA--Infrastructure Investment and Jobs Act
IP--Intellectual Property
NAFTA--North American Free Trade Agreement
NEPA--National Environmental Policy Act
NPRM--Notice of Proposed Rulemaking
OMB--Office of Management and Budget
PRA--The Paperwork Reduction Act
RSA--Rail Security Alliance
RSEP--Railroad Safety Enforcement Procedures
RSIA--Rail Safety Improvement Act of 1988
SOE--State-Owned Enterprise
Umler--Universal Machine Language Equipment Register
U.S.--United States
U.S. DOC--United States Department of Commerce
U.S.C.--United States Code
USITC--U.S. International Trade Commission
USMCA--United States-Mexico-Canada Agreement
USTR--U.S. Trade Representative

Table of Contents for Supplementary Information

I. Executive Summary
II. Discussion of Comments to the NPRM
    A. Comments About FRA's Proposed Application of the Act's 
Content Limitation and Sensitive Technology Requirements to Railroad 
Freight Car Manufacturers
    1. The Act Does Not Regulate After-Manufacture Changes to 
Railroad Freight Cars, Including Content Limitations and Sensitive 
Technology
    2. Railroad Freight Cars Already Placed in Service in the U.S. 
Are Not Subject to the Act
    3. Definitions Provided by the Act for the Terms Sensitive 
Technology, Component, Country of Concern, and State-Owned 
Enterprise Are Suitable for Implementing the Act
    4. The Scope of the IP Violation or Infringement Prohibition 
Being Incorporated Into the Freight Car Safety Standards Is Intended 
To Be the Same as the Act
    B. Comments About FRA's Proposal Implementing the Act's Freight 
Car Compliance Certification
    1. The Act Requires Certain Information To Be Included in the 
Certification
    2. The Act Requires Certification To Be Submitted Prior to 
Placing Freight Cars Into Service on the U.S. General Rail System
    C. Comments About FRA's Process for Enforcing the Act's 
Requirements and Penalties
    1. The Act Does Not Require a Finding of Willfulness To 
Establish a Violation
    2. Process for Manufacturers To Defend Against and Appeal 
Findings of Noncompliance With the Act
    3. Process for Railroad Freight Car Manufacturer To Be 
Reinstated After Being Prohibited Under the Act
    4. Five-Year Statute of Limitations Applies to the Act
III. Section-by-Section Analysis
IV. Regulatory Impact and Notices
    A. Executive Order 12866 as Amended by Executive Order 14094
    B. Regulatory Flexibility Act and Executive Order 13272
    C. Paperwork Reduction Act
    D. Federalism Implications
    E. International Trade Impact Assessment
    F. Environmental Impact
    G. Environmental Justice
    H. Unfunded Mandates Reform Act of 1995
    I. Energy Impact
    J. Privacy Act Statement

I. Executive Summary

Purpose of the Regulatory Action

    FRA is issuing this rulemaking as required by the Act, as codified 
at 49 U.S.C. 20171.\1\ The Act provides that a railroad freight car, 
wholly manufactured on or after the date that is 1 year after the date 
of issuance of regulations, may only operate on the U.S. general 
railroad system if: (1) the

[[Page 103678]]

railroad freight car is manufactured, assembled, and substantially 
transformed, as applicable, by a qualified manufacturer in a qualified 
facility; (2) none of the sensitive technology located on the railroad 
freight car, including components necessary to the functionality of the 
sensitive technology, originates from a COC or is sourced from a SOE; 
and (3) none of the content of the railroad freight car, excluding 
sensitive technology, originates from a country of concern (COC) or is 
sourced from a state-owned enterprise (SOE) that has been determined by 
a recognized court or administrative agency of competent jurisdiction 
and legal authority to have violated or infringed valid U.S. 
intellectual property rights of another including such a finding by a 
Federal district court under title 35 or the U.S. International Trade 
Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 
1337).\2\
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    \1\ The Infrastructure Investment and Jobs Act (IIJA), Sec. 
22425, Pub. L. 117-58, 135 Stat. 752 (Nov. 15, 2021) (codified at 49 
U.S.C. 20171) and generally referred to in this rule as the Act, or 
section 20171).
    \2\ 49 U.S.C. 20171(b)(1).
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    The Act further provides percentage limitations on freight car 
contents so that not later than one year after the date of issuance of 
regulations, a newly manufactured railroad freight car, even if 
complying with the requirements in the preceding paragraph, may not 
operate on the U.S. general railroad system if more than 20 percent of 
the content of the railroad freight car, calculated by the net cost of 
all components of the car and excluding the cost of sensitive 
technology, originates from a COC or is sourced from a SOE. After three 
years from the date of issuance of regulations, the percentage may not 
be more than 15 percent.\3\ See the notice of proposed rulemaking \4\ 
(NPRM) for detailed discussion on the background of the Act and other 
relevant laws.
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    \3\ Id. at (b)(2).
    \4\ 88 FR 85561 (Dec. 8, 2023).
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Summary of the Regulatory Action

    The Act requires regulations to be issued to implement its mandate 
and for freight car manufacturers to certify that freight cars covered 
by the Act are in compliance.\5\ FRA issued an NPRM on December 8, 
2023,\6\ proposing to codify a process for FRA to monitor and enforce 
compliance with the Act. This final rule adopts that proposal with 
minor clarifications. To carry out the Act's certification requirement, 
this rule requires railroad freight car manufacturers to electronically 
certify to FRA that each freight car complies with the Act before that 
car is operated on the U.S. general railroad system of transportation. 
The certification is required to identify each car being offered for 
operation and include the manufacturer's name and the name of the 
individual responsible for certifying compliance with the Act. In 
addition, this final rule requires manufacturers offering freight cars 
for service in the U.S. to maintain all records showing information to 
support certification, including content calculations, and such records 
are required to be made available to FRA upon request.
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    \5\ The Act requires certification to the ``Secretary of 
Transportation.'' Pursuant to 49 CFR 1.89(a), the Secretary has 
delegated that authority to FRA.
    \6\ 88 FR 85561.
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    Fifteen comments to the NPRM were submitted to the docket for this 
rulemaking proceeding.\7\ FRA reviewed all the comments, and in 
response, has incorporated portions of FRA's existing enforcement 
process into this final rule to clarify the process FRA will use to 
enforce the civil penalty fines provided in the Act. No other changes 
to the proposed rule text are provided in this final rule, but 
discussions are provided to help clarify: (1) the application of the 
Act's content limitation and sensitive technology prohibition 
requirements to freight car manufacturers; and (2) the implementation 
and enforcement of the Act's freight car compliance certification 
requirement and penalties.
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    \7\ Docket No. FRA-2023-0021.
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Costs and Benefits of the Regulatory Action

    This rule fulfills FRA's obligation to issue a rulemaking that 
implements the Act. In section ``V. A. Executive Order 12866 as Amended 
by Executive Order 14094'' of this rule, FRA describes the benefits and 
costs that are expected to come from issuing this regulation.
    In the economic analysis section, FRA qualitatively explains the 
benefits expected to result from implementing the rule. Issuing the 
rule will protect the U.S. rail system from risks that come from 
manufacturing freight cars with sensitive technology and technological 
components, necessary to the functionality of the sensitive technology, 
from a COC or SOE such as potential vulnerabilities in information 
security. As such, this rule mitigates potential issues related to 
compromised national security and corporate espionage. Issuing the rule 
also fulfills FRA's duties required by the Act.
    Over a 10-year period of analysis, FRA quantifies the following 
costs to the freight car manufacturing industry and FRA that come from 
issuing this rule: (1) limiting content sourced from COCs or SOEs; (2) 
prohibiting the use of sensitive technology from these sources; (3) 
industry compliance costs; and (4) government administrative monitoring 
and enforcement costs. As shown in Table 1, the cost from issuing the 
rule is approximately $143,600 (undiscounted), $130,300 (PV, 2%), 
$124,100 (PV, 3%), and $102,800 (PV, 7%). The annualized net costs are 
approximately $14,500 (PV, 2%) and $14,600 (PV, 3%).\8\
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    \8\ All cost estimates are in 2022 dollars.

        Table 1--Industry and FRA Burden From Issuing the Rule, Total Cost, 2022 Dollars, Rounded ($100)
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                                                       Cost                                 Annualized
             Entity              -------------------------------------------------------------------------------
                                   Undiscounted        PV 2%           PV 3%           PV 2%           PV 3%
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Industry........................          40,100          35,900          34,000           4,000           4,000
FRA.............................         103,500          94,900          90,100          10,500          10,600
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    Total cost..................         143,600         130,300         124,100          14,500          14,600
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II. Discussion of Comments on the NPRM

    FRA reviewed all fifteen comments received in response to the NPRM. 
Comments generally raised issues related to the proposed: (1) 
application of the Act's content limitation and sensitive technology 
prohibition requirements to freight car manufacturers; (2) 
implementation of the Act's freight car compliance certification; and 
(3) process for enforcing the Act's requirements and penalties. In 
response to the comments, this final rule incorporates portions of 
FRA's existing enforcement process into

[[Page 103679]]

the FCSS \9\ to help clarify the process FRA will use to enforce the 
civil penalties provided in the Act. Discussions are also provided in 
this section of this rulemaking to help clarify the other issues raised 
in the comments. In addition, other comments broadly expressed support 
\10\ for the proposal or concern \11\ about railroad safety, and 
although FRA considered these comments, FRA is not discussing those 
comments in this final rule because generally, they do not provide a 
basis for FRA to respond or are outside the scope of this rulemaking. 
Notably, FRA did not receive any comments in opposition to the 
proposals in the NPRM. For a complete list of comments please see the 
docket for this rulemaking.\12\
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    \9\ Adding Sec. Sec.  215.409 through 215.421 to the rule text 
in this final rule.
    \10\ Alliance for American Manufacturing's comment and letter 
from U.S. Senators Tammy Baldwin, John Cornyn, and Paul Casey Jr.
    \11\ FRA-2023-0021-0002.
    \12\ Docket No. FRA-2023-0021, Notice No. 1.
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A. Comments About FRA's Proposed Application of the Act's Content 
Limitation and Sensitive Technology Requirements to Railroad Freight 
Car Manufacturers

    The preamble to the NPRM provides FRA's understanding of how the 
Act applies to railroad freight car manufacturers.\13\ It generally 
explains that the Act: (1) applies to manufacturers and not railroads 
and does not cover after-manufacture changes to railroad freight cars, 
including sensitive technology; (2) does not apply to railroad freight 
cars already placed in service in the U.S.; and (3) provides 
definitions for the terms ''sensitive technology'', COCs, and SOEs that 
are suitable for implementation of the Act.
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    \13\ 88 FR at 85568.
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1. The Act Does Not Regulate After-Manufacture Changes to Railroad 
Freight Cars, Including Content Limitations and Sensitive Technology
    As discussed in the NPRM, FRA concluded that the Act regulates 
railroad freight cars by imposing requirements at the time of initial 
manufacture but does not require FRA to ensure that the requirements 
are met throughout the useful life of the equipment or at each re-entry 
into service following any changes to the railroad freight car 
including, repair, alteration, modification, rebuild, refurbishment, 
restoration, or reconstruction.\14\ Several manufacturers, trade 
associations, Brotherhood of Locomotive Engineers and Trainmen (BLET), 
and Rail Security Alliance (RSA) \15\ commented that the Act's 
sensitive technology prohibition should be extended beyond the time of 
initial manufacture to further protect against the potential influence 
from COCs and SOEs. The commenters agree with FRA's conclusion that the 
Act imposes requirements only at a car's time of initial manufacture, 
but they contend that extending the prohibition would be within the 
spirit of the Act. These comments generally expressed concern that 
aftermarket parts containing sensitive technology originating from SOEs 
and COCs could be controlled remotely and could be used to disrupt 
railroad operation. Trinity Industries and the Association of American 
Railroads commented agreeing with the proposed rule's conclusion that 
the Act's sensitive technology prohibition applies only at the time of 
initial manufacture and do not request any extension to aftermarket 
parts. As discussed in the NPRM, the Act expressly places requirements 
on the sensitive technologies installed on railroad freight car 
manufacturers at the time of the cars' initial manufacture and does not 
place on-going restrictions on the use of such technology (e.g., 
aftermarket parts) on freight cars.\16\ Without express Congressional 
intent to impose such ongoing restrictions, FRA is not extending the 
sensitive technology prohibitions to apply to freight cars after their 
time of initial manufacture.
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    \14\ Id.
    \15\ Alliance for American Manufacturing; American Foundry 
Society, American Iron and Steel Institute, and Steel Manufacturers 
Association; Amsted Railway Company; BLET; Canadian Association of 
Railway Suppliers; FRA-2023-0021-0002; RSA; United Steelworkers; and 
Wabtec Corporation.
    \16\ 88 FR at 85564.
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2. The Act Does Not Apply to Railroad Freight Cars Already Placed in 
Service in the U.S.
    One member of the public \17\ commented that the Act's requirements 
should not apply to existing freight cars. As discussed in the NPRM, 
railroad freight cars that are currently in-use are not subject to the 
Act, including when parts are replaced during maintenance or repair; 
because the Act only imposes requirements on newly-manufactured freight 
cars.\18\ With respect to applicability, the plain language states that 
only railroad freight cars that are wholly manufactured on or after a 
date that is one year after the issuance date are subject to Act's 
requirements.\19\ The Act requires FRA to issue regulations to 
implement the requirements set forth in the Act. For purpose of this 
analysis, FRA proposed to define the date on which FRA promulgates 
regulations as the ``issuance date.'' Thus, if FRA promulgates 
regulations on June 1, 2025, only railroad freight cars that are wholly 
manufactured on or after June 1, 2026, are subject to the Act's 
requirements. Using this hypothetical issuance date of June 1, 2025, as 
an example, railroad freight cars manufactured prior to June 1, 2026, 
and new railroad freight cars that were partially manufactured prior to 
June 1, 2026, are not subject to the Act.
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    \17\ FRA-2023-0021-002.
    \18\ 88 FR at 85565.
    \19\ 49 U.S.C. 20171(b)(1).
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3. Definitions Provided by the Act for the Terms ``Sensitive 
Technology'', ``Component'', ``Country of Concern'', and ``State-Owned 
Enterprise'' Are Suitable for Implementing the Act
    Several manufacturers, trade associations, BLET, and RSA \20\ 
commented that FRA should revise the proposed definition for 
``sensitive technology'' to expressly include only devices and 
components that are physically located on the freight car. As such, 
devices in such locations would be prohibited, if originating from a 
COC or sourced from a SOE.\21\ FRA disagrees that the revision is 
needed and in this final rule adopts the proposed rule's definition, 
incorporating the Act's definition for the term ``sensitive 
technology.'' The NPRM adopted the definition of the term ``sensitive 
technology'' directly from the Act. The Act defines sensitive 
technology as ``any device embedded with electronics, software, 
sensors, or other connectivity, that enables the device to connect to, 
collect data from, or exchange data with another device.'' FRA finds 
this definition suitable for implementing the Act's requirement. When 
read alone, FRA agrees with the commenters that the definition does not 
clearly restrict sensitive technology to devices located on freight 
cars. However, the Act's prohibition of certain sensitive technology 
expressly identifies ``sensitive technology located on the railroad 
freight car'' and proposed Sec.  215.401(a)(2), adopted in this final 
rule, makes clear that the prohibition applies to sensitive technology 
``on the

[[Page 103680]]

railroad freight car.'' As such, FRA finds that its conclusion 
(discussed in the NPRM \22\) that the Act's definition of ``sensitive 
technology'' is limited to devices located on freight cars is correct 
and as such, FRA does not find it necessary to revise the definition of 
``sensitive technology.''
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    \20\ Canadian Association of Railway Suppliers, American Foundry 
Society, American Iron and Steel Institute, and Steel Manufacturers 
Association, Trinity Industries, RSA, Greenbrier Companies, BLET, 
Railway Supply Institute (RSI), and Wabtec Corporation.
    \21\ The prohibition in 49 CFR 215.405(a)(2) would apply.
    \22\ 88 FR at 85562, 85567, and 85575.
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    Several manufacturers, trade associations, BLET, and RSA \23\ 
commented that FRA should revise the final rule to further clarify the 
term ``sensitive technology'' by expressly including microprocessors, 
short range wireless processors, and long-range wireless processors to 
ensure these devices (or components) would be prohibited, if 
originating from a COC or sourced from a SOE. The NPRM adopted the 
definition of the term ``sensitive technology'' directly from the Act 
and, in the preamble to the NPRM, FRA explained that as proposed, the 
sensitive technology prohibition would also apply to the components 
necessary to the functionality of the sensitive technology (i.e., the 
active components that work with the sensitive technology).\24\ 
Further, in the NPRM, FRA specifically listed ``any type of processor, 
transmitter, receiver, or data storage device'' as active components of 
sensitive technology.\25\ As such, FRA finds that it is clear that 
various processors identified by the commenters are covered by the 
prohibition as proposed. The comments did not explain why such 
processors would not be covered by the proposed definition. Thus, FRA 
concludes it is not necessary to explicitly call out these types of 
active components in the definition of the term ``sensitive 
technology,'' and adopts the proposed definition.
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    \23\ Canadian Association of Railway Suppliers, American Foundry 
Society, American Iron and Steel Institute, and Steel Manufacturers 
Association, RSA, BLET, RSI, and Wabtec Corporation.
    \24\ 88 FR at 85567.
    \25\ Id.
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    Amsted Rail's comment suggests that FRA ``adopt a de minimis 
limitation of 3%-5% of total material cost only on the finished railcar 
as a clear definition of small parts'' to interpret the term 
``component,'' as used in the Act. FRA declines to adopt a de minimis 
limitation, as it could be inconsistent with the definition provided by 
the Act. According to the Act, the term ``component'' means a part or 
subassembly of a railroad freight car.\26\ The de minimis limitation 
suggested by Amsted Rail does not exclude parts or subassemblies from 
being included in the calculation. As such, part or subassembly of a 
finished car could be calculated in the 3%-5% of total material cost. 
In such a scenario, excluding the part or subassembly from the 
definition of ``component'' would be inconsistent with the express 
definition provided by the Act. Amsted Rail's comment did not address 
whether it would be possible to avoid any such inconsistencies.
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    \26\ 49 U.S.C. 20171(a).
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    A member of the public \27\ commented that FRA should consult and 
coordinate with other relevant agencies and stakeholders to better 
refine and harmonize the proposed definitions for COC and SOE. The 
comment, however, does not express any concern with the proposed 
definitions, which are incorporated from the Act. FRA finds that the 
definitions are suitable for implementing the Act, and in this final 
rule, FRA adopts the definitions as proposed.
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    \27\ Docket number FRA-2023-0021-0003.
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4. The Scope of the IP Violation or Infringement Prohibition Being 
Incorporated Into the Freight Car Safety Standards Is Intended To Be 
the Same as That Delineated in the Act
    Wabtec Corporation and RSA commented on FRA's proposal for 
enforcing the Act's prohibition against railroad freight cars operating 
on the U.S. general railroad system of transportation if equipped with 
content originating from a COC or sourced from an SOE that has violated 
or infringed U.S. intellectual property (IP) rights.\28\ The 
commenters: (1) request that this final rule clarify that any railroad 
freight cars equipped with IP subject to a violation or infringement 
that is not from a COC or SOE do not trigger the Act's IP violation or 
infringement prohibition; and (2) disagree with FRA's proposal that the 
duration of the IP violation or infringement prohibition is always 
permanent.
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    \28\ 49 CFR 215.401(a).
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    FRA agrees with the commenters that the IP violation or 
infringement prohibition applies only when the IP subject to the 
violation or infringement comes from a COC or SOE. The following 
example, provided in the NPRM, helps clarify this point. In 2009, the 
ITC issued a 10-year Limited Exclusion Order against two Chinese 
companies (Tianrui Group Company Limited and Tianrui Group Foundry 
Company Limited) and two U.S. companies (Standard Car Truck Company, 
Inc. and Barber Tianrui Railway Supply, LLC).\29\ The ITC determined 
that the four respondents violated section 337 of the Tariff Act by 
misappropriating numerous Amsted trade secrets relating to the 
manufacture of cast steel railway wheels, importing into the U.S. cast 
steel railway wheels and substantially injuring, and threatening 
substantial injury to, Amsted's domestic cast steel railway wheel 
operations, which manufacture Amsted's Griffin[supreg] wheels.\30\ The 
ITC determination excluded any such steel railway wheels from entering 
into the U.S. for ten years. On appeal, the Federal Circuit upheld the 
ITC's decision.\31\ FRA understands that section 20171(b)(1)(C) \32\ 
would prohibit a railroad freight car from operating on the U.S. 
general railroad system of transportation if equipped with the steel 
wheels that were the subject of this case, only if they are from a COC 
or SOE. Therefore, a railroad freight car equipped with the steel 
wheels sourced from the either of the two U.S. companies (not SOEs) in 
this example, are not covered by the Act's IP violation or infringement 
prohibition.
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    \29\ See In the matter of Certain Cast Steel Railway Wheels, et 
al. USITC Inv. No. 337-TA-655 (U.S. Intern. Trade Com'n), 2009 WL 
10693128.
    \30\ In the matter of Certain Cast Steel Railway Wheels, et al. 
USITC Inv. No. 337-TA-655 (U.S. Intern. Trade Com'n), 2009 WL 
4261206.
    \31\ Tianrui Group Co. Ltd. v. Intl. Trade Comm'n, 661 F.3d 1322 
(Fed. Cir. 2011).
    \32\ Codified by this final rule at 49 CFR 215.401(a)(3).
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    As discussed in the NPRM, FRA understands the plain language of the 
Act to permit permanent prohibition, because it does not expressly 
limit the duration of the IP violation or infringement prohibition or 
connect it to any penalty provided in a determination by the ITC, or 
other court or agency of competent jurisdiction and legal 
authority.\33\ The commenters disagree, asserting that ``to the extent 
that the IP rights that were the subject of the violation have since 
lost their protected status other than through violation of law (e.g., 
where such IP was protected by a patent that has expired or where a 
trade secret is no longer protected as such for example due to 
intentional disclosure), . . . the prohibition would no longer apply.'' 
However, the scope of the application of the Act's IP violation or 
infringement prohibition is not limited to a particular owner, 
operator, or IP (likely a component on the railroad freight car), it is 
tied to the railroad freight car. The Act provides that the entire 
railroad freight car ``may only operate on the United States general 
railroad system of transportation if . . . none of the content of the 
railroad freight car . . .'' satisfies the prohibition.\34\ When the 
prohibition is

[[Page 103681]]

triggered, it applies to the entire railroad freight car that is so 
equipped, until it is brought into compliance (e.g. removing the 
component that is subject to an IP violation or infringement). As such, 
the IP violation or infringement prohibition would be permanent, if the 
railroad freight car is not brought into compliance.
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    \33\ 88 FR at 85567.
    \34\ 49 U.S.C. 20171(b)(1).
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B. Comments About FRA's Proposal Implementing the Infrastructure 
Investment and Jobs Act's Freight Car Compliance Certification

    The Act requires manufacturers to annually certify to FRA, as 
delegated by the Secretary, that any railroad freight cars it offers 
for operation on the U.S. general railroad system of transportation 
meet the requirements of the Act.\35\ This rulemaking incorporates the 
certification requirement into the FCSS \36\ and establishes a process 
for FRA to access necessary information to determine compliance with 
the Act.
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    \35\ Id. at (c)(3).
    \36\ 49 CFR part 215.
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1. The Act Requires Certain Information To Be Included in the 
Certification
    As proposed in the NPRM, this final rule requires manufacturers' 
certifications to be submitted electronically to FRA's Office of 
Railroad Safety.\37\ The certifications must include the manufacturer's 
name and address; the name, signature, and contact information for the 
person responsible for certifying compliance; and a car identification 
number for each car being certified. Manufacturers will be required to 
maintain records to support their compliance, and FRA must be able to 
access those records upon request.
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    \37\ 88 FR at 85577.
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    Two manufacturers,\38\ RSA, and RSI commented that FRA should 
impose a five-year limit to the recordkeeping requirement. FRA 
disagrees, because records may be needed to enforce the Act beyond a 
five-year period. The statute of limitations is five years for 
noncompliance with the Act, but as explained in section III. C. 4. 
``Five-Year Statute of Limitations Applies to the Act'' below, the 
prohibition penalty may be initiated after more than three monetary 
penalty assessments under the Act. Each of the three penalties could 
take multiple years using the process provided in Sec. Sec.  215.409 
through 215.421, and the penalty assessments may occur years apart. As 
such, the enforcement process would likely extend well beyond five 
years, and FRA may need access to records beyond a five-year period to 
enforce the regulation.
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    \38\ Trinity Industries and Wabtec Corporation.
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    Wabtec Corporation, RSA, and RSI commented that FRA should provide 
a standard certification form for manufacturers to certify compliance. 
FRA disagrees and adopts the certification requirements as proposed in 
the NPRM. These requirements provide FRA the information needed to 
implement the certification requirements and allow manufacturers 
flexibility to determine how best to comply. The information required 
in Sec.  215.403 can be conveniently and adequately provided in 
different formats. If desired, the industry may expand upon the minimum 
certification requirements and create an industry-wide certification 
form.
2. The Act Requires Certification To Be Submitted Prior to Placing 
Freight Cars Into Service on the U.S. General Rail System
    Two manufacturers,\39\ RSA, and RSI informed FRA in their comments 
that it may not be convenient to certify compliance with the Act when 
they request FRA perform a sample car inspection. FRA understands that 
a sample car inspection is conducted when the sample railcar is fully 
built for inspection.\40\ As such, it should be a convenient time to 
certify compliance. However, FRA expects manufacturers will develop 
their own process to ensure they comply with the certification 
requirements, including timely submissions to FRA.
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    \39\ Trinity Industries and Wabtec Corporation.
    \40\ Most newly built freight cars are considered cars of 
special construction under the freight car safety standards and 
manufacturers request FRA to inspect the cars prior to entering 
service. According to 49 CFR 231.118, cars of construction not 
covered by the 18 types of cars identified in the regulation, 
relative to handholds, sill steps, ladders, hand brakes and running 
boards may be considered as of special construction, but shall have, 
as nearly as possible, the same complement of handholds, sill steps, 
ladders, hand brakes, and running boards as are required for cars of 
the nearest approximate type. To help ensure the complement of 
safety appliances satisfy the requirements for the nearest 
approximate type, manufacturers request that FRA perform a sample 
car inspection after the cars are built, before they enter service. 
This seems to be a convenient time to certify that the cars comply 
with the Act. Manufactures commented that this would not be a 
convenient time to certify the cars are compliant but did not 
provide a clear explanation.
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C. Comments About FRA's Process for Enforcing the Act's Requirements 
and Penalties

    Some manufacturers,\41\ RSA, and RSI commented that FRA should 
revise the proposed rule \42\ to clarify or add the following: (1) 
willful noncompliance should be required to establish a violation of 
the Act's requirements; (2) FRA's Chief Counsel should provide written 
notice of a probable violation, and an express process should be 
established for manufacturers facing prohibition through which 
manufacturers can defend their position and appeal a finding of 
noncompliance; (3) a process by which manufacturers can be reinstated 
after the prohibition is triggered; and (4) clarification of the five-
year statute of limitations for enforcing identified violations. 
Generally, FRA expects violations of the Act to be rare; thus, FRA 
expects to address individual violations on a case-by-case basis. FRA 
agrees with the comments that an express process is warranted due to 
the severity of the potential penalties (the prohibition against 
offering cars for service in the U.S.) imposed by the Act. As discussed 
in the NPRM, FRA will use its Railroad Safety Enforcement Procedures 
(RSEP) (49 CFR part 209) to enforce the Act.\43\ This final rule 
incorporates the RSEP into the FCSS to clarify how the RSEP will 
apply.\44\
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    \41\ Trinity Industries, Greenbrier Companies, and Wabtec 
Corporation.
    \42\ 49 CFR 215.407.
    \43\ 88 FR at 85568.
    \44\ This final rule adds Sec. Sec.  215.409 through 215.421 to 
incorporate the relevant provisions from appendix A and subpart B 
(hazmat) to 49 CFR part 209 to expressly provide procedures to 
implement Sec.  215.407(a). Other portions of the RSEP are discussed 
in this section and will be used by FRA to determine when to 
initiate an enforcement action for a finding of noncompliance with 
the Act. Notably, any prohibition under Sec.  215.407(b) requires 
assessment of three penalties under Sec.  215.407(a), and will 
therefore, benefit from the process provided for Sec.  215.407(a).
---------------------------------------------------------------------------

    In addition, Association of American Railroads (AAR) expressed its 
understanding that FRA's proposal to request documentation to determine 
whether a freight car is registered with the Umler system would be 
limited to information relevant to determining such registration. As 
discussed in the NPRM, FRA plans to request information to enforce the 
requirements of the Act. In doing so, FRA intends to request 
information relevant to determine compliance with the Act and treat any 
protected or sensitive information appropriately.
1. The Act Does Not Require a Finding of Willfulness To Establish a 
Violation
    Wabtec Corporation and RSA commented that FRA should assess the 
Act's prohibition penalty against freight car manufacturers only when 
there is willful noncompliance with the Act's requirements. The 
commenters assert that the Act's language, ``[t]he Secretary of 
Transportation may [emphasis added] prohibit a railroad freight car 
manufacturer with respect to which the

[[Page 103682]]

Secretary has assessed more than 3 violations under subparagraph (A) 
from providing additional railroad freight cars for operation on the 
United States general railroad system of transportation . . . ,'' gives 
FRA some discretion to determine when to impose penalties. While FRA 
agrees the statutory language provides FRA discretion, FRA's RSEP 
provides the following criteria for FRA to use to determine which 
instances of noncompliance merit penalties: (1) the inherent 
seriousness of the condition or action; (2) the kind and degree of 
potential safety hazard the condition or action poses in light of the 
immediate factual situation; (3) any actual harm to persons or property 
already caused by the condition or action; (4) the offending person's 
(i.e., railroad's or individual's) general level of current compliance 
as revealed by the inspection as a whole; (5) the person's recent 
history of compliance with the relevant set of regulations, especially 
at the specific location or division of the railroad involved; (6) 
whether a remedy other than a civil penalty (ranging from a warning on 
up to an emergency order) is more appropriate under all of the facts; 
and (7) such other factors as the immediate circumstances make 
relevant. The criteria provided by the RSEP are appropriate for FRA to 
enforce the Act's penalties tailored to the freight car manufacturer's 
relevant compliance record and the facts surrounding its noncompliance 
and promote rail safety. The commenters do not specifically address the 
RSEP criteria, but generally seem concerned with the severity of the 
penalties and seem to recommend a willfulness standard to safeguard 
against any potential shortcomings. FRA agrees with commenters that the 
Act's civil monetary penalties, potentially culminating in a 
prohibition on manufacturers from offering cars for service, are more 
severe than the typical civil penalties FRA assesses for violations of 
other Federal rail safety laws.
    The RSEP explains FRA applies a willfulness standard for penalty 
assessments only when it is statutorily mandated. For example, FRA 
applies a willfulness standard for civil penalties assessed against 
individuals,\45\ but does not require willfulness for suspensions or 
disqualifications of individuals. The willfulness standard for 
individual civil penalties described in the RSEP was statutorily 
mandated and created in response to an FRA proposal.\46\ FRA proposed 
the willful act requirement for individuals because it ``believed then 
that it would be too harsh a system to collect fines from individuals 
on a strict liability basis, as the safety statutes permit FRA to do 
with respect to railroads.'' \47\
---------------------------------------------------------------------------

    \45\ 49 CFR 209.409, 209.335(a); see also part 209, appendix A.
    \46\ Part 209, appendix A (citing RSIA, Pub. L. 100-342, enacted 
June 22, 1988).
    \47\ Id.
---------------------------------------------------------------------------

    In contrast to the individual civil penalty provisions, the 
provisions in the Rail Safety Improvement Act of 1988 (RSIA) 
authorizing suspension or disqualification of an individual whose 
violation of Federal rail safety laws has shown that individual to be 
unfit for safety-sensitive service, do not require a showing of 
willfulness.\48\ In the absence of a statutory requirement, FRA's 
implementing regulations for disqualification actions did not require a 
violation to be willful.\49\
---------------------------------------------------------------------------

    \48\ Section 3(a) of the RSIA, Public Law 100-342.
    \49\ Subpart D of 49 CFR part 209, implementing the suspension 
and disqualification provisions of RSIA.
---------------------------------------------------------------------------

    Criminal penalties are the only provisions identified by the RSEP, 
other than individual civil monetary penalties, that require 
willfulness for assessment.\50\ This willfulness requirement also arose 
under statute.\51\ Accordingly, it is not established FRA practice to 
interpret a willfulness requirement where the statute does not 
expressly require one. FRA has, however, broadly incorporated 
willfulness as a factor for determining the penalty amount when not 
statutorily required. FRA's civil penalty schedules for regulated 
entities generally provide higher penalties for willful violations than 
non-willful violations. In other words, FRA uses willfulness to assess 
a higher monetary penalty rather than as a threshold requirement for a 
finding of a violation.\52\
---------------------------------------------------------------------------

    \50\ 49 CFR 209.131.
    \51\ SAFETEA-LU, Public Law 109-59, 119 Stat. 1144 (as amended) 
(enacted as 49 U.S.C. 5124(a)).
    \52\ See part 209, appendix A: ``Although railroads are strictly 
liable for violations of the railroad safety laws and deemed to have 
knowledge of those laws, FRA's penalty schedules contain, for each 
regulation, a separate amount earmarked as the initial assessment 
for willful violations. Where FRA seeks such an extraordinary 
penalty from a railroad, it will apply the definition of `willful' 
set forth [in appendix A to part 209].''
---------------------------------------------------------------------------

    For the forgoing reasons, FRA has found that willfulness is not 
required to support a violation of the Act's requirements. Without any 
evidence that Congress intended to apply a willfulness standard for the 
Act's requirements, per the RSEP, FRA will enforce the penalties using 
the same criteria as other civil monetary penalties assessed in FRA's 
safety program.
2. Process for Manufacturers To Defend Against and Appeal Findings of 
Noncompliance With the Act
    Three manufacturers,\53\ RSA, and RSI commented that FRA should 
revise the proposed rule to add a specific process for manufacturers to 
defend against and appeal FRA's findings of noncompliance with the Act 
and a requirement for FRA's Chief Counsel to provide written notice of 
a probable violation of the Act. The RSEP \54\ explains that when a 
violation is committed, ``penalties are assessed by issuance of a 
penalty demand letter that summarizes the claims, encloses the 
violation report with a copy of all evidence on which FRA is relying in 
making its initial charge, and explains that the railroad may pay in 
full or submit, orally or in writing, information concerning any 
defenses or mitigating factors.'' Consistent with the RSEP, FRA expects 
to issue a penalty demand letter, as described in the RSEP, for any 
violation of the Act prior to assessing any civil penalties.
---------------------------------------------------------------------------

    \53\ Greenbrier Companies, Trinity Industries, and Wabtec 
Corporation.
    \54\ Appendix A to part 209.
---------------------------------------------------------------------------

    The RSEP also provides a process for respondents to defend against 
a finding of noncompliance with the Act when FRA indicates its intent 
to enforce a civil penalty. Specifically, ``[t]he railroad safety 
statutes, in conjunction with the Federal Claims Collection Act, 
authorize FRA to adjust or compromise the initial penalty claims based 
on a wide variety of mitigating factors.'' \55\ Once penalties have 
been proposed, the respondent is given a reasonable amount of time to 
investigate the charges and then make its case before FRA in an 
informal conference.\56\
---------------------------------------------------------------------------

    \55\ Id.
    \56\ Appendix A refers to this step in the process as an 
``informal conference.'' The stated purpose is for the respondent to 
state their case.
---------------------------------------------------------------------------

3. Process for Railroad Freight Car Manufacturer To Be Reinstated After 
Being Prohibited Under the Act
    Two manufacturers and RSA commented that FRA should clarify the 
process for freight car manufacturers to provide cars for operation on 
the U.S. rail system after being prohibited from doing so due to 
noncompliance with the Act.\57\ According to the Act,\58\ the 
prohibition continues until FRA determines: (1) such manufacturer is in 
compliance with the Act; and (2) all civil penalties assessed to such 
manufacturer pursuant to this section

[[Page 103683]]

have been paid in full. Remedial action may be considered mitigation 
during the civil penalty process, and evidence of completed remedial 
actions may help FRA determine compliance with the Act. FRA expects 
that during the course of any enforcement process, a manufacturer will 
submit evidence of appropriate corrective actions demonstrating that it 
has corrected the identified noncompliance and that it has come into 
full compliance with the Act and this regulation. Once FRA determines 
that a manufacturer has come into compliance and paid all relevant 
civil penalties, FRA will document that determination in writing.
---------------------------------------------------------------------------

    \57\ Greenbrier Companies and Wabtec Corporation.
    \58\ Section 20171(c) incorporated by this final rule into the 
regulation at 49 CFR 215.407(b).
---------------------------------------------------------------------------

    To help further clarify the reinstatement process, this final rule 
is updating the term ``section'' in section 215.407(b)(1) to 
``subpart.'' Section 20171(c)(4) states that a freight car manufacturer 
can resume providing cars for operation on the U.S. freight railroad 
interchange system when ``[s]uch manufacturer is in compliance with 
this section.'' The phrase, ``this section,'' refers to 49 U.S.C. 
20171, which contains the Act's substantive requirements, including 
content limitations and certification. FRA's proposal, as indicated 
throughout the NPRM, intended to incorporate the statutory requirements 
into the regulation for the convenience of the regulated community 
without changing the substance. The proposed rule text incorporated the 
phrase, ``this section,'' from the Act into section 215.407(b)(1) 
without updating the reference to match the existing regulatory 
formatting and language. Within the existing regulatory formatting, the 
proper reference is to the ``subpart,'' referring to Subpart E--
Manufacturing, which contains the same substantive requirements 
contained in 49 U.S.C. 20171. As such, FRA is changing the phrase 
``this section'' to ``this subpart'' in the final rule's section 
215.407(b)(1).
4. Five-Year Statute of Limitations Applies to the Act
    RSA and Wabtec Corporation commented that FRA should clarify how 
the statute of limitations will apply to findings of noncompliance with 
the Act. The statute of limitations is generally five years for 
penalties enforced by FRA, including civil monetary penalties and 
prohibitions (such as forfeiture of the right to provide freight cars 
for operation on the U.S. rail system).\59\ As such, enforcement must 
commence within five years from the date when the claim first accrued. 
When FRA enforces civil monetary penalties for noncompliance with the 
Act,\60\ the date the claim first accrues is the date that the 
noncompliance occurred. When FRA enforces prohibitions for 
noncompliance with the Act,\61\ the date the claim first accrues is the 
date that more than three civil monetary penalties are assessed.
---------------------------------------------------------------------------

    \59\ 28 U.S.C. 2462 (``Except as otherwise provided by Act of 
Congress, an action, suit or proceeding for the enforcement of any 
civil fine, penalty, or forfeiture, pecuniary or otherwise, shall 
not be entertained unless commenced within five years from the date 
when the claim first accrued if, within the same period, the 
offender or the property is found within the United States in order 
that proper service may be made thereon.'').
    \60\ 49 CFR 215.407(a).
    \61\ Id.
---------------------------------------------------------------------------

III. Section-by-Section Analysis

    This section-by-section analysis is intended to explain the 
rationale for each revised or new provision FRA is incorporating into 
the FCSS. The regulatory changes are organized by section number.

Section 215.5 Definitions

    As proposed in the NPRM, FRA is incorporating several new defined 
terms into the FCSS, most pulled directly from the Act and some added, 
as necessary, to effectively implement the Act. FRA is also organizing 
the existing FCSS definitions along with the new definitions in 
alphabetical order to conform with FRA's other regulations. No changes 
are being made to the existing FCSS definitions. As also explained in 
the NPRM, the Act's definition for the term ``railroad freight car'' 
mirrors the definition for the same term in the current FCSS and 
accordingly, in this final rule, FRA is adopting that definition as 
proposed.
    The rule text for this section is unchanged from the NPRM. See the 
NPRM for more detailed section-by-section analysis.\62\ For discussion 
of comments received about the definition for the terms ``country of 
concern,'' ``sensitive technology,'' and ``state-owned enterprise'' in 
this section, see section II. A. 3. of this final rule. Although FRA is 
adopting each definition as proposed in the NPRM, FRA is reiterating 
the discussion of each definition below for the convenience of the 
reader.
---------------------------------------------------------------------------

    \62\ 88 FR at 85565.
---------------------------------------------------------------------------

    Component is defined by the Act,\63\ and FRA is adopting it in the 
FCSS. Although the definition does not identify specific parts and 
subassemblies of freight cars as ``components,'' FRA believes Congress 
intends this definition to include the major components of freight cars 
(e.g., trucks, wheel sets, center sills, draft gears, couplers, 
walkways, running boards) when calculating content limitations under 49 
CFR 215.401(b)(1). FRA does not intend the definition of ``component'' 
to include smaller parts that do not significantly impact manufacturing 
costs (e.g., wear plates, roof liners, or small pieces of hardware such 
as screws).
---------------------------------------------------------------------------

    \63\ 49 U.S.C. 20171(a)(1).
---------------------------------------------------------------------------

    Control is defined by the Act,\64\ and FRA is adopting it in the 
FCSS. This definition relates to the definitions of ``qualified 
facility'' and ``qualified manufacturer'' discussed below.
---------------------------------------------------------------------------

    \64\ Id. at (a)(2).
---------------------------------------------------------------------------

    Cost of sensitive technology is defined by the Act,\65\ and FRA is 
adopting it in the FCSS.
---------------------------------------------------------------------------

    \65\ Id. at (a)(3).
---------------------------------------------------------------------------

    Country of concern is defined by the Act \66\ and FRA is adopting 
it in the FCSS.\67\ As noted in the Infrastructure Investment and Jobs 
Act Background section in the NPRM, a country must meet all three 
criteria to qualify as a ``country of concern.'' Each of the criteria 
within the definition of ``country of concern'' are separated by 
``and'' instead of ``or,'' meaning a country must meet all three 
criteria to meet the definition.\68\ This term is separate and distinct 
from the terms ``foreign country of concern'' used in the CHIPS Act and 
implementing regulations to identify a country that is ``detrimental to 
the national security or foreign policy of the United States'' \69\ or 
``country of particular concern'' used in religious freedom 
designations made by the U.S. Department of State.\70\
---------------------------------------------------------------------------

    \66\ Id. at (a)(4).
    \67\ These same criteria are used to define ``country of 
concern'' in 49 U.S.C. 5323(u) (placing limitations on certain 
rolling stock procurements for public transportation that qualify 
for financial assistance), and the FTA has published Frequently 
Asked Questions Regarding Section 7613 of the National Defense 
Authorization Act for Fiscal Year 2020 that discusses the criteria 
and the definition of ``country of concern.'' https://www.transit.dot.gov/funding/procurement/frequently-asked-questions-regarding-section-7613-national-defense.
    \68\ These criteria are discussed in section 20171(a)(4)(A)-(C).
    \69\ Pub. L. 117-167, 136 Stat 1380, 15 CFR 231.102.
    \70\ International Religious Freedom Act of 1998 (H.R. 2431) and 
its amendment of 1999 (Public Law 106-55) codified at 22 U.S.C. 73.
---------------------------------------------------------------------------

    First, to qualify as a ``country of concern'' under section 20171, 
the United States Department of Commerce (U.S. DOC) must have 
identified that country as a nonmarket economy country pursuant to the 
Tariff Act of 1930 at the date of enactment (i.e., as of Nov. 15, 
2021).\71\ In 2021, when the Act became law, the U.S. DOC had named

[[Page 103684]]

eleven countries as nonmarket economy countries: Republic of Armenia, 
Republic of Azerbaijan, Republic of Belarus, People's Republic of 
China, Georgia, Kyrgyz Republic, Republic of Moldova, Republic of 
Tajikistan, Turkmenistan, Republic of Uzbekistan, and Socialist 
Republic of Vietnam \72\ Accordingly, the countries that meet this 
first prong of the definition will not change.
---------------------------------------------------------------------------

    \71\ 49 U.S.C. 20171(a)(4)(A).
    \72\ Int'l Trade Admin, Countries Currently Designated by 
Commerce as Non-Market Economy Countries, https://www.trade.gov/nme-countries-list (identifying the Federal Register notices wherein a 
country was designated as a non-market economy country).
---------------------------------------------------------------------------

    Second, to constitute a ``country of concern,'' the U.S. Trade 
Representative (USTR) must also name that country on the priority watch 
list \73\ in the most recent report required by the Trade Act of 
1974.\74\ In the most recently required report, the USTR identified 
seven countries on the priority watch list: Argentine Republic, 
Republic of Chile, People's Republic of China, Republic of India, 
Republic of Indonesia, Russian Federation, and Bolivarian Republic of 
Venezuela.\75\
---------------------------------------------------------------------------

    \73\ 19 U.S.C. 2242(g)(3).
    \74\ 49 U.S.C. 20171(a)(4)(B), 19 U.S.C. 2242.
    \75\ Office of the U.S. Trade Rep., 2024 Special 301 Report, 5 
(2024), (2024 Special 301 Report.pdf (ustr.gov)).
---------------------------------------------------------------------------

    Third, a country is deemed a ``country of concern'' only if it is 
subject to monitoring by the USTR under section 306 of the Trade Act of 
1974.\76\ Currently, the People's Republic of China is the only country 
subject to monitoring pursuant to section 306.
---------------------------------------------------------------------------

    \76\ 49 U.S.C. 20171(a)(4)(C), 19 U.S.C. 2416. See Office of the 
U.S. Trade Rep., 2024 Special 301 Report, 44 (2024), https://ustr.gov/issue-areas/intellectual-property/special-301/2023-special-301-review (listing countries included on the priority watch list 
and whether such countries are subject to monitoring under section 
306 of the Trade Act of 1974).
---------------------------------------------------------------------------

    Accordingly, the People's Republic of China is currently the only 
country that meets all three criteria and therefore is the only 
``country of concern'' as defined in the Act.
    Net cost is defined by the Act based on its definition in the USMCA 
or any subsequent free trade agreement between the United States, 
Mexico, and Canada,\77\ and FRA is adopting that definition in the 
FCSS. Currently, chapter 4 of the USMCA defines net cost.\78\
---------------------------------------------------------------------------

    \77\ 49 U.S.C. 20171(a)(5).
    \78\ Uniform Regulations Regarding the Interpretation, 
Application, and Administration of Chapter 4 (Rules or Origin) and 
Related Provisions in Chapter 6 (Textile and Apparel Goods) of the 
Agreement Between the United States of America, The United Mexican 
States, and Canada. https://ustr.gov/sites/default/files/files/agreements/usmca/UniformROO.pdf.
---------------------------------------------------------------------------

    Qualified facility is defined by the Act,\79\ and FRA is adopting 
it in the FCSS. When read in combination with the definition of the 
term control the Act provides, FRA finds that the Act intends for 
general corporate law principles to apply to determine whether a 
particular railroad freight car or component manufacturer is owned or 
controlled an SOE.\80\
---------------------------------------------------------------------------

    \79\ 49 U.S.C. 20171(a)(6).
    \80\ See 31 CFR 800.208 for examples of control.
---------------------------------------------------------------------------

    Qualified manufacturer is defined by the Act,\81\ and FRA is 
adopting it in the FCSS. For the purpose of this definition, a 
supplier, component and repair part manufacturer, or other entity may 
be a railroad freight car manufacturer, if it manufactures, assembles, 
of substantially transforms a freight car, as described in 49 CFR 
215.401(a)(1). Like the definition of qualified facility, when read in 
combination with the Act's definition of the term control, FRA again 
finds that the Act intends for general corporate law principles to 
apply to determine whether a particular railroad freight car or 
component manufacturer is owned or controlled by an SOE.\82\
---------------------------------------------------------------------------

    \81\ Id. at (a)(7).
    \82\ See 31 CFR 800.208 for examples of control.
---------------------------------------------------------------------------

    Sensitive technology is defined by the Act,\83\ and FRA is adopting 
it in the FCSS. While FRA understands the list of devices included in 
this definition to be examples that can be considered sensitive 
technology, FRA is not currently aware of any additional devices that 
should be included in the list.
---------------------------------------------------------------------------

    \83\ Id. at (a)(9).
---------------------------------------------------------------------------

    State-owned enterprise means--
    (a) an entity that is owned by, or under the control of, a 
national, provincial, or local government of a country of concern, or 
an agency of such government; or
    (b) an individual acting under the direction or influence of a 
government or agency described in paragraph (a) of this definition.\84\
---------------------------------------------------------------------------

    \84\ Id. at (a)(10).
---------------------------------------------------------------------------

    This definition is provided by the Act and FRA is adopting it in 
the FCSS.
    Substantially transformed is defined by the Act,\85\ and FRA is 
adopting it in the FCSS. FRA understands that a manufacturing process 
which changes an article's name, character, or use will often result in 
a change in the article's tariff classification. Accordingly, FRA 
understands the Act's definition of substantially transformed to mean a 
manufacturing process that changes an article's name, character, or 
use. FRA notes that the U.S. Customs and Border Protection (CBP) is an 
implementing agency for USMCA and although CBP uses a slightly 
different definition of substantially transformed than that provided in 
the Act, CBP explains that substantial transformation ``occurs when, as 
a result of manufacturing processes, a new and different article 
emerges, having a distinctive name, character, or use, which is 
different from that originally possessed by the article or material 
before being subject to the manufacturing process.'' \86\ FRA finds 
that the definition of substantially transformed provided in the Act 
and CBP's definition of the same term are compatible in that a 
manufacturing process which changes an article's name, character, or 
use will often also result in a change in the article's tariff 
classification.
---------------------------------------------------------------------------

    \85\ Id. at (a)(11).
    \86\ https://www.trade.gov/rules-origin-substantial-transformation.
---------------------------------------------------------------------------

    USMCA is defined by the Act,\87\ and FRA is adopting it in the 
FCSS.
---------------------------------------------------------------------------

    \87\ 49 U.S.C. 20171(a)(12).
---------------------------------------------------------------------------

Section 215.401 Requirements for Railroad Freight Cars Placed Into 
Service in the United States

    This section incorporates the requirements of 49 U.S.C. 20171(b)(1) 
into the FCSS. Section 20171(b)(1) provides that for a railroad freight 
car to operate on the U.S. general railroad system of transportation: 
(1) any car wholly manufactured after a certain date must be 
manufactured, assembled, and substantially transformed by a qualified 
manufacturer in a qualified facility; (2) none of the sensitive 
technology located on the car may originate from a COC or be sourced 
from a SOE; and (3) none of the content of the car (except sensitive 
technology) may originate from a COC or be sourced from a SOE with a 
history of problematic trade practices or respect for IP rights. These 
concepts are discussed further below.
    Paragraph (a)(1) of 49 CFR 215.401 mirrors paragraph (b)(1)(A) of 
section 20171 and mandates that any railroad freight car to be operated 
on the U.S. general railroad system of transportation and wholly 
constructed one year from a final rule in this proceeding, must be 
manufactured, assembled, and substantially transformed by a qualified 
manufacturer or a qualified facility. The rule text for this section is 
unchanged from the NPRM. See the NPRM for more detailed section-by-
section analysis.\88\ For discussion of comments received about this 
section, see section II. A. of this final rule.
---------------------------------------------------------------------------

    \88\ 88 FR at 85565.

---------------------------------------------------------------------------

[[Page 103685]]

Sensitive Technology Prohibition
    As proposed in the NPRM and adopted in this final rule, paragraph 
(a)(2) of 49 CFR 215.401 mirrors paragraph (b)(1)(B) of section 20171 
and addresses sensitive technology. This paragraph incorporates the 
Act's general prohibition on operating a freight car on the U.S. 
general railroad system of transportation, if any of its ``sensitive 
technology'' or ``components necessary to the functionality of the 
sensitive technology'' originates from a COC or is sourced from a SOE.
    As noted above, the Act defines ``sensitive technology,'' but does 
not define what constitutes ``components necessary to the functionality 
of the sensitive technology.'' FRA understands this phrase to generally 
include the active components that work with the sensitive technology 
because they may also be able to collect and transmit data. Passive 
components are excluded from this phrase because they cannot collect or 
transmit data. Examples of active components include, but are not 
limited to, any type of processor, transmitter, receiver, or data 
storage device. While the passive components are still necessary for 
the device to function as a whole, these components do not play a vital 
role in the storage, collection, exchange, transmittal, or manipulation 
of any data. Examples of passive components include, but are not 
limited to, printed circuit boards, power supplies, temperature 
sensors, pressure gauges, resistors, capacitors, etc.
Intellectual Property Infringement Prohibition
    As proposed in the NPRM and adopted in this final rule, paragraph 
(a)(3) of 49 CFR 215.401 mirrors paragraph (b)(1)(C) of section 20171 
and addresses IP violation and infringement. This language forbids the 
inclusion in any railroad freight car of any content from a COC or a 
SOE ``that has been determined by a recognized court or administrative 
agency of competent jurisdiction and legal authority to have violated 
or infringed valid U.S. intellectual property rights of another.'' The 
Act includes both ``a finding by a Federal district court under title 
35'' and a finding by the U.S. International Trade Commission (ITC) 
under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) as 
determinations sufficient to trigger the prohibition.
    For the purposes of this requirement, the ITC makes a finding that 
an entity has violated or infringed valid U.S. IP rights when the ITC 
issues a final determination under section 337. Under ITC procedure, an 
administrative law judge, who concludes that an entity violated section 
337 of the Tariff Act, first files an initial determination.\89\ This 
initial determination becomes a final determination of the ITC 60 days 
after it is filed, unless the ITC orders review of the initial 
determination, in which case the ITC's ultimate finding would be the 
final determination.\90\ These determinations are available on the 
ITC's website.\91\ FRA does not anticipate tracking determinations on 
an ongoing basis; manufacturers seeking certification are responsible 
for researching determinations against their own suppliers.
---------------------------------------------------------------------------

    \89\ 19 CFR 210.42(a)(1)(i).
    \90\ Id. at (h)(2).
    \91\ https://usitc.gov/intellectual_property/337_determinations.htm.
---------------------------------------------------------------------------

Content Limitations
    As proposed in the NPRM and adopted in this final rule, 49 CFR 
215.401(b) mirrors section 20171(b)(2) and addresses content 
limitations from COCs and SOEs generally. Consistent with the Act, 
beginning 1 year after this regulation is issued, Sec.  
215.401(b)(1)(i) would initially prohibit newly manufactured freight 
cars from operating on the U.S. general railroad system of 
transportation if more than 20 percent of the car's content originates 
from a COC or is sourced from a SOE. After 3 years, paragraph 
(b)(1)(ii) reduces that threshold to no more than 15 percent. Cars not 
meeting these thresholds are noncompliant, and the manufacturer is 
subject to civil monetary penalties under Sec.  215.407. Consistent 
with the Act, the percent of content is measured by the net cost of 
materials (excluding the cost of sensitive technology).\92\ Paragraph 
(b)(2) of Sec.  215.401 mirrors paragraph (b)(2)(B) of section 20171 
and explains that the content limitations provided in the Act shall 
apply notwithstanding any apparent conflict with provisions of chapter 
4 of the USMCA. Chapter 4 of the USMCA and the Act both establish rules 
for the country of origin for a product in international trade. This 
paragraph clarifies that compliance with chapter 4 of the USMCA does 
not constitute, or in any way affect, the content limitations in the 
Act, which apply independently.
---------------------------------------------------------------------------

    \92\ The definition of ``net cost'' is provided in section 215.5 
of this rule. For a discussion of ``net cost,'' see the section-by-
section analysis above.
---------------------------------------------------------------------------

Section 215.403 Certification of Compliance

    This section incorporates the requirements of paragraph (c) of 
section 20171 and includes requirements designed to help FRA monitor 
and enforce the Act's standards. The rule text for this section is 
unchanged from the NPRM. See the NPRM for more detailed section-by-
section analysis.\93\ For discussion of comments received about this 
section, see section II. B. of this final rule.
---------------------------------------------------------------------------

    \93\ 88 FR at 85565.
---------------------------------------------------------------------------

    Consistent with paragraph (c)(2) of section 20171, Sec.  215.403(a) 
requires railroad freight car manufacturers to annually certify to FRA, 
as delegated by the Secretary of Transportation, that any railroad 
freight car it provides for operation in the United States meets the 
requirements of section 20171.
    As proposed in the NPRM and adopted in this final rule, Sec.  
215.403(a)(1) requires railroad freight car manufacturers to submit a 
certification report to FRA, identifying and certifying compliance, for 
each freight car before it can operate on the U.S. general railroad 
system of transportation. Each certification report submitted to FRA 
may identify a single freight car or multiple freight cars based on the 
manufacturer's preference. For convenience, a manufacturer may submit 
its certification report directly to the Office of Railroad Safety 
along with any customary request to FRA for a sample base car 
inspection or safety appliance arrangement drawing review. Paragraph 
(a)(1)(i) requires the report to include a statement certifying 
compliance, the manufacturer's name and address, the individual 
responsible for certifying compliance with the Act and this rule, and 
the car identification number for each car being certified. Paragraph 
(a)(1)(ii) requires the freight car manufacturer to maintain all 
records showing the information, including calculations, made to 
support certification under this section and such records shall be made 
available to FRA upon request.

Section 215.405 Prohibition on Registering Noncompliant Railroad 
Freight Cars

    This section incorporates the requirements in 49 U.S.C. 
20171(c)(3)(B) into the FCSS. No substantive comments were received 
about this section, and the rule text for this section is unchanged 
from the NPRM. See the NPRM for more detailed section-by-section 
analysis.\94\ FRA will review registration records when there is 
evidence of noncompliance with the Act. For example, when FRA 
determines a railroad freight car manufacturer is not in compliance 
with the Act's substantive requirements (e.g., it is equipped with 
sensitive technology,

[[Page 103686]]

or 20 percent or 15 percent of its components, sourced from an SOE and 
operating on the U.S. general railroad system of transportation), FRA 
may request documentation to determine whether the freight car was 
registered with the Umler system. If the freight car was so registered, 
the freight car would also be in noncompliance with Sec.  215.405.
---------------------------------------------------------------------------

    \94\ 88 FR at 85565.
---------------------------------------------------------------------------

Section 215.407 Civil Penalties

    This section incorporates the requirements of 49 U.S.C. 20171(c)(4) 
into the FCSS. The Act specifies civil monetary penalty amounts for 
violations of its substantive requirements and specifies that the unit 
of violation is the freight car. As discussed in the NPRM, FRA 
anticipates utilizing the RSEP to enforce civil monetary penalties for 
noncompliance with the Act in a manner consistent with other civil 
monetary penalties enforced by FRA.\95\ To help clarify the process, 
this final rule provides specific procedures in Sec. Sec.  215.409 
through 215.421 to enforce these civil monetary penalties. For 
discussion of comments received about this section, see section II. B. 
of this final rule.
---------------------------------------------------------------------------

    \95\ 49 CFR part 209.
---------------------------------------------------------------------------

Section 215.409 Demand Letter

    Like the demand letter used in FRA's RSEP, Sec.  215.409 
establishes the demand letter requirements for the FCSS.\96\ The demand 
letter serves to initiate the enforcement process by providing certain 
essential information to the manufacturer subject to the enforcement 
action.
---------------------------------------------------------------------------

    \96\ See subpart B and appendix A to 49 CFR part 209.
---------------------------------------------------------------------------

Section 215.411 Reply

    This section incorporates the Reply step from FRA's RSEP into the 
FCSS.\97\ The reply provides the respondent with an opportunity to 
respond to the information provided in the demand letter described in 
Sec.  215.409.
---------------------------------------------------------------------------

    \97\ Id.
---------------------------------------------------------------------------

Section 215.413 Payment of Penalty; Compromise

    This section incorporates payment and compromise procedures from 
FRA's RSEP into the FCSS.\98\ This section provides the respondent with 
an opportunity to pay or negotiate penalties per Sec.  215.407.
---------------------------------------------------------------------------

    \98\ Id.
---------------------------------------------------------------------------

Section 215.415 Informal Response and Assessment

    This section incorporates the informal response process from FRA's 
RSEP into the FCSS.\99\ This section identifies the information needed 
for the respondent to informally reply to FRA's enforcement action. 
After consideration of an informal response, including any relevant 
information presented at a conference, FRA's Office of the Chief 
Counsel may dismiss the enforcement action in whole or in part. If the 
Office of the Chief Counsel does not dismiss the action in whole, the 
Office of the Chief Counsel may enter into a settlement agreement with 
the respondent or enter an order assessing a civil monetary penalty.
---------------------------------------------------------------------------

    \99\ Id.
---------------------------------------------------------------------------

Section 215.417 Request for Hearing

    This section incorporates the process to request a hearing from 
FRA's RSEP into the FCSS.\100\ Specifically, this section provides the 
respondent an opportunity for a hearing. To use this option, the 
respondent must submit a written request to FRA's Office of the Chief 
Counsel and include the pertinent information identified in this 
section to allow the case to be assigned to the presiding officer.
---------------------------------------------------------------------------

    \100\ Id.
---------------------------------------------------------------------------

Section 215.419 Hearing

    This section incorporates the hearing process from FRA's RSEP into 
the FCSS.\101\ This section generally describes how a hearing requested 
under Sec.  215.417 will be conducted, and the roles of the presiding 
officer, FRA's Office of the Chief Counsel, and the respondent during 
the hearing.
---------------------------------------------------------------------------

    \101\ Id.
---------------------------------------------------------------------------

Section 215.421 Presiding Officer's Decision

    This section incorporates the language regarding the presiding 
officer's decision from FRA's RSEP into the FCSS.\102\ Specifically, 
this section provides the decision options for the presiding officer. 
After consideration of the evidence of record, the presiding officer 
may dismiss the enforcement action in whole or in part. If the 
presiding officer does not dismiss the enforcement action in whole, the 
presiding officer will issue, and serve on the respondent, an order 
assessing a civil monetary penalty. The presiding officer's decision 
will include a statement of findings and conclusions, as well as the 
reasons therefor, on all material issues of fact, law, and discretion.
---------------------------------------------------------------------------

    \102\ Id.
---------------------------------------------------------------------------

IV. Regulatory Impact and Notices

A. Executive Order 12866 as Amended by Executive Order 14094

    This rule is a non-significant regulatory action within the meaning 
of Executive Order (E.O.) 12866 (``Regulatory Planning and Review''), 
as amended by E.O. 14094, Modernizing Regulatory Review,\103\ and DOT 
Order 2100.6A (``Rulemaking and Guidance Procedures''). This rule aims 
to enforce the Act's restrictions on content and technology originating 
from COCs and SOEs in newly built freight cars entering service on the 
U.S. general railroad system of transportation. Issuing this regulation 
authorizes FRA to monitor and enforce industry compliance with the Act. 
This section qualitatively explains benefits and quantitatively 
explains costs for the freight car industry and FRA associated with 
implementing this rule over a 10-year period, considering discount 
rates of 2 percent, 3 percent, and 7 percent.\104\
---------------------------------------------------------------------------

    \103\ 88 FR 21879 (April 6, 2023) located at https://www.federalregister.gov/documents/2023/04/11/2023-07760/modernizing-regulatory-review.
    \104\ All costs are expressed in 2022 base year dollars.
---------------------------------------------------------------------------

Summary of Public Comments Related to the Economic Analysis Presented 
in the NPRM
    FRA received public comments related to the following points 
regarding the economic analysis presented in the NPRM.
(1) General Support for Economic and Security Impacts
    A commenter commented on the rule's broader benefits, emphasizing 
its importance for national security, economic interests, and the 
reliability of the freight car industry, though without specific 
economic analysis points.
(2) Cost Benefit Agreement and Industry Implications
    Trinity Industries, RSA, The Greenbrier Companies, and RSI 
supported the economic analysis, agreeing that the anticipated industry 
costs are modest. They highlighted that compliance obligations are an 
incremental addition, primarily aligning with the USMCA requirements. 
RSA noted this incremental compliance approach would have minimal 
additional impact.

[[Page 103687]]

(3) Railroad Burden Concerns
    AAR expressed concerns about the burden on railroads, noting that 
railroads lack the means to independently verify manufacturer 
certifications through inspection and suggesting that the rule should 
not impose additional burdens on railroads. AAR also commented agreeing 
with the proposed rule's conclusion that the Act's sensitive technology 
prohibition applies only at the time of initial manufacture and do not 
extend to aftermarket parts.
Integration of Updated Analytical Standards in Final Rule
    In preparing the final economic analysis for the rule to be issued 
prior to January 2025, FRA has taken steps to align its methodology 
with the guidance provided in the updated Circular A-4, issued by the 
Office of Management and Budget (OMB) on November 9, 2023. While the 
new Circular A-4's requirements formally apply to proposed rules 
submitted to OMB's Office of Information and Regulatory Affairs after 
February 29, 2024, and final rules submitted after December 31, 2024, 
FRA recognizes the value of incorporating its principles to enhance the 
quality and transparency of our analysis.
Discount Rates
    Consistent with the new Circular A-4 guidance, FRA has used 
discount rates of 2 percent, 3 percent, and 7 percent for present value 
calculations in this analysis. These rates were selected to ensure our 
economic evaluation is consistent with current best practices and 
standards, improving the comparability and reliability of the findings.
    In conclusion, while FRA's proposed rule was issued in December 
2023 and not required to adhere to the new Circular A-4 guidelines, FRA 
has integrated its principles into the final economic analysis to 
enhance the quality, transparency, and comprehensiveness of the 
assessment. This approach not only aligns with emerging standards but 
also ensures a robust evaluation of the rule's impacts.
    FRA has concluded that the Act does not impose a continuing 
obligation on manufacturers or railcar owners related to certifying 
content and technology limitations throughout the useful life of each 
freight car. As such, the rule does not require FRA to enforce the 
requirements set forth in the Act at all times a freight railcar is in 
service on the U.S. general railroad system of transportation. This 
rule only impacts original freight car manufacturers related to the 
initial entry of freight cars into service in the U.S. general railroad 
system of transportation.
    Based on input from FRA subject matter experts in the Office of 
Motive Power and Equipment, this analysis estimates that the rule 
impacts six freight car manufacturers with manufacturing facilities 
within North America. This rule does not significantly impact any other 
entity. Over a 10-year period, this analysis estimates the impact of 
issuing this rule on the freight car manufacturing industry and FRA 
related to: (1) limiting content sourced from COCs or SOEs; (2) 
prohibiting the use of sensitive technology and components necessary to 
the functionality of the sensitive technology from a COC or a SOE; (3) 
compliance costs; and (4) government administrative costs associated 
with enforcing this rule. Additionally, this analysis provides a 
summary of the regulatory impact.
(1) Limit Content Sourced From COCs or SOEs
    Based on conversations with RSA and FRA subject matter experts, all 
six freight car manufacturers currently comply with the 15 percent 
content limitation, which will be required three years after this 
rule's implementation date. Also, absent FRA issuing this rule, over 
the next 10 years, this analysis forecasts that no freight car 
manufacturer plans to change its materials sourcing whereby a freight 
car manufacturer would not be in compliance with the content limitation 
set forth in this rule. Lastly, this analysis does not anticipate any 
new freight car manufacturers entering the North American freight car 
industry over the next 10 years (during the period of analysis). 
Therefore, related to complying with the content limitation, issuing 
this rule does not result in any costs or benefits.
(2) Prohibit the Use of Sensitive Technology From COCs or SOEs
    FRA understands the prohibition on the use of sensitive technology 
that originates from a COC or a SOE to also include any active 
technological components necessary to the functionality of the 
sensitive technology (excluding passive technological components) that 
originates from a COC or a SOE. Based on this understanding and input 
from the RSA and FRA subject matter experts, all six freight car 
manufacturers currently comply with the limitations on use of sensitive 
technological components as set forth in this rule. Also, absent FRA 
issuing this rule, over the next 10 years, this analysis forecasts that 
no freight car manufacturer plans to change its materials sourcing 
whereby a freight car manufacturer would not comply with the sensitive 
technology limitation set forth in this rule. Further, over the next 10 
years (during the period of analysis), this analysis does not 
anticipate any new freight car manufacturer entering the North American 
freight car industry. Therefore, the provision that would prohibit the 
use of sensitive technology, or active technological components 
necessary to the functionality of the sensitive technology that 
originates from a COC or a SOE for freight cars entering service in the 
U.S. general railroad system of transportation would not result in any 
costs.
    However, issuing this provision (prohibiting the use of sensitive 
technology from COCs or SOEs) may provide benefits. That is, issuing 
this rule mitigates concerns related to compromised national security 
and potential corporate espionage that exists if newly built freight 
cars with sensitive technology and active technological components 
necessary to the functionality of the sensitive technology from COC or 
SOE enter service into the U.S. general railroad system of 
transportation.
(3) Compliance Costs
    Issuing this rule creates a few compliance burdens for freight car 
manufacturers including affirming compliance with this rule, submitting 
an annual certification, and participating in periodic audits.
Manufacturers Affirm Compliance Prior to a Freight Car Entering Service
    Prior to a manufacturer providing a freight car for operation on 
the U.S. general railroad system of transportation, a manufacturer must 
affirm that the freight car is compliant with this regulation. 
Currently, FRA provides a courtesy safety appliance drawing review and/
or sample car inspection to freight car manufacturers that request it 
for all freight cars they intend to manufacture for operation on the 
U.S. general railroad system.\105\ FRA

[[Page 103688]]

anticipates manufacturers may affirm compliance with the Act by 
certifying at the time of their safety appliance drawing review and/or 
sample car inspection.\106\
---------------------------------------------------------------------------

    \105\ Most newly built freight cars are considered cars of 
special construction under the freight car safety standards and 
manufacturers request FRA to inspect the cars prior to entering 
service. According to 49 CFR 231.118, cars of construction not 
covered by the 18 types of cars identified in the regulation, 
relative to handholds, sill steps, ladders, hand brakes and running 
boards may be considered as of special construction, but shall have, 
as nearly as possible, the same complement of handholds, sill steps, 
ladders, hand brakes, and running boards as are required for cars of 
the nearest approximate type. To help ensure the complement of 
safety appliances satisfy the requirements for the nearest 
approximate type, manufacturers request that FRA perform a sample 
car inspection after the cars are built, before they enter service.
    \106\ A freight car manufacturer may also certify compliance 
with the Act by submitting an independent document to FRA for any 
build order (e.g., for subsequent orders of the same car builds 
utilizing the same safety appliance arrangement that have already 
been reviewed and/or inspected by FRA). This analysis concluded that 
the cost to submit an independent document to affirm compliance with 
the Act follows similarly to including such affirmation along with 
safety appliance review and/or sample car inspection request 
package.
---------------------------------------------------------------------------

    Based on input from FRA subject matter experts and previous 
submissions for safety appliance reviews and sample car inspection 
requests, this analysis estimates that each year manufacturers 
introduce approximately 35 freight car orders. An order can be of any 
type of car and of any quantity (as little as one car or thousands of 
cars on the order) and FRA expects one certification for each freight 
car order. FRA expects the number of annual freight car orders to 
remain constant over the period of analysis.
    Based on FRA subject matter expert input, this analysis assumes 
that an administrative professional in the freight car manufacturer's 
contract office will draft the document affirming compliance with the 
Act (1 hour), and a vice-president of engineering would review and sign 
the letter (15 minutes).\107\ Each year, the burden on manufacturers to 
affirm compliance with the Act for all newly built freight cars 
intended for operation on the U.S. general railroad system of 
transportation is estimated to be $3,438.\108\ Over the 10-year period 
of analysis, the industry burden is approximately, $34,400 
(undiscounted), $30,800 (PV, 2%), $29,200 (PV, 3%), and $23,600 (PV, 
7%).
---------------------------------------------------------------------------

    \107\ U.S. Bureau of Labor Statistics, Occupational Employment 
and Wage Statistics, National Industry-Specific Occupational 
Employment and Wage Statistics, May 2023 NAICS 336500 Railroad 
Rolling Stock Manufacturing ``Sales and Related Occupations'' $40.45 
(mean wage), ``Top Executives'' ($62.74) [May 2023] https://www.bls.gov/oes/current/naics4_336500.htm. When estimating labor 
burden, this analysis added a compensation factor of 1.75, so the 
administrative employee's hourly burden rate is $70.79, and the VP 
of engineering's hourly burden rate is $109.80.
    \108\ Industry burden for affirming compliance, annual = Number 
of freight car orders introduced (35) * [time to write the document 
affirming compliance with the Act (1 hour) * administrative 
professional's hour compensation rate ($70.79) + time to review and 
sign the document (15 minutes) * VP of engineering compensation rate 
($109.80)] = $3,438.
---------------------------------------------------------------------------

Cost for Railroads
    There is no anticipated burden on railroads as a result of this 
rulemaking.
Periodic Audit of Freight Car Manufacturers
    As part of FRA's enforcement of this rule, FRA expects to randomly 
audit freight car manufacturers to ensure compliance with the Act. 
Based on input from FRA subject matter experts, FRA will likely 
randomly audit one-third of the freight car manufacturers each year 
(approximately two freight car manufacturers each year). Based on FRA 
subject matter expert input, the likely audit process will consist of 
FRA selecting one freight car order from the manufacturer's product 
line and have the freight car manufacturer provide evidence of 
compliance. FRA will audit the bill of materials to determine if the 
manufacturer complied with this regulation. If the freight car 
manufacturer provides sufficient evidence to show its freight car is 
compliant with the rule, FRA will take no further action. Based on FRA 
subject matter expert input, FRA anticipates that the results of FRA's 
random audits will be that all freight car manufacturers are compliant 
with the rule.
    Based on input from FRA subject matter experts, this analysis 
estimates that it will take four hours for a freight car manufacturer 
to retrieve existing information that shows compliance with this rule 
and provide it to an FRA inspector. This analysis placed a relatively 
low hourly burden for the periodic audit because this rule requires 
freight railroads to maintain records that show compliance. Thus, other 
than retrieving records that should already exist, freight car 
manufacturers will have no additional burden. With an estimated two 
audits per year, the audit burden for all freight car manufacturers is 
8 hours or $566.\109\ Over the 10-year period of analysis, the burden 
of periodic audits of freight car manufacturers is approximately $5,700 
(undiscounted), $5,100 (PV, 2%), $4,800 (PV, 3%), and $3,900 (PV, 7%).
---------------------------------------------------------------------------

    \109\ Freight car manufacturers, participating in an audit, 
annual = Number of annual audits (2) * hours to prepare and 
participate in an audit (4 hours) * freight car administrative 
employee compensation rate ($70.78) = $566.
---------------------------------------------------------------------------

Total Cost and Benefit for Industry
    As shown, in Table 2, over the 10-year period of analysis, the 
industry burden is approximately $40,100 (undiscounted), $35,900 (PV, 
2%), $34,000 (PV, 3%), and $27,500 (PV, 7%) with annualized costs of 
$4,000 (PV, 2%), $4,000 (PV, 3%), and $4,000 (PV, 7%). The annualized 
discount rates are the same because the timing of cash flows are 
identical.

                     Table 2--Freight Car Industry, Total Costs, 2022 Dollars, Round ($100)
----------------------------------------------------------------------------------------------------------------
                                                       Cost                                 Annualized
          Type of cost           -------------------------------------------------------------------------------
                                   Undiscounted        PV 2%           PV 3%           PV 2%           PV 3%
----------------------------------------------------------------------------------------------------------------
Compliance certification........          34,400          30,800          29,200           3,400           3,400
Periodic audit..................           5,700           5,100           4,800             600             600
                                 -------------------------------------------------------------------------------
    Total.......................          40,100          35,900          34,000           4,000           4,000
----------------------------------------------------------------------------------------------------------------

    FRA is issuing this regulation as required by the Act. In this 
economic analysis, FRA qualitatively explains the potential benefits 
that are expected to result from implementing the rule.
(1) Governmental Administrative Costs
    Issuing this rule creates enforcement costs for FRA, including the 
review of freight car manufacturers certifying compliance, periodic 
audits of freight car manufacturers, and creating an annual report to 
Congress.
Review of Certification of Compliance Reports
    Based on input from FRA subject matter experts, this analysis 
estimates that each year the total manufacture industry will introduce 
approximately 35 freight car orders and certify to FRA

[[Page 103689]]

that its freight cars comply with this Act. FRA staff would spend 
approximately 30 minutes to review each of the 35 submissions. 
Therefore, FRA's annual burden related to reviewing the manufacturers 
is $2,201.110 111 Over the 10-year period of analysis, the 
total burden is approximately $22,000 (undiscounted), $19,700 (PV, 2%), 
$18,700 (PV), 3%), and $15,100 (PV, 7%).
---------------------------------------------------------------------------

    \110\ FRA headquarters staff salary estimated at the GS-14, step 
5, rate, Washington, DC) of $71.88 with a burden rate of 1.75 for an 
hourly burden rate of $125.79. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/.
    \111\ FRA burden for affirming compliance, annual = Number of 
freight car orders introduced (35) * [time to review affirmation 
(0.5 hour) * FRA headquarters employee compensation rate ($125.79)] 
= $2,201.
---------------------------------------------------------------------------

FRA Periodic Audit of Freight Car Manufacturers
    As explained in the above section that describes industry burden, 
each year FRA expects to audit approximately two freight car 
manufacturers as part of FRA's enforcement efforts. To minimize 
compliance costs, FRA will use FRA field staff who have duty stations 
in close proximity to the freight car manufacturing facility. However, 
based on subject matter expert input, in the first five years of 
implementation of the rule, FRA expects it would send both an FRA field 
inspector and an FRA headquarters employee to conduct an audit. 
Beginning in the sixth year, FRA expects that only FRA field inspectors 
will conduct audits.
    Based on FRA subject matter expert input, FRA's burden related to 
periodic audits of freight car manufacturers is 20 hours for FRA 
headquarters staff (4 hours to prepare for an audit, 4 hours to conduct 
an audit, and 12 hours of travel time) and 12 hours for FRA field staff 
(4 hours to prepare for an audit, 4 hours to conduct an audit, and 4 
hours travel time). In addition, FRA will incur travel expenses of $500 
for FRA headquarters staff and $100 for FRA field staff per audit. In 
the first year of analysis, the cost related to conducting two audits 
is $8,651.112 113 Over the 10-year period of analysis, FRA's 
burden for conducting periodic audits is $51,300 (undiscounted), 
$47,600 (PV, 2%), $45,800 (PV, 3%), and $39,500 (PV, 7%).
---------------------------------------------------------------------------

    \112\ FRA headquarters staff salary estimated at the GS-14, step 
5, rate, Washington, DC) of $71.88 with a burden rate of 1.75 for an 
hourly burden rate of $125.79. FRA field staff salary estimated at 
the GS-12, step 5, rate (Rest of United States) of $44.98 with a 
burden rate of 1.75 for an hourly burden rate of $78.72. See https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/.
    \113\ FRA audit burden, annual = number of audits per year (2 
audits) * [FRA headquarters staff time per audit (20 hours) * FRA 
headquarters staff compensation rate ($125.79) + FRA headquarters 
staff travel expense ($500) + FRA field staff time per audit (12 
hours) * FRA field staff compensation rate ($78.72) + FRA field 
staff travel expense ($100)] = $8,651.
---------------------------------------------------------------------------

Preparing an Annual Report to Congress
    After the final rule becomes effective, FRA expects that it will 
prepare and submit an annual report to Congress that summarizes all 
certification submissions that FRA received from all the manufacturers 
during the calendar year. FRA anticipates that it may include this 
report within its existing Fiscal Year, Enforcement Report to Congress. 
Based on input from subject matter experts, FRA expects that it will 
take staff approximately 24 hours to prepare and submit an annual 
report with an associated cost of $3,019.\114\ Over the 10-year period 
of analysis, the costs of preparing and submitting annual reports to 
Congress is $30,200 (undiscounted), $27,100 (PV, 2%), $25,600 (PV), 
3%), and $20,700 (PV, 7%).
---------------------------------------------------------------------------

    \114\ Prepare and submit annual report to Congress, annual = FRA 
staff hourly labor burden rate ($125.79) * hours to complete and 
submit report (24 hours) = $3,019.
---------------------------------------------------------------------------

Total FRA Burden
    As shown, in Table 3, over the 10-year period of analysis, FRA's 
enforcement burden is approximately $103,500 (undiscounted), $94,4000 
(PV, 2%), $90,100 (PV, 3%), and $75,300 (PV, 7%).

          Table 3--FRA Enforcement Burden From Issuing the Rule, Total Cost, 2022 Dollars, Round ($100)
----------------------------------------------------------------------------------------------------------------
                                                       Cost                                 Annualized
          Type of cost           -------------------------------------------------------------------------------
                                   Undiscounted        PV 2%           PV 3%           PV 2%           PV 3%
----------------------------------------------------------------------------------------------------------------
Review affirmations.............          22,000          19,700          18,700           2,200           2,200
Periodic audit..................          51,300          47,600          45,800           5,300           5,400
Annual report to Congress.......          30,200          27,100          25,600           3,000           3,000
                                 -------------------------------------------------------------------------------
    Total cost..................         103,500          94,400          90,100          10,500          10,600
----------------------------------------------------------------------------------------------------------------

(2) Summary of Regulatory Impact
    This section provides a summary of total costs and total benefits 
that is expected to come from issuing this rulemaking.
(a) Summary of Total Benefits
    FRA expects the benefits that will come from implementing this rule 
include addressing concerns related to compromised national security 
and potential corporate espionage.
    Based on conversations with RSA and FRA subject matter experts, all 
six freight car manufacturers currently comply with the 15 percent 
content limitation, which will be required three years after this 
rule's implementation date. Also, absent FRA issuing this rule, over 
the next 10 years, this analysis forecasts that no freight car 
manufacturer plans to change its materials sourcing whereby a freight 
car manufacturer would not be in compliance with the content limitation 
set forth in this rule. Also, this analysis does not anticipate any new 
freight car manufacturers entering the North American freight car 
industry over the next 10 years (during the period of analysis). 
Therefore, related to complying with the content limitation, issuing 
this rule does not result in any benefits.
    Related to sensitive technology, currently no domestic manufacturer 
sources sensitive technology from a COC or from a SOE. Moreover, FRA 
estimates that absent this rule no domestic manufacturer would have 
plans to source sensitive technology from a COC or from a SOE. 
Therefore, the portion of this rule that will prohibit sourcing 
sensitive technology that originates from a COC or from a SOE does not 
result in any benefit.
(b) Summary of Total Costs
    As shown in Table 4, FRA expects that the total cost from issuing 
the rule including the impact on industry and FRA is approximately 
$143,600 (undiscounted), $130,300 (PV, 2%),

[[Page 103690]]

$124,100 (PV, 3%), and $102,800 (PV, 7%).

    Table 4--Industry Compliance Burden and FRA's Enforcement Burden, Total Cost, 2022 Dollars, Round ($100)
----------------------------------------------------------------------------------------------------------------
                                                       Cost                                 Annualized
             Entity              -------------------------------------------------------------------------------
                                   Undiscounted        PV 2%           PV 3%           PV 2%           PV 3%
----------------------------------------------------------------------------------------------------------------
Industry........................          40,100          35,900          34,000           4,000           4,000
FRA.............................         103,500          94,900          90,100          10,500          10,600
                                 -------------------------------------------------------------------------------
    Total cost..................         143,600         130,300         124,100          14,500          14,600
----------------------------------------------------------------------------------------------------------------

B. Regulatory Flexibility Act and Executive Order 13272

    FRA received no comments on the Initial Regulatory Flexibility 
Analysis (IRFA) published in the proposed rule, and the Small Business 
Administration's Chief Counsel for Advocacy did not submit any 
comments. As a result, FRA's analysis and conclusions regarding the 
potential impact of this rule on small entities, as presented in the 
IRFA, remain unchanged.
Certification
    FRA hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities.
Basis for Certification
    The IRFA concluded that the rule would not have a significant 
economic impact on a substantial number of small entities. No public 
comments were received, and the Small Business Administration's Chief 
Counsel for Advocacy did not submit any comments. Therefore, FRA is not 
required to prepare a final regulatory flexibility analysis.

C. Paperwork Reduction Act

    The information collection requirements in this rule are being 
submitted for approval to OMB \115\ under the Paperwork Reduction Act 
of 1995.\116\ The information collection requirements and the estimated 
time to fulfill each requirement are as follows:
---------------------------------------------------------------------------

    \115\ FRA will be using the OMB control number (OMB No. 2130-
0502) that was issued when the previous NPRM was issued in 1979 for 
this information collection.
    \116\ 44 U.S.C. 3501 et seq.
    \117\ The dollar equivalent cost is derived from U.S. Bureau of 
Labor Statistics, 2021 NAICS 336500--Railroad Rolling Stock 
Manufacturing; 13-1000 Business Operations Specialist median wage 
$63.68 ($36.39 + 1.75 overhead costs. The one exception is Sec.  
215.5(d)(6), which is derived from the Surface Transportation 
Board's Full Year Wage 2021, group 200 Professional and 
Administrative.
    \118\ Totals may not add due to rounding.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Total annual        Average time per     Total annual burden    Total cost equivalent in
            CFR Section              Respondent universe        responses             response                hours                 U.S. dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    ....................  (A).................  (B).................  (C) = (A * B).......  (D) = (C * wage rates) \117\
                                   ---------------------------------------------------------------------------------------------------------------------
215.5(d)(6)--Dedicated Service--    784 railroads.......  4 notifications.....  1 hour..............  4.00 hours..........                       $311.64
 Notification to FRA.
215.403(a)(1)--Certification of     6 manufacturers.....  35 affirmations.....  1.25 hours..........  43.75...............                      2,786.00
 Compliance-- Manufacturers to
 electronically certify to FRA
 that the cars comply with the
 requirements of this subpart (New
 requirement).
--(a)(1)(ii) Records and such       6 manufacturers.....  0.33 report.........  6 hours.............  1.98 hours..........                        126.09
 records shall be made available
 to FRA upon request (New
 requirement).
                                                                                                                           -----------------------------
    Total \118\...................  784 railroads + 6     39.33 notifications.  N/A.................  49.73 hours.........                      3,223.73
                                     manufacturers.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    All estimates include the time for reviewing instructions; 
searching existing data sources; gathering or maintaining the needed 
data; and reviewing the information. Pursuant to 44 U.S.C. 
3506(c)(2)(B), FRA solicits comments concerning: whether these 
information collection requirements are necessary for the proper 
performance of the functions of FRA, including whether the information 
has practical utility; the accuracy of FRA's estimates of the burden of 
the information collection requirements; the quality, utility, and 
clarity of the information to be collected; and whether the burden of 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information technology, may be minimized. Organizations and individuals 
desiring to submit comments on the collection of information 
requirements or to request a copy of the paperwork package submitted to 
OMB should contact Ms. Arlette Mussington, Information Collection 
Clearance Officer, at email: [email protected] or telephone: 
(571) 609-1285 or Ms.

[[Page 103691]]

Joanne Swafford, Information Collection Clearance Officer, at email: 
[email protected] or telephone: (757) 897-9908.
    OMB is required to make a decision concerning the collection of 
information requirements contained in this rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. The final rule will respond 
to any OMB or public comments on the information collection 
requirements contained in this proposal. FRA is not authorized to 
impose a penalty on persons for violating information collection 
requirements that do not display a current OMB control number, if 
required.

D. Federalism Implications

    Executive Order 13132, Federalism,\119\ requires FRA to develop an 
accountable process to ensure ``meaningful and timely input by State 
and local officials in the development of regulatory policies that have 
federalism implications.'' ``Policies that have federalism 
implications'' are defined in the E.O. to include regulations that have 
``substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.'' Under 
E.O. 13132, the agency may not issue a regulation with federalism 
implications that imposes substantial direct compliance costs and that 
is not required by statute, unless the Federal Government provides the 
funds necessary to pay the direct compliance costs incurred by State 
and local governments or the agency consults with State and local 
government officials early in the process of developing the regulation. 
Where a regulation has federalism implications and preempts State law, 
the agency seeks to consult with State and local officials in the 
process of developing the regulation.
---------------------------------------------------------------------------

    \119\ 64 FR 43255 (Aug. 10, 1999).
---------------------------------------------------------------------------

    FRA has analyzed this rule in accordance with the principles and 
criteria contained in E.O. 13132. FRA has determined that this rule has 
no federalism implications, other than the possible preemption of State 
laws under 49 U.S.C. 20106. In addition, this rule is required by 
statute. 49 U.S.C. 20171(c)(1). Therefore, the consultation and funding 
requirements of E.O. 13132 do not apply, and preparation of a 
federalism summary impact statement for the rule is not required.

E. International Trade Impact Assessment

    The Trade Agreements Act of 1979 prohibits Federal agencies from 
engaging in any standards or related activities that create unnecessary 
obstacles to the foreign commerce of the United States. Legitimate 
domestic objectives, such as safety, are not considered unnecessary 
obstacles. The statute also requires consideration of international 
standards and, where appropriate, that they be the basis for U.S. 
standards. This rule implements a statutory mandate to fulfill 
legitimate domestic objectives, as directed by Congress.

F. Environmental Impact

    FRA has evaluated this rule consistent with the National 
Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq.), the Council of 
Environmental Quality's NEPA implementing regulations at 40 CFR parts 
1500 through 1508, and FRA's NEPA implementing regulations at 23 CFR 
part 771 and determined that it is categorically excluded from 
environmental review and therefore does not require the preparation of 
an environmental assessment (EA) or environmental impact statement 
(EIS). Categorical exclusions (CEs) are actions identified in an 
agency's NEPA implementing regulations that do not normally have a 
significant impact on the environment and therefore do not require 
either an EA or EIS.\120\ Specifically, FRA has determined that this 
rule is categorically excluded from detailed environmental review 
pursuant to 23 CFR 771.116(c)(15), ``[p]romulgation of rules, the 
issuance of policy statements, the waiver or modification of existing 
regulatory requirements, or discretionary approvals that do not result 
in significantly increased emissions of air or water pollutants or 
noise.''
---------------------------------------------------------------------------

    \120\ 40 CFR 1508.4.
---------------------------------------------------------------------------

    This rulemaking will not directly or indirectly impact any 
environmental resources and would not result in significantly increased 
emissions of air or water pollutants or noise. In analyzing the 
applicability of a CE, FRA must also consider whether unusual 
circumstances are present that would warrant a more detailed 
environmental review.\121\ FRA has concluded that no such unusual 
circumstances exist with respect to this rule and it meets the 
requirements for categorical exclusion under 23 CFR 771.116(c)(15).
---------------------------------------------------------------------------

    \121\ 23 CFR 771.116(b).
---------------------------------------------------------------------------

    Pursuant to section 106 of the National Historic Preservation Act 
and its implementing regulations, FRA has determined this undertaking 
has no potential to affect historic properties.\122\ FRA has also 
determined that this rulemaking does not approve a project resulting in 
a use of a resource protected by section 4(f).\123\
---------------------------------------------------------------------------

    \122\ See 16 U.S.C. 470.
    \123\ See Department of Transportation Act of 1966, as amended 
(Pub. L. 89-670, 80 Stat. 931); 49 U.S.C. 303.
---------------------------------------------------------------------------

G. Environmental Justice

    Executive Order 12898, ``Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations'' requires 
DOT agencies to achieve environmental justice as part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects, including 
interrelated social and economic effects, of their programs, policies, 
and activities on minority populations and low-income populations. DOT 
Order 5610.2C (``U.S. Department of Transportation Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations'') instructs DOT agencies to address compliance with E.O. 
12898 and requirements within DOT Order 5610.2C in rulemaking 
activities, as appropriate, and also requires consideration of the 
benefits of transportation programs, policies, and other activities 
where minority populations and low-income populations benefit, at a 
minimum, to the same level as the general population as a whole when 
determining impacts on minority and low-income populations.\124\ FRA 
has evaluated this rule under Executive Orders 12898, 14096 and DOT 
Order 5610.2C and has determined it would not cause disproportionate 
and adverse human health and environmental effects on communities with 
environmental justice concerns.
---------------------------------------------------------------------------

    \124\ E.O. 14096 ``Revitalizing Our Nation's Commitment to 
Environmental Justice,'' issued on April 26, 2023, supplements E.O. 
12898, but is not currently referenced in DOT Order 5610.2C.
---------------------------------------------------------------------------

H. Unfunded Mandates Reform Act of 1995

    Under section 201 of the Unfunded Mandates Reform Act of 1995,\125\ 
each Federal agency ``shall, unless otherwise prohibited by law, assess 
the effects of Federal regulatory actions on State,

[[Page 103692]]

local, and tribal governments, and the private sector (other than to 
the extent that such regulations incorporate requirements specifically 
set forth in law).'' Section 202 of the Unfunded Mandates Reform Act of 
1995 (2 U.S.C. 1532) further requires that ``before promulgating any 
general notice of proposed rulemaking that is likely to result in 
promulgation of any rule that includes any Federal mandate that may 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100,000,000 or more 
(adjusted annually for inflation) in any 1 year, and before 
promulgating any final rule for which a general notice of proposed 
rulemaking was published, the agency shall prepare a written 
statement'' detailing the effect on State, local, and Tribal 
governments and the private sector. This final rule would not result in 
the expenditure, in the aggregate, of $100,000,000 or more (as adjusted 
annually for inflation) in any one year, and thus preparation of such a 
statement is not required.
---------------------------------------------------------------------------

    \125\ Public Law 104-4, 2 U.S.C. 1531.
---------------------------------------------------------------------------

I. Energy Impact

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' requires 
Federal agencies to prepare a Statement of Energy Effects for any 
``significant energy action.'' \126\ FRA evaluated this rule under E.O. 
13211 and determined that this regulatory action is not a ``significant 
energy action'' within the meaning of E.O. 13211.
---------------------------------------------------------------------------

    \126\ 66 FR 28355 (May 22, 2001).
---------------------------------------------------------------------------

J. Privacy Act Statement

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the 
public to better inform its rulemaking process. DOT posts these 
comments, without edit, to www.regulations.gov, as described in the 
system of records notice, DOT/ALL-14 FDMS, accessible through 
www.dot.gov/privacy.

List of Subjects in 49 CFR Part 215

    Freight cars, Infrastructure Investment and Jobs Act, Railroad 
safety, Reporting and recordkeeping requirements.

The Final Rule

    For the reasons discussed in the preamble, FRA amends part 215 of 
chapter II, subtitle B of title 49, Code of Federal Regulations, as 
follows:

PART 215--RAILROAD FREIGHT CAR SAFETY STANDARDS

0
1. The authority citation for part 215 is revised to read as follows:

    Authority:  49 U.S.C. 20102-03, 20107, 20171; 28 U.S.C. 2461; 
and 49 CFR 1.89.

0
2. Revise Sec.  215.5 to read as follows:

Sec.  215.5  Definitions.

    As used in this part:
    Break means a fracture resulting in complete separation into parts;
    Component means a part or subassembly of a railroad freight car;
    Control means the power, whether direct or indirect and whether or 
not exercised, through the ownership of a majority or a dominant 
minority of the total outstanding voting interest in an entity; 
representation on the board of directors of an entity; proxy voting on 
the board of directors of an entity; a special share in the entity; a 
contractual arrangement with the entity; a formal or informal 
arrangement to act in concert with an entity; or any other means, to 
determine, direct, make decisions, or cause decisions to be made for 
the entity;
    Cost of sensitive technology means the aggregate cost of the 
sensitive technology located on a railroad freight car.
    Country of concern means a country that--
    (1) Was identified by the Department of Commerce as a nonmarket 
economy country (as defined in section 771(18) of the Tariff Act of 
1930 (19 U.S.C. 1677(18))) as of November 15, 2021;
    (2) Was identified by the United States Trade Representative in the 
most recent report required by section 182 of the Trade Act of 1974 (19 
U.S.C. 2242) as a foreign country included on the priority watch list 
(as defined in subsection (g)(3) of such section); and
    (3) Is subject to monitoring by the Trade Representative under 
section 306 of the Trade Act of 1974 (19 U.S.C. 2416).
    Dedicated service means the exclusive assignment of cars to the 
transportation of freight between specified points under the following 
conditions:
    (1) The cars are operated--
    (i) Primarily on track that is inside an industrial or other non-
railroad installation; and
    (ii) Only occasionally over track of a railroad;
    (2) The cars are not operated--
    (i) At speeds of more than 15 miles per hour; and
    (ii) Over track of a railroad--
    (A) For more than 30 miles in one direction; or
    (B) On a round trip of more than 60 miles;
    (3) The cars are not freely interchanged among railroads;
    (4) The words ``Dedicated Service'' are stenciled, or otherwise 
displayed, in clearly legible letters on each side of the car body;
    (5) The cars have been examined and found safe to operate in 
dedicated service; and
    (6) The railroad must--
    (i) Notify FRA in writing that the cars are to be operated in 
dedicated service;
    (ii) Identify in that notice--
    (A) The railroads affected;
    (B) The number and type of cars involved;
    (C) The commodities being carried; and
    (D) The territorial and speed limits within which the cars will be 
operated; and
    (iii) File the notice required by this paragraph (6)(iii) of the 
definition not less than 30 days before the cars operate in dedicated 
service;
    In service when used in connection with a railroad freight car, 
means each railroad freight car subject to this part unless the car:
    (1) Has a ``bad order'' or ``home shop for repairs'' tag or card 
containing the prescribed information attached to each side of the car 
and is being handled in accordance with Sec.  215.9;
    (2) Is in a repair shop or on a repair track;
    (3) Is on a storage track and is empty; or
    (4) Has been delivered in interchange but has not been accepted by 
the receiving carrier.
    Net cost has the meaning given such term in chapter 4 of the USMCA 
or any subsequent free trade agreement between the United States, 
Mexico, and Canada.
    Qualified facility means a facility that is not owned or under the 
control of a state-owned enterprise.
    Qualified manufacturer means a railroad freight car manufacturer 
that is not owned or under the control of a state-owned enterprise.
    Railroad means all forms of non-highway ground transportation that 
run on rails or electromagnetic guideways, including:
    (1) Commuter or other short-haul rail passenger service in a 
metropolitan or suburban area, and
    (2) High speed ground transportation systems that connect 
metropolitan areas, without regard to whether they use new technologies 
not associated with traditional railroads. Such term does not include 
rapid transit operations within an urban area that are not connected to 
the general railroad system of transportation.
    Railroad freight car means any car designed to carry freight or 
railroad personnel by rail, including--
    (1) A box car;

[[Page 103693]]

    (2) A refrigerator car;
    (3) A ventilator car;
    (4) An intermodal well car;
    (5) A gondola car;
    (6) A hopper car;
    (7) An auto rack car;
    (8) A flat car;
    (9) A special car;
    (10) A caboose car;
    (11) A tank car; and
    (12) A yard car.
    Sensitive technology means any device embedded with electronics, 
software, sensors, or other connectivity, that enables the device to 
connect to, collect data from, or exchange data with another device, 
including--
    (1) Onboard telematics;
    (2) Remote monitoring software;
    (3) Firmware;
    (4) Analytics;
    (5) Global positioning system satellite and cellular location 
tracking systems;
    (6) Event status sensors;
    (7) Predictive component condition and performance monitoring 
sensors; and
    (8) Similar sensitive technologies embedded into freight railcar 
components and sub-assemblies.
    State inspector means an inspector who is participating in 
investigative and surveillance activities under section 206 of the 
Federal Railroad Safety Act of 1970 (45 U.S.C. 435).
    State-owned enterprise means--
    (1) An entity that is owned by, or under the control of, a 
national, provincial, or local government of a country of concern, or 
an agency of such government; or
    (2) An individual acting under the direction or influence of a 
government or agency described in paragraph (1) of this definition.
    Substantially transformed means a component of a railroad freight 
car that undergoes an applicable change in tariff classification as a 
result of the manufacturing process, as described in chapter 4 and 
related annexes of the USMCA or any subsequent free trade agreement 
between the United States, Mexico, and Canada.
    USMCA. The acronym `USMCA' has the meaning given the term in 
section 3 of the United States-Mexico-Canada Agreement Implementation 
Act (19 U.S.C. 4502).

0
3. Add subpart E to part 215 to read as follows:

Subpart E--Manufacturing

Sec.
215.401 Requirements for railroad freight cars placed into service 
in the United States.
215.403 Certification of compliance.
215.405 Prohibition on registering noncompliant railroad freight 
cars.
215.407 Civil penalties.
215.409 Demand letter.
215.411 Reply.
215.413 Payment of penalty; compromise.
215.415 Informal response and assessment.
215.417 Request for hearing.
215.419 Hearing.
215.421 Presiding officer's decision.

Subpart E--Manufacturing

Sec.  215.401  Requirements for railroad freight cars placed into 
service in the United States.

    (a) Limitation on railroad freight cars. A railroad freight car 
wholly manufactured on or after December 19, 2025 may only operate on 
the United States general railroad system of transportation if:
    (1) The railroad freight car is manufactured, assembled, and 
substantially transformed, as applicable, by a qualified manufacturer 
in a qualified facility;
    (2) None of the sensitive technology located on the railroad 
freight car, including components necessary to the functionality of the 
sensitive technology, originates from a country of concern or is 
sourced from a state-owned enterprise; and
    (3) None of the content of the railroad freight car, excluding 
sensitive technology, originates from a country of concern or is 
sourced from a state-owned enterprise that has been determined by a 
recognized court or administrative agency of competent jurisdiction and 
legal authority to have violated or infringed valid United States 
intellectual property rights of another including such a finding by a 
Federal district court under title 35 or the U.S. International Trade 
Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 
1337).
    (b) Limitation on railroad freight car content--(1) Percentage 
limitation--
    (i) Initial limitation. Not later than December 19, 2025, a 
railroad freight car described in paragraph (a) of this section may 
operate on the United States general railroad system of transportation 
only if not more than 20 percent of the content of the railroad freight 
car, calculated by the net cost of all components of the car and 
excluding the cost of sensitive technology, originates from a country 
of concern or is sourced from a state-owned enterprise.
    (ii) Subsequent limitation. Effective beginning on December 19, 
2028, a railroad freight car described in paragraph (a) of this section 
may operate on the United States general railroad system of 
transportation only if not more than 15 percent of the content of the 
railroad freight car, calculated by the net cost of all components of 
the car and excluding the cost of sensitive technology, originates from 
a country of concern or is sourced from a state-owned enterprise.
    (2) Conflict. The percentages specified in the clauses in 
paragraphs (b)(1)(i) and (ii) of this section, as applicable, shall 
apply notwithstanding any apparent conflict with provisions of chapter 
4 of the USMCA.

Sec.  215.403  Certification of compliance.

    (a) Certification required. To be eligible to provide a railroad 
freight car for operation on the United States general railroad system 
of transportation, the manufacturer of such car shall certify, at least 
annually, to the Federal Railroad Administrator that any railroad 
freight cars to be so provided comply with 49 U.S.C. 20171.
    (1) Certification procedure. Prior to providing any cars for 
operation on the United States general railroad system of 
transportation, each freight car manufacturer shall certify to FRA that 
the cars comply with 49 U.S.C. 20171. Such certification shall be 
submitted via electronic mail by an authorized representative of the 
manufacturer to [email protected]. A manufacturer may submit this 
certification to FRA annually provided it covers all cars to be 
provided in the relevant year, or a manufacturer may submit separate 
certifications throughout the year.
    (i) The certification shall include the statement ``I certify that 
all freight cars that will be provided for operation on the United 
States general railroad system of transportation will comply with 49 
U.S.C. 20171, and the implementing regulations at 49 CFR part 215'' and 
contain:
    (A) The manufacturer's name and address;
    (B) The name, signature, and contact information for the person 
designated to certify compliance with this subpart; and
    (C) A car identification number for each car being certified.
    (ii) Manufacturers shall maintain records showing the information, 
including the calculations, made to support certification under this 
section and such records shall be made available to FRA upon request.
    (2) Valid certification required. At the time a railroad freight 
car begins operation on the United States general railroad system of 
transportation, the manufacturer of such railroad freight car shall 
have valid certification described in paragraph (a) of this section for 
the year in which such car begins operation.

[[Page 103694]]

    (b) [Reserved]

Sec.  215.405  Prohibition on registering noncompliant railroad freight 
cars.

    (a) Cars prohibited. A railroad freight car manufacturer may not 
register, or cause to be registered, a railroad freight car that does 
not comply with the requirements under this subpart in the Umler 
system.
    (b) [Reserved]

Sec.  215.407  Civil penalties.

    (a) In general. A railroad freight car manufacturer that has 
manufactured a railroad freight car for operation on the United States 
freight railroad interchange system that the Secretary of 
Transportation determines, after written notice and an opportunity for 
a hearing, has violated this subpart is liable to the United States 
Government for a civil penalty of at least $100,000, but not more than 
$250,000, for each such violation for each railroad freight car.
    (b) Prohibition for violations. The Secretary of Transportation may 
prohibit a railroad freight car manufacturer with respect to which the 
Secretary has assessed more than three violations under this section 
from providing additional railroad freight cars for operation on the 
United States freight railroad interchange system until the Secretary 
determines:
    (1) Such manufacturer is in compliance with this subpart; and
    (2) All civil penalties assessed to such manufacturer pursuant to 
this section have been paid in full.

Sec.  215.409  Demand letter.

    (a) FRA, through the Office of the Chief Counsel, begins a civil 
penalty proceeding under Sec.  215.407(a) by serving a demand letter on 
a railroad freight car manufacturer, charging the railroad freight car 
manufacturer with having violated one or more provisions of this 
subpart.
    (b) A demand letter issued under this section includes:
    (1) A statement of the provision(s) which the respondent is 
believed to have violated;
    (2) A statement of the factual allegations upon which the proposed 
civil monetary penalty is being sought;
    (3) Notice of the maximum amount of civil monetary penalty for 
which the respondent may be liable;
    (4) Notice of the amount of the civil monetary penalty proposed;
    (5) A description of the manner in which the respondent should make 
payment of any money to the United States;
    (6) A statement of the respondent's right to present written 
explanations, information, or any materials in answer to the charges or 
in mitigation of the penalty; and
    (7) A statement of the respondent's right to request a hearing and 
the procedures for requesting a hearing.
    (c) FRA may amend the demand letter at any time prior to completion 
of a fully executed settlement agreement or the entry of an order to 
pay a civil monetary penalty. If the amendment contains any new 
material allegation of fact, the respondent is given an opportunity to 
respond. In an amended demand letter, FRA may change the civil monetary 
penalty amount initially proposed, up to the maximum penalty amount for 
each violation.

Sec.  215.411  Reply.

    (a) Within sixty (60) days of the service of a demand letter issued 
under Sec.  215.409, the respondent may--
    (1) Pay as provided in Sec.  209.413(a) and thereby close the case;
    (2) Make an informal response as provided in Sec.  215.415; or
    (3) Request a hearing as provided in Sec.  215.417.
    (b) The Office of the Chief Counsel may extend the sixty (60) day 
period for good cause shown.
    (c) Failure of the respondent to reply by taking one of the three 
actions described in paragraph (a) of this section, within the period 
provided, constitutes a waiver of the right to appear and contest the 
allegations, and authorizes the Office of the Chief Counsel, without 
further notice to the respondent, to find the facts to be as alleged in 
the demand letter and to assess an appropriate civil penalty.

Sec.  215.413  Payment of penalty; compromise.

    (a) Payment of a civil monetary penalty may be made by credit card, 
certified check, money order, or wire transfer. Payment by credit card 
must be made via the internet at https://www.pay.gov/paygov/. 
Instructions for online payment are found on the website. Payments made 
by certified check or money order should be made payable to the Federal 
Railroad Administration and sent to DOT/FRA, M.M.A.C., AMK-324, HQ-RM 
181, P.O. Box 25082, Oklahoma City, OK 73125. Overnight express 
payments may be sent to DOT/FRA, M.M.A.C., AMK-324, HQ-RM 181, 6500 
South MacArthur Blvd., Oklahoma City, OK 73169.
    (b) At any time before an order requiring payment of a civil 
monetary penalty is referred to the Attorney General for collection, 
the respondent may offer to compromise for a specific amount by 
contacting the Office of the Chief Counsel.

Sec.  215.415  Informal response and assessment.

    (a) If a respondent elects to make an informal response to a demand 
letter, respondent must submit to the Office of the Chief Counsel such 
written explanations, information, or other materials as respondent may 
desire in answer to the charges or in mitigation of the proposed 
penalty.
    (b) The respondent may include in the informal written response a 
request for a conference. Upon receipt of such a request, the Office of 
the Chief Counsel arranges for a conference as soon as practicable.
    (c) Written explanations, information, or materials submitted by 
the respondent, and relevant information presented during any 
conference held under this section, are considered by the Office of the 
Chief Counsel in reviewing the demand letter and determining the 
fact(s) of the violation and the amount of any civil penalty to be 
paid.
    (d) After consideration of an informal response, including any 
relevant information presented at a conference, the Office of the Chief 
Counsel may dismiss the demand letter in whole or in part. If the 
Office of the Chief Counsel does not dismiss the action in whole, the 
Office of the Chief Counsel may enter into a settlement agreement or 
enter an order assessing a civil monetary penalty.

Sec.  215.417  Request for hearing.

    (a) If a respondent elects to request a hearing, the respondent 
must submit a written request to the Office of the Chief Counsel 
referring to the case number which appeared on the demand letter. The 
request must--
    (1) State the name and email address of the respondent and of the 
person signing the request, if different from the respondent;
    (2) State with respect to each allegation whether it is admitted or 
denied; and
    (3) State with particularity the issues to be raised by the 
respondent at the hearing.
    (b) After a request for hearing that complies with the requirements 
of paragraph (a) of this section, the Office of the Chief Counsel 
schedules a hearing for the earliest practicable date.
    (c) The Office of the Chief Counsel, or the hearing officer 
designated under Sec.  215.419, may grant extensions of the time of the 
commencement of the hearing for good cause shown.

Sec.  215.419  Hearing.

    (a) When a hearing is requested and scheduled under Sec.  215.417, 
a presiding officer designated by the Office of the

[[Page 103695]]

Chief Counsel convenes and presides over the hearing. If requested by 
the respondent, and if practicable, the hearing is held in the general 
vicinity of the place where the alleged violation occurred, at a place 
convenient to the respondent, or virtually. Testimony by witnesses 
shall be given under oath and the hearing shall be recorded verbatim.
    (b) The presiding official may:
    (1) Administer oaths and affirmations;
    (2) Issue subpoenas as provided by Sec.  209.7;
    (3) Adopt procedures for the submission of evidence in written 
form;
    (4) Take or cause depositions to be taken;
    (5) Rule on offers of proof and receive relevant evidence;
    (6) Examine witnesses at the hearing;
    (7) Convene, recess, reconvene, and adjourn and otherwise regulate 
the course of the hearing;
    (8) Hold conferences for settlement, simplification of the issues 
or any other proper purpose; and
    (9) Take any other action authorized by, or consistent with, the 
provisions of this subpart pertaining to civil monetary penalties and 
permitted by law that may expedite the hearing or aid in the 
disposition of an issue raised, therein.
    (c) The Office of the Chief Counsel has the burden of providing the 
facts alleged in the demand letter and may offer such relevant 
information as may be necessary fully to inform the presiding officer 
as to the matter concerned.
    (d) The respondent may appear and be heard on the respondent's own 
behalf or through counsel of the respondent's choice. The respondent or 
respondent's counsel may offer relevant information, including 
testimony, which they believe should be considered in defense of the 
allegations, or that may bear on the proposed civil monetary penalty, 
and conduct such cross-examination as may be required for a full 
disclosure of the material facts.
    (e) At the conclusion of the hearing, or as soon thereafter as the 
hearing officer shall provide, the parties may file proposed findings 
and conclusions, together with supporting reasons.

Sec.  215.421  Presiding officer's decision.

    (a) After consideration of the evidence of record, the presiding 
officer may dismiss the demand letter in whole or in part. If the 
presiding officer does not dismiss the civil penalty enforcement action 
in whole, the presiding officer will issue and serve on the respondent 
an order assessing a civil penalty. The presiding officer's decision 
will include a statement of findings and conclusions as well as the 
reasons therefor on all material issues of fact, law, and discretion.
    (b) If, within twenty (20) days after service of an order assessing 
a civil penalty fine issued by the presiding officer under paragraph 
(a) of this section, the respondent does not pay the civil penalty 
fine, the case may be referred to the Attorney General with a request 
that an action to collect the penalty be brought in the appropriate 
United States District Court. In the civil action, the amount and 
appropriateness of the civil penalty shall not be subject to review.

    Issued in Washington, DC.
Amitabha Bose,
Administrator.
[FR Doc. 2024-30030 Filed 12-18-24; 8:45 am]
BILLING CODE 4910-06-P
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