Document ID: FRA-2021-0035-0001
Agency: fra
Document Type: Proposed Rule
Title: Risk Reduction Program
Posted Date: 2022-09-08T04:00Z

[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Proposed Rules]
[Pages 54938-54948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19432]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 271

[Docket No. FRA-2021-0035, Notice No. 1]
RIN 2130-AC89

Risk Reduction Program

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: In response to issues raised by a petition for reconsideration 
of the Risk Reduction Program (RRP) final rule, FRA is issuing this 
NPRM to solicit information to help determine whether FRA should retain 
or remove a provision in the RRP final rule clarifying that contractors 
who perform a significant portion of a railroad's operations are 
considered the railroad's directly affected employees for purposes of 
the RRP rule.

DATES: Comments on this proposed rulemaking must be received on or 
before November 7, 2022. Comments received after that date will be 
considered to the extent possible without incurring additional expense 
or delay.

ADDRESSES: 
    Comments: Comments related to Docket No. FRA-2021-35 may be 
submitted by going to https://www.regulations.gov and following the 
online instructions for submitting comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to https://www.regulations.gov including any personal 
information provided. Please see the Privacy Act heading in the 
SUPPLEMENTARY INFORMATION section of this document for Privacy Act 
information related to any submitted comments or materials.
    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: Miriam Kloeppel, Staff Director, Risk 
Reduction Program Division, Office of Railroad Safety, FRA, telephone: 
202-493-6224, email: [email protected]gov; or Elizabeth Gross, 
Attorney Adviser, Office of the Chief Counsel, FRA, telephone: 202-493-
1342, email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents for Supplementary Information

I. Background
    A. Statutory Mandate
    B. Rulemaking Background
    C. Petition for Reconsideration
II. Discussion
    A. FRA's Rationale for Retaining Sec.  271.3(c)
    B. Information Requested
III. Regulatory Impact and Notices
    A. Executive Order 12866
    B. Regulatory Flexibility Act and Executive Order 13272
    C. Paperwork Reduction Act
    D. Environmental Impact
    E. Executive Order 12898 (Environmental Justice)
    F. Federalism Implications
    G. Unfunded Mandates Reform Act of 1995
    H. International Trade Impact Assessment
    I. Tribal Consultation
    J. Privacy Act Statement

I. Background

    Risk reduction is a comprehensive, system-oriented approach to 
improving safety by which an organization formally identifies and 
analyzes applicable hazards and takes action to mitigate, if not 
eliminate, the risks associated with those hazards. It provides a 
railroad with a set of decision-making processes and procedures that 
can help it plan, organize, direct, and control its railroad operations 
in a way that enhances safety and promotes compliance with regulatory 
standards. As such, risk reduction is a form of safety management 
system, which is a term generally referring to a comprehensive, 
process-oriented approach to managing safety throughout an 
organization.

A. Statutory Mandate

    On October 16, 2008, the Rail Safety Improvement Act of 2008 (RSIA) 
was enacted. Section 103 of the RSIA, codified at 49 U.S.C. 20156, 
directed the Secretary of Transportation (Secretary) to issue a 
regulation requiring Class I railroads, railroad carriers that provide 
intercity rail passenger or commuter rail passenger transportation 
(passenger railroads), and railroads with inadequate safety performance 
(ISP railroads) to develop, submit to the Secretary for review and 
approval, and implement a railroad safety risk reduction program. Under 
sec. 20156(g), each railroad carrier required to submit a railroad 
safety risk reduction program must ``consult with, employ good faith, 
and use its best efforts to reach agreement with, all of its directly 
affected employees, including any

[[Page 54939]]

nonprofit employee labor organization representing a class or craft of 
directly affected employees of the railroad carrier, on the contents of 
the safety risk reduction program.'' The Secretary delegated the 
authority to conduct this rulemaking and implement the rule to the 
Federal Railroad Administrator.\1\
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    \1\ 49 CFR 1.89(b).
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B. Rulemaking Background

    On February 27, 2015, FRA responded to the RSIA mandate by 
publishing an RRP NPRM that would apply to each Class I freight 
railroad and each ISP railroad. The RRP NPRM explained it would not 
implement the RSIA mandate for passenger railroads, which FRA was 
addressing in a separate System Safety Program (SSP) rulemaking. On 
August 12, 2016, FRA published an SSP final rule \2\ applying to 
passenger rail operations.\3\
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    \2\ 81 FR 53850.
    \3\ On March 4, 2020, FRA published a final rule amending the 
SSP rule to clarify its applicability to passenger rail operations. 
85 FR 12826, 12829-12833.
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    On February 18, 2020, FRA published an RRP final rule \4\ that 
added regulations at 49 CFR part 271 (part 271) requiring each Class I 
freight railroad and each ISP railroad to develop and implement an RRP 
under a written RRP plan that FRA has reviewed and approved.\5\ The RRP 
final rule contains the following requirements that relate to how an 
RRP must engage a railroad's directly affected employees:
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    \4\ 85 FR 9262.
    \5\ 49 CFR 271.101(b).
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     Section 271.207(a), as mandated by sec. 20156(g), requires 
each railroad to consult in good faith, and best efforts to reach 
agreement with, its directly affected employees (including any non-
profit labor organization representing the directly affected employees) 
on the contents of its RRP plan.
     For RRP plan substantive amendments, section 271.303(a)(1) 
requires a railroad to follow the process described in its RRP plan, 
pursuant to Sec.  271.209, for consulting with its directly affected 
employees and submitting a consultation statement to FRA.
     Section 271.113(a) requires a railroad to involve its 
directly affected employees in the establishment and implementation of 
its RRP.
     Section 271.221 requires a railroad's RRP plan to describe 
the railroad's processes for involving railroad employees in the 
establishment and implementation of an RRP pursuant to Sec.  271.113. 
If a railroad contracts out significant portions of its operations, the 
contractor and the contractor's employees performing the railroad's 
operations shall be considered employees.
    The RRP final rule does not contain a definition for ``directly 
affected employee.'' However, the rule clarifies in Sec.  271.3(c) that 
``[i]f a railroad contracts out significant portions of its operations, 
the contractor and the contractor's employees performing the railroad's 
operations shall be considered directly affected employees for purposes 
of this part.''
    While FRA did not propose Sec.  271.3(c) in the RRP NPRM, the 
preamble to the RRP final rule explained that the added language came 
from 49 CFR 270.107(a)(2) of the SSP rule, and was necessary to address 
how directly affected employee consultation and involvement would be 
handled when a railroad contracts out significant portions of its 
operations to other entities.\6\ The preamble further explained that 
contractors and contractor employees would be considered directly 
affected employees only when the contracts were ongoing and involved 
significant aspects of the railroad's operations (e.g., contracting out 
maintenance of locomotives and rail cars).\7\ The preamble encouraged 
railroads to contact FRA for guidance if they were unsure whether a 
contracted entity and its employees would be directly affected 
employees under Sec.  271.3(c).\8\ For purposes of this NPRM, FRA will 
refer to this population of Sec.  271.3(c) contractors as 
``operationally significant contractors.''
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    \6\ 85 FR 9277.
    \7\ Id.
    \8\ Id.
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C. Petition for Reconsideration

    On April 10, 2020, FRA received a petition for reconsideration of 
the RRP final rule from the Association of American Railroads (AAR).\9\ 
AAR's petition asked FRA to reconsider certain aspects of the final 
rule, including requirements regarding both employee and contractor 
involvement.\10\ Relevant to this NPRM, AAR asked FRA, to reconsider 
the inclusion of Sec.  271.3(c).\11\ As explained above, Sec.  271.3(c) 
requires a railroad to consider a contractor and its employees who 
perform significant portions of the railroad's operations (i.e., 
operationally significant contractors) as directly affected employees 
for purposes of RRP plan consultation (Sec.  271.207) and employee 
involvement (Sec.  271.113(a)).
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    \9\ FRA-2009-0038-0116.
    \10\ AAR's petition also asked FRA to reconsider requirements 
regarding implementation deadlines and FRA's methodology and 
accompanying costs calculations used to determine which railroads 
demonstrate ISP. On May 8, 2020, FRA provided an initial response to 
AAR's petition, denying AAR's request to extend the implementation 
deadlines in the RRP final rule. FRA-2009-0038-0117. FRA's response 
stated that the agency would reply to AAR's petition regarding 
employee/contractor involvement and ISP determinations in a separate 
communication.
    \11\ AAR Pet. at 8-10.
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    In asking FRA to consider removing Sec.  271.3(c) from the RRP 
final rule, AAR's petition argued that while the inclusion of 
contractor employees may be appropriate in the SSP rule for passenger 
railroads that contract out their entire operations, the same is not 
true for Class I freight railroads.\12\ As such, AAR argued that 
including Sec.  271.3(c), without corresponding safety justifications 
or notice and opportunity to comment, was arbitrary and 
unreasonable.\13\ AAR further argued that FRA did not adequately define 
a ``significant portion'' of a railroad's operation or account for 
costs associated with Sec.  271.3(c).\14\
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    \12\ AAR Pet. at 8.
    \13\ Id.
    \14\ Id. at 8-10.
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    FRA responded to AAR's petition on November 16, 2020, granting the 
petition in part by stating it would initiate a rulemaking to consider 
removing Sec.  271.3(c) from the RRP final rule.\15\ FRA's response 
indicated a rulemaking would allow a thorough discussion of whether the 
RRP final rule should include Sec.  271.3(c), taking into account both 
Class I railroads, which FRA acknowledged may not contract out 
significant portions of their operations to the extent that Sec.  
271.3(c) would apply, and ISP railroads.
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    \15\ FRA otherwise denied AAR's petition. FRA-2009-0038-0124.
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    FRA's response also acknowledged that a rulemaking to remove Sec.  
271.3(c) may not be completed before the arrival of certain 
implementation deadlines in the rule for Class I freight railroads. 
FRA's response, therefore, made clear that, through its enforcement 
discretion, FRA intended to neither take enforcement action based on 
Sec.  271.3(c) nor disapprove a Class I freight railroad's RRP plan on 
grounds that it did not comply with Sec.  271.3(c) before the 
rulemaking was completed.
    Since issuing this response, FRA has received and approved RRP 
plans from all seven Class I freight railroads. Consistent with AAR's 
petition, none of the Class I railroad RRP plans stated that the 
railroads use operationally significant contractors. FRA also did not 
receive any statement from directly affected employees implicating 
Sec.  271.3(c) concerns as part of the RRP plan consultation 
process.\16\ FRA has

[[Page 54940]]

not yet identified which Class II or III freight railroads must comply 
with the RRP final rule because they demonstrate ISP.
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    \16\ Section 271.207(e).
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II. Discussion

    This NPRM solicits information to help FRA determine whether Sec.  
271.3(c) should be retained in or removed from the RRP final rule. For 
reasons discussed below, this NPRM does not specifically propose 
removing Sec.  271.3(c) because FRA currently believes the provision 
should be retained. However, FRA may issue a final rule removing Sec.  
271.3(c) and making any necessary conforming changes (such as removing 
similar language from Sec.  271.221) in response to public comment.

A. FRA's Rationale for Retaining Sec.  271.3(c)

    For reasons explained in the preamble to the RRP final rule, FRA 
continues to maintain that Sec.  271.3(c) is necessary in the RRP final 
rule.\17\ Specifically, Sec.  271.3(c) contains language from Sec.  
270.107(a)(2) of the SSP rule,\18\ and is necessary to address how 
directly affected employee consultation and involvement will be handled 
when a railroad contracts out significant portions of its operations to 
operationally significant contractors.\19\ FRA intends the scope of 
Sec.  271.3(c) to be limited so that contractors and contractor 
employees are considered operationally significant contractors (and 
thereby treated as directly affected employees for purposes of the RRP 
rule) only when the contracts are ongoing and involve significant 
aspects of the railroad's operations (e.g., contracting out maintenance 
of locomotives and rail cars or dispatching services).\20\ For example, 
Sec.  271.3(c) would cover contractor employees who were performing 
duties for a railroad on a daily basis, particularly if those duties 
were necessary for the daily operations of a railroad. If a contractor 
performs operations for a railroad only on a one-time or intermittent 
basis, the limited scope of Sec.  271.3(c) would not apply because 
these duties would not constitute a significant portion of the 
railroad's operations. By illustration, Sec.  271.3(c) would not apply 
to contractors hired for a one-time construction project of limited 
duration or to contractors who may only provide the railroad services 
on an as-needed or intermittent basis (such as environmental response 
contractors who respond to a hazardous materials leak or accident-
clearing contractors).
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    \17\ 85 FR 9277.
    \18\ There were no petitions for reconsideration of Sec.  
270.107(a)(2) of the SSP rule.
    \19\ 85 FR 9277.
    \20\ Id.
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    As explained in FRA's response to AAR's petition, FRA acknowledges 
that Sec.  271.3(c) may not currently impact Class I railroads--indeed, 
FRA has already approved all Class I freight railroad RRP plans without 
identifying any potential operationally significant contractors. FRA's 
review, however, focused primarily on information provided in the 
submitted Class I RRP plans, and any statements received from directly 
affected employees, and was not a comprehensive evaluation of a 
railroad's operations. FRA notes, however, that even if Class I 
railroads currently do not hire operationally significant contractors, 
that does not mean they will not do so in the future.
    FRA does not believe a current lack of Class I operationally 
significant contractors is sufficient reason for removing Sec.  
271.3(c) altogether because AAR's argument does not address Class II 
and Class III railroads that may be subject to the RRP rule because FRA 
determines they demonstrate ISP. There is a large amount of 
organizational diversity among Class II and Class III freight 
railroads, and FRA believes some of these Class II and Class III 
freight railroads may hire operationally significant contractors.
    Finally, FRA notes that there may be adverse railroad safety 
effects if the RRP rule treats operationally significant contractors 
and employees differently by not requiring a railroad to consult with 
and involve operationally significant contractors in RRP planning and 
implementation. Contractors perform a range of important railroad 
operation services, such as dispatching, switching, track construction, 
and flagging. FRA is also aware of contractors who provide certified 
locomotive engineers and conductors to conduct train operations. To 
comprehensively address the hazards and risk on a railroad's system, 
FRA believes an RRP must treat operationally significant contractors 
the same as employees for purposes of the rule's consultation and 
involvement requirements. For example, a person who is regularly 
performing dispatching services for a railroad should be consulted on 
the contents of a railroad's RRP plan and involved in the railroad's 
RRP, regardless of whether that person is an employee or a 
contractor.\21\ The comprehensive, system-wide nature of RRP also makes 
it important for a railroad to incorporate operationally significant 
contractors directly into its RRP, rather than requiring contractors to 
establish their own RRPs that would then apply piecemeal to a 
railroad's operation. This type of fragmented approach could lead to 
safety gaps where it was not clear whether the operation was covered by 
the railroad's RRP or the contractor's RRP, or where safety hazards and 
risks were not effectively communicated between the railroad and 
operationally significant contractors.
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    \21\ The importance of contractors to railroad safety is 
reflected in the numerous FRA safety regulations that define 
``employee'' to include employees of a contractor to a railroad. 
See, e.g., 49 CFR 214.7 (definitions of ``employee,'' ``roadway 
worker,'' and ``railroad bridge worker or bridge worker''), Sec.  
218.93 (definition of ``employee''), Sec.  220.5 (definition of 
``employee''), and Sec.  241.5 (definition of ``employee'').
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B. Exercise of Enforcement Discretion if FRA Retains Sec.  271.3(c)

    Until the conclusion of this rulemaking, and as indicated in its 
response to AAR's petition,\22\ FRA will continue to exercise its 
discretion to neither take enforcement against a Class I freight 
railroad based on Sec.  271.3(c) nor to disapprove a Class I freight 
railroad's RRP plan on grounds that it did not comply with Sec.  
271.3(c).
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    \22\ FRA-2009-0038-0124.
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    As discussed above, based on the information available to FRA, FRA 
understands that, at this time, Class I freight railroads do not employ 
operationally significant contractors. If Class I freight railroads 
indeed do not hire operationally significant contractors, their RRP 
plans would remain in compliance with the rule even if FRA elects to 
retain Sec.  271.3(c). FRA would, however, monitor for Sec.  271.3(c) 
compliance as part of its external audit process under Part 271, 
Subpart F--External Audits. If FRA were to find during an audit that a 
Class I freight railroad utilizes operationally significant 
contractors, FRA would address any identified Sec.  271.3(c) non-
compliance as part of the audit process, which could include reopening 
review of the railroad's RRP plan pursuant to Sec.  271.305.\23\
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    \23\ Section 271.305 authorizes FRA to reopen review of an RRP 
plan for cause stated.
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    FRA may receive information during this rulemaking indicating that 
one or more Class I freight railroads do hire operationally significant 
contractors. If FRA finalizes this rulemaking by retaining Sec.  
271.3(c), FRA will continue exercising its enforcement discretion to 
provide any such Class I freight railroads a reasonable amount of time 
to amend their RRP plans and conduct any additional consultation 
necessary to achieve compliance with Sec.  271.3(c). FRA specifically 
requests public

[[Page 54941]]

comment on what would be a reasonable amount of time, anticipating that 
it would be between six months and one year. Providing six months would 
be consistent with the amount of time provided Class I freight 
railroads to file initial RRP plans after the rule's information 
protection provisions went into effect,\24\ and providing a year would 
allow a Class I freight railroad the opportunity to submit any required 
RRP plan revisions along with its annual internal assessment 
report,\25\ which would lessen administrative filing burdens. After 
this additional period of enforcement discretion, FRA would have the 
authority under Sec.  271.305 to reopen review of a Class I freight 
railroad's RRP plan for cause stated, such as non-compliance with Sec.  
271.3(c).
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    \24\ The rule's information protection provisions went into 
effect on February 17, 2021, and the filing deadline for Class I 
freight railroad RRP plans was no later than August 16, 2021. 49 CFR 
271.11(a) and 271.301(b)(1).
    \25\ The RRP rule requires a railroad to conduct an internal 
assessment of its RRP once every calendar year, and to provide FRA 
an internal assessment report within 60 days of completing the 
internal assessment. 49 CFR 271.401(a) and 271.405(a).
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C. Information Requested

    Although FRA currently believes Sec.  271.3(c) should be retained, 
this NPRM solicits additional information for FRA to consider. FRA 
specifically requests comments on whether contractors play a different 
role for Class I freight railroads and Class II and III freight 
railroads (which would have to comply with the RRP rule if FRA 
determines they demonstrate ISP). FRA is also interested in additional 
information regarding the extent to which contractors perform 
operations for freight railroads and for how long FRA should exercise 
its enforcement discretion if it determines that Class I freight 
railroads do hire operationally significant contractors. FRA is 
requesting information not only about the current role of contractors 
in the freight railroad industry, but also information about how 
contractors' role may change in the future.
    As this NPRM is only addressing those issues raised in the petition 
for reconsideration, FRA is specifically limiting the requested public 
comment to the need to retain or remove Sec.  271.3(c). For purposes of 
this NPRM, FRA will not consider any comments that go beyond the scope 
of Sec.  271.3(c). For example, FRA will not consider comments on the 
employee consultation requirements in Sec.  271.207, comments on the 
employee involvement requirements in Sec.  271.113, or comments 
requesting revisions to any section of the rule other than Sec.  
271.3(c).
    As discussed under the Privacy Act heading in the SUPPLEMENTARY 
INFORMATION section of this document, if you wish to provide comments 
containing proprietary or confidential information, please contact FRA 
for alternate submission instructions.

III. Regulatory Impact and Notices

A. Executive Order 12866

    This NPRM is a nonsignificant regulatory action under Executive 
Order 12866, ``Regulatory Planning and Review.'' \26\ FRA made this 
determination by finding that this proposed regulatory action did not 
meet the definition of ``significant regulatory action'' in section 
3(f) of E.O. 12866.
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    \26\ 58 FR 51735 (Sep. 30, 1993).
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    This section evaluates the economic impacts associated with the 
proposed rulemaking. Because FRA is proposing to retain Sec.  271.3(c) 
in the RRP rule to address how directly affected employee consultation 
and involvement will be handled when a railroad contracts out 
significant portions of its operations to operationally significant 
contractors, this proposed rulemaking will not have an economic impact 
unless FRA revises the provision in response to information and 
comments gathered following publication of this NPRM. The economic 
impacts of such potential alternatives are described below. FRA 
requests comments and data related to Sec.  271.3(c) and the 
assumptions and calculations presented in this analysis.
1. Need for Regulatory Action
    This NPRM does not propose to make any regulatory change to the 
existing RRP rule. Rather, this NPRM provides an opportunity for public 
comment on Sec.  271.3(c), which was included in the RRP final rule but 
not proposed in the RRP NPRM. This rulemaking provides an expanded 
opportunity for public comment on this section. Under Sec.  271.3(c), 
``If a railroad contracts out significant portions of its operations, 
the contractor and the contractor's employees performing the railroad's 
operations shall be considered directly affected employees for purposes 
of this part.'' For ease of reference, this analysis refers to this 
universe of Sec.  271.3(c) contractors as ``operationally significant 
contractors.'' As previously explained in this rulemaking, the RRP rule 
contains two requirements that relate to how an RRP must engage with a 
railroad's directly affected employees in Sec. Sec.  271.207(a) (RRP 
plan consultation) and Sec.  271.113(a) (employee involvement). 
Generally, these provisions require a railroad to consult with its 
directly affected employees on the contents of its RRP plan and any 
substantive amendments thereto, and to involve its directly affected 
employees in the establishment and implementation of the RRP.
    This NPRM notes FRA may consider alternatives to Sec.  271.3(c), 
given sufficient data and evidence of an unjustified burden or superior 
approach. Since this proposed rulemaking is primarily an effort to 
collect public comment on Sec.  271.3(c) and does not propose new 
requirements, this analysis determined that this proposed rulemaking 
would not carry any economic impacts or paperwork burden. While the 
proposed rule would not have economic impacts, FRA examined two 
alternatives that would trigger costs and/or benefits if included in a 
final rule.
2. Regulatory Alternatives
    This analysis considers two alternative regulatory approaches to 
retaining Sec.  271.3(c) in the RRP final rule, including the 
alternative of removing Sec.  271.3(c), which is considered in this 
proposed rulemaking and associated preamble. The assumptions and 
calculations upon which the analyses are based are included below to 
provide clarity and document FRA's methodology.
    The first alternative considers the removal of Sec.  271.3(c) and 
would generate an estimated $4,069,640 in cost savings. The second 
alternative considers expanding Sec.  271.3(c) to include all 
contractors who perform or utilize significant safety-related services, 
as identified by a railroad's RRP plan pursuant to Sec.  271.101(d). 
For ease of reference, this analysis refers to Sec.  271.101(d) 
contractors as ``safety significant contractors.'' This analysis also 
assumes all operationally significant contractors are included in this 
broader category of safety significant contractors. This second 
alternative would trigger an estimated $1,887,473 in costs.
    Per U.S. Office of Management and Budget (OMB) guidance in Circular 
A-4, the alternatives considered in this analysis present both a less 
stringent case (Alternative 1) and a more stringent case (Alternative 
2) compared to the baseline case expected for the proposed rulemaking 
if finalized.\27\ As discussed above, this rulemaking proposes to 
retain Sec.  271.3(c) to address how directly affected employee 
consultation and

[[Page 54942]]

involvement will be handled when a railroad contracts out significant 
portions of its operations. The proposed rulemaking would therefore not 
generate any economic impacts if finalized, and this analysis only 
addresses the economic impacts of the two alternatives in comparison to 
the baseline case of retaining Sec.  271.3(c).
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    \27\ U.S. Office of Management and Budget. 2003. Circular A-4. 
Washington, DC.

                           Table I.1--Summary of Regulatory Alternatives for Analysis
----------------------------------------------------------------------------------------------------------------
                                        Baseline Case: retain     Alt. 1: Remove Sec.      Alt. 2: Expand Sec.
                                           Sec.   271.3(c)              271.3(c)                 271.3(c)
----------------------------------------------------------------------------------------------------------------
Affected Workers.....................  Railroad employees and   Railroad employees only  Railroad employees and
                                        operationally                                     safety significant
                                        significant                                       contractors.
                                        contractors.
----------------------------------------------------------------------------------------------------------------

3. Methodology
    This analysis employs benefit-cost analysis to evaluate more and 
less stringent regulatory alternatives. The baseline case is not 
evaluated because it presents the expected steady state of the economy 
without additional regulatory action. The analysis presents each case 
in monetary values to facilitate comparison. The value of the variables 
included are based on industry research, subject matter expertise, and 
a list of stated assumptions listed below.
    Alternative 1 is narrower than the baseline case and is expected to 
produce cost savings, while Alternative 2 is broader than the baseline 
case and is expected to increase costs.\28\ To calculate the net cost 
savings of Alternative 1, which would drop the requirement for 
railroads to consider operationally significant contractors as 
directly-affected employees for purposes of the RRP rule by removing 
Sec.  271.3(c), the analysis estimates the expected costs of compliance 
with that provision and assumes the entirety of those costs would be 
removed. To calculate the net costs of Alternative 2, which would 
expand Sec.  271.3(c) beyond operationally significant contractors in 
the baseline case to include all safety significant contractors, the 
analysis estimates the total compliance costs of the broader 
alternative and then removes the estimated compliance costs of the 
baseline case (i.e., the amount estimated for Alternative 1). The 
number of contractors impacted is the only variable that changes in the 
calculations.\29\
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    \28\ This analysis does not attempt to quantify a monetary value 
for the costs or savings associated with each alternative's 
potential impact on safety risk (e.g., the marginal impact of 
including additional contractors in the RRP consultation pool) 
because the amount of uncertainty exceeds the confidence FRA has 
that it could correctly estimate these figures. Rather, the analysis 
focuses exclusively on the anticipated administrative costs and 
savings associated with the proposed alternatives because the data 
needed to evaluate them are more readily available. For a 
qualitative discussion of the safety benefits associated with 
retaining Sec.  271.3(c) in the RRP rule, please see the background 
discussion for this proposed rulemaking.
    \29\ Baseline = (Railroad Employees + Operationally Significant 
Contractors). Alternative 1 = Baseline--Operationally Significant 
Contractors = Railroad Employees only. Alternative 2 = Baseline + 
Safety Significant Contractors.
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    The scope of this analysis covers Class I freight railroads and 
potential ISP railroads.\30\ It applies a ten-year period of analysis 
that is long enough to capture ongoing costs without unduly predicting 
longer term impacts, which are liable to shift as the industry evolves. 
The first year of the analysis term is assumed to be the year of the 
effective date of a final rule arising from this NPRM. All Class I 
railroads have already consulted with directly affected employees and 
submitted their initial RRP plans, which FRA has reviewed and approved. 
However, FRA's response to AAR's petition notified these railroads that 
it would exercise enforcement discretion regarding Sec.  271.3(c) as it 
worked on this rulemaking. Therefore, this analysis assumes that upon 
promulgation of this rulemaking, Class I railroads would perform an 
initial consultation with the applicable contractors. Because it is 
currently unclear whether Class I railroads hire operationally 
significant contractors to whom Sec.  271.3(c) would apply, this 
assumption may result in exaggerated savings and costs for Alternatives 
1 and 2, respectively, which FRA finds preferable to underestimating 
the impact. FRA welcomes comments and data on whether railroads have 
treated any contractors as directly affected employees in their RRP 
plan development and the extent to which railroads contract out their 
operations.
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    \30\ FRA uses a statistical process guided by expert review to 
determine which railroads demonstrate inadequate safety performance. 
Essentially, FRA compares a railroad to its peers and evaluates its 
three-year accident/incident history, and operational 
characteristics to see if its performance is significantly different 
than comparable railroads.
---------------------------------------------------------------------------

    Over the course of the analysis' time horizon, FRA expects the 
total number of ISP railroads will increase, starting with 10 in the 
first year and adding 5 each year thereafter. FRA subject matter 
experts expect the number of ISP railroads will plateau as safety 
operations are improved, as the poorest performing railroads correct 
their practices in the initial years of the program, and risk reduction 
planning becomes more engrained in railroad culture at large.\31\ The 
number of ISP railroads may decline following the ten-year analysis 
term for these same reasons, but such a scenario is not included in the 
scope of this analysis. FRA anticipates that as the industry realizes 
the benefits of the RRP process, more railroads will engage in risk 
reduction planning voluntarily (as permitted by Sec.  271.15), which is 
another reason for not extending the analysis of the rule's impact 
beyond ten years.
---------------------------------------------------------------------------

    \31\ Under the RRP final rule, an ISP railroad may petition FRA 
to discontinue compliance after five years. 49 CFR 271.13(g).
---------------------------------------------------------------------------

    The Class I freight railroads' costs are front-loaded in the first 
year of the rule because FRA's analysis assumes they will consult with 
operationally significant contractors and amend their RRP plans within 
that year to ensure Sec.  271.3(c) compliance (unlike a Class II or 
Class III freight railroad, which will only submit an RRP plan if FRA 
determines that it demonstrates ISP). The analysis assumes the number 
of Class I freight railroads (currently 7) will not change over the 
ten-year time horizon.\32\
---------------------------------------------------------------------------

    \32\ FRA is aware of potential mergers within the Class I 
freight railroad industry. However, this analysis assumes the number 
of Class I railroads will remain unchanged over the ten-year time 
horizon of the proposed rulemaking. Notably, even in the case of a 
merger, FRA assumes the number of Class I railroad employees would 
be expected to be unaffected by the merger.
---------------------------------------------------------------------------

    This analysis does not separate the impacts by country among the 
Class I or ISP freight railroads. OMB Circular A-4 instructs that 
regulatory impact analyses should focus on the impacts on U.S. 
residents; however, consistent with FRA practice, the impacts of the 
rule associated with the two Canada-based Class I freight railroads, 
Canadian National and Canadian Pacific (as well as any international 
Class II or III freight railroads under FRA jurisdiction), are included 
in this analysis because they operate extensively in the U.S. and the 
process of filtering out the relevant country-specific impacts would be 
prohibitively extensive.

[[Page 54943]]

4. Baseline
    In most economic and regulatory impact analyses, the ``no action 
alternative'' is an important case to consider and contrast with the 
proposed rulemaking. In the case of this proposed rulemaking, which is 
a follow-up to the RRP final rule, the ``no action'' baseline is the 
expected course if a final rule arises from this proposed rulemaking. 
Because FRA believes the RRP rule should retain Sec.  271.3(c) to 
address railroads with operationally significant contractors, this NPRM 
proposes no changes to the RRP final rule as it was published on 
February 18, 2020. Rather, this rulemaking is intended to solicit and 
receive feedback on FRA's position that Sec.  271.3(c) should be 
retained. Therefore, the baseline is assumed to be the current state of 
the industry under the RRP final rule as promulgated. FRA measures the 
impact of the alternatives relative to this base case.
5. Scope
    The sections of the RRP rule that apply to the operationally 
significant contractors under Sec.  271.3(c) include the following:
     Section 271.207--Consultation requirements, which requires 
a railroad to ``consult with, employ good faith, and use its best 
efforts to reach agreement with'' all directly affected employees;
     Section 271.303(a)(1)--Amendments, which requires a 
railroad to follow the process, described in its RRP plan pursuant to 
Sec.  271.209, for consulting with its directly affected employees and 
submitting a consultation statement to FRA for substantive amendments 
to its RRP plan.
     Section 271.113--Involvement of railroad employees, which 
requires a railroad to involve its directly affected employees in the 
establishment and implementation of the RRP. Section 271.221--
Involvement of railroad employees process requires an RRP plan to 
describe the railroad's processes for involving railroad employees in 
the establishment and implementation of an RRP under Sec.  271.113, and 
repeats the Sec.  271.3(c) requirement that if a railroad contractors 
out significant portions of its operations, the contractor and the 
contractor's employees performing the railroad's operations shall be 
considered directly affected employees for the purposes of this 
section.
6. Calculations
    The following section-by-section calculation formulas are applied 
to each of the two alternatives presented, which include either 
operationally significant contractors or safety significant 
contractors. The calculations in this analysis are applied to Class I 
and ISP freight railroads separately. The values of the variables for 
these two types of railroads differ and are displayed in the 
Assumptions list of this analysis. For clarity, the calculations below 
are presented in simplified form. Furthermore, the calculations apply 
to each year of the analysis, with the values of the variables changing 
each year according to the assumptions listed below.
Section 271.207--Consultation Requirements
    Initial Consultation:

(Number of RRs Conducting RRP Plan Consultations * Administrative Time 
Spent on Consultation * Administrative Wage Rate) + (Average Number of 
Contractors * Contractor Time Spent on Consultation * Contractor Wage 
Rate)

    Consultation Revision Tasked by FRA:

(Number of RRs Tasked w/ Revision * Administrative Time Spent for 
Revision * Administrative Wage Rate) + (Average Number of Contractors * 
Contractor Time Spent Consulting for Revisions * Contractor Wage Rate)
Section 271.303(a)(1)--Amendments
(Number of RRs Amending RRP Plans * Administrative Time for Update 
Process * Administrative Wage Rate) + (Total Contractors Involved * 
Time Spent per Contractor on Update Process * Contractor Wage Rate)
Section 271.113--Involvement of Railroad Employees
(Number of RRs Conducting Ongoing Involvement * Administrative Time 
Spent * Administrative Wage Rate) + (Average Number of Contractors * 
Average Contractor Time Spent on Ongoing Involvement * Contractor Wage 
Rate)
7. Analysis of Alternatives
Alternative 1: Remove the Operationally Significant Contractor 
Engagement Component
    The first case analyzes the primary alternative of removing Sec.  
271.3(c). This case is the less stringent alternative. It evaluates the 
potential savings that would accrue to Class I and ISP freight 
railroads by not having to comply with the existing requirement to 
include operationally significant contractors as directly affected 
employees for purposes of RRP plan consultation and ongoing RRP 
involvement. However, the resultant benefits must be analyzed alongside 
FRA's position that the inclusion of such operationally significant 
contractors as directly affected employees, both in terms of added 
safety and in regulatory clarity by maintaining continuity between both 
the RRP (for freight railroads) and SSP (for passenger railroads) 
rules, is more valuable.
    If Alternative 1 were adopted, the railroads could experience 
marginally lower costs by saving compliance costs for including 
operationally significant contractors as directly affected employees in 
their RRP process. Over the 10-year analysis, these benefits are 
estimated to be $4,069,640 and are displayed in Tables 1.1 and 1.2, 
along with totals at both 3 and 7 percent discount rates. Table 1.1 
presents the anticipated savings arising from not incurring costs from 
including operationally significant contractors as directly affected 
employees in railroad RRP processes. Table 1.2 delineates the year-by-
year benefits anticipated.

                                                 Table 1.1--Total Savings From Removing Section 271.3(c)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consultation     Resubmission
                                            Initial      revision tasked    due to RRP        Ongoing                       Discounted,     Discounted,
                                         consultation        by FRA          revision       involvement        Total            3%              7%
                                           (271.207)     (271.207, pt 2)     (271.209)       (271.213)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class I RRs...........................      $1,027,384          $290,110        $222,285      $2,034,044      $3,573,823      $3,203,815      $2,816,054
ISP RRs...............................         187,898            14,505          46,033         247,382         495,817         415,735         334,952
                                       -----------------------------------------------------------------------------------------------------------------
                                        ..............  ................  ..............  ..............       4,069,640       3,619,549       3,151,006
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 54944]]

                                                                 Table 1.2--Year-by-Year Savings from Removing Section 271.3(c)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                          Total cost by year
                                                                    ----------------------------------------------------------------------------------------------------------------------------
                                                                        Year 1      Year 2     Year 3     Year 4     Year 5     Year 6     Year 7     Year 8     Year 9    Year 10      Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Class I RRs........................................................   $1,543,127   $225,633   $225,633   $225,633   $225,633   $225,633   $225,633   $225,633   $225,633   $225,633   $3,573,823
ISP RRs............................................................       45,829     31,942     36,457     40,971     45,485     49,999     54,513     59,027     63,541     68,055      495,817
                                                                    ----------------------------------------------------------------------------------------------------------------------------
    Yearly Total...................................................    1,588,955    257,575    262,089    266,604    271,118    275,632    280,146    284,660    289,174    293,688    4,069,640
Discounted, 3%.....................................................    1,542,675    242,789    239,849    236,874    233,868    230,837    227,784    224,713    221,628    218,531    3,619,549
Discounted, 7%.....................................................    1,485,005    224,976    213,943    203,391    193,303    183,665    174,461    165,675    157,291    149,296    3,151,006
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Alternative 2: Expand Sec.  271.3(c) To Include Safety Significant 
Contractors
    The second alternative presents a scenario in which Class I and ISP 
freight railroads must expand the universe of contractors that they 
consider directly affected employees for RRP purposes (i.e., RRP plan 
consultation and ongoing employee involvement) to include all safety 
significant contractors identified in their RRP plans under Sec.  
271.101(d). This case is the more stringent alternative. FRA's proposed 
position is that Sec.  271.3(c) should remain tailored to apply only to 
those contractors who perform operationally significant work for the 
railroads. Based on the information available, FRA has determined that 
this narrowed scope of operationally significant contractors 
accomplishes the intended goal of the RRP rule without unduly burdening 
the industry. Furthermore, expanding Sec.  271.3(c) would make the RRP 
rule inconsistent with the SSP rule, and FRA has no data indicating 
freight and passenger railroads should be subject to different 
contractor requirements. However, it could be the case that requiring 
railroads to include more contractors as directly affected employees 
could lead to better input in their RRPs, with corresponding safety and 
operational benefits. While it is conceivable there could be marginal 
safety benefits from the addition of more information from the expanded 
universe of contractors, FRA lacks information to define or to quantify 
such benefits at this time. Furthermore, based on subject matter 
experience, FRA expects this approach would cost more than it would 
provide in safety benefits.
    If the baseline universe of operationally significant contractors 
were expanded to include other safety significant contractors, the 
additional consultations and involvement to integrate these additional 
workers into the railroads' RRP processes would increase the cost of 
the rule. There would also be marginally higher administrative costs to 
accommodate the expansion of the number of contractors included, but 
FRA did not attempt to estimate those costs here because it believes 
they would be relatively minimal. It is also possible that an expansion 
of the application of Sec.  271.3(c), and thereby the RRP consultation 
and involvement requirements, to more contractors would eventually 
impact contract costs for these workers who must now engage in 
additional tasks. FRA did not include estimates for these impacts 
because it lacked data to make a confident estimate. The total cost of 
Alternative 2 over the ten-year analysis is estimated to be $1,887,473 
and the details are displayed in Tables 2.1 and 2.2, along with totals 
at both 3 and 7 percent discount rates.

                                                 Table 2.1--Total Costs From Expanding Section 271.3(c)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consultation     Resubmission
                                            Initial      revision tasked    due to RRP        Ongoing                       Discounted,     Discounted,
                                         consultation        by FRA          Revision       involvement        Total            3%              7%
                                           (271.207)     (271.207, pt 2)     (271.209)       (271.213)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class I RRs...........................        $501,694          $143,341         $95,561      $1,003,388      $1,743,983      $1,563,673      $1,374,692
ISP RRs...............................          51,098            10,252          21,750          60,389         143,490         120,432          97,160
                                       -----------------------------------------------------------------------------------------------------------------
                                        ..............  ................  ..............  ..............       1,887,473       1,684,105       1,471,852
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                              Table 2.2--Year-by-Year Costs From Expanding Section 271.3(c)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Total cost by year
                              --------------------------------------------------------------------------------------------------------------------------
                                 Year 1     Year 2     Year 3     Year 4     Year 5     Year 6     Year 7     Year 8     Year 9    Year 10      Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class I RRs..................   $754,930   $109,895   $109,895   $109,895   $109,895   $109,895   $109,895   $109,895   $109,895   $109,895   $1,743,983
ISP RRs......................     13,682      9,368     10,632     11,896     13,159     14,423     15,687     16,950     18,214     19,478      143,490
                              --------------------------------------------------------------------------------------------------------------------------
    Yearly Total.............    768,612    119,263    120,527    121,791    123,054    124,318    125,582    126,845    128,109    129,373    1,887,473
Discounted, 3%...............    746,225    112,417    110,299    108,209    106,148    104,114    102,109    100,133     98,185     96,265    1,684,105
Discounted, 7%...............    718,329    104,169     98,386     92,913     87,736     82,838     78,206     73,825     69,683     65,767    1,471,852
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Results of Alternatives Analysis
    The analysis of the two alternatives above demonstrates that there 
would be measurable economic impacts to selecting either path. If upon 
receiving public input on this proposed rulemaking FRA decides to 
remove Sec.  271.3(c) from the final rule in line with Alternative 1, 
there would be an anticipated cost savings to the regulated entities of 
$4,069,640 ($3,619,549, discounted at 3 percent; $3,151,006, discounted 
at 7 percent). If FRA decides to expand Sec.  271.3(c) in line with 
Alternative 2, the result would be an anticipated total cost increase 
for the regulated entities of $1,887,473 ($1,684,105, discounted at 3 
percent; $1,471,852, discounted at 7 percent). FRA does not have data 
to quantify monetarily the safety impacts of either removing or 
expanding Sec.  271.3(c). Nevertheless, FRA believes retaining Sec.  
271.3(c) in the RRP rule is consistent with the systemic approach of a 
safety risk management program, for reasons

[[Page 54945]]

explained in the background section of this proposed rulemaking. FRA 
welcomes data and comment on the impacts of eliminating or expanding 
the applicability of Sec.  271.3(c) to inform the final rule.

----------------------------------------------------------------------------------------------------------------
              Regulatory Path                               Action                     Cost          Benefits
----------------------------------------------------------------------------------------------------------------
Baseline...................................  Maintain Sec.   271.3(c) as is.....               0               0
Alternative 1..............................  Remove Sec.   271.3(c).............             N/A     $ 4,069,640
Alternative 2..............................  Expand contractor pool subject to       $ 1,887,473             N/A
                                              Sec.   271.3(c).
----------------------------------------------------------------------------------------------------------------

9. Assumptions and Inputs
    These assumptions are based on published industry and economic 
data, FRA data, and FRA subject matter expertise. These assumptions 
include definitions for certain variables that were not included in the 
initial RRP rule. Since the publication of the RRP rule, FRA has 
reviewed submitted Class I freight railroad plans and gathered more 
information and experience on the RRP process and anticipated resources 
needed to comply. Accordingly, FRA has updated the calculations and 
assumptions to reflect this improved understanding in evaluating the 
regulatory alternatives above. FRA requests comment on the assumptions 
and welcomes any data that may contribute to better understanding how 
the retention, exclusion, or expansion of Sec.  271.3(c) might impact 
railroads.
Railroads
    There are 7 Class I freight railroads. There are 784 total 
railroads on the general system.\33\ There will be 10 ISP freight 
railroads in Year 1, and an additional 5 per year in Years 2-10. Once 
designated as ISP, FRA assumes railroads will not cease to be 
designated as such during the ten-year analysis time horizon.\34\ There 
are 135,000 Class I railroad employees. The average number of employees 
on an ISP railroad is 125. The number of employees is assumed to remain 
constant over the ten-year analysis term. One Class I railroad will 
amend its RRP each year. Ten percent of ISP railroads will amend their 
RRPs each year.
---------------------------------------------------------------------------

    \33\ Based on 2021 FRA data.
    \34\ Under the RRP final rule, an ISP railroad may petition FRA 
to discontinue compliance after five years. Section 271.13(g). FRA 
is assuming ISP railroads would continue to be designated as such 
for ten years to avoid underestimating costs in this analysis, not 
to imply that all ISP railroads will be required to comply for ten 
years.
---------------------------------------------------------------------------

Contractors
    Contractors who are operationally significant account for 10 
percent of a Class I railroad's total workforce. Contractors who are 
safety significant account for 15 percent of a Class I railroad's total 
workforce. Contractors who are operationally significant account for 20 
percent of an ISP railroad's total workforce. Contractors who are 
safety significant account for 30 percent of an ISP railroad's total 
workforce. For the purpose of this analysis, operationally significant 
contractors are considered to be fully subsumed in the safety 
significant contractor pool.
Wages
    Overhead and fringe costs impose a 75 percent multiplier on average 
worker wages, which are reflected in the following wage rates. The 
fully burdened wage rate for professional and administrative railroad 
staff is $77.91.\35\ The fully burdened wage rate for railroad 
contractors is equivalent to average railroad employees, which is 
$59.46. Average wage rates are equivalent between Class I and ISP 
railroads. Wages are not adjusted for inflation for the ten-year time 
horizon of the rule.
---------------------------------------------------------------------------

    \35\ The wage data in this analysis are based on railroad wage 
data provided by the Surface Transportation Board for 2021 in its 
Quarterly Wage A&B Data, specifically Group 200 to represent 
professional and administrative staff, and Group 300 to represent a 
proxy for railroad contractors similar in duties to maintenance of 
way and structures employees (https://www.stb.gov/reports-data/economic-data/quarterly-wage-ab-data/).
---------------------------------------------------------------------------

Time
    Administrative time spent per Class I freight railroad for initial 
consultation is 44 hours. Administrative time spent per Class I freight 
railroad for consultation revision tasked by FRA is 22 hours, half the 
time needed for the initial consultation. Administrative time spent per 
ISP railroad for initial consultation is 20 hours. Administrative time 
spent per ISP railroad for consultation revision tasked by FRA is 10 
hours. Contractor time spent for initial consultation (applies to Class 
I and ISP RRs) is 1.25 hours per contractor. Contractor time spent for 
consultation revision tasked by FRA is the same as the initial 
consultation and is 1.25 hours per applicable contractor. This 
equivalent contractor time assumes that a component of the FRA-tasked 
update is insufficient consultation with the employees/contractors that 
needs to be completed, applicable to Class I and ISP railroads. 
Administrative time spent by an ISP railroad making substantial changes 
to its RRP in compliance with the rule is 15 hours. Administrative time 
spent by a Class I railroad making substantial changes to its RRP to 
comply with the rule is 40 hours. Contractor time spent to update 
materials for RRP revision is 10 minutes per contractor. This economic 
analysis assumes that railroads will only revise portions of their RRP 
and therefore the average amount of time spent by each contractor will 
not be greater than for full consultation on the initial RRP. 
Administrative time spent per railroad for ongoing involvement (Class I 
and ISP railroads) is 5 hours. Contractor time spent per railroad for 
ongoing involvement is 15 minutes per contractor on average.
10. Discount Rates
    Discount rates of 3 and 7 percent are presented to meet the 
guidelines set forth in OMB Circular A-4. Discount rates are intended 
to reflect the value of money over time in order to reveal opportunity 
cost. The 7 percent discount rate is an estimate of the average rate of 
return to private capital in the U.S. For regulatory changes that do 
not primarily impact the allocation of capital, but rather impact 
consumption, the lower discount rate of 3 percent is a historical 
approximation of that impact.
    Because this analysis does not attempt to quantify the safety 
impacts of either alternative, it skews the results of the discounting 
because it lacks the relative comparison to how net impacts would be 
experienced over time.

B. Regulatory Flexibility Act and Executive Order 13272

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) and 
Executive Order 13272 (67 FR 53461, Aug. 16, 2002) require agency 
review of proposed and final rules to assess their impacts on small 
entities. An agency must prepare an Initial Regulatory Flexibility 
Analysis (IRFA) unless it determines and certifies that a rule, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities. FRA has not determined whether 
this proposed rulemaking would have a significant economic impact on a 
substantial number of small

[[Page 54946]]

entities, and has therefore prepared this IRFA. FRA invites all 
interested parties to submit data and information regarding the 
potential economic impact on small entities that would result from the 
adoption of the proposals in this NPRM. FRA seeks comment on the 
economic impacts of this proposed rulemaking on small entities.
1. Reasons for Considering Agency Action
    This action provides notice and solicits comment on FRA's position 
that the RRP final rule should retain Sec.  271.3(c) and is responsive 
to petitions of reconsideration received by FRA.
2. A Succinct Statement of the Objectives of, and the Legal Basis for, 
the Proposed Rule
    FRA is proposing to keep part 271 in effect as published, but is 
using this rulemaking to gather additional public response to the 
proposal of retaining Sec.  271.3(c). FRA initiated the RRP rulemaking 
in response to a statutory mandate set forth in section 103 of RSIA 
that directed FRA develop comprehensive, system-oriented, risk 
reduction planning requirements for Class I railroads, passenger 
railroads, and ISP railroads. This proposed rulemaking addresses issues 
raised by petitions for reconsideration that FRA received on the RRP 
final rule.
3. A Description of, and Where Feasible, an Estimate of the Number of 
Small Entities to Which the Proposed Rule Would Apply
    The Regulatory Flexibility Act of 1980 requires a review of 
proposed and final rules to assess their impact on small entities, 
unless the Secretary certifies that the rule would not have a 
significant economic impact on a substantial number of small entities. 
``Small entity'' is defined in 5 U.S.C. 601 as a small business concern 
that is independently owned and operated, and is not dominant in its 
field of operation. The U.S. Small Business Administration (SBA) has 
authority to regulate issues related to small businesses, and 
stipulates in its size standards that a ``small entity'' in the 
railroad industry is a for profit ``line-haul railroad'' that has fewer 
than 1,500 employees, a ``short line railroad'' with fewer than 500 
employees, or a ``commuter rail system'' with annual receipts of less 
than seven million dollars. See ``Size Eligibility Provisions and 
Standards,'' 13 CFR part 121, subpart A.
    Federal agencies may adopt their own size standards for small 
entities in consultation with SBA and in conjunction with public 
comment. Pursuant to that authority FRA has published a final statement 
of agency policy that formally establishes ``small entities'' or 
``small businesses'' as railroads, contractors, and hazardous materials 
shippers that meet the revenue requirements of a Class III railroad as 
set forth in 49 CFR 1201.1-1, which is $20 million or less in 
inflation-adjusted annual revenues, and commuter railroads or small 
governmental jurisdictions that serve populations of 50,000 or less. 
See 68 FR 24891 (May 9, 2003) (codified at appendix C to 49 CFR part 
209).
    The $20 million limit is based on the Surface Transportation 
Board's revenue threshold for a Class III railroad carrier. Railroad 
revenue is adjusted for inflation by applying a revenue deflator 
formula in accordance with 49 CFR 1201.1-1. FRA is using this 
definition for the proposed rulemaking. For other entities, the same 
dollar limit in revenues governs whether a railroad, contractor, or 
other respondent is a small entity.
    This proposed rulemaking would be applicable to ISP railroads, who 
must comply with the RRP rule. The only ISP railroads that may be 
considered a small entity would be those that meet the above 
definition. FRA estimates that the maximum number of ISP railroads 
would be 55, although the average number of ISP railroads over the next 
ten years is estimated to be 33.\36\ It is unclear at this point how 
many of these ISP railroads may meet the definition of ``small 
entity''; however, as an upper bound, even if all of the ISP railroads 
that are anticipated to be identified over the ten-year horizon of this 
analysis are small entities, they would only comprise 7 percent of the 
small entities. This holds true for any given year (ranging from a 
minimum of 1.3 percent in Year 1 to a maximum of 7 percent in Year 10 
and beyond) and the ten-year average (4.2 percent).
---------------------------------------------------------------------------

    \36\ There are expected to be 10 ISP railroads in Year 1, 
followed by 5 additional ISP railroads each year after, which will 
accumulate to, and plateau at, 55 in Year 10 and thereafter. 
Averaged across the ten-year time horizon, the result is 32.5 per 
year, rounded up to 33.
---------------------------------------------------------------------------

4. A Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Proposed Rule, Including an Estimate of 
the Class of Small Entities That Would Be Subject to the Requirements 
and the Type of Professional Skill Necessary for Preparation of the 
Report or Record
    Since this rulemaking is not proposing to make any revisions to the 
existing regulation, small railroads are not required to take any 
action for reporting, recordkeeping, or other compliance matters. 
Therefore, this proposed rulemaking would not have any economic impact 
on small entities.
5. Identification, to the Extent Practicable, of All Relevant Federal 
Rules That May Duplicate, Overlap, or Conflict With the Proposed Rule
    FRA is not aware of any relevant Federal rule that duplicates, 
overlaps with, or conflicts with the proposed regulations in this NPRM.
    FRA invites all interested parties to submit comments, data, and 
information demonstrating the potential economic impact on small 
entities that would result from the proposed rulemaking or any of the 
alternatives. FRA particularly encourages small entities that could 
potentially be impacted by the proposed rulemaking and any alternatives 
to participate in the public comment process. FRA will consider all 
comments received during the public comment period for this NPRM when 
making a final determination of the NPRM's economic impact on small 
entities.
6. A Description of Significant Alternatives to the Proposed Rule
    This NPRM does not propose to make any rule changes but opens the 
opportunity to receive data and comment about a specific section of the 
previously published RRP final rule, Sec.  271.3(c). There are two 
significant alternatives to the rule as proposed. The proposed 
rulemaking states that FRA may decide to amend Sec.  271.3(c) in 
response to the data and comments received during the public comment 
period.
    One significant alternative would be the removal of Sec.  271.3(c), 
which would eliminate the requirement that railroads consider certain 
contractors, specifically their operationally significant contractors, 
as directly affected employees in complying with the consultation and 
employee involvement requirements of the RRP rule. This alternative is 
discussed in this NRPM and would decrease the administrative burden. 
Small railroads would receive cost savings, however marginal, from this 
change.
    A second alternative would move in the opposite direction, 
expanding the applicable pool of contractors subject to Sec.  271.3(c) 
to include safety significant contractors a railroad identifies in its 
RRP plan pursuant to Sec.  271.101(d). While this could impact 
additional small entities, that impact is expected to be marginal.
    FRA anticipates that neither of the significant alternatives to 
this proposed

[[Page 54947]]

regulation that have been outlined above would disproportionately place 
any small railroads that are small entities at a significant 
competitive disadvantage.

C. Paperwork Reduction Act

    There are no new collection of information requirements contained 
in this proposed rulemaking and, in accordance with the Paperwork 
Reduction Act of 1995, 44 U.S.C. 3501 et seq., an information 
collection submission to OMB is not required. The recordkeeping and 
reporting requirements already contained in the RRP final rule (see 85 
FR 9262) were approved by OMB on June 5, 2020. The information 
collection requirements thereby became effective when they were 
approved by OMB. The OMB approval number is OMB No. 2130-0610, and OMB 
approval expires on June 30, 2023.

D. Environmental Impact

    Consistent with the National Environmental Policy Act \37\ (NEPA), 
the Council on Environmental Quality's NEPA implementing 
regulations,\38\ and FRA's NEPA implementing regulations,\39\ FRA has 
evaluated this proposed rulemaking 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.\40\ Specifically, FRA has 
determined that this proposed rulemaking 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.''
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    \37\ 42 U.S.C. 4321 et seq.
    \38\ 40 CFR parts 1500 through 1508.
    \39\ 23 CFR part 771.
    \40\ See 40 CFR 1508.4.
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    The purpose of this rulemaking is to solicit information on whether 
FRA should retain a provision in the RRP final rule clarifying that 
contractors who perform significant portions of a railroad's operations 
are considered the railroad's directly affected employees for purposes 
of the rule. This proposed rulemaking would 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.\41\ FRA has concluded that no such unusual 
circumstances exist with respect to this proposed rulemaking and the 
proposal meets the requirements for categorical exclusion under 23 CFR 
771.116(c)(15).
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    \41\ 23 CFR 771.116(b).
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    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.\42\ FRA has also 
determined that this proposed rulemaking does not approve a project 
resulting in a use of a resource protected by Section 4(f).\43\
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    \42\ See 54 U.S.C. 306108.
    \43\ See Department of Transportation Act of 1966, as amended 
(Pub. L. 89-670, 80 Stat. 931); 49 U.S.C. 303.
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E. Executive Order 12898 (Environmental Justice)

    Executive Order 12898, Federal Actions to Address Environmental 
Justice in Minority Populations and Low-Income Populations, and DOT 
Order 5610.2C \44\ require 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. The DOT Order instructs DOT 
agencies to address compliance with Executive Order 12898 and 
requirements within the DOT Order in rulemaking activities, as 
appropriate. FRA has evaluated this proposed rulemaking under Executive 
Order 12898 and the DOT Order and has determined it would not cause 
disproportionately high and adverse human health and environmental 
effects on minority populations or low-income populations.
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    \44\ 91 FR 27534 (May 10, 2012).
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F. Federalism Implications

    Executive Order 13132, ``Federalism,'' \45\ 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 Executive Order 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 Executive Order 13132, an 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.
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    \45\ 64 FR 43255 (Aug. 10, 1999).
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    FRA has analyzed the proposed rulemaking under the principles and 
criteria contained in Executive Order 13132. This proposed rulemaking 
would not 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. In addition, FRA has determined that the proposed 
rulemaking would not impose substantial direct compliance costs on 
State and local governments. Therefore, the consultation and funding 
requirements of Executive Order 13132 would not apply. However, this 
proposed rulemaking could have preemptive effect by operation of law 
under certain provisions of the Federal railroad safety statutes, 
specifically the former Federal Railroad Safety Act of 1970, repealed 
and recodified at 49 U.S.C. 20106. Section 20106 provides that States 
may not adopt or continue in effect any law, regulation, or order 
related to railroad safety or security that covers the subject matter 
of a regulation prescribed or order issued by the Secretary of 
Transportation (with respect to railroad safety matters) or the 
Secretary of Homeland Security (with respect to railroad security 
matters), except when the State law, regulation, or order qualifies 
under the ``essentially local safety or security hazard'' exception to 
section 20106.
    In sum, FRA has analyzed this proposed rulemaking under the 
principles and criteria in Executive Order 13132. As explained above, 
FRA has determined this proposed

[[Page 54948]]

rulemaking has no federalism implications, other than the possible 
preemption of State laws under Federal railroad safety statutes, 
specifically 49 U.S.C. 20106. Therefore, preparation of a federalism 
summary impact statement for this proposed rulemaking is not required.

G. Unfunded Mandates Reform Act of 1995

    Pursuant to section 201 of the Unfunded Mandates Reform Act of 
1995,\46\ each Federal agency shall, unless otherwise prohibited by 
law, assess the effects of Federal regulatory actions on State, 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 Act \47\ further requires that before 
promulgating any general notice of proposed rulemaking that is likely 
to result in the promulgation of any rule that includes any Federal 
mandate that may result in 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 one 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 proposed rulemaking would not result in 
such an expenditure, and thus preparation of such a statement is not 
required.
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    \46\ Public Law 104-4, 2 U.S.C. 1531.
    \47\ 2 U.S.C. 1532.
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H. Energy Impact

    Executive Order 13211 requires Federal agencies to prepare a 
Statement of Energy Effects for any ``significant energy action.'' \48\ 
FRA has evaluated this proposed rulemaking in accordance with Executive 
Order 13211 and determined that this regulatory action is not a 
``significant energy action'' within the meaning of the Executive 
Order.
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    \48\ 66 FR 28355 (May 22, 2001).
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I. Tribal Consultation

    FRA has evaluated this proposed rulemaking under the principles and 
criteria in Executive Order 13175, Consultation and Coordination with 
Indian Tribal Governments, dated November 6, 2000. This proposed 
rulemaking would not have a substantial direct effect on one or more 
Indian tribes, would not impose substantial direct compliance costs on 
Indian tribal governments, and would not preempt tribal laws. 
Therefore, the funding and consultation requirements of Executive Order 
13175 do not apply, and a tribal summary impact statement is not 
required.

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.transportation.gov/privacy. To facilitate comment tracking and 
response, FRA encourages commenters to provide their names, or the name 
of their organization; although submission of names is optional. 
Whether or not commenters identify themselves, FRA will fully consider 
all timely comments. If you wish to provide comments containing 
proprietary or confidential information, please contact FRA for 
alternate submission instructions.

    Issued in Washington, DC.
Amitabha Bose,
Administrator.
[FR Doc. 2022-19432 Filed 9-7-22; 8:45 am]
BILLING CODE 4910-06-P