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Rule2024-30030

Freight Car Safety Standards Implementing the Infrastructure Investment and Jobs Act

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Published

December 19, 2024

Effective

January 21, 2025

Issuing agencies

Transportation DepartmentFederal Railroad Administration

Abstract

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.

Full Text

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<title>Federal Register, Volume 89 Issue 244 (Thursday, December 19, 2024)</title>
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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 [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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 <a href="https://www.regulations.gov">https://www.regulations.gov</a> 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: <a href="/cdn-cgi/l/email-protection#adcec5c8cec683c6ccc0edc9c2d983cac2db">[email&#160;protected]</a>; or
Michael Masci, Senior Attorney Adviser, Office of the Chief Counsel,
telephone: (202) 302-7117, email: <a href="/cdn-cgi/l/email-protection#14797d777c7571783a797567777d54707b603a737b62">[email&#160;protected]</a>.

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)
----------------------------------------------------------------------------------------------------------------
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
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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.
---------------------------------------------------------------------------

\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.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

\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.'' <a href="https://www.transit.dot.gov/funding/procurement/frequently-asked-questions-regarding-section-7613-national-defense">https://www.transit.dot.gov/funding/procurement/frequently-asked-questions-regarding-section-7613-national-defense</a>.
\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, <a href="https://www.trade.gov/nme-countries-list">https://www.trade.gov/nme-countries-list</a> (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 (<a href="http://ustr.gov">ustr.gov</a>)).
---------------------------------------------------------------------------

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), <a href="https://ustr.gov/issue-areas/intellectual-property/special-301/2023-special-301-review">https://ustr.gov/issue-areas/intellectual-property/special-301/2023-special-301-review</a> (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. <a href="https://ustr.gov/sites/default/files/files/agreements/usmca/UniformROO.pdf">https://ustr.gov/sites/default/files/files/agreements/usmca/UniformROO.pdf</a>.
---------------------------------------------------------------------------

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\ <a href="https://www.trade.gov/rules-origin-substantial-transformation">https://www.trade.gov/rules-origin-substantial-transformation</a>.
---------------------------------------------------------------------------

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\ <a href="https://usitc.gov/intellectual_property/337_determinations.htm">https://usitc.gov/intellectual_property/337_determinations.htm</a>.
---------------------------------------------------------------------------

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 <a href="https://www.federalregister.gov/documents/2023/04/11/2023-07760/modernizing-regulatory-review">https://www.federalregister.gov/documents/2023/04/11/2023-07760/modernizing-regulatory-review</a>.
\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] <a href="https://www.bls.gov/oes/current/naics4_336500.htm">https://www.bls.gov/oes/current/naics4_336500.htm</a>. 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 <a href="https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/">https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/</a>.
\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 <a href="https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/">https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2023/general-schedule/</a>.
\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: <a href="/cdn-cgi/l/email-protection#8aebf8e6effefeefa4e7fff9f9e3e4edfee5e4caeee5fea4ede5fc">[email&#160;protected]</a> or telephone:
(571) 609-1285 or Ms.

[[Page 103691]]

Joanne Swafford, Information Collection Clearance Officer, at email:
<a href="/cdn-cgi/l/email-protection#c5afaaa4ababa0ebb6b2a4a3a3aab7a185a1aab1eba2aab3">[email&#160;protected]</a> 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 <a href="http://www.regulations.gov">www.regulations.gov</a>, as described in the
system of records notice, DOT/ALL-14 FDMS, accessible through
<a href="http://www.dot.gov/privacy">www.dot.gov/privacy</a>.

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 <a href="/cdn-cgi/l/email-protection#87c1d5c6d5d5d4cad7c2c7e3e8f3a9e0e8f1">[email&#160;protected]</a>. 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 <a href="https://www.pay.gov/paygov/">https://www.pay.gov/paygov/</a>.
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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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.