Rule2026-11272
Project Management Oversight
Primary source
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Published
June 4, 2026
Effective
July 6, 2026
Issuing agencies
Transportation DepartmentFederal Transit Administration
Abstract
This final rule modifies the applicability of project management oversight by raising the total cost and Federal investment thresholds to align with the statutory thresholds for Small Starts projects under FTA's Capital Investment Grant program.
Full Text
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<title>Federal Register, Volume 91 Issue 107 (Thursday, June 4, 2026)</title>
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[Federal Register Volume 91, Number 107 (Thursday, June 4, 2026)]
[Rules and Regulations]
[Pages 33648-33651]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11272]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
49 CFR Part 633
[Docket No. FTA-2025-0010]
RIN 2132-AB59
Project Management Oversight
AGENCY: Federal Transit Administration (FTA), Department of
Transportation (DOT).
ACTION: Final rule.
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SUMMARY: This final rule modifies the applicability of project
management oversight by raising the total cost and Federal investment
thresholds to align with the statutory thresholds for Small Starts
projects under FTA's Capital Investment Grant program.
DATES: This rule is effective July 6, 2026.
FOR FURTHER INFORMATION CONTACT: For program matters, contact Corey
Walker, Office of Program Management (TPM), (202) 366-0826 or
<a href="/cdn-cgi/l/email-protection#14777b66716d3a6375787f716654707b603a737b62"><span class="__cf_email__" data-cfemail="54373b26312d7a2335383f312614303b207a333b22">[email protected]</span></a>. For legal matters, contact Mark Montgomery,
Office of Chief Counsel, (202) 366-1017 or <a href="/cdn-cgi/l/email-protection#4a272b3821642725243e2d25272f38330a2e253e642d253c"><span class="__cf_email__" data-cfemail="036e6271682d6e6c6d77646c6e66717a43676c772d646c75">[email protected]</span></a>.
Office hours are from 8:30 a.m. to 5 p.m., Monday through Friday,
except Federal holidays.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
A. Statutory Authority
B. Background
C. Summary of Provisions
II. Notice of Proposed Rulemaking and Response to Comments
III. Regulatory Analyses and Notices
I. Executive Summary
This final rule amends the Project Management Oversight (PMO)
regulation at 49 CFR part 633. The rule modifies the applicability of
project management oversight by raising the total cost threshold from
$300 million to $400 million and the Federal investment threshold from
$100 to $150 million, to align with the statutory thresholds for Small
Starts projects under FTA's Capital Investment Grant (CIG) program.
This amendment reduces the number of projects subject to project
management oversight requirements and therefore reduces regulatory
burden.
A. Statutory Authority
This rulemaking is issued under the authority of 49 U.S.C. 5327,
which requires the Secretary to conduct oversight of major capital
projects and to promulgate a rule for that purpose that includes a
definition of major capital project to delineate the types of projects
governed by the rule.
B. Background
Recognizing a compelling need to strengthen the management and
oversight of major capital projects, in the Surface Transportation and
Uniform Relocation Assistance Act of 1987 (STURAA) (Pub. L. 100-17)
(April 2, 1987), Congress authorized FTA's predecessor agency, the
Urban Mass Transportation Administration (UMTA), to conduct oversight
of major capital projects and to promulgate a rule for that purpose.
The statute, now codified at 49 U.S.C. 5327, authorizes FTA to obtain
the services of project management oversight contractors (PMOCs) to
assist FTA in overseeing the expenditure of Federal financial
assistance for major capital projects. Further, the statute requires
FTA to promulgate a regulation that includes a definition of ``major
capital project'' to identify the types of projects governed by the
rule.
Accordingly, UMTA promulgated a rule for oversight of major capital
projects on September 1, 1989, at 49 CFR part 633 (54 FR 36708). At
that time, the average total cost of CIG projects was $266 million (not
adjusted for inflation). The UMTA regulation defined ``major capital
project'' as any project for the construction of a new fixed guideway
or extension of an existing fixed guideway or a project involving the
rehabilitation or modernization of an existing fixed guideway with a
total project cost of $100 million or more. The rule limited covered
projects to those receiving funds made available under sections 3, 9,
or 18 of the Urban Mass Transportation Act of 1964, as amended; 23
U.S.C. 103(e)(4); or section 14(b) of the National Capital
Transportation Amendments of 1979.
By 2011, the annual dollar value of the Federal transit capital
programs was nearly five times the level authorized under STURAA in
1987, and the number of active PMOC task orders was more than double
the number in 1987. Furthermore, FTA funded a larger number of projects
with a total cost of more than one billion dollars that presented
significant oversight challenges. On September 13, 2011, FTA published
a notice of proposed rulemaking (NPRM) (76 FR 56378) that proposed to:
(1) enable FTA to identify the necessary management capacity and
capability of a sponsor of a major capital project more clearly; (2)
spell out the many facets of project management that must be addressed
in a project management plan; (3) tailor the level of FTA oversight to
the costs, complexities, and risks of a major capital project; (4) set
forth the means and objectives of risk assessments for major capital
projects and; (5) articulate the roles and responsibilities of FTA's
PMOCs.
After the NPRM was published, however, the Moving Ahead for
Progress in the 21st Century Act (MAP-21) (Pub. L. 112-141) (July 6,
2012) expanded the scope of the project management oversight
requirements to cover major capital projects for public transportation
under any provision of Federal law. Moreover, MAP-21 shifted the
initiation of project management oversight to the project development
phase and removed the statutory requirement that recipients of
financial assistance for projects with a total cost of $1 billion
submit an annual financial plan. Given the fundamental changes to the
project management oversight requirements and scope, FTA withdrew the
NPRM (78 FR 16460) to reexamine its proposed definition of major
capital project and its policy and procedures for risk assessment.
Subsequently, the Fixing America's Surface Transportation (FAST) Act
(Pub. L. 114-94) (December 4, 2015) further amended 49 U.S.C. 5327 to
limit project management oversight to quarterly reviews, absent a
finding that more frequent oversight was necessary, and mandated that
the Secretary prescribe regulations outlining a process for at-risk
recipients to return to quarterly reviews.
FTA has become much more knowledgeable about the risks common to
major capital projects, having conducted its own risk assessments since
2005, witnessed some project sponsors' lack of management capacity and
capability and appropriate project controls for some projects, and
studied the reasons for cost and schedule changes on many major capital
projects. Consequently, on September 23, 2020, following a notice of
proposed rulemaking (84 FR 44590) and an opportunity for comment, FTA
published a final rule (85 FR 59672) that changed the applicability of
the regulation by shifting the definition of a ``major capital
project'' from one based on the type of project or total project cost
to one based on both the amount of Federal financial assistance and the
total project cost, which FTA views as a more appropriate benchmark
than the type of project or total capital cost of a project alone.
The rule applied a project cost threshold to all fixed guideway
capital projects. As a default, the rule raised the total project cost
threshold to $300
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million or more and required that the project receive $100 million or
more in Federal investment to be subject to project management
oversight. A key consideration for selecting these thresholds was that
they reflect the thresholds Congress chose to distinguish Small Starts
projects from New Starts projects in the CIG program. New Starts
projects have more steps to complete in the CIG process and tend to be
more complex, potentially requiring more oversight. Reducing the number
of lower-risk Small Starts projects undergoing project management
oversight allows FTA to focus on higher-risk New Starts projects while
yielding annual cost savings to FTA and its recipients.
Subsequently, the Infrastructure Investment and Jobs Act (Pub. L.
117-58; November 15, 2021) amended 49 U.S.C. 5309 to raise the
thresholds for Small Starts projects in the CIG program to $400 million
or more in total costs and $150 million or more in Federal investment.
Accordingly, through this rulemaking, FTA amends the definition of
``major capital project'' under 49 CFR 633.5 to align with these
statutory thresholds, consistent with the rationale in its 2020 final
rule.
C. Summary of Provisions
FTA amends the definition of ``major capital project'' in 49 CFR
633.5 by raising the total cost and Federal investment thresholds to
match those established for Small Starts projects under 49 U.S.C. 5309.
The current regulation defines the term as a project to construct,
expand, rehabilitate, or modernize a fixed guideway of $300 million or
more that receives $100 million or more in Federal financial
assistance. This final rule raises the thresholds to $400 million and
$150 million, respectively.
II. Notice of Proposed Rulemaking and Response to Comments
FTA issued an NPRM for PMO on July 1, 2025 (90 FR 28690). The
public comment period for the NPRM closed on September 2, 2025. FTA
received two comment submissions to the rulemaking docket. Commenters
included a large public transportation agency and a major transit
industry association. FTA reviewed all relevant comments and took them
into consideration when developing the final rule.
Comments: Both commenters expressed support for raising the total
cost threshold for project management oversight. The public
transportation agency articulated its general support of the proposed
modifications to raise the total cost and Federal investment thresholds
to match those established for Small Starts projects, noting that the
costs of public transportation projects has increased significantly
post-COVID 19. The commenter also expressed its support for FTA to
further increase the proposed thresholds to account for inflation and
other factors impacting project costs.
The industry association asserted its strong support for
modernizing the definition of ``major capital project'' to reduce the
number of lower-risk projects undergoing project management oversight
and allow FTA to focus its oversight on higher-risk projects. However,
the commenter urged FTA to raise the total cost threshold for project
management oversight to $500 million and to eliminate the Federal
investment threshold to bring FTA's regulation into parity with the
Federal Highway Administration's (FHWA) oversight threshold for major
capital projects. The commenter also recommended that FTA decrease the
frequency of reviews for major capital projects to an annual process,
instead of the current quarterly review process.
FTA response: FTA appreciates the support from both commenters to
amend the definition of ``major capital project'' to reduce unnecessary
oversight of lower-risk projects. With regard to the request to raise
the total project cost threshold to $500 million, FTA declines to adopt
the suggestion. FTA selected the $400 million total cost threshold and
$150 million Federal assistance threshold to reflect the thresholds
Congress chose to distinguish Small Starts projects from New Starts
projects in the CIG program. New Starts projects tend to be more
complex, potentially requiring more oversight, whereas Small Starts
projects tend to be lower-risk and generally require less oversight.
FTA also declines to remove the amount of Federal financial
assistance threshold from the definition of ``major capital project.''
The statutory thresholds that distinguish Small Starts projects from
New Starts projects include both Federal financial assistance and total
project cost components, which FTA views as a more appropriate
benchmark for oversight than total cost alone. FTA notes that it
retains its authority under 49 CFR 633.19 to determine on a case-by-
case basis that, regardless of total project costs or amount of Federal
investment, certain projects should not be subject to project
management oversight based on an assessment of risk.
Regarding the suggestion to reduce the amount of oversight from
quarterly to annual reviews, FTA declines because this would require
legislation to amend 49 U.S.C. 5327(d)(1)(B).
III. Regulatory Analyses and Notices
Executive Order (E.O.) 12866 and E.O. 13563 (Regulatory Review)
E.O. 12866 (``Regulatory Planning and Review''), as supplemented by
E.O. 13563 (``Improving Regulation and Regulatory Review''), directs
Federal agencies to assess the benefits and costs of regulations and to
select regulatory approaches that maximize net benefits when possible.
OMB has determined the final rule is not significant within the meaning
of E.O. 12866 and has not reviewed the rule under that order.
Project management oversight requirements apply to all major
capital projects. The current definition of a ``major capital project''
includes all projects involving the construction, expansion,
rehabilitation, or modernization of a fixed guideway with a total
project cost of $300 million or more and $100 million or more in
Federal investment. The final rule increases the total project cost
threshold to $400 million and the Federal investment threshold to $150
million.
Removing project management oversight from projects with total
costs between $300 and $400 million and Federal investment between $100
million and $150 million may increase the risk of materially exceeding
budget or falling behind schedule for some projects; however, the
potential negative impacts are not quantifiable. First, it is not the
case that project management oversight eliminates the risk of cost or
schedule overruns, nor that the lack of project management oversight
necessarily implicates a high risk of such overruns.
Second, falling under the total cost and Federal investment
thresholds does not preclude a project from receiving project
management oversight. Section 633.5(e)(2) allows the Administrator to
determine on a case-by-case basis that certain projects should be
subject to project management oversight based on an assessment of risk,
which would include an analysis of the likelihood of budget and
schedule overruns. Of the 33 CIG projects currently in construction,
FTA utilized this provision to designate six as major capital projects
based on this risk assessment to receive additional oversight.
The final rule results in cost savings for recipients and for FTA
by reducing the number of capital projects subject to project
management oversight.
[[Page 33650]]
Removing the oversight requirements reduces labor hours for oversight
procedures, which include attending meetings, preparing quarterly
reports and other requested documents, and accompanying contractors at
project construction sites.
At the time of NPRM publication, there were 59 CIG and formula-
funded major capital projects for public transportation subject to
project management oversight. There are currently 65 such projects.
Twenty of those projects have total costs between $300 million and $400
million or Federal investments between $100 million and $150 million.
Eight of the projects between the existing and new thresholds have
received grant agreements and are in construction. Those projects were
not impacted by the new thresholds under this final rule. However, the
remaining 12 projects still in project development no longer meet the
definition of major capital project and are not subject to project
management oversight requirements under this final rule.
In 2020, FTA estimated that the oversight required approximately
one FTE (full-time equivalent) of recipient time (2,080 hours) and 0.5
FTE of FTA staff time (1,040 hours) per project per year. Removing
oversight requirements for 12 projects annually results in annual
savings of 24,960 hours for recipients and 12,480 hours for FTA staff.
To estimate cost savings for project sponsors, FTA used May 2024
occupational wage data from the Bureau of Labor Statistics, the latest
available as of May 2025, in the ``Transit and Ground Passenger
Transportation'' industry (North American Industry Classification
System code 485000).\1\ To estimate the wages of agency staff
completing the auditing requirements, FTA used the ``General and
Operations Managers'' job category (code 11-1021). FTA used median
hourly wages ($42.45) as a basis for the estimates, multiplying the
wages by 1.62 ($42.45 x 1.62 = $68.69) to account for employer
benefits.\2\
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\1\ Bureau of Labor Statistics, ``May 2024 National Occupational
Employment and Wage Estimates: United States: NAICS 485000--Transit
and Ground Passenger Transportation,'' (2025), available at: <a href="https://data.bls.gov/oes/#/industry/485000">https://data.bls.gov/oes/#/industry/485000</a>
\2\ Multiplier derived using Bureau of Labor Statistics data on
employer costs for employee compensation in December 2024 (<a href="https://www.bls.gov/news.release/ecec.htm">https://www.bls.gov/news.release/ecec.htm</a>). Employer costs for State and
local government workers averaged $63.46 an hour, with $39.22 for
wages and $24.23 for benefit costs. To estimate full costs from
wages, one would use a multiplier of $63.46/$39.22, or 1.62.
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To estimate cost savings for FTA, FTA estimated an hourly wage of
$64.06 for oversight staff, based on the hourly wage rate for Federal
GS (General Schedule) employees at step 5 of the GS-13 grade level in
the Washington, DC locality pay area.\3\ The hourly rate was then
multiplied by 1.62 to account for employer benefits ($64.06 x 1.62 =
$103.65).
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\3\ Office of Personnel Management, ``Salary Table 2024-DCB''
(2023), available at: <a href="https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2024/DCB_h.pdf">https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2024/DCB_h.pdf</a>
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The final rule results in annual cost savings of $3.0 million
(24,960 recipient hours x $68.69 + 12,480 FTA hours x $103.65) in
undiscounted 2024 dollars, $2.5 million at a three percent discount
rate (discounted to 2024), and $2.0 million at a seven percent discount
rate over the ten year period from 2026 to 2036. In addition, there
will be cost savings for future FTA projects between $300 million and
$400 million in total cost or $100 million and $150 million in Federal
investment, that would have otherwise been subject to project
management oversight under the current thresholds. However, because
projects under the CIG and formula programs comprise a broad range of
complexity, total costs, and amounts of Federal investment and vary
from year to year, FTA is not attempting to quantify them.
Executive Order 14192 (Deregulatory Action)
E.O. 14192 (``Unleashing Prosperity Through Deregulation'')
requires that for ``each new [E.O. 14192 regulatory action] issued, at
least ten prior regulations be identified for elimination.''
Implementation Guidance for E.O. 14192, issued by OMB (Memorandum M-25-
20, March 25, 2025) defines an E.O. 14192 deregulatory action as ``an
action that has been finalized and has total costs less than zero.''
This final rule is expected to have total costs less than zero, and
therefore is expected to be an E.O. 14192 deregulatory action.
Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601 et seq.)
requires Federal agencies to assess the impact of a regulation on small
entities unless the agency determines that the regulation is not
expected to have a significant economic impact on a substantial number
of small entities.
This final rule does not change any requirements for small
entities, as no small entities are pursuing public transportation
projects with a total cost between $300 and $400 million based on FTA
data. All agencies with projects that meet the relevant total cost
threshold are in areas with populations above the 50,000 population
threshold for small government entities.
FTA therefore certifies that the final rule does not have a
significant effect on a substantial number of small entities, as there
is no impact on any small entities.
Unfunded Mandates Reform Act of 1995
FTA has determined that this final rule does not impose unfunded
mandates, as defined by the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4, March 22, 1995). This rule does not include a Federal mandate
that may result in expenditures of $100 million or more in any one
year, adjusted for inflation, by State, local, and tribal governments
in the aggregate or by the private sector.
Executive Order 13132 (Federalism Assessment)
E.O. 13132 requires agencies to assure meaningful and timely input
by State and local officials in the development of regulatory policies
that may have a substantial direct effect 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. This action has been analyzed in accordance with the
principles and criteria contained in E.O. 13132, dated August 4, 1999,
and FTA determined this action will not have a substantial direct
effect or sufficient federalism implications on the States. FTA also
determined this action will not preempt any State law or regulation or
affect the States' ability to discharge traditional State governmental
functions.
Executive Order 12372 (Intergovernmental Review)
The regulations implementing E.O. 12372 regarding intergovernmental
consultation on Federal programs and activities do not apply to this
rulemaking.
Paperwork Reduction Act
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.) (PRA), and the White House Office of Management and
Budget's (OMB) implementing regulation at 5 CFR 1320.8(d), FTA will not
seek a revision to an approved OMB information collection 2132-0584 as
there is no change in burden or cost associated with this new
regulatory action.
[[Page 33651]]
National Environmental Policy Act
The Department has analyzed the environmental impacts of this
rulemaking pursuant to the National Environmental Policy Act of 1969
(NEPA) (42 U.S.C. 4321 et seq.). FTA has determined that this rule is
categorically excluded pursuant to 23 CFR 771.118(c)(4). Categorical
exclusions are categories of actions that the agency has determined
normally do not significantly affect the quality of the human
environment and, therefore, do not require either an environmental
assessment (EA) or environmental impact statement (EIS). See DOT Order
5610.1D Sec. 9. In analyzing the applicability of a categorical
exclusion, the agency must also consider whether extraordinary
circumstances are present that would warrant the preparation of an EA
or EIS. Id. Sec. 9(b). This rulemaking, which reduces the regulatory
burden on grant recipients by reducing the number of projects subject
to project management oversight, is categorically excluded pursuant to
23 CFR 771.118(c)(4): ``[p]lanning and administrative activities not
involving or leading directly to construction, such as: promulgation of
rules, regulations, directives, or program guidance.'' FTA does not
anticipate any environmental impacts, and there are no extraordinary
circumstances present in connection with this rulemaking.
Executive Order 13175 (Tribal Consultation)
FTA has analyzed this final rule under E.O. 13175, dated November
6, 2000, and it will not have substantial direct effects on one or more
Indian Tribes; will not impose substantial direct compliance costs on
Indian Tribal governments; and will not preempt Tribal laws. Therefore,
a Tribal summary impact statement is not required.
Executive Order 13211 (Energy Effects)
FTA has analyzed this action under E.O. 13211, Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use. FTA has determined this action is not a significant energy action
under that order and is not likely to have a significant adverse effect
on the supply, distribution, or use of energy. Therefore, a Statement
of Energy Effects is not required.
Privacy Act
Anyone can search the electronic form of all comments received into
any of our dockets by the name of the individual submitting the comment
(or signing the comment, if submitted on behalf of an association,
business, labor union, etc.). You may review DOT's complete Privacy Act
Statement in the Federal Register at 65 FR 19477 (April 11, 2000).
Regulation Identifier Number
A Regulation Identifier Number (RIN) is assigned to each regulatory
action listed in the Unified Agenda of Federal Regulations. The
Regulatory Information Service Center publishes the Unified Agenda in
April and October of each year. The RIN contained in the heading of
this document can be used to cross-reference this final rule with the
Unified Agenda.
List of Subjects in 49 CFR Part 633
Government contracts, Grant programs--transportation, Mass
transportation, Reporting and recordkeeping requirements.
In consideration of the foregoing, and under the authority of 49
U.S.C. 5327 and 5334, and the delegation of authority at 49 CFR 1.91,
the Federal Transit Administration amends title 49, Code of Federal
Regulations, part 633, as set forth below:
PART 633--PROJECT MANAGEMENT OVERSIGHT
0
1. The authority citation for part 633 is revised to read as follows:
Authority: 49 U.S.C. 5327; 49 U.S.C. 5334; 49 CFR 1.91.
0
2. Amend Sec. 633.5, by revising the definition for ``FTA'' and adding
the definition, in alphabetical order, for ``Major capital project'' to
read as follows:
Sec. 633.5 Definitions.
* * * * *
FTA means the Federal Transit Administration.
Major capital project, except as provided in Sec. 633.19, means a
project that:
(1) Involves the construction, expansion, rehabilitation, or
modernization of a fixed guideway that:
(i) Has a total project cost of $400 million or more and receives
Federal funds of $150 million or more; and
(ii) Is not exclusively for the acquisition, maintenance, or
rehabilitation of vehicles or other rolling stock; or
(2) The Administrator determines to be a major capital project
because project management oversight under this part will benefit the
Federal government or the recipient, and the project is not exclusively
for the acquisition, maintenance, or rehabilitation of rolling stock or
other vehicles. Typically, this means a project that:
(i) Involves new technology;
(ii) Is of a unique nature for the recipient; or
(iii) Involves a recipient whose past record indicates the
appropriateness of extending project management oversight under this
part.
* * * * *
Issued in Washington, DC, under authority delegated in 49 CFR
1.91.
Jamie Pfister,
Acting Executive Director.
[FR Doc. 2026-11272 Filed 6-3-26; 8:45 am]
BILLING CODE 4910-57-P
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