[Federal Register Volume 87, Number 139 (Thursday, July 21, 2022)]
[Proposed Rules]
[Pages 43467-43489]
[FR Doc No: 2022-15192]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 224

[Docket No. FRA-2021-0080, Notice No. 1]
RIN 2130-AC77

Reflectorization of Rail Freight Rolling Stock; Codifying
Existing Waivers

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: FRA proposes to amend its standards for Reflectorization of
Rail Freight Rolling Stock (Reflectorization Standards) to codify
waivers and remove the outdated implementation schedule. The proposed
changes are expected to enhance safety, promote innovation, clarify
existing requirements, and reduce unnecessary paperwork burdens. The
proposed amendments are consistent with the mandate of the
Infrastructure Investment and Jobs Act (IIJA), which requires FRA to
review and analyze certain longstanding waivers to determine whether
incorporating the

waivers into FRA's regulations is justified.

DATES: Comments on the proposed rule must be received by September 19,
2022. Comments received after that date will be considered to the
extent practicable.

ADDRESSES:
    Comments: Comments related to Docket No. FRA-2021-0080 may be
submitted by going to https://www.regulations.gov and following the
online instructions for submitting comments.
    Instructions: All submissions must include the agency name and
docket number or Regulatory Identification Number (RIN) for this
rulemaking. Note that all comments received will be posted without
change to https://www.regulation.gov; this includes any personal
information. Please see the Privacy Act heading in the SUPPLEMENTARY
INFORMATION section of this document for Privacy Act information
related to any submitted comments or materials.
    Docket: For access to the docket to read background documents or
comments received, go to https://www.regulations.gov and follow the
online instructions for accessing the docket.

FOR FURTHER INFORMATION CONTACT: Check Kam, Mechanical Engineer, Office
of Railroad Safety, at telephone:<PHONE_NUMBER> or email:
[email protected]; or Michael Masci, Senior Attorney, Office of the
Chief Counsel, at telephone:<PHONE_NUMBER> or email:
[email protected].

SUPPLEMENTARY INFORMATION:

Abbreviations and Terms Used in This Document

AAR--Association of American Railroads
ASLRRA--American Short Line and Regional Railroad Association
ASTM--ASTM International (formerly known as American Society for
Testing and Materials)
CE--Categorical Exclusion
CFR--Code of Federal Regulations
DOT--Department of Transportation
EA--Environmental Assessment
EIS--Environmental Impact Statement
FHWA--Federal Highway Administration
FR--Federal Register
FRA--Federal Railroad Administration
GS--General Schedule
IIJA--Infrastructure Investment and Jobs Act (Pub. L. 117-58)
IRFA--Initial Regulatory Flexibility Analysis
LED--Light-Emitting Diode
MOW--Maintenance of Way
NEPA--National Environmental Policy Act
NPRM--Notice of Proposed Rulemaking
OMB--Office of Management and Budget
PRA--The Paperwork Reduction Act
RIT--Run-Into-Train
RRA--Running Repair Agent
S-916--AAR's Standard S-916; Retroreflective Comparator Panel
Requirements
SCABT--Single Car Air Brake Test
SIA--Specific Intensity per unit Area
STB--Surface Transportation Board
THEERP--Tourist, Historic, Excursion, Educational, Recreational, or
Private
TTI--Texas A&M Transportation Institute
UMLER--Universal Machine Language Equipment Register
U.S.C.--United States Code
Volpe--Volpe National Transportation Systems Center

Table of Contents for Supplementary Information

I. Executive Summary
II. Statutory and Regulatory Background
    A. Existing Reflectorization Requirements
    B. Waivers Excluding From Part 224 Rail Freight Rolling Stock
Used Only for Tourist, Historic, Excursion, Educational,
Recreational, or Private (THEERP) Purposes, Except for Incidental
Freight Service
    C. Waivers Allowing Development and Testing of Alternative
Methods To Determine When To Replace Retroreflective Sheeting
III. Overview and Technical Discussion of Proposed Requirements
    A. Proposal To Exclude From Part 224 Rail Freight Rolling Stock
Used Only for THEERP Purposes, Except for Incidental Freight Service
    B. Proposal To Allow Alternative Methods To Determine When To
Replace Retroreflective Sheeting
    1. The Existing 10-Year Replacement Cycle Ensures Effective
Retroreflective Sheeting, but May Require Replacement Sooner Than
Necessary
    2. FRA Worked Closely With The Association of American Railroads
(AAR) and Texas A&M Transportation Institute (TTI) To Develop a
Comparator Panel That Could Be Used With the Reflectorization
Standards
    3. FRA Approved a Pilot Program To Test AAR's Standard S-916;
Retroreflective Comparator Panel Requirements (S-916) in Service
IV. Section-by-Section Analysis
V. Regulatory Impact and Notices
    A. Executive Order 12866
    B. Regulatory Flexibility Act and Executive Order 13272
    C. Paperwork Reduction Act
    D. Federalism Implications
    E. International Trade Impact Assessment
    F. Environmental Impact
    G. Executive Order 12898 (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 periodically reviews, and proposes amendments to, its
regulations to identify ways to enhance safety, and update regulatory
requirements. This proposed rule is expected to enhance safety, promote
innovation, reduce unnecessary costs, and clarify existing
requirements. Moreover, FRA expects reduced environmental waste
resulting from not needlessly replacing retroreflective sheeting prior
to the end of its useful life.
    This proposed rule would respond to the mandate of section 22411 of
the IIJA (Pub. L. 117-58) which requires the Secretary to review and
analyze existing waivers issued under 49 U.S.C. 20103 that have been in
continuous effect for a 6-year period to determine whether issuing a
rule consistent with the waiver is in the public interest and
consistent with railroad safety. After conducting the appropriate
analysis, if the Secretary concludes that it would be in the public
interest and consistent with railroad safety to initiate a rulemaking
to incorporate into the regulations the relevant aspects of the waivers
analyzed, section 22411 specifically authorizes the Secretary to
initiate such a rulemaking.

Summary of the Regulatory Action

    The Reflectorization of Rail Freight Rolling Stock
(Reflectorization Standards or Part 224) contain minimum safety
requirements to help motor vehicle operators contain minimum safety
requirements to help motor vehicle operators see rail freight rolling
stock at night and under conditions of poor visibility. Part 224 was
designed to reduce the number and severity of highway-rail grade
crossing accidents and deaths, injuries, and property damage resulting
from those accidents. Generally, FRA has provided two types of relief
from part 224's requirements: (1) relief to THEERP operations, because
they do not typically travel over low visibility highway-rail grade
crossings at nighttime; and (2) relief to allow the use of a
performance-based method (comparator panels) to determine when to
replace reflectorization sheeting. FRA proposes to codify these waivers
for two reasons: (1) freight rolling stock used exclusively for THEERP
purposes do not typically travel over low visibility highway-rail grade
crossings at nighttime; and (2) to allow the replacement of
retroreflective sheeting to be based on alternative methods of
evaluating its effectiveness. Allowing for performance-based methods of
reflectorization evaluation and replacement is a more reliable and
accurate way to evaluate the effectiveness of the retroreflectivity of
the required sheeting than part 224's current 10-year default
replacement cycle. Codifying these waivers is

expected to enhance safety (i.e., by ensuring retroreflective sheeting
is replaced when it is no longer effective), promote innovation, and
reduce unnecessary paperwork burdens for both industry and FRA by
eliminating the need to continue to use the waiver process for relief.
Codifying these waivers would also provide the railroad industry with
regulatory certainty as to the applicability of part 224 to equipment
used for THEERP purposes, while enhancing safety.
    Finally, FRA proposes to remove Sec.  224.107, which has become
outdated. Section 224.107 requires the locomotive fleet population to
be fully equipped with part 224 compliant retroreflective sheeting by
November 28, 2010, and the freight car fleet to be compliant by
November 28, 2015. FRA is proposing to remove this section, because the
implementation dates have passed and are no longer necessary to have in
the regulation.

Costs and Benefits of the Proposed Regulatory Action

    The proposed rule would eliminate the need for railroads to submit
waiver petitions (and repeated extensions of those waivers every 5
years) from part 224 for certain older railroad equipment used in
THEERP operations, and eliminate the Federal Government's need to
review and approve the waiver petitions and extension requests. In
addition, the proposed rule would allow railroads and private car
owners to replace retroreflective sheeting based on performance,
instead of time, thus increasing efficient use of resources and
reducing environmental waste from discarding retroreflective sheeting
prior to the end of its useful life. FRA estimates there will be minor
costs for purchasing and recalibration of the comparator panels used to
evaluate retroreflective sheeting, and training employees in their use
(about 0.2% of total NPRM costs).
    FRA expects the proposed rule to enhance safety, promote
innovation, clarify existing requirements, and reduce unnecessary
burdens. Entities that have been operating under the THEERP waivers and
performance-based waivers using a comparator panel to evaluate
retroreflective sheeting have not shown an increase in accidents/
incidents. Also, retroreflective sheeting that is performing poorly
would likely be replaced sooner under the NPRM than under the existing
10-year replacement cycle, better ensuring continued effectiveness of
the sheeting. Overall FRA estimates the proposed rule will result in
net benefits in terms of businesses benefits. FRA's estimates of
benefits for the NPRM are shown in the table below.

                          Table ES-1--Summary of Total Benefits Over the 20-Year Period
                                                 [2020 Dollars]
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                                                   Present value   Present value
             Impact                Undiscounted         7%              3%         Annualized 7%   Annualized 3%
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Baseline Cost...................    $540,747,953    $286,435,001    $402,248,463     $27,037,438     $27,037,415
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Baseline Costs consist of Visual Inspection & Replacement, 10-Year Renewal, Transportation of Cars Typically not
 Interchanged, and Waivers.
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NPRM Cost.......................    $436,091,940    $231,038,590    $324,420,840     $21,808,408     $21,806,176
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NPRM Costs for Visual Inspection & Replacement; Periodic Evaluation & Retroreflective Sheeting Replacement
 (Performance-Based); Transportation of Cars Typically not Interchanged; 10-Year Renewal (@15% of Cars, Provides
 Flexibility for Small Entities); and Comparator Panel Purchase, Recalibration, and Employee Training.
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Net Benefits....................    $104,656,013     $55,396,411     $77,827,623      $5,229,029      $5,231,239
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Government Costs for Waivers            $167,171         $89,183        $124,739          $8,418          $8,384
 (Baseline).....................
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Qualitative Benefit: Reduced environmental waste from not replacing effective reflective sheeting prematurely.

II. Statutory and Regulatory Background

A. Existing Reflectorization Requirements

    The Reflectorization Standards require retroreflective sheeting on
the sides of rail freight rolling stock to enhance the visibility of
trains. The final rule establishing the Reflectorization Standards in
2005 did not discuss how it would apply to equipment used for THEERP
purposes.\1\ By default, THEERP operations were required to comply with
the Reflectorization Standards in the same manner as conventional
railroads. THEERP operations did not comment during the rulemaking
proceeding and FRA did not anticipate the challenges THEERP operations
would encounter when attempting to bring their equipment into
compliance with the Reflectorization Standards. THEERP operations began
requesting relief through FRA's waiver process shortly after FRA
published the Reflectorization Standards.\2\ Their petitions for waiver
explained the operational differences between THEERP entities and
conventional railroads and the relative corresponding disutility of
reflectorization during such operations. After more fully considering
these differences, FRA granted a series of waivers excluding equipment
used for THEERP purposes from the Reflectorization Standards.\3\
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    \1\ 70 FR 144, January 3, 2005.
    \2\ See e.g., Docket Numbers FRA-2005-2308 (Strasburg Railroad
Company) and FRA-2008-0021 (Lavacot Locomotive Works).
    \3\ A list of active waivers FRA has issued to THEERP operations
is available in the docket.
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    Currently, reflectorization is required to be replaced after no
more than 10 years of service, regardless of its condition at the time
of replacement (49 CFR 224.111). FRA's research when developing the
Reflectorization Standards concluded that the durability and adhesive
properties of the microprismatic retroreflective material could provide
adequate luminance intensity levels and be sustained for up to 10 years
with minimum maintenance.\4\ At the time, it was not clear how the
sheeting would withstand real-world railroad operating conditions or
whether it could be effective for longer than 10 years. In 2015, after
using the sheeting for close to 10 years, it became evident, that under
certain circumstances, it could continue to perform as required beyond
10 years. To

better tailor the reflectorization requirements to the actual condition
of the sheeting, the railroad industry began developing an alternate
method to evaluate the effectiveness of the sheeting. After successful
initial results, AAR, on behalf of its member railroads, petitioned FRA
for relief from the Reflectorization Standards to use an alternate
method to determine when to replace the retroreflective sheeting.\5\
FRA granted a waiver to AAR to develop alternate methods of evaluating
the effectiveness of the sheeting and to implement a pilot program for
in-service testing.\6\
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    \4\ 70 FR 145, January 3, 2005.
    \5\ Docket Number FRA-2015-0105, Document No. 1 (available at
https://www.regulations.gov/document/FRA-2015-0105-0001).
    \6\ Docket Number FRA-2015-0105, Document No. 22 (available at
https://www.regulations.gov/document/FRA-2015-0105-0022).
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B. Waivers Excluding From Part 224 Rail Freight Rolling Stock Used Only
for THEERP Purposes, Except for Incidental Freight Service

    As of 2022, the Safety Board has granted relief from part 224 in
response to 14 waiver petitions from 12 different railroads that
operate rail freight rolling stock used exclusively for THEERP
purposes. In some rare instances, the subject equipment is also used
for incidental freight services when no other equipment is available.
Railroads petitioned for relief, because adding retroreflective
sheeting to their equipment would detract from its aesthetic or
historical nature. Such equipment is typically not interchangeable,
generally does not travel in the dark, and operates at low speeds and
on rail lines not connected to the general railroad system. In
addition, such equipment often travels over crossings protected by
automatic warning gates and flashing lights, or the equipment travels
over crossings at a much lower frequency than freight equipment. These
operating conditions significantly reduce the benefit of
retroreflective sheeting, which increases visibility of trains
primarily during nighttime conditions and at passive grade crossings.
When deciding these waivers, the Safety Board reviewed available
records and found that the specific railroad operations and operating
environments demonstrated no history of accidents at grade crossings
resulting from low visibility.
    While monitoring implementation of these waivers, FRA reviewed all
accident and incident reports from railroads operating under the
waivers, and identified no injuries or deaths that were attributable to
the lack of part 224 reflectorization. Given the railroad industry's
long-term success in safely operating under these waivers, FRA is
proposing to codify them in part 224. This change would eliminate the
need for further waivers and the associated employee hours spent on
their documentation and renewal every five years.

C. Waivers Allowing Development and Testing of Alternative Methods
(Comparator Panel Evaluation) To Determine When To Replace
Retroreflective Sheeting

    On September 22, 2015, AAR petitioned FRA \7\ for a waiver from
compliance with 49 CFR 224.111. That section requires retroreflective
sheeting to be replaced with new sheeting no later than 10 years after
the date of initial installation, regardless of the sheeting's
condition at the time of replacement. In support of the petition, AAR
contracted with TTI to test and evaluate retroreflective sheeting on
approximately 900 freight cars and approximately 100 locomotives in
service. That testing found that generally sheeting that had been
applied to rail cars more than nine years before met or exceeded the
Reflectorization Standards. This data, collected in 2012 and in 2014
using a RoadVista 922 retroreflectometer,\8\ showed the performance of
the retroreflective sheeting on both rail cars and locomotives is more
a function of material condition and cleanliness than it is of the
amount of time passed since the application date. In particular, the
sheeting demonstrated that, after more than nine years in service, it
performed effectively (above the minimum thresholds outlined in Table 1
to subpart B of part 224) and should be allowed to remain in service if
properly maintained. The field data collected by AAR supported using an
alternative method in lieu of the 10-year replacement cycle for
retroreflective sheeting on rail freight rolling stock, provided that
the sheeting is undamaged and maintained in a relatively clean
condition. Thus, AAR sought a waiver to extend the replacement
requirement for at least three years to develop an alternate evaluation
method. On November 25, 2015, the Safety Board granted AAR relief from
the 10-year replacement cycle for three years.\9\
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    \7\ Docket Number FRA-2015-0105, Document No. 1 (available at
https://www.regulations.gov/document/FRA-2015-0105-0001).
    \8\ A retroreflectometer is an instrument (typically handheld)
capable of accurately and reliably measuring the retroreflective
properties of retroreflective sheeting materials.
    \9\ https://www.regulations.gov/document/FRA-2015-0105-0009.
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    A retroreflectometer, like the hand-held RoadVista 922 that AAR and
TTI used to gather data in support of their waiver petition, is the
most direct form of measuring sheeting's retroreflective value.
Retroreflectometers are costly (approximately $10,000 or more per unit)
and are cumbersome to use, and therefore are not currently practical
for regular use in a railroad shop or field environment. For a more
practical option, the AAR Equipment Engineering Committee looked to the
Federal Highway Administration (FHWA) Comparison Panel Method. FHWA
indicates that the comparison panels are fabricated to have
retroreflectivity values at or above the minimum required levels and
are used to assess highway signs that have marginal
retroreflectivity.\10\ AAR proposed to develop a standard comparator
panel that could be used to assess rail freight rolling stock
retroreflective sheeting to the minimally required photometric
performance requirements of part 224. This standard comparator panel
would be fabricated to have retroreflectivity values at or above the
minimum photometric values outlined in Sec.  224.103.
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    \10\ https://safety.fhwa.dot.gov/roadway_dept/night_visib/sign_retro_4page.pdf.
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    After approximately three years of development, AAR finalized the
design, specifications, and procedures for a standard comparator panel
for evaluating the effectiveness of retroreflective sheeting on rail
freight rolling stock, and on July 27, 2018, AAR petitioned FRA for
final approval to use its comparator panel process in lieu of the 10-
year replacement cycle.\11\ On October 10, 2018, the Safety Board
granted the petition finding that the comparator panel could be used to
reliably evaluate the effectiveness of the installed retroreflective
sheeting and that the design and specifications of AAR's proposed
comparator panel met the minimum photometric performance requirements
in Sec.  224.103.\12\
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    \11\ https://www.regulations.gov/document/FRA-2015-0105-0021.
    \12\ Docket Number FRA-2015-0105, Document No. 22 (available at
https://www.regulations.gov/document/FRA-2015-0105-0022).

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III. Overview and Technical Discussion of Proposed Requirements

A. Proposal To Exclude From Part 224 Rail Freight Rolling Stock Used
Only for THEERP Purposes, Except for Incidental Freight Service

    The Reflectorization Standards require retroreflective sheeting on
the sides of rail freight rolling stock to enhance the visibility of
trains. These standards were developed, generally, because low
visibility, particularly at highway-rail grade crossings, can
contribute to motorists colliding with rail equipment. According to
data from 1992 through 2001, gathered from the FRA Office of Safety
Analysis' crossing accident database, the number of accidents involving
motor vehicles running into trains occupying grade crossings accidents
(RIT accidents) was roughly 23% of all highway-rail grade crossing
accidents. Almost 80% of these RIT accidents occurred during nighttime
conditions (dusk, dawn, or darkness) and involved the highway vehicle
striking the train after the first two units of the consist. Adding
reflectorization to rail equipment reduces the likelihood of RIT
accidents. When developing the Reflectorization Standards, FRA relied
on a report from the John A. Volpe National Transportation Systems
Center (Volpe Center Report) \13\ to develop specific retroreflectivity
requirements based on minimum threshold detectability levels by
motorists. The Volpe Center Report defined Category 1 RIT accidents as
accidents or collisions involving a highway vehicle striking the train
after the lead unit and reported roughly 70% of the Category 1 RIT
accidents (from 1975 to 1996) occurred during nighttime conditions.
Category 1 RIT accidents during nighttime conditions at crossings with
passive warning devices accounted for 3.0% of the total accidents
during this 22-year period. This became the intended target population
for the Reflectorization Standards.
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    \13\ Carroll, A.A., Multer, J., Williams, D., & Yaffee, M.A.
Safety of Highway-Railroad Grade Crossings: Freight Car
Reflectorization. DOT/FRA/ORD-98/11, John A. Volpe National
Transportation Systems Center, January 1999.
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    The Reflectorization Standards exclude locomotives and passenger
cars used exclusively in passenger service,\14\ because generally, the
conspicuity of equipment used in conventional passenger service is
significantly better than the conspicuity of equipment used in freight
service.\15\ For example, highway-rail grade crossings along passenger
routes are typically better protected than crossings used exclusively
in freight service. Also, many passenger cars have bright exteriors or
are painted in contrasting colors and are maintained in a much cleaner
condition than freight cars. In addition, passenger cars typically have
inside lights which are visible through the side windows that run the
entire length of the car. Due to enhanced conspicuity and better
protected crossings, reflectorization is not necessary for locomotives
and passenger cars used exclusively for passenger service. Such
equipment is currently operating without retroreflective sheeting and
FRA is unaware of any accidents or incidents involving this equipment
that would have been mitigated by the presence of reflectorization.
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    \14\ 49 CFR 224.3(c).
    \15\ 70 FR 149.
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    Similarly, retroreflective sheeting provides no clear safety
benefit for equipment used exclusively for THEERP purposes because like
other passenger equipment, equipment used exclusively for THEERP
purposes is more highly visible than conventional railroad equipment
and, as discussed above, is used in a more protected operating
environment. For these reasons, FRA proposes to exclude equipment used
for THEERP purposes from the Reflectorization Standards.

B. Proposal To Allow Alternative Methods (Comparator Panel Evaluation
or Retroreflectometer Measurement) To Determine When To Replace
Retroreflective Sheeting

    As noted above, in 2015, FRA granted AAR's waiver petition
providing relief from the replacement requirement in Sec.  224.111 for
three years, allowing time for AAR to develop an alternate method for
evaluating the effectiveness of retroreflective sheeting more than 10
years old.\16\ AAR initially proposed to adopt a minimum performance
level of 45 candela per foot-candle per square foot (cd/fc/ft\2\) \17\
for a yellow comparator panel, which AAR stated was consistent with the
recommendation provided by the Volpe Center Report, but did not mirror
the complete specifications in Sec.  224.103. After FRA expressed
concerns about the proposed specifications, AAR agreed to develop
standard comparator panels that would meet the complete minimum
photometric performance requirements in Sec.  224.103 (i.e., 45 cd/fc/
ft\2\ for yellow or fluorescent yellow sheeting and 75 cd/fc/ft\2\ for
white sheeting with a specific condition of a 30[deg] entrance angle
and a 0.5[deg] observation angle).\18\ Following development, FRA
agreed to allow a pilot program for AAR to test the comparator panel
method in service.\19\ A trained railroad inspector would place a
comparator panel immediately adjacent to, or overlapping,
retroreflective sheeting installed on rail freight rolling stock, and
determine its relative brightness. When the comparator panel was equal
to, or brighter than, the installed sheeting, it was replaced. Testing
showed the comparator panel is an accurate and easy way to determine
when retroreflective sheeting needs to be replaced in compliance with
the Reflectorization Standards. Similarly, a retroreflectometer device
can be used to take direct measurements of the sheeting and be an
effective performance-based method for evaluating retroreflectivity. As
such, FRA proposes to add comparator panel evaluation and direct
measurements with a retroreflectometer, as alternative options to
determine compliance with the Reflectorization Standards. These methods
would provide flexibility for the rail industry while, in most
instances, enhancing safety because allowing for alternative methods of
reflectorization evaluation and replacement is a more reliable and
accurate way to evaluate the effectiveness of the retroreflective
sheeting than part 224's current 10-year default replacement cycle.
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    \16\ Docket Number FRA-2015-0105, Document No. 9 (available at
https://www.regulations.gov/document/FRA-2015-0105-0009).
    \17\ The units of cd/fc/ft 2 are equivalent to the units of cd/
lux/m 2 (candela per lux per square meter) and are often used
interchangeably, and the Specific Intensity per unit Area (SIA) is
another notation for referencing retroreflection values, which is
expressed in the units above.
    \18\ Docket Number FRA-2015-0105, Document No. 10 (available at
https://www.regulations.gov/document/FRA-2015-0105-0010).
    \19\ Docket Number FRA-2015-0105, Document No. 22 (available at
https://www.regulations.gov/document/FRA-2015-0105-0022).
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1. The Existing 10-Year Replacement Cycle Ensures Effective
Retroreflective Sheeting, but Often Requires Replacement Sooner Than
Necessary
    Currently, all retroreflective sheeting, required by part 224, must
be replaced with new sheeting after 10 years of service, regardless of
its condition at the time of replacement. FRA established the 10-year
replacement cycle based on the 10-year useful life of the sheeting
according to most manufacturers.\20\ This means the retroreflective
sheeting is expected to maintain its performance for no less than 10
years. As such, sheeting that complies with the Reflectorization
Standards, when installed, is expected to continue to comply throughout
the

10-year cycle despite inevitable accumulations of dirt and
environmental aging. This regulatory approach helps ensure rail freight
rolling stock is equipped with effective retroreflective sheeting, but
it may also result in railroads unnecessarily replacing sheeting that
continues to be effective beyond 10 years of service.
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    \20\ 70 FR 157.
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    When the initial 10-year replacement deadline approached, and in
support of AAR's petition to the FRA, AAR conducted testing on
retroreflective sheeting of approximately 900 railcars and
approximately 100 locomotives using a RoadVista 922
retroreflectometer.\21\ The installation dates for retroreflective
sheeting in the sampling were from 2005 to 2014. Based on the
performance measurements, AAR believed the sheeting could continue to
comply with the Reflectorization Standards for a significant amount of
time beyond 10 years of service.
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    \21\ Docket FRA-2015-0105, Document No. 1 (available at https://www.regulations.gov/document/FRA-2015-0105-0001) Appendix B:
Supporting Documentation from AAR Equipment Engineering Committee.
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    On January 27, 2017, AAR submitted a status report to FRA on its
reflectorization waiver,\22\ providing field measurement data for
retroreflective sheeting evaluated ``as is'' and ``after cleaning'' for
service ages ranging from 1 to nearly 10 years of age. Prior to AAR's
field measurements, FRA did not have any data showing the performance
of retroreflective sheeting in the field, but expected it would perform
at or above the minimum detectable threshold levels required by the
Reflectorization Standards throughout its useful life. The data
confirmed that retroreflective sheeting can perform well up to, and
perhaps beyond, 10 years, especially when periodically cleaned. The
data also showed that not all initially applied compliant material
performs equally well throughout its anticipated useful life and can be
affected by the type of service or commodity (salt, coal, chemicals,
etc.) and environmental conditions (multiple freeze-thaw cycles,
extreme cold or heat, high humidity, etc.) that the equipment endures.
Under the more extreme of these circumstances, samples yielded
measurements, after being cleaned, that were below the minimum proposed
comparator panel values just 1 to 2 years after application. One cause
for the poor performing samples was found to be internal degradation of
the sheeting due to damage or delamination, which can lead to mold or
mildew growth over the microprismatic layer. Such poor performing or
internally degraded material, could be identified early on through use
of the proposed comparator panel or direct measurements with a
retroreflectometer, allowing for earlier replacement. Overall, this
would lead to better performing sheeting in service, resulting in an
increase in safety compared to a blanket application of a 10-year
replacement cycle.
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    \22\ Docket FRA-2015-0105, Document No. 23.
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    AAR estimates the number of freight cars (not including
locomotives) that would need full replacement of retroreflective
sheeting based on the 10-year age limit was 283,500 freight cars in
2016, 152,000 freight cars in 2017, 149,000 freight cars in 2018,
96,500 freight cars in 2019, and 93,000 freight cars in 2020.\23\ These
figures are for freight cars only and do not include locomotives. In
2020, AAR estimated the average cost of one retroreflective sheet (4
inches by 18 inches) at $1.31 and the average labor rate to be
approximately $141.38 per hour ($2.36 per minute). AAR also estimated
that the length of time allotted for the application of the first sheet
per side of a car is 9.2642 minutes and 2.6197 minutes for each
additional sheet. Assuming each freight car is equipped with a minimum
3.5 square feet of retroreflective material, this equates to a minimum
of 25 minutes per side for each car. Thus, by 2020 it would have cost
an estimated $105 million or more for full replacement of
retroreflective sheeting based on the 10-year age limit during that 5-
year period.\24\ The cost estimate for 2019 and 2020, alone, was
approximately $26 million. However, between the 4th quarter of 2018
through 3rd quarter of 2020 when AAR was implementing the comparator
panel process, AAR estimated that 1,143,500 cars were evaluated with
the comparator panel during a single-car airbrake test (SCABT) and that
an average of 0.71 sheets per car was replaced for all cars under this
procedure. AAR indicated that, with the comparator panel evaluation, it
takes about 3.2743 minutes to clean and 2.7574 minutes to inspect
retroreflective material per car (6 minutes total). Thus, the cost
estimate between the 4th quarter of 2018 through 3rd quarter of 2020
for using the comparator panel during SCABT was approximately $42
million.\25\ This estimate may include sheeting that was replaced as a
result of being damaged, missing, or obscured during the SCABT, as
required under Sec.  224.109, and therefore does not entirely reflect
the sole cost of sheeting that was replaced as a result of failing the
comparator panel, and does not include the cost of the comparator
panels themselves. To better understand the efficacy of the comparator
panels, FRA seeks comment from the industry regarding the proportion of
sheets that were replaced as a direct result of not meeting the
performance criteria versus sheets that were replaced under Sec.
224.109. When FRA granted AAR relief from the Reflectorization
Standards to develop and test the comparator panel method, AAR avoided
unnecessarily replacing 584,500 pieces of effective retroreflective
sheeting that would have cost approximately $79 million during those
first three years. Codifying the performance-based method will avoid
requiring railroads to unnecessarily replace the sheeting on
approximately 1.5 million freight cars over the next 10 years.
---------------------------------------------------------------------------

    \23\ Docket FRA-2015-0105, Document No. 24.
    \24\ (774,000 freight cars) x [(14 sheets) x ($1.31 per sheet) +
(50 minutes) x ($2.36 per minute)] = $105,527,000.
    \25\ (1,143,500 freight cars) x [(0.71 sheets) x ($1.31 per
sheet) + (6 minutes + 9.2642 minutes) x ($2.36 per minute)] =
$42,323,000.
---------------------------------------------------------------------------

    In addition, FRA believes railroads may be unnecessarily replacing
compliant retroreflective sheeting because the inspection and
replacement process can be cumbersome, and detailed tracking is not
required. Section 224.109 requires retroreflective sheeting to be
visually inspected for presence and condition at the time of SCABT \26\
or annual locomotive inspection and replaced at that time, if more than
20% of the required area is missing, damaged, or obscured. It is
unclear to FRA, if, or how, railroads update Universal Machine Language
Equipment Register (UMLER) or other records to show the date that
retroreflective sheeting is replaced based on inspection results. On
October 1, 2020, FRA sent an inquiry to AAR with questions regarding
the reflectorization replacement process before and after the waiver
was granted.\27\ FRA asked how the UMLER system is updated with the
date of installation or replacement if only a portion of
retroreflective sheeting is replaced during the SCABT or annual
locomotive inspection. AAR responded that updates have been
inconsistent because the industry no longer relies on the information
provided by the UMLER fields (because relief from the 10-year
replacement cycle was in place). Thus, it is FRA's understanding that
the date of installation is not updated when only a portion of the
minimum required

sheeting area is replaced under Sec.  224.109. Accordingly, when the
10-year replacement becomes due on the remaining retroreflective
sheeting that was initially installed on a piece of rail freight
rolling stock, without knowing a portion of the sheeting was recently
replaced, railroads may replace the almost new retroreflective sheeting
along with the retroreflective sheeting due for the 10-year
replacement. In this scenario, replacing the almost new retroreflective
sheeting may be premature and unnecessary per the regulation and likely
without any safety benefit.
---------------------------------------------------------------------------

    \26\ AAR estimates the industry median time in 2020 between
SCABT is approximately 25.6 months.
    \27\ Docket FRA-2015-0105, Document No. 24.
---------------------------------------------------------------------------

    During the approximately 3-year period of relief from the 10-year
replacement requirement from 2015 to 2018, and prior to AAR
implementing the pilot program to test its performance-based method,
the majority of retroreflective sheeting in service on AAR-member
railroads was installed in 2005 and continued in service beyond 10
years. After reviewing pertinent records, FRA is unaware of any
reportable RIT accidents attributable to under-performing
retroreflective sheeting. Once the pilot program was approved to test
the comparator panel method on in-service equipment, all sheeting on
equipment within AAR interchange was evaluated using the comparator
panels whenever the equipment underwent the SCABT or annual locomotive
inspection, and replaced as necessary when sheeting failed the
comparator evaluation. By gradually replacing retroreflective sheeting
as needed, a significant amount performed effectively beyond 10 years
and was allowed to continue in service beyond 10 years. These findings
help confirm AAR's conclusion that retroreflective sheeting can perform
effectively beyond 10 years of service.
    Thus far, only AAR-member railroads have participated in the pilot
program to test the comparator panel method, but FRA anticipates
additional railroads would choose to use it, if codified. In response
to the public notice FRA published related to AAR's waiver petition,
three commenters expressed concurrence with the proposal of an
alternative method in lieu of the 10-year replacement cycle and
suggested relief should be applied to all railroads.\28\ However, FRA
could not apply the relief to all railroads at that time, because not
all railroads were party to the waiver petition. Thus, short line
railroads, private car owners, and other entities not affiliated with
AAR are still subject to the 10-year replacement cycle.
---------------------------------------------------------------------------

    \28\ Docket Number FRA-2015-0105; comments from Railroad Supply
Institute, Colorado Springs Utilities, and North America Freight Car
Association.
---------------------------------------------------------------------------

    FRA believes allowing an alternative evaluation of installed
retroreflective sheeting would better tailor the replacement
requirements to the condition of the sheeting. The retroreflective
sheeting has a finite service life and performance-based methods of
evaluation will help ensure: (1) sheeting that continues to perform
well after the 10 years of service can remain in service; and (2)
sheeting that underperforms before the 10 years of service can be
identified and replaced on a more frequent, as needed basis. FRA
understands that not all railroads may benefit from the use of
alternative methods because of the financial burden of procuring a
comparator panel or retroreflectometer device and related training for
employees, particularly for some small railroads with limited
equipment. Such railroads may prefer to continue to utilize the 10-year
replacement cycle. Therefore, FRA proposes to retain the 10-year
replacement cycle as an option.
2. FRA Worked Closely With AAR and TTI To Develop a Comparator Panel
That Could Be Used With the Reflectorization Standards
    Over approximately three years, FRA worked closely with AAR and TTI
to develop a comparator panel that could evaluate retroreflective
sheeting and determine whether it complies with existing photometric
performance requirements outlined in Sec.  224.103. The
Reflectorization Standards (Table 1 to subpart B of part 224) included
minimum photometric performance requirements (i.e., minimum SIA) for
both yellow and white retroreflective material at observation angles of
0.2[deg] and 0.5[deg] and light entrance angles of -4[deg] and 30[deg]
based on typical grade crossing configurations and the standards in
ASTM D 4956-01a.\29\ The Volpe Center Report established that the
minimum threshold SIA of 45 cd/fc/ft\2\ is sufficient for detectability
and recognition of a crossing train by an approaching motorist. This
value was derived from the example of a vehicle traveling 50 mph on wet
level pavement, a 2.5 second driver reaction time, and a necessary
stopping distance of 500 feet to bring the vehicle to a safe stop
without hitting the crossing train. In many cases, the reflected light
received by the observer is reduced by three factors: the incidence (or
entrance angle), the divergence (or observation) angle, and the
properties of the retroreflecting material.
---------------------------------------------------------------------------

    \29\ ASTM D 4956-01a: Standard Specification for Retroreflective
Sheeting on Traffic Control.
---------------------------------------------------------------------------

    Appendix H of the Volpe Center Report further showed the
observation angle on a level road at a detection distance of 500 feet
ranges from 0.15[deg] for small passenger cars to 0.55[deg] for cab-
over-engine trucks, as the elevation from the driver to the headlight
increases. The observation angle has a greater effect on reflectivity
than does the entrance angle. The entrance angle is also a function of
the approach of the vehicle with respect to the crossing. Appendix H
also indicated that FRA's Grade Crossing Inventory identified
approximately 80% of all crossings having a crossing angle between
60[deg] and 90[deg], 16% between 30[deg] and 59[deg], and only 4% are
between 0[deg] and 29[deg]. In essence, 80% of all crossings will have
a vehicle (light) entrance angle of between 0[deg] and 30[deg] (with
0[deg] being the head-on approach). Thus, the real-world scenarios
outlined in the Volpe Center Report support the typical entrance and
observation angles outlined in ASTM D 4956-01a for retroreflective
material.
    Additionally, in determining these minimum photometric performance
requirements for the Reflectorization Standards, FRA extrapolated test
data detailed in the Volpe Center Report out by 10 years, which is the
manufacturer's stated useful life of the material. This extrapolation
demonstrated that the forecasted SIA levels remained well above the
minimum detection level established in the Volpe Center Report (45 cd/
fc/ft\2\). Furthermore, Table 1 to subpart B of part 224 specifies only
the minimum values, as initially applied, for the retroreflectivity
values for the given combinations of entrance (-4[deg] and 30[deg]) and
observation angles (0.2[deg] and 0.5[deg]). The rule does not require
that these initial values be retained for any particular length of
time, e.g., 5 or 10 years. However, it is reasonable to expect the
material to perform well up to the manufacturer's stated useful life
(i.e., 10 years).
    AAR began the development process by applying methodology similar
to FHWA's comparison panels used for evaluating retroreflective
materials (discussed in section II D above). The comparator panel was
constructed by adding a set of fine dot matrix markings such that the
target reflectivity was achieved at the desired boundary conditions.
AAR planned an evaluation process that would allow a field inspector to
view the comparator panel next to, or on top of, existing sheeting from
a prescribed distance away with a light source perpendicular to the
plane of the sheets. AAR believed this would most likely resemble the -
4[deg] entrance

angle and 0.2[deg] observation angle configuration. Therefore,
developing a comparator panel with sufficient retroreflectivity at this
configuration would also inherently contain the minimum detection level
(45 cd/fc/ft\2\) at the more oblique angles (30[deg] entrance angle and
0.5[deg] observation angle configuration) and would eliminate the need
for a field inspector to evaluate sheeting at various angles and off
center from the installed sheeting.
    To find an appropriate target retroreflectivity for the comparator
panel, AAR and TTI sampled part 224 compliant sheeting from various
manufacturers and gathered the retroreflectivity measurements (with the
922 RoadVista) at each entrance and observation angle configuration.
Correlation ratios were obtained between the two entrance angles (-
4[deg] and 30[deg]) for each corresponding observation angle (0.2[deg]
and 0.5[deg]) for all the samples. The lowest correlation ratio between
all samples of 0.50 was then applied to the minimum threshold
retroreflectivity of 45 cd/fc/ft\2\, which relates to the 30[deg]
entrance angle, to obtain a corresponding retroreflectivity value at
the -4[deg] entrance angle. Because the apparent surface area of
sheeting reduces as the angle at which it is viewed increases, a cosine
correction factor was applied to compensate for the reduction of
apparent size at the 30[deg] entrance angle compared to -4[deg]
entrance angle. A standard sheet of reflectorization is typically 4-
inches by 18-inches and has a total surface area of 72 square inches,
but when viewed from 30 degrees off normal the apparent surface area is
reduced to approximately 85% of the true total surface area, or 62
square inches. Taking the correlation ratio and cosine correction into
consideration and applying it to the minimum threshold
retroreflectivity of 45 cd/fc/ft\2\, a minimum retroreflectivity value
is obtained at for the -4[deg] entrance angle and 0.2[deg] observation
angle configuration for a yellow comparator panel. To provide some
assurance that the applied sheeting being evaluated remains suitable
for a period after the SCABT or locomotive annual inspection is
performed, AAR and FRA agree upon a minimum threshold value of 150 cd/
fc/ft\2\ (or cd/lux/m\2\). Also, to make manufacturing the comparator
panel more feasible, a range was provided which set a maximum at 170
cd/fc/ft\2\. The same methodology was applied to obtain the minimum
retroreflectivity values for a white comparator panel which
corresponded to minimum retroreflectivity value of 250 cd/fc/ft\2\ and
a maximum of 285 cd/fc/ft\2\ for the -4[deg] entrance angle and
0.2[deg] observation angle configuration.
    Both AAR and FRA felt it was necessary to define what the minimum
retroreflectivity value is for the 30[deg] entrance angle and 0.5[deg]
observation angle configuration because the comparator panels are
typically manufactured by adding fine dot matrix layers to part 224
compliant reflectorization to reduce the overall retroreflectivity and
achieve the desired level of retroreflectivity. This ensured that while
the overall retroreflectivity was being reduced at the -4[deg] entrance
angle and 0.2[deg] observation angle configuration to a target
retroreflectivity value of 150 cd/fc/ft\2\, it did not inadvertently
drop below 45 cd/fc/ft\2\ for the 30[deg] entrance angle and 0.5[deg]
observation angle configuration. As previously mentioned, the existing
Reflectorization Standards do not require that all initial
retroreflectivity values be retained for a set period; however, it is
reasonable to expect the sheeting to perform as intended for its useful
life. Industry practice requires that the sheeting retain at least 80%
of its initial values when subjected to 36 months of accelerated
weathering.\30\ Therefore, both AAR and FRA felt it was reasonable to
require the comparator panels to have 80% of the minimum
retroreflectivity value at the 30[deg] entrance angle and 0.5[deg]
observation angle configuration, or 35 cd/fc/ft\2\ for yellow panels
and 60 cd/fc/ft\2\ for white panels.
---------------------------------------------------------------------------

    \30\ ASTM D 4956-01a: Standard Specification for Retroreflective
Sheeting on Traffic Control.
---------------------------------------------------------------------------

    With the specifications for the retroreflective comparator panels
established, AAR solicited samples from various retroreflective
sheeting manufacturers made to the comparator panel specifications. AAR
procured six sample comparator panels from one manufacture for
evaluation and took measurements of the retroreflectivity with the 922
RoadVista. The results show that the six samples of comparator panels
average an SIA value of about 160 cd/fc/ft\2\ at the -4[deg]/0.2[deg]
configuration and about 55 cd/fc/ft\2\ at the 30[deg]/0.5[deg]
configuration. While these values were from one single manufacturer,
both AAR and FRA were confident that the specifications outlined for
the comparator panel could be achieved from other manufacturers as
well.
3. FRA Approved a Pilot Program To Test AAR's Standard S-916;
Retroreflective Comparator Panel Requirements (S-916) in Service
    On July 27, 2018, AAR petitioned FRA for approval of a pilot
program to test its newly developed standard comparator panel and
process for using it to evaluate retroreflective sheeting for
compliance with the Reflectorization Standards instead of the 10-year
replacement cycle required by Sec.  224.111.\31\ The Safety Board found
the design and specifications of AAR's proposed comparator panel were
acceptable and noted that when viewed at -4[deg] entrance angle and
0.2[deg] observation angle (-4[deg]/0.2[deg]), the comparative panel
achieved the equivalent minimum detectable SIA, as referenced in the
Volpe Center Report (45 cd/fc/ft\2\ for yellow material or 75 cd/fc/
ft\2\ for white material), at an entrance angle of 30[deg] and
observation angle of 0.5[deg] (30[deg]/0.5[deg]), or reasonably at a
service worn estimate of 80 percent of these values. On October 10,
2018, the Safety Board approved of AAR's proposed pilot program.\32\ To
facilitate the pilot program, AAR finalized and adopted AAR Standard S-
916, Retroreflective Comparator Panel Requirements, prescribing the
requirements for comparator panels to be used in the performance
evaluation of retroreflective sheeting on freight cars and locomotives.
The pilot program is currently ongoing. Throughout the pilot program,
within AAR interchange, comparator panel evaluations have been, and
will continue to be, required for all retroreflective sheeting on
freights cars during each SCABT and on locomotives during each annual
inspection.
---------------------------------------------------------------------------

    \31\ Docket FRA-2015-0105, Document No. 21.
    \32\ Docket FRA-2015-0105, Document No. 22.
---------------------------------------------------------------------------

    Currently, Table 3.1 of S-916 provides the following specifications
for a comparator panel:

[GRAPHIC] [TIFF OMITTED] TP21JY22.033

    In addition to the retroreflectivity specifications, S-916 also
provided a comprehensive list of other aspects of the comparator panel.
To maintain sufficient surface area for retroreflectivity, and for ease
of use and versatile placement of the comparator panel on various parts
of rail freight rolling stock, S-916 specifies that the retroreflective
surface of the panels shall measure 4 inches by 4 inches and be
equipped with a magnetic backing. Unlike the miscroprismatic
retroreflective material required for rail freight rolling stock, the
comparator panels shall be constructed of glass-beaded material or
other material that displays uniform appearance when rotated and viewed
with a light source. Because part 224 allows for horizontal and
vertical placement of retroreflective sheeting, this helps eliminate
the slight directional dependency of the panel that would otherwise be
exhibited in prismatic material; however, this does not diminish the
amount of retroreflectivity for the same given value.
    AAR and FRA agreed that the comparator panels would need to contain
pertinent information about the panel so that individuals using the
panel could easily verify it was valid, i.e., calibrated and/or
certified. Thus, as a condition of FRA's approval of the comparator
panels, FRA required the panels to have a waterproof and dust-proof
label on the back side that contained the phrase ``Retroreflective
Comparator Panel--Yellow'' or ``Retroreflective Comparator Panel--
White;'' and the name of the manufacturer, the part, model, or serial
number, the date the panel was manufactured, the target
retroreflectivity level to which the panel was manufactured (measured
in cd/lx/m\2\), and a space provided for future recalibration date
sticker(s). FRA and AAR concluded that a recalibration sticker would
help ensure the panels stay within the specified retroreflectivity
levels. Initially, an expiration date was considered, however, setting
an expiration on a comparator panel that may continue to function as
intended is contrary to the purpose for developing comparator panels to
evaluate the sheeting. Thus, AAR built a recalibration requirement into
S-916, to ensure that comparator panels are checked or recalibrated
periodically to confirm they remain within the manufactured
specifications for continued use. Specifically, S-916 requires the use
of a sticker attached to the back of each comparator panel with a
recalibration date specified.
    To help implement its comparator panel standard, AAR published
Specification M-944, Retroreflective Sheeting Inspection Procedure (M-
944). M-944 provides the process for conducting a performance
evaluation of retroreflective sheeting on railroad freight cars and
locomotives using a comparator panel or electronic handheld
retroreflectometer. An initial inspection of the car or locomotive
includes cleaning and examination of sheeting with a light source
approximately 15 feet away as a preliminary screening to determine if
further inspection is necessary. If the perceived reflected light
intensity of the entire installed sheeting appears brighter than that
of the comparator panel, it does not need to be further evaluated with
the comparator panel. Sheeting that has signs of condemnable
degradation (i.e., internal mold or mildew growth) also do not need to
be further evaluated with the comparator panel, as they are simply
replaced. If the perceived reflected light intensity of the entire
installed sheeting does not appear brighter than that of the comparator
panel and does not have signs of condemnable degradation (typically
exhibiting dull or otherwise questionable retroreflectivity) it is
evaluated by a comparator panel for evaluation (or a handheld
retroreflectometer). The comparator panel is placed adjacent to or
overlapping the target sheeting, and both are evaluated with a light
source adjacent to the inspector's eye and from approximately 15 feet
away. Sheeting that appears brighter than the comparator panel does not
need to be further evaluated and does not need to be replaced. If the
comparator panel appears brighter than the sheeting, or if the
inspector cannot distinguish one as being brighter than the other, the
sheeting shall be replaced. A handheld annular retroreflectometer can
also be used to directly evaluate sheeting. The minimum retroreflective
value to continue in service is 150 cd/lux/m\2\ for yellow sheeting and
250 cd/lux/m\2\ for white sheeting, when measured at -4[deg] entrance
angle and 0.2[deg] observation angle. Sheeting that yields
retroreflective values below these minimums shall be replaced.
    AAR incorporated the specifications of the comparator card and
inspection procedures into AAR Interchange Rule 66, Reflective
Sheeting. Rule 66 also established a new billing repair ``Why Made
Code: 1F'' related to use of the comparator panel and replacing
reflective sheeting for not meeting the minimum reflectivity levels per
Rule 66. The existing ``Why Made Code: 49'' is still valid for
reflective sheeting lacking FRA-224 stamp, damaged, obscured, or
missing, for use with Job Codes 5500 and 5502. FRA seeks comment from
AAR regarding the proportion of ``Why Made Code: 1F'' to ``Why Made
Code: 49'' that was billed during freight car SCABT or locomotive
annual inspection.
    Since late 2018, AAR's alternate method has been widely used by
industry (specifically within interchange among AAR member railroads).
FRA understands the standard has been successful and has no record of
accidents, incidents, or violations related using the standard. FRA is
proposing to codify the current elements of the standard in this
rulemaking proceeding and requests comments on whether the elements of
the standard should be codified to continue use of the standard for
complying with part 224 and make it an option for the entire railroad
industry.

IV. Section-by-Section Analysis

Section 224.3 Applicability

    Section 224.3 sets forth the scope and application of part 224.
Part 224 generally applies to all railroad freight

cars and locomotives that operate over a public or private highway-rail
grade crossing and are used for revenue or work train service. Existing
paragraphs (a) through (d) of Sec.  224.3 exclude from part 224's
applicability, certain types of equipment and operations because they
present a low risk of RIT collisions. FRA proposes to add paragraph (e)
to exclude rail freight rolling stock used solely for THEERP purposes,
except for incidental freight service. FRA is proposing to exclude
equipment used only for THEERP purposes because (as discussed further
in Section II C. and III A. of the supplementary materials above) those
operations present a low risk of RIT collisions. Incidental freight
service would include when a railroad uses rail freight rolling stock
for other than THEERP purposes only on rare occasions as necessary to
facilitate some of their operations. For example, California State
Railroad Museum requested relief from part 224 for two locomotives used
primarily for yard switching, freight service, and rarely in passenger
(excursion) train service, but only when its steam locomotives
fail.\33\ In another instance, The Everett Railroad Company stated that
its caboose car is retained primarily for use on excursion trains,
historical and public relation events, along with possible, but very
infrequent, use as a crew caboose or shoving platform.\34\ For these
particular instances, the freight train consist, as well as the
railroad trackage, are short, and the trains operate at much lower
speeds than typical freight service.
---------------------------------------------------------------------------

    \33\ Docket FRA-2010-0171, Document No. 9.
    \34\ Docket FRA-2012-0024, Document No. 4.
---------------------------------------------------------------------------

Section 224.107 Implementation Schedule

    FRA proposes to remove this section. On November 28, 2005, when the
Reflectorization Standards took effect, railroads operating rail
freight rolling stock subject to this part, were required to commit to
an implementation schedule for equipping their fleet with
reflectorization. This section required such railroads to submit an
implementation schedule to FRA for approval, or adopt FRA's proposed
implementation schedule, equipping 10% of total freight fleet per year
for 10 years, and 20% of total locomotive fleet per year for 5 years.
This meant that by November 28, 2015, 100% of the freight fleet
population would be fully equipped with part 224 compliant
retroreflective sheeting. Similarly, by November 28, 2010, 100% of the
locomotive fleet population would be fully equipped with part 224
compliant retroreflective sheeting. With the passage of time, railroads
are no longer required to submit an implementation schedule or adopt
FRA's proposed implementation schedule. Therefore, this section is
outdated and FRA is proposing to remove the language to shorten and
simplify part 224.

Section 224.109 Inspection, Repair, and Replacement

    FRA proposes to revise paragraphs (a) and (b) to remove any
references to Sec.  224.107, because that section's requirements are
outdated, and in this rulemaking proceeding FRA is proposing to remove
it. Specifically, FRA proposes to remove the following language
``(Sec.  224.107 in the case of freight cars subject to Sec.
224.107(a)(3))'' from paragraph (a), and the following language
``(Sec.  224.107 in the case of locomotives subject to Sec.
224.107(b)(3))'' from paragraph (b).

Section 224.111 Renewal

    FRA proposes to retitle this section from ``Renewal'' to
``Evaluation, and replacement of 10-year old or underperforming
retroreflective sheeting.'' The existing title, ``Renewal,'' reflects
the only current replacement option, which is to renew the
retroreflective sheeting after 10 years, regardless its condition. The
proposed title would indicate two options for replacing the
retroreflective sheeting: the same 10-year replacement cycle; or using
a performance-based method to determine when replacement is required.
    In paragraph (a), FRA proposes to identify two options for
replacing retroreflective sheeting: a 10-year replacement cycle; and an
alternative method to determine when replacement is required. FRA
proposes to include the existing 10-year replacement option in
paragraph (b) and the alternative option in paragraph (c).
    FRA proposes to retain the 10-year replacement option in paragraph
(b), because some short line railroads or individual car owners may not
want to invest in the equipment and training needed to switch to an
alternative method. As discussed above, it is not clear if, or how,
railroads are able to distinguish between replacement sheeting and
previously installed sheeting on the same piece of equipment. According
to AAR, UMLER system updates have been inconsistent, because the
railroad industry no longer relies on the information provided by the
UMLER fields. FRA requests comment from the railroad industry on how
records are created and maintained to track the installation date of
sheeting when only a portion of the required sheeting is replaced prior
to 10-years from the date of original installation.
    Proposed paragraph (c) would require railroads to evaluate
retroreflective sheeting during the SCABT and annual locomotive
inspection. Proposed paragraph (c)(1) provides the specifications for
an acceptable comparator panel to carry out the evaluation. Proposed
paragraph (c)(2) sets forth the process and criteria for evaluating the
existing sheeting using a comparator panel under paragraph (c)(1).
Proposed paragraph (c)(3) permits the use of a handheld
retroreflectometer to perform the required evaluation. As part of FRA's
routine compliance oversight, the agency expects to review railroads'
inspection records to verify an alternative evaluation was conducted.
    As proposed, the retroreflectivity, color, and construction
requirements in paragraph (c)(1)(i) through (iii) are the same as the
current S-916. The proposed labeling requirement in subparagraph
(c)(1)(iv) is also the same as the current S-916, with the additional
requirement that a panel's label include information on the calibration
status of the panel. Since AAR indicated that the median time between
SCABT is 25.6 months, FRA proposes to have the comparator panels
recalibrated at least every two years (i.e., no more than two years
from its manufactured date or previous recalibration date, whichever is
most recent). FRA seeks comment on this proposed timeframe and how much
downtime is expected while a panel is out for recalibration.
    Proposed paragraph (c)(2) would establish the same comparator panel
evaluation process and criteria as the current M-944. M-944 recommends
evaluating installed sheeting with a comparator panel from 15 feet. FRA
understands that 15 feet provides an appropriate amount of space to
perform the evaluation, but also understands that during a SCABT or
locomotive annual inspection it may not be practicable for an inspector
to stand 15 feet from the equipment. To provide some flexibility,
proposed paragraph (c)(2)(iv) would require sheeting to be evaluated
from a distance of between 10 and 20 feet, with a 15-foot distance
being preferable. FRA seeks comments on whether a range of 10 to 20
feet is sufficient to properly evaluate retroreflective sheeting and
whether the proposed range provides sufficient flexibility.
    Consistent with M-944, proposed paragraph (c)(2)(v) sets forth the
process for conducting the evaluation (e.g., with light source
positioned adjacent to the

inspector's eye and directed at the sheeting and comparator panel, the
inspector compares the reflected light intensity of the entire
installed sheeting to that of the comparator panel). Proposed paragraph
(c)(2)(v)(A) provides that if the perceived reflected light intensity
of the entire installed sheeting appears brighter than that of the
comparator panel, the installed sheeting passes the evaluation.
Proposed paragraph (c)(2)(v)(B) provides that if the perceived
reflected light intensity of the entire installed sheeting does not
appear brighter than the comparator panel or if the two are
indistinguishable, the installed sheeting, does not pass the
evaluation. If the two are indistinguishable, the installed sheeting is
already at or near the minimum threshold to comply with this section
and would only continue to degrade below the threshold if allowed to
continue in service until the next evaluation required by this section.
Therefore, as proposed, FRA would require such sheeting to be replaced.
    In paragraph (c)(3), FRA proposes to allow the use of handheld
reflectometers to evaluate retroreflective sheeting and determine when
it is required to be replaced under this part. FRA understands that
reflectometers can be used to evaluate retroreflective sheeting easily,
reliably, and accurately. Proposed paragraph (c)(3) would require use
of an annular reflectometer, placed directly against the
retroreflective sheeting. FRA is requiring an annular device, if a
reflectometer is used, because it is easier to ensure an accurate
evaluation compared to other types of devices that require multiple
measurements from different angles to properly evaluate the sheeting.
Proposed paragraph (c)(3)(iii) sets forth the minimum allowable
retroreflective values and necessary measurement angles if a
reflectometer is used. Due to the current high cost of a handheld
reflectometer, FRA does not anticipate widespread use of reflectometers
initially. However, if the cost diminishes overtime, railroads may
prefer it.

V. Regulatory Impact and Notices

A. Executive Order 12866

    The proposed rule is a nonsignificant regulatory action under
Executive Order 12866, ``Regulatory Planning and Review.'' FRA made
this determination as the economic effects of the proposed rulemaking
would not exceed the $100 million annual threshold defined by Executive
Order 12866. FRA estimates this proposed rule would result in benefits
over a 20-year period from not replacing retroreflective sheeting prior
to the end of its useful life, while potentially improving safety by
replacing in less than 10 years sheeting that has already reached the
end of its useful life.
1. Need for Regulatory Action
    The Reflectorization Standards were promulgated in 2005; in the
over-15 years since their publication, FRA has learned that the
reflective sheeting applied to rail freight rolling stock can remain
effective beyond the 10 years initially thought at the time the
Reflectorization Standards were developed. This rulemaking updates the
Reflectorization Standards in light of this new information by allowing
the use of an alternative method to evaluate retroreflective sheeting.
The alternative method, currently implemented by using a comparator
panel (under waiver), allows railroads and private car owners to
replace retroreflective sheeting as needed, based on performance,
instead of a mandatory replacement based on length of time. The
proposed rule also recognizes a segment of the regulated entities that
operate THEERP freight rolling stock and extends the exclusion from the
Reflectorization Standards to THEERP operations, as they pose a low
risk of highway-rail grade crossing incidents. For both stakeholders
that choose to use the comparator panel, and those that operate THEERP
freight rolling stock, the proposed rule promotes regulatory certainty
and efficiency. Unnecessary paperwork burdens would also be reduced by
no longer needing to periodically file waivers with FRA for relief from
their respective sections of part 224.
    The proposed rulemaking amends part 224 in two substantive ways.
First, the proposed rule codifies waivers excepting THEERP operations
from reflectivity standards in Sec.  224.3. Second, the proposed rule
codifies the AAR waiver allowing railroads to use an alternative method
(i.e., the comparator panel) for determining when retroreflective
sheeting needs replacement. The comparator panel would be added as an
option to the existing 10-year replacement cycle under Sec.  224.111.
2. Baseline
    The typical baseline scenario from which benefits and costs of the
regulation are measured is the no-action baseline, which is an
assessment of the railroad world without the proposed rule.\35\ Without
the NPRM, it is likely that the railroads will continue to file waivers
and waiver renewals for using the alternative method and exclusion of
THEERP freight rolling stock from the Reflectorization Standards. One
possible baseline would assume FRA approves most of these waivers with
conditions, as it has in the past. In comparing this baseline to the
NPRM, the benefit from the NPRM would be the removal of unnecessary
paperwork burdens of having to file future waivers and renewals with
FRA.
---------------------------------------------------------------------------

    \35\ Office of Management and Budget (OMB), Circular A-4:
Regulatory Analysis (Sept. 17, 2003). Available: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
---------------------------------------------------------------------------

    However, another baseline might offer more information about the
impacts of the proposed rule. The waiver to use the comparator panel is
relatively recent (2018), and many of the THEERP waivers are also less
than 10 years old. The comparator-panel waiver covers almost all the
rail freight rolling stock. Another baseline would describe a scenario
absent the comparator-panel waiver, that is, in which approval of the
waiver is uncertain and reflective sheeting is replaced per the 10-year
renewal cycle in existing Sec.  224.111. FRA proposes to use this
baseline to better estimate the substantive impacts of the NPRM. The
baseline is accounted for as a separate alternative under the Costs
section below. FRA invites comment on the appropriate baseline to use
for the regulatory analysis.
3. Costs
a. Methodology
    Since the retroreflective sheeting is applied per rail car, this
analysis used the per-car cost as the basis to estimate much of the
costs related to retroreflective sheeting. The costs for preparing
waiver petitions were estimated based on the labor costs of those
employees preparing the waivers.
    FRA requested data from AAR about the railroads' experiences under
the approved waiver using the comparator panel. FRA reviewed the data
supplied by AAR and incorporated it into the cost estimates below. AAR
provided data for before and after the comparator panel waiver.\36\
---------------------------------------------------------------------------

    \36\ Association of American Railroads (AAR), FRA Data Request
for Docket FRA-2015-0105 (Nov. 3, 2020).
---------------------------------------------------------------------------

    In its estimates, AAR used an average labor rate of $140.38 per
hour or $2.34 per minute, in 2020 dollars, which may be based on
interchange billing rates. For its regulatory analyses, however, FRA
uses standardized labor rates which the Class I railroads report to the
Surface Transportation Board (STB).

These rates are burdened by 75 percent for any fringe benefits. (The
Class I railroads report service hours and compensation to STB under 49
CFR 1245.2.) For this analysis FRA used the STB wage rates for the
relevant employee groups. These are STB Group 200 employees consisting
of Executives, Officials, & Staff Assistants who likely complete waiver
petitions for the railroads, and Group 400 Maintenance of Equipment &
Stores employees who inspect and apply the reflective sheeting. The
Executives, Officials, & Staff Assistants burdened rate is $77.44 per
hour or $1.29 per minute, and the Maintenance of Equipment & Stores
employees burdened rate is $59.89 per hour or $1.00 per minute (in 2020
dollars).\37\
---------------------------------------------------------------------------

    \37\ Surface Transportation Board (STB), Quarterly Wage A&B Data
(2020). Annual composite for All Railroads. Available: https://www.stb.gov/reports-data/economic-data/quarterly-wage-ab-data/.
Calculations: For Group 200 employees, $44.25 per hour STB average
straight time rate x 1.75 fringe benefit multiplier = $77.44 per
hour burdened wage rate. Similarly, for Group 400 employees, $34.22
x 1.75 = $59.89 per hour burdened wage rate.
---------------------------------------------------------------------------

    To estimate Government costs and benefits resulting from reviewing
and approving waivers, FRA used the General Schedule (GS) pay rates for
grade GS-14 step 5 employees in the Washington, DC area. The Federal
pay rate was also burdened by 75 percent yielding a Federal pay rate of
$115.29 per hour.\38\
---------------------------------------------------------------------------

    \38\ Office of Personnel Management (OPM), Salary Table 2020-DCB
(Jan. 2020). Available: https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2020/DCB_h.pdf.
Calculation: $65.88 per hour GS-14 Step 5 rate x 1.75 fringe benefit
multiplier = $115.29 per hour burdened rate.
---------------------------------------------------------------------------

    AAR provided counts of the maintenance of way (MOW) cars and
locomotives that would be covered under part 224; however, FRA focused
on freight rail cars to simplify the analysis. Given that MOW cars and
locomotives represent a small portion of all freight rail cars (about
2.5 percent and 1.6 percent respectively), including them in the
analysis would not significantly affect the results.
    FRA used a 20-year period of analysis for this rulemaking because
retroreflective sheeting appears to have an effective service life
beyond 10 years (based on data from the AAR comparator panel waiver).
FRA also identified one study that estimated prismatic sheeting used on
traffic signs may last 15 to 30 years, which may be a reasonable proxy
for similar sheeting used on rail cars.\39\ However, for the rail
freight rolling stock used in THEERP operations, a 10-year period of
analysis may be a better ``fit'' because overage equipment may only be
actively used for an additional 5 to 10 years. Since the provision
permitting use of the comparator panel covers most of the rail car
fleet, FRA chose to use a 20-year period of analysis.
---------------------------------------------------------------------------

    \39\ Preston, Howard, Traffic Sign Life Expectancy (St. Paul,
MN: 2014). Report No. MN/RC 2014-20. Minnesota Dept. of
Transportation. Available: https://www.lrrb.org/pdf/201420.pdf.
---------------------------------------------------------------------------

    First, the baseline scenario costs were determined, followed by the
NPRM costs. The difference between the two costs represents the
estimated net benefits (or costs) of the NPRM: Baseline costs-NPRM
costs = Net benefits (or costs).
    The costs and benefits associated with the NPRM are summarized in
Table V-1 below.

                          Table V-1--Summary of Total Benefits Over the 20-Year Period
                                                 [2020 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                   Present value   Present value
             Impact                Undiscounted         7%              3%        Annualized  7%  Annualized  3%
----------------------------------------------------------------------------------------------------------------
Baseline Cost...................    $540,747,953    $286,435,001    $402,248,463     $27,037,438     $27,037,415
NPRM Cost.......................     436,091,940     231,038,590     324,420,840      21,808,408      21,806,176
Net Benefits....................     104,656,013      55,396,411      77,827,623       5,229,029       5,231,239
Government Costs for Waivers             167,171          89,183         124,739           8,418           8,384
 (Baseline).....................
----------------------------------------------------------------------------------------------------------------
Qualitative Benefit: Reduced environmental waste from not replacing effective reflective sheeting prematurely.

    The impacts are described in detail below.
b. Baseline Costs
    Absent this NPRM, both THEERP operations and other railroads to
which the Reflectorization Standards apply will incur costs for the
following requirements:
     Cost for inspection and replacement of missing, damaged,
or obscured retroreflective sheeting (``sheeting'') under Sec.
224.109.
     Cost to renew, i.e., replace sheeting no later than 10
years after installation under Sec.  224.111. The baseline assumes
sheeting will be replaced periodically every 10 years.
     Incidental cost for transporting rail cars that would not
typically appear on a repair track or shop for a SCABT to renew
sheeting under Sec.  224.111.
     Cost of petitioning FRA for waivers from the
Reflectorization Standards.
    These cost elements may be represented by the equation: Baseline
cost = Visual inspection & sheeting replacement + 10-year renewal +
Transport + Waiver.
    The cost for inspection and replacement of missing, damaged, or
obscured sheeting was determined by the cost of a visual inspection and
sheeting replacement multiplied by the number of cars undergoing a
SCABT. The SCABT serves as the triggering event for the inspection and
replacement of sheeting under Sec.  224.109. To determine the number of
cars undergoing a SCABT per month, FRA used the median time between
SCABTs of 25.6 months, and the average annual number of freight cars of
1,658,334 (an average over the recent period 2016-2020). The cars per
month were multiplied by 12 months to yield an estimated 765,385 cars
per year undergoing a SCABT.\40\
---------------------------------------------------------------------------

    \40\ Calculation: 1,658,334 fleet size/26 months = 63,782 SCABT
cars per month. Then 63,782 cars per month x 12 months = 765,385
cars per year that undergo a SCABT, or about 46% of the fleet.
Source: FRA Data Request, 2020.
---------------------------------------------------------------------------

    Further, the cost of the visual inspection and sheeting replacement
was determined by the sum of the cost of the visual inspection and cost
to replace missing, damaged, or obscured sheeting. AAR indicated the
time for a visual inspection was 0.83 minutes, the time to replace the
first sheet per side was 9.3 minutes, the average number of sheets
replaced during SCABTs was 0.71 sheets, and the cost per sheet was
$1.31. Accounting for the labor time using the STB Maintenance of
Equipment & Stores wage rate of $1.00 per minute results in a per-car
cost of $11.00. Then the cost under Sec.  224.109 was calculated by
multiplying the estimated cars undergoing a SCABT by

the cost per car, resulting in a cost of $8,423,025 per year.\41\
---------------------------------------------------------------------------

    \41\ Calculations: Per-car cost for visual inspection and sheet
replacement = 0.83 min. x $1 per min. visual inspection + 9.3 min. x
$1 per min. sheeting replacement + 0.71 sheets x $1.31 per sheet =
$11.00. Total cost for visual inspection and sheeting replacement =
765,385 cars x $11 per car = $8,423,025 per year.
---------------------------------------------------------------------------

    Similarly, the cost to renew the sheeting after 10 years was
determined by the number of cars affected multiplied by the cost of
renewal. The average number of cars that would need full renewal was
154,800 per year based on the average over the years 2016 to 2020 (FRA
Data Request, 2020). That represents about 10 percent of the fleet per
year, which is expected given the 10-year renewal period. The cost for
sheeting material per car was estimated given 14 sheets (of 0.5 square-
foot each) would be needed for 2 sides of the rail car (less than 50-
foot car, 7 sheets per side), for a cost of $18.34 per car. AAR
provided that the time to apply the sheeting was 9.3 minutes for the
first sheet per side, and 2.6 minutes for each additional sheet,
totaling almost 50 minutes for both sides of a rail car and $50 in
labor costs (using the STB Maintenance of Equipment & Stores wage rate
of $1.00 per minute). The cost per car for sheeting renewal is the sum
of the material cost and labor application costs ($18.34 + $49.87 =
$68.21 per car). Then the renewal cost for all affected cars is
$10,558,758 annually.\42\
---------------------------------------------------------------------------

    \42\ Calculation: Cost to renew sheeting after 10 years =
154,800 cars x $68.21 per car = $10,558,758 per year on average.
---------------------------------------------------------------------------

    In order to model the impacts more accurately under the baseline,
FRA estimated the potential costs for transporting rail cars, that in
their normal operations, would not appear on a repair track or shop
(for a SCABT). These cars may be owned by private car owners that do
not own repair shops, MOW cars that are not regularly interchanged,
older cars that are not regularly interchanged, stored cars, and
seasonally used cars. These cars may incur additional expense for
transportation to a repair shop when their sheeting needs renewal after
10 years. However, this situation is mitigated by mobile repair units
or a railroad's Running Repair Agent (RRA) that can perform SCABTs and
replace sheeting.\43\ Nevertheless, FRA accounted for the
transportation costs for some cars that may need to be moved for
sheeting replacement because of scheduling issues with mobile repair
agents or operational issues. As a proxy estimate for the number of
cars requiring transport, FRA used the 23,000 freight cars that have
interchange restrictions as reported by AAR; these cars are usually
older cars.\44\ Another way to estimate the number of affected cars is
to consider the conditional probability of not undergoing a SCABT on a
repair track or shop and cars that would need full sheeting renewal.
The probability of not undergoing a SCABT was found by dividing the
number of cars undergoing a SCABT by the average fleet size, then
subtracting from 1, for a result of 0.54 or about 50 percent.\45\ From
the discussion above, the probability of renewal for a car is about 10
percent or 0.1. The conditional probability is the product of the two
probabilities, equaling about 0.05 or 5 percent of the fleet, and
representing 89,295 rail cars. Qualitatively, the majority of these
cars can be serviced by mobile repair agents and RRAs, and FRA used
23,000 cars as a reasonable estimate.
---------------------------------------------------------------------------

    \43\ Railinc, Running Repair Agents--Active. Available: https://findusrail.railinc.com/#/home.
    \44\ AAR, Railroad Facts: 2020 Edition (Washington: 2020) 53.
    \45\ Calculation: 1-765,385 SCABT cars/1,658,334 average fleet
size = 1-0.46 = 0.54, or about 50 percent of cars not likely to
appear on a repair track or shop for a SCABT.
---------------------------------------------------------------------------

    For the transportation cost per car, FRA estimated the expected
transportation cost as the probability that a car would need
transportation for sheeting renewal multiplied by its transportation
cost. FRA estimated a range of $3,000 for $4,000 to transport an empty
car, or an average cost of $3,500 per car; the expected cost in any one
year is $350.\46\ Then, the transportation cost for the rail car fleet
is the estimated 23,000 affected cars multiplied by the expected
transportation cost of $350, for an overall transportation cost of
$8,050,000 annually. Given the uncertainty about the number of cars
affected, there is a higher degree of uncertainty about this cost
estimate and FRA invites comment on the inputs used.
---------------------------------------------------------------------------

    \46\ Calculation: Expected (transportation cost per car) =
probability (car would need 10-year sheeting renewal) x
transportation cost = 0.1 x $3,500 = $350.)
---------------------------------------------------------------------------

    The last cost element in the baseline scenario is the cost of
petitioning FRA for waivers from the Reflectorization Standards. When
approved, waivers generally provide regulatory relief for five years.
For this analysis, FRA distinguished between waiver extensions and
waiver renewals. Waivers extensions permit the railroad or individual
car owners to continue to operate under the original waiver for another
five years, and do not require preparation of a Federal Register
notice. After 10 years, the railroad or individual car owner can no
longer apply for an extension, but must instead request a renewal of
the waiver. The renewal requires more administrative tasks including a
Federal Register notice. The baseline waiver cost is the estimated
number of new waivers plus waiver extensions and renewals, multiplied
by the cost of filing waivers. This analysis estimated the waiver costs
for both THEERP operations and the performance-based (i.e., comparator-
panel) waiver.
    In the case of waivers for THEERP operations, FRA has received and
reviewed 22 waivers over 16 years, for a rate of 1.375 new waivers per
year, which is rounded to 1.5 waivers for analysis. Therefore, over the
20-year period of analysis (years 2022 to 2041), FRA expects 30 new
waiver petitions. Based on historical experience and FRA subject matter
expert estimates, FRA has found that waiver extensions and renewals are
subject to the following three conditions:
     Railroads or individual car owners will likely not operate
overage equipment beyond 10 years.
     Railroads or individual car owners have not asked for
renewals of waivers beyond 10 years.
     FRA has approved 14 out of 22 waivers for an approval rate
of 64 percent (i.e., 64 percent of 1.5 new waivers is about 1 new
waiver per year). Moreover, there were 7 dismissed or denied waivers,
and 1 double-counted waiver to complete the set of 22 THEERP waivers).
    Applying these conditions to the number of new waivers, FRA
estimated 15 waiver extensions over the period of analysis. As
explanation, new waivers approved during years 1 through 5 of the
period of analysis (from calendar years 2022 through 2026) will likely
receive extensions during years 6 through 10 of the period of analysis
(from calendar years 2027 through 2031) respectively, resulting in 5
extensions. (After 10 years, requests for waivers renewals are not
likely under the first two conditions above.) Similarly, new waivers
approved during years 6 through 10 of the analysis will likely receive
extensions during years 11 through 15 of the analysis (from 2032
through 2036) respectively, resulting in an additional 5 extensions.
Finally, new waivers approved during years 11 through 15 of the
analysis will likely receive extensions during years 16 through 20 of
the analysis (from 2037 through 2041) respectively, resulting in 5 more
extensions. In total, FRA expects 15 waiver extensions.
    Also, THEERP operations that currently have waivers may request

extensions resulting in an additional 6 waiver extensions. Of the 14
approved THEERP waivers, 4 did not request a waiver renewal and expired
before year 2022 (waivers FRA-2010-0148, 2010-0156, 2008-0021, and
2014-0082). Of the remaining 10 approved THEERP waivers, 1 is due for
an extension in year 1 of the analysis, i.e., calendar year 2022
(waiver FRA-2016-0110--approved in 2017). Four approved waivers are due
for extensions in year 3 of the analysis, i.e., year 2024 (waivers FRA-
2018-0026, 2018-0086, 2019-0008, 2019-0047--all approved in 2019).
Finally, 1 approved waiver is due for an extension in year 4 of the
analysis, i.e., year 2025 (waiver FRA-2020-0046--approved in 2020). In
sum, FRA expects 6 waiver extensions. Four of the 10 approved waivers
may request waiver renewals during the period of analysis but are
unlikely to do so based on the above conditions.
    Thus, FRA expects THEERP operations to file 30 new waivers, 15
extensions of these new waivers, and 6 extensions of existing waivers.
FRA estimated each new THEERP waiver petition requires 40 hours of
labor, and each extension requires 8 hours of labor. Accounting for
these labor hours at the STB Executives, Officials, & Staff Assistants
burdened wage rate yields a new waiver cost of $3,097.50 per waiver,
and a corresponding cost of $4,646 for 1.5 new waivers per year.\47\
The cost for a waiver extension is $619.50 per extension. The costs are
scheduled according to the frequency of occurrence of new THEERP
waivers (1.5 per year), new THEERP waiver extensions (1 per year
starting in year 6 of the analysis), and currently-approved THEERP
waiver extensions (1 in year 1 of the analysis, 4 in year 4, and 1 in
year 5). The cost schedule also accounts for extensions and renewals of
the performance-based waiver at $1,587 per extension or renewal (see
below, 1 extension expected in year 2 of the analysis, and thereafter 1
renewal per each year in years 7, 12, and 17). As an example, in year 2
of the analysis, FRA expects 1.5 new THEERP waivers ($4,646), and 1
alternative waiver extension ($1,587), for a total estimated cost of
$6,234.
---------------------------------------------------------------------------

    \47\ Calculation: Cost for 1 waiver = 40 hrs. x $77.44 =
$3,097.50. Then 1.5 new waivers x $3,097.50 per waiver = $4,646.
---------------------------------------------------------------------------

    For regulated entities petitioning to use alternative methods to
evaluate sheeting, FRA is not aware of any new methods in development
and expects no new waiver filings. If a new performance-based waiver
was filed, the cost to file such a waiver would be qualitatively high
because it would likely involve extensive development and in-service
testing like the comparator panel. Given the research to develop the
comparator panel, FRA expects AAR will continue to file for extensions
and renewals to extend the waiver's relief. Over the period of
analysis, FRA estimated 4 extensions and renewals, requiring 20.5 hours
each at the same Executives, Officials, & Staff Assistants wage rate
for a per-waiver cost of $1,587.47. FRA estimated the performance-based
waiver extension requires more labor time than the THEERP-operations
waiver extension because Class I railroads' operations are more
complex. (A THEERP-operations waiver renewal, however, may involve
detailed descriptions of the subject equipment that may add to the time
to file a potential renewal.)
    Furthermore, the Federal Government expends resources to review
these waiver petitions. Depending on the waiver, FRA's review will
involve legal personnel, subject matter experts, administrative
personnel, and railroad inspectors. FRA estimated these costs using the
same respective labor hours as for THEERP-operations waivers and
performance-based waivers above. For the wage rate, instead of using an
average wage rate for the variety of personnel involved, FRA used a
representative wage rate for GS-14 step 5 employees of $115.29 per
hour. The resulting FRA costs are $4,611.60 for a new THEERP-operations
waiver, $922.32 for a THEERP-operations waiver extension, and $2,363.45
for the comparator-panel wavier extension and renewal.
    The following table presents the estimated baseline scenario cost
elements. The Government costs are not included in the total baseline
cost.

                                       Table V-2--Baseline Scenario Costs
                                                 [2020 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                   Present value   Present value
      Baseline cost impact         Undiscounted         7%              3%        Annualized  7%  Annualized  3%
----------------------------------------------------------------------------------------------------------------
Visual Inspection & Replacement     $168,460,499     $89,233,646    $125,313,342      $8,423,025      $8,423,025
 (Sec.   224.109)...............
10-Year Renewal (Sec.   224.111)     211,175,170     111,859,638     157,087,664      10,558,758      10,558,758
Transportation for Non-SCABT         161,000,000      85,281,815     119,763,673       8,050,000       8,050,000
 Cars...........................
Waivers.........................         112,284          59,902          83,784           5,654           5,632
                                 -------------------------------------------------------------------------------
    Total Baseline..............     540,747,953     286,435,001     402,248,463      27,037,438      27,037,415
Government Costs for Waivers....         167,171          89,183         124,739           8,418           8,418
----------------------------------------------------------------------------------------------------------------

c. NPRM Costs
    The first substantive change under the NPRM would add freight
rolling stock used for THEERP operations to the list of excepted
equipment under Sec.  224.3. These operations would no longer need to
file waivers and waiver extensions with FRA and thus save the
associated paperwork costs. The benefits would equal the baseline costs
for waivers (when taken together with the similar type of benefits from
codifying the comparator panel waiver).
    The largest change under the NPRM would be evaluating rail cars
with a comparator panel instead of replacing sheeting under the 10-year
renewal cycle. THEERP operations and other railroads to which the
Reflectorization Standards apply will incur costs for the following
requirements:
     Cost for inspection and replacement of missing, damaged,
or obscured retroreflective sheeting under Sec.  224.109. This
requirement is unchanged from the baseline except for removing old
implementation dates.
     Cost to evaluate and replace sheeting under Sec.  224.111.
The NPRM retains the option to use the 10-year replacement cycle.
     Incidental cost for transporting rail cars that would not
typically appear on a repair track or shop for a SCABT to renew
sheeting under Sec.  224.111. This

cost occurs under the baseline too but is adjusted for relief from the
10-year replacement cycle, and longer expected sheeting life.
     Small entities that may use the 10-year replacement cycle
option under Sec.  224.111 (estimated at 15 percent of small entities).
     Cost of the comparator panel.
     Cost to recalibrate the comparator panel under Sec.
224.111.
     Employee training to use the comparator panel as described
in AAR Field Manual Rule 66. (The comparator panel inspection of
reflective sheeting will become part of the SCABT and annual locomotive
inspection.)
    These cost elements may be represented by the equation: NPRM Cost =
Visual inspection & sheeting replacement + Periodic evaluation &
sheeting replacement + Transport + 10-year renewal option estimated for
small entities + Comparator panel + Comparator panel recalibration +
Employee training.
    The cost for visual inspection and replacement of missing, damaged,
or obscured sheeting remained the same as under the baseline scenario
because FRA is only removing the references to the outdated
implementation schedule. The substantive requirements remain the same.
    The primary change under the NPRM would be evaluating the sheeting
on rail cars with a comparator panel. The cost of using the comparator
panels is determined by the number of cars undergoing a SCABT and
evaluated with the comparator panel multiplied by the material and
labor costs per car. Based on data supplied by AAR, FRA estimated
571,750 cars will evaluated, a preliminary inspection will require 2.8
minutes, cleaning will take 3.3 minutes, and the time to apply 1 sheet
will require 9.3 minutes. AAR also found an average of 0.72 sheets
renewed during their waiver at a cost of $1.31 per sheet. FRA applied
the STB Group 400 Maintenance of Equipment and Stores employee wage
rate to estimate a cost per car of $16.21, and $9,270,752 per year for
the affected cars. (In contrast, the estimated cost per car for
sheeting renewal under the baseline scenario was $68.21 per car.) \48\
---------------------------------------------------------------------------

    \48\ Calculation: Material cost per car = 0.72 sheets x $1.31
per sheet = $0.95. Labor cost per car = (2.8 min. inspection + 3.3
min. cleaning + 9.3 min. first sheet application) x $1 per min. =
$15.27. Material and labor costs per car = $0.95 + $15.27 = $16.21.
Cost for evaluated cars = 571,750 cars x $16.21 per car =
$9,270,750.
---------------------------------------------------------------------------

    The NPRM also allows use of a handheld retroreflectometer to
directly evaluate the performance of sheeting. The retroreflectometer
may be easier to use than the comparator panel, but given its current
high cost ($10,000), its use will likely be minimal at this time.
    As in the baseline scenario, some rail cars may incur a
transportation cost to renew sheeting because they may not periodically
undergo a SCABT at a repair shop or track, or receive service from a
mobile service agent. However, given the experience under the AAR
comparator panel waiver showing reflective sheeting can likely remain
effective beyond 10 years, these cars would need to be transported less
frequently. These cars would no longer be subject to the 10-year
renewal cycle. FRA used the estimates from Preston (2014) of an average
reflector service life of about 20 years to calculate the reduced
impact of cars needing transport for reflective sheeting replacement
under the NPRM. Using a 20-year service life reduced the probability
that cars would need transport by half to 5 percent, and the resulting
expected cost per car from $350 to $175. Given the same number of cars
needing transport as under the baseline scenario (23,000 cars), yielded
a transportation cost of $4,025,000 per year.
    The NPRM contains an option for railroad car owners to continue
using a 10-year replacement cycle for sheeting. FRA assumes that a
portion of small entities will be most likely to choose this option to
reduce their investment in the comparator panel and associated costs to
implement it (such as training employees). Based on feedback from the
American Short Line and Regional Railroad Association (ASLRRA), FRA
understands most short line railroads are in fact using the comparator
panel. However, for operations that find using the comparator panel
costly, FRA estimated 15 percent of small entities will use the 10-year
replacement option. To count the number of rail cars owned by small
entities, FRA subtracted Class I railroad owned cars in North America,
Class II railroad owned cars, and privately-owned cars from all freight
cars--to estimate Class III railroads own 54,766 rail cars on average
(over the years 2016 to 2020). Thus, 15 percent of these Class III
railroad cars is 8,215 cars. FRA used AAR Railroad Facts books and
Progressive Railroading magazine ``Fleet Stats'' for various years to
determine car ownership.\49\ Using the same percent of cars that would
need full renewal under the baseline scenario of 10 percent means about
821 cars per year would need sheeting renewal. FRA applied the same
cost per car for 10-year sheeting replacement as under the baseline
scenario ($68.21 per car) and estimated a cost of $56,033 per year
under the NPRM.
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    \49\ AAR, Railroad Facts (Washington: multiple editions 2017-
2020) 65-80. Foran, Pat, & Stagl, Jeff, eds., ``Fleet Stats,''
Progressive Railroading (multiple editions 2016-2019, and 2021).
Year 2020 not available, 2019 Railroad Car Owners data carried over
to 2020. Available: https://www.progressiverailroading.com/keywords/keywords.aspx?id=0&keywords=Fleet+Stats&year=2017. (May require log-
in for some years.)
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    To estimate the number of comparator panels that may be purchased,
FRA used the difference between the average number of shops and
locations qualified to perform a SCABT and evaluate sheeting using a
comparator panel, before and after the comparator panel waiver. AAR
estimated an average of 1,570 shops and locations qualified for SCABTs
before the waiver, and 1,063 shops and locations equipped with a
comparator panel after the waiver; the difference of about 500 shops
and locations represents the shops and locations that may purchase a
comparator panel. AAR notes its estimates include shops and locations
that performed five or more SCABT tests, so the actual counts may be
higher. In addition, FRA internally estimated 300 shops and locations
may need to purchase a comparator panel. FRA used an average of the two
estimates for analysis, or 400 shops and locations. FRA assumed 1
comparator panel purchased per shop or location, and applied the $190
cost per panel to estimate a marginal cost of $76,000 for acquiring
comparator panels. Furthermore, AAR offers these comparator panels may
need replacement every 4 years (years 1, 5, 9, 13, and 17 of the 20-
year period of analysis).
    These comparator panels are also required to be periodically
recalibrated (not later than 2 years) so that an accurate number of
retroreflective sheets are replaced on rail cars. Given the 4-year
average life of a comparator panel, a comparator panel will be
typically recalibrated 1 time during its useful life. For example, if a
comparator panel is purchased in year 1 of the period of analysis, it
would be recalibrated in year 3, and a new comparator panel purchased
in year 5. Over the period of analysis, recalibration would occur in in
years 3, 7, 11, 15, and 19. Additionally, AAR estimated a recalibration
cost of $80 per panel with a discount if multiple panels are
recalibrated per shop. As FRA does not know how many shops own multiple
comparator panels, the cost of recalibrating one panel was used to
estimate a cost of $32,000 for recalibrating 400 comparator panels.

    Employees inspecting and replacing reflective material likely would
need training and instruction in these procedures. Rule 66, Reflective
Sheeting, of the AAR Field Manual contains instructions for inspecting
sheeting using the comparator panels. A manufacturer of comparator
panels also provides step-by-step instructions on its website.\50\ FRA
assumed these comparator panel instructions will be combined with
existing training sessions on performing SCABTs and locomotive
inspections. FRA estimated a marginal training cost using the same
amount of time estimated to inspect reflective sheeting using a
comparator panel of 2.8 minutes, applied to 20,253 STB Group 400
Maintenance of Equipment and Stores employees at their wage rate, to
calculate a training cost of $55,739. Only the first year of training
is considered because the cost of subsequent training is covered under
the training rule, 49 CFR part 243.\51\
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    \50\ Avery Dennison, available: RR-Comparison-Panel-
Kit_Overview.pdf (averydennison.com).
    \51\ Calculation: 2.8 min. marginal training time x $1 per min.
x 20,253 employees = $55,739.
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    The following table presents the estimated NPRM cost elements.

                                              Table V-3--NPRM Costs
                                                 [2020 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                   Present value   Present Value
        NPRM cost impact           Undiscounted         7%              3%        Annualized  7%  Annualized  3%
----------------------------------------------------------------------------------------------------------------
Visual Inspection & Replacement     $168,460,499     $89,233,646    $125,313,342      $8,423,025      $8,423,025
 (Sec.   224.109)...............
Periodic Evaluation & Sheeting       185,415,041      98,214,480     137,925,381       9,270,752       9,270,752
 Replacement (Sec.   224.111)...
Transportation for Non-SCABT          80,500,000      42,640,907      59,881,836       4,025,000       4,025,000
 Cars...........................
10-Year Renewal Option est. for        1,120,661         593,615         833,630          56,033          56,033
 Small Entities.................
Comparator Panel................         380,000         221,151         295,326          20,969          19,851
Comparator Panel Recalibration..         160,000          81,699         117,210           7,712           7,878
Employee Training...............          55,739          52,092          54,115           4,917           3,637
                                 -------------------------------------------------------------------------------
    Total NPRM..................     436,091,940     231,038,590     324,420,840      21,808,408      21,806,176
----------------------------------------------------------------------------------------------------------------

4. Alternatives
    FRA considered a few regulatory alternatives before deciding to
offer stakeholders the option of using either the 10-year replacement
cycle or the alternative method (comparator panels) as proposed. As a
presumably lower-cost alternative, FRA considered eliminating the 10-
year replacement cycle completely given that most of the industry is
using the comparator panel waiver. However, FRA assessed that some
entities might incur higher costs for evaluating sheeting on MOW cars
and other privately-owned cars using the comparator panel because these
cars may not appear at a repair shop or on a repair track regularly for
a SCABT. Some smaller entities with fewer cars may also find it easier
to replace the retroreflective sheeting on their cars every 10 years. A
pre-determined schedule for replacing sheeting provides regulatory
simplicity for these entities and may be easier to implement than a
comparator panel-based standard. Overall, including both alternatives
as proposed increases regulatory flexibility for railroads and car
owners.
    FRA also considered stricter alternatives that would help FRA
enforce the Reflectorization Standards. For example, FRA could mandate
railroads and private-car owners record and report when retroreflective
sheeting is changed. FRA could also require the industry to report
which standard for evaluation and replacement they are following (i.e.,
either the alternative replacement or the 10-year replacement cycle).
As noted in the Overview section above, under the approved waiver for
using the comparator panel, the industry has not been consistently
recording in UMLER when and why sheeting is replaced. That makes it
difficult to determine how much of the sheeting was replaced because of
damage, and how much because of the passage of time. Given the size of
the fleet and frequency of SCABTs, the record-keeping and reporting
costs could be somewhat significant. Railroads would need to record and
report information that is not currently required, including when the
sheeting is replaced, why it is replaced (obscured, damaged, or
missing), and how much of the rail car sheeting was replaced. FRA
estimates this would cost at least $167,000 annually.\52\ In return,
better records could facilitate FRA enforcement, for example, to check
if the overall rate of sheeting replacement under the NPRM is in-line
with expectations for the service life of sheeting in various
operations and environments. As proposed, enforcement will generally
rely on FRA inspectors visually inspecting sheeting and SCABT data,
which, given the low accident risk under the waivers historically,
would provide a less costly alternative to requiring more record-
keeping and reporting. For example, if an inspector observes sheeting
to be in poor condition, and requests records from the railroad that
list a recent SCABT, it would provide an indication the sheeting may
not have been replaced when required.
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    \52\ The Paperwork Reduction Act (PRA) analysis for this
proposal estimates a cost of $167,000 for recording and reporting
obscured, damaged, or missing sheeting under Sec.  224.109. This
analysis assumes the stricter alternative would require railroads to
record and report additional data. As an approximation, the
additional burden is another 5 minutes, or $167,000 annually. Also,
Railinc would incur a cost for programming changes to the UMLER
database to accommodate the new data fields. FRA inspectors would
also spend more time reviewing these more detailed records.
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5. Sensitivity Analysis
    The cost and benefit estimates could change if the analysis's
underlying assumptions or inputs were to change. The largest categories
of costs presented in Table V-3 are the pre-existing requirement to
visually inspect and replace sheeting (Sec.  224.109), periodically
evaluate and replace sheeting (Sec.  224.111), and transport cars that
would not typically appear on a repair track or shop for a SCABT. The
costs to visually inspect and replace sheeting, and to periodically
evaluate and replace sheeting, depend primarily on the number of cars.
The number of cars is about 750,000 and 500,000 respectively for these
cost estimates. If the number of cars used in calculating these
estimates were to increase, then the estimated net business benefits
would increase too. The number of active freight cars may increase if
economic growth continues in the short run, likely increasing the
demand for freight transportation. FRA used an

average of recent freight cars counts (2016-2020) as a reasonable
estimate in its cost estimates.
    Furthermore, for the cost to periodically evaluate and replace
sheeting, if the cost for purchasing a retroreflectometer decreases
over time, or a cheaper substitute method of directly measuring the
reflectivity becomes available, the labor time to evaluate the sheeting
on a car will decrease. The benefits from using an alternative method
will then increase as well.
    For the transportation cost, the cost per car is a significant
factor. FRA applied the probability of sheeting renewal to estimate
this cost. As the actual service life of sheeting in different railroad
operations and environments becomes better known, the need to transport
cars to replace sheeting may further decrease, reducing this cost.
Additionally, as mentioned, FRA used a proxy to estimate the number of
cars that may need transportation, which is a source of uncertainty in
the estimate, but conceptually represents the type of cars that may
need transportation.
    FRA also used STB wage rates in its estimates, based on the Class I
railroads' reports to the STB. Using AAR wage rates will affect the
scale of costs, but not the resources used in terms of capital (i.e.,
the number of cars and comparator panels), and labor time used to
comply with the regulation.
6. Conclusion
    As shown in Table V-1 above, FRA estimates the NPRM results in net
benefits with a present value of $55 million using a 7 percent discount
rate and $78 million using a 3 percent discount rate (over a 20-year
period of analysis in 2020 dollars). In annualized terms, the net
benefits are $5 million per year using a 7 percent discount rate, and a
similar $5 million using a 3 percent discount rate. In addition, the
Federal Government would save the cost of reviewing and analyzing
waivers of about $89,183 (present value, 7 percent discount rate);
$124,739 (present value, 3 percent discount rate), or $8,418
(annualized, both 7 and 3 percent discount rates).
    FRA also estimates there may be ancillary benefits of the NPRM in
terms of reduced environmental impact from disposing of reflective
sheeting prematurely. Given reflective sheeting can remain effective
more than 10 years, there would be less reflective sheeting replaced
under the NPRM during the period of analysis. Based on the Preston
(2014) study, if reflective sheeting lasts 15 to 20 years, then there
would be 50 percent to 100 percent less reflective sheeting replaced
and disposed of in comparison to the mandatory 10-year replacement. The
benefit would be less environmental waste. Although FRA has not
quantified this benefit, it could be important given the large number
of rail cars affected. As in the regulation before this NPRM,
reflective sheeting would still need replacement earlier than 10 years
if damaged or obscured. Also, in the long run, the reflective sheeting
applied on all cars would need replacement and disposal eventually. FRA
invites comment on these environmental benefits.

B. Regulatory Flexibility Act and Executive Order 13272

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) and
Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' (67 FR 53461 (Aug. 16, 2002)) require agency
review of proposed and final rules to assess their impacts on small
entities. An agency must prepare an Initial Regulatory Flexibility
Analysis (IRFA) unless it certifies that a rule, if promulgated, would
not have a significant economic impact on a substantial number of small
entities. FRA has not determined whether this proposed rule would have
a significant economic impact on a substantial number of small
entities, and has therefore prepared this IRFA. FRA seeks comment from
small entities on the economic impacts of this proposed rule.
1. Reasons for Considering Agency Action
    FRA is initiating this rulemaking to codify two types of waivers
that entities have submitted for relief from the Reflectorization
Standards (or part 224). First, entities that operate rail freight
rolling stock in THEERP operations have petitioned for exclusion from
the Reflectorization Standards. Generally, FRA has found these
operations do not operate their equipment under low-light conditions
(i.e., at night) over highway-rail grade crossings. Therefore, these
operations pose a low safety risk in terms of accidents/incidents
preventable by retroreflective sheeting. By codifying waivers for
equipment used in THEERP operations, FRA would provide relief from
unnecessary paperwork burdens for these entities because they would no
longer need to file these waivers. Second, the NPRM codifies a waiver
granted to AAR to use an alternative method, specifically the
comparator panel, to determine when to replace retroreflective
sheeting. The existing Reflectorization Standards require replacement
of retroreflective sheeting after 10 years of service, based on the
best information available at the time the Reflectorization Standards
were promulgated. Through its pilot program to test the comparator
panel method, AAR has demonstrated that retroreflective sheeting can
often perform effectively beyond 10 years. Using the comparator panel
method allows retroreflective sheeting to be replaced as needed,
resulting reduced costs and environmental waste. The comparator panel
method may also result in replacing degraded or otherwise substandard
sheeting sooner than it would have been under the 10-year replacement
cycle, thus potentially increasing overall train visibility for motor
vehicle drivers--and improving public safety. The proposed rule
recognizes this more efficient method for evaluating retroreflective
sheeting and makes it available to all entities operating freight
rolling stock. In addition, the NPRM retains the option for entities to
use the 10-year replacement cycle for entities that may find that
method less burdensome for their particular operation. The proposed
rule also removes outdated implementation schedules for retroreflective
sheeting to improve regulatory clarity.
2. A Succinct Statement of the Objectives of, and Legal Basis for, the
Proposed Rule
    The objective of this proposed rule is to enhance safety, promote
innovation, and reduce the unnecessary paperwork burdens on the
railroad industry. The provision to codify waivers for rail freight
rolling stock used in THEERP operations would reduce paperwork costs
for these operations. Except for larger railroads that operate older
equipment as private business cars and for special events, most of the
entities that operate rail cars used in THEERP operations are small
entities. These small entities would benefit economically from the
provision to codify THEERP-related waivers. The second provision to
codify the alternative method (comparator panel) to determine when to
replace retroreflective sheeting would reduce compliance costs for most
of the railroad industry. ASLRRA indicated to FRA that most of the
small railroads are using the comparator panel method; FRA estimates 85
percent of small entities are using the comparator panel, and 15
percent are using the 10-year replacement cycle. FRA has kept the 10-
year replacement cycle as an alternative compliance method for that
share of small entities that wish to use it. These small entities may
have operations for

which using the comparator panel may be burdensome, such as operating
equipment that may not be regularly interchanged, and incurring the
costs for purchasing and using the panel. Some small entities may also
find it less burdensome and prefer the regulatory simplicity of
following a predetermined replacement schedule for retroreflective
sheeting. For entities using the 10-year replacement option, the cost
to comply would remain the same as it is before the proposed rule. For
the entities using the alternative replacement option, FRA estimates
the costs to comply would decrease, while enhancing safety.
    The Secretary of Transportation has broad statutory authority to
``prescribe regulations and issue orders for every area of railroad
safety'' under 49 U.S.C. 20103, including reflectorization of rail
freight rolling stock regulated in part 224. FRA's review and
codification of existing waivers issued under 49 U.S.C. 20103 is also
responsive to section 22411 of the Infrastructure Investment and Jobs
Act (Pub. L. 117-58).
3. A Description of and, Where Feasible, an Estimate of the Number of
Small Entities to Which the Proposed Rule Would Apply
    The Regulatory Flexibility Act of 1980 requires a review of
proposed and final rules to assess their impact on small entities,
unless the Secretary certifies that the rule would not have a
significant economic impact on a substantial number of small entities.
``Small entity'' is defined in 5 U.S.C. 601 as a small business concern
that is independently owned and operated and is not dominant in its
field of operation. The U.S. Small Business Administration (SBA) has
authority to regulate issues related to small businesses, and
stipulates in its size standards that a ``small entity'' in the
railroad industry includes a for-profit ``line-haul railroad'' that has
fewer than 1,500 employees and a ``short line railroad'' with fewer
than 500 employees.\53\
---------------------------------------------------------------------------

    \53\ ``Size Eligibility Provisions and Standards,'' 13 CFR part
121, subpart A.
---------------------------------------------------------------------------

    Federal agencies may adopt their own size standards for small
entities in consultation with SBA and in conjunction with public
comment. Under that authority, FRA has published a final statement of
agency policy that formally establishes ``small entities'' or ``small
businesses'' as railroads, contractors, and hazardous materials
shippers that meet the revenue requirements of a Class III railroad as
set forth in 49 CFR part 1201, General Instruction 1-1, which is $20
million or less in inflation-adjusted annual revenues; and commuter
railroads or small governmental jurisdictions that serve populations of
50,000 or less.\54\ The $20 million limit is based on the Surface
Transportation Board's revenue threshold for a Class III railroad
carrier. Railroad revenue is adjusted for inflation by applying a
revenue deflator formula in accordance with 49 CFR part 1201, General
Instruction 1-1. The current threshold is $40.4 million.\55\ FRA is
using this definition for the proposed rule.
---------------------------------------------------------------------------

    \54\ 68 FR 24891 (May 9, 2003) (codified at appendix C to 49 CFR
part 209).
    \55\ The Class III railroad revenue threshold is $40.4 million
or less, for 2020. (The Class II railroad threshold is between $40.4
million and $900 million, and the Class I railroad threshold is $900
million or more.) See Surface Transportation Board (STB), Data
Issued in Regulatory Proceedings. Revenue Deflators. Available:
https://www.stb.gov/reports-data/economic-data/. See also STB
Decision, Docket No. EP 748, Indexing the Annual Operating Revenues
of Railroads, Decided June 10, 2020. https://prod.stb.gov/reports-data/economic-data/railroad-revenue-deflator-factors/.
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