SUPPLEMENTARY INFORMATION:

Table of Contents for Supplementary Information

I. General Background

II. Proceedings to Date, Provision of Opportunity for Comment, Comparison of Initial and New Proposals

A. Initial Proposal

B. Subsequent Changes in the Minimum and Ordinary Maximum Civil Penalties

C. Provision of Opportunity for Comment, With Comparison of the Initial and New Proposals

III. FRA's New Proposed Approach to Reevaluating the Schedules of Civil Penalties

IV. Rankings of the Rail Safety Regulatory Provisions and the Hours of Service Laws in the New Proposal

A. Motive Power and Equipment Regulations (MP&E) (49 CFR Parts 215, 218 (Partially), 223, 224, 227, 229, 230, 231, 232, 238, and 239 (Partially))

B. Track and Workplace Safety Regulations (49 CFR Parts 213 and 214)

C. Grade Crossing Signal Systems and Signal and Train Control Regulations (49 CFR Parts 233, 234, 235, and 236)

D. Operating Practices Regulations (49 CFR Parts 217, 218 (Partially), 219, 220, 221, 222, 225, 228, 239 (Partially), 240, and 241) and the Hours of Service Laws (49 U.S.C. Chapter 211)

V. Response to Public Comment on the Schedules Proposed in December 2006

A. Concerns Related to Respondents That Are Small Businesses

B. Concerns About Initially Proposed Penalty Amounts for Violations of 49 CFR Parts 222, 225, and 229

C. Concerns Related to Respondents Who Are Cited as Individuals

D. Concerns About Effects on FRA's Confidential Close Call Reporting Project

E. Concerns About Proposed Monetary Increases in the Civil Penalty Amounts

I. General Background

FRA last published comprehensive, line-by-line final revisions to the Schedules of its safety regulations on December 29, 1988. 53 FR 52918. The revisions reflected the higher maximum penalty amounts made available by the enactment of the Rail Safety Improvement Act of 1988 (Pub. L. 100-342). With the exception of the penalties relating to the hours of service laws (49 U.S.C. chapter 211), the Rail Safety Improvement Act of 1988 raised the maximum penalty for any ordinary violation from $2,500 to $10,000 (“the ordinary maximum”) and to $20,000 for a grossly negligent violation or a pattern of repeated violations that has created an imminent hazard of death or injury or caused death or injury (“the aggravated maximum”). Therefore, FRA published amendments to the Schedules in order to “give effect to the full range of civil penalties * * * permitted to be assessed for violation of specific regulations.” 53 FR 52918. These amendments revised not only the maximum civil penalty amount for any violation, but also the individual line-item penalties for specific sections or subsections of the regulations.

The Rail Safety Enforcement and Review Act (“RSERA”) (Pub. L. 102-365), which was enacted September 3, 1992, increased the maximum penalty for a violation of the hours of service laws, from $1,000 to $10,000 and in some cases to $20,000, making these penalty amounts uniform with those of FRA's other regulatory provisions. RSERA also increased the minimum penalty from $250 to $500 for all of FRA's regulatory provisions.

Since the publication of the Schedules in 1988, FRA has periodically adjusted its minimum and its ordinary or aggravated maximum penalty to conform to the mandates of the Federal Civil Penalties Inflation Adjustment Act of 1990. 28 U.S.C. 2461 note, as amended (“Inflation Act”). The Inflation Act requires that an agency adjust by regulation each maximum penalty, or range of minimum and maximum penalties, within that agency's jurisdiction periodically to reflect inflation. In the Inflation Act, Congress found a way to counter the effect that inflation has had on the penalties by having the agencies ( printed page 57599) charged with enforcement responsibility administratively adjust the penalties. Currently FRA's minimum penalty is $650, the ordinary maximum is $25,000 and the aggravated maximum is $100,000 (for when a “grossly negligent violation or pattern of repeated violations has caused an imminent hazard or death or injury to individuals, or has caused death or injury”).

The Inflation Act requires only that the minimum, the ordinary maximum, and the aggravated maximum civil penalty for a violation be adjusted, not that the guideline penalty amounts for a specific type of violation ( e.g., a section of a particular regulation) be adjusted. As a result, FRA has not adjusted the line-item guideline penalties found in the Schedules in conjunction with its adjustments of the minimum, maximum and aggravated maximum civil penalties. FRA's practice has been to issue Schedules assigning to each section or subsection of the regulations specific dollar amounts for initial penalty assessments. These Schedules (and all line-item penalty amounts found within them) are statements of agency policy that specify the penalty that FRA will ordinarily assess for the violation of a particular section or subsection of a safety regulation, and are published to inform members of the regulated community of the amount that they are likely to be assessed for a given violation within the range of $650 to $25,000. The Schedules are “meant to provide guidance as to FRA's policy in predictable situations, not to bind FRA from using the full range of penalty authority where extraordinary circumstances warrant.” 49 CFR part 209, appendix A. Thus, regardless of the amounts shown in the Schedules, FRA continues to reserve the right to assess, within the range established by the rail safety statutes (49 U.S.C. chapter 213) or by regulation pursuant to the Inflation Act, an amount other than that listed in the Schedules based on the circumstances of the alleged violation. 73 FR 79698, Dec. 30, 2008.

II. Proceedings to Date, Provision of Opportunity for Comment, and Comparison of Initial and New Proposals

A. Initial Proposal

FRA published 25 proposed Schedules with a request for comments on December 5, 2006, which first presented the agency's intention of once again comprehensively revising the civil penalty amounts. 71 FR 70590. In this Initial Proposal, FRA explained its approach to reevaluating the Schedules and explained the severity scale that was developed for setting line-item penalty amounts in the Schedules. The severity scale's penalty amounts were assessed within the statutory range for civil penalties at that time, which was from the minimum of $550 to the ordinary maximum of $11,000, as follows:

B. Subsequent Changes in the Minimum and Ordinary Maximum Civil Penalties

Subsequently, in 2007, pursuant to the requirements of the Inflation Act, FRA recalculated the ordinary maximum penalty and raised it from $11,000 to $16,000. 71 FR 51194, Sept. 6, 2007. Then, on October 16, 2008, the Rail Safety Improvement Act of 2008 (Pub. L. 110-432, Div. A) (“RSIA”) was enacted; Section 302 of the RSIA increased the ordinary and aggravated maximum penalty amounts to $25,000 and $100,000, respectively. In a final rule published on December 30, 2008, FRA adjusted its minimum penalty from $550 to $650 pursuant to Inflation Act requirements. 73 FR 79698. In that rule FRA also evaluated whether it needed to increase the ordinary and aggravated maximum penalties pursuant to the Inflation Act; however, the enactment of the RSIA statutorily changed the ordinary and aggravated maximum penalties to $25,000 and $100,000, respectively, and therefore rendered any inflationary adjustments to either figure unnecessary. Instead, FRA adopted $25,000 as the ordinary maximum and $100,000 as the aggravated maximum required by the RSIA. ( See also correcting amendment to the Schedule for 49 CFR part 232. 74 FR 15387, April 6, 2009.)

C. Provision of Opportunity for Comment, With Comparison of the Initial and New Proposals

Given the large statutorily mandated increase in the ordinary maximum civil penalty from $11,000 to $25,000 after publication of the Initial Proposal, FRA is offering the public an opportunity to review and comment on the new higher civil penalty amounts assessed for violations on each severity scale level in the New Proposal.^[1] In the New Proposal, FRA is issuing another set of proposed Schedules and seeking comments from the general public. Comments on the new proposed Schedules will be useful to the agency's decision making process.

FRA has also slightly modified the severity scale in the New Proposal from the severity scale in the Initial Proposal. In the New Proposal, FRA has used a targeted enforcement approach for establishing the civil penalties for ordinary (non-willful) violations of railroad safety regulations. As part of the targeted enforcement approach, ( printed page 57600) ordinary violations occurring at the middle and lower levels of the severity scale are assessed smaller civil penalties in relation to the ordinary maximum while the highest penalty amounts are assessed for ordinary Level A violations where serious injuries, deaths, or other railroad accidents or incidents are most likely to occur. FRA did not take a targeted enforcement approach for establishing the civil penalty amounts for willful violations in the New Proposal. Instead, the civil penalty amounts for willful violations increase up the severity scale in steady dollar amounts, not in graduated percentage increases like the civil penalties for ordinary violations.

Higher penalty amounts for violations of Federal railroad safety laws and regulations are necessary because many of FRA's civil penalties have not been changed in real terms for many years. As a result, inflation has somewhat eroded the deterrent effects of most of FRA's civil penalties because the amounts have not been increased to account for the effects of inflation. While many of the penalty amounts in the New Proposal would represent large increases in penalty amounts even after adjusting for inflation, some penalty amounts for violations would remain unchanged ( e.g.,49 CFR 219.205(b), 222.49(b), 229.71, and 239.301(c)(1)) if adopted by FRA because of the uniform rating of FRA's existing penalties on the severity scale. The new penalty amounts in this New Proposal will maintain the deterrent effects of FRA's rail safety penalties, aiding the success of FRA's mission to make the United States rail system safer.

FRA has also reexamined how it had ranked individual rail safety violations on the severity scale in the Initial Proposal. Upon second review of the severity scale rankings, FRA is proposing to move certain regulatory provisions to higher or lower levels on the severity scale in order to refine the agency's application of the severity scale to the various violations. For example, FRA is proposing to raise the severity scale ranking of 49 CFR 219.3 (“Application: Railroad does not have required program”), in this New Proposal from a “C” level penalty to a “B” level penalty. This change is necessary because the failure of a railroad covered by 49 CFR part 219 to have an alcohol and drug testing program is more likely than not to cause a rail equipment accident/incident or other accident/incident involving death, injury, or occupational illness rather than just substantially increase the likelihood that one of these events could occur. Conversely, in this New Proposal, FRA would lower the severity scale ranking of 49 CFR 225.35 (“Access to records and reports”), from an “A” level penalty to a “D” level penalty. This proposed change in severity scale level reflects FRA's judgment that denying its inspectors access to records and reports required by 49 CFR part 225 is not extremely likely to lead to a railroad accident/incident or other accident/injury including death, injury, or occupational illness, but could slightly increase the likelihood of one of the above mentioned occurrences if FRA is not provided access to accident reporting records and reports. FRA expects that these proposed changes to the severity scale rankings of some of its violations in the Initial Proposal better refine the agency's application of the Severity Scale to the various violations.

In addition, FRA is proposing minor changes to its Schedules in this New Proposal to correct errors and omissions and to reflect more accurately FRA's current enforcement practices. Such errors include obvious spelling or typographical errors that were caught during the review process. Omissions corrected include line-item penalties for any existing section or subsection that had been inadvertently omitted from an existing Schedule, such as 49 CFR 213.110. Other proposed minor revisions to the Schedules include, but are not limited to, adding or deleting a suggested penalty for a violation ( e.g.,49 CFR 213.109(c), 214.343(a)(2), 220.38, and 240.201(b)), rewording a line-item description for a violation ( e.g.,49 CFR 219.23(f) and 233.9), renumbering violation subsections ( e.g.,49 CFR 214.343(b)(1), 236.587, 236.905(d), and 236.913(j)), and adding or revising footnotes to the Schedules ( e.g.,49 CFR parts 214, 232, and 239). For example, FRA is proposing to add a footnote 3 to the Schedule for 49 CFR part 214 to clarify that FRA will consult the suggested penalty amounts under 49 CFR 214.343 (“Training and qualification, general:”) when assessing penalties for the training violations in 49 CFR 214.345 through 214.355, as the suggested penalty amounts for these sections had been left blank in previous versions of part 214's penalty schedule. FRA is hopeful these proposed minor changes updating its Schedules would provide a more accurate picture to the regulated community of FRA's actual enforcement practices.

New suggested penalty amounts have also been proposed for violations of subparts that had not been mentioned in the existing penalty schedules: 49 CFR part 218, subpart E (“Protection of Occupied Camp Cars”); 49 CFR part 228, subpart D (“Electronic Recordkeeping”); 49 CFR part 232, subpart G (“Electronically Controlled Pneumatic (ECP) Braking Systems”); and 49 CFR part 236, subpart I (“Positive Train Control Systems”) are also included. FRA is also suggesting new penalty amounts for 49 CFR part 227 (“Occupational Noise Exposure”) which was not ranked in the severity scale in the Initial Proposal because the final rule creating part 227 was published on October 27, 2006, but not effective until February 26, 2007. 71 FR 63066. In addition, FRA will also be accepting comments on the new penalties in 49 CFR part 237 that were published in a bridge safety standards final rule on July 15, 2010 and will become effective on September 13, 2010. 75 FR 41282.

Further, FRA is proposing to add language to 49 CFR part 228, appendix A, to state its proposed guideline penalty amounts for both non-willful and willful violations of the hours of service laws (49 U.S.C. chapter 211). In addition, this New Proposal would also add or change language in the portion of 49 CFR part 209, appendix A, entitled “Penalty Schedules: Assessment of Maximum Penalties,” to reflect the new minimum, ordinary maximum, and aggravated maximum civil penalties of $650, $25,000, and $100,000 respectively. Finally, FRA is also proposing to add the language “or orders” in two places within this portion of part 209, appendix A to update the language to reflect FRA's already existing policy of establishing civil penalty schedules and recommended civil penalty amounts applicable to violations of various orders issued by FRA (such as emergency orders under 49 U.S.C. 20104) when necessary to advance the agency's safety mission.

III. FRA's New Proposed Approach to Reevaluating the Schedules of Civil Penalties

The Federal Railroad Administrator is authorized as the delegate of the Secretary of Transportation to enforce the Federal railroad safety statutes (49 U.S.C. chapters 201-213) regulations, and orders, including the statutory civil penalty provisions at 49 U.S.C. chapter 213. 49 CFR 1.49. FRA currently has 26 parts of regulations that contain Schedules.^[2] With this New Proposal, ( printed page 57601) FRA is proposing to amend each of the line-item guideline penalty amounts contained within the Schedules for each of the regulations and to add guideline penalty amounts for violations of the hours of service laws to 49 CFR part 228, appendix A (collectively, Penalty Guidelines). In reevaluating the penalty amounts in the Schedules, FRA has developed a new proposed severity scale (“New Proposed Severity Scale”) for setting the line-item penalty amounts for each violation of the safety regulations and for violations of the hours of service laws. The severity scale FRA is proposing to adopt in this New Proposal is described in the following section.

New Proposed Severity Scale for Setting Line-Item Penalty Amounts in FRA Penalty Guidelines

FRA's rail safety regulations and the rail safety statutes are intended either to prevent a railroad accident/incident or to mitigate the consequences if one were to occur. For the most severe ratings on the scale, FRA concentrated on the degrees of likelihood that an accident/incident ^[3] will occur or that graver consequences of an accident/incident will occur as a result of failing to comply with the section. The following New Proposed Severity Scale is intended to reflect this focus:

Level A-Very High Probability —Failure of a railroad to comply with this section or subsection of the Code of Federal Regulations (“CFR”), this FRA order, or this rail safety statute is extremely likely to result in one or more of the following events, but does not create an imminent hazard of death or injury to individuals or cause an actual death or injury ^[4] :

1. Rail equipment accident/incident

2. Other accident/incident (including death, injury, or occupational illness)^[5]

FRA is proposing to issue a penalty guideline for Level “A” of $19,500 for an ordinary violation and $25,000 for a willful violation of the regulation, order, or statute.

Level B—High Probability —Failure of railroad to comply with this section or subsection of the CFR, this FRA order, or this rail safety statute is more likely than not to result in the occurrence of:

1. Rail equipment accident/incident; or

2. Other accident/incident (including death, injury, or occupational illness).

FRA is proposing to issue a penalty guideline for Level “B” of $13,000 for an ordinary violation and $20,500 for a willful violation of the regulation, order, or statute.

For the following levels, FRA is not only addressing the likelihood that noncompliance will or could contribute to an accident or aggravated consequences if an accident occurred, but also the importance of maintaining compliance in order to prevent violations of these regulatory or statutory sections or subsections from becoming leading accident causes in the future.

Level C—Moderate Probability —Failure of railroad to comply with this section or subsection of the CFR, this FRA order, or this rail safety statute substantially increases the likelihood that one of the following will occur:

1. Rail equipment accident/incident; or

2. Other accident/incident (including death, injury, or occupational illness).

FRA is proposing to issue a penalty guideline for Level “C” of $9,500 for an ordinary violation and $17,000 for a willful violation of the regulation, order, or statute.

Level D—Minor Probability —Failure of the railroad to comply with this section or subsection of the CFR, this FRA order, or this rail safety statute slightly increases the likelihood that one of the following will occur:

1. Rail equipment accident/incident; or

2. Other accident/incident (including death, injury, or occupational illness).

FRA is proposing to issue a penalty guideline for Level “D” of $5,500 for an ordinary violation and $10,000 for a willful violation of the regulation, order, or statute.

Level E—Minimal Probability —Failure to comply with this section or subsection of the CFR, this FRA order, or this rail safety statute does not materially increase the likelihood that a rail equipment accident/incident or other accident/incident will occur, except in special circumstances, such as if the noncompliance is willful or widespread. Nevertheless, noncompliance with any one of these provisions undercuts the effectiveness of the Federal railroad safety program, and could compromise the safety of rail operations.

Example: Violation of § 225.13—Late Reports —Submitting a late accident/incident report to FRA does not increase the likelihood that a rail equipment accident/incident or other accident/incident will occur. Widespread noncompliance with that provision, however, could lead to inaccuracies in Federal accident databases, which in turn could delay FRA's response to emerging safety problems.

FRA is proposing to issue a penalty guideline for Level “E” of $2,500 for an ordinary violation and $5,000 for a willful violation of the regulation, order, or statute.

Like the Initially Proposed Severity Scale, the New Proposed Severity Scale shows, there are five different levels of probabilities, ranging from “A” (the most severe) to “E” (the least severe of the types of violations). In developing the rankings (“A” through “E”), FRA concentrated on the degrees of likelihood that an accident/incident will occur or that graver consequences will occur as a result of the failure to comply with the particular section or subsection of the safety regulations or with the statute. Using the New Proposed Severity Scale, FRA then assigned a ranking (from “A” to “E”) to each of the provisions of the particular rail safety regulations and to the hours of service statute, which the agency has responsibility for administering and enforcing. The resulting proposed line-item penalty amounts for violations of each of the sections or subsections of the safety regulations affected and for violations of the hours of service laws reflect FRA's determination, based on safety data and industry knowledge, of how likely the violation of a particular provision is to result in a rail equipment accident/incident or another type of accident/incident. Due to the increase in the ordinary maximum from $11,000 to $25,000 since the Initial Proposal, the new proposed civil penalty amounts have increased in most instances, but in some cases the new proposed civil penalty amount would remain the same ( e.g.,49 CFR 219.205(b), 222.49(b), 229.71, and 239.301(c)(1)) if adopted by FRA. Nonetheless, a determination by FRA that violation of a provision does not increase the likelihood that a rail equipment accident/incident or other accident will occur, however, does not mean that the provision is inconsequential to the effectiveness of ( printed page 57602) the Federal railroad safety program or to the overall safety of railroad operations.

Currently, each Schedule is in the form of a table consisting of three columns with one or more footnotes. Like the initially proposed Schedules, the new proposed Schedules would continue to be structured in this fashion and to provide guideline penalty amounts for two categories of violations: Ordinary (non-willful) and willful. Each new proposed Schedule lists the CFR section or subsection in the left-hand column, sometimes with additional designations to distinguish different types of violations (penalty codes) of the section or subsection in order to facilitate the assessment of civil penalties. The only exception continues to be 49 CFR part 231; the left-hand column of the new proposed Schedule lists the FRA defect codes ^[6] for that part, and not the corresponding CFR sections. The reason for this continues to be the fact that the defect codes are organized by the type of safety appliance, which makes them easier to use, than the section numbers of part 231, which are organized primarily by car or locomotive type. Nevertheless, if necessary, every defect code can be traced to a specific regulatory provision in part 231 or statutory provision in 49 U.S.C. chapter 203, or both. The corresponding penalties for each violation are listed in the middle and right-hand columns: The guideline penalty amount for an ordinary violation and then the guideline penalty amount for a willful violation. The ordinary penalties apply to railroads or other respondents, except individuals, while the “willful” column applies to willful violations committed by railroads or individuals.

The following chart summarizes the new proposed guideline amounts for ordinary and willful violations by severity level:

IV. Rankings of the Rail Safety Regulatory Provisions and the Hours of Service Laws in the New Proposal

Although the railroad industry's overall safety record has improved over the last decade, significant train accidents/incidents continue to occur. As a result, the FRA's safety program is being guided by careful analysis of accident/incident, inspection, and other safety data. FRA has also directed both its regulatory and compliance efforts toward the areas that involve the highest of safety risks, in order to reduce the number and severity of accidents/incidents caused by a failure to comply with those safety regulations. Therefore, the goal of the new proposed line-item penalty amounts for each of the Schedules and the new proposed penalty amount for violations of the hours of service statute is to reflect the different degrees of probability that a violation of a particular regulatory section or subsection, order, or statute will result in a rail equipment accident/incident or other accident/incident, in order to improve the overall safety of railroad operations.

A. Motive Power and Equipment Regulations (MP&E) (49 CFR Parts 215, 218 (Partially), 223, 224, 227, 229, 230, 231, 232, 238, and 239 (Partially))

In reevaluating the current line-item penalty amounts for each of the CFR sections or subsections found in 49 CFR parts 215, 218 (partially), 223, 224, 227, 229, 230, 231, 232, 238, and 239 (partially) of the CFR, FRA took into consideration, among other factors, the nationwide list of “Top 10” MP&E defects. The defects are listed in the table below, in descending order, according to the number of times that each defect was determined to have caused a rail equipment accident/incident, excluding highway-rail grade crossing accidents/incidents that are also classified as rail equipment accidents/incidents (“train accidents”), between January 2005 and December 2009.

The CFR sections or subsections that relate to these defects have received higher proposed rankings in the Schedules compared to other MP&E defects and as such now carry higher penalty amounts. For example, a violation of 49 CFR 215.103(d)(3), which involves a defective wheel rim with a crack of one inch or more, received a proposed “A” severity ranking (and a proposed guideline penalty amount of $19,500) because of the high safety risk that the defect will cause a broken rim that, in turn, causes a derailment. In addition, FRA applied the New Proposed Severity Scale in order to determine the degrees of likelihood that any type of accident/incident will occur as a result of noncompliance with the regulations.

B. Track and Workplace Safety Regulations (49 CFR Parts 213 and 214)

In recent years, most of the serious accidents/incidents (train collisions or derailments resulting in a release of hazardous materials or harm to rail passengers, rail employees, or the general public) resulted from human factor or track causes. Over the last five years, 31.9 percent of train accidents were caused by track defects. In an effort to reduce track accidents, FRA is focusing its track inspections on the areas of highest risks and encouraging inspectors to recommend enforcement action on the kinds of violations that are considered leading causes of track-caused train accidents. Therefore, in evaluating the line-item penalty amounts for all the sections or subsections, FRA took into consideration the leading causes of track-related train accidents when applying the New Proposed Severity Scale to the Track Safety Standards. For example, violations of 49 CFR 213.53 “Gage” received a new proposed “A” ranking (and new proposed penalty guideline amounts of $19,500 for an ordinary violation and $25,000 for a willful violation) because improper gage is one of the leading causes of track-related train accidents.

In ranking the sections or subsections of 49 CFR part 214 (“Railroad Workplace Safety”), FRA took into consideration not only the probability that an accident/incident could result if a violation occurred, but also the fact that ( printed page 57603) the accident/incident could result in serious injury or death. One example of the rankings for part 214 is the ranking for the second type of violation of 49 CFR 214.103, coded 214.103(ii), “Failure to use fall protection.” This violation designated 214.103(ii) received a proposed ranking of “A” (and a proposed guideline penalty of $19,500 for an ordinary violation and $25,000 for a willful violation) because the violation could result in serious injury or death, as evidenced by the several bridge worker fatalities in the past 10 years due to the failure to use fall protection.

C. Grade Crossing Signal Systems and Signal and Train Control Regulations (49 CFR Parts 233, 234, 235, and 236)

FRA applied the New Proposed Severity Scale to each of the sections in 49 CFR parts 233, 234, 235, and 236, in order to determine the appropriate proposed rankings for each of the sections or subsections of the regulations. In the area of signal and train control (S&TC), FRA followed the New Proposed Severity Scale, which concentrates on the potential for an accident/incident resulting from noncompliance. S&TC systems are vital to the safe functioning of the general railroad system because train crews and highway motorists rely on the accuracy of the information provided by these systems to make safe movements on the railway system and through highway-rail grade crossings. While there are relatively few train accidents and highway-rail grade crossing accidents/incidents associated with S&TC causes that have occurred in recent years, the consequences of an S&TC-caused accident can be catastrophic. Therefore, it is imperative that the Schedules put into effect by FRA reflect the levels of risks associated with the violation of these CFR sections or subsections, in order to prevent future S&TC-caused accidents.

D. Operating Practices Regulations (49 CFR Parts 217, 218 (Partially), 219, 220, 221, 222, 225, 228, 239 (Partially), 240, and 241) and Hours of Service Laws (49 U.S.C. Chapter 211)

Over the five years from January 2005 to December 2009, human-factor-related causes accounted for 34.2 percent of all train accidents. A review of the FRA's Office of Railroad Safety database indicated that in 2009 the top four human factor causes contributing to train accidents were improperly lined switches; employees absent on, at, or ahead of a shoving movement; failure to control during a shoving movement; and failure to comply with restricted speed or its equivalent when not in connection with a block or interlocking signal. These top causes are often involved in violations of such regulations as 49 CFR part 220 (“Railroad Communications”). A review of the top four causes for human factor train accidents between January 2005 and December 2009 showed that these causes accounted for 1,812 reportable train accidents/incidents (including 13 employee fatalities, 463 employee injuries, and over $96 million in damages). Therefore, when applying the New Proposed Severity Scale to the regulatory provision or statute, FRA considered all of this safety information in order to ensure that each new proposed line-item penalty amount reflected the likelihood that noncompliance would result in a train accident/incident, or that graver consequences would occur as a result of failing to comply with the statute or section or subsection of the regulations.

V. Response to Public Comment on the Schedules Proposed in December 2006

As previously stated, the existing Schedules are statements of agency policy, which FRA has authority to amend or replace without having to provide prior notice and opportunity for comment under the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(A). Nevertheless, FRA provided members and representatives of the regulated community and the general public with an opportunity to comment on the proposed line-item penalty amounts published on December 5, 2006. FRA received six comments on the Schedules proposed in December 2006. FRA has considered the comments received and now responds to the questions and concerns raised in them.

A. Concerns Related to Respondents That Are Small Businesses

The Small Railroad Business Owners of America (“SRBOA”) commented that FRA's December 2006 proposed civil penalty policy does not adequately take into account the interests of small businesses. The commenter suggested that doubling certain civil penalties for smaller railroads is unfair, especially because most of the accidents/incidents occur on larger railroads. The commenter also asked that FRA provide additional training and assistance to smaller railroads in comprehension and application of the rail safety regulations.

In addition, the American Short Line and Regional Railroad Association (“ASLRRA”) commented that the proposed statement of agency policy ignores the effect that proposed amounts would have on small railroads. ASLRRA suggested that FRA move instead, towards a sliding scale system of civil penalties based on the class of track under 49 CFR part 213 that is involved in the violation. In the alternative, ASLRRA suggested that FRA take the time to codify a second, lower schedule of penalties for small railroads.

In response to these concerns, FRA would like to emphasize appendix C to 49 CFR part 209, where FRA has published its policy statement concerning small business entities. FRA understands that small entities in the rail industry have significantly different characteristics from larger carriers and shippers. Therefore, FRA has developed programs to respond to compliance-related inquiries of small entities, and to ensure proper handling of civil penalty and other enforcement actions against small businesses. FRA inspectors provide training on the requirements of all railroad safety statutes for new and existing small businesses upon request. Also, it is FRA's policy to maintain frequent and open communications with the national representatives of the primary small entity associations and to consult with these organizations before embarking on new policies that may impact the interests of small businesses. Additionally, FRA has posted all of its manuals electronically for compliance with the rail safety disciplines at www.fra.dot.gov.

FRA employs an enforcement policy that addresses the unique nature of small entities in the imposition of civil penalties and resolution of those assessments. Pursuant to appendix A to 49 CFR part 209, it is FRA's policy to consider a variety of factors in determining whether to take enforcement action against persons, including small entities, who have violated the safety laws and regulations. In general, the presence of both good faith and prompt remedial action on the part of the small entity militates against taking a civil penalty action, especially if the violation is an isolated event. Once FRA has assessed a civil penalty, FRA may adjust or compromise the initial penalty claim based on a wide variety of mitigating factors. The mitigating criteria that FRA applies are found in the railroad safety statutes at 49 U.S.C. ch. 213 and in the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (“SBREFA”); these factors include the severity of the safety or health risk presented; the existence of alternative methods of eliminating the safety hazard; the entity's culpability; the entity's compliance history; the entity's ability to pay the assessment; the impact an assessment might exact on the ( printed page 57604) entity's continued business; and evidence that the entity acted in good faith. 49 CFR part 209, appendix C.

FRA's enforcement policy with respect to small entities is flexible and comprehensive, but FRA's first priority in its compliance and enforcement activities is public and employee safety. FRA notes that an accident on a small railroad could have the same consequences as an accident on a large railroad. Therefore, small railroads are responsible for compliance with the railroad safety statutes and regulations.

Finally, the Small Railroad Business Owners' Association of America (“SRBOA”) commented that FRA's civil penalties were higher than those used by the Federal Motor Carrier Safety Administration (“FMCSA”) for enforcing commercial motor vehicle driver and trucking safety, and suggested that FRA should impose civil penalties for smaller railroads only if discussing the situation with them does not work first.

As explained above, FRA's rail safety inspectors take into account a variety of factors in determining whether to take enforcement actions. They have the option of citing the railroads for defects, which in their judgment do not merit civil penalties before citing them for violations, which do carry civil penalty recommendations. Also, FRA does not believe it is appropriate to compare FRA's rail safety penalties to FMCSA's penalties for driver and trucking safety. The safety considerations in the trucking and rail industries are very different. An accident involving a train is potentially far more catastrophic and costly than a similar accident involving a truck. For example, one railroad tank car could contain many truckloads of hazardous material, and one train could consist of many such railroad tank cars.

B. Concerns About Initially Proposed Penalty Amounts for Violations of 49 CFR Parts 222, 225, and 229

The Association of American Railroads (“AAR”) stated that, in several cases, the penalties proposed in December 2006 are disproportionate to the severity of the violation. Specifically, AAR took exception to penalties proposed for noncompliance with 49 CFR parts 222, 225, and 229.

With regard to part 222 (the train horn rule), AAR contended that a “D” level penalty for a violation of § 222.21(b) is unsubstantiated, as the sounding of a horn for more than 20 seconds will not increase the likelihood of an accident or incident.

FRA provides that the train horn rule focuses on public and community interests. To remain true to the intention of the rule, FRA must take the interests of the community into account when determining the penalty amount that a violation merits. FRA believes that it is important that sufficient warning be provided to the motorist who needs time to recognize the audible signal, understand its message, initiate a reaction, and take appropriate action when at a grade crossing. See71 FR 47618, Aug. 17, 2006. If the train horn is sounded more than 25 seconds before the train enters the train crossing, motorists might well begin to doubt the credibility of the train horn as an indicator of the train's immediacy to the grade crossing. As a result, motorists will be more likely to take the risk of traveling through the crossing even when the train horn is sounded.

The rule text for § 222.21(b) also provides a “good faith” exception for the required length of time that the horn is sounded. The section permits additional flexibility by stating that the engineer shall not be in violation of § 222.21(b) if the engineer sounds the horn not more than 25 seconds before the crossing, if in good faith the engineer cannot precisely estimate the arrival time of the train at the crossing. FRA has determined that the interests of avoiding an accident or incident as well as the interests of the community have been taken into account in assessing violations of § 222.21(b) as a proposed “D” level penalty with the exception of “failure to sound the horn at least 15 seconds and less than 1/4 -mile before a crossing,” which is assessed as a proposed “C” level penalty.

Additionally, AAR stated that routine sounding of the horn at a grade crossing within a quiet zone, pursuant to § 222.45, will not increase the likelihood of an accident or incident.

With regard to AAR's comment on § 222.45, although sounding the train horn in a quiet zone may not substantially increase the likelihood of an accident the first time or the first few times, trains that routinely sound their horns at quiet-zone grade crossings might cause motorists to doubt the credibility of signs marking a grade crossing as a quiet-zone grade crossing and whether a particular grade crossing is actually a quiet-zone grade crossing. Therefore, if routine violations of a quiet zone continue, motorists will begin to expect the warning of a train horn when a train is preparing to enter quiet-zone grade crossings where routine violations of the quiet zone occur. That could predictably lead to fatal accidents.

In addition, violations of § 222.45 increase the annoyance level of the communities surrounding the grade crossing. A fundamental feature of this rule was to balance driver and pedestrian safety with community noise concerns. Decreasing the civil monetary penalty would reduce the incentive to comply with the part and potentially increase noise for the surrounding communities. FRA maintains that the initial and new proposed “D” level penalty for a violation of § 222.45 sufficiently addresses the concerns that brought about the part 222 rulemaking. See71 FR 47614, Aug. 17, 2006.

AAR also argued that a “B” level penalty for a violation of 49 CFR 225.13 was unmerited, as a railroad's filing of a report one day late would not be more likely to cause an accident or incident.

FRA has taken into consideration AAR's comments involving FRA's regulations on accident/incident reporting, 49 CFR part 225. FRA acknowledges the merits in AAR's comments with regard to § 225.13, and FRA has revised the proposed penalty ranking for a violation of § 225.13 from a “B” to an “E.” Upon reevaluating how part 225 violations were ranked on the severity scale in the Initial Proposal, FRA has lowered many of the proposed severity scale rankings for violations of this part. For example, FRA has determined to change the ranking of a § 225.11 violation (failure to submit monthly report of accidents/incidents) from a proposed “B” to a proposed “D” level penalty. At the same time, FRA has determined that a violation of § 225.9, failure to report certain accidents or incidents, immediately via telephone to the National Response Center, would be more detrimental to railroad safety, because the failure could prevent FRA from learning about the event and deciding whether or not the agency should commence an investigation. Even delayed notification could compromise such an investigation and prevent FRA from obtaining information that could identify safety problems that could cause future accidents or incidents. FRA has, therefore, changed the penalty amount from a proposed “E” to a proposed “C” level penalty.

Finally, AAR stated that a “C” level penalty for a violation of a provision of the Locomotive Safety Standards, 49 CFR 229.137(a)(3), was uncalled for, as the lack of a toilet in the lead locomotive will not “substantially increase the likelihood of an accident or incident.”

When FRA promulgated the notice of proposed rulemaking for the locomotive cab sanitation standards, FRA determined that serious health consequences may result if railroad employees are exposed to unsanitary conditions or lack access to facilities. In fact, it is widely known that exposure to ( printed page 57605) human fecal matter or untreated sewage waste can lead to diarrheal diseases such as amebiasis, giardiasis, shigellosis, and viral diseases such as hepatitis. See66 FR 137, Jan. 2, 2001. FRA notes that any one of these mentioned conditions would fulfill the reporting requirements under the definition of an “occupational illness” pursuant to 49 CFR 225.19(d) and therefore be considered an accident/incident within the meaning of the initially proposed Severity Scale and the New Proposed Severity Scale. FRA also notes that an engineer who contracts one of those diseases on duty might well be unable to operate his or her train safely.

C. Concerns Related to Respondents Who Are Cited as Individuals

The Brotherhood of Locomotive Engineers and Trainmen (“BLET”) had a number of comments on civil penalties against individuals for rail safety violations. The BLET raised concern that FRA's conclusions on the data indicate a “lack of discipline by the workers.” Also, the commenter suggested that the December 2006 proposed statement of agency policy suffers from “the same infirmity as the railroad operating rules NPRM (notice of proposed rulemaking).” Overall, the BLET seemed very concerned with the effect that a larger penalty would have on an individual as opposed to a railroad.

FRA responds that civil penalties assessed against individuals pursuant to the rail safety statutes, regulations, and orders may be assessed administratively only if FRA determines that the individual's conduct was willful in nature. 49 U.S.C. 21304. “FRA considers a `willful' violation to be one that is an intentional, voluntary act committed either with knowledge of the relevant law or reckless disregard for whether the act violated the requirements of the law.” 49 CFR part 209, appendix A. FRA continues to hold that the higher penalties for a willful violation serve to deter an individual from engaging in this type of egregious behavior. Further, FRA assesses rail safety civil penalties against railroads at a substantially higher frequency than against individuals. As neither the Initial Proposal nor the New Proposal addresses the issues covered in “Railroad Operating Rules: Program of Operational Tests and Inspections; Railroad Operating Practices: Handling Equipment, Switches and Fixed Derails,” FRA declines to respond in this proposal to comments regarding that rulemaking, in which a final rule was published on June 16, 2008. 73 FR 33888.

D. Concerns About Effects on FRA's Confidential Close Call Reporting Project

The BLET also provided comments exhibiting a concern as to how the proposed penalty schedule in the Initial Proposal would impact FRA's Confidential Close Call Reporting Pilot Project (“Close Call Project”). The Close Call Project involves encouraging employees from its participating railroads to report “close call” incidents voluntarily and anonymously. A “close call” is an event in which a death, a personal injury, or property damage is narrowly averted. Thus, a “close call” presents an opportunity to improve safety practices in a situation or incident that has potential for more serious consequences by allowing the people involved to report the event in detail without fear of adverse consequences, thereby providing FRA with vital data about precursors to accidents or incidents that FRA might otherwise not receive. The information collected from the Close Call Project provides an opportunity to identify and correct weaknesses in a railroad's safety system before an accident/incident or other unsafe event occurs. The system can also be used to monitor changes in safety over time and to uncover hidden unsafe conditions that were previously unreported.

FRA does not agree with BLET's comment that the Initial Proposal would nullify the incentive for voluntary submission of information in this pilot program. The employees participating in the Close Call Project are protected from carrier discipline, decertification, and FRA enforcement action in the same manner regardless of whether the civil penalties are increased. Before a Close Call Project may be initiated, the employing railroad and the employees' union representatives sign a memorandum of understanding (“MOU”) that specifies each party's rights and responsibilities. Revising the Schedules would not impact any MOU that has been implemented, and would not affect any MOU that is to be implemented in the future, as they would not expand FRA's enforcement authority.

E. Concerns About Proposed Monetary Increases in the Civil Penalty Amounts

Commenters measured the change between the current penalties and the initially proposed penalties in nominal terms. That is, commenters calculated the price change between the initially proposed penalties and the current penalties without first adjusting the current penalty amounts for inflation. Inflation erodes the purchasing power of money over time. As previously stated in this New Proposal, the enforcement and deterrent effects of the current penalties have decreased over time as they had not been increased line by line to account for the effects of inflation. A better, “apples-to-apples” comparison would be to compare the proposed penalties to the inflation-adjusted, or real, current penalties. Adjusting for inflation allows comparison of the penalties using dollars with the same purchasing power.

Given that inflation-adjusted, current penalties serve as the proper baseline for measuring change, it is significant that many of the current penalties have not changed in nominal terms for many years.

As previously stated, in undertaking this effort to revise the Schedules comprehensively after many years, FRA is focusing on areas that pose greater safety risks, and maintaining enforcement in other regulatory areas per its authority to set penalty guidelines within the minimum, ordinary maximum, and aggravated maximum statutory penalties. With the New Proposal, some of the proposed penalty amounts if adopted by FRA will indeed show large increases, even after adjusting for inflation.^[7] However, as previously stated, some newly proposed penalty amounts for violations would remain unchanged ( e.g.,49 CFR 219.205(b), 222.49(b), 229.71, and 239.301(c)(1)). Again, the penalty amounts in the New Proposal reflect the ( printed page 57606) reanalyzed risk basis for the penalty amounts and the new ordinary maximum statutory penalty. FRA believes that these new proposed Schedules will maintain and increase the effect of the civil monetary penalties, fostering a higher overall level of safety.

In consideration of the foregoing, FRA proposes to amend parts 209, 213, 214, 215, 217, 218, 219, 220, 221, 222, 223, 224, 225, 227, 228, 229, 230, 231, 232, 233, 234, 235, 236, 238, 239, 240, and 241 of subtitle B, chapter II of title 49 of the Code of Federal Regulations to read as follows: