[Senate Report 105-103]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 201
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-103
_______________________________________________________________________


 
                    THE FEDERAL TRANSIT ACT OF 1997

                               __________

                              R E P O R T

                                 of the

                     COMMITTEE ON BANKING, HOUSING,

                           AND URBAN AFFAIRS

                          UNITED STATES SENATE





                October 8, 1997.--Ordered to be printed


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                 ALFONSE M. D'AMATO, New York, Chairman
PHIL GRAMM, Texas                    PAUL S. SARBANES, Maryland
RICHARD C. SHELBY, Alabama           CHRISTOPHER J. DODD, Connecticut
CONNIE MACK, Florida                 JOHN F. KERRY, Massachusetts
LAUCH FAIRCLOTH, North Carolina      RICHARD H. BRYAN, Nevada
ROBERT F. BENNETT, Utah              BARBARA BOXER, California
ROD GRAMS, Minnesota                 CAROL MOSELEY-BRAUN, Illinois
WAYNE ALLARD, Colorado               TIM JOHNSON, South Dakota
MICHAEL B. ENZI, Wyoming             JACK REED, Rhode Island
CHUCK HAGEL, Nebraska

                    Howard A. Menell, Staff Director
     Steven B. Harris, Democratic Staff Director and Chief Counsel
                      Joseph N. Mondello, Counsel
                    Peggy Kuhn, Financial Economist
                       George E. Whittle, Editor



                            C O N T E N T S

                              ----------                              
                                                                   Page
Introduction.....................................................     1
History of the Legislation.......................................     1
Purpose and Summary..............................................     2
Need for Legislation.............................................     2
Background.......................................................     3
Section-by-Section Analysis......................................     4
    Section 1. Short Title and Table of Contents.................     4
    Section 2. Authorizations....................................     4
    Section 3. Capital Projects and Small Area Flexibility.......     5
    Section 4. Metropolitan Planning.............................     6
    Section 5. Metropolitan Planning Organizations...............     7
    Section 6. Fare Box Revenues.................................     7
    Section 7. Clean Fuels Program...............................     7
    Section 8. Capital Investment Grants and Loans...............     9
    Section 9. Transit Supportive Land Use.......................     9
    Section 10. New Starts.......................................    10
    Section 11. Joint Partnership for Deployment of Innovation...    10
    Section 12. Workplace Safety.................................    10
    Section 13. University Transportation Centers................
    Section 14. Job Access Grants................................    11
    Section 15. Grant Requirements...............................    12
    Section 16. HHS and Public Transit Service...................    12
    Section 17. Proceeds from the Sale of Transit Assets.........    12
    Section 18. Operating Assistance for Small Transit 
      Authorities in Large Urbanized Areas.......................    13
    Section 19. Apportionment of Appropriations for Fixed 
      Guideway Modernization.....................................    13
    Section 20. Urbanized Area Formula Study.....................    13
Regulatory Impact Statement......................................    14
Cost Estimate....................................................    14
Changes in Existing Law..........................................    17



                                                       Calendar No. 201
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-103
_______________________________________________________________________


                    THE FEDERAL TRANSIT ACT OF 1997

                                _______
                                

                October 8, 1997.--Ordered to be printed

_______________________________________________________________________


Mr. D'Amato, from the Committee on Banking, Housing, and Urban Affairs, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1271]

    The Committee on Banking, Housing, and Urban Affairs, 
reported an original bill, to reauthorize the mass transit 
programs of the Federal Government, and for other purposes 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.
    On September 25, 1997, the Committee on Banking, Housing, 
and Urban Affairs marked up and ordered to be reported an 
original bill to reauthorize the mass transit portion of the 
Intermodal Surface Transportation Efficiency Act of 1991 
(``ISTEA''). The reauthorization is for a period of six years 
through September 30, 2003. The bill authorizes $35.7 billion 
for federal transit programs and $600 million for an access-to-
jobs program over the six year period from fiscal years 1998 to 
2003.
    The bill contains new authorizations for a clean fuels 
program and an access-to-jobs program to assist welfare 
recipients and other low-income individuals in getting to and 
from workplaces.

                       HISTORY OF THE LEGISLATION

    The bill reported by the Committee incorporates proposals 
developed in consultation with the Administration, leading 
transit authorities, and transit-related industry leaders from 
across the country.
    On July 22, 1997, the Committee held a hearing on ISTEA 
reauthorization. Gordon Linton, the Administrator of the 
Federal Transit Administration (``FTA'') testified on behalf of 
the Administration. Also testifying were: Mr. Derick Berlage of 
the National Association of Counties, Mr. John Poorman of the 
American Association of Metropolitan Planning Organizations, 
Mr. Edward Wytkind, Executive Director of the Transportation 
and Trades Department of the AFL-CIO, Mr. William Millar, 
Executive Director of the American Public Transit Association, 
Mr. Eugene J. Berardi, Jr., Board Member of the American Bus 
Association, Ms. Barbara Singleton, Associate Director of the 
Community Transportation Association of America, Mr. Hank 
Dittmar, Executive Director of the Surface Transportation 
Policy Project, Ms. Bernice Shepard, Board Member, American 
Association of Retired Persons, and Ms. Nancy Smith of the 
National Easter Seals Society.
    On September 25, 1997, the Committee conducted a mark up of 
an original bill to reauthorize the mass transit portion of 
ISTEA. During the mark up, the Committee approved one amendment 
by a roll call vote of 11-7. The amendment, offered by Senator 
Moseley-Braun, authorizes the creation of a federal program to 
assist welfare recipients and other low-income individuals in 
getting to and from jobs where current mass transit services 
are not adequate to meet these needs. The Committee, by a 
rollcall vote of 17-1, ordered the bill, as amended, to be 
reported.

                          PURPOSE AND SUMMARY

    The purpose of this bill is to provide for a six-year 
reauthorization of the transit programs under ISTEA. The bill 
essentially retains ISTEA's programs and formulas for 
distributing funds. The bill includes the following changes 
from ISTEA: refinement of the planning process, creation of a 
new clean fuels formula grant program, greater program 
flexibility for transit operators, and additional funds for 
workplace safety.

                          NEED FOR LEGISLATION

    Transit services are often the only form of transportation 
available to many citizens. These services provide mobility to 
the millions of Americans that cannot, for various reasons, use 
an automobile. More than 80 million Americans, almost one-third 
of the U.S. population are transit-dependent; that is, they 
cannot drive or do not have access to a car. The 32 million 
senior citizens are the fastest growing segment of the nation's 
population. There are 24 million people with disabilities who 
require reliable, safe public transportation service to 
maintain their independence.
    Today, the American transit industry consists of nearly 
6,000 transit systems in both urban and rural areas, operating 
more than 124,000 vehicles. These include subways, buses, light 
rail, commuter railroads, ferries, vans, cable cars, aerial 
tramways, vans, and taxis. Non-profit elderly and disabled 
service providers constitute almost two-thirds of systems. An 
estimated 10 million people use transit each workday. More than 
half (54 percent) of all trips on transit are worktrips. People 
who choose to use transit come from every income level and 
demographic background.
    Federal transit programs are not solely urban-centered. 
ISTEA has provided transit funding to both urban and non-urban 
areas. As a result, transit in rural America dramatically 
improved under ISTEA. Today, rural transit carries riders a 
billion miles each year. Rural areas have a higher incidence of 
elderly and disabled populations, and a higher percentage of 
low income persons than urban areas.
    The Intermodal Surface Transportation Efficiency Act of 
1991 (``ISTEA'') expires on September 30, 1997. The Committee 
must take action to reauthorize the mass transit title of ISTEA 
in order to continue the federal government's critical role in 
mass transit programs.

                               BACKGROUND

    Although ISTEA returned much of the decision making 
authority to state and local governments, ISTEA maintained a 
strong Federal role in transportation. ISTEA has worked well 
because of four basic principles: flexibility on funding 
decisions for state and local governments, the encouragement of 
public participation in the planning process, an emphasis on 
intermodal issues, and the promotion of environmentally sound 
intermodal transportation projects.
    In 1991, ISTEA implemented a major overhaul of federal 
transportation policy to providemore flexibility for states and 
localities in using federal transportation dollars. ISTEA provided 
opportunities for state and local officials to use highway and transit 
funds flexibly for surface transportation projects. Under ISTEA, states 
and localities can use funds under the Surface Transportation Program 
(``STP'), and the Congestion Mitigation and Air Quality Improvement 
(``CMAQ'') program to assist in financing transit improvements based on 
local conditions and needs. This flexibility has provided local 
decision makers with the tools to invest in the best transportation 
solution for that area, regardless of mode. Since the enactment of 
ISTEA through April 1997, local officials in 43 states have chosen to 
use more than $3.1 billion in flexible funds on transit projects 
nationwide.
    The transportation planning provisions of ISTEA are 
important to metropolitan areas and transit systems, as they 
allow for a balanced planning process that looks at all 
feasible local solutions and provides for appropriate citizen 
participation in the planning process. ISTEA specifically 
requires that government consult with business and the public 
to decide among the various transportation options, including 
mass transit and ``intermodal'' facilities that utilize more 
than one means of transportation.
    The air quality benefits of mass transit over single 
occupant vehicle use are well documented. Without mass transit, 
there would be 5 million more cars on the nation's roads 
requiring 27,000 more lane miles of roads. Americans would 
spend an additional 367 million hours sitting in traffic jams.
    While diminishing roadway traffic, transit reduces auto-
related pollution and fuel consumption. America's transit 
travel, in replacing automobile travel, stops over 126 million 
pounds of hydrocarbons--a primary cause of smog--and 156 
million pounds of nitrogen oxides from being released into the 
atmosphere.
    The CMAQ program has been a particularly important 
environmental program beneficial to urban areas and transit 
systems. This program targets funds to air quality non-
attainment areas and assists these areas in implementing 
transportation solutions that will improve air quality. The 
CMAQ program has provided non-attainment areas with additional 
resources to improve existing transit systems and implement new 
transit services that reduce vehicle pollutants.
    Mass transit also produces a number of economic benefits. A 
recent report entitled ``Dollars and Sense: The Economic Case 
for Public Transportation in America'' conservatively estimates 
that the net economic return on public expenditures for public 
transportation is 4 or 5 to 1.
    Mass transit obviously reduces congestion on our roads and 
highways by offering commuters an alternative to driving. 
According to the FTA's annual report, the annual economic loss 
to U.S. business caused by traffic congestion is $40 billion. 
An additional $15 billion would be lost if all U.S. transit 
commuters drove instead. As noted earlier, ten million 
Americans now use transit each working day. Another 25 million 
Americans use transit less frequently but on a regular basis. 
Thus, the expansion of our mass transit systems is critical to 
maintaining our productivity.
    Mass transit plays an important role in facilitating 
economic development. A transit rail station enhances land 
values and attracts commercial development, thus creating 
additional jobs in that area. For example, a study by KMPG Peat 
Marwick, Fiscal Impact of Metrorail on the Commonwealth of 
Virginia, notes the economic impact of Metrorail service in 
Virginia. The report estimates that by 2010, Metrorail will 
have generated an additional $2.1 billion in Virginia tax 
revenues and over 90,000 additional jobs.
    In addition, mass transit provides the means for many 
workers who cannot afford cars to reach their jobs. 37 million 
people living below the poverty line often cannot afford a car 
and rely on transit to reach their jobs. In some cases, mass 
transit can help connect inner city welfare recipients with new 
suburban jobs. A 1993 study by the American Public Transit 
Association surveyed 56 reverse commuting programs. Of the 56 
programs surveyed, 19 were linked directly to employment 
programs.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title and table of contents

    This title would be referred to as the ``Federal Transit 
Act of 1997''.

Section 2. Authorizations

    Section 2 of the legislation would provide authorization 
levels for the various programs in the bill, including formula 
programs for both urban and rural areas under sections 5307 and 
5311, section 5309 New Starts, fixed guideway modernization, 
and bus discretionary programs, section 5310 funds for elderly 
and handicapped transit services, and planning under sections 
5303 through 5305. Funding is provided largely from the Mass 
Transit Account of the Highway Trust Fund, although general 
funds are also provided.
    The bill retains the current program structure, including 
the section 5309 funding split for New Starts (40 percent of 
authorized section 5309 funds), fixed guideway modernization 
(40 percent), and the bus capital programs (20 percent). The 
bill retains the 5.5 percent allocation of formula funds for 
the rural program.
    Funding for the various programs would be distributed 
consistent with current law. Three percent of total FTA funds 
would be authorized for planning, programming and research. 
Those funds would be distributed as follows:
          45 percent would be available for Metropolitan 
        Planning Organizations (``MPO'') under section 5303(g);
          5 percent would be available for the Rural Transit 
        Assistance Program under section 5311(b)(2);
          20 percent would be available for the state research 
        and planning program under section 5313; and
          30 percent would be available for the national 
        planning and research program under section 5314.
    The bill keeps in place the existing set-asides of 0.96 
percent of total FTA funds for administrative expenses under 
section 5334; 1.34 percent of total FTA funds for elderly and 
handicapped transportation under section 5310(a); and 
$6,000,000 for each of fiscal years 1998 through 2003 under 
section 5317 for University Transportation Centers.
    The bill authorizes $35.7 billion for federal transit 
programs over the 6 year period from fiscal years 1998 to 2003 
in a manner consistent with the recently enacted Balanced 
Budget Act. This represents a $4 billion increase (13 percent) 
over ISTEA authorizations of $31.5 billion. In addition, the 
bill authorizes $600 million for a new access-to-jobs program 
designed to assist in getting welfare recipients and other low 
income individuals to and from work.
    The Committee recognizes that there are many important 
transit systems that may not be built over the next six years 
because of budgetary constraints on the New Starts program. In 
addition, newly authorized projects must compete for funding 
through the appropriations process with other projects which 
have already received full funding grant agreements from the 
FTA.
    The Committee recognizes the need to look at ways to 
leverage limited federal dollars to try and meet the ever-
growing demand for mass transit. The Committee intends to 
continue to work to ensure that the mass transportation needs 
of the nation's communities do not continue to go unmet because 
of a lack of creative financing.
    The Committee recognizes the need for consistency between 
the treatment of funding under the Highway Account and the Mass 
Transit Account, both within the Highway Trust Fund. Under 
current law, the Mass Transit Account must meet a more 
stringent liquidity test. The Committee supports applying the 
liquidity test that now applies only to highway program funding 
to the mass transit program.

Section 3. Capital projects and small area flexibility

    Section 3 of the legislation expands and clarifies the 
definition of ``capital project'' under section 5302(a)(1) to 
add preventive maintenance and intelligent transportation 
systems. It also brings together existing capital provisions on 
leasing of transit equipment and facilities, the deployment of 
new technology, and joint development activities into the 
broadened capital definition. Joint development is expanded to 
include safety elements and community services as eligible 
activities.
    Making preventive maintenance an eligible capital expense 
gives transit operators greater flexibility and helps to ensure 
that the federal investment is properly maintained. Preventive 
maintenance does not include routine or servicing activities or 
repairing damage caused by an accident.
    Section 3 also enables small urbanized areas, which are 
defined as having a population between 50,000 and 200,000, to 
use any funding distributed under the urbanized area formula 
program (section 5307), for either operating or capital 
expenses. Previously, this section limited the amount of 
formula funding that could be used for operating assistance in 
small urbanized areas. This enhanced flexibility mirrors that 
which is currently provided to rural areas (populations under 
50,000).

Section 4. Metropolitan planning

    Section 4 of the legislation amends the current 
metropolitan planning provisions in sections 5303, 5304, and 
5305 and adds a new section 5305a on Statewide Planning. This 
new section largely parallels the statewide planning provisions 
in the highway laws, and is included as a separate provision in 
the transit laws, as suggested by the Administration, because 
rural and small urban transit recipients are subject to 
statewide planning requirements.
    The planning provisions in the Committee's bill preserve 
and strengthen the ISTEA regional and statewide transportation 
planning process, which has been widely regarded as a major 
strength of the 1991 law. Many of the changes incorporated in 
the Committee bill were proposed by the Administration.
    The bill retains the requirement that MPOs follow the ISTEA 
planning process outlined in the law. It replaces the 16 
individual planning factors in current law with a broader list 
of seven national goals and factors for the MPOs to consider, 
and retains consideration of land use. The Committee clarifies 
that consideration of these seven factors applies to the 
planning process as a whole, not separately to each project 
under review. The Committee adds language directing the MPOs to 
cooperate with the state and transit operators, through a 
public process, to establish goals and propose programs 
relating to these factors. The bill adds freight shippers to 
the list of those who can comment on plans and transportation 
improvement programs. These same changes are included in the 
Statewide Planning provisions.
    The bill retains the requirement that the transportation 
plans be fiscally constrained. This provision requires MPOs to 
identify the funding source for projects that are proposed for 
the regional transportation plan.
    The bill adds new language directing MPOs to bring together 
the wide range of transportation services being provided within 
the region, many of which are funded either directly or 
indirectly by federal programs other than the Department of 
Transportation (``DOT'). The intent of the Committee is to 
encourage the participation of these non-DOT funded 
transportation services, either through individual or 
representative organizations, in coordinating regional 
transportation services. An analogous provision is included in 
the Statewide Planning provisions. The Committee 
recognizeselsewhere in the bill the importance of coordinating these 
transportation services. Indeed, the Department of Health and Human 
Services (``HHS'') and DOT have a long-standing Coordinating Council 
which is evaluating the departments'' current coordination strategies. 
The objectives of this coordination include: joint identification of 
human service client transportation needs and the appropriate mix of 
transportation services to meet those needs; the expanded use of public 
transit services to deliver human services program transportation; and 
cost-sharing arrangements for HHS program clients transported by ADA 
paratransit systems based on a uniform accounting system. The Committee 
anticipates receiving the Council's coordination evaluation as soon as 
it is complete.
    The bill adds new language for publication of information 
in the 3-year transportation improvement program and the annual 
selection of projects, as well as publication of information 
about the long-range transportation plan. It revises the 
requirement for redesignating MPOs. The bill adds clarifying 
language that MPOs will continue in their present form until 
redesignated. The Committee supports the principle that issues 
of MPO governance should be determined at the local level and 
intends that this provision ensure the continuity of existing 
MPO designations until a redesignation occurs as provided by 
law.
    The Committee gives the Secretary greater flexibility in 
dealing with MPOs by permitting the Secretary to conditionally 
certify the MPO, rather than simply cut off a portion of 
federal funds.

Section 5. Metropolitan planning organizations

    Section 5 of the legislation requires that any metropolitan 
planning organization that is classified as a transportation 
management area and is redesignated after the enactment of this 
Act, shall include representatives of the users of public 
transit. It is intended that rider advocacy groups and private 
citizens who depend upon mass transit should be represented in 
the metropolitan planning process.

Section 6. Fare box revenues

    Section 6 of the legislation amends sections 5307(e) and 
5309(h) to permit state and local transit agencies to use the 
proceeds from issuance of farebox revenue bonds to be used as 
the local share for financing capital projects. This change is 
intended to permit transit agencies to take advantage of recent 
developments in the financial markets. Revenue-backed bonds now 
have a broader, more fully-developed market than when this 
restriction was put in place.
    The bill also makes clear that these revenue-backed 
issuances are not intended to supplant other existing funding 
sources. By making this change in the matching requirements, 
the Committee hopes to facilitate an overall increase in the 
level of investment in mass transit. Thus, this section 
includes a requirement that states must maintain their state 
and local level of investment at the average level of the past 
three years.

Section 7. Clean fuels program

    Section 7 of the legislation creates a new Clean Fuels 
formula grant program, with an annual funding authorization of 
$200 million. This program will assist transit systems in 
purchasing low emissions buses and related equipment, 
constructing alternative fuel fueling facilities, modifying 
existing garage facilities to accommodate clean fuel vehicles 
and assisting in the utilization of biodiesel fuel. 
Participation in this new program is voluntary.
    Funds are provided separately to large and small urbanized 
areas to ensure that there are sufficient funds available for 
each group. Two-thirds of authorized funding is provided to 
urbanized areas over one million population, and one-third to 
areas under one million population. At least 5 percent of the 
aggregate program funding must be used for hybrid electric or 
battery powered buses or related facilities. In addition, 
annual grants to any one recipient are capped at $25 million 
for recipients in urbanized areas over one million population 
and $15 million for recipients in urbanized areas under one 
million population.
    Transit recipients wishing to participate in this program 
must apply to receive a grant by January 1 of each year. Funds 
are allocated according to a formula applied to all eligible 
applicants based equally on the recipient's bus fleet and 
passenger-miles of travel, with each component weighted by the 
severity of air quality non-attainment. This air quality non-
attainment weighting is similar to that used in the CMAQ 
program formula under the federal highway program. Recipients 
must supply at least 20 percent of the project cost. Funds not 
used within two years are recycled to eligible recipients.
    Eligible technologies include compressed natural gas 
(``CNG''), liquified natural gas (``LNG''), biodiesel fuel, 
battery, alcohol-based fuel, hybrid electric, fuel cell or 
other zero emissions technology. Other emerging technologies 
can be certified by the Secretary as eligible under this 
program if they meet or exceed emissions standards of existing 
clean fuel vehicles. It is the intent of the Committee that 
this program be used to help transit systems finance the 
purchase of alternative fuel, hybrid-electric and other low 
emissions technology vehicles. Although the Committee 
recognizes that newer diesel engines are less polluting than 
the older diesel engines that they replace, these newer ``clean 
diesel'' engines are not eligible under the Clean Fuel Program. 
Purchase of ``clean diesel'' buses and related equipment remain 
eligible under all other transit formula and bus discretionary 
programs.
    An ``electric bus'' means a passenger bus of at least 15 
feet in length that is primarily powered by an electric motor 
that draws current from rechargeable storage batteries, fuel 
cells, or other sources of electric current. A ``hybrid 
electric bus'' means a vehicle powered by a combination of an 
electric motor and a conventional fuel burning engine (using 
either diesel or natural gas fuel), which results in a more 
efficient use of energy and produces significantly lower 
emissions than conventional fuel burning engines alone.
    Biodiesel is a renewable alternative fuel derived from 
agricultural feedstocks, such assoybean and other vegetable 
oils, as well as recycled waste cooking oils. Blends of biodiesel with 
petroleum diesel improve engine performance, wear and emissions. 
Biodiesel cuts down on targeted emissions significantly. The Committee 
recommends that biodiesel recipients of grants under this section use 
fuel blends of at least 50 percent biodiesel in order to achieve 
maximum environmental benefits. However, fuel blends containing a 
minimum of 20 percent biodiesel are eligible for grants under this 
section, provided that buses in which fuel blends of less than 50 
percent biodiesel are utilized have an exhaust system oxidation 
catalyst working in conjunction with the biodiesel fuel.
    The Committee believes that the benefits of alternative 
fuel vehicles can be enhanced by the use of heavy-duty, 
lightweight composite primary structures. Lightweight 
composites can increase an alternative fuel vehicle's energy 
efficiency, particularly in the case of compressed natural gas 
engines which often weigh more than standard diesel engines. 
The category of lightweight composites includes such 
technologies as fiberglass sandwich composites including those 
which use the various, available vacuum-assisted resin infusion 
processes for the load bearing monocoque structure of the 
vehicle.
            Fuel tax exemption
    Section 6427 of the Internal Revenue Code provides limited 
exemptions for federal motor fuels taxation. Under current law, 
fuel purchased for intercity and local public transportation 
purposes is exempt from taxation, but only if the service is 
fixed-route, or if the service uses vehicles seating more than 
20 adults. In general, this provision has little impact on most 
of the public transit network, because most bus operations in 
urbanized areas are provided by units of state or local 
government, who are exempted elsewhere from federal motor fuels 
taxation. Many private entities, however, do benefit from the 
current section 6427 provisions because they operate services 
that are fixed-route or use vehicles which seat at least 20 
adults.
    Unfortunately, many public transportation providers which 
serve the elderly, persons with disabilities, and rural areas 
do not benefit from the existing fuel tax exemption because 
they do not operate on fixed-routes or they use vehicles with a 
capacity under 20 passengers. The Committee feels this 
exemption should be changed.
    While not within the jurisdiction of this Committee, the 
Committee supports modifying current law to ensure that small 
transit operators are eligible for the fuel tax exemption by 
either lifting both the fixed-route and capacity requirements, 
or by changing the capacity requirement from 20 passengers to 8 
passengers.

Section 8. Capital investment grants and loans

    Section 8 of the legislation extends the existing division 
of funds among the three discretionary grant programs under 
section 5309 through the life of the bill. Under this division, 
40 percent is available for fixed guideway modernization, 40 
percent is available for new fixed guideway systems and 
extensions to existing fixed guideway systems, and 20 percent 
is available for the replacement, rehabilitation and purchase 
of buses and bus-related equipment and facilities.
    The section also renames section 5309 as ``Capital 
Investment Grants and Loans.''

Section 9. Transit supportive land use

    Section 9 of the legislation amends section 5309(e)(3)(B) 
to add the benefits of transit-oriented land use as one of the 
factors to be considered by the Secretary in reviewing New 
Starts projects. There is a growing awareness and agreement 
that mass transit investment produces economic benefits, partly 
through reduced local infrastructure costs. This change is 
intended to reflect the importance of these considerations in 
evaluating New Starts.

Section 10. New starts

    Section 10 of the legislation amends section 5309(m) to 
limit the amount of New Starts funding that can be used for 
purposes other than final design and construction to 8 percent 
of amounts made available for this program. The Committee 
believes that this change is necessary to direct the majority 
of New Starts funding to projects that are ready for, or under 
construction. Local communities have a responsibility to 
demonstrate their commitment to transit projects by providing a 
greater share of their own monies to fund preliminary 
activities.
    Eligible costs that are fundable as final design and 
construction activities include activities such as right-of-way 
acquisition, construction management, project management, value 
engineering, constructability reviews and peer view. These 
costs are eligible expenses regardless of whether required 
environmental review steps are completed or a record of 
decision has been issued.
    Under current law, some portion of federal funds are used 
for activities such as environmental work, planning and 
preliminary engineering for transportation projects. It is the 
Committee's expectation that MPOs will continue to support 
these project activities through the available planning funds 
as provided by law.

Section 11. Joint partnership for deployment of innovation

    Section 11 of the legislation amends section 5312, adding a 
new subsection ``Joint Partnership Program for Deployment of 
Innovation,'' to implement major research activities. FTA would 
join with consortia of public or private organizations which 
provide mass transportation services to the public, and 
businesses offering goods or services to mass transportation 
providers. A consortium may also include public or private 
research organizations or state or local governmental 
authorities. The program would permit FTA to enter into 
cooperative agreements, grants, contracts, or other agreements 
with consortia to promote the deployment of innovation in mass 
transportation technology, services, management, or operations 
practices. The federal government's share of the cost would be 
limited to a maximum of 50 percent of the net projectcost. The 
bill gives the Secretary the authority to establish the solicitation 
and award process. The bill further states that the Secretary shall 
receive a portion of the net revenues, with these proceeds credited to 
the Mass Transit Account and used for future joint partnerships under 
this subsection.

Section 12. Workplace safety

    Section 12 of the legislation allocates an additional one 
million dollars annually from fiscal year 1998 through 2003 to 
the National Mass Transportation Institute at Rutgers 
University. This money is designated to establish a workplace 
safety training program at the Institute.

Section 13. University transportation centers

    Section 13 of the legislation restores current law which 
designates University Research Institutes and Regional and 
National University Transportation Centers at various 
educational institutions around the nation. This section 
restores the designation and funding for these facilities 
following their repeal by the highway program reauthorization 
legislation as reported by the Senate Environment and Public 
Works Committee in S. 1173 on September 17, 1997.
    University Research Institutes are charged with the 
responsibility of conducting transportation-related research 
and training students interested in careers in transportation. 
These institutes have provided federal and state Departments of 
Transportation, as well as the transportation industry, with 
vital studies and statistics on infrastructure conditions, 
transportation problems facing rapidly-growing urban and 
suburban areas, and a host of other topics.
    Regional Transportation Centers are situated in colleges 
and universities in each of the ten United States Government 
regions that comprise the Standard Federal Regional Boundary 
System. Each Center carries out and disseminates research on 
transportation-related topics. Each Center must demonstrate a 
strong track record of transportation research before receiving 
a grant under this section. National University Transportation 
Centers have specific teaching and research missions, such as 
rural transportation, enhancing minority and women 
participation in transportation, and advanced transportation 
technology.

Section 14. Job access grants

    Section 14 of the legislation authorizes the Secretary of 
Transportation to make grants totaling $100 million per year to 
help welfare recipients and other low-income individuals get to 
and from jobs.
    Sixty percent of funds appropriated under this program must 
be awarded to projects in large urbanized areas, 20 percent to 
projects in small urbanized areas, and 20 percent to projects 
in non-urbanized areas. Grants require a 50 percent local 
match. Other federal funds, notably those provided through 
programs at the Department of Health and Human Services, may be 
used to meet the matching requirements.
    In order to promote coordination and regional planning, 
MPOs and States must apply for the grants on behalf of the 
States, local governments, transit properties, or non-profit 
organizations who will actually provide the transportation 
services. Grant funds received under this section are not 
intended for planning and coordination activities. MPOs and 
States are encouraged to use their planning funds received 
under Sections 5303 through 5305a for such purposes.
    Grants may be used to establish or extend transit services 
to under-served areas, help provide transit services to workers 
with non-traditional schedules, encourage employers to provide 
transit passes to eligible individuals (but not for vehicles or 
operational costs for employer-provided transportation), or 
provide vouchers for eligible individuals to ride existing 
transit services.
    Transportation services provided with funds under this 
section will be available to anyone currently receiving Federal 
welfare benefits, or anyone who has received benefits at any 
time during the preceding three years. Individuals living at or 
below 150 percent of the federal poverty definition are also 
eligible for services, although the Committee expects the 
Secretary to give priority consideration to projects that will 
serve the highest percentages of welfare recipients.
    In order to measure the success of this program, this 
section directs the Comptroller General to study projects 
supported with these grants every six months, and requires the 
Secretary to conduct a thorough review of the programs after 
two years.
    The Committee anticipates that this grant program will 
encourage recipients to implement long-term and self-sustaining 
plans to address the transportation needs of welfare recipients 
and eligible low-income individuals who live in areas devoid of 
job opportunities.

Section 15. Grant requirements

    Section 15 of the legislation conforms the requirements for 
receiving formula and discretionary grants under sections 5307 
and 5309 with requirements for entities receiving grants for 
transit projects under the recently enacted or proposed 
``innovative financing'' programs, including State 
Infrastructure Banks (``SIBs'') and the Transportation 
Infrastructure Finance and Innovation Act (``TIFIA'). Identical 
requirements apply to innovative financing projects under the 
highway program.

Section 16. HHS and public transit service

    Section 16 of the legislation requires coordination between 
governmental agencies and nonprofit organizations that receive 
federal government funds, either directly or indirectly, to 
provide nonemergency transportation services and public transit 
operators that receive assistance under this title. As 
discussed previously in the planning section, the Committee 
wants toencourage the participation of non-DOT funded 
transportation services, either through individual or representative 
organizations, in coordinating regional transportation services. Such 
coordination will eliminate costly duplication of services and lead to 
more comprehensive, streamlined transportation services provided to 
human service agency clients and the general public.

Section 17. Proceeds from the sale of transit assets

    Under section 17 of the legislation, section 5334(g) is 
amended to allow grantees to sell assets, including land, that 
are acquired with federal funds and to retain the proceeds from 
the sale so long as the proceeds are used for mass 
transportation.
    This change enhances flexibility in making decisions 
regarding asset disposition, and facilitates the undertaking of 
joint development projects.

Section 18. Operating assistance for small transit authorities in large 
        urbanized areas

    Section 18 of the legislation amends section 5336(d) to 
require the Secretary, in distributing operating assistance to 
large urban areas, to direct each area to consider the impact 
of any operating assistance reduction on smaller transit 
authorities operating within the area.

Section 19. Apportionment of appropriations for fixed guideway 
        modernization

    Section 19 of the legislation modifies the formula in 
section 5337 used to apportion funds under the existing Fixed 
Guideway Modernization program. The fixed guideway 
modernization program provides funding to improve and modernize 
the nation's older transit systems built decades ago, and also 
assists newer transit systems to maintain their infrastructure. 
To be eligible for fixed guideway modernization funds, a system 
or route segment must have been in operation for 7 years.
    The formula revision preserves much of the existing formula 
distribution up to the FY 1997 funding level of $760 million, 
and then increases the share of the program that goes to newer 
systems that have growing needs for modernization.
    Funds up to $760 million will be allocated only to those 
areas that received them in FY 1997, and eligibility for 
funding up to the $760 million level will be based only on 
routes and segments of routes counted in the FY 1997 
distribution. This means that current recipients of funding 
under the program will receive no less than their share of 
funds up to the $760 million level using ISTEA formulas. Cities 
or segments that first become eligible for funding in FY 1998 
will receive funding exclusively out of funding in excess of 
$760 million. Furthermore, routes and segments of routes added 
to systems that currently receive funding under the program 
will not be counted in their modernization factors until such 
routes or segments are seven years old.
    With regard to the distribution of funds in excess of $760 
million, the ``new areas'' in the program (those not now listed 
in Tier 1) will receive an increased share of program funding 
at levels in excess of $760 million. Funding between $760 
million and $900 million is allocated on a 65 percent-35 
percent basis between ``old'' and ``new'' areas. Funding 
between $900 million and $1 billion is allocated on a 60 
percent-40 percent basis between ``old'' and ``new'' areas. 
Funding in excess of $1 billion is allocated on a 50 percent-50 
percent basis. Areas in each group receive funding within their 
group under the applicable formula factors used in the 
urbanized area formula program.

Section 20. Urbanized area formula study

    Section 20 of the legislation requires that the Secretary 
of Transportation conduct a study of the current urbanized area 
formula to determine whether changes are needed to reflect the 
fact that some small urban areas with populations under 200,000 
carry more passengers per mile or per hour than larger systems 
operating in areas with populations over 200,000. This report, 
due December 31, 1999, shall also make recommendations for 
changes to the method for apportioning funds to urbanized areas 
with populations between 50,000 and 200,000.

                      Regulatory Impact Statement

    Pursuant to rule XXVI, paragraph 11(b), of the Standing 
Rules of the Senate, the Committee has evaluated the regulatory 
impact of the bill and concludes that it will not increase the 
net regulatory burden imposed by the Government.

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 8, 1997.
Hon. Alfonse M. D'Amato,
Chairman, Committee on Banking, Housing, and Urban Affairs, U.S. 
        Senate, Washington, DC
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for the Federal Transit Act 
of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kristen 
Layman.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

Federal Transit Act of 1997

    Summary: The Federal Transit Act of 1997 would authorize 
federal mass transit programs for fiscal years 1998 through 
2003. For that six-year period, the bill would provide contract 
authority of approximately $32 billion, primarily for the 
Federal Transit Administration (FTA). This amount would exceed 
the contract authority projected in CBO's March 1997 baseline 
by $1.8 billion over the six-year period. In addition, the 
legislation would authorize the appropriation of about $5 
billion for other FTA programs for the 1998-2003 period. By 
providing new contract authority, the bill would affect direct 
spending; therefore, pay-as-you-go procedures would apply. 
However, because outlays from contract authority provided in 
this bill are controlled by annual obligation limitations in 
appropriations bills, the pay-as-you go effect on outlays from 
direct spending would be zero in each year.
    The legislation would retain almost all of the transit 
programs and formulas for distributing funds that were 
authorized in the Intermodal Surface Transportation Efficiency 
Act of 1991 (ISTEA). The bill also would retain all of the 
existing set-asides for administrative expenses, programs for 
the elderly and disabled, and university transportation center 
programs, and it would extend the current division of funds in 
the discretionary grants program. The legislation would 
authorize two new programs: an access-to-jobs program and a 
clean fuels program. Finally, the legislation would authorize 
additional funds for a workplace safety training program at the 
National Mass Transportation Institute at Rutgers University.
    The Federal Transit Act of 1997 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act of 1995 (UMRA) and would impose no 
costs on state, local, or tribal governments except as a 
condition of receiving federal assistance or participating in a 
voluntary federal program.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of enacting the Federal Transit Act of 1997 is 
shown in the following table. Authorizations of contract 
authority for the trust fund share of expenses and the capital 
investment grant program are included in the top portion of the 
table (``Direct Spending'') Authorizations of appropriations 
from the general fund for formula grants, access-to-jobs, and 
the clean fuel initiative are included in the bottom portion of 
the table (``Spending Subject to Appropriation''). The costs of 
this legislation fall within budget function 400 
(transportation).

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                     1997     1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Baseline spending under current law:                                                                            
    Estimated budget authority \1\...............    4,539    4,653    4,778    4,907    5,040    5,176    5,316
    Estimated outlays............................        0        0        0        0        0        0        0
Proposed changes:                                                                                               
    Estimated budget authority...................        0      279      287      295      302      309      317
    Estimated outlays............................        0        0        0        0        0        0        0
Total spending:                                                                                                 
    Estimated budget authority...................    4,539    4,932    5,065    5,202    5,342    5,485    5,633
    Estimated outlays............................        0        0        0        0        0        0        0
                                                                                                                
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Spending under current law:                                                                                     
    Budget authority.............................      823        0        0        0        0        0        0
    Estimated outlays \2\........................    4,366    4,029    3,826    3,739    3,797    3,850    3,980
Proposed changes:                                                                                               
    Estimated authorization level................        0      738      756      774      793      812      832
    Estimated outlays \3\........................        0      358      841    1,346    1,663    1,960    2,078
Total spending:                                                                                                 
    Estimated authorization level................      823      738      756      774      793      812      832
    Estimated outlays............................    4,366    4,386    4,666    5,085    5,461    5,810    6,057
----------------------------------------------------------------------------------------------------------------
\1\ The 1997 level is the amount of contract authority provided under ISTEA. The 1998-2003 levels are the       
  amounts of contract authority included in CBO's March 1997 baseline, which assumes annual increases for       
  anticipated inflation.                                                                                        
\2\ Includes both outlays from the mandatory contract authority for programs that are subject to annual         
  obligation limitations, and outlays from discretionary appropriations.                                        
\3\ Outlays from new authorizations in addition to the programs subject to the obligation limitation.           

Basis of estimate

    Enacting the bill would affect both direct spending and 
spending subject to appropriation. Over the 1998-2003 period, 
the bill would provide $32 billion in contract authority (a 
form of direct spending). All of the outlays from such contract 
authority are controlled by annual obligation limitations 
established in appropriation acts. For the purpose of 
estimating outlays in this estimate, CBO assumes that 
obligation limitations would be equal to the annual contract 
authority levels in each year. All of the projected outlays 
controlled by appropriation action, whether from appropriated 
budget authority or annually limited contract authority, are 
shown in the bottom half of the table (``Spending Subject to 
Appropriation'').
            Direct spending
    Over the six-year period, the bill would provide contract 
authority totaling $17.3 billion for the trust fund share of 
expenses, $14.2 billion for the capital investment program, and 
$100 million for the clean fuels program that would be created 
by the bill (the first two programs already exist). In 
addition, the bill would provide--over the 1998-2003 period--
$36 million in contract authority for university transportation 
centers, and $38 million in contract authority for university 
research institutes.
    Finally, the bill would allow the Secretary of 
Transportation to enter into partnerships to promote early 
deployment of innovation, and would allow the Secretary to 
accept a portion of the revenues resulting from the sale of 
innovation projects. These revenues could then be spent to 
enter into future partnerships. CBO estimates that receipts 
resulting from this provision would not be significant over the 
next five years and that any additional receipts would be 
offset by increased spending.
            Spending subject to appropriation
    For those programs with authorizations of appropriated 
funding, CBO assumes that the amounts authorized for each year 
would be appropriated by or near the start of each fiscal year. 
Outlay estimates are based on historical spending rates. The 
bill would authorize funding for the general fund portion of 
formula grants, university transportation centers, 
administrative expenses, transit planning and research, the 
clean fuel initiative, and the access-to-jobs program. although 
the legislation is not specific in stipulation whether the 
existing programs would be funded from appropriated budget 
authority or contract authority,CBO assumes for the purposes of 
this estimate that they would be funded by appropriations because they 
are currently funded that way.
    The access-to-jobs program is a new authorization provided 
in this bill. Outlay estimates are based on historical spending 
rates for formula grants. The bill would authorize the 
appropriation of $100 million for the access-to-jobs program 
for each fiscal year from 1998-2003. For the other new 
program--the clean fuel initiative--the bill would authorize 
funding of $200 million a year, of which $100 million would be 
contract authority, and $100 million would come from 
appropriations.
    The legislation would direct the Secretary of 
Transportation to conduct a study to determine whether current 
apportionment formulas for urbanized areas accurately reflect 
the needs of those areas. In addition, the bill would require 
the Secretary of Transportation to conduct a study to evaluate 
the access-to-jobs program. Based on information from FTA, CBO 
estimates the cost of these studies to be approximately 
$450,000. Spending for these studies would be subject to the 
availability of appropriated funds. In addition, the bill would 
direct the Comptroller General to conduct a study to evaluate 
the access-to-jobs program. Based on information from the 
General Accounting Office, CBO estimates the cost of this study 
to be negligible.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. While the bill would provide contract authority for 
mass transit programs, the outlays for these programs are 
considered discretionary. Therefore, the pay-as-you-go effect 
on outlays from direct spending would be zero in each year. The 
bill would not affect governmental receipts.
    Estimated impact on state, local, and tribal governments: 
The Federal Transit Act of 1997 contains no intergovernmental 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments except as a condition of receiving 
federal assistance or participating in a voluntary federal 
program. Most of the funding authorized in this bill would be 
redistributed to states in the form of grants for 
transportation purposes.
    Estimated impact on the private sector: This bill would 
impose not new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: Kristen Layman; Impact 
on State, Local, and Tribal Governments: Kristen Layman.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                        CHANGES IN EXISTING LAW

    In the opinion of the Committee, it is necessary to 
dispense with the requirements of paragraph 12 of the rule XXVI 
of the Standing Rules of the Senate in order to expedite the 
business of the Senate.

                                
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