[Federal Register Volume 65, Number 36 (Wednesday, February 23, 2000)]
[Notices]
[Pages 9040-9053]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4224]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

Federal Transit Administration

[FHWA Docket No. FHWA-99-4317]


Transportation Equity Act for the 21st Century; Final Guidance 
for the Congestion Mitigation and Air Quality Improvement Program

AGENCIES: Federal Highway Administration (FHWA), Federal Transit 
Administration (FTA), DOT.

ACTION: Notice; issuance of final guidance.

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SUMMARY: This document publishes final guidance on section 1110 of the 
Transportation Equity Act for the 21st Century (TEA-21) for the 
congestion mitigation and air quality improvement program (CMAQ). This 
final guidance replaces all earlier CMAQ guidance documents and 
provides information on: (1) CMAQ authorization levels and 
apportionment factors; (2) the new flexibility and transferability 
provisions; (3) geographic area eligibility for CMAQ funds and the 
impacts of new National Ambient Air Quality Standards on eligibility; 
(4) project eligibility; (5) analytical requirements; and (6) Federal, 
State, and local agency roles and responsibilities in the 
administration of the program.

DATES: This final guidance is effective on April 28, 1999.

FOR FURTHER INFORMATION CONTACT: For the FHWA program office: Mr. 
Michael J. Savonis, HEPN-10, Office of Environment and Planning, (202) 
366-2080; For the FTA program office: Mr. Abbe Marner, TPL-12, Office 
of Planning, (202) 366-4317; For legal issues (FHWA): Mr. S. Reid 
Alsop, HCC-30, Office of the Chief Counsel, (202) 366-1371. For legal 
issues (FTA): Mr. Scott Biehl, TCC-30, Assistant Chief Counsel, 
Environment and Regional Operations Division, (202) 366-0952. Office 
hours are from 8 a.m. to 4:30 p.m., e.t., Monday through Friday, except 
Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    An electronic copy of this document may be downloaded using a modem 
and suitable communications software from the Government Printing 
Office's Electronic Bulletin Board Service at (202) 512-1661. Internet 
users may reach the Office of the Federal Register's home page at: 
http://www.nara.gov/fedreg and the Government Printing Office's 
database at: http://www.access.gpo.gov/nara. Internet users may also 
access the written comments on the interim guidance [FHWA Docket No. 
FHWA-98-4317] received by the U.S. DOT Dockets, Room PL-401, by using 
the universal resource locator (URL): 
http://dms.dot.gov. It is available 24 hours a day, 365 days each year. 
Please follow the instructions online for more information and help.

Background

    On October 26, 1998, at 63 FR 57154, the FHWA and the FTA published 
interim implementation guidance for

[[Page 9041]]

the CMAQ program provided in section 1110 of the TEA-21, Public Law 
105-178, 112 Stat. 107, at 142 (1998). The text of the final guidance, 
which has been in effect since April 28, 1999, is provided as an 
attachment to this notice.
    In the latter part of 1998, the FHWA and the FTA hosted five forums 
in four cities (Washington, D.C., San Francisco, CA, Chicago, IL, and 
St. Louis, MO) to provide an opportunity for those directly involved in 
congestion mitigation and air quality improvement programs to assist in 
developing the final guidance.
    The CMAQ program, established under the Intermodal Surface 
Transportation Efficiency Act of 1991 (ISTEA), Public Law 102-240, 105 
Stat. 1914, was designed to assist nonattainment and maintenance areas 
in attaining the national ambient air quality standards (NAAQS) by 
funding transportation projects and programs that will improve air 
quality. It was reauthorized with some changes under section 1110 of 
the TEA-21.
    The primary purpose of the CMAQ program remains the same: to fund 
projects and programs in air quality nonattainment and maintenance 
areas that reduce transportation-related emissions. It is the only 
program under title 23, U.S.C., with funds dedicated to helping 
nonattainment and maintenance areas to achieve and maintain the NAAQS.

Discussion of Comments

    Interested persons were invited to comment on the interim guidance 
for the CMAQ program under the TEA-21. We received 34 comments from 32 
agencies in response to an invitation to submit written comments to the 
docket number FHWA-1998-4317 by November 30, 1998. Of the 32 
commenters, 14 were State agencies, 7 were local agencies, 7 were 
private sector companies or industry associations, 2 were public 
interest institutes, 1 was a Federal agency, and 1 was a private 
citizen. The Federal Register notice specifically asked for general 
comments, as well as for input on eight questions and issues related to 
the new flexibilities in the CMAQ program (For brevity, the original 
questions are abridged in this summary). The FHWA and the FTA also 
conducted extensive outreach efforts by holding five stakeholder forums 
in which over 200 participants provided input.
    In general, the comments were supportive of the CMAQ program, 
acknowledging its important role in helping States and metropolitan 
areas reach air quality goals. Given the several years of experience 
with CMAQ and public involvement processes under ISTEA, as well as the 
continued need to provide flexibility to States and metropolitan 
planning organizations (MPOs), most commenters, particularly those at 
the stakeholder forums, urged that CMAQ implementation guidance be 
flexible--not prescriptive--and allow for existing processes to work or 
be enhanced appropriately.
    Many of the written comments to the docket on the interim guidance 
addressed two issues: (1) Eligibility of CMAQ funding in areas where 
the 1-hour ozone standard has been revoked; and (2) project evaluation 
and project selection criteria.
    Many of the State agencies commenting to the docket opposed 
eliminating the eligibility of CMAQ funding for the areas where the 1-
hour ozone standard has been revoked. The law makes clear, however, 
that only those areas that are classified in accordance with sections 
181(a) and 186(a) or (b) of the Clean Air Act (42 U.S.C. 7511 and 7512) 
can be included in the statutory formula apportioning CMAQ funds. 
Further, the law requires that CMAQ funds be expended to assist 
nonattainment and maintenance areas, if any exist within the State, to 
attain and maintain the standards. Since nonattainment areas that have 
the 1-hour standard revoked have no ozone standard to meet and, as a 
result, have no maintenance plans and continuing air quality 
responsibilities, the CMAQ funds could not be expended to assist 
attainment or maintenance of the 1-hour standard in those areas. 
Finally, reinstatement of the 1-hour ozone standard, as proposed by the 
U.S. Environmental Protection Agency (EPA), would render this issue 
moot.
    In the final guidance, the FHWA and the FTA have attempted to 
provide as much flexibility to State and local agencies in using CMAQ 
funding within the existing authority provided by the TEA-21. As 
reflected in the final guidance, in order to provide continuity in the 
transportation and air quality planning process, the FHWA and the FTA 
will allow those areas where the 1-hour ozone standard has been revoked 
to use CMAQ funds for air quality improvement projects that were 
included in the first three years of the transportation improvement 
program (TIP) in effect when the standard was revoked. In addition, 
these areas were granted a four-month period (beginning with the April 
28, 1999 guidance or the effective date of revocation, whichever is 
later) to make any adjustments to those TIPs.
    Nearly all of the written comments emphasized the need for project 
evaluation and selection criteria that could quantify air quality 
benefits more accurately and encourage the selection of the most cost-
effective projects. Many commenters also felt that such evaluation 
protocols would help ensure that public-private partnerships serve the 
public interest. The FHWA and the FTA recognize the importance of 
ensuring that CMAQ funds continue to provide an important resource for 
reducing air pollution from mobile sources, and, in particular, to 
assist attainment of the national ambient air quality standards. The 
law, however, does not require performance standards. In addition, the 
CMAQ program funds a great variety of projects, each with unique 
circumstances and potential impacts (including air quality improvement, 
congestion relief, quality of life enhancements, and other public 
benefits), that preclude the application of a standardized and 
inflexible evaluation protocol. The FHWA and the FTA have encouraged 
States to prudently use their CMAQ funds for those projects that have 
strong emissions and other public benefits. The FHWA and the FTA 
believe that information on evaluation and project selection criteria 
and effective practices is best provided in follow-up technical 
assistance rather than prescribed in the final guidance document.

Question 1. Public-Private Partnerships

    (a) Are there ways to ensure that the public funding (CMAQ) is 
limited to the production of a public benefit--air quality improvement?
    Thirty commenters responded to the four questions concerning 
public-private partnerships. Collectively, the comments identified 
several methods to ensure that CMAQ funding used in public-private 
partnerships serve the public interest. For the most part, commenters 
cited the need for performance measures (such as cost-effectiveness 
criteria) and a standard methodology for measuring and reporting air 
quality improvement and public benefits. Some commenters suggested that 
programs administered by the U.S. Department of Energy, the California 
Air Resources Board, and the Connecticut Department of Transportation 
could serve as models on how to administer public-private partnerships.
    Like the great majority of commenters, the FHWA and the FTA 
strongly believe that public-private partnerships provide a significant 
opportunity to advance a greater number of clean air transportation 
initiatives than could be

[[Page 9042]]

achieved with public funds alone. The final guidance addresses public-
private partnerships as an eligible activity. The TEA-21 requires that 
a written agreement be in place between the public agency and private 
or non-profit entity before implementing a CMAQ-funded project. Since 
the public benefit is air quality improvement, it is expected that 
future funding proposals involving private entities will demonstrate 
strong emission reduction benefits. In this respect, public-private 
partnerships are no different from public sector CMAQ projects. In 
addition, the FHWA is currently researching effective models and 
practices for public-private partnerships that will be shared in future 
technical assistance.
    (b) How can the Federal, State, and local agencies insure that an 
open process for project selection is preserved?
    For the most part, all of the commenters agreed that an open 
process was important and essential. Many commenters identified 
possible elements of an open process, which included the following: (1) 
Asking MPOs to provide public notice of the availability of funding for 
CMAQ programs; (2) providing opportunities for prospective participants 
to meet with transportation planning officials to discuss the merits of 
their projects; and (3) having Federal, State, and local agencies 
identify the various steps the private sector must take to participate 
in public-private partnership programs. The FHWA and the FTA agree with 
the majority of commenters that it is essential that all interested 
parties have full and timely access to the process of selecting 
projects for CMAQ funding. Given the great interest from commenters and 
the diversity of ideas, the FHWA and the FTA expect to provide 
additional information on effective practices and procedures on cost-
effectiveness and project selection in future technical assistance.
    (c) What safeguards, agreements, or other mechanisms should be 
employed to protect the public investment and insure that joint public-
private projects funded under the CMAQ program are used for their 
intended public purpose, which is to improve air quality?
    In general, commenters believed that existing processes protect the 
public interest and offer adequate safeguards to public agencies. Three 
commenters cited U.S. Department of Energy and California Air Resources 
Board programs as possible models for effective administration of 
public-private partnerships. Collectively, the commenters identified 
several mechanisms to safeguard the public interest in public-private 
partnerships that receive CMAQ funds as follows: (1) Establish a 
regular monitoring program that measures air quality improvements and 
other public benefits; (2) retain an appropriate percentage of the CMAQ 
funding until the State is satisfied that a project is meeting its 
intended purpose; (3) require MPOs to certify that the project will 
improve air quality using appropriate evaluation procedures; and (4) 
appoint a project manager from another agency as an administrator. The 
FHWA and the FTA will consider these comments in future technical 
assistance concerning public-private partnerships related to CMAQ-
funded projects. As reflected in the final guidance, the States are 
responsible for ensuring that the intent of CMAQ funded projects is 
served.
    (d) What are the implications of these new flexibilities on the 
transportation/air quality planning process? For transportation 
conformity?
    Several State agencies emphasized that documentation of estimated 
emission reduction is the key for conformity analysis, regardless of 
project sponsor, while an open planning process and emphasis on 
carrying out the State Implementation Plan (SIP) will assist 
conformity. However, one State agency felt the new public-private 
partnership provisions would have a minimal impact on the 
transportation and air quality planning and conformity process. Based 
on these comments and input from other stakeholders at public forums, 
the FHWA and the FTA expect that, through the continued vigilance and 
responsibilities of the States, public-private partnerships will not 
negatively impact the ability of areas to achieve air quality and 
conformity goals. The final guidance also stresses the use of CMAQ 
funds for projects that have strong emissions benefits.

Question 2. Telecommuting

    Currently, eligibility for expenses related to telecommuting 
programs is limited to planning, technical and feasibility studies, 
training, coordination and promotion. Purchase of computer and office 
equipment for public agencies and related activities are not eligible. 
Should CMAQ eligibility be expanded to include these costs?
    Of the 14 responses to this question, 6 commenters felt that 
telecommuting eligibility should not be extended to the purchase of 
computer and office equipment. These commenters either believed that 
funding for these items could come from other sources, or that 
telecommuting projects had a minimal impact on air quality 
improvements. One commenter expressed concerns that telecommuting 
programs may actually exacerbate sprawl by encouraging employees to 
live farther from their workplaces. Another 8 commenters believed that 
telecommuting programs should be able to purchase equipment with CMAQ 
funds with some caveats as follows: (1) Purchase of computer and office 
equipment should be eligible as a one-time expenditure; (2) equipment 
purchases for home use or for only one employee should not be eligible; 
(3) equipment must remain for use by the telecommuting program; and (4) 
the telecommuting program must be large enough to have an actual, 
quantifiable impact upon air conformity. One commenter suggested that 
agencies should fund pilot projects to develop empirical data on the 
benefits of telecommuting programs. Based on the conflicting comments 
received, the FHWA and the FTA felt there was no compelling reason to 
change the existing eligibility policy on telecommuting.

Question 3. Alternative Fuel Vehicles (AFV)

    Under the interim guidance and under TEA-21, CMAQ eligibility under 
the public-private partnership provisions is limited to the incremental 
cost of a new alternative fuel vehicle as compared to a conventionally 
fueled vehicle of the same type. Should this policy be extended to 
projects that will provide for the use of alternative fuels for 
publicly-owned vehicles and vehicle fleets (other than vehicles used 
for public transit services)?
    There were 20 responses to this question. Three commenters felt 
that the policy should be extended to projects that encourage the use 
of alternative fuels for publicly-owned vehicles and vehicle fleets. 
Another 8 commenters stated that the policy should not be extended to 
such publicly-owned projects. Many of these commenters believed that 
the FHWA and the FTA should maintain as much flexibility as possible so 
that areas can realize the potential air quality improvements offered 
by AFVs, particularly those that exceed EPA standards. Of the other 9 
responses, 8 commenters expressed general support for the eligibility 
of alternative fuel vehicle projects for CMAQ funds, while 1 commenter 
stated that the FHWA and FTA should not intervene in the AFV market.
    Based on the positive response from the majority of commenters to 
the Federal Register notice and in public forums, the final guidance 
maintains current eligibility for the full cost of publicly-owned, 
alternative fuel

[[Page 9043]]

vehicles, for on-site fueling facilities, and for other infrastructure 
needed to fuel alternative fuel vehicles. However, if privately-owned 
fueling stations are in place and are reasonably accessible and 
convenient, then CMAQ funds may not be used to construct or operate 
publicly-owned fueling stations as before. The FHWA and the FTA 
emphasize that there must continue to be a sound and open process, 
which safeguards the public interest, and which does not favor one 
private sector interest over another. In particular, States continue to 
be responsible for ensuring that the public interest is protected.

Question 4. Traffic Calming Measures

    Should traffic calming projects be categorically excluded from CMAQ 
funding or should they be considered for eligibility on a case-by-case 
basis?
    Of the 13 commenters, 9 agencies felt that traffic calming projects 
should be considered for CMAQ funding on a case-by-case basis by 
carefully evaluating possible increases in hydrocarbon and carbon 
monoxide (CO) emissions at lower speeds against potential long-term 
reductions in automobile travel by single occupancy vehicles. One of 
these agencies also stipulates that traffic calming projects should be 
part of a broader area systems plan in order to receive CMAQ funds.
    Two agencies believed that traffic calming projects should not be 
eligible, while another two believed that the FHWA and the FTA should 
sponsor further research investigating the long-term potential of mode 
switching and traffic diversion resulting from traffic calming 
projects. Based on the comments received, the FHWA and the FTA will 
continue to consider traffic calming measures for CMAQ funding on a 
case-by-case basis.

Question 5. Experimental Pilot Projects

    What can the FHWA and the FTA do to encourage the implementation of 
experimental projects under this provision?
    Twelve agencies responded to this question, offering several ideas 
to the FHWA and the FTA on possible actions to encourage experimental 
pilot projects as follows: (1) Provide direction and examples as to how 
areas could best determine priority ranking of experimental CMAQ 
projects compared to other proposed projects that have quantified 
emissions benefits; (2) develop a working group or pursue research 
regarding the development of unique CMAQ pilot projects; (3) consider a 
process by which a pilot project that demonstrates quantifiable air 
quality benefits can be incorporated into ``regular'' CMAQ programs; 
(4) create an objective rating system for candidate projects that 
establishes a bonus for innovative projects that don't have significant 
access to other TEA-21 funding; and (5) direct States to set aside a 
minimum percentage of CMAQ appropriations for experimental projects, 
the allocation of which would be determined jointly by the individual 
States' air quality, energy, and transportation agencies. Given the 
diversity of comments received, the FHWA and the FTA will consider the 
wide-ranging suggestions in future research and program activities.

Question 6. Fare/Fee Subsidy Program

    The current CMAQ Guidance allows for partial, short-term subsidies 
of transit and paratransit fares as a means of encouraging transit use. 
Transit agencies have used this provision to offer reduced fares on 
``ozone alert'' days. Should this provision be changed to allow ``free 
fares?'' Should the provision be loosened to allow a broader period of 
coverage, i.e., throughout the high-ozone season rather than individual 
episodes?
    Of the 13 agencies responding to this question, 10 believed that 
the provisions should allow free fares and a broader period of 
coverage. These ten agencies believed that such an expansion would 
provide greater local flexibility in planning, and enable more routine 
use of transit. In particular, these agencies believed that allowing a 
broader period of coverage would enable better planning, and eliminate 
the difficulty of predicting ``high ozone'' days far enough in advance 
to have an impact on travel choice. Two agencies believed that the FHWA 
and the FTA should assess subsidy programs for cost-effectiveness 
before expanding program eligibility. In addition, one State agency 
opposed relaxing the provisions, stating that free fares and broader 
coverage would only enable existing transit users to make more 
substantial use of the transit system rather than attract new transit 
users.
    The final guidance allows for the use of CMAQ funds to subsidize a 
transit fare if the reduced or free fare is part of a more 
comprehensive program in the nonattainment or maintenance area to 
prevent exceedances of a national air quality standard. In the final 
guidance, the FHWA and the FTA focus on the potential to attract new 
riders to transit so that transit can contribute to an action plan to 
meet air quality objectives.

Question 7. High Occupancy Toll (HOT) Lanes

    Should projects to fund the development and/or operation of HOT 
lanes be eligible under the CMAQ program?
    Of the 11 commenters on this question, 5 believed that HOT lanes 
should be eligible. Many of these commenters believed that the revenues 
from these projects should be reinvested for air quality improvements. 
A public interest group for highway and safety qualified their 
affirmative response by stating that medium or heavy trucks should be 
excluded from participating in a congestion pricing program on HOT 
lanes receiving CMAQ funds. Two agencies commented that HOT lanes 
should not be eligible since they have mixed air quality improvement 
results and could be self-funding. Another four agencies believed that 
HOT lanes must demonstrate air quality benefits before becoming 
eligible. There is no clear consensus among the commenters. Further 
concerns exist regarding the FHWA's and the FTA's discretion to allow 
CMAQ funding for HOT lanes and no commenters suggested an alternative 
interpretation of the law that might preclude these concerns. In the 
final guidance, the FHWA and the FTA state that projects to plan, 
develop, assess, or construct new High Occupancy Toll lanes are an 
eligible CMAQ expense only if they are part of the Value Pricing 
Program under TEA-21 (which provides relief under the law from some 
statutory provisions like those in 23 U.S.C. 149.)

Question 8. Reporting Requirements

    Do you have any suggestions on how to improve upon the quality of 
data and information provided in annual reports? Would you use an 
electronic reporting format if that option were available to you? Do 
you have any suggestions on how to improve the reporting requirements 
and minimize the administrative burden of reporting on CMAQ-funded 
projects?
    Of the 10 agencies responding to these questions, all welcomed 
electronic reporting, particularly a system that could take advantage 
of internet technologies. These commenters believed that electronic 
reporting would facilitate communication, help streamline the reporting 
process, and reduce the administrative burden. Based on the positive 
comments and endorsement received, the FHWA is developing a web-based 
electronic reporting system that can be used by Federal, State, and MPO 
agencies, and also make information about CMAQ projects more accessible 
to the public.


[[Page 9044]]



    Authority: 23 U.S.C. 315; sec. 1110, Pub. L. 105-178, 112 Stat. 
107 (1998); 49 CFR 1.48 and 1.51.

    Issued on: February 14, 2000.
Nuria Fernandez,
Acting Federal Transit Administrator.
Kenneth R. Wykle,
Federal Highway Administrator.
    The text of the final implementation guidance on the CMAQ program 
reads as follows:

The Congestion Mitigation and Air Quality Improvement (CMAQ) 
Program: Program Guidance

I. Introduction

    The CMAQ program was reauthorized in the recently enacted TEA-21 
(Public Law 105-178, June 9, 1998). The primary purpose of the CMAQ 
program remains the same: to fund transportation projects and programs 
in nonattainment and maintenance areas which reduce transportation-
related emissions. Over $8.1 billion dollars is authorized over the 6-
year program (1998-2003), with annual authorization amounts increasing 
each year during this period.
    This guidance provides complete information on the CMAQ program 
including:
    1. Authorization levels and apportionment factors under TEA-21;
    2. Flexibility and transferability provisions available to States;
    3. Geographic area eligibility for CMAQ funds;
    4. Project eligibility information;
    5. Project selection processes; and 6. Program oversight and 
reporting responsibilities.
    This guidance replaces all earlier CMAQ guidance documents. 
Information on the current annual apportionment to each State and 
copies of this guidance are available from the FHWA Web Site at: 
www.fhwa.dot.gov.

II. Program Purpose

    The purpose of the CMAQ program is to fund transportation projects 
or programs that will contribute to attainment or maintenance of the 
national ambient air quality standards (NAAQS) for ozone and carbon 
monoxide (CO). The TEA-21 also allows CMAQ funding to be expended in 
particulate matter (PM) nonattainment and maintenance areas.
    Congress did not intend CMAQ funding to be the only source of funds 
to reduce congestion and improve air quality. Other funds under the 
Surface Transportation Program (STP) or the Federal Transit 
Administration (FTA) capital assistance programs, for example, may be 
used for this purpose as well. Furthermore, the greatest air quality 
benefit will accrue not solely from Federal funds, but from a 
partnership of Federal, State and local efforts.

III. Priority for Use of CMAQ Funds

    Section 176(c) of the Clean Air Act (CAA, 42 U.S.C. 7506, July 14, 
1955, c. 360, Title I, Section 176(c)(2)(B) as amended Nov. 15, 1990) 
requires that the Federal Highway Administration (FHWA) and the FTA 
ensure timely implementation of transportation control measures (TCMs) 
in applicable State Implementation Plans (SIPs), and consequently, the 
highest priority for funding under the CMAQ program is for the 
implementation of such measures. The SIPs and the control measures they 
contain are necessary to assist a State to attain and maintain the 
NAAQS. A basic criterion for making conformity determinations is the 
timely implementation of TCMs in the SIP, and conformity determinations 
are necessary before transportation plans, programs, or projects can be 
adopted and approved. If States fail to ensure timely implementation of 
TCMs included in SIPs, their conformity determinations and 
transportation initiatives will be in jeopardy. In addition, failing to 
implement TCMs in SIPs can also trigger the application by the 
Environmental Protection Agency (EPA) of the CAA highway sanctions (42 
U.S.C. Sec. 7509, July 14, 1955, c. 360, Title I, Section 179(b)(1), as 
amended Nov. 15, 1990).
    Once CMAQ projects and programs are identified, States need to 
insure that sufficient obligation authority is reserved to implement 
these projects and programs so that nonattainment areas make progress 
toward attainment of the NAAQS and that maintenance areas do not 
backslide into nonattainment. While the continuation of CMAQ funds into 
the maintenance period now makes it possible to look at longer term 
strategies, States and metropolitan planning organizations (MPOs) are 
still encouraged to consider and give priority to strategies that would 
help them meet their attainment deadlines and maintain the NAAQS into 
the future.
    States and MPOs should make strategic use of the CMAQ funds 
allotted to them even if they will not be used for TCMs in their SIPs. 
For example, CMAQ funding should also be considered for use in 
implementing other CMAQ eligible transportation projects in SIPs such 
as inspection and maintenance (I/M) programs. These and other 
transportation projects may be essential to attainment of the NAAQS and 
therefore States and MPOs are urged to consider their funding, where 
eligible, under the CMAQ program.
    The FHWA and FTA continue to recommend that States and MPOs develop 
their transportation/air quality programs using complementary measures 
that simultaneously provide alternatives to single-occupant vehicle 
(SOV) travel while reducing demand through pricing, parking management, 
regulatory or other means. Further, the FHWA and FTA urge States and 
MPOs to develop a full and open public process for the solicitation and 
selection of meritorious projects to be funded through the CMAQ 
program.

IV. Authorization Levels Under TEA-21

Authorization Levels
    Table 1 shows the TEA-21 CMAQ authorization levels by fiscal year. 
The CMAQ funds will be apportioned to States each year based upon the 
adopted apportionment factors as shown in Table 2.

               Table 1.--TEA-21 CMAQ Authorization Levels
------------------------------------------------------------------------
                                                             Amount
               Fiscal year authorization                   authorized
------------------------------------------------------------------------
FY1998................................................    $1,192,619,000
FY1999................................................     1,345,415,000
FY2000................................................     1,358,138,000
FY2001................................................     1,384,930,000
FY2002................................................     1,407,474,000
FY2003................................................     1,433,996,000
------------------------------------------------------------------------

Minimum Guarantee
    The TEA-21 includes a minimum guarantee that provides each State 
funding in an amount not less than 90.5 percent of the estimated annual 
Federal gasoline tax payments each State pays into the Highway Trust 
Fund (HTF). Due to the Minimum Guarantee, the annual authorizations 
listed in Table 1 are the minimum authorization levels and are likely 
to be increased depending on actual HTF receipts.
Transferability of CMAQ Funds
    States may transfer CMAQ funds to other programs according to the 
following provision (23 U.S.C. 110(c)). An amount not to exceed 50 
percent of the State's annual apportionment may be transferred less the 
amount the State would have received if the CMAQ program was authorized 
at $1,350,000,000 for that year. Any transfer of such funds must still 
be obligated in nonattainment and maintenance areas. This increment of 
transferable funds will differ from year-to-year and State-to-State 
depending on overall authorization levels. Each year FHWA will inform 
each State how

[[Page 9045]]

much of their CMAQ funding is transferable, if any, and will track the 
transfer of CMAQ funds each year.

V. Annual Apportionments of CMAQ Funds to States

Apportionment Factors
    The CMAQ funds are apportioned annually according to factors (23 
U.S.C. Sec. 104(a)), largely based on air quality need, which are 
calculated in the following manner. The population of each area in a 
State (based upon Census bureau data by county), that at the time of 
apportionment is a nonattainment or maintenance area for ozone and/or 
CO and meets the classifications contained in the CAA, is multiplied by 
the appropriate factor listed in Table 2. Two key changes are included 
in the apportionment factors under TEA-21. Areas that are designated 
and classified as submarginal and maintenance areas for ozone are now 
explicitly included in the apportionment formula, and there are new 
weighting factors for CO nonattainment areas.

                                   Table 2.--TEA-21 CMAQ Apportionment Factors
----------------------------------------------------------------------------------------------------------------
                                            Classification at the Time of
                Pollutant                       annual Apportionment                  Weighting factor
----------------------------------------------------------------------------------------------------------------
Ozone (O3) or (CO)......................  Maintenance (these areas had to   .8
                                           be previously eligible as
                                           nonattainment areas-See Section
                                           VI).
Ozone...................................  Submarginal.....................  .8
                                          Marginal........................  1.0
                                          Moderate........................  1.1
                                          Serious.........................  1.2
                                          Severe..........................  1.3
                                          Extreme.........................  1.4
CO......................................  Nonattainment (for CO only).....  1.0
Ozone and CO............................  Ozone nonattainment or            1.1 x O3 factor
                                           maintenance and CO maintenance.
                                          Ozone nonattainment or            1.2 x O3 factor
                                           maintenance and CO
                                           nonattainment.
All States--minimum apportionment.......  \1/2\ of 1 percent total annual   N/A
                                           apportionment of CMAQ funds.
----------------------------------------------------------------------------------------------------------------

Minimum Apportionments
    Each State is guaranteed at least \1/2\ of 1 percent of each year's 
CMAQ authorized funding regardless of whether the State has any 
nonattainment or maintenance areas.
Use of Minimum Apportionments in States Without Nonattainment or 
Maintenance Areas
    If a State does not have, and has never had, a nonattainment or 
maintenance area, the State may use its minimum apportionment for any 
projects in the State eligible under either the CMAQ or the STP. Such 
States are encouraged to give priority to the use of CMAQ program funds 
for projects that will relieve congestion or improve air quality in 
areas that are at risk of being designated as nonattainment.
Use of Minimum Apportionments in States With Nonattainment or 
Maintenance Areas
    Some of the States receiving minimum apportionments have 
nonattainment or maintenance areas. In States where the amount of CMAQ 
funds generated due to nonattainment or maintenance areas is less than 
the minimum apportionment levels, additional flexibility is granted 
under TEA-21. A State receiving the minimum apportionment must use that 
portion of funds related to nonattainment and maintenance status (the 
``air quality'' portion), in those nonattainment or maintenance areas. 
The State may use the funds added above the formula amount to make up 
the minimum apportionment (the ``flexible portion'') for any CMAQ or 
STP eligible project in the State.
    When the total annual CMAQ authorization exceeds $1.35 billion, 
States may also use the transferability provisions as described in 
Section IV. After the apportionment process each year, the FHWA will 
advise the minimum apportionment States with nonattainment or 
maintenance areas of the amount that can be flexed and the amount that 
can be transferred, if any.
Apportionments and State Suballocation
    Despite the statutory formula for determining the apportionment 
amount, the State can use its CMAQ funds in any ozone, CO or PM-10 
nonattainment or maintenance area. A State is under no statutory 
obligation to suballocate CMAQ funds in the same way as they were 
apportioned. However, States are strongly encouraged to consult with 
affected MPOs to determine CMAQ priorities and allocate funds 
accordingly. Further, to facilitate planning and programming of funds, 
it is critical that States provide MPOs with timely and reasonable 
estimates of the amount of CMAQ funding they can expect each year.
Federal Share and State/Local Match Requirements
    The Federal share for most eligible activities and projects is 80 
percent or 90 percent if used on the interstate system. Under certain 
conditions (including sliding scale rates), the Federal share under 
title 23 of the United States Code can even be higher. Certain 
activities identified in section 120(c) of title 23, including traffic 
control signalization, commuter carpooling and vanpooling, and 
signalization projects to provide priority for transit vehicles may be 
funded at 100 percent Federal share if they meet the conditions of that 
section.
    Those responsible for CMAQ project decisions have discretion with 
respect to the level of local match, if any, beyond the minimum Federal 
requirements. For example, decisionmakers may decide that a particular 
project requires a 50 percent local match contribution rather than the 
usual 20 percent required under Federal law.

VI. Geographic Areas that are Eligible to Use CMAQ Funds

Impact of the Revised NAAQS
    The CMAQ eligibility provisions under TEA-21 (23 U.S.C. 149(b)) 
allow that any area designated as nonattainment after December 31, 
1997, be eligible to spend CMAQ funding even though the area may not be 
classified according to the classifications identified in the Clean Air 
Act Amendments of 1990 (Sections 181(a), and 186(a)). Such areas, 
however, will not be included in the apportionment factors since they 
will

[[Page 9046]]

not be given classifications. This provision ensures that any areas 
designated nonattainment as a result of the revised ozone and PM air 
quality standards, promulgated in 1997, will be eligible to receive 
CMAQ funding. Areas which are designated as nonattainment after 
December 31, 1997, and are subsequently redesignated to maintenance 
areas are also eligible to receive CMAQ funds.
    The EPA's policies regarding the revocation of the PM-10 standard 
are still under development. Issues affecting the distribution of CMAQ 
funds and eligibility for affected areas will be addressed after EPA 
determines its policies with respect to revocation of the PM-10 
standard.
Revocation of the 1-Hour Ozone Standard
    As part of the transition to the 8-hour ozone standard, EPA is 
revoking the 1-hour standard in areas that demonstrate the requisite 3 
years of ``clean'' monitoring data. Among areas where the 1-hour 
standard is revoked, those areas that have EPA-approved maintenance 
plans on the effective date of revocation will continue to have their 
maintenance plans in full force. As maintenance areas, they will 
continue to be eligible for CMAQ funds and will be included in the 
annual apportionment factors. The conformity requirements will also 
continue to apply in these areas.
    Other areas for which the 1-hour ozone standard is revoked may not 
have EPA-approved maintenance plans. These areas are no longer 
designated nonattainment or maintenance relative to the 1-hour 
standard. As such, these areas will not be subject to the conformity 
requirements, and they will no longer be able to meet the basic 
statutory requirement for CMAQ eligibility unless they are designated 
nonattainment or maintenance for CO and/or PM. In order to provide 
continuity in the transportation/air quality planning process, FHWA/FTA 
will allow these areas to use CMAQ funds for air quality improvement 
projects that were included in the first 3 years of the transportation 
improvement program (TIP). In addition, these areas will be granted a 
4-month period beginning with the date of release of this guidance or 
the effective date of revocation, whichever is later, to make any 
adjustments to their TIPs.
Classification Criteria
    An area that was designated as a nonattainment area for ozone, CO 
or PM-10 under the CAA prior to December 31, 1997, is eligible for CMAQ 
funds provided that the area is also classified in accordance with 
Sections 181(a), 186(a), or 188(a) or (b) of the CAA. This means that 
ozone nonattainment areas must be designated and classified 
``marginal'' through ``extreme,'' and CO and PM-10 nonattainment areas 
must be designated and classified either ``moderate'' or ``serious'' to 
be eligible for CMAQ funding. Submarginal ozone nonattainment areas are 
now included in the CMAQ apportionment formula and are eligible to 
receive CMAQ funds. Areas that were previously designated nonattainment 
and classified in accordance with this section, but are subsequently 
redesignated to maintenance areas are also eligible to receive CMAQ 
funds.
    Areas which were designated nonattainment prior to December 31, 
1997, but were not classified in accordance with the above are not 
eligible to receive CMAQ funds. These include but are not limited to 
areas that were formerly considered as ozone ``transitional'' and 
``incomplete data'' areas and CO ``not classified'' areas.
Maintenance Areas
    Maintenance areas that were designated nonattainment, but have 
since met the air quality standards are now explicitly eligible to 
receive CMAQ funding and are included in the apportionment factors. 
Such areas must have met the classification requirements of the 1990 
CAA if they were designated nonattainment prior to December 31, 1997, 
(as discussed in Section V above) in order to be eligible and included 
in the apportionment factors.
    In States which have ozone or CO maintenance areas and no 
nonattainment areas, CMAQ funds must be used in the maintenance areas. 
Previous guidance allowed such States flexibility to use their CMAQ 
funding for projects eligible under the STP if a State could 
demonstrate that it had sufficient funding to meet its air quality 
commitments within its maintenance areas. Such flexibility is no longer 
allowed since maintenance areas are now included in the apportionment 
formula and the eligibility provisions require that CMAQ funding be 
used in nonattainment and maintenance areas.
PM-10 Nonattainment and Maintenance Areas
    Nonattainment and maintenance areas for PM-10 are also now 
explicitly eligible to receive CMAQ funding. States that have PM-10 
nonattainment or maintenance areas only (i.e., no ozone or CO 
nonattainment or maintenance areas) are granted additional flexibility 
under TEA-21. Since these areas are not included in the CMAQ 
apportionment calculation, the State may use its minimum apportionment 
for projects eligible under the STP or the CMAQ program anywhere in the 
State. However, such States are encouraged to use their CMAQ funds in 
the PM-10 nonattainment and maintenance areas. Examples of eligible 
projects and programs in a PM-10 nonattainment or maintenance area 
include paving dirt roads, diesel bus replacements, and purchase of 
more effective street-sweeping equipment.

VII. Project Eligibility Provisions

Projects Not Eligible for CMAQ Funding
    As was the case under the Intermodal Surface Transportation 
Efficiency Act of 1991 (ISTEA) (Pub. L. 102-240, Dec. 18, 1991, 105 
Stat. 1914), certain projects may not be funded under the CMAQ program 
under any circumstances. Activities which are legislatively prohibited, 
including scrappage programs and highway capacity expansion projects, 
may not be funded under the CMAQ program. Similarly, rehabilitation and 
maintenance activities, as noted below, show no potential to make 
further progress in achieving the air quality standards and may not be 
funded under the CMAQ program. Program funds may also not be used for 
projects which are outside of nonattainment or maintenance area 
boundaries except in cases where the project is located in close 
proximity to the nonattainment or maintenance area and the benefits 
will be realized primarily within the nonattainment or maintenance area 
boundaries. (Note: The use of CMAQ funds under the flexibility 
provisions discussed in Section V are an exception). Public-private 
partnerships involving the implementation of statutorily mandated 
measures (e.g., phase-in of alternatively fueled fleets) may not be 
funded with CMAQ funds. Finally, projects not meeting the specific 
eligibility requirements under titles 23 or49 of the United States Code 
may also not be funded under this provision.
    Highway and Transit Maintenance and Reconstruction Projects: 
    Routine maintenance projects are not eligible for CMAQ funding. 
Routine maintenance and rehabilitation on existing facilities maintains 
the existing levels of highway and transit service, and therefore 
maintains existing ambient air quality levels. Thus, no progress is 
made toward achieving the NAAQS. Rehabilitation projects only serve to 
bring existing facilities back to

[[Page 9047]]

acceptable levels of service. Other funding sources, like the STP and 
FTA's Section 5307 program, exist for reconstruction, rehabilitation 
and maintenance activities. Replacement-in-kind of track or other 
equipment, reconstruction of bridges, stations and other facilities, 
and repaving or repairing roads are also ineligible for CMAQ funding.
    Construction of SOV Capacity: 
    Construction projects which will add new capacity for SOV are not 
eligible under this program unless the project consists of a high-
occupant vehicle (HOV) facility that is available to SOV only at off-
peak travel times. For purposes of this program, construction of added 
capacity for SOV means the addition of general purpose through lanes to 
an existing facility which are not HOV lanes, or construction of a 
highway at a new location. However, projects to plan, develop, assess, 
or construct new High Occupancy Toll lanes are an eligible CMAQ expense 
so long as they are part of the Value Pricing Program under TEA-21 (23 
U.S.C. 149(a)).
Project Eligibility-General Conditions
    All projects and programs eligible for CMAQ funds must come from a 
conforming transportation plan and TIP, and be consistent with the 
conformity provisions contained in section 176(C) of the CAA and the 
Transportation Conformity Rule Projects (40 CFR Parts 51 and 93, as 
amended) need to be included in TIPs or state-wide transportation 
improvement projects developed by MPOs or States respectively, under 
the metropolitan or statewide planning regulations (23 CFR 450, 49 CFR 
Part 613). Projects also need to complete the National Environmental 
Policy Act (NEPA) requirements and meet basic eligibility requirements 
for funding under titles 23 and 49 of the United States Code.
    In cases where specific guidance is not provided, the following 
should guide CMAQ eligibility decisions.
    Capital Investment: 
    CMAQ funds should be used for establishment of new or expanded 
transportation projects and programs to help reduce emissions. In many 
cases this is likely to be capital investment in transportation 
infrastructure or establishment of a new demand management strategy or 
other program.
    Operating Assistance: There are several general conditions which 
must be met in order for any type of operating assistance to be 
eligible under the CMAQ program.
     In extending the use of CMAQ funds to operating 
assistance, the intent is to help start up viable new transportation 
services which can demonstrate air quality benefits and eventually will 
be able to cover their costs to the maximum extent possible. Other 
established funding sources should supplement and ultimately supplant 
the use of CMAQ funds for operating assistance.
     Operating assistance includes all costs related to ongoing 
provision of new transportation services including, but not limited to, 
labor, administrative costs and maintenance.
     When using CMAQ funds for operating assistance, local 
share requirements still apply.
     Operating assistance is limited to new transit services 
and new or expanded transportation demand management strategies.
     Operating assistance under the CMAQ program is limited to 
3 years, except as noted elsewhere in this guidance.
    Emission Reductions: Projects funded under the CMAQ program must be 
expected to result in tangible reductions in CO, ozone precursor 
emissions, or PM-10 pollution. This can be demonstrated by the 
assessment of anticipated emission reductions that is required under 
this guidance for most projects. The FHWA and FTA strongly encourage 
State and local governments to use CMAQ funds for their primary purpose 
which is to assist nonattainment and maintenance areas to reduce 
transportation-related emissions.
    Public Good: CMAQ funded projects should be for the good of the 
general public. Public-private partnerships may be eligible, however, 
so long as a public good (i.e., reduced emissions) results from the 
project (see discussion of public-private partnerships below).
Eligible Activities and Projects
    Eligibility information on activities and projects and program 
areas is provided below, together with any restrictions. All possible 
requests for CMAQ funding are not covered; this section provides 
particular cases where guidance can be given and rules of thumb applied 
to assist decisions regarding CMAQ eligibility.
    1. Transportation Activities in an Approved SIP or Maintenance 
Plan: 
    Transportation activities in approved SIPs and maintenance plans 
are likely to be eligible activities and, if so, must be given the 
highest priority for CMAQ funding. Their air quality benefits will 
generally have already been documented. If not, such documentation is 
necessary before CMAQ funding can be approved. Further, the 
transportation improvement must contribute to the specific emission 
reductions necessary to bring the area into attainment.
    2. TCMs: 
    The TCMs included in 42 U.S.C. 7408(f)(1) are the kinds of projects 
intended by the TEA-21 for CMAQ funding, and generally satisfy the 
eligibility criteria. As above, and consistent with the statute, air 
quality benefits for TCMs must be determined and documented before a 
project can be considered eligible. One CAA TCM, xvi--programs to 
encourage removal of pre-1980 vehicles is specifically excluded from 
the CMAQ program by the TEA-21 legislation. Eligible TCMs are listed 
below as they appear in 42 U.S.C. 7408 (f)(1).
    (i) programs for improved public transit;
    (ii) restriction of certain roads or lanes to, or construction of 
such roads or lanes for use by, passenger buses or HOV;
    (iii) employer-based transportation management plans, including 
incentives;
    (iv) trip-reduction ordinances;
    (v) traffic flow improvement programs that achieve emission 
reductions;
    (vi) fringe and transportation corridor parking facilities serving 
multiple-occupancy vehicle programs or transit service;
    (vii) programs to limit or restrict vehicle use in downtown areas 
or other areas of emission concentration particularly during periods of 
peak use;
    (viii) programs for the provision of all forms of high-occupancy, 
shared-ride services;
    (ix) programs to limit portions of road surfaces or certain 
sections of the metropolitan area to the use of non-motorized vehicles 
or pedestrian use, both as to time and place;
    (x) programs for secure bicycle storage facilities and other 
facilities, including bicycle lanes, for the convenience and protection 
of bicyclists, in both public and private areas;
    (xi) programs to control extended idling of vehicles;
    (xii) reducing emissions from extreme cold-start conditions (newly 
eligible);
    (xiii) employer-sponsored programs to permit flexible work 
schedules;
    (xiv) programs and ordinances to facilitate non-automobile travel, 
provision and utilization of mass transit, and to generally reduce the 
need for SOV travel, as part of transportation planning and development 
efforts of a locality, includ ing programs and ordinances applicable to 
new shopping centers, special events, and other centers of vehicle 
activity;
    (xv) programs for new construction and major reconstructions of 
paths,

[[Page 9048]]

tracks or areas solely for the use by pedestrian or other non-motorized 
means of transportation when economically feasible and in the public 
interest. For purposes of this clause, the Administrator shall also 
consult with the Secretary of the Interior; and
    (xvi) programs to encourage removal of pre-1980 vehicles (Excluded 
from Eligibility).
    3. Extreme Low-Temperature Cold Start Programs: 
    Projects intended to reduce emissions from extreme cold-start 
conditions are now eligible for CMAQ funding. This TCM is listed in 42 
U.S.C. 7408 (f)(1) and was heretofore excluded from eligibility for 
CMAQ funding. Examples of such projects include:
     Retrofitting vehicles and fleets with water and oil 
heaters; and
     Installing electrical outlets and equipment in publicly-
owned garages or fleet storage facilities (see also section below on 
public-private partnerships for a possible expansion to privately-owned 
equipment and facilities).
    4. Public-Private Partnerships: 
    The TEA-21 provides greater access to CMAQ funds for projects which 
are cooperatively implemented under agreements between the public and 
private sectors and/or non-profit entities. The new statutory language 
leads to several important changes regarding the eligibility of joint 
public-private initiatives. Nevertheless, it remains the responsibility 
of the cooperating public agency to apply for CMAQ funds through the 
metropolitan planning process and to oversee and protect the investment 
of Federal funds in a public-private partnership.
    The TEA-21 requires that a legal, written agreement be in place 
between the public agency and private or non-profit entity before 
implementing a CMAQ-funded project. This provision supersedes the 
requirement under previous guidance that private entities have public 
agency sponsors before participating in CMAQ-funded projects. These 
agreements should clearly specify the use to which CMAQ funding will be 
put; the roles and responsibilities of the participating agencies; 
cost-sharing arrangements for capital investments and/or operating 
expenses; and how the disposition of land, facilities and equipment 
will be effected should the original terms of the agreement be changed, 
such as insolvency or a change in the ownership of the private entity.
    While the new statute provides greater latitude in funding projects 
initiated by private or non-profit entities, it also raises concerns 
about the use of public funds to benefit a specific private entity. 
Since the public benefit is air quality improvement, it is expected 
that future funding proposals involving private entities will 
demonstrate strong emission reduction benefits. Furthermore, this new 
flexibility requires that greater emphasis be placed on an open, 
participatory process leading up to the selection of projects for 
funding. Because of concerns about the equitable use of public funds, 
FHWA and FTA consider it essential that all interested parties have 
full and timely access to the process of selecting projects for CMAQ 
funding. This should involve open solicitation for project proposals; 
objective criteria developed for rating candidate projects; and 
announcement of selected projects.
    The TEA-21 also contains some restrictions and special provisions 
on the use of CMAQ funds in public-private partnerships. Eligible costs 
under this section may not include costs to fund an obligation imposed 
on private sector or non-profit entities under the CAA or any other 
Federal law. For example, CMAQ funds may not be used to fund mandatory 
control measures such as Stage II Vapor Recovery requirements placed on 
fuel sellers. Energy Policy Act requirements which apply to private 
sector entities are not eligible for CMAQ funds. However, if the 
private or non-profit entity is clearly exceeding its obligations under 
Federal law, CMAQ funds may be used for that incremental portion of the 
project.
    Decisions over which projects and programs to fund under CMAQ 
should continue to be made through a cooperative process involving the 
State departments of transportation, affected MPOs, transit agencies 
and State and local air quality agencies. All projects funded with CMAQ 
funds must be included in conforming transportation plans and TIPs in 
accordance with the metropolitan planning regulations (23 CFR 450.300), 
the transportation conformity requirements (40 CFR parts 51 and 93), 
and NEPA requirements.
    Activities eligible to be considered as meeting the local match 
requirements under the public-private partnership provisions include:
     Ownership or operation of land, facilities or other 
physical assets;
     Carrying out construction or project management; and
     Other forms of participation approved by the U.S. DOT 
Secretary.
    The TEA-21 also contained special provisions for alternative fuel 
projects that are part of a public-private partnership. For purchase of 
privately-owned vehicles or fleets using alternative fuels, activities 
eligible for CMAQ funding are limited to the Federal share of the 
incremental cost of an alternative fueled vehicle compared to a 
conventionally fueled vehicle. Further, if other Federal funds are used 
for vehicle purchase in addition to CMAQ funds, such Federal funds must 
be applied to the incremental cost before CMAQ funds are applied.
    Cost sharing of total project expenses, both capital and operating, 
is a critical element of a successful public-private venture. This is 
even more important if the private entity is expected to realize 
profits as part of the joint venture. State and local officials are 
urged to consider a full range of cost-sharing options when developing 
a public-private partnership, including a larger State/local match than 
the usual 20 percent required under Federal law.
    5. Alternative Fuels:
    The purchase of publicly-owned, alternative fuel vehicles is 
eligible for CMAQ funding (for information on eligible public-private 
sector alternative fuel projects see the discussion on public-private 
partnerships above).
    Since all alternative fueled vehicles are not necessarily good for 
air quality, proposals for alternative fuel conversion should be 
coordinated with the State air agency and be aimed primarily at air 
quality improvement. As with all CMAQ proposals, it must be 
demonstrated that the proposed switch to alternative fuels is effective 
in reducing the specific pollutant(s) causing the air quality 
violation.
    Fleet conversions no longer need to be specifically identified or 
included in the SIP or maintenance plan in order to be eligible for 
CMAQ funding. Consideration of such projects should be coordinated with 
air quality agencies prior to selection for funding under the CMAQ 
program. This coordination will ensure that such projects are 
consistent with SIP strategies to attain the NAAQS or in maintenance 
plans to ensure continued maintenance of the NAAQS.
    The establishment of publicly-owned, on-site fueling facilities and 
other infrastructure needed to fuel alternative-fuel vehicles are also 
eligible expenses. If privately-owned fueling stations are in place and 
are reasonably accessible and convenient, then CMAQ funds may not be 
used to construct or operate publicly-owned fueling stations except 
under a public-private partnership. Such an activity would interfere 
with private enterprise, and needlessly use transportation/air quality 
funds for services duplicated in the area.
    6. Traffic Flow Improvements:
    The metropolitan planning provisions of TEA-21 (23 U.S.C. 134(i)(3) 
and 49 U.S.C. 5305) require that the

[[Page 9049]]

metropolitan planning process in all Transportation Management Areas 
(metropolitan areas of 200,000 or more in population) include a 
congestion management system.
    Projects to develop, establish, and implement the congestion 
management system for both highway and transit facilities, whether 
under the provisions of 23 U.S.C. Secs. 134 or under a State's own 
procedures, remain eligible for CMAQ funds where it can be demonstrated 
that such use is likely to reduce transportation-related emissions.
    In addition to traffic signal modernization, coordination, or 
synchronization projects designed to improve traffic flow within a 
corridor or throughout an area like a central business district, 
Intelligent Transportation Systems (ITS), traffic management and 
traveler information systems can be effective in reducing traffic 
congestion, enhancing transit bus performance and improving air 
quality. The following have the greatest potential for improving air 
quality:
     regional multi-modal traveler information systems;
     traffic signal control systems;
     freeway management systems;
     transit management systems;
     incident management programs;
     electronic fare payment systems; and
     electronic toll collection systems.
    While interconnected traffic signal control systems and freeway 
management systems have been recognized for their air quality 
improvement benefits, other user services like electronic fare and toll 
collection systems can be useful in reducing or eliminating air quality 
``hot spots''. Individually, these core infrastructure elements can 
reduce emissions and therefore qualify for CMAQ funding. However, when 
linked together in a system, their benefits are likely to be greater.
    Agencies seeking to implement ITS projects must demonstrate 
consistency with the National ITS Architecture. This is addressed in 
separate guidance.
    Operating expenses for traffic flow improvements are eligible for 
CMAQ funding where they can be shown to: (1) have air quality benefits, 
(2) the expenses are incurred from new or additional services, and (3) 
previous funding mechanisms, such as fares or fees for services, are 
not displaced.
    Since CMAQ-funded projects should contribute to the attainment or 
maintenance of a NAAQS, it must be found that these operating costs are 
necessary for the overall system to contribute to attainment or 
maintenance of an ambient air quality standard. It is reasonable to 
assume that, after several years, a transportation service may no 
longer be considered to be an air quality improvement project, but that 
it has become a part of the existing transportation network. Hence, 
FHWA and FTA field offices are advised to use the consultation process 
with EPA to make a determination that operating assistance for traffic 
management systems, traveler information systems and other ITS projects 
or programs, beyond the initial 3-year period of eligibility, will 
assist in the attainment or maintenance of an air quality standard. 
(Also see operating assistance eligibility discussion earlier in this 
guidance.)
    7. Transit Projects:
    Improved public transit is one of the TCMs identified in section 
108(f)(1)(A) of the CAA. However, not all transit improvements are 
eligible under the CMAQ program. The general guideline for determining 
eligibility is whether an increase in transit ridership can reasonably 
be expected to result from the project. As with all CMAQ-funded 
projects, this must be supported by a quantified estimate of the 
emissions effects due to the project.
    Facilities: New transit facilities are eligible if they are 
associated with new or enhanced mass transit service. If the project is 
rehabilitation, reconstruction, or maintenance of an existing facility, 
it is not eligible since there would be no change in emissions caused 
by the project. Other FTA grant programs can be used for upgrading 
existing facilities.
    Vehicles: Acquisition of new transit vehicles (bus, rail, van) to 
expand the fleet are eligible. New vehicles acquired as replacements 
for existing fleet vehicles are also eligible; however, diesel-powered 
replacement vehicles will have minimal impact on attaining the ozone, 
PM, and CO standards. For these projects in particular, emissions 
effects must be documented so that they can be arrayed with other CMAQ 
proposals and allow informed decisions on the best use of available 
funds.
    Operating Assistance: CMAQ funding can be used to support the 
start-up of new transit services. In order to be eligible, the service 
must be a discrete new addition to the system so that operating costs 
can be easily identified. Operating assistance is for a maximum of 3 
years, after which other sources of funding must be used if the service 
is to be continued.
    Fare subsidies: CMAQ funds may be used to subsidize regular transit 
fares, but only if the reduced or free fare is part of an overall 
program for preventing exceedances of a national air quality standard 
during periods of high pollutant levels. Examples include metropolitan 
areas that have implemented voluntary mobile source emission reduction 
programs which promote a range of measures individuals can take to 
reduce ozone-forming emissions. ``Ozone-action'' programs, designed to 
avoid exceedances when ozone concentrations are high, are bolstered by 
more permanent measures aimed at discouraging SOV driving. Refer to 
section VII.12 for additional discussion of fare/fee subsidies.
    8. Bicycle and Pedestrian Facilities and Programs:
    Bicycle and pedestrian facilities and programs are included as a 
TCM in section 108(f)(1)(A) of the CAA. Included as eligible projects 
are:
     construction of bicycle and pedestrian facilities;
     non-construction projects related to safe bicycle use; and
     establishment and funding of State bicycle/pedestrian 
coordinator positions, as established in the ISTEA, for promoting and 
facilitating the increased use of non-motorized modes of 
transportation. This includes public education, promotional, and safety 
programs for using such facilities.
    9. Travel Demand Management:
    Travel demand management encompasses a diverse set of activities 
ranging from traditional carpool and vanpool programs to more 
innovative parking management and road pricing measures. Many of these 
measures are specifically referenced in the legislation creating the 
CMAQ program. Travel demand management projects meeting the basic 
eligibility requirements of the FHWA and FTA funding programs are 
eligible for CMAQ funding. Eligible activities include: market research 
and planning in support of travel demand management (TDM) 
implementation; traffic calming measures; capital expenses required to 
implement TDM measures; operating assistance to administer and manage 
TDM programs for up to 3 years; as well as marketing and public 
education efforts to support and bolster TDM measures.
    Experience to date suggests that new transportation service has the 
greatest chance of success if offered along with complementary measures 
which discourage SOV use, such as parking restrictions or differential 
parking fees. Several provisions in TEA-21 require metropolitan areas 
to consider TDM measures in the planning process and this guidance 
seeks to encourage their development and implementation.
    With respect to traffic calming measures, such projects should be 
examined on a case-by-case basis to assess eligibility. Not all traffic 
calming

[[Page 9050]]

measures will lead to reduced emissions and States and MPOs should 
analyze these projects in the local context in which they would be 
implemented.
    10. Outreach and Rideshare Activities: 
    Outreach activities, such as public education on transportation and 
air quality, advertising of transportation alternatives to SOV travel, 
and technical assistance to employers or other outreach activities 
relating to promoting non-SOV travel options have been, and continue to 
be, eligible for CMAQ funds. Such outreach activities may be funded 
under the CMAQ program for an indefinite period.
    Outreach activities differ fundamentally from the establishment of 
transportation services. They are communication services that are 
critical to successful implementation of transportation measures and 
may equally affect new and existing transit, shared ride, I/M, traffic 
management and control, bicycle and pedestrian, and other 
transportation services. As such, they are intended to continue 
reaching new audiences each time they are implemented, and restrictions 
on the length of time they may be funded seems contrary to one of the 
program's goals of effecting behavioral changes to reduce 
transportation emissions.
    Marketing Programs: Marketing programs to increase use of 
transportation alternatives to SOV travel and public education 
campaigns involving the linkage between transportation and air quality 
are eligible operating expenses. Transit ``stores'' selling fare media 
and dispensing route and schedule information which occupy leased space 
are also eligible. In addition, programs to promote the recently 
enacted Tax Code change related to commute benefits are eligible for 
CMAQ funding. [Note: The Internal Revenue Code 26 U.S.C. Sec. 132(f)) 
allows employers to exclude up to $65 per month for transit and vanpool 
expenses and up to $175 per month for qualified parking expenses from 
an employee's gross income. (For taxable years after December 31, 2001, 
the amount for transit and vanpooling increases to $100 per month and 
is indexed for inflation (as is already the case for qualified parking 
expenses) beginning for taxable years after December 31, 2002.) As a 
result of TEA-21 amendments to the Code, employers may either provide 
these benefits free to employees as a tax-free benefit, in addition to 
existing compensation and benefits, or allow employees to use their own 
gross income before taxes to purchase these benefits through their 
employers, thus saving on taxes.]
    Carpooling and Vanpooling: Carpool and vanpool programs include 
computer matching of individuals seeking to carpool and employer 
outreach to establish rideshare programs and meet CAA requirements. 
These activities, even if they are part of an existing rideshare 
program, are eligible for CMAQ funding. New or expanded rideshare 
programs, such as new locations for matching services, upgrades for 
computer matching software, etc. are also eligible and may be funded 
for an indefinite period of time for both carpool and vanpool services.
    The implementation of a vanpool operation entails purchasing or 
leasing vehicles and providing a transportation service. Therefore, 
proposals for vanpool activities such as these must be for new or 
expanded service to be eligible and are subject to the 3-year 
limitation on operating costs.
    Under the CMAQ program, the purchase price of a publicly-owned 
vehicle for a vanpool service does not have to be paid back to the 
Federal Government. Requiring payback would place an additional 
constraint to wider implementation and usage of vanpool programs. 
Nonetheless, CMAQ funds should not be used to buy or lease vans that 
would be in direct competition with and impede private sector 
initiatives. Consistent with the statewide and metropolitan planning 
regulation (23 CFR 450.300), States and MPOs should consult with the 
private sector prior to using CMAQ funds to purchase vans, and if local 
private firms have definite plans to provide adequate vanpool service, 
CMAQ funds should not be used to supplant that service.
    Transportation Management Associations: Transportation Management 
Associations (TMAs) are comprised of groups of individuals, firms or 
employers who organize to address the transportation issues in their 
immediate locale. The CMAQ funds may be used for the establishment of 
TMAs provided that the TMA performs a specified purpose in the project 
agreement that will be part of any air quality improvement strategy. 
The TMAs can play a useful role in brokering transportation services to 
private employers, and CMAQ funds may be used to contract with TMAs for 
this purpose. Eligible costs include coordinating and marketing 
rideshare programs, providing shuttle services, developing parking 
management programs, etc. Eligible expenses for reimbursement of 
associated TMA start-up costs are limited to 3 years.
    11. Telecommuting: 
    The DOT supports the establishment of telecommuting programs. 
Planning, technical and feasibility studies, training, coordination, 
marketing and promotion are eligible activities under CMAQ. Physical 
establishment or construction of telecommuting centers, computer and 
office equipment purchases and related activities are not eligible.
    12. Fare/Fee Subsidy Programs: 
    The CMAQ program allows funding for user fare or fee subsidies in 
order to encourage greater use of alternative travel modes (e.g., 
carpool, vanpool, transit, bicycling and walking). This policy has been 
established to encourage areas to take a more comprehensive approach--
including both supply and demand measures--in reducing transportation 
emissions.
    Transit Services: CMAQ funds can be used to subsidize transit fares 
only if the reduced fare is offered as a component of a comprehensive, 
targeted program to reduce SOV use during episodes of high pollutant 
concentrations. (Also see Transit Project eligibility section.)
    Other Demand Management Strategies: CMAQ funds can be used to 
subsidize fares or fees for vanpools, shuttle services, flat-fare taxi 
programs and other demand management strategies. Examples of how the 
fare/fee subsidy might be used include: a program subsidizing empty 
seats during the formation of a new vanpool; reduced fares for shuttle 
services within a defined area, such as a flat-fare taxi program; or 
providing financial incentives for carpooling, bicycling, and walking 
in conjunction with a commuter choice or other program such as those 
described under Outreach and Rideshare Activities above.
    Other components of fare/fee subsidy programs include public 
information and marketing of non-SOV alternatives, parking management 
measures, employer-based commuter choice programs, and better 
coordination of existing transportation services. Fare/fee subsidies 
under the CMAQ program are intended as short-term incentives. As with 
operating assistance, there is a maximum 3-year time limit.
    13. Intermodal Freight: 
    The CMAQ funds have been, and continue to be, used for improved 
intermodal freight facilities where air quality benefits can be shown. 
Capital improvements as well as operating assistance meeting the 
conditions of this guidance are eligible.
    14. Planning and Project Development Activities: 
    Project development activities that lead to construction of 
facilities or new

[[Page 9051]]

services and programs with air quality benefits, such as preliminary 
engineering or project planning studies are eligible. This includes 
studies for the preparation of environmental or NEPA documents and 
related transportation/air quality project development activities. 
Project development studies directly related to a TCM are also 
eligible. In the event that air quality monitoring is necessary to 
determine the air quality impacts of a proposed project which is 
eligible for CMAQ funding, the costs of that monitoring are also 
eligible. As is the case with all CMAQ funded activities, all projects 
proposed for funding must be included in the MPO Plan and TIP and must 
meet the metropolitan planning requirements.
    General planning activities, such as economic or demographic 
studies, that do not directly propose or support a transportation/air 
quality project or are too far removed from project development to 
ensure any emission reductions are not eligible for funding. Funding 
for preparation of NEPA or other environmental documents that are not 
related to a transportation project to improve air quality is also 
ineligible. Such activities should be funded with other appropriate 
title 23 or title 49 FTA funds.
    Region- or area-wide air quality monitoring is not eligible because 
such projects do not themselves yield air quality improvements nor do 
they lead directly to projects that would yield air quality benefits. 
Air quality monitoring is normally a State air quality agency 
responsibility which is funded under section 105 of the CAA. If the MPO 
or State chooses, air quality monitoring could also be funded as a 
transportation planning activity and appropriate title 23 funds used.
    15. I/M Eligibility: 
    Emission I/M programs and related activities show strong potential 
for improving air quality and are cost-effective uses of CMAQ funds. 
Recognizing this, construction of facilities and purchase of equipment 
for I/M stations are eligible for CMAQ funds. Projects necessary for 
the development of these I/M programs and one-time start-up activities, 
such as updating quality assurance software or developing a mechanic 
training curriculum, are also eligible activities. Operating expenses 
are eligible for CMAQ funding subject to the general conditions 
applying to all new transportation services. Specifically, the I/M 
program must constitute new or additional efforts; existing funding 
(including inspection fees) should not be displaced, and operating 
expenses are only eligible for 3 years.
    Funds under the CMAQ program may be used for the establishment of 
I/M programs at publicly-owned I/M facilities. Publicly-owned I/M 
facilities may be constructed, equipment may be purchased, and the 
facility operated for up to 3 years with CMAQ funds, provided that the 
conditions covering operations described above are met.
    The establishment of I/M programs at privately-owned stations, such 
as service stations that own the equipment and conduct emission test-
and-repair services, can only be funded under the CMAQ program under 
the provisions covering ``public-private partnerships'' contained in 
this guidance. However, if the State relies on private stations, State 
or local administrative costs for the planning and promotion of the 
State's I/M program may be funded under the CMAQ program.
    The establishment of ``portable'' I/M programs is also eligible 
under the CMAQ program, provided that they are public services, 
contribute to emission reductions and do not conflict with statutory I/
M requirements or EPA implementing regulations. Like all CMAQ-funded 
projects, these programs must meet any relevant NEPA requirements and 
must be included in the area's plan and TIP before they can be funded.
    16. Magnetic Levitation Transportation Technology Deployment 
Programs:
    CMAQ funds may be used to fund a portion of the full project costs 
(including planning, engineering, and construction) pursuant to section 
1218--Magnetic Levitation Transportation Technology Deployment Program 
of TEA-21 (23 U.S.C. 322) and in accordance with the provisions of 
section 1218.
    17. Experimental Pilot Projects:
    States and local areas have long experimented with various types of 
transportation services--and different means of employing them--in an 
effort to better meet the travel needs of their constituents. These 
``experimental'' projects may not meet the precise eligibility criteria 
for Federal and State funding programs, but they may show promise in 
meeting the intended public purpose of those programs in an innovative 
way. The FHWA and FTA have supported this approach in the past and 
funded some of these projects as demonstrations to determine their 
benefits and costs.
    The CMAQ provisions of TEA-21 allow experimentation provided that 
the project or program can reasonably be defined as a 
``transportation'' project and that emission reductions can reasonably 
be expected ``through reductions in vehicle miles traveled (VMT), fuel 
consumption or through other factors.'' This guidance encourages States 
and MPOs to creatively address their transportation/air quality 
problems and to experiment with new services, innovative financing 
arrangements, public-private partnerships and complementary approaches 
that constitute comprehensive strategies to reduce emissions through 
transportation programs. The CMAQ program can be used to support a well 
conceived project even if the proposal may not otherwise meet the 
eligibility criteria of this guidance. Proposals submitted for funding 
under this provision should show promise in reducing transportation 
emissions in nonattainment or maintenance areas and should have the 
concurrence of the MPO, State transportation agency and the FHWA/FTA. 
Such proposals must also be coordinated with EPA and State/local air 
quality agencies.
    While the CMAQ provisions of TEA-21 were written broadly to 
encourage an innovative approach, the principles of sound program 
management must still be followed. Under this approach, there will 
likely be proposals for funding with which transportation agencies have 
little experience. As such, before-and-after studies are required to 
determine the actual project impacts on the transportation network 
(measured in VMT or trips reduced, or other appropriate measure) and on 
air quality (emissions reduced). An assessment of the project's 
benefits should be forwarded to FHWA or FTA documenting the immediate 
impacts as well as a projection of the project's long-term benefits.
    All projects funded under this section should be explicitly 
identified in the annual report of CMAQ activities as required under 
section IX of this guidance. In future years, when before-and-after 
studies are complete, a summary of the actual project benefits should 
also be included in the annual report. The amount obligated for 
proposals made pursuant to this section should not exceed 25 percent of 
a State's yearly CMAQ apportionment.

VIII. Project Selection Process--General Conditions

    Proposals for CMAQ funding should include a precise description of 
the project, providing information on the project's size, scope and 
timetable. Also, an assessment of the proposal's expected emission 
reductions in accordance with the provisions

[[Page 9052]]

described below is required. States, MPOs, and transit agencies are 
encouraged to develop procedures for assessing the emission reduction 
benefits of CMAQ projects. States are also required to submit annual 
reports detailing the obligations made under the CMAQ program during 
the previous fiscal year.
Air Quality Analysis
    1. Quantitative Analyses:
    Quantitative assessment of how the proposal is expected to reduce 
emissions is extremely important to assist areas in developing and 
funding the most effective projects in nonattainment and maintenance 
areas. They also provide an objective basis for comparing the costs and 
benefits of competing proposals for CMAQ funding. SinceStates are 
required to submit annual reports (see discussion below), analysis of 
air quality benefits for individual project proposals will assist in 
their preparation. It is particularly important to assess and quantify 
the benefits of projects that increase or improve basic transportation 
services. This includes assessing emission reductions of transit, 
traffic flow improvements, ITS projects and programs, ridesharing, 
bicycle and pedestrian improvements. In addition, analyses are expected 
for conversions to alternative fuels and for I/M programs.
    Decisions regarding the level and type of air quality analysis 
needed, as well as the credibility of its results, are left to FTA and 
FHWA field staff, in consultation with EPA. Across the country, State 
and local transportation/air quality agencies have different 
approaches, analytical capabilities and technical expertise with 
respect to such analysis. At the national level, it is not feasible to 
specify a single method of analysis applicable in all cases.
    While no single method is specified, every effort must be taken to 
ensure that determinations of air quality benefits are credible and 
based on a reproducible and logical analytical procedure that will 
yield quantitative results of emission reductions. Of course, if an air 
quality analysis has been done for other reasons, it may also be used 
for this purpose.
    2. Qualitative Assessment:
    Although quantitative analysis of air quality impacts is required 
whenever possible, some improvements may not lend themselves to 
rigorous quantitative analysis because of the project's characteristics 
or because practical experience is lacking to adequately analyze the 
project. In these cases, a qualitative assessment based on a reasoned 
and logical examination of how the project or program will decrease 
emissions and contribute to attainment or maintenance of a NAAQS is 
appropriate and acceptable.
    Public education, marketing and other outreach efforts fall into 
this category. The primary benefit of these activities is enhanced 
communication and outreach that is expected to influence travel 
behavior, and thus, air quality. Yet tracing the benefits to air 
quality through the intervening steps requires a multi-disciplinary 
approach that incorporates market research analysis, base case 
documentation, surveying, and other analytical techniques which may not 
be readily available to many transportation agencies. As such, these 
projects which can include advertising alternatives to SOV travel, 
employer outreach, public education campaigns, and communications or 
outreach to the public during ``ozone alerts,'' or similar programs do 
not require a quantitative analysis of air quality benefits.
    3. Analyzing Groups of Projects:
    In many situations, it may be more appropriate to examine the 
impacts of more comprehensive strategies to improve air quality by 
grouping TCMs. A strategy to reduce reliance on single-occupant 
vehicles in a travel corridor, for example, could include transit 
improvements coupled with demand management. The benefits of such a 
strategy should be evaluated together rather than as separate projects. 
Transit improvements, ridesharing programs or other TCMs affecting an 
entire region may be best analyzed in this fashion.

IX. Program Oversight Responsibility

Annual Reports
    To assist in meeting statutory obligations, States are required to 
prepare annual reports for FHWA, FTA, and the general public that 
specify how CMAQ funds have been spent and the expected air quality 
benefits. Annual reporting enhances accountability and the annual 
report enables FHWA and FTA to be responsive to the Congress on the 
utilization of CMAQ funds and their impact.
    This report should be provided by the first day of February 
following the end of the previous Federal fiscal year (September 30) 
and cover all CMAQ obligations for that fiscal year. The report should 
include:
    1. A list of projects funded under CMAQ, best categorized by one of 
the following eight project types:
     public-private partnerships;
     experimental pilot projects;
     transit: facilities, vehicles and equipment, operating 
assistance for new transit service, etc;
     shared-ride: vanpool and carpool programs and parking for 
shared-ride services, etc;
     traffic flow improvements: traffic management and control 
services, signalization projects, ITS projects, intersection 
improvements, and construction or dedication of HOV lanes, etc;
     demand management: trip reduction programs, transportation 
management plans, flexible work schedule programs, vehicle restriction 
programs, etc.;
     pedestrian/bicycle: bikeways, storage facilities, 
promotional activities, etc; and
     I/M and other TCMs (not covered by the above categories).
    For reporting purposes, project developmental activities, as well 
as public education, marketing and other outreach efforts that are 
eligible under the CMAQ program should be reported in the same category 
as the project or program they support.
    2. The amount of CMAQ funds obligated for each project (or project 
category where groups of projects are analyzed together) for the year, 
disaggregated by the categories of projects listed above; and
    3. A tabulation of the estimated emissions benefits for each 
project (or group of projects) for the year summed from project-level 
analyses and expressed as reductions of ozone precursors (volatile 
organic compounds and nitrogen oxides), CO, or PM-10. These reductions 
should be expressed as kilograms per day removed from the atmosphere.
    Note that the annual report should now specifically include and 
identify any projects funded under the Experimental Pilot Projects 
provision of this guidance as well as the newly eligible public-private 
partnerships (see section VII). Summaries of before-and-after studies 
should be included as they become available.
Federal Agency Responsibilities and Coordination
    The FTA and FHWA field offices should establish a consultation and 
coordination process with their respective EPA regional offices for 
early review of CMAQ funding proposals. Review by EPA is critical to 
assist the determination of whether the CMAQ-proposed projects will 
have air quality benefits and to help assure that effective projects 
and programs are approved for CMAQ funding. Proposals for funding 
should be forwarded to EPA as soon as possible to ensure timely review. 
Where Memorandum of Understanding (MOU) are in place to facilitate 
Federal agency

[[Page 9053]]

review, such MOUs should be updated as needed.
    Either the local FTA or FHWA office will be responsible for project 
administration. In cases where the project is clearly related to 
transit, FTA will determine the project's eligibility and administer 
the project. Similarly, traffic flow improvements that improve air 
quality through operational improvements of the road system are be 
administered by FHWA. For projects that include both traffic flow and 
transit elements, such as park-and-ride lots and intermodal projects, 
the administering agency will be decided on a case-by-case basis. 
Following initial review by the administering agency and consultation 
with EPA, the administering agency makes the final determination on 
whether the project or program is likely to contribute to attainment of 
a NAAQS and is eligible for CMAQ funding. The consultation process 
should provide for timely review and handling of CMAQ funding 
proposals.
State and MPO Responsibilities
    Decisions over which projects and programs to fund under CMAQ 
should be made through the appropriate metropolitan and/or statewide 
planning process which would include the involvement of State and local 
air quality agencies. This process serves to develop a pool of 
potential CMAQ projects to be considered for funding in a State's 
nonattainment and maintenance areas. States, MPOs and transit agencies, 
in consultation with air quality agencies, are encouraged to 
cooperatively develop criteria for selection of CMAQ projects. The 
programming of CMAQ projects should be consistent with the appropriate 
metropolitan plan.
    Projects to be funded with CMAQ funds must be included in the plans 
and TIPs that are developed by the MPOs in cooperation with the State 
and transit operators. Under the metropolitan planning regulations (23 
CFR 450.300), TIPs must contain a priority list of projects to be 
carried out in the 3-year period following adoption. As a minimum, 
projects must be identified by year and proposed funding source. For 
projects targeting CMAQ funds, priority in the TIP should be based on 
the projects' estimated air quality benefits.
    Since the TIPs must be consistent with available funding, it is 
important that the State advise the MPOs of the estimated amount of 
CMAQ funds in a timely manner. Once CMAQ projects are included in a TIP 
(approved by the MPO and the Governor), and included in a FHWA/FTA-
approved statewide TIP, those projects in the first year may be 
implemented. Projects in the second or third year of the TIP could be 
advanced for implementation using the specified project selection 
procedures in the planning regulation.
    It is the State's responsibility to manage its obligation authority 
made pursuant to title 23 to ensure that CMAQ (and other Federal-aid) 
funds are obligated in a timely fashion and do not lapse. Other 
provisions affecting the overall Federal-aid program, such as advance 
construction authority, apply to the CMAQ program as well.
    Close coordination is needed between the State and MPO to assure 
that CMAQ funds are used appropriately and to maximize their 
effectiveness in meeting the CAA requirements. States and MPOs must 
fulfill this responsibility so that nonattainment and maintenance areas 
are able to make good-faith efforts to attain and maintain the NAAQS by 
the prescribed deadlines. State DOTs and MPOs should consult with State 
and local air quality agencies to develop an appropriate project list 
of CMAQ programming priorities which will have the greatest impact on 
air quality.

[FR Doc. 00-4224 Filed 2-22-00; 8:45 am]
BILLING CODE 4910-22-P