[Federal Register Volume 66, Number 228 (Tuesday, November 27, 2001)]
[Proposed Rules]
[Pages 59188-59201]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29370]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 420

[FHWA Docket No. FHWA-2001-8874]
RIN 2125-AE84


Planning and Research Program Administration

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: This document proposes to amend the regulation on planning and 
research program administration to reflect legislative changes due to 
enactment of the Transportation Equity Act for the 21st Century (TEA-
21); remove provisions that are no longer necessary; and make several 
changes in terminology. Most notable among the changes are renumbering 
of the State planning and research (SPR) funds section in title 23, 
United States Code, Highways (title 23, U.S.C.) from section 307(c) to 
section 505; revisions to 23 U.S.C. 302 that now allow a State 
transportation department to be reimbursed for indirect costs; and 
changes in the Federal-aid highway program categories from which SPR 
funds are set aside.

DATES: Comments must be received on or before January 28, 2002.

ADDRESSES: Mail or hand deliver comments to the U.S. Department of 
Transportation, Dockets Management Facility, Room PL-401, 400 Seventh 
Street, SW., Washington, DC 20590, or submit electronically at http://dmses.dot.gov/submit. All comments should include the docket number 
that appears in the heading of this document. All comments received 
will be available for examination and copying at the above address from 
9 a.m. to 5 p.m., e.t., Monday through Friday, except Federal holidays. 
Those desiring notification of receipt of comments must include a self-
addressed, stamped postcard or you may print the acknowledgment page 
that appears after submitting comments electronically.

FOR FURTHER INFORMATION CONTACT: For 23 CFR part 420, subpart A: Mr. 
Tony Solury, (202) 366-5003, Planning and Environment Core Business 
Unit, HEP-2, Federal Highway Administration, 400 Seventh Street, SW., 
Washington, DC 20590; for 23 CFR part 420, subpart B: Jowell Parks or 
William Zaccagnino, Office of Program Development and Evaluation, HRPD-
1, (202) 493-3166, Federal Highway Administration, Research, 
Development, and Technology Service Business Unit, 6300 Georgetown 
Pike, McLean, VA 22101. For legal questions: Reid Alsop, Office of the 
Chief Counsel, HCC-30, (202) 366-1371. Office hours are from 7 a.m. to 
4:15 p.m., e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    You may submit or retrieve comments online through the Document 
Management System (DMS) at: http://dmses.dot.gov/submit. Acceptable 
formats include: MS Word (versions 95 to 97), MS Word for Mac (versions 
6 to 8), Rich Text File (RTF), American Standard Code Information 
Interchange (ASCII)(TXT), Portable Document Format (PDF), and 
WordPerfect (versions 7 to 8). The DMS is available 24 hours each day, 
365 days each year. Electronic submission and retrieval help and 
guidelines are available under the help section of the web site.
    An electronic copy of this document may also be downloaded from the

[[Page 59189]]

Government Printing Office's Electronic Bulletin Board Service at (202) 
512-1661 by using a computer, modem, and suitable communications 
software. Internet users may also reach the Office of the Federal 
Register's home page at: http://www.nara.gov/fedreg and the Government 
Printing Office's web page at: http://www.access.gpo.gov/nara.

Background

    The FHWA's regulations for Planning and Research Program 
Administration were last revised on July 22, 1994, (59 FR 37548) prior 
to the enactment of the TEA-21 (Pub. L. 105-178, 112 Stat.107(1998)). 
Section 5119(b) of TEA-21 repealed the SPR funds section in 23 U.S.C. 
307(c) and section 5105 of TEA-21 added a new SPR funds section 505 to 
title 23, United States Code. Changes in the Federal-aid highway 
program in TEA-21 also resulted in changes in the Federal-aid highway 
program categories from which SPR funds are set aside. Section 1212 of 
TEA-21 revised 23 U.S.C. 302 to allow a State transportation department 
(STD) to be reimbursed for indirect costs.
    Based on experience since the 1994 revision, we are proposing 
revisions to clarify the meaning and applicability of several sections 
of the regulation, and to replace the phrase ``peer review'' with 
``peer exchange'' to describe the transfer of research, development, 
and technology transfer (RD&T) related information and best practices 
between STDs, the FHWA, universities and public and private sector 
transportation organizations. In addition, we propose to add a 
definition of ``transportation pooled fund study'' to reflect current 
practice and the conditions under which the non-Federal share of an SPR 
or metropolitan planning (PL) funded project may be waived would be 
clarified.

General Discussion of the Proposal

    We propose to reword the title of each section of the regulation 
into a question format to better indicate the content of the sections. 
In addition, this action proposes to add references to 49 CFR part 19, 
Uniform Administrative Requirements for Grants and Agreements with 
Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations, in appropriate sections throughout the regulation since 
FHWA planning and research funds are often passed through to entities 
covered by Part 19. Furthermore, in all appropriate places throughout 
the regulation where an approval action or review is required by an 
FHWA Division Office, we propose to replace the term ``FHWA'' with 
``FHWA Division Administrator'' to clarify which FHWA office has the 
approval responsibility.

Section-by-Section Discussion

Section 420.101  What Is the Purpose of This Part?

    This section would be revised to more clearly indicate the 
applicability of 23 CFR part 420 and subparts A and B.

Section 420.103  How Does the FHWA Define the Terms Used in This Part?

    In the definition of FHWA planning and research funds, references 
to 23 U.S.C. 307(c) would be changed to 23 U.S.C. 505. In the 
definition of FHWA planning and research funds under item 1, the words 
``or allocated'' would be added after ``apportioned'' since under the 
TEA-21, SPR funds are now also derived from funds allocated under the 
minimum guarantee program. The reference to minimum allocation funds 
would be deleted, since such funds were not continued under the TEA-21, 
and the new TEA-21 category of minimum guarantee funds would be added.
    We propose to revise the wording of the definition of ``grant 
agreement'' to be more consistent with the definition in the Federal 
Grant and Cooperative Agreement Act (31 U.S.C. 6301 et seq.) and 
``subrecipient'' would be added to help clarify when a subaward by a 
recipient is considered to be a subgrant.
    The FHWA proposes to revise the definition of ``metropolitan 
planning area'' to update the reference to the metropolitan 
transportation planning requirements from ``section 8 of the Federal 
Transit Act'' to ``49 U.S.C. 5303-5305.''
    We propose to move the definition of National Cooperative Highway 
Research Program (NCHRP) currently in Sec. 420.203 to Sec. 420.103 
since that term is now used in subpart A.
    We propose to replace the definitions of ``national pooled fund 
study'' and ``regional pooled fund study'' with a definition of 
``transportation pooled fund study'' to reflect current pooled fund 
study practices and the elimination of FHWA regional offices.
    The FHWA proposes to slightly revise the definition of 
``procurement contract'' to be more consistent with the definition in 
the Federal Grant and Cooperative Agreement Act and ``subrecipient'' 
would be added to help clarify when a subaward by a recipient is 
considered to be a subcontract.
    This action proposes to delete the definition of ``State 
transportation agency (STA)'' and to replace the term throughout part 
420 with ``State transportation department (STD)'' which is defined in 
section 101(a) of title 23, U.S.C.
    We further propose to add a definition of ``Transportation 
management area'' since the term is used in the regulation.
    This action also proposes to delete the phrase ``during the next 1 
or 2-year period'' from the definition of ``work program'' to allow 
STDs and metropolitan planning organizations (MPOs) greater flexibility 
to follow procedures that best meet their own needs.

Section 420.105  What Is the FHWA's Policy on Use of FHWA Planning and 
Research Funds?

    In this section, the FHWA proposes to make the following changes:
    Paragraph (a) would be reworded for clarity and the reference ``23 
U.S.C. 307(c)'' would be changed to ``23 U.S.C. 505.''
    The word ``multimodal'' in paragraph (a)(1) would be changed to 
``intermodal'' for consistency with current usage within the FHWA.
    A new paragraph (c) would be added to more clearly indicate that 
the FHWA has the authority and responsibility to determine which 
activities are eligible for Federal funding.

Section 420.107  What Is the Minimum Required Expenditure of State 
Planning and Research Funds for Research, Development and Technology 
Transfer?

    We propose the following amendments to this section:
    The reference ``23 U.S.C. 307(c)'' in paragraph (a) would be 
changed to ``23 U.S.C. 505.''
    Paragraph (b)(1) would be revised to update the reference to 
Federal Transit Act State planning and research funds from ``Section 
26(a)(2)'' to ``49 U.S.C. 5313(b).''
    In paragraph (c), the title ``Associate Administrator'' would be 
changed to ``Director'' to reflect organizational changes in the FHWA. 
In paragraph (c)(2), and all other places where it is in the existing 
regulation, ``pooled fund'' would be changed to ``transportation pooled 
fund'' to reflect the revised definition discussed above. Since data on 
expenditures for RD&T prior to enactment of the Intermodal Surface 
Transportation Efficiency Act of 1991 (ISTEA), Pub. L. 102-240, 105 
Stat. 1914, is no longer readily available, paragraph (c)(4) would be 
removed and paragraphs (5) and (6) would be renumbered (4) and (5), 
respectively. The language in renumbered paragraphs (c)(4)'(5) and in 
(d) would be revised for clarity.

[[Page 59190]]

Section 420.109  What Are the Requirements for Distribution of 
Metropolitan Planning Funds?

    The FHWA proposes to make the following changes in this section:
    Paragraph (a) would be revised by adding language that recognizes 
that a State's PL fund distribution formula, which must be developed in 
cooperation with the MPOs, may include provisions that allow funds to 
be used for activities that benefit all MPOs in the State or for 
discretionary awards to those MPOs to supplement their allocated share 
of the funds.
    Paragraph (f) would be revised to require that a State's PL fund 
distribution formula be in compliance with the provisions of paragraphs 
(a) and (b) before distribution of any new apportionment of PL funds to 
MPOs.

Section 420.111  What Are the Documentation Requirements for Use of 
FHWA Planning and Research Funds?

    We propose to add the language ``or other document that describes 
the work to be accomplished'' in paragraph (a) to clarify the FHWA's 
long-standing practice of allowing projects to be funded separately 
from a work program if such projects can be better administered 
separately. For example, if a project is expected to take several years 
to complete and is funded under a consultant contract, it may be easier 
to administer if funds needed during each year of the contract did not 
need to be shown in each corresponding annual work program. If funded 
as a separate Federal-aid project, the project would stay open until 
all work has been completed, as for highway construction projects. The 
third sentence of the existing paragraph, which discussed separate or 
combined planning and RD&T projects, would be removed since it is a 
fiscal issue that is covered in Sec. 420.115.
    Existing paragraph (b) would be amended by moving the requirement 
for each work program to include a summary of the amounts and sources 
of funds from existing paragraph (c)(1) through (c)(4) to revised 
paragraph (b)(1)(i) through (iv) and the remainder of existing 
paragraph (c) would become revised paragraph (d).
    The provisions in 23 CFR part 450 that allow metropolitan areas 
that are not TMAs to used simplified statements of work in lieu of a 
more detailed work program would be included in new paragraph (c) to 
clearly indicate this option.
    Existing paragraph (d) would become paragraph (e) and the reference 
to 23 CFR Part 450 would be removed since it is not necessary.

Section 420.113  What Costs Are Eligible?

    Prior to revision of 23 U.S.C. 302 by section 1212(a) of the TEA-
21, STDs were not allowed to charge indirect costs to title 23, U.S.C., 
funded projects. However, STDs were allowed to charge salaries of 
certain planning and research unit administrative staff directly to SPR 
funds on a prorata basis. The MPOs and other subgrantees could charge 
indirect costs in accordance with the Office of Management and Budget 
(OMB) cost principles applicable to those subgrantees. Paragraphs (b)-
(d) of existing Sec. 420.113 specify the allowability of indirect costs 
for each of these types of grantee and subgrantee. With the amendment 
to 23 U.S.C. 302, STDs can now also claim reimbursement for indirect 
costs in compliance with OMB Circular A-87, Cost Principles for Grants, 
and Cooperative Agreements with State, Local, and Indian Tribal 
Governments. Therefore, existing paragraphs (b) through (d) would be 
deleted and replaced with a new paragraph (b) that covers indirect 
costs of the STDs and their subgrantees.

Section 420.115  What Are the FHWA Approval and Authorization 
Requirements?

    We propose to add the words ``or other documents that describe the 
work to be performed'' after ``work program'' in paragraph (a) for 
consistency with the change to Sec. 420.111(a) described above and a 
reference to 49 CFR 19.25 would be added to indicate where the 
provisions for changes can be found when the subrecipient is a non-
profit organization or institution of higher education.

Section 420.117  What Are the Program Monitoring and Reporting 
Requirements?

    In order to indicate where the provisions for reporting can be 
found when the subrecipient is a non-profit organization or institution 
of higher education, we propose to add a reference to 49 CFR 19.14 to 
paragraph (c).
    Paragraph (e), which requires preparation of reports to document 
work performed with FHWA planning and research funds, would be revised 
to remove the reference to the Federal-aid project agreement since this 
report requirement is no longer in the agreement.

Section 420.119  What Are the Fiscal Requirements?

    We propose to delete existing paragraphs (a) and (b) because they 
include internal FHWA fiscal procedures that do not apply to grantees.
    Existing paragraph (d) would be split into a new paragraph (a) and 
revised paragraph (d) and revised for clarity. Existing paragraph (e), 
which includes a reference to matching provisions in 49 CFR 18.24 would 
be moved to new paragraph (a) and a citation to the matching provision 
for non-profits and institutions of higher education in 49 CFR 19.23 
would be added.
    We propose to add a new paragraph (b) to incorporate the 
requirements in 49 CFR 18.24 and 49 CFR 19.23 that apply to use of the 
value of in kind services as a match for FHWA planning and research 
funds.
    A new paragraph (c) would be added to address additional options, 
such as toll credits, for matching FHWA planning and research funds.
    In revised paragraph (d) we propose to more clearly indicate the 
applicability and procedures for FHWA waiver of the non-Federal fund 
matching requirements for SPR and PL funds. This provision does not 
apply to other 23 U.S.C funds that may be used for planning and 
research. The reference to 23 U.S.C. 307(c)(3) would be updated to 23 
U.S.C. 505(c). Minimum Guarantee (MG) funds would be added to the list 
of funds that this provision does not apply to. The titles of the FHWA 
officials who may approve the matching fund waiver would be updated to 
reflect the previously mentioned FHWA reorganization.
    Existing paragraph (c) would become (e) and would be revised for 
clarity by replacing the term ``optional'' with the specific categories 
of funds, by removing the reference to minimum allocation funds because 
they no longer exist, and by adding MG funds. The reference to 23 CFR 
part 450 would be replaced with the specific transportation improvement 
program provisions in part 450.
    We propose to revise existing paragraph (f) by adding a reference 
to the payment provisions for non-profits and institutions of higher 
education in 49 CFR 19.22.

Section 420.121  What Other Requirements Apply to the Administration of 
FHWA Planning and Research Funds?

    For ease of finding specific requirements, we propose to put the 
provisions in existing Sec. 420.121 into alphabetical order by subject.
    Existing paragraph (c) on audits would become paragraph (a) and 
would be revised by deleting the reference to

[[Page 59191]]

49 CFR part 90 because this part has been rescinded.
    Existing paragraph (g) on procurement would become paragraph (j) 
and would be revised by adding ``and (i)'' after ``49 CFR 18.36(a)'' to 
clarify that the provisions in 49 CFR 18.36(i) are applicable to STD 
procurements with FHWA planning and research funds. We further propose 
to move the provisions regarding suspension and debarment to a new 
paragraph (o) that would more clearly indicate the restrictions on 
awards of Federal funds to suspended or debarred parties.
    Existing paragraph (n) would become paragraph (c) and would be 
revised to reference the most recent disadvantaged business enterprise 
legislative and regulatory provisions that are applicable to FHWA 
planning and research funds.
    We propose to delete paragraph (p) because it specified that 
reports produced with FHWA planning and research funds were to be in 
metric and we believe that is unnecessary.

Section 420.201  What Is the Purpose of This Subpart?

    We propose to rewrite this section for clarity.

Section 420.203  How Does the FHWA Define the Terms Used in This 
Subpart?

    The FHWA proposes to amend this section in the following manner:
    The terms ``applied research,'' ``basic research,'' and 
``development'' would be revised to be more consistent with definitions 
used by the National Science Foundation.
    The term ``cooperatively funded study'' would be removed since it 
would not be used in the revised regulation.
    The term ``peer review'' would be replaced with ``peer exchange'' 
to describe the transfer of RD&T related information and best practices 
between STDs, the FHWA, universities and public and private sector 
transportation organizations.
    The term ``RD&T activity'' would be revised for clarity.
    The term ``research'' would be removed to avoid redundancy in light 
of the definitions for applied research and basic research.
    The Term ``Transportation Research Information Service'' would be 
revised to reflect the partnership between the Transportation Research 
Board and the National Transportation Library.

Section 420.205  What Is the FHWA's Policy for Research, Development, 
and Technology Transfer Funding?

    In paragraph (b) peer review would be replaced with peer exchange.
    New language would be added to paragraph (c) to encourage STDs to 
include technology transfer programs to share the results of research 
efforts and promote the use of new technology. The second sentence in 
paragraph (c) would become new paragraph (d) and language would be 
added to new paragraph (d) encouraging STDs to pool their funds as a 
means to leverage resources.
    Existing paragraphs (d) through (g) would be renumbered (e) through 
(h), respectively, and the reference to the FHWA Regional offices in 
existing paragraph (g) would be amended to Resource Center.

Section 420.207  What Are the Requirements for Research, Development, 
and Technology Transfer Work Programs?

    We propose to redesignate existing Sec. 420.209 as Sec. 420.207 and 
in this section we propose to replace ``national'' and ``regional'' 
with ``transportation'' in reference to pooled fund studies in 
paragraph (a). Language would be added to indicate that a previously 
funded study needs to be included in the work program until the final 
report for the study is completed.
    In addition, we propose adding language to paragraph (a) that would 
require that studies funded under previous work programs be shown in 
subsequent work programs until a final report has been completed for 
the studies. This provision will enable the FHWA to track work 
performed under previous grants so that closing of those grants can 
proceed in a timely manner.

Section 420.209  What Are the Conditions for Approval?

    Because of the overlap or redundancy among the provisions in 
existing Secs. 420.207, 420.211, and 420.213, we are proposing to 
combine and revise these three sections into new Sec. 420.209. The 
following changes are proposed:
    ``National'' and ``regional'' would be replaced with 
``transportation'' in reference to pooled fund studies in paragraph 
(a)(2).
    The reference to ``peer reviews'' in paragraph (a)(5) would be 
changed to ``peer exchanges.''
    Former paragraph (c) would be revised for clarity and redesignated 
as paragraph (a)(7).
    Former paragraph (c) would be redesignated as paragraph (b) and the 
reference to ``peer reviews'' would be changed to ``peer exchanges.''
    Former paragraph (b) would be redesignated (c) and reworded for 
clarity. The provisions regarding the FHWA selection of reviewers would 
be removed.
    Former Sec. 420.113, Certification requirements, would be rewritten 
to remove outdated material and consolidated in new paragraph 420.209 
(c). The STDs would still need to certify that it is in compliance with 
the requirements of 23 CFR part 420, subpart B.
    Former Sec. 420.115, Procedure for withdrawal of approval, would be 
rewritten to remove outdated material and consolidated in new 
Sec. 420.209 (c).

Distribution Table

    For ease of reference, a distribution table is provided for the 
current sections and the proposed sections as follows:

                           Distribution Table
------------------------------------------------------------------------
              Old section                          New section
------------------------------------------------------------------------
420.101................................  420.101 Revised.
420.103................................  420.103 Revised.
    FHWA planning and research funds...  Revised.
    Grant agreement....................  Revised.
    Metropolitan planning area.........  Revised.
    Metropolitan planning organization.  Unchanged.
    National Cooperative Highway         Added.
     Research Program (NCHRP).
    National pooled-fund study.........  Removed.
    Procurement contract...............  Revised.
    Regional pooled-fund study.........  Removed.
    State transportation agency........  Removed.
    Transportation management area.....  Added.
    Transportation pooled-fund study...  Added.

[[Page 59192]]

 
    Work program.......................  Revised.
420.105(a) Introductory Paragraph......  420.105(a) Introductory
                                          Paragraph Revised.
420.105(a)(1)..........................  420.105(a)(1) Revised.
420.105(a)(2)..........................  420.105(a)(2) Unchanged.
420.105(b).............................  420.105(b) Revised.
None...................................  420.105(c) Added.
420.107(a).............................  420.107(a) Revised.
420.107(b).............................  420.107(b) Revised.
420.107(c)(1) through (3)..............  420.107(c)(1) through (3)
                                          Revised.
420.107(c)(4)..........................  Removed.
420.107(c)(5)..........................  420.107(c)(4) Revised.
420.107(c)(6)..........................  420.107(c)(5) Revised.
420.107(d).............................  420.107(d) Revised.
420.109................................  420.109 Revised.
420.111(a).............................  420.111(a) Revised.
420.111(b) 1st Sentence................  420.111(b)(1) Revised.
420.111(b) 2d Sentence.................  420.111(b)(2) Revised.
420.111(c)(1) through (4)..............  420.111(b)(1)(i) through (iv).
None...................................  420.111(c) Added.
420.111(c) introductory paragraph......  420.111(d) Revised.
420.111(d).............................  420.111(e) Revised.
420.113(a)(1)..........................  420.113(a)(1) Unchanged.
420.113(a)(2)..........................  420.113(a)(2) Revised.
420.113(a)(3) to (a)(5)................  420.113(a)(3) to (a)(5)
                                          Unchanged.
420.113(b).............................  420.113(b) Revised.
420.113(c).............................  420.113(b) Revised.
420.113(d).............................  420.113(b) Revised.
420.115(a).............................  420.115(a) Revised.
420.115(b).............................  420.115(b) Revised.
420.115(c).............................  420.115(c) Revised.
420.117(a).............................  420.117(a) Revised.
420.117(b)(1)..........................  420.117(b)(1) Revised.
420.117(b)(2)..........................  420.117(b)(2) Unchanged.
420.117(c).............................  420.117(c) Revised.
420.117(d).............................  420.117(d) Revised.
420.117(e).............................  420.117(e) Revised.
420.119(a).............................  Removed.
420.119(b).............................  Removed.
420.119(c).............................  420.119(d) Revised.
None...................................  420.119(c).
420.119(d), 1st Sentence...............  420.119(a) Revised.
420.119(d), 2nd and 3rd Sentences......  420.119(b) Revised.
420.119(e).............................  420.119(a) Revised.
420.119(f).............................  420.119(f) Revised.
420.121(a).............................  420.121(f) Revised.
420.121(b).............................  420.121(k) Revised.
420.121(c).............................  420.121(a) Revised.
420.121(d).............................  420.121(e) Revised.
420.121(e).............................  420.121(p) Revised.
420.121(f).............................  420.121(b) Revised.
420.121(g), 1st Sentence...............  420.121(j) Revised.
420.121(g), 2nd Sentence...............  420.121(o) Revised.
420.121(h).............................  420.121(m) Revised.
420.121(i).............................  420.121(l) Revised.
420.121(j).............................  420.121(i) Revised.
420.121(k).............................  420.121(d) Revised.
420.121(l).............................  420.121(g) Revised.
420.121(m).............................  420.121(h) Revised.
420.121(n).............................  420.121(c) Revised.
420.121(o).............................  420.121(n) Revised.
420.121(p).............................  Removed.
420.201................................  420.201 Revised.
420.203................................  420.203 Revised.
    Applied research...................  Revised.
    Basic research.....................  Revised.
    Cooperatively funded study.........  Removed.
    Development........................  Revised.
    Final report.......................  Unchanged.
    Intermodal RD&T....................  Unchanged.
    National Cooperative Highway         420.103 Revised.
     Research Program (NCHRP).
    Peer review........................  Peer exchange. Revised.
    RD&T activity......................  Revised.

[[Page 59193]]

 
    Research...........................  Revised.
    Technology transfer................  Unchanged.
    Transportation Research Information  Revised.
     Services (TRIS).
420.205(a).............................  420.205(a).
420.205(b).............................  420.205(b) Revised.
420.205(c).............................  420.205(c) Revised.
420.205(c), 2nd Sentence...............  420.205(d) Revised.
420.205 (d) through (g)................  420.205(e) through (h) Revised.
420.207(a).............................  420.209(a) Revised.
420.207(a)(1)..........................  420.209(a)(1) Revised.
420.207(a)(2)..........................  420.209(a)(2) Revised.
420.207(a)(3)-(4)......................  420.209(a)(3)-(4).
420.207(a)(5)..........................  420.209(a)(5) Revised.
420.207(a)(6)..........................  420.209(a)(6).
420.207(b).............................  420.209(a)(7) Revised.
420.207(c).............................  420.209(b) Revised.
420.209(a)-(c).........................  420.207(a)-(c) Revised.
420.211................................  Removed.
420.213(a)-(c).........................  420.209(c) Revised.
420.215(a)-(d).........................  420.209(d) Revised.
------------------------------------------------------------------------

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable. In addition to late comments, the 
FHWA will also continue to file relevant information in the docket as 
it becomes available after the comment period closing date, and 
interested persons should continue to examine the docket for new 
material. A final rule may be published at any time after close of the 
comment period.

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The FHWA has determined that this action would not be a significant 
regulatory action within the meaning of Executive Order 12866 and would 
not be significant within the meaning of U.S. Department of 
Transportation regulatory policies and procedures. It is anticipated 
that the economic impact of this rulemaking would be minimal. The 
proposed changes would update the existing rule to conform to changes 
included in the TEA-21 and amend the current rule to make it clearer 
and easier to understand. These proposed changes would not adversely 
affect, in a material way, any sector of the economy. In addition, 
these changes would not interfere with any action taken or planned by 
another agency and would not materially alter the budgetary impact of 
any entitlements, grants, user fees, or loan programs. Consequently, a 
full regulatory evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612) the FHWA has evaluated the effects of this proposed 
action on small entities. This rule addresses the administrative 
procedures and requirements that STDs must comply with when using FHWA 
planning and research funds provided under title 23, U.S.C. This rule 
would not impose any direct requirement on small entities that would 
result in increased economic costs. The proposed changes would update 
the existing rule to conform to provisions in the TEA-21 and make it 
clearer and easier to understand. Based on this evaluation, the FHWA 
certifies that this rule would not have a significant economic impact 
on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule would not impose unfunded mandates as defined by 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 
1995, 109 Stat. 48). This proposed rule would not result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year (2 
U.S.C. 1532). The proposed changes will update the existing rule to 
conform to provisions in the TEA-21 and make it clearer and easier to 
understand. The costs of compliance with the provisions of this rule 
are minor and are eligible for Federal funding.

Executive Order 13132 (Federalism Assessment)

    This proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132, and the 
FHWA has determined that this action would not have sufficient 
Federalism implications to warrant the preparation of a Federalism 
assessment. The FHWA has also determined that this proposed action 
would not preempt any State law or State regulation or affect the 
States' ability to discharge traditional State governmental functions. 
The rule provides STDs the authority and flexibility to manage their 
federally assisted State planning and research programs using their own 
procedures to the extent permitted under the principles and criteria 
contained in OMB Circular A-102, Grants and Cooperative Agreements with 
State and Local Governments. Accordingly, the FHWA certifies that this 
rule does not have sufficient Federalism implications to warrant the 
preparation of a full Federalism Assessment under the principles and 
criteria contained in Executive Order 13132.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing 
Executive Order 12372 regarding intergovernmental consultation on 
Federal programs and activities apply to FHWA planning and research 
fund grants. Accordingly, the FHWA solicits comments on this issue.

[[Page 59194]]

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et 
seq.), Federal agencies must obtain approval from the Office of 
Management and Budget (OMB) for each collection of information they 
conduct, sponsor, or require through regulations. Although 23 CFR part 
420 also includes administrative requirements and procedures for funds 
provided for Metropolitan Planning Organizations (MPOs) to carry out 
the requirements of 23 U.S.C. 134, the FHWA clearance only covers 
transportation planning and research, development and technology (RD&T) 
work performed by State Departments of Transportation (State DOTs) with 
funds provided under the provisions of 23 U.S.C. 505 or, at a State 
DOT's option, other 23 U.S.C. sections as identified in the definition 
of FHWA planning and research funds in 23 CFR 420.103. The FHWA has 
determined that this proposal contains collection of information 
requirements for the purposes of the PRA. The information collection 
requirements referenced in Sec. 420.105(b) have been approved by the 
OMB and have been assigned OMB control numbers 2125-0028 (expiration 
date, February 28, 2003) and 2125-0032 (expiration date, March 31, 
2003). The information collection requirements in Secs. 420.111, 
420.117, and 420.213 for State planning and RD&T activities have been 
have been approved by the OMB and assigned control number 2125-0039 
(expiration date, April 30, 2004). The information collection 
requirements in Secs. 420.111, and 420.117 for work performed by the 
MPOs is a joint FHWA/FTA requirement that is covered under the FTA OMB 
Control Number 2132-0529 (expiration date, March 31, 2004). The 
information collection requirements in Sec. 420.115, Preparation and 
Execution of the Project Agreement and Modifications, for project 
agreements has been approved by the OMB and have been assigned OMB 
control number 2125-0529 (expiration date June 30, 2204).

Executive Order 12630 (Taking of Private Property)

    This proposed rule would not effect a taking of private property or 
otherwise have taking implications under Executive Order 12630, 
Governmental Actions and Interference with Constitutionally Protected 
Property Rights.

Executive Order 12988 (Civil Justice Reform)

    This action meets applicable standards in section 3(a) and 3(b)(2) 
of Executive Order 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

    We have analyzed this action under Executive Order 13045, 
Protection of Children from Environmental Health Risks and Safety 
Risks. This proposed rule is not economically significant and does not 
concern an environmental risk to health or safety that may 
disproportionately affect children.

Executive Order 13175 (Tribal Consultation)

    The FHWA has analyzed this proposal under Executive Order 13175, 
dated November 6, 2000, and believes that the proposed action will not 
have substantial direct effects on one or more Indian tribes; will not 
impose substantial direct compliance costs on Indian tribal 
governments; and will not preempt tribal law. Therefore, a tribal 
summary impact statement is not required.

Executive Order 13211 (Energy Effects)

    We have analyzed this proposed rule under Executive Order 13211, 
Actions Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. We have determined that it is not a significant 
energy action under that order because it is not a significant 
regulatory action under Executive Order 12866 and is not likely to have 
a significant adverse effect on the supply, distribution or use of 
energy. Therefore, a Statement of Energy Effects under Executive Order 
13211 is not required.

National Environmental Policy Act

    The agency has analyzed this proposed action for the purpose of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321) and has 
determined that this proposed action would not have any effect on the 
quality of the environment.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects in 23 CFR Part 420

    Accounting, Grant programs--transportation, Highways and roads, 
Planning, Reporting and recordkeeping requirements, Research.

    Issued on: November 19, 2001
Mary E. Peters,
Federal Highway Administrator.

    In consideration of the foregoing, the FHWA proposes to amend, 
title 23, Code of Federal Regulations by revising, part 420 to read as 
set forth below:

PART 420--PLANNING AND RESEARCH PROGRAM ADMINISTRATION

Subpart A--Administration of FHWA Planning and Research Funds

Sec.
420.101   What is the purpose of this part?
420.103   How does the FHWA define the terms used in this part?
420.105   What is the FHWA's policy on use of FHWA planning and 
research funds?
420.107   What is the minimum required expenditure of State planning 
and research funds for research development and technology transfer?
420.109   What are the requirements for distribution of metropolitan 
planning funds?
420.111   What are the documentation requirements for use of FHWA 
planning and research funds?
420.113   What costs are eligible?
420.115   What are the FHWA approval and authorization requirements?
420.117   What are the program monitoring and reporting 
requirements?
420.119   What are the fiscal requirements?
420.121   What other requirements apply to the administration of 
FHWA planning and research funds?
Subpart B--Research, Development, and Technology Transfer Program 
Management
Sec.
420.201   What is the purpose of this subpart?
420.203   How does the FHWA define the terms used in this subpart?
420.205   What is FHWA's for policy research development and 
technology transfer funding?
420.207   What are the requirements for research, development, and 
technology transfer work programs?
420.209   What are the conditions for approval?

    Authority: 23 U.S.C. 103(b)(6), 104(f), 115, 120, 133(b), 
134(n), 303(g), 505, and 315; and 49 CFR 1.48(b).

Subpart A--Administration of FHWA Planning and Research Funds


Sec. 420.101  What is the purpose of this part?

    This part prescribes the Federal Highway Administration (FHWA) 
policies and procedures for the administration of activities undertaken

[[Page 59195]]

by State transportation departments (STDs) and their subrecipients, 
including metropolitan planning organizations (MPOs), with FHWA 
planning and research funds. This subpart A identifies the 
administrative requirements that apply to use of FHWA planning and 
research funds both for planning and for research, development, and 
technology transfer (RD&T) activities. Subpart B of this part describes 
the policies and procedures that relate to the approval and 
authorization of RD&T work programs. The requirements in this part 
supplement those in 49 CFR part 18, Uniform Administrative Requirements 
for Grants and Cooperative Agreements to State and Local Governments 
and 49 CFR part 19, Uniform Administrative Requirements for Grants and 
Cooperative Agreements with Institutions of Higher Education, Hospitals 
and Other Non-Profit Organizations.


Sec. 420.103  How does FHWA define the terms used in this part?

    Unless otherwise specified in this part, the definitions in 23 
U.S.C. 101(a) are applicable to this part. As used in this part:
    FHWA planning and research funds include:
    (1) State planning and research (SPR) funds (the two percent set 
aside of funds apportioned or allocated to a STD for activities 
authorized under 23 U.S.C. 505);
    (2) Metropolitan planning (PL) funds (the one percent of funds 
authorized under 23 U.S.C. 104(f) to carry out the provisions of 23 
U.S.C. 134);
    (3) National highway system (NHS) funds authorized under 23 U.S.C. 
104(b)(1) used for transportation planning in accordance with 23 U.S.C. 
134 and 135, highway research and planning in accordance with 23 U.S.C. 
505, highway-related technology transfer activities, or development and 
establishment of management systems under 23 U.S.C. 303;
    (4) Surface transportation program (STP) funds authorized under 23 
U.S.C. 104(b)(3) used for highway and transit research and development 
and technology transfer programs, surface transportation planning 
programs, or development and establishment of management systems under 
23 U.S.C. 303; and
    (5) Minimum guarantee (MG) funds authorized under 23 U.S.C. 505 
used for transportation planning and research, development and 
technology transfer activities that are eligible under title 23, U.S.C.
    Grant agreement means a legal instrument reflecting a relationship 
between an awarding agency and a recipient or subrecipient when the 
principal purpose of the relationship is to transfer a thing of value 
to the recipient or subrecipient to carry out a public purpose of 
support or stimulation authorized by a law instead of acquiring (by 
purchase, lease, or barter) property or services for the direct benefit 
or use of the awarding agency.
    Metropolitan planning area means the geographic area in which the 
metropolitan transportation planning process required by 23 U.S.C. 134 
and 49 U.S.C. 5303-5305 must be carried out.
    Metropolitan planning organization (MPO) means the forum for 
cooperative transportation decisionmaking for a metropolitan planning 
area.
    National Cooperative Highway Research Program (NCHRP) means the 
cooperative RD&T program directed toward solving problems of national 
or regional significance identified by STDs and the FHWA, and 
administered by the Transportation Research Board, National Academy of 
Sciences.
    Procurement contract means a legal instrument reflecting a 
relationship between an awarding agency and a recipient or subrecipient 
when the principal purpose of the instrument is to acquire (by 
purchase, lease, or barter) property or services for the direct benefit 
or use of the awarding agency.
    Transportation management area (TMA) means an urbanized area with a 
population over 200,000 (as determined by the latest decennial census) 
or other area when TMA designation is requested by the Governor and the 
MPO (or affected local officials), and officially designated by the 
Administrators of the FHWA and the Federal Transit Administration 
(FTA).
    Transportation pooled fund study means a planning, research, 
development, or technology transfer activity administered by the FHWA, 
a lead STD, or other organization that is supported by two or more 
participants and that addresses an issue of significant or widespread 
interest related to highway, public, or intermodal transportation. A 
transportation pooled fund study is intended to address a new area or 
provide information that will complement or advance previous 
investigations of the subject matter.
    Work program means a periodic statement of proposed work and 
estimated costs that document eligible activities to be undertaken by 
STDs and/or their subrecipients with FHWA planning and research funds.


Sec. 420.105  What is the FHWA's policy on use of FHWA planning and 
research funds?

    (a) If the FHWA determines that planning activities of national 
significance, identified in paragraph (b) of this section, and the 
requirements of 23 U.S.C. 134, 135, 303, and 505 are being adequately 
addressed, the FHWA will allow STDs and MPOs:
    (1) Maximum possible flexibility in the use of FHWA planning and 
research funds to meet highway and intermodal transportation planning 
and RD&T needs at the national, State, and local levels while ensuring 
legal use of such funds and avoiding unnecessary duplication of 
efforts; and
    (2) To determine which eligible planning and RD&T activities they 
desire to support with FHWA planning and research funds and at what 
funding level.
    (b) The STDs must provide data that support the FHWA's 
responsibilities to the Congress and to the public. These data include, 
but are not limited to, information required for: preparing proposed 
legislation and reports to the Congress; evaluating the extent, 
performance, condition, and use of the Nation's transportation systems; 
analyzing existing and proposed Federal-aid funding methods and levels 
and the assignment of user cost responsibility; maintaining a critical 
information base on fuel availability, use, and revenues generated; and 
calculating apportionment factors.
    (c) The policy in paragraph (a) of this section does not remove the 
FHWA's responsibility and authority to determine which activities are 
eligible for funding. Activities proposed to be funded with FHWA 
planning and research funds by the STDs and their subrecipients shall 
be documented and submitted for FHWA approval and authorization as 
prescribed in Secs. 420.111 and 420.113.


(The information collection requirements in paragraph (b) of 
Sec. 420.105 have been approved by the Office of Management and Budget 
(OMB) under control numbers 2125-0028 and 2125-0032.)


Sec. 420.107  What is the minimum required expenditure of State 
planning and research funds for research development and technology 
transfer?

    (a) An STD must expend no less than 25 percent of its annual SPR 
funds on RD&T activities relating to highway, public transportation, 
and intermodal transportation systems in accordance with the provisions 
of 23 U.S.C. 505(b), unless a STD certifies, and the FHWA accepts the 
STD's certification, that total expenditures by the STD during the

[[Page 59196]]

fiscal year for transportation planning under 23 U.S.C. 134 and 135 
will exceed 75 percent of the amount apportioned for the fiscal year.
    (b) Prior to submitting a request for an exception to the 25 
percent requirement, the STD must ensure that:
    (1) The additional planning activities are essential, and there are 
no other reasonable options available for funding these planning 
activities (including the use of NHS, STP, MG, or FTA State planning 
and research funds (49 U.S.C. 5313(b)) or by deferment of lower 
priority planning activities);
    (2) The planning activities have a higher priority than RD&T 
activities in the overall needs of the STD for a given fiscal year; and
    (3) The total level of effort by the STD in RD&T (using both 
Federal and State funds) is adequate.
    (c) If the STD chooses to pursue an exception, it must send the 
request, along with supporting justification, to the FHWA Division 
Administrator for action by the FHWA Director of Research, Development, 
and Technology. The Director's decision will be based upon the 
following considerations:
    (1) Whether the STD has a process for identifying RD&T needs and 
for implementing a viable RD&T program.
    (2) Whether the STD is contributing to cooperative RD&T programs or 
activities, such as the National Cooperative Highway Research Program, 
the Transportation Research Board, and transportation pooled fund 
studies.
    (3) Whether the STD is using SPR funds for technology transfer and 
for transit or intermodal research and development to help meet the 25 
percent minimum requirement.
    (4) Whether the STD can demonstrate that it will meet the 
requirement or substantially increase its RD&T expenditures over a 
multi-year period, if an exception is granted for the fiscal year.
    (5) Whether Federal funds needed for planning exceed the 75 percent 
limit for the fiscal year and whether any unused planning funds are 
available from previous fiscal years.
    (d) If the FHWA Director of Research, Development and Technology 
approves the STD's request for an exception, the exception is valid 
only for that fiscal year's funds. A new request must be submitted and 
approved for subsequent fiscal year funds.


Sec. 420.109  What are the requirements for distribution of 
metropolitan planning funds?

    (a) The STDs shall make all PL funds authorized by 23 U.S.C. 104(f) 
available to the MPOs in accordance with a formula developed by the 
STD, in consultation with the MPOs, and approved by the FHWA Division 
Administrator. The formula may allow for a portion of the PL funds to 
be used by the STD, or other agency agreed to by the STD and the MPOs, 
for activities that benefit all MPOs in the State, but STDs shall not 
use any PL funds for grant or subgrant administration. The formula may 
also provide for a portion of the funds to be made available for 
discretionary grants to MPOs to supplement their annual amount received 
under the distribution formula.
    (b) In developing the formula for distributing PL funds, the STD 
shall consider population, status of planning, attainment of air 
quality standards, metropolitan area transportation needs, and other 
factors necessary to provide for an appropriate distribution of funds 
to carry out the requirements of 23 U.S.C. 134 and other applicable 
requirements of Federal law.
    (c) The STDs shall inform the MPOs and the FHWA Division Office of 
the amounts allocated to each MPO as soon as possible after PL funds 
have been apportioned by the FHWA to the STDs.
    (d) If the STD, in a State receiving the minimum apportionment of 
PL funds under the provisions of 23 U.S.C. 104(f)(2), determines that 
the share of funds to be allocated to any MPO results in the MPO 
receiving more funds than necessary to carry out the provisions of 23 
U.S.C. 134, the STD may, after considering the views of the affected 
MPO(s) and with the approval of the FHWA Division Administrator, use 
those funds for transportation planning outside of metropolitan 
planning areas.
    (e) In accordance with the provisions of 23 U.S.C. 134(n), any PL 
funds not needed for carrying out the metropolitan planning provisions 
of 23 U.S.C. 134 in any State may be made available by the MPO(s) to 
the STD for funding statewide planning activities under 23 U.S.C. 135, 
subject to approval by the FHWA Division Administrator.
    (f) Any State PL fund distribution formula that does not meet the 
requirements of paragraphs (a) and (b) of this section shall be brought 
into conformance with those requirements before distribution on any new 
apportionment of PL funds.


Sec. 420.111  What are the documentation requirements for use of FHWA 
planning and research funds?

    (a) Proposed use of FHWA planning and research funds must be 
documented by the STDs and subrecipients in a work program, or other 
document that describes the work to be accomplished, that is acceptable 
to the FHWA Division Administrator. Statewide, metropolitan, other 
transportation planning activities, and transportation RD&T activities 
may be documented in separate programs, paired in various combinations, 
or brought together as a single work program. The expenditure of PL 
funds for transportation planning outside of metropolitan planning 
areas under Sec. 420.109(d) may be included in the work program for 
statewide transportation planning activities or in a separate work 
program submitted by the STD.
    (b)(1) A work program(s) for transportation planning activities 
must include a description of work to be accomplished and cost 
estimates by activity or task. In addition, each work program must 
include a summary that shows:
    (i) Federal share by type of fund;
    (ii) Matching rate by type of fund;
    (iii) State and/or local matching share; and
    (iv) Other State or local funds.
    (2) Additional information on metropolitan planning area work 
programs is contained in 23 CFR part 450. Additional information on 
RD&T work program content and format is contained in subpart B of this 
part.
    (c) In areas not designated as TMAs, a simplified statement of work 
that describes who will perform the work and the work that will be 
accomplished using Federal funds may be used in lieu of a work program. 
If a simplified statement of work is used, it may be submitted 
separately or as part of the Statewide planning work program.
    (d) The STDs that use separate Federal-aid projects in accordance 
with Sec. 420.111(a) must submit an overall summary that identifies the 
amounts and sources of FHWA planning and research funds available, 
matching funds, and the amounts budgeted for each activity (e.g., 
statewide planning, RD&T, each metropolitan area, contributions to 
NCHRP and transportation pooled fund studies, etc.).
    (e) The STDs and MPOs also are encouraged to include cost estimates 
for transportation planning, research, development, and technology 
transfer related activities funded with other Federal or State and/or 
local funds; particularly for producing the FHWA-required data 
specified in paragraph (b) of Sec. 420.105, for planning for other 
transportation modes, and for air quality planning activities in areas 
designated as non-attainment for transportation-related pollutants in 
their work programs. The MPOs in TMAs must

[[Page 59197]]

include such information in their work programs.


(The information collection requirements in Secs. 420.111 have been 
approved by the OMB and assigned control numbers 2125-0039 for States 
and 2132-0529 for MPOs.)


Sec. 420.113  What costs are eligible?

    (a) Costs will be eligible for FHWA participation provided that the 
costs:
    (1) Are for work performed for activities eligible under the 
section of title 23, U.S.C., applicable to the class of funds used for 
the activities;
    (2) Are verifiable from the STD's or the subrecipient's records;
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project objectives and meet the other criteria for 
allowable costs in the applicable cost principles cited in 49 CFR 
18.22;
    (4) Are included in the approved budget, or amendment thereto; and
    (5) Were not incurred prior to FHWA authorization.
    (b) Indirect costs of STDs and their subrecipients are allowable if 
supported by a cost allocation plan and indirect cost proposal 
prepared, submitted (if required), and approved by the cognizant or 
oversight agency in accordance with the OMB requirements applicable to 
the STD or subrecipient specified in 49 CFR 18.22(b).


Sec. 420.115  What are the FHWA approval and authorization 
requirements?

    (a) The STD and its subrecipients must obtain approval and 
authorization to proceed prior to beginning work on activities to be 
undertaken with FHWA planning and research funds. Such approvals and 
authorizations should be based on final work programs or other 
documents that describe the work to be performed. The STD and its 
subrecipients also must obtain prior approval for budget and 
programmatic changes as specified in 49 CFR 18.30 or 49 CFR 19.25 and 
for those items of allowable costs which require approval in accordance 
with the cost principles specified in 49 CFR 18.22(b) applicable to the 
entity expending the funds.
    (b) Authorization to proceed with the FHWA funded work in whole or 
in part is a contractual obligation of the Federal Government pursuant 
to 23 U.S.C. 106 and requires that appropriate funds be available for 
the full Federal share of the cost of work authorized. Those STDs that 
do not have sufficient FHWA planning and research funds or obligation 
authority available to obligate the full Federal share of a work 
program or project may utilize the advance construction provisions of 
23 U.S.C. 115(a) in accordance with the requirements of 23 CFR Part 
630, subpart G. The STDs that do not meet the advance construction 
provisions, or do not wish to utilize them, may request authorization 
to proceed with that portion of the work for which FHWA planning and 
research funds are available. In the latter case, authorization to 
proceed may be given for either selected work activities or for a 
portion of the program period, but such authorization does not 
constitute a commitment by the FHWA to fund the remaining portion of 
the work if additional funds do become available.
    (c) A project agreement must be executed by the STD and the FHWA 
Division Office for each statewide transportation planning, 
metropolitan planning area, or RD&T work program, individual activity 
or study, or any combination administered as a single Federal-aid 
project. The project agreement may be executed concurrent with or after 
authorization has been given by the FHWA Division Administrator to 
proceed with the work in whole or in part. In the event that the 
project agreement is executed for only part of the work, the project 
agreement must be amended when authorization is given to proceed with 
additional work.


(The information collection requirements in Secs. 420.115(c) have been 
approved by the OMB and assigned control numbers 2125-0529.)


Sec. 420.117  What are the program monitoring and reporting 
requirements?

    (a) In accordance with 49 CFR 18.40, the STD shall monitor all 
activities performed by its staff or by subrecipients with FHWA 
planning and research funds to assure that the work is being managed 
and performed satisfactorily and that time schedules are being met.
    (b)(1) The STD must submit performance and expenditure reports, 
including a report from each subrecipient, that contain as a minimum:
    (i) Comparison of actual performance with established goals;
    (ii) Progress in meeting schedules;
    (iii) Status of expenditures in a format compatible with the work 
program, including a comparison of budgeted (approved) amounts and 
actual costs incurred;
    (iv) Cost overruns or underruns;
    (v) Approved work program revisions; and
    (vi) Other pertinent supporting data.
    (2) Additional information on reporting requirements for individual 
RD&T studies is contained in subpart B of this part.
    (c) Reports required by paragraph (b) of this section shall be 
annual unless more frequent reporting is determined to be necessary by 
the FHWA Division Administrator. The FHWA may not require more frequent 
than quarterly reporting unless the criteria in 49 CFR 18.12 or 49 CFR 
19.14 are met. Reports are due 90 days after the end of the reporting 
period for annual and final reports and no later than 30 days after the 
end of the reporting period for other reports.
    (d) Events that have significant impact on the work must be 
reported as soon as they become known. The types of events or 
conditions that require reporting include: problems, delays, or adverse 
conditions that will materially affect the ability to attain program 
objectives. This disclosure must be accompanied by a statement of the 
action taken, or contemplated, and any Federal assistance needed to 
resolve the situation.
    (e) Suitable reports that document the results of activities 
performed with FHWA planning and research funds must be prepared by the 
STD or subrecipient and submitted for approval by the FHWA Division 
Administrator prior to publication. The FHWA Division Administrator may 
waive this requirement for prior approval. The FHWA's approval of 
reports constitutes acceptance of such reports as evidence of work 
performed but does not imply endorsement of a report's findings or 
recommendations. Reports prepared for FHWA-funded work must include 
appropriate credit references and disclaimer statements.


(The information collection requirements in Secs. 420.117 have been 
approved by the OMB and assigned control numbers 2125-0039 for States 
and 2132-0529 for MPOs.)


Sec. 420.119  What are the fiscal requirements?

    (a) The maximum rate of Federal participation for FHWA planning and 
research funds shall be as prescribed in title 23, U.S.C., for the 
specific class of funds used (i.e., SPR, PL, NHS, STP, or MG) except is 
specified in paragraph (d) of this section. The provisions of 49 CFR 
18.24 or 49 CFR 19.23 are applicable to any necessary matching of FHWA 
planning and research funds.
    (b) The value of third party in-kind contributions may be accepted 
as the match for FHWA planning and research funds, in accordance with 
the provisions of 49 CFR 18.24(a)(2) or 49 CFR 19.23(a) and may be on 
either a total planning work program basis or for specific line items 
or projects. The use of third party in-kind contributions

[[Page 59198]]

must be identified in the original work program/scope of work and the 
grant/subgrant agreement, or amendments thereto. The use of third-party 
in-kind contributions must be approved in advance by the FHWA Division 
Administrator and may not be made retroactive prior to approval of the 
work program/scope of work or an amendment thereto. The STD or 
subrecipient is responsible for ensuring that the following additional 
criteria are met:
    (1) The third party performing the work agrees to allow the value 
of the work to be used as the match;
    (2) The cost of the third party work is not paid for by other 
Federal funds or used as a match for other federally funded grants/
subgrants;
    (3) The work performed by the third party is an eligible 
transportation planning or RD&T related activity that benefits the 
federally funded work;
    (4) The third party costs (i.e., salaries, fringe benefits, etc.) 
are allowable under the applicable Office of Management and Budget 
(OMB) cost principles (i.e., OMB Circular A-21, A-87, or A-122).\1\
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    \1\ OMB Circulars are available on the Internet at http://www.whitehouse.gov/omb/circulars/index.html.
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    (5) The third party work is performed during the period to which 
the matching requirement applies;
    (6) The third party in-kind contributions are verifiable from the 
records of the STD or subrecipient and these records show how the value 
placed on third party in-kind contributions was derived; and
    (7) If the total amount of third party expenditures at the end of 
the program period is not sufficient to match the total expenditure of 
Federal funds by the a recipient/subrecipient, the recipient/
subrecipient will need to make up any shortfall with its own funds.
    (c) In accordance with the provisions of 23 U.S.C. 120(j), toll 
revenues that are generated and used by public, quasi-public, and 
private agencies to build, improve, or maintain highways, bridges, or 
tunnels that serve the public purpose of interstate commerce may be 
used as a credit for the non-Federal share of an FHWA planning and 
research funded project.
    (d) In accordance with 23 U.S.C. 505(c) or 23 U.S.C. 104(f)(3), the 
requirement for matching SPR or PL funds may be waived if the FHWA 
determines the interests of the Federal-aid highway program would be 
best served. Waiver of the matching requirement is intended to 
encourage STDs and/or MPOs to pool SPR and/or PL funds to address 
national or regional high priority planning or RD&T problems that would 
benefit multiple States and/or MPOs. Requests for waiver of matching 
requirements must be submitted to the FHWA headquarters office for 
approval by the Program Manager for Planning and Environment (for 
planning activities) or the Director of Research, Development, and 
Technology (for RD&T activities). The matching requirement may not be 
waived for NHS, STP, or MG funds.
    (e) NHS, STP, or MG funds used for eligible planning and RD&T 
purposes must be identified separately from SPR or PL funds in the work 
program(s) and must be administered and accounted for separately for 
fiscal purposes. In accordance with the statewide and metropolitan 
planning process requirements for fiscally constrained transportation 
improvement program (TIPs) planning or RD&T activities funded with NHS, 
STP, or MG funds must be included in the Statewide and/or metropolitan 
TIP(s) unless the STD and MPO (for a metropolitan area) agree that they 
may be excluded from the TIP.
    (f) Payment shall be made in accordance with the provisions of 49 
CFR 18.21 or 49 CFR 19.22.


Sec. 420.121  What other requirements apply to the administration of 
planning and research funds?

    (a) Audits. Audits of the STDs and their subrecipients shall be 
performed in accordance with OMB Circular A-133, Audits of States, 
Local Governments, and Non-Profit Organizations.\2\ Audits of for-
profit contractors are to be performed in accordance with STD or 
subrecipient contract administration procedures.
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    \2\ See footnote 1.
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    (b) Copyrights. The STDs and their subrecipients may copyright any 
books, publications, or other copyrightable materials developed in the 
course of the FHWA planning and research funded project. The FHWA 
reserves a royalty-free, nonexclusive and irrevocable right to 
reproduce, publish, or otherwise use, and to authorize others to use, 
the work for Government purposes.
    (c) Disadvantaged business enterprises. The STDs must administer 
the transportation planning and RD&T program(s) consistent with their 
overall efforts to implement section 1001(b) of the Transportation 
Equity Act for the 21st Century (Pub. L. 105-178) and 49 CFR part 26 
regarding disadvantaged business enterprises.
    (d) Drug free workplace. In accordance with the provisions of 49 
CFR part 29, subpart F, STDs must certify to the FHWA that they will 
provide a drug free workplace. This requirement may be satisfied 
through the annual certification for the Federal-aid highway program.
    (e) Equipment. Acquisition, use, and disposition of equipment 
purchased with FHWA planning and research funds by the STDs must be in 
accordance with 49 CFR 18.32(b). Local government subrecipients of STDs 
must follow the procedures specified by the STD. Universities, 
hospitals, and other non-profit organizations must follow the 
procedures in 49 CFR 19.34.
    (f) Financial management systems. The financial management systems 
of the STDs and their local government subrecipients must be in 
accordance with the provisions of 49 CFR 18.20(a). The financial 
management systems of universities, hospitals, and other non-profit 
organizations must be in accordance with 49 CFR 19.21.
    (g) Lobbying. The provisions of 49 CFR part 20 regarding 
restrictions on influencing certain Federal activities are applicable 
to all tiers of recipients of FHWA planning and research funds.
    (h) Nondiscrimination. The nondiscrimination provisions of 23 CFR 
parts 200 and 230 and 49 CFR part 21, with respect to Title VI of the 
Civil Rights Act of 1964 and the Civil Rights Restoration Act of 1987, 
apply to all programs and activities of recipients, subrecipients, and 
contractors receiving FHWA planning and research funds whether or not 
those programs or activities are federally funded.
    (i) Patents. The STDs and their subrecipients are subject to the 
provisions of 37 CFR part 401 governing patents and inventions and must 
include, the standard patent rights clause at 37 CFR 401.14, except for 
Sec. 401.14(g), in all subgrants or contracts. In addition, STDs and 
their subrecipients must include the following clause, suitably 
modified to identify the parties, in all subgrants or contracts, 
regardless of tier, for experimental, developmental or research work: 
``The subgrantee or contractor will retain all rights provided for the 
State in this clause, and the State will not, as part of the 
consideration for awarding the subgrant or contract, obtain rights in 
the subgrantee's or contractor's subject inventions.''
    (j) Procurement. Procedures for the procurement of property and 
services with FHWA planning and research funds by the STDs must be in 
accordance with 49 CFR 18.36(a) and (i) and, if applicable, 18.36(t). 
Local government subrecipients of STDs must follow the procedures 
specified by the STD. Universities, hospitals, and other

[[Page 59199]]

non-profit organizations must follow the procedures in 49 CFR 19.40 to 
19.48. The STDs and their subrecipients must not use FHWA funds for 
procurements from persons (as defined in 49 CFR 29.105) who have been 
debarred or suspended in accordance with the provisions of 49 CFR part 
29, subparts A through E.
    (k) Program income. Program income, as defined in 49 CFR 18.25(b) 
or 49 CFR 19.24, must be shown and deducted from total expenditures to 
determine the Federal share to be reimbursed, unless the FHWA Division 
Administrator has given prior approval to use the program income to 
perform additional eligible work or as the non-Federal match.
    (l) Record retention. Recordkeeping and retention requirements must 
be in accordance with 49 CFR 18.42 or 49 CFR 19.53.
    (m) Subgrants to local governments. The STDs and subrecipients are 
responsible for administering FHWA planning and research funds passed 
through to MPOs and local governments, for ensuring that such funds are 
expended for eligible activities, and for ensuring that the funds are 
administered in accordance with this part, 49 CFR part 18, Uniform 
Administrative Requirements for Grants and Agreements to State and 
Local Governments, and applicable OMB cost principles. The STDs shall 
follow State laws and procedures when awarding and administering 
subgrants to MPOs and local governments and must ensure that the 
requirements of 49 CFR 18.37(a) have been satisfied.
    (n) Subgrants to universities, hospitals, and other non-profit 
organizations. The STDs and subrecipients are responsible for ensuring 
that FHWA planning and research funds passed through to universities, 
hospitals, and other non-profit organizations are expended for eligible 
activities and for ensuring that the funds are administered in 
accordance with this part, 49 CFR part 19, Uniform Administrative 
Requirements for Grants and Agreements with Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations, and 
applicable OMB cost principles.
    (o) Suspension and debarment. (1) The STDs and their subrecipients 
shall not award grants or cooperative agreements to entities who are 
debarred or suspended, or otherwise excluded from or ineligible for 
participation in Federal assistance programs under Executive Order 
12549; and
    (2) The STDs and their subrecipients shall comply with the 
provisions of 49 CFR part 29, subparts A through E, for procurements 
from persons (as defined in 49 CFR 29.105) who have been debarred or 
suspended.
    (p) Supplies. Acquisition and disposition of supplies acquired by 
the STDs and their subrecipients with FHWA planning and research funds 
must be in accordance with 49 CFR 18.33 or 49 CFR 19.35.

Subpart B--Research, Development and Technology Transfer Program 
Management


Sec. 420.201  What is the purpose of this subpart?

    The purpose of this subpart is to prescribe requirements for 
research, development, and technology transfer (RD&T) activities, 
programs, and studies undertaken by State transportation departments 
(STDs) and their subrecipients with FHWA planning and research funds.


Sec. 420.203  How does the FHWA define the terms used in this subpart?

    Unless otherwise specified in this part, the definitions in 23 
U.S.C. 101(a) and subpart A of this part, are applicable to this 
subpart. As used in this subpart:
    Applied research means the study of phenomena to gain knowledge or 
understanding necessary for determining the means by which a recognized 
need may be met; the primary purpose of this kind of research is to 
answer a question or solve a problem.
    Basic research means the study of phenomena, and of observable 
facts, without specific applications towards processes or products in 
mind; the primary purpose of this kind of research is to increase 
knowledge.
    Development means the systematic use of the knowledge or 
understanding gained from research, directed toward the production of 
useful materials, devices, systems or methods, including design and 
development of prototypes and processes.
    Final report means a report documenting a completed RD&T study or 
activity.
    Intermodal RD&T means research, development, and technology 
transfer activities involving more than one mode of transportation, 
including transfer facilities between modes.
    Peer exchange means a periodic review of an STD's RD&T program, or 
portion thereof, by representatives of other STD's, for the purpose of 
exchange of information or best practices. The STD may also invite the 
participation of the FHWA, and other Federal, State, regional or local 
transportation agencies, the Transportation Research Board, academic 
institutions, foundations or private firms that support transportation 
research, development or technology transfer activities.
    RD&T activity means a basic or applied research project or study, 
development or technology transfer activity.
    Research means a systematic study directed toward fuller scientific 
knowledge or understanding of the subject studied. Research can be 
basic or applied.
    Technology transfer means those activities that lead to the 
adoption of a new technique or product by users and involves 
dissemination, demonstration, training, and other activities that lead 
to eventual innovation.
    Transportation Research Information Services (TRIS) means the 
database produced and maintained by the Transportation Research Board 
and available online through the National Transportation Library. TRIS 
includes bibliographic records and abstracts of on-going and completed 
RD&T activities. TRIS Online also includes links to the full text of 
public-domain documents.


Sec. 420.205  What is the FHWA's policy for research, development, and 
technology transfer funding?

    (a) It is the FHWA's policy to administer the RD&T program 
activities utilizing FHWA planning and research funds consistent with 
the policy specified in Sec. 420.105 and the following general 
principles in paragraphs (b) through (g) of this section.
    (b) The STDs must provide information necessary for peer exchanges.
    (c) The STDs are encouraged to develop, establish, and implement an 
RD&T program, funded with Federal and STD resources that anticipates 
and addresses transportation concerns before they become critical 
problems. Further, the STDs are encouraged to include in this program 
development and technology transfer programs to share the results of 
their own research efforts and promote the use of new technology.
    (d) To promote effective use of available resources, the STDs are 
encouraged to cooperate with other STDs, the FHWA, and other 
appropriate agencies to achieve RD&T objectives established at the 
national level and to develop a technology transfer program to promote 
and use those results. This includes contributing to cooperative RD&T 
programs such as the NCHRP, the TRB, and transportation pooled fund 
studies as a means of addressing

[[Page 59200]]

national and regional issues and as a means of leveraging funds.
    (e) The STDs will be allowed the authority and flexibility to 
manage and direct their RD&T activities as presented in their work 
programs, and to initiate RD&T activities supported by FHWA planning 
and research funds, subject to the limitation of Federal funds and to 
compliance with program conditions set forth in subpart A of this part 
and Sec. 420.207.
    (f) The STDs will have primary responsibility for managing RD&T 
activities supported with FHWA planning and research funds carried out 
by other State agencies and organizations and for ensuring that such 
funds are expended for purposes consistent with this subpart.
    (g) Each STD must develop, establish, and implement a management 
process that ensures effective use of available FHWA planning and 
research funds for RD&T activities on a statewide basis. Each STD is 
permitted to tailor its management process to meet State or local 
needs; however, the process must comply with the minimum requirements 
and conditions of this subpart.
    (h) The STDs are encouraged to make effective use of the FHWA 
Division, Resource Center, and Headquarters office expertise in 
developing and carrying out their RD&T activities. Participation of the 
FHWA on advisory panels and in program exchange meetings is encouraged.


Sec. 420.207  What are the requirements for research, development, and 
technology transfer work programs?

    (a) The STD's RD&T work program must, as a minimum, consist of a 
description of RD&T activities to be accomplished during the program 
period, estimated costs for each eligible activity, and a description 
of any cooperative activities including the STD's participation in any 
transportation pooled fund studies and the NCHRP. The STD's work 
program should include a list of the major items with a cost estimate 
for each item. The work program should also include any study funded 
under a previous work program until a final report has been completed 
for the study.
    (b) The STD's RD&T work program must include financial summaries 
showing the funding levels and share (Federal, State, and other 
sources) for RD&T activities for the program year. STDs are encouraged 
to include any activity funded 100 percent with State or other funds 
for information purposes.
    (c) Approval and authorization procedures in Sec. 420.115 are 
applicable to the STD's RD&T work program.


Sec. 420.209  What are the conditions for approval?

    (a) As a condition for approval of FHWA planning and research funds 
for RD&T activities, a STD must develop, establish, and implement a 
management process that identifies and results in implementation of 
RD&T activities expected to address high priority transportation 
issues. The management process must include:
    (1) An interactive process for identification and prioritization of 
RD&T activities for inclusion in an RD&T work program;
    (2) Use of all FHWA planning and research funds set aside for RD&T 
activities, either internally or for participation in transportation 
pooled fund studies or other cooperative RD&T programs, to the maximum 
extent possible;
    (3) Procedures for tracking program activities, schedules, 
accomplishments, and fiscal commitments;
    (4) Support and use of the TRIS database for program development, 
reporting of active RD&T activities, and input of the final report 
information;
    (5) Procedures to determine the effectiveness of the STD's 
management process in implementing the RD&T program, to determine the 
utilization of the STD's RD&T outputs, and to facilitate peer exchanges 
of its RD&T Program on a periodic basis;
    (6) Procedures for documenting RD&T activities through the 
preparation of final reports. As a minimum, the documentation must 
include the data collected, analyses performed, conclusions, and 
recommendations. The STD must actively implement appropriate research 
findings and should document benefits; and
    (7) Participation in peer exchanges of its RD&T management process 
and of other STDs' programs on a periodic basis. To assist peer 
exchange teams in conducting an effective exchange, the STD must 
provide to them the information and documentation required to be 
collected and maintained under this subpart. Travel and other costs 
associated with the STD's peer exchange may be identified as a line 
item in the STD's work program and will be eligible for 100 percent 
Federal funding. The peer exchange team must prepare a written report 
of the exchange.
    (b) Documentation that describes the STD's management process and 
the procedures for selecting and implementing RD&T activities must be 
developed by the STD and submitted to the FHWA Division office for 
approval. Significant changes in the management process also must be 
submitted by the STD to the FHWA for approval. The STD must make the 
documentation available, as necessary, to facilitate peer exchanges.
    (c) The STD must include a certification that it is in full 
compliance with the requirements of this subpart in each RD&T work 
program. If the STD is unable to certify full compliance, the FHWA 
Division Administrator may grant conditional approval of the STD's work 
program. A conditional approval must cite those areas of the STD's 
management process that are deficient and require that the deficiencies 
be corrected within 6 months of conditional approval. The certification 
must consist of a statement signed by the Administrator, or an official 
designated by the Administrator, of the STD certifying as follows: I 
(name of certifying official), (position title), of the State 
(Commonwealth) of__________, do hereby certify that the State 
(Commonwealth) is in compliance with all requirements of 23 U.S.C. 505 
and its implementing regulations with respect to the research, 
development, and technology transfer program, and contemplate no 
changes in statutes, regulations, or administrative procedures which 
would affect such compliance.
    (d) The FHWA Division Administrator shall periodically review the 
STD's management process to determine if the State is in compliance 
with the requirements of this subpart. If the Division Administrator 
determines that a STD is not complying with the requirements of this 
subpart, or is not performing in accordance with its RD&T management 
process, the FHWA Division Administrator shall issue a written notice 
of proposed determination of noncompliance to the STD. The notice will 
set forth the reasons for the proposed determination and inform the STD 
that it may reply in writing within 30 calendar days from the date of 
the notice. The STD's reply should address the deficiencies cited in 
the notice and provide documentation as necessary. If the STD and the 
Division Administrator cannot resolve the differences set forth in the 
determination of nonconformity, the STD may appeal to the Federal 
Highway Administrator whose action shall constitute the final decision 
of the FHWA. An adverse decision shall result in immediate withdrawal 
of approval of FHWA planning and research funds for

[[Page 59201]]

the STD's RD&T activities until the STD is in full compliance.
[FR Doc. 01-29370 Filed 11-26-01; 8:45 am]
BILLING CODE 4910-22-P