[Federal Register Volume 67, Number 112 (Tuesday, June 11, 2002)]
[Rules and Regulations]
[Pages 40100-40109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-14547]



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Part III





Department of Transportation





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Federal Transit Administration



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49 CFR Part 624



Clean Fuels Formula Grant Program; Final Rule

  Federal Register / Vol. 67, No. 112 / Tuesday, June 11, 2002 / Rules 
and Regulations  

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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 624

[Docket No. FTA-2001-9877]
RIN 2132-AA64


Clean Fuels Formula Grant Program

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Final rule.

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SUMMARY: On June 9, 1998, the Transportation Equity Act for the 21st 
Century (TEA-21) was enacted requiring the Federal Transit 
Administration (FTA) to establish a new grant program entitled the 
Clean Fuels Formula Grant Program. This rule establishes the procedures 
eligible recipients must use to apply for this new program. Although 
the FY 1999, FY 2000, FY 2001 and FY 2002 appropriations bills did not 
make funding available for this program, legislation was enacted each 
of these fiscal years, which provided that the guaranteed funds for 
this new program be made available to the bus and bus facilities 
categories of the Capital Investment Grants and Loans program of 49 
U.S.C. 5309. FTA is publishing this final rule to ensure application 
procedures are available should funding be made available for this 
program.

DATES: The effective date of this final rule is July 11, 2002.

ADDRESSES: Comments and material received from the public, as well as 
any documents indicated in the preamble as being available in the 
docket, are part of docket FTA-2001-9877 and are available for 
inspection or copying at the Docket Management Facility, U.S. 
Department of Transportation, room Pl-401, 400 Seventh Street SW., 
Washington, DC, between 9 a.m. and 5 p.m. Monday through Friday, except 
Federal Holidays. You may also find this docket on the Internet at 
http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For program issues: Nancy Grubb, 
Office of Resource Management and State Programs, (202) 366-2053; for 
program evaluation issues, Abbe Marner, Office of Planning, (202)366-
4317; and Christina Gikakis, Office of Research, Demonstration, and 
Innovation, FTA, (202)366-2637. For legal issues: Scheryl Portee, 
Office of Chief Counsel, FTA, (202) 366-1936 (telephone) or (202) 366-
3809 (fax). Electronic access to this and other rules may be obtained 
through the FTA World Wide Web home page at http://www.fta.dot.gov/library/legal/frootoc.htm. Comments may be reviewed via the Internet at 
http://dms.dot.gov.

SUPPLEMENTARY INFORMATION:

Regulatory Information

    On August 28, 2001, FTA published a notice of proposed rulemaking 
(NPRM) entitled ``Clean Fuels Formula Grant Program'' in the Federal 
Register (66 FR 45552). We received sixteen letters commenting on the 
proposed rule. No public hearing was requested, and none was held.

Background and Purpose

    The Clean Fuels Formula Grant Program is a transit grant program 
contained in section 3008 of the Transportation Equity Act for the 21st 
Century (TEA-21) as amended, Pub. L. 105-178, (codified at 49 U.S.C. 
5308). This program has a two-fold purpose. First, the program is 
intended to assist nonattainment and maintenance areas in achieving or 
maintaining air quality attainment status. Second, the program seeks to 
support emerging clean fuel and advanced propulsion technologies for 
transit buses and to create markets for these technologies.
    As the legislation establishes the basic parameters of the program, 
the focus of this rulemaking is application procedures. While the 
program is a formula program, the amount of funds available to 
individual grantees cannot be calculated in advance of the receipt of 
applications. The formula is applied to the universe of eligible 
applications subsequent to receiving and screening all applications in 
each Federal fiscal year.
    The formula provides two-thirds of the funds to urban areas over 
one million in population and one-third of the funds to urban areas 
less than one million in population. In addition, TEA-21 provides 
weighting factors based on the severity of nonattainment for ozone and 
carbon monoxide (CO).
    TEA-21 provides authorization levels of up to $200,000,000 per year 
and guaranteed levels at $100,000,000 per year. However, in FYs 1999, 
2000, 2001, and 2002 no funds were made available to the program. 
Rather, Congress, enacted legislation in each of these fiscal years, 
which provided that the $100,000,000 in guaranteed funds for the Clean 
Fuels Formula Grant program be made available to the bus and bus 
facilities categories of the Capital Investment Grants and Loans 
program of 49 U.S.C. 5309.
    FTA will make the funding levels for the Clean Fuels program 
available in the annual Federal Register notice that announces each 
fiscal year's appropriations and allocations when funds are made 
available.
    Section 5308 of title 49, United States Code, defines eligibility 
and provides both minimum and maximum percentages of funds for certain 
clean fuel technologies. With respect to the second purpose of 
promoting new clean fuel technologies for transit buses, section 
3015(d) of TEA-21 also authorized a new Joint Partnership Program for 
Deployment of Innovation (JPP), which was announced in a separate 
Federal Register notice on October 2, 1998. Projects determined 
eligible for funding under the Clean Fuels Formula Grant Program, 
meeting the requirements of section 3015(d) and FTA's JPP guidelines, 
may also be considered for inclusion under that program.
    With respect to the weighting factors for severity of 
nonattainment, it appears that Congressional intent was to use the same 
weighting that had been developed for the Congestion Mitigation and Air 
Quality Improvement (CMAQ) Program under the Intermodal Surface 
Transportation Efficiency Act (ISTEA). However, it appears that errors 
were made in section 5308 regarding the carbon monoxide (CO) 
nonattainment classification terms. To properly apply the weighting 
factors for ``severity of nonattainment,'' FTA is making certain 
interpretations concerning the statutory language in section 
5308(d)(2). The statute uses the nonattainment classification terms 
``marginal,'' ``moderate,'' ``serious,'' ``severe,'' and ``extreme'' 
for both ozone and carbon monoxide. However, the Clean Air Act 
Amendments of 1990 only use the terms ``moderate'' and ``serious'' to 
classify CO nonattainment areas. Thus, FTA will use those two 
classifications for CO and disregard the other CO classifications and 
associated weighting factors.
    The CMAQ weighting factors for ozone and CO nonattainment areas are 
laid out in 23 U.S.C. 104(b). Both ozone and CO areas are also given 
weighting factors in 49 U.S.C. 5308(d)(2)(A). Section 5308(d)(2)(B) 
provides additional weighting to CO areas. FTA believes that the 
drafters of this legislation did not intend double weighting for CO 
nonattainment areas. Thus, FTA will use the higher of the weighting 
factors for ozone and CO in section 5308(d)(2)(A), and then apply the 
additional adjustment of 1.2 in areas classified as both nonattainment 
for CO and either nonattainment or maintenance for ozone as described 
in section 5308(d)(2)(B). Section 5308(d)(2)(A) indicates that the 
number

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of clean fuel vehicles will be a multiplier; however, FTA believes that 
the multiplier should be the number of buses in the bus fleet as laid 
out in section 5308(d)(1).
    TEA-21 provides limitations on the use of funds and the maximum 
amount of grants. In general, the amount of a grant to a designated 
recipient for an eligible project shall not exceed the lesser of: (1) 
$15,000,000 in areas with a population under 1,000,000 or $25,000,000 
in areas with a population of at least 1,000,000; or (2) 80 percent of 
the eligible project's total project cost. Additionally, at least five 
percent of the total program funding must be used for the purchase of 
hybrid electric or battery-powered buses or construction of facilities 
designed to service those buses. No more than 35 percent of the amount 
made available each fiscal year may be available to fund clean diesel 
buses. No more than five percent of the amount made available each 
fiscal year may be available to fund retrofitting or replacement of the 
engines of buses that do not meet the clean air standards of the 
Environmental Protection Agency (EPA).
    TEA-21 requires that FTA issue a rule describing the application 
procedures it proposes to use to implement this new grant program. The 
purpose of this rulemaking is to comply with that requirement.

Electronic Access

    Electronic access to this and other documents is available through 
FTA's home page on the World Wide Web, at http://www.fta.dot.gov.
    Internet users can access all comments received by the U.S. DOT 
Dockets, Room PL-401, via the Docket Management System (DMS) on the DOT 
home page, at http://dms.dot.gov. The DMS is available 24 hours each 
day, 365 days each year. Please follow the instructions online for more 
information and help. An electronic copy of this document may be 
downloaded using a modem and suitable communications software from the 
Government Printing Office Electronic Bulletin Board Service at (202) 
512-1661. Internet users may reach the Federal Register's home page, at 
http://www.nara.gov/fedreg, and the GPO database, at http://www.access.gpo.gov/nara.

Discussion of Comments and Changes

    FTA received a total of sixteen comments to this rulemaking. We 
discuss the comments received and explain any changes made to the 
regulations in the following paragraphs. FTA considered all comments 
filed in a timely manner.
    Each commenter expressed support for the rulemaking while offering 
recommendations to improve FTA's interpretation to implement this 
statutory program. A written copy of each comment is available at the 
DOT Docket Manager's Web site: http://www.dms.dot.gov

A. Comments Received

    1. Bi-State Development Agency recommended that the incremental 
cost of biodiesel fuel should be included as an eligible project.
    2. Georgia Regional Transportation Authority (GRTA) requested 
clarification on the role of the designated recipient and also believes 
that the program lends itself to congressional earmarking.
    3. The Big Blue Bus (the Bus) expressed support for the simple 
format of the pre-application worksheet and the decentralized review 
process that allows applicants to work with their respective FTA 
Regional Office; however, the Bus recommends that all [project] 
eligibility issues should be resolved during the pre-application 
process.
    4. Electric Vehicle Association of the Americas (EVAA) believes 
that although the pre-application process is stream-lined and does not 
impose unduly burdensome paperwork requirements, it recommends that the 
final application either be waived or stream-lined with the elimination 
of significant portions that are already submitted with the pre-
application. EVAA is also concerned with potential statutory Buy 
America requirements. Another recommendation by EVAA regarding data 
collection is for FTA to review and use policies, procedures and 
systems in ongoing FTA funded projects, such as the project 
administered by EVAA and the Electric Power Research Institute (EPRI), 
but establishing a separate database for the information collected for 
the Clean Fuels program. To evaluate the success of the Clean Fuels 
Program, EVAA recommends that actual vehicle miles traveled should also 
be collected to assist with determining the program's impact on air 
quality in a particular area.
    5. The Texas Department of Transportation (TxDOT) indicated that 
this program might cause FTA to discourage the use of 49 U.S.C. 5308 
funds for the conversion of newer conventionally fueled transit 
vehicles. TxDOT also recommended that liquefied petroleum gas (LPG) be 
added to the rule. Regarding the pre-application worksheet, TxDOT 
recommends clarification of the information that new agencies will be 
required to submit since these agencies will not have the benefit of 
two years of historical data submitted in the National Transit Database 
(NTD).
    6. The Metropolitan Transit Authority of Harris County, Texas 
(METRO) recommended that FTA also consider a project's contribution to 
emissions reductions during the selection process. METRO also 
recommended that projects be evaluated on merit without regard to the 
type of fuel a project will use. Although METRO agrees that FTA should 
compile basic inventory and operational data over a three-year 
reporting period, it recommends that annual reporting instead of 
quarterly reporting by transit agencies is more appropriate.
    7. SunLine Transit Agency recommended that the Clean Fuels Program 
be limited to vehicles powered by alternatives to clean diesel, such as 
renewable energy or domestically produced clean natural gas, because 
the purchase of clean diesel buses is sufficiently funded by other 
programs. SunLine also recommended that clean diesel projects be 
subject to testing to ensure that traps are used on vehicles using this 
fuel. In addition, SunLine proposed these additionaland priority-
weighting factors; experience with earlier generation clean fuel 
vehicles/infrastructure development, including technical training, 
priority for renewable energy development and use. SunLine also 
recommended that FTA pursue the addition of particulate matter 
nonattainment to the CMAQ statutory language for this program. In 
regard to the reporting requirements, SunLine recommends that all 
projects be required to report on vehicle operations, performance and 
maintenance so that head-to-head comparisons can be made. SunLine also 
encourages FTA to provide funds directly to grantees and not allocate 
funds through air districts or similar state agencies.
    8. The Los Angeles County Metropolitan Transportation Authority 
(METRO) recommended the following revisions to enhance the program. 
METRO believes that FTA would have all necessary information to 
estimate the amount of funds potentially available for regions prior to 
the January pre-application deadline date; therefore, this information 
should be released to all applicants prior to the January deadline 
date. METRO also requested that FTA clarify how the weighting for 
carbon monoxide nonattainment areas will occur. METRO believes that the 
definition of eligible applicants is inconsistent with the statutory 
language of section 5308 (a)(2). METRO recommends that FTA provide a 
definition for ``clean diesel'' fuels and

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that retrofitted engines must use particulate traps that have been 
certified by the State or other appropriate regulatory agency(ies). In 
regard to the application process, METRO recommended that FTA require 
the most recent audited National Transit Data NTD since at any given 
time previously collected NTD data may be three years old. METRO also 
recommended that the apportioning formula be amended to factor in the 
difference in size and technology of various transit vehicles.
    9. Laketran, the regional transit authority for Lake County Ohio, 
recommended that the rule be revised to include the incremental cost of 
clean fuels such as Purinox.
    10. The San Francisco Municipal Railway (Muni) noted that the 
legislation for the Clean Fuels Program is only authorized for one more 
year and questioned the efficacy of issuing a final rule at this time. 
Muni noted that the level of funding is insufficient as an incentive 
for transit operators to launch program's in untested technologies; 
therefore, the program is more likely to supplement existing clean fuel 
efforts, such as its alternative fuels program, hence FTA should 
develop less burdensome reporting requirements. In regard to the 
apportionment formula, MUNI recommended that FTA consider alternative 
measures such as bus passengers per revenue hour of service to assist 
in determining eligible projects in areas with populations over 1 
million.
    11. The American Public Transportation Association (APTA) 
recommended that additional incremental cost of purchasing clean fuel 
be eligible for funding under the program. APTA also recommended that 
FTA Regional Offices be given greater flexibility during the pre-
application period to provide guidance to the transit agencies earlier 
in the process. Although APTA recognizes FTA's need to collect data 
from the successful applicants, it believes that information already 
reported in the TEAM system should be sufficient to evaluate the 
program's effectiveness. APTA also recommends that FTA amend its 
proposed mandatory reporting and make it voluntary or in the 
alternative permit the cost of the reporting requirements as an 
eligible grant activity.
    12. The Missouri Soybean Association recommended that the 
incremental cost of biodiesel fuels be included as an eligible project 
cost.
    13. The Orange County Transportation Authority (OCTA) noted that 
for purposes of consistency with 49 U.S.C. 5308, section 624.3(b)(1) of 
the proposed rule should include the following; ``(ix) other low or 
zero emissions technology''. OCTA also recommended that the proposed 
regulation should include a subsection identifying the maximum grant 
amount available to any designated recipient based on the population of 
the project area.
    14. The National Biodiesel Board (NBB) recommended that FTA 
identify eligible biodiesel projects in the final application 
procedures, suggesting that this will allow applicants to know that 
certain biodiesel projects can qualify for funding. NBB also 
recommended that the incremental cost of biodiesel blends be included 
as an eligible project cost in the final application procedures. As to 
the pre-application and evaluation process, NBB recommended that the 
amount of biodiesel fuel along with the number of buses that would be 
fueled by biodiesel be included in the pre-application worksheet.
    15. The Natural Gas Vehicle Coalition (NGVC) believes that grants 
should only be awarded to transit agencies that use vehicles that 
exceed Federal and California performance levels; hence, FTA should 
provide clear definitions of the ``sufficient'' emissions reductions 
necessary to qualify for program funds. NGVC also stated that FTA 
should provide additional guidance on what is considered ``clean 
diesel'', since an industry definition doesn't exist. Regarding data 
collection criteria, NGVC recommended that FTA require successful 
applicants to establish control buses and report data on the control 
buses and those funded under the program.
    16. The Chicago Transit Authority (CTA) supports the establishment 
of the Clean Fuels Grant Program; however, it disagrees with FTA's 
interpretation of the statutory weighting factors. CTA takes exception 
to the proposed section 624.9(d), which provides for an additional 
adjustment to the bus passenger miles and bus counts for areas with 
both ozone and carbon monoxide. CTA believes the proposed formula 
provides a disproportionately larger amount of funds to a smaller 
number of urbanized areas that qualify for the extra weight factor. CTA 
recommended that FTA define the criteria that will be used to fund an 
eligible development project. Regarding the Letters of Interest in 
section 624.5(b)(1), CTA concurred with FTA's proposed rule. CTA also 
recommended that FTA require mandatory reporting from all successful 
applicants.

B. FTA Response

    A. Sec. 624.1 Eligible Applicant. As noted in the NPRM (66 FR 4552) 
section 624.1 notes that eligible applicants are state or local 
governmental authorities (designated recipients) that provide mass 
transportation services. A commenter recommended that FTA amend this 
section to reflect the language of the clean fuels statute. FTA agrees, 
section 624.1 of the final rule is amended to reflect the statute, 
which states in part that designated recipients are the same as noted 
in title 49, United States Code (U.S.C.), section 5307(a). (See 49 
U.S.C. 5308(a)(2)). The role of the designated recipient is discussed 
in section 5307 Circular FTA C 9030.1C.
    As was recommended by one commenter, the statute requires FTA to 
provide funds to the designated recipient instead of air districts. As 
with many FTA programs, the regional offices will provide direct 
assistance and guidance regarding the application process, once funds 
are appropriated for this program.
    B. Sec. 624.3 Eligible Activities. Title 49, U.S.C., section 5308 
sets forth the criteria that FTA must use for determining eligible 
activities. Some comments indicated that additional criteria not found 
in the statute should also be considered. FTA is not permitted to 
expand the selection criteria beyond that found in the statute. For 
similar reasons, FTA may not restrict vehicles that use clean diesel as 
an eligible activity as recommended by a commenter.
    However, we agree with those comments that indicated that the clean 
fuel definition in section 624.3 should include other low or zero 
emissions technology as noted in the statute. The final rule will 
include this provision. (See 49 U.S.C. 5308(a)(1)(A)(ix)).
    (i) Alternative Fuel Cost. FTA received a number of comments 
stating that the incremental cost of bio-diesel and other alternative 
fuels should be an eligible expense under this program. Proponents 
believe that many of these fuels are readily usable in existing diesel 
engines without requiring modifications to these engines. Similar 
comments were made regarding Purinox, an emulsified diesel fuel. FTA 
agrees that many of these fuels may assist in emission reductions; 
however, it is important to note that fuel purchases are not defined as 
eligible projects under the clean fuels statute (see 49 U.S.C. 
5308(a)).
    The Clean Fuels Program funds the purchase or lease of buses and 
related facilities, but does not cover the incremental cost of fuel; 
therefore, FTA

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is not permitted to fund this cost under this program. However, the 
purchase or lease of vehicles using these fuel technologies may be 
eligible for funding under the program.
    (ii) For purposes of this program, FTA will use the Environmental 
Protection Agency (EPA) emissions standards and certification for 
determining clean diesel vehicle eligibility. We also clarify that 
``after-market treatment technology'' refers only to those products 
that are EPA certified.
    C. Sec. 624.5 Pre-application-Application. As noted in the preamble 
of the NPRM, FTA cannot determine the available funding amounts for 
applicants until after the total number of eligible applicants has been 
determined and the specific formula funding ceilings have been applied. 
The pre-application process will provide the necessary data to make 
these determinations; therefore, a two-step process is required.
    FTA's regional offices will provide assistance to pre-applicants 
regarding the eligibility of projects during the pre-application 
process. Operators not required to submit NTD data should provide data 
from two years prior (e.g., if applying in FY 2003, provide data from 
2001). Those applicants without two or more years of service will be 
required to submit data from the previous years. Since the pre-
application and worksheet only provides baseline information regarding 
the pool of potential applicants and proposed projects, a final 
application will be required once the funding allotment has been 
determined based on the formula. However, FTA is committed to 
streamlining the application process as much as possible with the use 
of electronic filing.
    D. Sec. 624.9 Formula. As noted in the NPRM, FTA determined that 
the statutory intent of the formula is to reflect the Congestion 
Mitigation and Air Quality Improvement (CMAQ) program; hence, FTA has 
narrowly interpreted the statute to be consistent with the provisions 
of CMAQ. FTA is not permitted to consider other factors that were not 
within the statute (e.g., size and technology). Neither is FTA 
permitted to disregard other requirements noted in the statute.
    One commenter indicated that FTA's statutory interpretation, which 
provides for additional weighting for carbon monoxide nonattainment 
advantages a smaller number of urbanized areas. However, we note that 
the statute provides for additional adjustment for areas that are 
nonattained for ozone and carbon monoxide. (See 49 U.S.C. 5308 
(d)(2)(b)). FTA does not believe that the additional weight factor will 
provide for a disproportionately larger amount of funds to a smaller 
number of urbanized areas. We note that other variables such as bus 
passenger miles and number of buses are also factored in the formula.
    Regarding clarification on how the weighting for CO nonattainment 
areas will occur, applicants will be asked on the pre-application 
worksheet to identify the county or counties in which they provide 
transit service. If they serve a county which contains all or part of a 
nonattainment (or maintenance) area, they are eligible under this 
program. Prior to apportioning the funds, FTA will obtain from EPA an 
up-to-date list of classified ozone and CO nonattainment and 
maintenance areas. This list, known as the Greenbook, is available on 
the Internet at: www.epa.gov/oar/oaqps/greenbk/index.html. We note that 
ozone nonattainment areas, in particular, cover large geographic areas. 
They commonly include an urbanized area at the center and suburban and 
rural area on the periphery. Within the apportionment formula, there is 
a basic breakdown for apportioning the program funds between urban 
areas greater than one million population and urban areas less than one 
million population. It is possible, then, for transit agencies 
operating in the same nonattainment area to be placed in different 
categories under the apportionment formula based on the population of 
the jurisdiction they serve.
    As recommended, section 624.9 of the final rule will reflect the 
maximum grant amount available to a designated recipient. (See 49 
U.S.C. 5308(d)(3)).
    E. Sec. 624.11 Reporting. FTA received a number of comments on the 
issue of data collection and reporting requirements. As noted in the 
NPRM, FTA is interested in collecting relevant information on the 
operations and performance of clean fuel technology buses in revenue 
service to help assess the reliability, benefits, and costs of these 
technologies compared to conventional vehicles.
    Although FTA considered modifying the submission of reports, we 
maintain that quarterly reporting provides the best opportunity for FTA 
and other interested parties to spot trends that would not be apparent 
with annual or bi-annual reporting. FTA does not believe that quarterly 
reporting on data elements that are typically collected by a transit 
agency would impose an undue burden. However, FTA is reviewing APTA's 
recommendation that any incremental cost associated with mandatory 
reporting be included as part of the capital expense for purposes of 
funding. We note that if this expense is included it will not increase 
the aggregate amount of formula funds.
    FTA has chosen to focus specifically on more advanced technologies 
(e.g., battery electric, hybrid electric, and fuel cell powered 
vehicles) since the least amount of transit data is currently available 
for these technologies. FTA believes that a significant amount of data 
is currently available for vehicles that use alternative fuels; 
therefore, only projects to purchase or lease buses powered by advanced 
propulsion technologies will have mandatory reporting requirements; all 
others will be on a voluntary basis. However, FTA will attempt to 
minimize these requirements by using existing electronic reporting 
procedures. Further guidance on reporting procedures will be issued as 
this program is implemented.

Regulatory Evaluation

    This rule is not a ``significant regulatory action'' under section 
3(f) of Executive Order 12866, Regulatory Planning and Review, and does 
not require an assessment of potential costs and benefits under section 
6(a)(3) of that Order. We expect the economic impact of the final rule 
to be so minimal that a full Regulatory Evaluation under paragraph 10e 
of the regulatory policies and procedures of DOT is unnecessary. We 
reached this conclusion based on the fact this final rule provides 
grant application procedures for designated recipients that are 
interested in applying for Federal funds to acquire buses that use 
clean fuel technology.
    This rule is a significant regulation as defined by the 
Department's Regulatory Policies and Procedures. The rule is 
significant because it is expected to generate substantial public 
interest, although it only involves grant application procedures.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601-
612, FTA has evaluated the effects of this rule on small entities. This 
rule will not have a significant effect on a substantial number of 
small entities because it merely establishes application procedures for 
the Clean Fuels Formula Grant Program.

Paperwork Reduction Act

    This rule includes information collection requirements subject to 
the Paperwork Reduction Act. The Office of Management and Budget (OMB) 
has approved FTA's new information collection request. The affected 
public would be mass transit operators that

[[Page 40104]]

apply for Federal funds under this program. Any burden associated with 
this rule would be added to the current information collection package, 
Clean Fuels Formula Grant Program, OMB approval number 2132-0560. 
Comments solicited during the NPRM indicated that any cost associated 
with the paperwork requirements, should be considered a capital 
expense. FTA has determined that collection of information is necessary 
for the proper performance of the FTA grant process, and any cost 
associated with this rule is minimal; however, FTA is reviewing the 
recommendation to include any incremental data collection cost in the 
grant. FTA will also minimize the burden of the collection of 
information on the applicants, through the use of automated collection 
techniques (e.g., filing applications via facsimile (fax), electronic 
mail or other forms of information technology).
    The Government Paperwork Elimination Act (GPEA) of 1998 requires 
all Federal agencies to have an electronic means of reporting to the 
government as an alternative to reporting on paper by October 2003. 
Because of logistical difficulties, all means of electronic filing are 
not immediately available. However, FTA intends to develop the 
authentication infrastructure to receive worksheets through additional 
electronic means, such as web-based forms and electronic file transfer 
by October 2003.

Federalism

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 and it has been determined 
that the proposed rule does not have sufficient Federalism implications 
to warrant the preparation of a Federalism Assessment because it sets 
forth application procedures for a discretionary grant program.

Environment

    This program will have a positive impact on the environment. It 
promotes the alternative use of clean fuels in vehicles used for mass 
transportation.

Energy Effects

    Mass transit has a positive impact on energy consumption as it 
promotes an alternative to the single occupant vehicle.

Unfunded Mandates Reform Act

    This program is a voluntary grant program and will not result in 
the expenditure by state, local and tribal governments, in the 
aggregate, of $100,000,000 or more in any one year.

List of Subjects in 49 CFR Part 624

    Grant Programs--Transportation, Mass transportation, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons cited above, the FTA amends title 49 
of the CFR by adding a new part 624, as set forth below:

PART 624--CLEAN FUELS FORMULA GRANT PROGRAM

Sec.
624.1   Eligible applicant.
624.3   Eligible activities.
624.5   Application process.
624.7   Certification.
624.9   Formula.
624.11   Reporting.

Appendix A to Part 624--Pre-Application Worksheet

    Authority: 49 U.S.C. 5308; 49 CFR 1.51.


Sec. 624.1  Eligible applicant.

    (a) An eligible applicant is a designated recipient (designated 
recipient has the same meaning as in 49 U.S.C. 5307(a)(2)) in either 
an:
    (1) Ozone and carbon monoxide nonattainment areas that have the 
specific classifications established by the 1990 Clean Air Act 
Amendments [Public Law 101-549], or
    (2) Ozone and carbon monoxide (CO) ``maintenance'' areas that, 
before they were redesignated to attainment by the Environmental 
Protection Agency (EPA), had these same classifications.
    (b) The nonattainment classifications for ozone are ``marginal,'' 
``moderate,'' ``serious,'' ``severe,'' and ``extreme.'' The 
nonattainment classifications for CO are ``moderate'' and ``serious.''


Sec. 624.3  Eligible activities.

    (a) Eligible activities include the purchase or lease of clean fuel 
buses and facilities, repowering or retrofitting buses to operate on 
clean fuels, and the improvement of existing facilities to accommodate 
clean fuel buses.
    (b)The term ``clean fuel vehicle'' means a vehicle that--
(1) Is powered by --
    (i) Compressed natural gas;
    (ii) Liquefied natural gas;
    (iii) Biodiesel fuels;
    (iv) Batteries;
    (v) Alcohol-based fuels;
    (vi) Hybrid electric;
    (vii) Fuel cells;
    (viii) Clean diesel, to the extent allowed under this section; or
    (ix) Other low or zero emissions technology; and
    (2) The Administrator of the Environmental Protection Agency has 
certified sufficiently reduces harmful emissions.
    (c) Eligible projects are the following:
    (1) Purchasing or leasing clean fuel buses, including buses that 
employ a lightweight composite primary structure, and vans for use in 
revenue service. The purchase or lease of non-revenue vehicles is not 
an eligible project.
    (2) Constructing or leasing clean fuel bus facilities or electrical 
recharging facilities and related equipment. Facilities and related 
equipment for clean diesel buses are not eligible.
    (3) Improving existing mass transportation facilities to 
accommodate clean fuel buses.
    (4) Repowering pre-1993 engines with clean fuel technology that 
meets the current urban bus emission standards. Repowering means the 
removal of an engine from a bus followed by the installation of another 
engine and applies to engines that are replaced with new, previously 
unused, engines as well as those exchanged from an inventory of rebuilt 
engines.
    (5) Retrofitting or rebuilding pre-1993 engines if before half life 
(e.g., prior to six years of bus life) to rebuild; ``retrofit'' means 
use of the latest after-market technology such as ``upgrade kits,'' or 
after-treatment devices that treat the exhaust after it has left the 
engine, such as catalytic converters and particulate filters.
    (6) At the discretion of FTA, projects relating to clean fuel, 
biodiesel, hybrid electric, or zero emissions technology vehicles that 
achieve emissions reductions equivalent or superior to existing clean 
fuel or hybrid electric technologies.


Sec. 624.5  Application process.

    (a) Pre-applications must be submitted to the appropriate FTA 
regional office no later than January 1 of each fiscal year. Subject to 
the availability of funds, FTA will apportion the funds based on the 
formula and the pool of applicants, no later than February 1 of each 
year. Once the applicant has been notified of the apportionment of 
funds and the eligibility of its application, it should proceed to 
complete and file the final application. The final application must be 
submitted electronically if the grantee is using the electronic 
application process (i.e., TEAM).
    (b) The pre-application consists of a Letter of Interest and a Pre-
application Worksheet as described as follows:
    (1) Letter of interest. This letter serves as the cover letter for 
the Pre-application Worksheet, expressing interest in submitting an 
application. It describes the overall clean fuel technology program of 
the agency,

[[Page 40105]]

including the technology selected, describes the necessary 
infrastructure to support the program and the long-range objectives of 
the program including the eventual size of the clean fuel fleet. It 
summarizes the eligible activities for which the agency is applying and 
the amount of funds that the agency is seeking.
    (2) Pre-application worksheet. Applicants must use the worksheet 
found in Appendix A to this part.


Sec. 624.7  Certification.

    The applicant must use the certification contained in the Annual 
Notice of Assurances and Certifications published in the Federal 
Register each October.


Sec. 624.9  Formula.

    (a) Areas with population 1,000,000 and above. Two thirds of the 
funds available each fiscal year shall be apportioned to applicants 
with eligible projects in urban areas with a population of 1,000,000 
and above. Of this, 50 percent shall be apportioned so that each 
applicant receives a grant in an amount equal to the ratio between:
    (1) The number of vehicles in the bus fleet of the eligible 
applicant, weighted by the severity of nonattainment for the area in 
which the eligible applicant is located; and
    (2) The total number of vehicles in the bus fleets of all eligible 
applicants in areas with a population of 1,000,000 and above, weighted 
by the severity of nonattainment for all areas in which those eligible 
projects are located as provided in paragraphs (c) and (d) of this 
section. The remaining 50 percent shall be apportioned such that each 
designated recipient receives a grant in an amount equal to the ratio 
between:
    (i) The number of bus passenger miles of the eligible designated 
recipient, weighted by the severity of nonattainment of the area in 
which the eligible applicant is located as provided in paragraphs (c) 
and (d) of this section.
    (ii) The total number of bus passenger miles of all eligible 
applicants in areas with a population of 1,000,000 and above, weighted 
by the severity of nonattainment of all areas in which those eligible 
applicants are located as provided in paragraphs (c) and (d) of this 
section.
    (b) Areas under 1,000,000 population. The formula for areas under 
1,000,000 in population is the same as paragraph (a) of this section, 
except the formula removes the pool of eligible applicants in areas 
with a population of 1,000,000 and above and replaces it with the pool 
of eligible applicants in areas with populations under 1,000,000.
    (c) Weighting factors. (1) The weighting factor for ozone shall be 
determined based on the following factors.
    (i) 1.0 if, at the time of the apportionment, the area is a 
maintenance area for ozone;
    (ii) 1.1 if, at the time of the apportionment, the area is 
classified as a marginal ozone nonattainment area;
    (iii) 1.2 if, at the time of the apportionment, the area is 
classified as a moderate ozone nonattainment area;
    (iv) 1.3 if, at the time of the apportionment, the area is 
classified as a serious ozone nonattainment area;
    (v) 1.4 if, at the time of the apportionment, the area is 
classified as a severe ozone nonattainment area;
    (vi) 1.5 if, at the time of the apportionment, the area is 
classified as an extreme ozone nonattainment area;
    (2) The weighting factor for CO shall be determined based on the 
factors:
    (i) 1.0 if, at the time of the apportionment, the area is a 
maintenance area for carbon monoxide;
    (ii) 1.2 if, at the time of the apportionment, the area is 
classified as a moderate carbon monoxide nonattainment area;
    (iii) 1.3 if, at the time of the apportionment, the area is 
classified as a serious carbon monoxide nonattainment area.
    (3) The number of buses in the fleet and the bus passenger miles 
shall be multiplied by the higher of the ozone or CO factors.
    (d) Additional adjustment. The number of buses in the fleet and the 
bus passenger miles shall be further multiplied by a factor of 1.2 if 
the area is both nonattainment for CO and either nonattainment or 
maintenance for ozone.
    (e) Limitation on uses. (1) Not less than 5 percent of the amount 
made available by or appropriated under 49 U.S.C. 5338 in each fiscal 
year to carry out this section shall be available for any eligible 
projects for which an application is received from a designated 
recipient for the purchase or construction of hybrid electric or 
battery-powered buses or facilities specifically designed to service 
those buses.
    (2) Not more than 35 percent of the amount made available by or 
appropriated under 49 U.S.C. 5338 in each fiscal year to carry out this 
section may be made available to fund clean diesel buses.
    (3) Not more than 5 percent of the amount made available by or 
appropriated under 49 U.S.C. 5338 in each fiscal year to carry out this 
section may be made available to fund 21 retrofitting or replacement of 
the engines of buses that do not meet the clean air standards of the 
Environmental Protection Agency, as in effect on the date on which the 
application for such retrofitting or replacement is submitted under 
Sec. 624.5.

    Note to Sec. 624.9. Maximum grant amount. The amount of a grant 
made to a designated recipient under this section shall not exceed 
the lesser of--for an eligible project in an area with a population 
of less than 1,000,000, $15,000,000,--and for an eligible project in 
an area with a population of at least 1,000,000, $25,000,000; or 80 
percent of the total cost of the eligible project. Any amounts that 
would otherwise be apportioned to a designated reciipient under this 
Note that exceed the amount described in this Note shall be 
reapportioned among other designated recipients in accordance with 
this section.
    The Clean Fuels Formula funds will be apportioned according to 
the following formula:

Sec. 624.11  Reporting.

    (a) Recipients of financial assistance under 49 U.S.C. 5308 who 
purchase or lease hybrid electric, battery electric and fuel cell 
vehicles must report to the appropriate FTA regional office on a 
quarterly basis for the first three years of the useful life of the 
vehicle with the following information:
    (1) Vehicle miles traveled;
    (2) Fuel/energy costs;
    (3) Vehicle fuel/energy consumption and oil consumption;
    (4) Number of road calls or breakdowns resulting from clean fuel 
and advanced propulsion technology systems, and
    (5) Maintenance costs associated with the clean fuels or advanced 
propulsion system.
    (b) Recipients of financial assistance under 49 U.S.C. 5308 who 
purchase or lease compressed natural gas (CNG), liquefied natural gas 
(LNG), and liquefied petroleum gas (LPG) vehicles may report the 
information described in paragraph (a) of this section, but this 
reporting is voluntary.
    (c) Recipients of financial assistance under 49 U.S.C. 5308 who 
purchase or lease clean diesel vehicles should not report information 
beyond the normal FTA quarterly reporting requirements.

APPENDIX A TO PART 624--PRE-APPLICATION WORKSHEET

    The following are instructions for completing the pre-
application worksheet:
    (1) Requesting Agency. Fill in the name of the applicant. The 
applicant must be a designated recipient.
    (2) UZA (or Urban Area). List the name of the urbanized area if 
the applicant is located in an urbanized area. Otherwise, indicate 
the name of the city or town.

[[Page 40106]]

    (3) Nonattainment or Maintenance Area Name. List the name of the 
nonattainment or maintenance area in which your agency provides 
service.
    (4) Classification for Ozone. List the current EPA nonattainment 
classification for your service area. (The classification must be of 
the following terms: marginal, moderate, serious, severe, or 
extreme.)
    (5) Classification for Carbon Monoxide. List the current EPA 
nonattainment classification for your service area. (The 
classification must be either moderate or serious.)

I. Proposed activity.

    (1) New Bus Purchase/Lease. Enter the number of vans or buses by 
fuel category in the pre-application. For hybrid electric vehicles, 
include fuel types. Indicate whether the structure is lightweight 
composite or traditional structure and weight. Enter the total and 
Federal amount for each fuel type.
    (2) Construct/Lease New Clean Fuel Facility and Related 
Equipment. Indicate the Federal and total amount for a clean fuels 
facility, related equipment or electrical recharging facility. Enter 
any descriptive or explanatory information on the lines for 
additional information, including what fuel type is being 
accommodated. Facilities to accommodate clean diesel are not 
eligible.
    (3) Indicate the Federal amount and total amount for 
improvements to existing facilities to accommodate clean fuel buses. 
Enter any descriptive or explanatory information on the line for 
additional items, including what fuel type is being accommodated.
    (4) Indicate the Federal amount and total amount for repowering/
replacing pre-1993 engines with engines that meet current emissions 
standards when installed. Please include a separate entry for each 
fuel type. For the purposes of this program, repowering/replacement 
means the removal of an engine from the bus followed by the 
installation of another engine. This applies to engines that are 
replaced with new, previously unused engines, as well as those 
exchanged from an inventory of rebuilt engines.
    (5) Enter a quantity, Federal amount, and total amount by fuel 
type for retrofit/rebuild of pre-1993 engines to comply with latest 
EPA-certified emissions standards. For the purposes of this program, 
``retrofit'' means the use of the latest after-market technology 
such as ``upgrade kits,'' or after-treatment device(s) that treat 
the exhaust after it has left the engine, such as catalytic 
converters or particulate filters. ``Before the half-life rebuild'' 
means that the retrofitting would need to occur before the bus is 
six years old. Since this provision applies to pre-1993 engines, 
this provision is of limited time availability.
    (6) This section should describe any proposed clean fuel project 
not included in the categories above. Since any project not included 
above requires approval at the discretion of FTA, projects included 
here should also be described in the letter of interest. Include the 
Federal amount and total.
    (7) Summary. Indicate the Totals for the Federal and Total 
Amounts requested for all projects listed in this Section I.

II. Data

    This section contains the active bus fleet and annual bus 
passenger miles information that is required to run the Clean Fuels 
formula.
    (1) Enter the number of buses in the active fixed route fleet. 
For this purpose, ``bus'' includes articulated motorbus, Class A bus 
(35 seats), Class B bus (25-35 seats), Class C bus (<25 
seats), double-decked bus, school bus, and electric trolley bus. Use 
NTD data that was reported 2 years prior (e.g., if applying in FY 
2003, use data from FY 2001). For UZAs that have already submitted 
information to the National Transit Database (NTD), add the data 
from column H of Form 408 for the following vehicle types: AB, BA, 
BB, BC, DD, SB, and TB. (These vehicle types are defined in 
reporter's guidance for the NTD.)
    (2) Enter the fixed route annual bus passenger miles for 2 years 
prior (e.g., if applying in FY 2003, use data from FY 2001. This may 
include motorbus (see types above) or trolley bus. For UZAs that 
have submitted NTD data, add the information from column I of line 
25 of Form 406 for the modes MB and TB.

III. Projects Subject to Minimum/Maximum Apportionments

    This section provides a dollar total for the areas that are 
affected by either maximum or minimum constraints. These constraints 
apply to the entire program and not to individual applicants. 
However, in order to comply with these constraints, FTA must know 
how much each applicant is applying for in each of these areas.
    (1) Enter the total Federal dollar amount for the purchase/lease 
of clean diesel vehicles.
    (2) Enter the total Federal dollar amount for project elements 
that fall into the category of purchasing hybrid electric or 
battery-powered buses or constructing facilities designed to service 
them.
    (3) Enter the total Federal dollar amount for project elements 
that fall into the category of retrofitting or replacing bus engines 
that do not meet the clean air standards of the EPA.

    Note: Because of the uncertainty of how many grantees will 
apply, the actual amount that a grantee receives in an apportionment 
may be different from the amount requested in the application that 
was submitted. Furthermore, because clean diesel and retrofit/
replacement of bus engines are subject to maximum constraints, the 
amounts specifically apportioned for those purposes may not resemble 
the proportionality of the application. For example, suppose Grantee 
A's application included $500,000 for clean diesel and $100,000 for 
a compressed natural gas bus. If the 35 percent ceiling for clean 
diesel is exceeded by the total applications, Grantee A may only be 
allowed $50,000 to be used specifically for clean diesel because of 
the ceiling. The remainder of the funds apportioned to Grantee A 
(say, $300,000) would have to be used in areas without a maximum 
constraint, i.e., in areas other than clean diesel or retrofit/
replacement of bus engines if applied for.

IV. Certification

    The chief executive officer or the general manager of the 
transit agency should sign this certification.

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    Issued: June 4, 2002.
Jennifer L. Dorn,
Administrator, Federal Transit Administration.
[FR Doc. 02-14547 Filed 6-10-02; 8:45 am]
BILLING CODE 4910-57-P