[Federal Register Volume 67, Number 138 (Thursday, July 18, 2002)]
[Rules and Regulations]
[Pages 47268-47278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18007]


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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: Final rule.

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SUMMARY: This document amends 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). It 
removes provisions that are no longer necessary, makes several changes 
in terminology, and incorporates revisions based upon comments received 
during the notice of proposed rulemaking. Most notable among the 
changes are renumbering of a State planning and research (SPR) funds 
section (i) that now allow a State department of transportation (State 
DOT) to be reimbursed for indirect costs; and changes in the Federal-
aid highway program categories from which SPR funds are set aside.

EFFECTIVE DATE: August 19, 2002.

FOR FURTHER INFORMATION CONTACT: For 23 CFR part 420, subpart A: Mr. 
Tony Solury, (202) 366-5003, Office of Planning and Environment, 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 7:45 a.m. to 4:15 p.m., 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    Internet users may access all comments received by the U.S. DOT 
Docket Facility, Room PL-401, by using the universal resource locator 
(URL) http://dmses.dot.gov. It 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 by using a 
computer, modem, and suitable communications software from the 
Government Printing Office's Electronic Bulletin Board Service at (202) 
512-1661. 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.

Background

    On November 27, 2001, the FHWA issued a notice of proposed 
rulemaking (NPRM) in the Federal Register (66 FR 59188) to obtain 
comments from interested persons on proposed revisions to the 
regulation. Changes to the existing regulation were made to reflect the 
TEA-21 legislation and to eliminate outdated regulatory references. New 
language was added to encourage sharing of research results, pooling of 
funds, and the promotion of new technology. In addition, the phrase 
``peer review'' was changed to ``peer exchange'' to reflect the 
underlying philosophy that--rather than an audit--the peer exchange is 
an opportunity to share best practices and foster excellence in 
research, development, and technology transfer (RD&T) program 
management.
    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 (Public Law 105-178, 112 Stat. 107 
(1998)). Section 5119(b) of the TEA-21 repealed the SPR funds section 
in 23 U.S.C. 307(c) and section 5105 of the TEA-21 added a new SPR 
funds section 505 to title 23, U.S. Code. Changes in the Federal-aid 
highway program in the TEA-21 also resulted in changes in the Federal-
aid highway program categories from which SPR funds are set aside. 
Section 1212 of the TEA-21 revised 23 U.S.C. 302 to allow a State DOT 
to be reimbursed for indirect costs.
    Based on experience since the 1994 revision, changes were made to 
refine definitions and to clarify the meaning and applicability of 
several sections of the regulation. For example, the phrase ``peer 
review'' has been replaced with ``peer exchange'' to describe the 
transfer of RD&T related information and best practices between State 
DOTs, the FHWA, universities and public and private sector 
transportation organizations. The phrase ``transportation pooled fund 
study'' is used to replace the regional and national distinctions and 
to reflect current practice. Also, the FHWA made further clarification 
regarding the conditions under which the non-Federal share of an SPR or 
metropolitan planning (PL) funded project may be waived.

[[Page 47269]]

    The NPRM was published in the Federal Register on November 27, 
2001, at 66 FR 59188. The comment period ended on January 28, 2002. We 
received 9 docket comments, all from State DOTs, in response to the 
NPRM. Many of the comments support the rule revision and mention that 
it has added greater clarity to the regulation. A summary of the 
comments, the FHWA response, their disposition, and the changes made to 
the rule follow.

Discussion and Analysis of Comments

General

    Two commenters expressed displeasure with the question and answer 
(Q&A) format.
    The FHWA has rewritten the rule using the guidelines established in 
the Federal Register Document Drafting Handbook under the section 
Making Regulations Readable. The handbook's guidance reflects the 
directives outlined in the June 1, 1998, Presidential Memorandum, 
``Plain Language in Government Writing,'' (3 CFR, 1999 Comp., p. 289) 
available online at http://www.access.gpo.gov/nara/cfr/waisidx--99/
other--99.html.
    Two commenters mentioned that the abbreviation STD was an 
inappropriate one due to its negative connotations.
    The term ``State transportation department'' is included in section 
302 of title 23, U.S. Code. In addition Sec. 1201 of TEA-21 amended 23 
U.S.C. 101 to remove ``State highway department'' and added the term 
``State transportation department.'' The abbreviation ``STD'' was 
simply derivative. However, we understand and appreciate the 
commenter's concerns and have changed STD to State DOT where 
appropriate. In addition, a definition of State DOT has been added in 
Sec. 420.103. For consistency with the legislation, the definition is 
the same as that included in section 101 of title 23, U.S.C for State 
department of transportation, which is defined as that department, 
commission, board, or official of any State charged by its laws with 
the responsibility for highway construction.
    In response to a recent assessment of the FHWA's 1998 
restructuring, the title Program Manager for Planning and Environment 
has been changed to Associate Administrator for Planning and 
Environment and the title Director of Research, Development and 
Technology has been changed to Associate Administrator for Research, 
Development and Technology in the final rule.

Section 420.103

    In Sec. 420.103, we replaced ``designated by the Administrators of 
the FHWA and the Federal Transit Administration (FTA)'' in the 
definition of transportation management area with ``designated by the 
Secretary of Transportation'' to be consistent with legislative 
language in 23 U.S.C. 134(i).
    We added the words ``covering no less than one year'' to the 
definition of the term Work Program. We felt it is important to clarify 
that work programs of less than one year in duration should not be 
submitted because of administrative burden that would be involved.

Section 420.105

    In Sec. 420.105(a)(1), we replaced ``intermodal'' with ``local 
public transportation'' to be consistent with legislative language in 
23 U.S.C. 505(a)(2) that states that FHWA planning funds can be used 
for the planning of future highway programs and local public 
transportation systems and the planning of financing of such programs 
and systems, including metropolitan and statewide planning under 23 
U.S.C. 134 and 135.

Section 420.109

    Regarding the consultation with Metropolitan Planning Organizations 
(MPOs), one State DOT mentioned that the use of the phrase 
``consultation with MPOs'' was preferred over the use of ``in 
cooperation with MPOs.'' The State DOT observed that the term 
``consultation'' gives States greater flexibility in working with local 
governments (Sec. 420.109).
    The term ``consultation'' used in the regulation is the correct 
term. The term ``cooperation'' was inadvertently used in the preamble 
to discuss changes made in Sec. 420.109. The final rule contains the 
term ``consultation'' and not ``cooperation.''
    Four commenters supported the ``flexibility'' provided in 
Sec. 420.109 that allows State PL fund distribution formulas to include 
provisions for using PL funds for activities that benefit all MPOs in 
the State or for discretionary awards to MPOs.
    This flexibility has always been allowed, but was not reflected in 
the previous regulations. All PL funds apportioned to a State must be 
made available by the State to the MPOs in accordance with a formula 
developed by the State in consultation with the MPOs and approved by 
the FHWA. Therefore, any ``hold back'' of PL funds by the State for 
such uses must be reflected in the approved formula. However, it is not 
necessary for the formula to reflect the situation where an MPO(s) has 
received its PL fund allocation based on the State formula to choose to 
allow the State to perform work for the MPO(s) with PL funds.
    One commenter indicated that the provisions in Sec. 420.109(d) and 
(e) that allow use of excess PL funds for planning outside of 
metropolitan areas would also be helpful.
    Both of these provisions were in the previous regulation and are 
based on legislative provisions. Under the legislation, each State 
receives a minimum of one-half of one percent of the annual PL fund 
apportionments regardless of the States population in urbanized areas 
of 50,000 or more population. In these minimum PL apportionment States, 
the State DOT may use PL funds not needed for metropolitan planning for 
transportation planning outside of metropolitan areas after considering 
the views of the affected MPOs and with the approval of the FHWA. In 
States that receive more than the one-half of one percent minimum 
apportionment, the MPOs may make PL funds not needed by them for 
metropolitan planning available to the State for statewide 
transportation planning with the approval of the FHWA.

Section 420.113

    One State DOT requested that States be allowed the option of 
continuing to charge pro-rata costs of administrative salaries to SPR 
funds or of using an indirect cost rate as required in revised 
Sec. 420.113. This commenter also suggested that the language regarding 
annual updates and approvals be combined in paragraph (b) of 
Sec. 420.113 rather than being separated into paragraphs (b) and (c).
    Prior to enactment of TEA-21, State DOTs could not claim 
reimbursement for indirect costs, such as those of supervisory 
personnel and support staff who did not work directly on grant 
supported activities, for FHWA funded projects. However, we did allow a 
share of the salaries of such personnel in the State DOT planning and 
research units to be charged directly based on the percent of work in 
these units that was performed with FHWA planning and research funds. 
One of the basic criteria in the Office of Management and Budget (OMB) 
Circular A-87, Cost Principles for State, Local and Indian Tribal 
Governments revised May 4, 1995, (available online at http://www.whitehouse.gov/omb/circulars/a087/toc.html) is that costs be 
treated consistently in order to be allowed to be charged to Federal 
grants. Now that

[[Page 47270]]

State DOTs can charge indirect costs to all FHWA projects, it would be 
inappropriate to continue this pro-rata charge for selected units of 
the State DOT. In addition there is a potential the portion of these 
salaries that are charged directly would mistakenly be included with 
the remainder of the salaries in the State DOTs indirect cost pool. 
This would result in these costs being recovered both directly and 
indirectly, which is not permitted. Therefore, the final rule retains 
the revision to this provision proposed in the NPRM. Effective with the 
first State DOT fiscal year beginning after the effective date of this 
rule indicated above, these salaries may no longer be charged on a pro-
rata basis.

Section 420.119

    One State DOT asked for clarification of the term ``third-party'' 
as opposed to ``subrecipient'' in Sec. 420.119 and asked if a local 
government receiving metropolitan planning funds is a subrecipient or a 
third-party and that definitions of these terms be included in the 
regulation. This same commenter asked if the ``new requirement'' that 
the use of in-kind contributions be approved in advance by the FHWA 
would be made retroactive for current programs or projects.
    Since local governments, which by definition in OMB Circular A-87 
and U.S. DOT grant regulations at 49 CFR part 18, Uniform 
Administrative Requirements for Grants and Cooperative Agreements to 
State and Local Governments (available online at http://www.access.gpo.gov/ecfr), includes agencies such as councils of 
government and regional planning agencies that provide MPO staff 
services, receive FHWA planning and research funds through the State 
DOTs and not directly from the FHWA, local governments and other 
agencies that receive these funds are subrecipients. As defined in 49 
CFR part 18, ``third party in-kind contributions mean property or 
services which benefit a federally assisted project or program and 
which are contributed by non-Federal third parties without charge to 
the grantee, or a cost-type contractor under the grant agreement.'' A 
local government can be both a subrecipient and a ``third-party.'' For 
example, if the local government receives Federal funds from a State 
DOT or MPO, it would be a subrecipient of the State or MPO; a local 
government that donates services (such as collection of traffic data) 
to a State DOT or MPO without charge would be a third-party and the 
State DOT or MPO could use the value of the donated services to match 
the Federal funds expended by the State or MPO. Since these terms are 
defined in other regulations that are cited in 23 CFR part 420, we have 
not added the definitions. The requirement that use of in-kind 
contributions as the match for FHWA planning and research funds is not 
retroactive. However, it has always been required that the source of 
matching funds be identified.
    One State DOT commented that the provision for waiver of matching 
in Sec. 420.119(d) would have positive impacts where local match is 
difficult for an MPO to obtain.
    As indicated in Sec. 420.119(d), the waiver provision is not 
intended for individual situations such as this, but to encourage State 
DOTs and MPOs to pool their SPR or PL funds to address issues of common 
concern.

Section 420.207

    One State DOT mentioned that it did not support the concept in 
Sec. 420.207 that RD&T studies funded under previous work programs 
should be shown in subsequent work programs because it would create 
extra paperwork. It mentioned that this is a tracking issue and that 
the work program is not a tracking tool.
    The work program is a mandatory requirement used to justify 
expenditure of State planning and research funds. If there is no 
commitment of funds on a given study during the work program period and 
the study is incomplete (e.g., awaiting review of final report, etc.), 
this fact must be noted on the work program until the study is closed 
out. That is, there must be a reconciliation between the funds spent 
and the required deliverable or product at some point. This should not 
require significant additional paperwork, only a line acknowledging the 
status of the study until it is closed out.

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

    The FHWA has determined that this action is not a significant 
regulatory action within the meaning of Executive Order 12866 or within 
the meaning of U.S. Department of Transportation regulatory policies 
and procedures. The economic impact of this rulemaking will be minimal. 
This final rule will not adversely affect, in a material way, any 
sector of the economy. In addition, it will 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 action on 
small entities and has determined that the action will not have a 
significant economic impact on a substantial number of small entities. 
This final rule addresses the administrative procedures and 
requirements that State DOTs must comply with when using FHWA planning 
and research funds provided under title 23, U.S. Code. This rule would 
not impose any direct requirement on small entities that would result 
in increased economic costs. For these reasons, the FHWA certifies that 
this rule will not have a significant economic impact on a substantial 
number of small entities.

Unfunded Mandates Reform Act of 1995

    This rule does 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 rule will 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). This 
final rule updates the existing rule to conform to provisions in the 
TEA-21 and makes 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)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132, and the FHWA has 
determined that this action does not have sufficient federalism 
implications to warrant the preparation of a Federalism assessment. The 
FHWA has also determined that this action would not preempt any State 
law or State regulation or affect the States' ability to discharge 
traditional State governmental functions. The rule provides State DOTs 
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

[[Page 47271]]

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.

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. The FHWA has 
determined that this action contains collection of information 
requirements for the purposes of the PRA. These information collections 
are currently approved by the OMB, and there are no burden revisions to 
them as a result of this action.
    The information collection requirements referenced in 
Sec. 420.105(b) are assigned OMB control numbers 2125-0028 (expiration 
date, February 28, 2003) and 2125-0032 (expiration date, March 31, 
2003).
    The FHWA is responsible for transportation planning and research, 
development and technology (RD&T) work performed by State DOTs with 
funds provided under the provisions of 23 U.S.C. 505 or other 23 U.S.C. 
funds, as identified in the definition of FHWA planning and research 
funds in 23 CFR 420.103, used for such purposes at a State DOT's 
option. Therefore, the information collection requirements in 
Secs. 420.111, 420.117, and 420.209 for State DOT planning and RD&T 
activities are assigned an FHWA OMB control number 2125-0039 
(expiration date, April 30, 2004). 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 metropolitan planning process is a 
jointly funded and administered FHWA/Federal Transit Administration 
(FTA) requirement. The information collection requirements in 
Secs. 420.111 and 420.117, for work performed by the MPOs is assigned 
an FTA OMB control number 2132-0529 (expiration date, March 31, 2004).
    The information collection requirements referenced in Sec. 420.209 
are assigned OMB control number 2125-0039 (expiration date, April 30, 
2004).

Executive Order 12630 (Taking of Private Property)

    This final rule will 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 final 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 final rule 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 final 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 final rule for the purpose of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321) and has 
determined that this action will 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: July 12, 2002.
Mary E. Peters,
Administrator, Federal Highway Administration.

    In consideration of the foregoing, the FHWA revises 23 CFR 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
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?

[[Page 47272]]

PART 420--PLANNING AND RESEARCH PROGRAM ADMINISTRATION

    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 
by State departments of transportation (State DOTs) and their 
subrecipients, including metropolitan planning organizations (MPOs), 
with FHWA planning and research funds. 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 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 the 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 State DOT 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 State DOTs 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.
    State Department of Transportation (State DOT) means that 
department, commission, board, or official of any State charged by its 
laws with the responsibility for highway construction.
    Transportation management area (TMA) means an urbanized area with a 
population over 200,000 (as determined by the latest decennial census) 
and designated by the Secretary of Transportation or other area when 
TMA designation is requested by the Governor and the MPO (or affected 
local officials), and officially designated by the Secretary of 
Transportation.
    Transportation pooled fund study means a planning, research, 
development, or technology transfer activity administered by the FHWA, 
a lead State DOT, 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, covering 
no less than one year, and estimated costs that documents eligible 
activities to be undertaken by State DOTs 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 State DOTs and MPOs:
    (1) Maximum possible flexibility in the use of FHWA planning and 
research funds to meet highway and local public 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 State DOTs 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 State DOTs and their subrecipients 
shall be documented and submitted for FHWA approval and authorization 
as prescribed in Secs. 420.111 and 420.113. (The

[[Page 47273]]

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) A State DOT 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 State DOT certifies, 
and the FHWA accepts the State DOT's certification, that total 
expenditures by the State DOT during the 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 State DOT 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 State DOT for a given fiscal 
year; and
    (3) The total level of effort by the State DOT in RD&T (using both 
Federal and State funds) is adequate.
    (c) If the State DOT chooses to pursue an exception, it must send 
the request, along with supporting justification, to the FHWA Division 
Administrator for action by the FHWA Associate Administrator for 
Research, Development, and Technology. The Associate Administrator's 
decision will be based upon the following considerations:
    (1) Whether the State DOT has a process for identifying RD&T needs 
and for implementing a viable RD&T program.
    (2) Whether the State DOT 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 State DOT 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 State DOT 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 Associate Administrator for Research, Development, 
and Technology approves the State DOT'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 State DOTs 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 State DOT, 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 State DOT, or other agency agreed to by the 
State DOT and the MPOs, for activities that benefit all MPOs in the 
State, but State DOTs 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 State 
DOT 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 State DOTs 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 State DOTs.
    (d) If the State DOT, 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 State DOT 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 State DOT 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 State DOTs 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 State DOT.
    (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.

[[Page 47274]]

    (d) The State DOTs that use separate Federal-aid projects in 
accordance with paragraph (a) of this section 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 State DOTs 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 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 State DOT'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 State DOTs 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 State DOT or subrecipient specified in 49 CFR 
18.22(b).


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

    (a) The State DOT 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 State DOT 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 State DOTs 
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 State DOTs 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 State DOT 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 Sec. 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 State DOT 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 State DOT 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 
State DOT 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

[[Page 47275]]

collection requirements in Sec. 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 as 
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 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 State DOT 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 State DOT 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 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 State DOTs 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 Associate Administrator for Planning and Environment 
(for planning activities) or the Associate Administrator for 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 State DOT 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 
FHWA planning and research funds?

    (a) Audits. Audits of the State DOTs 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 State DOT or 
subrecipient contract administration procedures.
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    \2\ See footnote 1.
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    (b) Copyrights. The State DOTs 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 State DOTs 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, State DOTs 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 State DOTs must 
be in accordance with 49 CFR 18.32(b). Local government subrecipients 
of State DOTs must follow the procedures specified by the State DOT. 
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 State DOTs 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

[[Page 47276]]

whether or not those programs or activities are federally funded.
    (i) Patents. The State DOTs and their subrecipients are subject to 
the provisions of 37 CFR part 401 governing patents and inventions and 
must include or cite the standard patent rights clause at 37 CFR 
401.14, except for Sec. 401.14(g), in all subgrants or contracts. In 
addition, State DOTs 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 State DOTs must 
be in accordance with 49 CFR 18.36(a) and (i) and, if applicable, 
18.36(t). Local government subrecipients of State DOTs must follow the 
procedures specified by the State DOT. Universities, hospitals, and 
other non-profit organizations must follow the procedures in 49 CFR 
19.40 through 19.48. The State DOTs 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 State DOTs 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 State DOTs 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 State DOTs 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 State DOTs 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 of February 18, 1986 (3 CFR, 1986 Comp., p. 189); 
and
    (2) The State DOTs 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 State DOTs 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 DOTs 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 a State DOT's RD&T 
program, or portion thereof, by representatives of other State DOT's, 
for the purpose of exchange of information or best practices. The State 
DOT 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

[[Page 47277]]

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 State DOTs must provide information necessary for peer 
exchanges.
    (c) The State DOTs are encouraged to develop, establish, and 
implement an RD&T program, funded with Federal and State DOT resources 
that anticipates and addresses transportation concerns before they 
become critical problems. Further, the State DOTs 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 State DOTs 
are encouraged to cooperate with other State DOTs, 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 national and regional issues and as a 
means of leveraging funds.
    (e) The State DOTs 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 State DOTs 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 State DOT 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 State DOT 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 State DOTs 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 State DOT'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 State DOT's 
participation in any transportation pooled fund studies and the NCHRP. 
The State DOT'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 State DOT'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. State DOTs 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 State DOT'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 State DOT 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 State DOT's 
management process in implementing the RD&T program, to determine the 
utilization of the State DOT'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 State DOT 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 State DOTs' programs on a periodic basis. To assist peer 
exchange teams in conducting an effective exchange, the State DOT must 
provide to them the information and documentation required to be 
collected and maintained under this subpart. Travel and other costs 
associated with the State DOT's peer exchange may be identified as a 
line item in the State DOT'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 State DOT's management process 
and the procedures for selecting and implementing RD&T activities must 
be developed by the State DOT and submitted to the FHWA Division office 
for approval. Significant changes in the management process also must 
be submitted by the State DOT to the FHWA for approval. The State DOT 
must make the documentation available, as necessary, to facilitate peer 
exchanges.
    (c) The State DOT must include a certification that it is in full 
compliance with the requirements of this subpart in each RD&T work 
program. If the State DOT is unable to certify full compliance, the 
FHWA Division Administrator may grant conditional approval of the State 
DOT's work program. A conditional approval must cite those areas of the 
State DOT'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 State DOT 
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

[[Page 47278]]

procedures which would affect such compliance.''
    (d) The FHWA Division Administrator shall periodically review the 
State DOT's management process to determine if the State is in 
compliance with the requirements of this subpart. If the Division 
Administrator determines that a State DOT 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 State DOT. The notice will set forth the reasons for the proposed 
determination and inform the State DOT that it may reply in writing 
within 30 calendar days from the date of the notice. The State DOT's 
reply should address the deficiencies cited in the notice and provide 
documentation as necessary. If the State DOT and the Division 
Administrator cannot resolve the differences set forth in the 
determination of nonconformity, the State DOT 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 the State DOT's 
RD&T activities until the State DOT is in full compliance.


(The information collection requirements in Sec. 420.209 have been 
approved by the OMB and assigned control number 2125-0039.)
[FR Doc. 02-18007 Filed 7-17-02; 8:45 am]
BILLING CODE 4910-22-P