[Federal Register Volume 71, Number 146 (Monday, July 31, 2006)]
[Notices]
[Pages 43280-43284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12137]



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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2006-25365]


Formula Grants for Other Than Urbanized Areas Program (49 U.S.C. 
5311): Notice of Program Guidance

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of proposed program guidance and request for comments.

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SUMMARY: This Notice proposes guidance in the form of a revised program 
circular for the Federal Transit Administration's Formula Grants for 
Other Than Urbanized Areas Program (Section 5311) and seeks comments on 
the proposed circular. It also addresses comments FTA received with 
regard to its Section 5311 program in response to a Federal Register 
Notice entitled, ``FTA Transit Program Changes, Authorized Funding 
Levels and Implementation of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users'' (70 FR 71950, November 
30, 2005), in addition to comments received during several public 
listening sessions. The proposed circular will be available in Docket 
Number: FTA-2006-25365 at http://dms.dot.gov.

DATES: Comments should be submitted by September 29, 2006. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments identified by the docket number 
[FTA-2006-25365] by any of the following methods:
    1. Web site:http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
    2. Fax: 202-493-2251.
    3. Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, PL-401, 
Washington, DC 20590-0001.
    4. Hand Delivery: Room PL-401 on the plaza level of the Nassif 
Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.
    Instructions: You must include the agency name (Federal Transit 
Administration) and the Docket number (FTA-2006-25365) for this Notice 
at the beginning of your comments. You should submit two copies of your 
comments if you submit them by mail. If you wish to receive 
confirmation that FTA received your comments, you must include a self-
addressed stamped postcard. Note that all comments received will be 
posted, without change, to http://dms.dot.gov including any personal 
information provided and will be available to internet users. You may 
review DOT's complete Privacy Act Statement in the Federal Register 
published on April 11, 2000 (65 FR 19477) or you may visit http://dms.dot.gov. Docket: For access to the docket to read background 
documents and comments received, go to http://dms.dot.gov at any time 
or to Room PL-401 on the plaza level of the Nassif Building, 400 
Seventh Street, SW., Washington, DC between 9 a.m. and 5 p.m., Monday 
through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Lorna Wilson, Office of Program 
Management, Federal Transit Administration, 400 Seventh Street, SW., 
Room 9114, Washington, DC 20590, phone: (202) 366-2053, fax: (202) 366-
7951, or e-mail, [email protected]. Legal questions may be addressed 
to Richard L. Wong, Office of Chief Counsel, Federal Transit 
Administration, 400 Seventh Street, SW., Room 9316, Washington, DC 
20590, phone: (202) 366-4011, fax: (202) 366-3809, or e-mail, 
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Overview
II. Chapter-by-Chapter Analysis
    A. Chapter I--Introduction and Background
    B. Chapter II--Program Overview
    C. Chapter III--General Program Information
    D. Chapter IV--Program Development
    E. Chapter V--Locally Developed, Coordinated Public Transit--
Human Services Transportation Plan
    F. Chapter VI--Program Management and Administrative 
Requirements
    G. Chapter VII--State Management Plan
    H. Chapter VIII--Intercity Bus
    I. Chapter IX--Rural Transportation Assistance Program
    J. Chapter X--Other Provisions
    K. Appendices

I. Overview

    This proposed circular revises the existing FTA Circular 9040.1E, 
``Nonurbanized Area Formula Program Guidance and Grant Application 
Instructions,'' dated 10-01-98.
    On November 30, 2005, FTA published a Federal Register Notice, 
``Transit Program Changes, Authorized Funding Levels and Implementation 
of the Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users'' (70 FR 71950, November 30, 2005), which 
described new programs and changes to or extensions of existing 
programs contained in its new reauthorization legislation, the Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU). In addition, FTA held public listening sessions 
in five locations around the country, a conference call with State 
administering agencies, and a meeting with representatives of the 
intercity bus industry.
    In its November 30th Federal Register Notice, FTA requested public 
comment on several specific issues such as whether the State-based 
rural data module should serve as the basis for the new mandatory 
reporting requirements. Another issue was whether the per State minimum 
distribution of Rural Transportation Assistance Program (RTAP) funds 
(floor) should again be raised and whether the low density portion of 
the Section 5311 formula should be used as a basis for Section 5311 
RTAP formula apportionments. FTA also sought comments on use of the 
national RTAP resource.
    This Notice acknowledges comments received by FTA from the November 
30th Notice and additional comments received during FTA's public 
outreach efforts. The Notice also seeks comments on the proposed 
revisions to the existing circular. The text of the proposed circular 
is available in its entirety in the docket.
    Although the proposed circular addressed by this Notice contains 
summaries of cross-cutting provisions such as Charter Bus, Buy America, 
Title VI, and Equal Employment Opportunity (EEO) requirements, those 
subjects are addressed by separate dockets, therefore, the public 
should not submit comments on those topics to the docket for this 
circular. Persons seeking to view and provide comments to those dockets 
can do so through the Department of Transportation's Docket Management 
System (http://dms.dot.gov). Docket numbers for some of those cross-
cutting proposals are as follows:

Charter Bus...............................  Docket 22657
Buy America...............................   Docket 23082
Title VI..................................  Docket 23227
EEO.......................................  Docket 23227
 

    FTA reserves the right to make changes to this circular in the 
future to update references to requirements contained in other revised 
or new guidance and regulations without further notice and comment on 
this circular.

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II. Chapter-by-Chapter Analysis

A. Chapter I--Introduction and Background

    This chapter is a general introduction to FTA that is proposed to 
be included in all new and revised program circulars for the 
orientation of readers new to the FTA programs. Chapter I also includes 
definitions.

B. Chapter II--Program Overview

    This chapter replaces the former Chapter I, ``General Overview,'' 
in Circular 9040.1E. It provides an overview of the Section 5311 
program in terms of its statutory authority and program goals. It 
defines the role of States and FTA, and explains the program's 
relationship to other FTA-funded programs, as well as its coordination 
with other Federal programs. It contains the same information as the 
existing circular, with minor updates.

C. Chapter III--General Program Information

    This chapter consolidates the former Chapters II ``Apportionments'' 
and III ``Eligibility'' in Circular 9040.1E. This revised chapter sets 
forth the basis for the apportionment of Section 5311 funds including, 
the availability of those funds and the transfer of funds. It also 
identifies eligible recipients and expenses, and the Federal-State 
matching ratio. The discussion of use of other Federal funds as match 
was expanded to clarify that Section 5310 funds used to purchase 
service from a Section 5311 subrecipient cannot be used to match 
Section 5311 program funds. Although this revised chapter retains much 
of the content of the original two chapters, it includes several 
changes required by SAFETEA-LU: A sliding scale that permits a higher 
Federal share for capital and operating costs for several States based 
on a formula used by the Federal Highway Administration; an expanded 
list of eligible capital expenses for crime prevention and security; 
and the eligibility of Mobility Management as a capital expense.
    One commenter asked that FTA broaden project eligibility to include 
capital items eligible under Section 5309, such as park and ride lots, 
in order to respond to the varying needs of the States and the areas to 
be served by the Section 5311 program.
    FTA agrees with this recommendation, and proposes to clarify that 
the definition of eligible capital activities in 49 U.S.C. 5302(a)(1) 
applies to the Section 5311 program, which would include park and ride 
lots. The proposed circular provides additional guidance on some 
aspects of capital eligibility, and it details eligibility requirements 
specific to the program.
    Other commenters asked whether Federal funds received from other 
than U.S. Department Of Transportation (DOT) sources (e.g., USDA) can 
be used as the local matching share. Another commenter noted that a 50% 
match is hard for small operators, and that a sliding scale should 
permit 80% for operating expenses under Section 5311.
    Consistent with SAFETEA-LU's coordination goals, funds from other 
than U.S. DOT governmental sources (including other Federal funds) can 
be used provided that those funds are eligible to be used for 
transportation purposes. Federal lands funds (including Indian 
Reservation Roads funds) provided by the Federal Highway Administration 
(FHWA) are not included in the prohibition on the use of U.S. DOT funds 
as the local matching share. The statute does not allow for an 80% 
Federal share for operating assistance. The maximum share for operating 
assistance is 62.5% of the Federal share allowed to a State for capital 
assistance under the sliding scale approved by FHWA. Thus the sliding 
scale share for operating assistance ranges from 50.81% to 59.31%.
    In addition to changes required by SAFETEA-LU, we propose to 
require compliance with FTA's, ``Capital Leases'' regulations, 49 CFR 
Part 639, for capital leases financed under the Section 5311 program. 
When FTA Circular 9040.1E was published in October 1, 1998, FTA's 
Capital Leases regulations had not been promulgated, but FTA's enabling 
legislation enacted in 1998 expanded cost evaluation regulations to be 
promulgated by FTA to all FTA assisted capital leases. Thus, FTA could 
only advise States to treat FTA Capital Leases regulations as ``useful 
guidelines.'' By December 10, 1998, FTA did promulgate its Capital 
Lease regulations covering all FTA programs. Consequently, we propose 
requiring compliance with those regulations. However, we are seeking 
comments about the implications of doing so and are interested in how 
those regulations would affect State leasing practices.

D. Chapter IV--Program Development

    This chapter renames the former Chapter IV ``Program Management and 
Administrative Requirements,'' which is now the title of Chapter VI of 
the proposed circular. It makes minor updates to Chapter IV of the 
current Circular 9040.1E, and adds a requirement that designated State 
agencies provide annual Certifications and Assurances to FTA, which was 
always assumed under the former circular but is now made explicit under 
the proposed circular.
    One Native American tribe asked that FTA ensure a fair distribution 
of funds within a State that is inclusive of Indian communities. FTA 
agrees. The revised circular notes that SAFETEA-LU created a separate 
supplemental Tribal Transportation Program, but that language retained 
in SAFETEA-LU requires that States must continue to include tribes in 
the fair distribution of funds apportioned to States.

E. Chapter V--Locally Developed, Coordinated Public Transit--Human 
Services Transportation Plan

    This chapter replaces the former Chapter V ``Application 
Instructions,'' which is attached as Appendix A to the proposed 
circular. The new Chapter V describes the Locally Developed Coordinated 
Public Transit-Human Services Transportation Plan required for three 
other FTA programs and addresses the relationship to that planning 
process for Section 5311 subrecipients. Although Section 5311 projects 
are not specifically required by SAFETEA-LU to be derived from a local 
coordinated plan, FTA states in Chapter V the expectation that Section 
5311 and 5307 recipients would be included as essential partners or 
participants in any coordinated planning activities.
    One non-profit organization recommended that the planning 
requirement for the three related coordinated formula programs be 
integrated into and consistent with the metropolitan and State planning 
processes. It requested clarification on how the coordinated plan will 
be used to identify and integrate capital and operating needs funded 
through the Sections 5307, 5309, and 5311 programs, including flexible 
FHWA funding and fund transfers.
    The proposed circulars for Sections 5310 (Elderly and Individuals 
with Disabilities), 5316 (Job Access and Reverse Commute--JARC), and 
5317 (New Freedom) programs will include detailed guidance on the 
Locally Developed Coordinated Public Transit-Human Service 
Transportation Plan and its relationship to the metropolitan and State 
planning processes. Chapter V of this proposed circular states that 
rural transit providers are expected to be participants in the local 
planning process, and encourages the inclusion of rural intercity 
mobility needs and

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intercity bus operators in the planning process in rural areas.

F. Chapter VI--Program Management and Administrative Requirements

    This chapter retains the requirements that were in Chapter VI of 
Circular 9040.1E, but adds a National Transit Database (NTD) reporting 
requirement mandated by SAFETEA-LU.
    One State commenter noted that the addition of the NTD requirement 
for Section 5311 sub-recipients will facilitate data capture and 
reporting for this program. Another agreed with FTA's stated intent to 
keep the NTD requirements for Section 5311 similar to the pilot 
voluntary State-based rural data module previously developed in 
cooperation with various State DOTs.
    One non-profit organization representing private operators 
suggested that FTA convene a team of NTD consultants, rural public and 
private operators, and human service providers to design a practical 
and useful NTD questionnaire to meet the new reporting requirements. 
One State DOT noted that the data requested in the current NTD Rural 
General Public Transit Service form (RU-20) exceeds the data required 
in SAFETEA-LU.
    Another non-profit organization representing public transit 
operators recognized that FTA now has several years of experience in 
collecting data from the volunteer pilot program and suggested that 
these data should form the base for any adjustments, noting the need 
for additional precision in the definitions of the data that are 
reported.
    That same non-profit organization also suggested that FTA permit 
direct reporting of data from rural recipients of Section 5311 funds to 
the NTD, similar to the approach taken for urbanized and rural 
operators in reporting drug and alcohol regulation compliance data. The 
organization also suggested that the data be reported quarterly, 
recognizing the on-going differences in Federal, State and local fiscal 
years and to make the date consistent with whatever reporting period is 
necessary. Finally, the organization noted that some operators receive 
separate funding to serve both rural and urbanized areas, and that the 
NTD must recognize those situations so that the benefits of both 
funding sources are recognized.
    FTA's revised program circular merely states the statutory 
requirement and defers to annual NTD reporting instructions for 
specific data required in a given year. Annual reporting instructions 
can be found on the NTD Website (http://www.ntdprogram.com)
    For FY 2006, FTA will use the existing rural data module for the 
NTD reporting requirement. FTA will consider implementing a Web-based 
data collection that mirrors other management information systems which 
could allow States to import data from their subrecipients into the 
existing NTD. However, due to timing and funding availability, FTA will 
not be able to implement such a change in 2006.
    To ease the burden of gathering the information for 2006 reporting, 
FTA will send out a spreadsheet (in the format of the RU-20) so that 
subrecipients can fill in the data and submit the information 
electronically to the State. After the 2006 reports have been entered 
into the NTD, this information will be automatically uploaded in 
subsequent years. Another factor that will assist States in NTD 
reporting is information for the RU-30 will be automatically populated 
by data entered into the RU-20. Small urbanized transit agencies, that 
receive both Section 5307 and 5311 funds, will continue to report the 
5307 service data as previously established and report the rural 
service data to the State DOT for entry into the NTD rural module. FTA 
will ensure that their service is not double counted. FTA will 
establish a workgroup that includes selected State DOTs to assist it in 
the review of existing definitions to the reporting criteria to avoid 
confusion in entering data. Administrative procedures already exist for 
adjusting reporting deadlines, as requested by some States to 
accommodate situations where local subrecipient fiscal years are not 
the same as the State fiscal year.
    With regard to the categories of data, FTA believes that the seven 
data elements listed in SAFETEA-LU are illustrative and but not 
exhaustive. However, when the rural module was developed in 2002, one 
of the SAFETEA-LU data elements, fleet type, was not included. The 
existing rural module will be updated to include fleet type data 
elements at a later date. For FY 2006, all existing data elements 
included on the NTD rural module must be reported by the State for each 
individual subrecipient.
    One State DOT requested that FTA simplify its Disadvantaged 
Business Enterprise (DBE) reporting requirements. The State DOT also 
recommended the elimination of the $250,000 program participation 
threshold to reduce the paperwork burden on small rural operators. The 
request for simplification is beyond the scope of this circular. The 
$250,000 threshold is not an FTA requirement, but instead was 
established by the U.S. DOT in its DBE regulation at 49 CFR part 26.

G. Chapter VII--State Management Plan

    This chapter consists of Circular 9040.1E's Chapter XI, which has 
been moved upward in the table of contents to be consistent with the 
general format for FTA's revised circulars. This chapter contains no 
significant revisions from the existing circular, except to require 
documentation of any consultation process for intercity bus (see 
below).

H. Chapter VIII--Intercity Bus

    This chapter retains the same information from Chapter VII of 
Circular 9040.1E and adds an enhanced consultative process requirement, 
as mandated by SAFETEA-LU. While consultation between a State and 
intercity bus operators regarding the adequacy of intercity bus service 
within the State was encouraged under the previous Circular, SAFETEA-LU 
now makes consultation mandatory for any State certifying that 
intercity bus needs are adequately met.
    Several commenters, including State DOTs and organizations 
representing private bus operators, asked that the revised circular 
establish specific guidelines that would define ``meaningful 
consultation'' and establish a clear process to determine ``unmet 
needs'' regarding the participation of local private operators in 
intercity bus programs funded under Section 5311(f).
    The proposed circular adopts the definition of ``consultation'' 
contained in the FTA/FHWA Joint Planning Regulations (49 CFR part 613/
23 CFR part 450) and establishes four minimum elements of the 
consultation process. The circular also provides guidance to States for 
designing effective processes. The proposed circular also requires that 
any State certifying that needs are adequately met must have conducted 
a Statewide assessment of intercity bus needs no more than four years 
prior to the certification.
    One organization representing private bus operators noted that 
SAFETEA-LU did not define the term ``intercity bus service,'' and 
requested that FTA (1) establish a proper working definition of that 
term so that private operators understand what intercity bus service 
may not be provided by a federally-funded transit agency; and (2) what 
rural service, accessibility and capital projects may be properly 
funded by FTA.
    In its 9040.1E Circular, FTA defined intercity bus service as 
regularly scheduled bus service for the general public that operates 
with limited stops over fixed routes connecting two or

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more urban areas not in close proximity, that has the capacity for 
transporting baggage carried by passengers, and that makes meaningful 
connections with scheduled intercity bus service to more distant 
points, if such service is available. The circular also provided 
additional guidance regarding eligible activities and services. This 
definition and guidance are retained in the proposed circular.
    With regard to the request that the revised circular clarify and 
define eligible rural and capital intercity bus activities, consistent 
with 49 U.S.C. 5311(f), the revised circular retains the language from 
Circular 9040.1E that specifies eligible intercity bus activities to 
include ``planning and marketing for intercity bus transportation, 
capital grants for intercity bus shelters, joint-use stops and depots, 
operating grants through purchase-of-service agreements, user-side 
subsidies and demonstration projects, and coordination of rural 
connections between small transit operations and intercity bus 
carriers.'' FTA notes that consistent with the statutory heading of 
Section 5311, financial assistance under Section 5311(f) must be used 
to support intercity bus service in rural and small urban areas. 
Charter service is not eligible for FTA assistance.

I. Chapter IX--Rural Transportation Assistance Program (RTAP)

    This chapter contains the renumbered Chapter VIII from Circular 
9040.1E. Although it makes no significant substantive changes, it 
reflects the new funding source for the RTAP program as defined by 
SAFETEA-LU. Prior to SAFETEA-LU, the RTAP was funded from FTA's 
research budget. Under SAFETEA-LU, the RTAP is now funded by a 2% 
takedown from the Section 5311 program, with 85% going to the States 
for local projects, and 15% for national projects to supplement State 
projects, such as the maintenance of a national RTAP resource center. 
This funding method ensures a predictable source of annual funding on a 
year-to-year basis.
    In their responses to the November 30th Apportionments Notice, a 
handful of DOTs from less-populated western States supported raising 
the per State minimum distribution of RTAP funds (floor), while a DOT 
from a heavily-populated western State prefers no change be made to the 
existing RTAP funding floor because ample funding provided by the new 
low-density tier will provide for the needs of such low density (and 
population) States. That State suggested retaining the $65,000 floor 
for each State ($10,000 for territories), with the balance allocated 
based on the non-urbanized population in the 2000 Census.
    An organization representing rural transit agencies noted that 
training in completing rural data reporting should be a priority for 
the RTAP, and made available at annual and bi-annual professional 
meetings. The organization also recommended that the minimum 
apportionment per state be increased for States such as North Dakota 
which serve many rural operators, over States like Alaska, Hawaii and 
Rhode Island which, according to the Community Transportation 
Association of America (CTAA) database, serve only 1 to 3 operators. In 
addition, one commenter asked that FTA to direct some RTAP funds to a 
Tribal Transportation Assistance Program.
    For FY 2006 RTAP allocations, FTA used the existing administrative 
formula with a floor of $65,000 ($10,000 for territories) and the 
balance allocated based on the nonurbanized population in the 2000 
Census. Given the lack of substantial support for raising the floor in 
the comments to the November 30 Notice, in the revised circular, FTA is 
not currently proposing to change the formula for allocating State RTAP 
funds.
    Uses for national RTAP program funds are determined by FTA in 
consultation with a national RTAP program review board composed of 
State RTAP program managers and rural transit providers. Training to 
support data collection and support for tribal transit are among the 
priorities FTA is considering, outside the scope of this circular 
revision.

J. Chapter X--Other Provisions

    This chapter combines Circular 9040.1E's Chapter IX ``Civil Rights 
Requirements'' and Chapter X ``Other Provisions.'' While it 
incorporates the same text from those two existing chapters, albeit 
renumbered and reorganized, the revised chapter expands the public 
hearing and involvement requirement for capital project planning to 
conform with SAFETEA-LU. It adds standardized language on Real Property 
Acquisition and Relocation Assistance and it relieves the pre-award and 
post-deliver audit review requirement for procurements of 20 vehicles 
or less. It amends the Buy America provisions to reflect SAFETEA-LU 
changes regarding post-award requests and the right of an adversely 
affected party to seek FTA review, and adds a new section on safety and 
security.
    Several State DOTs asked that the revised circular provide better 
guidance regarding FTA's policy on charter service, particularly for 
Section 5311 subrecipients that provide rural demand-responsive 
service. They noted particular difficulties in interpreting and 
applying the charter service prohibition to demand-responsive 
providers, since all of their service is in response to specific 
customer requests, and therefore can easily resemble charter service. 
It is also difficult for demand response operators to provide an annual 
event ``route'' as part of their public transportation services because 
they do not publish route schedules.
    FTA believes that it would be improper to provide additional 
charter service guidance at this time. Consistent with Section 3032(d) 
of SAFETEA-LU, FTA has initiated a negotiated rulemaking seeking 
comment on FTA's Charter Bus regulation. FTA sponsored Charter Bus 
Negotiated Rulemaking Advisory Committee (CBNRAC) meetings beginning in 
May 2006, and the CBNRAC will develop, through negotiated rulemaking 
procedures, recommendations for improving the regulation regarding the 
prohibition of FTA grant recipients from providing charter bus service. 
The CBNRAC will prepare a report, consisting of consensus 
recommendations for the regulatory text of a draft notice of proposed 
rulemaking (NPRM). This report may also include suggestions for the 
NPRM preamble, regulatory evaluation, or other supplemental documents. 
Interested parties may comment on the Charter Service NPRM once it is 
published in the Federal Register.

K. Appendices

    Exhibits A-G of Circular 9040.1E have been relabeled and 
reorganized as Appendices A-H of the revised circular. The new Appendix 
A contains revised application instructions that were formerly 
contained in Chapter V of Circular 9040.1E. Appendix B retains the 
Sample Selection of Projects that was formerly Exhibit A, but it has 
been amended to recognize the transfer of funds from the Section 5310, 
5316, and 5317 programs. Appendix C retains Section 5311 budget 
information from the former Exhibit B, adding new codes for the Section 
5310, 5316, and 5317 programs. Appendix D is new, reflecting the use of 
flexible funds under SAFETEA-LU. The next three appendices have been 
retained without significant change: Appendix E retains the sample 
intercity bus certification from the former Exhibit E with the addition 
of evidence of consultation; Appendix F reserves the Section 5333(b) 
labor protection warranty from the former Exhibit F; and Appendix G

[[Page 43284]]

retains the Capital Cost of Contracting percentage breakdowns from the 
former Exhibit G. The revised circular adds a new Appendix H, listing 
contact information for FTA's Regional Offices.

    Issued in Washington, DC, this 24th day of July, 2006.
Sandra K. Bushue,
Deputy Administrator.
 [FR Doc. E6-12137 Filed 7-28-06; 8:45 am]
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