[Federal Register Volume 73, Number 190 (Tuesday, September 30, 2008)]
[Notices]
[Pages 56892-56896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22891]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2007-29122]


Grant Management Guidance

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of Availability of Final Circular.

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SUMMARY: The Federal Transit Administration (FTA) has placed in the 
docket and on its Web site (http://www.fta.dot.gov) guidance in the 
form of Circular 5010.1D, Grant Management Requirements, which circular 
replaces FTA's prior Grant Management Circular 5010.1C. Circular 
5010.1D includes information pertaining to new and existing FTA 
programs; incorporates provisions of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); 
discusses the circumstances under which a grantee may request budget 
revisions and grant amendments; identifies useful life standards for 
trolleys, ferry boats, and facilities; and increases the threshold that 
determines whether FTA must approve a real estate appraisal.

DATES: The effective date of the circular is November 1, 2008.

FOR FURTHER INFORMATION CONTACT: For program questions, please contact 
MaryAnne Polkiewicz at 202-366-0203 or [email protected]. For 
legal questions, please contact Jayme L. Blakesley at 202-366-0304 or 
[email protected].

SUPPLEMENTARY INFORMATION:

Availability of Final Circular

    The final circular is not included with this document. You may 
download an electronic copy of the circular from FTA's Web site at 
http://www.fta.dot.gov. From the home page, click on ``Legislation, 
Regulations and Guidance'' and on that page click on ``Circulars.'' 
Circulars are listed in numerical order; the Grant Management Circular 
is number 5010.1D. Paper copies of the circular may be obtained by 
calling FTA's Administrative Services Help Desk at 202-366-4865.
    You may retrieve the circular and comments online through the 
Federal Document Management System (FDMS) at: http://www.regulations.gov. Enter docket number 29122 in the search field. 
Instructions on using FDMS can be found under the help section of the 
Web site.

Table of Contents

I. Overview
II. Chapter-by-Chapter Analysis
    A. Chapter I--Introduction and Background
    B. Chapter II--Circular Overview
    C. Chapter III--Grant Administration
    D. Chapter IV--Project Management
    E. Chapter V--Oversight
    F. Chapter VI--Financial Management
    G. Appendices

I. Overview

    This notice provides a summary of changes to FTA's Grant Management 
Circular. The prior Grant Management Circular was numbered C 5010.1C. 
This new Grant Management Circular is numbered C 5010.1D. This final 
Circular 5010.1D supersedes Circular 5010.1C.
    This notice addresses comments received in response to the 
September 28, 2007, Federal Register notice (72 FR 55629, Notice of 
Proposed Guidance and Request for Comment on the Federal Transit 
Administration's Grant Management Requirements FTA Circular 5010.1D). 
FTA received comments from nine parties, including an industry 
association, transit agencies, and State departments of transportation 
(State DOTs).
    FTA has adopted most of the proposed formatting changes published 
in the proposed circular. For example, we changed the format to make 
this circular consistent with the style of other circulars FTA is 
updating while maintaining some consistency with the previous document. 
Substantive changes in content and comments to the

[[Page 56893]]

proposed circular are discussed in the Chapter-by-Chapter Analysis 
heading.
    One commenter noted that in the September 28, 2007, Federal 
Register notice FTA titled proposed Circular 5010.1D ``Grant Management 
Requirements.'' This commenter asked FTA to change the title to ``Grant 
Management Guidelines.'' FTA disagrees with this change. The 
requirements in the circular are based on existing regulation.
    The cover page to Circular 5010.1D includes a statement at Section 
(6) that ``FTA reserves the right to update this circular to reflect 
changes in other revised or new guidance and regulations that undergo 
notice and comment without further notice and comment on this 
circular.'' One commenter objected to this statement, arguing that all 
changes should be subject to notice and comment. FTA disagrees. When 
the revision of a circular or regulation includes an opportunity for 
notice and comment, there is no need to duplicate that effort for each 
circular affected by such revision.
    One commenter lauded FTA, noting that the expanded narrative and 
examples are positive improvements. This commenter and one other stated 
that FTA could improve Circular 5010.1D by adding more references or 
Web addresses. FTA agrees with this commenter and will include Web 
addresses in the electronic version of Circular 5010.1D.
    Three commenters asked FTA to clarify the difference between the 
terms grantee, recipient, and subrecipient. FTA has added language to 
Circular 5010.1D stating that it uses the terms grantee and recipient 
interchangeably, and clarifying its pass-thru policies.

II. Chapter-by-Chapter Analysis

    As a preliminary matter, some commenters had non-substantive 
comments, such as formatting suggestions, a suggestion to remove 
references to old Federal Register notices, to include specific terms 
in the index, and to do a thorough review of the draft for typos, 
cross-referencing errors, and the like. We have removed the old Federal 
Register references, made some, but not all, of the suggested 
formatting changes, added terms to the index, and we have thoroughly 
reviewed the document in an effort to remove the errors noted by 
commenters. Furthermore, we have reordered the sections of some of the 
chapters to provide the material in a more organized fashion. Some 
comments were outside the scope of the proposed circular, and we have 
not addressed those comments in either the circular or this Federal 
Register notice.

A. Chapter I--Introduction and Background

    Chapter I introduces the Federal Transit Administration (FTA) and 
its authorizing legislation (49 U.S.C. Chapter 53). It also instructs 
readers on how to contact FTA and how to find out about competitive 
grant opportunities using Grants.gov. Finally, Chapter I defines all 
terms-of-art used in Circular 5010.1D.
    One commenter asked FTA to change its definition of ``real 
property'' to conform to certain State provisions that define real 
property to include machinery and equipment that are fixtures. After 
careful consideration, FTA has decided against changing its definition 
of real property.
    The same commenter asked FTA to revise its definitions of 
``equipment'' and ``supplies'' so that the dollar value thresholds are 
comparable. This commenter asked FTA to raise the ceiling for supplies 
to $25,000. FTA declines to revise its definitions of ``equipment'' and 
``supplies.'' These definitions are based on the definitions and 
requirements at 49 CFR part 18--Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments (also 
known as the Common Grant Rule).
    One commenter noted that by defining a budget revision to include 
the addition or deletion of an activity line item (ALI) in FTA's 
Transportation Electronic Award and Management (TEAM) system, the 
proposed circular appeared to contradict prior FTA guidance. FTA notes 
that this change is intentional and in the instance of any such 
contradictions, Circular 5010.1D supersedes prior versions of the 
circular.
    One commenter recommended that the proposed definition for 
discretionary funding should be revised to read ``grant funds 
distributed at the discretion of the agency, or Congress, as distinct 
from formula funding.'' Except for ``or Congress,'' FTA has 
incorporated this language into the final version of Circular 5010.1D.
    Another commenter suggested that FTA revise its definition of 
straight line depreciation. FTA has modified its definition 
accordingly.
    Another commenter asked FTA to define ECHO. FTA has added a 
definition of ECHO-Electronic Clearing House Operation.
    One commenter noted discrepancies in FTA's use of the term ``force 
account.'' This same commenter asked FTA to add information about the 
Catalog of Federal Domestic Assistance (CFDA). The definition of force 
account has been revised and Catalog of Federal Domestic Assistance has 
been added to the definition section.
    Another commenter asked FTA to clarify whether a Native American 
tribe is considered a local government authority. FTA has edited the 
introduction section to include federally recognized Indian tribes and 
a definition of Tribal Government from 43 U.S.C. 1601.
    One commenter asked FTA to state that the Common Rule (49 CFR part 
18) applies to all FTA grantees. FTA has added language making clear 
the applicability of the Common Rule.

B. Chapter II--Circular Overview

    Chapter II provides an overview of Circular 5010.1D, including 
applicable program descriptions, grant management responsibilities, and 
Federal civil rights requirements.
    One commenter suggested that the applicable program descriptions 
should include fewer details. FTA disagrees. FTA is using the same 
program descriptions in all of its circulars to reduce the need for ad 
hoc revisions to each circular whenever programs change.
    The same commenter asked FTA to consider adding under its role that 
FTA may utilize a Project Management Oversight Consultant to aid in its 
management of grants. FTA declines to make this revision, noting that 
this is explained in Chapter V, Oversight.
    One commenter said it was redundant for FTA to provide an 
introduction under the heading ``Responsibilities of Grant Management'' 
and to add another list of specifications. FTA disagrees. These 
sections are similar but not identical.
    Another commenter asked FTA to review the list of Civil Rights 
requirements to ensure that it includes the proper thresholds. FTA has 
updated Circular 5010.1D accordingly.

C. Chapter III--Grant Administration

    Chapter III discusses the mechanics and requirements for grant 
administration, including the grant application process, reporting 
requirements, and grant modifications (including budget revisions).
    One commenter noted that FTA's TEAM system requires FTA approval on 
all budget revisions. As noted, TEAM does not recognize the difference 
between budget revisions that do and do not require FTA approval. 
Accordingly, grantees may continue to make certain budget revisions 
without prior FTA approval.

[[Page 56894]]

    This same commenter asked FTA to add descriptions of size and 
physical characteristics to Subsection 4.a(3)(e). FTA declines to add 
more detail to this subsection, for any change in size or physical 
characteristic would require FTA approval. Even the smallest change in 
the size or physical characteristic, such as the difference between 
surface or structured parking, could affect FTA and grantee 
responsibilities under the National Environmental Policy Act or other 
Federal requirements.
    One commenter urged FTA to enlarge the universe of changes that may 
be made without pre-approval. FTA disagrees with this commenter. 
Circular 5010.1D strikes a balance between flexibility and good 
stewardship. To allow greater flexibility would risk the misuse of 
Federal funds.
    With respect to spare vehicles, another commenter suggested that as 
long as the spare ratio requirements are maintained and funds are 
available within the rolling stock scope or other scopes, FTA should 
permit grantees to make revisions regarding fleet number without prior 
FTA approval. FTA disagrees with this commenter. Prior FTA approval 
must be obtained for revenue rolling stock, whenever the budget 
revision changes the number of vehicles to be purchased by more than 
two units (for grants with fewer than 10 vehicles) or more than 20 
percent from the quantity identified in the original grant. The grantee 
must continue to meet FTA bus spare ratio requirements for any change 
in the number of revenue rolling stock. If the change in the number of 
revenue rolling stock exceeds 20 percent, the budget revision must be 
supported by a Rolling Stock Status Report.
    Another commenter noted that the addition or deletion of ALIs 
represents significant changes to the purpose of a grant and asked FTA 
to clarify the difference between revisions and amendments. This same 
commenter asked FTA to establish time limits for processing budget 
revisions and to advise grantees whenever administrative amendments are 
anticipated. FTA appreciates these suggestions. With respect to the 
difference between budget revisions and grant amendments, FTA has 
included language in Circular 5010 distinguishing between budget 
revisions, administrative amendments, and grant amendments.
    A budget revision is any change within the scope that impacts 
budget allocations of the original grant. A budget revision may be a 
transfer of funds within a project scope or between existing ALIs 
within an approved grant. It could also include the addition or 
deletion of an ALI.
    An administrative amendment is a minor change in a grant agreement 
normally initiated by FTA to modify or clarify certain terms, 
conditions, or provisions of a grant. A grant amendment is the 
modification of a grant that includes a change in scope and/or a change 
in Federal funds. With respect to establishing time limits for 
processing budget revisions and grant amendments, FTA agrees with the 
commenter but believes that such timeframes are best made through 
internal standard operating procedures (SOPs) and not through this 
circular.
    FTA proposed requiring prior approval for budget revisions for all 
grants with a Federal share of more than $100,000 and if the change in 
the cumulative amount of funds allocated to each scope from the 
originally approved scope exceeds 20 percent. One commenter asked FTA 
to rethink the $100,000 threshold. This commenter suggests applying the 
20 percent rule to all grants, regardless of whether the Federal share 
exceeds $100,000. The $100,000 threshold is based on the Common Grant 
Rule requirements at 49 CFR part 18--Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments.
    One commenter asked FTA to inform the grantee when FTA is about to 
take any unilateral action with respect to a grant, especially if that 
action relates to closing out a grant. FTA agrees. Although it is 
common practice to inform the grantee of such actions, FTA will 
reemphasize the need to contact grantees before taking unilateral 
action to close out a grant.
    This same commenter asked FTA to explain why the ``details'' 
section in TEAM limits text to 60 characters. FTA instructs its 
grantees to use the attachment feature if 60 characters are 
insufficient.
    One commenter pointed out that, contrary to its statement in the 
Federal Register, FTA did not indicate in proposed Circular 5010.1D how 
it has changed its use of the term ``scope.'' FTA agrees with this 
commenter and clarified the definitions of scope and activity line 
items (ALIs).
    Milestone/progress reporting for all Section 5309 grant recipients, 
regardless of location and population area, has been revised to reflect 
the requirement to submit quarterly reports in TEAM when grants include 
construction of a facility.
    In the records retention section of its proposed guidance, FTA 
noted that photocopies are acceptable. One commenter asked FTA to 
expand this policy to include other formats such as microfiche or 
digitally scanned documents. FTA has examined this comment and added 
language to Circular 5010.1D that allows for other formats.

D. Chapter IV--Project Management

    Real property, equipment and supplies, rolling stock, and 
facilities purchased or constructed for project purposes must be 
managed, used, and disposed of in accordance with applicable laws and 
regulations. Chapter IV provides guidance on the management, use, and 
disposition of FTA funded real property, equipment, supplies, rolling 
stock, and facilities.
    One commenter asked why FTA decided to include real property in its 
Grant Management Circular and not in its Procurement Circular. FTA 
notes that it may need to include a section on real property in its 
Procurement Circular, but declines to remove it from Circular 5010.1D.
    Another commenter applauded FTA's proposal to raise the threshold 
for appraisal concurrence from $100,000 to $500,000, but asked FTA to 
consider increasing the threshold to $1,000,000. While FTA appreciates 
this comment, it is still common for FTA to discover incorrect 
appraisals. For this reason, FTA will not increase the threshold to 
$1,000,000.
    One commenter asked FTA to better explain the conditions that may 
warrant the use of a grantee's own labor forces, commonly referred to 
as force account. FTA has added the following conditions to Circular 
5010.1D: (1) Cost savings, (2) exclusive expertise, (3) safety and 
efficiency of operations, and (4) union agreement.
    A commenter stated that FTA should require its grantees to notify 
FTA of excess land as soon as it becomes excess, and asked that such 
notification include a disposition proposal and schedule for 
disposition. FTA does not agree with this commenter. Grantees must 
notify FTA when property is removed from the service originally 
intended. The notification must include the anticipated disposition or 
action proposed.
    Previously, FTA would rely upon a grantee's expertise when 
determining the useful life for assets other than rolling stock. One 
commenter asked FTA to continue this practice instead of fixing a 
useful life for all assets. FTA disagrees with this commenter. By 
establishing a useful life for facilities, FTA ensures consistency 
across projects and regions. Where a useful life policy has not been 
defined by FTA, the

[[Page 56895]]

grantee, in consultation with the FTA regional or metropolitan office 
shall ``make the case'' by identifying a useful life period for all 
equipment and facilities with an acquisition value greater than $5,000 
to be procured with Federal funds. In the grant application, the 
grantee shall propose and identify a useful life for the capital asset 
to be purchased with Federal funds. FTA approval of the grant 
represents FTA concurrence of the final determination of useful life 
for the purpose of project property acquisition. This in turn will 
identify the useful life of the Federal interest for the disposition of 
the project property in later years. Acceptable methods to determine 
useful life include but are not limited to:
    (a) Generally accepted accounting principles.
    (b) Independent evaluation.
    (c) Manufacturer's estimated useful life.
    (d) Internal Revenue Service guidelines.
    (e) Industry standards.
    (f) Grantee experience.
    (g) The grantee's independent auditor who needs to concur that the 
useful life is reasonable for depreciation purposes.
    (h) Proven useful life developed at a Federal test facility.
    Useful Life of a fixed guideway electric trolley-bus with rubber 
tires obtaining traction from overhead catenary has been revised to be 
15 years from previously proposed 18 years.
    One commenter stated that FTA's proposal concerning vehicles 
removed from service because of fire, collision, or natural disaster 
inappropriately shifts risk to its grantees, noting that the existing 
circular looks to the post-event value of the vehicle to measure the 
remaining Federal interest while the proposed circular would refer to 
the pre-event value. This commenter urged FTA to maintain the existing 
policy. FTA disagrees. The policy articulated in Circular 5010.1D is 
consistent with FTA's Master Agreement and current FTA practice. 
Similar to Circular 5010.1D, Section 19.h(b)(1) of FTA's Master 
Agreement states that the fair market value of project equipment and 
supplies shall be the value immediately before the occurrence prompting 
the withdrawal of the equipment or supplies from appropriate use. In 
the case of project equipment or supplies lost or damaged by fire, 
casualty, or natural disaster, the fair market value shall be 
calculated on the basis of the condition of the equipment or supplies 
immediately before the fire, casualty, or natural disaster, 
irrespective of the extent of insurance coverage.
    One commenter asked FTA to consider adopting the practice of 
communicating directly with the grantee receiving a new grant award, 
perhaps by modifying TEAM to include a facility for automatically 
advising grantee contacts by e-mail when FTA revises the grant's status 
or inputs comments. FTA is looking at improving TEAM accordingly. In 
the meantime, FTA's regional offices will make every effort to contact 
grantees when modifying a grant application or award.
    Several parties offered comments on the reporting requirements 
articulated in proposed Circular 5010.1D. Please note that FTA has made 
its best effort to avoid duplicative reporting requirements. Moreover, 
FTA notes that the reporting requirements may vary depending on the 
size of the grantee, the type of funding, or the amount of funding a 
grantee receives. Please contact the regional or metropolitan office 
with questions regarding the applicability of the reporting 
requirements of Chapter III. With respect to requiring grantees to 
state the useful life of an asset in its grant application, FTA is 
ensuring that it can verify the use and disposition of that asset 
throughout its useful life.
    Another commenter identified several misnumbered sections in this 
chapter. FTA has corrected these errors.
    A State DOT asked FTA to clarify language regarding its Equal 
Employment Opportunity programs to apply to more than just transit 
agencies. FTA has modified Chapter III accordingly.
    The same commenter noted that the National Transit Database Safety 
and Security Reporting requirement is exclusive to urban areas. FTA 
agrees and has clarified this point.
    Another State DOT asked FTA to note that there is no minimum 
vehicle threshold for reporting in the nonurbanized program. FTA agrees 
and has modified Circular 5010.1D accordingly.
    One commenter stated its understanding that 49 U.S.C. 5334(h)(1)-
(3) applies to transferring property that has not met useful life 
standards, and suggested that FTA amend the circular text to include 
this statement. FTA agrees and has modified Circular 5010.1D 
accordingly.
    The same commenter noted that insurance proceeds set the current 
fair market value of an asset and that the Federal share is based upon 
this number. FTA refers this commenter to the following language from 
FTA's Master Agreement: In the case of Project equipment or supplies 
lost or damaged by fire, casualty, or natural disaster, the fair market 
value shall be calculated on the basis of the condition of the 
equipment or supplies immediately before the fire, casualty, or natural 
disaster, irrespective of the extent of insurance coverage.
    One commenter identified several inadvertent omissions from the 
section on real property. FTA has updated this section in accordance 
with the Department's Uniform Relocation Act regulations.
    Two parties asked FTA to distinguish between rebuilding and 
overhauling a vehicle or system. Accordingly, FTA has updated Circular 
5010.1D to distinguish between overhaul and rebuild. Overhaul is 
performed as a planned or concentrated preventative maintenance 
activity and is intended to enable the rolling stock to perform to the 
end of its original useful life. Rebuild is a capital expense incurred 
at or near the end of the useful life of rolling stock that results in 
a new useful life for the rolling stock that is consistent with the 
extent of the rebuilding.
    One commenter asked FTA to clarify when a grantee or recipient must 
return insurance money that it receives from a subrecipient. FTA's 
Master Agreement in Section 19, Subsection i states that if the 
recipient receives insurance proceeds as a result of damage or 
destruction to the project property, the recipient agrees to: (1) Apply 
those insurance proceeds to the cost of replacing the damaged or 
destroyed Project property taken out of service, or (2) Return to the 
Federal Government an amount equal to the remaining Federal interest in 
the damaged or destroyed Project property.
    Another commenter asked FTA to clarify when a grantee should submit 
a Project Management Plan (PMP) to FTA as a prerequisite to grant 
approval. According to FTA's Project Management Oversight rule, 49 CFR 
part 633, for all major capital projects, the grantee must submit a PMP 
as part of its grant application.
    Several commenters expressed concern that FTA proposes to include 
useful life determination in grant agreements and that the minimum 
threshold for such determinations is $5,000. FTA disagrees with these 
commenters. According to the Common Grant Rule, every asset over $5,000 
must be accounted for. Indirectly, this means that every asset over 
$5,000 must have a useful life.

E. Chapter V--Oversight

    Chapter V discusses FTA oversight. FTA evaluates grantee adherence 
to program and administrative requirements through a comprehensive

[[Page 56896]]

oversight program. FTA's Master Agreement specifies these requirements. 
FTA determines compliance through self-certification, oversight review 
and audits, and site visits. FTA annually completes an individual 
Grantee Oversight Assessment Questionnaire, which serves as baseline 
information for each grantee's capacity to comply, and the degree of 
the risk the grantee's program may represent for the Federal program. 
Based on this information, FTA makes decisions about which grantees 
will receive oversight reviews during the coming year. Regional staff 
uses the information to develop regional oversight plans and to 
allocate oversight resources within the region for the upcoming fiscal 
year, which may include oversight reviews, regional meetings, and/or 
regional site visits.
    One commenter asked FTA to add its Job Access Reverse Commute 
(JARC) and New Freedom Programs to the list of programs covered by 
State Management Reviews. FTA only listed programs for which it is 
authorized to withhold a percentage for oversight activities. FTA 
retains the right to review any of its programs through State 
Management Reviews.

F. Chapter VI--Financial Management

    Chapter VI discusses the proper use and management of Federal funds 
FTA expects from its grantees. Financial management is one of the most 
important practices in the management of Federal funds.
    One commenter asked FTA to define the Cash Basis of Accounting and 
its permissible use. Definitions have been added.
    Another commenter asked FTA to clarify whether a specific form is 
required for documenting internal controls. FTA notes that the form 
checklist provided in Circular 5010.1D is not mandatory. FTA has 
provided it to those transit properties that do not currently do their 
own testing. FTA has modified Circular 5010.1D to make clear that this 
form is a tool, not a requirement.

G. Appendices

    One commenter noted that Appendix C, Guide for Preparing an 
Appraisal Scope of Work, is excellent guidance and asked FTA to include 
a review appraisal scope of work. FTA agrees with this comment and has 
indicated that the Guide for Preparing an Appraisal Scope of work can 
also be used for a review appraisal.
    Appendix D, Fleet Status Report, has been renamed and revised so as 
to not be confused with the Fleet Status Report screen in TEAM. The new 
name is Rolling Stock Status Report. The use of this report is limited 
to disposing of a vehicle that has met minimum useful life and fair 
market value is greater than $5,000, disposing of a vehicle before it 
reaches minimum useful life, or requesting a budget revision affecting 
vehicles.

    Issued in Washington, DC, this 22nd day of September, 2008.
James S. Simpson,
Administrator.
[FR Doc. E8-22891 Filed 9-29-08; 8:45 am]
BILLING CODE 4910-57-P