[Federal Register Volume 79, Number 11 (Thursday, January 16, 2014)]
[Notices]
[Pages 2930-2936]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00666]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2013-0010]


Urbanized Area Formula Program: Final Circular

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, guidance, in the form of a Circular, to 
assist recipients in their implementation of the Urbanized Area Formula 
Program. The purpose of this Circular is to provide recipients of FTA 
financial assistance with instructions and guidance on the program's 
administration and the grant application process.

DATES: Effective Date: The effective date of the Circular is January 
16, 2014.

FOR FURTHER INFORMATION CONTACT: For program matters, Adam Schildge, 
Office of Project Management, Federal Transit Administration, 1200 New 
Jersey Ave. SE.; (202) 366-0778 or [email protected]. For legal 
matters, Rita Maristch or Candace Key, Office of Chief Counsel, same 
address; (215) 656-7100; (202) 366-4011, respectively, or 
[email protected]; [email protected].

SUPPLEMENTARY INFORMATION:

Availability of Final Circular

    This notice provides a summary of changes to the Urbanized Area 
Formula Program Circular 9030.1E, and responses to comments. The final 
Circular itself is not included in this notice; instead, an electronic 
version may be found on FTA's Web site, at www.fta.dot.gov, and in the 
docket, at www.regulations.gov. Paper copies of the final Circular may 
be obtained by contacting FTA's Administrative Services Help Desk, at 
(202) 366-4865.

Table of Contents

Overview
I. Chapter-by-Chapter Analysis
    A. General Comments
    B. Chapter I--Introduction and Background
    C. Chapter II--Program Overview
    D. Chapter III--General Program Information
    E. Chapter IV--Eligible Projects and Requirements
    F. Chapter V--Planning and Program Development
    G. Chapter VI--Program Management and Administrative 
Requirements
    H. Chapter VII--Other Provisions
    I. Chapter VIII--Tables, Graphs, and Illustrations
    J. Chapter IX--Appendices

I. Overview

    FTA is updating its Circular 9030.1D, ``Urbanized Area Formula 
Program: Program Guidance and Application Instructions,'' last revised 
on May 10, 2010, to incorporate changes made to the section 5307 
Urbanized Area Formula Program (section 5307 Program) by the Moving 
Ahead for Progress in the 21st Century Act (MAP-21, Pub. L. 112-141), 
signed into law on July 6, 2012. The section 5307 Program authorizes 
Federal financial assistance for public transportation in urbanized 
areas for capital and planning projects, job access and reverse commute 
projects, and, in some cases, operating assistance. This notice 
provides a summary of changes to FTA Circular 9030.1D and addresses 
comments received in response to the proposed Circular that was 
published in the Federal Register on April 22, 2013. 78 FR 23818. The 
final Circular, 9030.1E, ``Urbanized Area Formula Program: Program 
Guidance and Application Instructions,'' becomes effective upon 
publication, and will supersede FTA Circular 9030.1D.
    MAP-21 made several significant changes to the laws authorizing the 
Federal transit programs. Many of the changes have cross-cutting 
impacts across all of FTA's programs and further several important 
goals of the Department of Transportation (DOT). Most notably, MAP-21 
grants FTA significant new authority to oversee and regulate the safety 
of public transportation systems throughout the United States. The Act 
also puts new emphasis on restoring and replacing the Nation's aging 
public transportation infrastructure by establishing a new State of 
Good Repair Formula Program and new asset management requirements. In 
addition, it aligns Federal funding with key performance goals and 
tracks recipients' progress towards these goals. Finally, MAP-21 
improves the efficiency of program administration through program 
consolidation and streamlining. For example, job access and reverse 
commute activities, previously included in a separate Federal transit 
assistance

[[Page 2931]]

program, have been consolidated in the section 5307 Program and the 
section 5311 Formula Grants for Rural Areas Program.
    The final Circular reflects changes in the law to the section 5307 
Program and, where applicable, changes to other programs and 
provisions. The final Circular has also been reorganized and revised to 
improve clarity and to achieve consistency with FTA's other guidance 
documents. FTA expects the additional updates and clarification 
provided by the final Circular to provide recipients with the guidance 
and direction they need to properly apply for funding and comply with 
the requirements of the section 5307 Program.
    The final Circular will apply to all new grants made on or after 
the effective date of the final Circular with FY 2013 or later funds. 
The requirements of the section 5307 Program under the Safe 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU, Pub. L. 109-59 (2005) and the guidance provided 
in the old Circular, 9030.1D, will continue to apply to grants made 
with FY 2012 or earlier funds after the effective date of the final 
Circular. In accordance with FTA's Master Agreement, MAP-21 cross 
cutting provisions will apply to each new grant, despite funding year.

Chapter-by-Chapter Analysis

A. General Comments

    A total of 58 commenters responded to the proposed Circular. The 
majority of the comments received pertained to eligibility and other 
requirements for job access and reverse commute projects. A number of 
commenters made suggestions or recommendations that were outside the 
scope of this Circular. For example, comments were made about the 
process for recipient oversight assessments, and reporting requirements 
for the National Transit Database. In addition, a number of commenters 
suggested that FTA reference updated FTA guidance documents on others 
issues in this Circular, requested minor clarifications to statements 
or terms that did not impact the substance of the Circular, and 
commented on other issues that were not directly relevant to section 
5307 program requirements.
    Several commenters suggested that FTA clarify language regarding 
particular points of guidance provided in the previous Circular that 
had either been misinterpreted by grantees or pertain to issues that 
arise under relatively uncommon circumstances. Where possible, FTA has 
made edits to clarify the language in the Circular. For example, FTA 
revised language that provided guidance on the provision which allows 
up to 10 percent of an apportionment to be used for paratransit 
operations as a capital project. This provision does not preclude 
paratransit operations from being eligible to receive additional 
funding for operating expenses under standard operating expense 
eligibilities. In other cases, FTA inserted clarifying language from 
other circulars when a cross-cutting provision was mentioned.

B. Chapter I--Introduction and Background

    Chapter I of the final Circular is an introductory chapter that 
covers general information about FTA, provides a brief history of the 
5307 Program (49 U.S.C. 5307), including changes MAP-21 made to the 
section 5307 Program, and defines terms applicable across all FTA 
programs. The final Circular includes the following statutory 
definitions:
     Associated transit improvements (previously ``transit 
enhancements'')
     Bus rapid transit (BRT) system
     Commuter highway vehicle or vanpool vehicle
     Disability
     Fixed guideway
     Job access and reverse commute project
     Low income individual
     Private provider of public transportation by vanpool
     Public transportation
     Regional transportation planning organization
     Senior
    Definitions have also been added to this section for terms that are 
unclear or currently undefined in Federal transit law, regulation or 
guidance. Where applicable, we have used the same definitions found in 
statute, rulemakings or other circulars to ensure consistency.
    There were several comments that suggested revisions to the 
definitions section. One commenter suggested that FTA revise the 
definitions of ``capital asset'' and ``operating expenses'' to account 
for variations of these definitions in State laws. FTA believes that 
the definition of terms must be applied uniformly to its Federal 
transit assistance programs for purposes of administration and, 
therefore, declines to accept the suggested revisions. Another 
commenter suggested that FTA clarify whether the definition of ``force 
account'' requires grantees to use force accounts for work completed by 
in-house staff in the process of supervising contractor work. FTA 
clarified the definition of force account to state that force account 
does not include project administration, preventive maintenance, 
mobility management, or other non-traditional capital project types. 
FTA has also included a reference to Circular 5010.1D, ``Grant 
Management Requirements,'' which provides additional guidance on force 
accounts.

C. Chapter II--Program Overview

    Chapter II covers general information about the 5307 Program, 
including revisions to the section entitled ``Statutory Authority,'' to 
add references to MAP-21. As a result of MAP-21, section 5307 Program 
funds are available for certain new and redefined activities, including 
job access and reverse commute projects, operating costs, and 
associated transit improvements.
    The Circular includes a new section entitled ``Census Designation 
of Urbanized Areas'' (UZA). This section describes the designation of 
UZAs based on the 2010 Census. Beginning in fiscal year (FY) 2013, FTA 
incorporated the results of the 2010 Census into its formula 
apportionments. The 2010 Census data shows that the number of UZAs 
increased from 465 in 2000 to 497 in 2010, and the total population 
residing in UZAs increased from 195 to 223 million-an increase of 
approximately 12 percent. As a result, some UZAs have crossed 
statutorily-mandated population thresholds resulting in changes to the 
amount of formula funds that those areas can receive, and possibly 
resulting in changes to eligible uses of those funds.
    The section entitled ``FTA's Role in Program Administration'' was 
revised to clarify that funds are apportioned to States and designated 
recipients (DR), only: States for small UZAs; and DRs for large UZAs. 
One commenter suggested that a regional body be permitted to serve as a 
designated recipient for small UZAs. Federal law does not allow a 
regional planning organization to serve as a designated recipient for 
the purpose of allocating apportioned funds to small UZAs. Only 
governors have the authority to approve the allocation of funds in 
small UZAs. Therefore, FTA treats the State as the designated recipient 
for these areas and expects them to approve the individual allocations 
for the small UZAs.
    A new section was added to this chapter entitled, ``Direct 
Recipient and Sub-recipient Eligibility.'' This section clarifies the 
process for selecting and establishing a direct recipient, and 
clarifies the process for allocating funds to direct recipients and for 
sub-awarding funds to subrecipients. Direct recipients must be public 
entities that are legally eligible to apply for FTA

[[Page 2932]]

funding. If certain requirements are met, a public agency may apply for 
some or all of a UZA's apportionment.
    One commenter suggested that FTA allow private for-profit transit 
operators to be eligible subrecipients under the section 5307 Program. 
In addition, several commenters, particularly those located in newly- 
classified urbanized areas as a result of the 2010 Census, requested 
that FTA consider allowing non-profits to be eligible subrecipients 
under the section 5307 program. Historically, the only eligible 
subrecipients under this program have been public entities otherwise 
eligible to be direct recipients. However, FTA proposed and is 
continuing its position that non-profit agencies be eligible 
subrecipients for job access and reverse commute projects only. This is 
described in more detail in Section E of this notice and Chapter IV of 
the Circular. Outside of this allowance, private for-profit and non-
profit operators may receive 5307 funding through a contracted service 
arrangement with an eligible FTA recipient.
    A Section 5307 recipient, whether a designated recipient or direct 
recipient, may choose to pass its grant funds through to another 
eligible entity (sub-recipient) to carry out a project eligible under 
Section 5307. Designated recipients must inform FTA of specific 
allocations for direct recipients in a ``split letter,'' which 
establishes the allocation of section 5307 funds in a large UZA. With 
respect to associated transit improvement projects, one commenter 
suggested that the split letter include the agencies undertaking 
associated transit improvements, and not specific projects. The 
Circular explicitly states that specific projects do not need to be 
identified. However, FTA made a minor change to the circular language 
to clarify that a designated recipient's sub-area allocation 
documentation should identify the use of funds for eligible associated 
transit improvements and how the requirement will be met.
    Added to the final Circular was further clarification of 
subrecipient arrangements that may arise as a result of revisions to 
urbanized area boundaries based on the U.S. Census. Designated 
recipients and direct recipients may enter into a contract for service 
with private non-profits who once provided public transportation 
service in a rural area that has been re-designated as an urbanized 
area. FTA acknowledges that some localities may consider other 
alternatives, including providing the service directly.
    Also included in this Chapter in the section entitled 
``Relationship to Other Programs,'' is discussion on the relationship 
between the section 5307 Program and the Safe, Accountable, Efficient 
Transportation Equity Act, a Legacy for Users (Pub. L. 109-59, SAFETEA-
LU) programs that were repealed by MAP-21, including the following:

     Clean Fuels Grant Program (former section 5308)
     Bus and Bus Facilities Discretionary Program (former 
section 5309(b)(3)
     Job Access and Reverse Commute Program (former section 
5316)
     New Freedom Program (former section 5317)
     Paul S. Sarbanes Transit in the Parks Program (former 
section 5320)
     Alternatives Analysis Program (former section 5339)

    Funds previously authorized for programs that were repealed by MAP-
21 may remain available for obligation unless Congress rescinds or 
redirects them to other programs. Funds made available to carry out the 
above programs are subject to the program rules and requirements at the 
time funds were appropriated.

    This section also discusses the relations between the section 5307 
Program and programs that were either added or amended by MAP 21, 
including the following:

 Fixed Guideway Capital Investment Program (section 5309, New 
and Small Starts, and Core Capacity Improvements)
 Public Transportation Emergency Relief Program (section 5324)
 Bus and Bus Facilities Formula Program (section 5339)
 State of Good Repair Formula Program (section 5337)
 Rural Area Formula Program (section 5311)
 Transit Oriented Development Pilot Program (section 20005(b) 
of MAP-21)
 Transportation Alternatives Program (23 U.S.C. 213(b))
 Federal Lands Access Program (23 U.S.C. 204).

    Once commenter requested clarification of the transfer provision 
described under the discussion of the section 5339 Bus and Bus 
Facilities Formula Program. Under the section 5339 Bus and Bus 
Facilities formula program, a portion of the funds are allocated 
through an initial national distribution to States. The remaining funds 
are apportioned consistent with the formula under section 5336 (other 
than subsection (b)) to States and UZAs on the basis of population, 
vehicle revenue miles and passenger miles. In general, section 5307 
Program requirements apply to section 5339 grants. The Governor of a 
State or the Governor's designee may transfer funds apportioned under 
the national distribution only to supplement amounts apportioned under 
the Rural Area (section 5311(c)) or section 5307 Program. The law does 
not allow section 5339 funds apportioned pursuant to the section 5336 
formula to be transferred to the section 5307 or 5311 programs. FTA 
revised the final Circular to address this comment. Further information 
on section 5339 will be published in a separate proposed Circular for 
notice and comment.

D. Chapter III--General Program Information

    This chapter discusses in more detail the apportionments for the 
section 5307 Program. It also discusses the Federal share of projects 
costs, local share, other sources of financing, and the new Passenger 
Ferry Discretionary Grant Program. Discussion of eligible projects was 
moved from chapter III in the previous Circular, to chapter IV in the 
final Circular.
    The section entitled ``Apportionment of Program Funds,'' provides 
the revised apportionment calculations, including the new set-asides 
and formula calculations established by MAP-21. Section 5336(h) of 
title 49, U.S.C., now provides that 3.07 percent of section 5307 funds 
available for apportionment are allocated on the basis of low-income 
persons residing in UZAs, with 25 percent of these funds allocated to 
areas below 200,000 in population and the remaining 75 percent 
allocated to areas 200,000 and over in population. MAP-21 also 
increased the percentage of funds allocated on the basis of Small 
Transit Intensive Cities (STIC) factors from 1 to 1.5 percent. Finally, 
MAP-21 established a new 0.5 percent takedown from the 5307 program for 
the State Safety Oversight Grant Program and a $30 million takedown for 
the new Passenger Ferry Discretionary Grant Program.
    Generally, MAP-21 extended the number of years that apportioned 
funds remain available for obligation from 4 to 6 years. As a result, 
apportioned funds are now available for obligation for a total of 6 
years, including the year of apportionment.
    One commenter requested clarification on whether the Governor of a 
State is permitted to redirect funds apportioned to a large UZA within 
90 days of lapsing. This is not permitted under MAP-21, nor was it 
permitted

[[Page 2933]]

under SAFETEA-LU. However, to better articulate the transfer provisions 
found in section 5336(e), FTA has clarified the language in the 
circular to reflect that a Governor may use any 5307 program funds from 
the Governor's apportionment that remain available for obligation 
beginning ninety days before the expiration of their period of 
availability in any area within the state (including large UZA's) for 
purposes eligible under the Urbanized Area Formula Program without 
prior consultation. The Governor may not redirect funds apportioned to 
a large UZA, unless the funds are transferred to the State by the 
designated recipient in accordance with the procedures identified in 
the final Circular.
    This chapter also provides a brief introduction of the new 
Passenger Ferry Grants Discretionary Program. Each fiscal year, a total 
of $30 million is authorized to be set aside from the 5307 program to 
support passenger ferry projects that will be selected on a competitive 
basis. One commenter suggested that consideration be given to making 
the application process for discretionary ferry grants as streamlined 
as possible to reduce the administrative burden on transit operators 
who are preparing proposals. It was also requested that funding be made 
predictable, to the extent possible. FTA has coordinated extensively 
with the passenger ferry industry in developing the Passenger Ferry 
Discretionary Program. By statute, funds are allocated on a competitive 
basis, and cannot be entirely predictable due to the differences in the 
applications submitted from year to year.
    Generally, and consistent with MAP-21, the final Circular does not 
change the local match requirements--there is a 20 percent local match 
requirement for capital assistance and a 50 percent requirement for 
operating assistance. However, MAP-21 expanded the category of funds 
that can be used as local match. In addition to those sources of local 
match previously authorized under SAFETEA-LU, local match may also be 
derived from the following newly authorized sources:
     Amounts appropriated or otherwise made available to a 
department of or agency of the Government (other than DOT), such as 
Community Development Block Grant Funds administered by the Department 
of Housing and Urban Development.
     Any amount expended by providers of public transportation 
by vanpool for the acquisition of rolling stock to be used in the 
recipient's service area, excluding any amounts the provider may have 
received in Federal, State or local government assistance for such 
acquisition. The provider is required to have a binding agreement with 
the public transportation agency to provide service in the relevant 
UZA.
    The final Circular has been revised to clarify that the Federal 
share of vehicle acquisition for purposes of complying with the Clean 
Air Act or the Americans with Disabilities Act, is 85 percent. The 
Federal share is 90 percent for vehicle related equipment and 
facilities. One commenter identified a discrepancy in the Federal 
Register notice accompanying the proposed circular regarding the 
eligibility of clean fuel buses as clean air act projects. The 
statement in the Federal Register notice was incorrect. Clean fuel 
buses remain eligible Clean Air Act projects and are eligible for an 
increased Federal share. However, biodiesel is no longer considered a 
clean fuel.
    Lastly, the section entitled ``Alternative Financing'' includes 
discussion of updated eligibility criteria for capital projects seeking 
Transportation Infrastructure Finance and Innovation Act (TIFIA) 
financing, pursuant to section 2002 of MAP-21 (23 U.S.C. 601 et seq). 
Eligible projects include any transit capital project which is 
anticipated to meet the minimum statutory monetary threshold size for 
TIFIA financing.

E. Chapter IV--Eligible Projects and Requirements

    In the final Circular, project eligibility and requirements was 
moved from chapter III into a new chapter IV. This chapter discusses 
the types of projects and activities that may be funded under the 5307 
program. One commenter suggested that FTA clarify whether the list of 
eligible projects provided in the proposed Circular was exhaustive, and 
to include reference to bus rapid transit projects in this list. FTA 
accepts this suggestion and has revised the final Circular accordingly. 
In response to other comments received, FTA also made a number of 
clarifying edits which are reflected in the final Circular.
    Most of the comments received on the proposed Circular pertained to 
the section entitled ``Job Access and Reverse Commute Projects.'' MAP-
21 repealed the Job Access and Reverse Commute (JARC) Program, (former 
section 5316); however, job access and reverse commute projects are now 
eligible under the section 5307 Program. Job access and reverse commute 
projects are transportation projects ``to finance planning, capital, 
and operating costs that support the development and maintenance of 
transportation services designed to transport welfare recipients and 
eligible low-income individuals to and from jobs and activities related 
to their employment, including transportation projects that facilitate 
the provision of public transportation services from urbanized areas 
and rural areas to suburban employment locations.'' 49 U.S.C. 5302(9).
    Under the former section 5316 JARC Program, funds were apportioned 
to States and designated recipients which were then required to expend 
those funds on eligible JARC projects. Under the section 5307 Program, 
designated recipients are not required to expend funds on job access 
and reverse commute projects. Job access reverse commute projects are 
now similar to other types of projects that are eligible under the 
section 5307 Program. Several commenters requested that FTA require 
designated recipients to continue to fund existing JARC projects, or 
that they conduct an analysis or otherwise demonstrate that the needs 
of the target population are being met without funding for such 
services. The law does not authorize FTA to require recipients to spend 
funds on JARC projects, nor does FTA have the statutory authority to 
require that an analysis be completed prior to allocating funds. 
Designated recipients have the authority to determine how program funds 
are allocated in their urbanized area. The metropolitan planning 
process and the statutory requirement for a program of projects (POP) 
provide opportunities for public review and comment on which projects 
are selected for funding. As stated in the final Circular, FTA strongly 
encourages recipients to conduct proactive outreach to representatives 
of human services transportation providers, representatives of low-
income populations, and welfare recipients in developing the program of 
projects.
    In the proposed Circular, FTA proposed that the car loan program 
and the voucher program, which were previously eligible under the 
section 5316 JARC Program, no longer be eligible JARC projects under 
the section 5307 Program. Numerous commenters requested that JARC 
activities eligible under the former section 5316 JARC Program also be 
eligible under the section 5307 Program, including car loan and voucher 
programs that would not otherwise be consistent with the definition of 
public transportation. FTA concurs that all categories of projects that 
were previously eligible under the former section 5316 JARC Program 
remain eligible for funding under the section 5307 Program. All other 
section 5307 Program requirements would apply to such projects as well.

[[Page 2934]]

    Each potential project must be for the ``development'' or 
``maintenance'' of transportation services designed to transport 
welfare recipients and eligible low-income individuals to and from jobs 
and employment-related activities and also must be otherwise eligible 
under the 5307 Program. FTA defines ``development of transportation 
services'' to mean new projects that were not in service on October 1, 
2012. New JARC projects may include the expansion or extension of an 
existing service, so long as the new service was designed to support 
the target populations; however, such projects are not required to be 
designed for the sole use of the target populations.
    One commenter requested clarification on whether JARC projects in 
large UZAs were eligible for operating assistance, where operating 
assistance may otherwise be restricted or prohibited. Consistent with 
the definition of ``job access reverse commute project,'' provided in 
the final Circular, such projects may include operating assistance in a 
large UZA, where operating assistance is otherwise not an eligible 
expense. Operating assistance for eligible job access and reverse 
commute projects are not limited by the ``100-bus'' special rule for 
operating assistance pursuant to 49 U.S.C. 5307(a)(2).
    One commenter requested that FTA clarify the planning requirements 
for JARC projects. Previously, under the section 5316 JARC Program, 
recipients were required to engage in a coordinated planning process. 
There is no longer a statutory requirement that recipients engage in a 
coordinated planning process for JARC projects that are eligible under 
the section 5307 Program and funded with FY 2013 funds and beyond. 
However, the coordinated planning process is still required for 
projects that are funded with section 5316 funds appropriated prior to 
FY 2013. Unobligated FY 2012 and prior JARC program funds remain 
available to FTA for obligation until Congress rescinds or redirects 
the funds to other programs. Recipients must obligate apportioned FY 
2012 and prior JARC program funds through the period of availability 
and must follow the SAFETEA-LU requirements. For example, section 5316 
JARC projects must still be derived from a human service public 
transportation coordinated plan and must also be selected by the 
designated recipient through an area-wide or statewide competitive 
selection process.
    Although current law does not require JARC projects to be developed 
through a coordinated planning process, the project must be identified 
by the MPO and designated recipient as a JARC project in the designated 
recipient's annual Program of Projects, which must be developed in 
consultation with interested parties, published with the opportunity 
for comments, and subject to a public hearing.
    Consistent with their prior eligibility under the section 5316 JARC 
Program, the final Circular reflects FTA's policy to include private 
non-profits as eligible sub-recipients for JARC projects. Several 
commenters commended FTA for allowing private non-profits as sub-
recipients for JARC projects. Subrecipients will still be required to 
comply with the section 5307 and other Federal grant requirements for 
such projects. Relatedly, one commenter suggested that FTA clarify 
whether recipients may contract for service for JARC projects. 
Consistent with other types of projects eligible under this program, 
recipients have the option of contracting for service with private 
operators. Information on contracting for service is provided in detail 
elsewhere in the circular.
    One commenter noted that under SAFETEA-LU, National Transit 
Database (NTD) reporting was not required of JARC subrecipients, and 
requested that FTA make subrecipients exempt from this requirement if 
they are receiving section 5307 Program funds for JARC projects. While 
FTA appreciates the comment and the potential burden that this 
requirement may pose on recipients of funding for JARC projects, by 
statute all 5307 recipients and subrecipients must report to the NTD. 
(49 U.S.C. 5335(b)) Operators of services with fewer than 30 vehicles 
may submit a streamlined report. Recipients that do not operate public 
transportation may submit a pro-forma NTD report, such as those 
submitted by State DOTs that use 5307 funds only for planning.
    One commenter proposed also that subrecipients not be required to 
provide non-peak discounts, noting that under SAFETEA-LU, non-peak 
discounts were not required of JARC subrecipients. The commenter 
proposed that in order to be consistent with the previous JARC guidance 
and to reduce the administrative burden on non-profits who do not 
provide traditional transit services, FTA make subrecipients exempt 
from this requirement if they are receiving section 5307 Program funds 
for JARC project purposes only. While FTA appreciates the comment and 
the potential burden that this requirement may pose on recipients of 
funding for JARC projects, FTA cannot waive the half fare requirement 
as it is established by statute. (49 U.S.C. 5307(c)(1)(D))
    Associated transit improvements are also eligible under the section 
5307 Program. However, under MAP-21, ``public art'' is no longer an 
eligible associated transit improvement (formerly ``transit 
enhancement''). Incorporation of design and artistic considerations 
into public transportation projects may still be an allowable cost, so 
long as it is an integral part of the project. For example, an artist 
may be employed as part of the construction design team, or art can be 
incorporated into functional elements such as walls, seating, lighting, 
or railings.
    One commenter requested that ``transit-oriented carsharing'' should 
be an eligible expense under the associated transit improvements 
category and others. Some expenses associated with car sharing may be 
eligible projects under the JARC program. Eligible uses of funds for 
associated transit improvements are enumerated in law and addressed in 
the final Circular.
    This chapter also includes a section entitled ``Operating 
Assistance.'' Recipients in UZAs under 200,000 in population may use 
5307 program funds for operating assistance at a 50 percent Federal 
share. There is no cap on the amount that can be used in these areas 
for operating assistance. Unless specifically authorized, recipients in 
UZAs of 200,000 or more in population are not permitted to use program 
funds for operating assistance.
    Under MAP-21, a special rule (49 U.S.C. 5307(a)(2)) hal allows 
recipients in UZAs with populations of 200,000 or above and that 
operate 100 or fewer buses in fixed route service during peak hours, to 
receive a grant for operating assistance subject to the following 
criteria:
     Public transportation systems that operate a minimum of 76 
buses and a maximum of 100 buses in fixed route service during peak 
service hours may receive operating assistance in an amount not to 
exceed 50 percent of the share of the apportionment that is 
attributable to such systems within the UZA, as measured by vehicle 
revenue hours.
     Public transportation systems that operate 75 or fewer 
buses in fixed route service during peak service hours may receive 
operating assistance in an amount not to exceed 75 percent of the share 
of the apportionment that is attributable to such systems within the 
UZA, as measured by vehicle revenue hours.
    One commenter suggested that operators that only provide demand-

[[Page 2935]]

response service should also be eligible for operating assistance under 
this new provision. By law, this provision is only applicable to 
providers of fixed route service. FTA does not have the legal authority 
to extend applicability to providers that only provide demand response 
service. One commenter requested that small transit operators be 
permitted to receive operating assistance without the proposed 
operating cap if their services are in portions of large UZAs that are 
outside of the service area boundaries of the local metropolitan 
transit authority. The eligibility for operating assistance in a large 
UZA is defined in statute and includes only the new 100-bus provision 
and eligible JARC projects, subject to the eligibility requirements 
described in the circular. FTA does not have the authority to permit 
further exceptions to these requirements.
    The final Circular also clarifies that ``revenues'', as used to 
determine eligible operating costs, are farebox revenues. FTA has made 
this definition consistent throughout the circular, including deleting 
park and ride lot revenues from the sample operating expense worksheet.
    Not included in the final Circular is the section on Debt Service 
Reserve because MAP-21 repealed the 5307 debt service reserve pilot 
program at 49 U.S.C. 5323(e)(4)(A), as amended by SAFETEA-LU.

F. Chapter V--Planning and Program Development

    This new chapter replaces the chapter in the previous Circular 
entitled ``Coordinated Planning.'' Under SAFETEA-LU, certain eligible 
projects were required to be developed under a locally developed, 
coordinated planning process. Under MAP-21, coordinated planning is 
only a requirement of eligibility under the section 5310 program. 
However, 5307 recipients who apply for section 5310 funds are still 
required to participate in the local planning process for coordinated 
public transit-human services. Moreover, FTA strongly encourages 5307 
recipients to engage in a coordinated planning process.
    One commenter stated that FTA appeared to establish a new 
certification requirement in the section of the Circular that discusses 
the coordinated planning process, and requested clarification as to 
which entity is responsible for this certification. FTA removed the 
language, which was intended to refer to existing certification 
requirements that are discussed elsewhere in FTA guidance and is not 
the subject of this Circular.
    This chapter includes a revised discussion of Transportation 
Management Areas (TMAs) for planning purposes. The statutory definition 
of a TMA is a UZA with a population of over 200,000 individuals. There 
is also reference to the joint FTA/FHWA transportation planning 
regulations at 23 CFR part 40, which include guidelines on determining 
the boundaries of a Metropolitan Planning Area (MPA).
    The Performance Based Planning Section in this chapter is a new 
addition to the Circular and discusses the requirements of MAP-21's new 
broad performance management program which supports the seven national 
performance goals. The performance management framework attempts to 
improve project decision-making through performance-based planning and 
programming and through fostering a transparent and accountable 
decision-making process for MPOs, States, and providers of public 
transportation.
    The section entitled ``Availability of FHWA Flexible Funds for 
Transit Projects'' clarifies the availability of FHWA funds for 
eligible transit projects. FHWA flexible funds may be available to FTA 
recipients for planning and capital projects, and operating expenses. 
This section also clarifies the requirements for transfer of Congestion 
Mitigation and Air Quality (CMAQ) Improvement Program funds for transit 
purposes.
    This chapter also includes a section entitled ``Associated Transit 
Improvements.'' MAP-21 changed the term ``transit enhancements'' to 
``associated transit improvements.'' An associated transit improvement 
is a project ``designed to enhance public transportation service or use 
and that [is] physically or functionally related to transit 
facilities.'' This section of the proposed circular discusses the 
requirements to expend a percentage of a UZA's 5307 program funds on 
associated transit improvements and also discusses eligible projects.
    At least one percent of large UZA's apportionment must be expended 
on associated transit improvements. One commenter noted that this 
requirement is too burdensome for small transit agencies. This is a 
statutory requirement and cannot be waived by FTA (49 U.S.C. 5307 
(c)(1)(K). Recipients may expend funds for associated transit 
improvements on a wide variety of project types, including landscaping 
and streetscaping, to improve the public environment in which transit 
operates. This requirement can be met at the UZA level if other 
providers have eligible projects and does not apply in UZAs with 
populations of under 200,000.
    Also, at least one percent of a UZA's apportioned funds must be 
expended on transportation security projects unless it is decided that 
the expenditure is not necessary. Eligible projects are limited to 
those explicitly stated in statute.
    Previously, FTA applied the one percent requirement for 
transportation security projects at the recipient level. One commenter 
supported the proposed change to the calculation of the one percent 
expenditure requirement for public transportation security projects 
allowing this requirement to be applied at the urbanized area level, 
rather than at the grant level. This commenter requested that this 
change apply first in the fiscal year after the final Circular is 
adopted. In general, policy changes reflected in the final Circular 
will take effect immediately upon publication. Changes that affect 
procedures or steps required for allocating funds or receiving a grant 
will take effect at the next time that such procedures are initiated, 
whether that occurs in the current fiscal year or the next. For 
example, if a recipient has initiated the TIP or POP approval process 
under the prior requirements, the new requirements will apply in the 
next fiscal year.
    This chapter also includes a section on ``Undertaking Projects in 
Advance.'' The final Circular revises this section to explain the 
different authorities that allow a recipient to incur costs on a 
project before grant approval, while still retaining their eligibility 
for reimbursement after grant approval. The three types of authorities 
are pre-award authority, letters of no prejudice (LONP), and advanced 
construction authority (ACA). This section discusses the distinction 
among these three authorities and the terms and conditions that apply 
equally to all three.
    A few commenters su ggested that the POP only be required to 
contain information relating to the designated recipient and that 
information required by the Circular may not be available. Several 
commenters noted that the roles of the MPO and designated recipient may 
differ among UZAs, and suggested that FTA provide flexibility by 
allowing an MPO to communicate suballocations to FTA rather than the 
designated recipients. FTA allows for flexibility by allowing multiple 
designated recipients to submit their POPs to FTA in multiple parts. If 
an MPO is responsible for determining the suballocation, the MPO may be 
assigned as the designated recipient and given the formal role of 
determining suballocations.

[[Page 2936]]

    Another commenter requested that FTA retain flexibility in allowing 
fixed allocation percentages for sub-area allocations when they have 
been determined to be the most appropriate method by the MPO members. 
FTA has made a minor change to the Circular language to indicate that 
the use of a fixed percentage may not be appropriate, rather than ``is 
not considered satisfactory.''
    This chapter has also been revised to clarify that recipients 
should consult with FTA regarding the proper level of environmental 
review prior to expending funds for a project.
    Lastly, two commenters suggested that, in cases of loss through a 
natural disaster, the Circular state that FTA's requirement for early 
disposition reimbursement may be waived. While FTA has the authority to 
grant such a waiver, it has not determined that such a waiver will be 
granted in the future, and does not want to create an expectation that 
such a waiver will be granted.

G. Chapter VI--Program Management and Administrative Requirements

    The proposed circular updates this section to add the requirement 
that recipients certify compliance with 49 U.S.C. 5329(d), which 
requires recipients and States to develop and implement a Public 
Transportation Agency Safety Plan.
    The final Circular reflects three major changes to this Chapter. 
First, all references to FTA's current Electronic Grants Management 
System (commonly known as ``TEAM'') have been removed in consideration 
of a new system, currently under development. That system is now 
generically identified as the Electronic Award Management System in 
this circular. Second, a new section was added to discuss the Federal 
Funding Accountability and Transparency Act (FFATA) Requirement which 
requires recipients report information about each first tier sub-award 
over $25,000 by the end of the month following the month the direct 
recipient makes any sub-award or obligation.
    Lastly, the final Circular clarifies the discussion in the proposed 
circular on NTD Reporting regarding waivers. The proposed circular 
stated that FTA would no longer issue any NTD waivers. However, FTA has 
implemented a reduced reporting requirement for small systems. Where, 
under certain circumstances described in NTD Reporting Manuals, grant 
recipients may apply for reduced NTD reporting requirements. For 
instance, under the Small Systems Waiver, grantees with fewer than 30 
vehicles in maximum (peak) service do not have to report some data 
items. There are waivers of other data reporting requirements for 
planning/capital only reporters, reporters that have experienced 
natural disasters, and for reporters that are not able to generate 
specific data elements.

H. Chapter VII--Other Provisions

    This section of the Circular was revised pursuant to the changes to 
the State Safety Oversight (SSO) Program and the requirements of 49 CFR 
part 659 made by MAP-21. Section 5330, which authorizes the SSO 
Program, will be repealed three years from the effective date of the 
new regulations implementing the new section 5329 safety requirements. 
Until then, the current requirements of 49 CFR part 659 will continue 
to apply.

I. Tables, Graphs, and Illustrations

    There were no changes made to this section of the Circular.

J. Appendices

    There were no substantive changes made to this section of the 
Circular.

Peter Rogoff,
Administrator.
[FR Doc. 2014-00666 Filed 1-15-14; 8:45 am]
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