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Bus and Bus Facilities Formula Program: Guidance and Application Instructions

American Government Special Collections Reference Desk

American Government Buses

Bus and Bus Facilities Formula Program: Guidance and Application Instructions

Therese M. McMillan
Federal Transit Administration
April 16, 2015

[Federal Register Volume 80, Number 73 (Thursday, April 16, 2015)]
[Pages 20564-20570]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-08773]



Federal Transit Administration

[Docket No. FTA-2014-0018]

Bus and Bus Facilities Formula Program: Guidance and Application 

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of availability of final circular.


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 Section 5339 Bus and 
Bus Facilities Formula Program (Bus Program). The purpose of this 
circular is to provide recipients of FTA financial assistance with 
instructions and guidance on program administration and the grant 
application process. This circular is a result of the new Bus Program 
enacted through the Moving Ahead for Progress in the 21st Century Act 

DATES: The final circular becomes effective May 18, 2015.

FOR FURTHER INFORMATION CONTACT: For program matters, Sam Snead, Office 
of Transit Programs, (202) 366-1089 or samuel.snead@dot.gov. For legal 
matters, Michelle Hershman, Office of Chief Counsel, (202-493-0197) or 
michelle.hershman@dot.gov. Office hours are from 8:30 a.m. to 5:00 
p.m., Monday through Friday, except Federal holidays.


Table of Contents

I. Overview
II. 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--Planning and Program Development
F. Chapter V--Program Management and Administrative Requirements
G. Chapter VI--State and Program Management Plans
H. Chapter VII--Other Provisions
I. Appendices

II. Overview

    The Moving Ahead for Progress in the 21st Century Act (MAP-21, Pub. 
L. 112-141), signed into law on July 6, 2012, establishes the Section 
5339 Bus and Bus Facilities Formula program (Section 5339 or Bus 
Program), replacing some of the elements of the Bus and Bus Facilities 
discretionary program (formerly 49 U.S.C. 5309(b)(3) under the Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users Act of 2005 (SAFETEA-LU)). The Section 5309 Bus and Bus 
Facilities Program under SAFETEA-LU provided discretionary funds for 
capital bus and bus facility grants, which from 2010-2012, were 
primarily used in support of the U.S. Department of Transportation's 
(U.S. DOT) State of Good Repair, Bus Livability, Veterans 
Transportation and Community Living, and Clean Fuels initiatives. In 
addition, SAFETEA-LU allocated funds under this program for Ferry Boat 
Systems, Fuel Cell Bus, and the Bus Testing program. The new Section 
5339 Bus Program provides funding to replace, rehabilitate, and 
purchase buses and related equipment as well as to construct bus-
related facilities.
    The FTA is implementing new circular 5100.1, ``Bus and Bus 
Facilities Program: Guidance and Application Instructions,'' in order 
to provide grantees with guidance for applying for funding under the 
Bus Program. In addition, the circular addresses the requirements that 
must be met in the application for Section 5339 program assistance.
    On July 30, 2014, FTA issued a notice of availability of the 
proposed circular in the Federal Register (79 FR 44241) and requested 
public comment on the proposed circular. The comment period closed on 
September 29, 2014. The FTA received comments from 76 entities, 
including trade associations, State DOTs, metropolitan planning 
organizations, public transportation providers, and individuals. This 
notice addresses comments received and explains changes FTA made to the 
proposed circular in response to comments.
    This document does not include the revised circular; however, an 

[[Page 20565]]

version is available on FTA's Web site, at www.fta.dot.gov. Paper 
copies may be obtained by contacting FTA's Administrative Services Help 
Desk, at (202) 366-4865.

III. Chapter-by-Chapter Analysis

A. General Comments

    This section addresses comments that were not directed at specific 
chapters, but to the circular as a whole.
    Two commenters recommended that FTA provide flexibility to 
recipients of FTA funds whenever the statute can accommodate such 
flexibility. With regards to this circular, one of the commenters 
asserted that flexibility was necessary so that small transit systems 
are not burdened with requirements applicable to large systems. In 
response, most of the FTA programs authorized by Congress do not 
provide for varying program requirements based on the size of the 
public transportation provider. Certainly where such flexibility 
exists, FTA grants that flexibility. The same commenter noted the 
length of the proposed circular in relation to the length of the 
statutory provision and suggested that FTA streamline the guidance 
document to focus on issues specific to Section 5339 and make greater 
use of cross references to other FTA guidance documents. In response, 
FTA notes the purpose of the document is to provide detailed guidance 
in order to address all of the legal provisions required in delivering 
an FTA program. The content contained within the circular ensures 
grantees fully understand the requirements of Section 5339.
    Another commenter urged FTA to use consistent language and 
definitions throughout its regulatory documents. The FTA has updated 
this circular to be as consistent and uniform as possible with other 
    A few commenters recommended FTA add language to the ``Purpose'' 
section to clarify its understanding of the intended purpose of the 
Section 5339 program. In response, FTA notes that the purpose of the 
circular and the Bus and Bus Facilities formula program is clearly 
stated on the cover page of the circular.

B. Chapter I--Introduction and Background

    Chapter I of the circular is an introductory chapter that covers 
general information about FTA and its authorizing legislation, provides 
a brief history of the Bus Program, includes definitions applicable to 
the Bus Program and defines terms applicable across all FTA programs. 
Where appropriate, we have used the same definitions found in 
rulemakings or other circulars to ensure consistency.
    The FTA received six comments on this chapter, five of which 
related to definitions and one which related to fleet management plans. 
One commenter indicated that the term ``original useful life'' is not 
defined in the circular or any other FTA documents and could be 
interpreted as a minimum useful life, an economic useful life or a 
service life. The commenter stated that the distinction between a 
minimum useful life and a service life is critical in determining if an 
activity can be eligible as an overhaul. The FTA has amended the 
circular to reflect the terminology, ``minimum useful life,'' and notes 
the definition of overhaul is identical to the definition of overhaul 
in Circular 9030.1E, Urbanized Area Formula Program: Program Guidance 
and Application Instructions. One commenter recommended incorporating 
the definition of ``rehabilitation'' from the proposed Section 5337 
State of Good Repair Grants Program Circular (5300.1) into the final 
version of this circular. In response, FTA has defined ``rehabilitate'' 
in section 4 of Chapter 1 to mean rebuild of a revenue vehicle to the 
original specifications of the manufacturer. Further, given FTA's 
response to comments regarding the eligibility of mid-life overhaul 
activities, which is explained in more detail in the Chapter 3 analysis 
in this notice, FTA has expanded the definition of rehabilitate to 
include mid-life overhaul activities. This definition specifically 
relates to the Bus and Bus Facilities Program as the definition in FTA 
Circular 5300.1 ``State of Good Repair Grants Program: Guidance and 
Application Instructions,'' pertains mostly to fixed guideway transit 
    Two commenters suggested revising the definition of ``Clean Fuel 
Bus'' to incorporate hydraulic hybrid technology and other eligible 
vehicle technologies. In response, FTA notes that the definition 
included in the proposed circular mirrors the statutory language used 
by Congress in creating the program (see, 49 U.S.C. 5308 [Repealed]) 
and includes ``other low or zero emissions technology'' which is 
expansive enough to cover hydraulic hybrid and other technologies. The 
FTA also notes that as most transit vehicles are already eligible for a 
Federal match greater than 80 percent because of their Americans with 
Disabilities Act (ADA) and Clean Air Act (CAA) compliance, the specific 
inclusion of the other technologies is not going to qualify recipients 
for a greater FTA match beyond the existing ceiling.
    One commenter questioned the efficiency of requiring both the Fleet 
Management Plan and Reporting and the Transit Asset Management (TAM) 
Plans and Reporting. The commenter suggested FTA consider consolidating 
the Fleet Management Plan and Reporting under the Transit Asset 
Management Plans and Reporting to avoid redundancy. In response, FTA 
recognizes that some of the information gathered for the Fleet 
Management Plan may be useful when reporting to the National Transit 
Database for Transit Asset Management and recognizes that the 
requirements for the TAM plans and reporting are being promulgated 
through a rule-making. Therefore, FTA is unable to consolidate them at 
this time, nor does it see these requirements as redundant, but rather 
as complementary. We will continue to review these processes for the 
possibility of streamlining.

C. Chapter II--Program Overview

    Chapter II covers general information about the Bus Program, 
including program administration, eligibility and oversight. Chapter II 
clarifies that FTA will only apportion Bus Program funds for urbanized 
areas (UZA) to the State and to designated recipients that operate or 
allocate funding to fixed-route bus operators. There are no other 
eligible direct recipients for the Bus Program under MAP-21. This 
section also describes the process for allocating funds to 
subrecipients and discusses pass-through arrangements whereby a State 
or designated recipient may pass its Bus Program grant funds through to 
a subrecipient to carry out the project agreed to in the grant. Unlike 
supplemental agreements between a designated recipient, direct 
recipient, and FTA, a pass-through arrangement to a subrecipient does 
not relieve the designated recipient of its responsibilities to carry 
out the terms and conditions of the grant agreement.
    The FTA received 18 comments on this chapter, 10 of which related 
to recipient eligibility and the designated recipient's role in program 
administration for this program.
    Several of the commenters expressed concerns that only States and 
designated recipients can apply for funds under the Section 5339 
program and suggested FTA broaden eligibility to include fixed route 
bus operators that are not designated recipients. A few commenters 
suggested that the existing procedure for Section 5307 which involves 
designated recipients for a metropolitan area and public transit

[[Page 20566]]

agencies executing supplemental agreements to permit public transit 
agencies to apply directly to FTA and assume all responsibilities under 
a grant agreement with FTA be followed under Section 5339 to relieve 
the administration burden on designated recipients. Another commenter 
suggested that FTA exercise its administrative authority to interpret 
eligible recipients similar to the former Section 5308 Clean Fuels 
program. In response, FTA notes that the statutory language in Section 
5339(c) clearly states that ``eligible recipients in this section are 
designated recipients that operate fixed route bus service or that 
allocate funding to fixed route bus operators'' and thus, FTA has no 
flexibility in its interpretation of eligible recipients for Section 
    A few of the commenters indicated that FTA should revise Chapter II 
to clarify that Section 5339 funds may be used for bus facilities and 
vehicles that do not run in fixed-route service. In response, FTA has 
revised Chapter II to clarify that recipient eligibility does not limit 
Section 5339 funds to fixed route projects. Thus, capital projects in 
support of demand response services are eligible under the Bus Program.
    Two commenters asked FTA to revise Chapter II to allow a Governor 
to transfer the funds allocated to the State for use in the UZAs of 
less than 200,000 in population to the Section 5307 program. The 
transfer provision found at Section 5339(e)(1) allows the Governor to 
transfer the ``National Distribution'' funds to supplement the State's 
Section 5311 rural apportionment or to any urbanized area's Section 
5307 apportionment, but does not permit the transfer requested by 
commenters. The law is explicit regarding the transfer requirements of 
this program, and FTA has no discretion in adding additional transfer 
    One commenter asked FTA to clarify that cooperative planning 
agreements between the Section 5339 designated recipient and 
subrecipients developed in compliance with Federal planning regulations 
(23 CFR 450, Subpart C) and that specify the role of each agency in 
allocating Section 5339 funds will satisfy FTA's requirement for a 
written agreement. The FTA agrees that the suggested cooperative 
planning agreement is an example of a written agreement.
    One commenter asked for clarification regarding whether the State 
may delegate Section 5339 project selection for small urbanized area 
funds to regional or local agencies as long as the State retains final 
approval of the program of projects. In response, FTA notes that States 
are responsible for administration of this program for small urban and 
rural areas. If they choose to delegate the responsibility to make 
recommendations for funding, that is allowable. However, the State must 
ensure that the funds are used in small UZAs and the State must monitor 
the use of the funds.
    In response to the section on FTA oversight, one commenter asserted 
that triennial reviews should not apply to Section 5339 designated 
recipients that allocate funds to fixed route bus operators but do not 
operate bus service themselves. The FTA notes that recipients may be 
subject to a Triennial, State Management, or other regularly scheduled 
comprehensive review to evaluate their performance. Oversight reviews 
of recipient performance allow FTA to determine if the recipient is 
complying with the certifications it has made. To further this effort, 
FTA's oversight reviews programs have been augmented to incorporate 
questions pertaining to how designated recipients administer this 
program. In addition, FTA is working within its existing oversight 
programs to recognize where direct recipients of Section 5307 funding, 
who may be receiving direct oversight from FTA, may be subrecipients 
under the Section 5339 program. As a result, FTA will look to 
designated recipients for the overall administration of the program 
pursuant to its management plan, but will not require duplicative 
oversight. As appropriate, it is recommended that designated recipients 
review the results of subrecipients' past oversight reviews.
    The FTA received six comments on section 7 of this chapter related 
to the Bus Program's relationship to other programs. A few commenters 
expressed concern that language in this section of the proposed 
circular regarding Section 5339 eligibility guidelines could thwart the 
ability of a State to effectively transfer the funds for use in the 
Section 5311(c) rural program. In response, FTA notes that funds 
available under the National Distribution allocation may be transferred 
from Section 5339 to Section 5311 for administrative purposes, but if 
the funds are transferred, they must be used for eligible bus and bus 
facilities capital projects.
    One commenter supported FTA's clarification in this section 
regarding identifying ways in which the Section 5339 funds relate to 
other FTA programs, specifically as outlined under 49 U.S.C. 5309. 
Specifically, the commenter stated that this clarification offers 
public transit agencies some flexibility in developing financing 
packages for large capital projects.
    Though most comments related to bus overhauls were submitted in 
relation to Chapter III of the proposed circular, one commenter noted 
in response to this section that bus overhauls are listed as eligible 
capital expenses in FTA Circular 9030.1E (page IV-2), which determines 
projects eligible for funding through Section 5307, and FTA Circular 
9040.1G (page III-8), which lists eligible capital expenses under 
Section 5311. The commenter asked FTA to clarify whether its intent is 
to encourage applicants to use Sections 5307 and 5311 to obtain funding 
for engine overhauls instead of Section 5339. In response, recipients 
are eligible to utilize these other programs to support engine 
overhauls. However, as noted in the next section in response to 
comments, FTA has also expanded eligibility under the Section 5339 
program to include engine overhaul activities, which is described in 
Chapter III.

D. Chapter III--General Program Information

    In this Chapter information is provided regarding the availability 
of funding and addresses general project and program eligibility. The 
FTA received a number of comments on this chapter, many of which 
related to FTA's proposed exclusion of midlife overhauls from the list 
of eligible capital projects in section 5 of this chapter.
    Several commenters expressed concern that not enough Section 5339 
funds would be available to rural transit agencies based on the 
apportionment calculations for the Bus Program detailed in Chapter III 
of the proposed circular. Specifically, commenters asserted that the 
Section 5339 funds should be allocated based on need rather than 
population. One commenter asked that FTA revise section 1 to state that 
the National Distribution set aside funds should be the only Section 
5339 funds available to rural transit operators. Any change to the 
National Distribution set aside would require legislative action. The 
FTA notes that Section 5336 lists how the apportionment of all FTA 
formula programs must be allocated. Therefore, FTA does not have the 
discretion to change the formula allocations for Section 5339. The same 
commenter asked FTA to revise section 3 to make Section 5339 funding 
available for the same amount of time as Sections 5307 and 5311 funds. 
In response, to ensure timely obligation of funds and for consistency 
with the Section 5309 and 5337 programs as well as the former Bus and 
Bus Facilities program, FTA has established the period of availability 

[[Page 20567]]

be 4 years--the year of apportionment plus 3 additional years.
    A few commenters recommended revising section 4 to expand the 
Governor's ability to transfer funds to Section 5311 projects. One 
commenter suggested the transfer should be mandated based on vehicle 
replacement needs rather than Governor's discretion. FTA notes that the 
law does not stipulate that Governors must prioritize vehicle 
replacements before expansions and facilities. Therefore, FTA has no 
authority to mandate funding priority as it relates to types of 
projects or intended recipients (e.g. rural).
    Two commenters asked FTA to allow designated recipients other than 
States to transfer apportionments to Section 5307 to be used for 
eligible Bus Program activities and to allow Section 5307 direct 
recipients to apply directly to FTA for their allocation in order to 
eliminate unreimbursed costs of full grant administration. As noted 
previously, the only transfer provision allowed under this section is 
for the National Distribution allocation, which is provided to the 
States. Therefore, FTA notes that only States can transfer 5339 funds, 
and even then it is limited to the amounts available under the National 
Distribution allocation. Therefore, FTA does not have the discretion to 
allow other recipients to transfer funds. Furthermore, a set aside was 
not provided for administrative funds for this program.
    In regards to midlife overhauls, the circular proposed that 
rebuilds are eligible but overhauls and preventive maintenance are not. 
The majority of the commenters recommended that overhauls be expressly 
included in the list of eligible capital projects.
    A few commenters recommended that FTA allow bus overhauls to be 
considered as an eligible capital expense under Section 5339 by 
specifically listing it as one of the capital projects eligible in 
section 5 with the caveat that it is the sole preventive maintenance 
activity allowed under Section 5339. One commenter asserted that FTA 
has no statutory authority to make preventive maintenance ineligible 
under Section 5339. A few commenters stated that the definitions for 
overhaul and rebuild in the proposed circular mischaracterize overhauls 
as a preventive maintenance activity and asserted that midlife 
overhauls extend far beyond those areas covered by manufacturers' 
recommended maintenance procedures. Several commenters asserted that 
MAP-21 defines Section 5339 project eligibility to include both bus 
rehabilitation and bus replacement/purchases, without distinguishing 
between mid-life overhauls and rebuilds in further defining 
    A few commenters expressed concern that FTA's position on mid-life 
overhaul eligibility could reverse the positive trend of clean fuel 
technologies. Without Federal dollars available for mid-life energy 
storage replacement and upgrades, financially-strapped transit agencies 
may not choose to buy hybrid and electric drive buses.
    In response to the myriad of comments related to bus overhauls, FTA 
has revised the circular to include bus overhauls as an eligible 
capital project, specifically as an eligible rehabilitation activity. 
For rolling stock to be overhauled, it must have accumulated at least 
40 percent of its useful life. It is important to note that overhauls 
are the only preventive maintenance capital expenses allowed in the 
Section 5339 program. The FTA has also notes that the overhaul 
eligibility is in addition to eligibility of rehabilitation which is 
defined as ``rehabilitate'' in section 4 of Chapter I.
    One commenter encouraged FTA to continue to allow the use of 
Federal funds for public artwork that enhances a transit facility or 
has historical meaning to the local region. In response, MAP-21 
specifically repealed the eligibility of public artwork in public 
transportation projects. However, art can be integrated into facility 
design, landscaping, and historic preservation, and funded as a capital 
expense. Art also can be integrated through the use of floor or wall 
tiles that contain artist-designed and fabricated elements, use of 
color, use of materials, lighting, and in the overall design of a 
facility. In addition, eligible capital projects include incidental 
expenses related to acquisition or construction, including design 
costs. Therefore, the incidental costs of incorporating art into 
facilities and including an artist on a design team continue to be 
eligible expenses. Procuring sculptures or other items not integral to 
the facility is no longer an eligible expense.
    The FTA received several comments on the proposed elimination of 
``intercity bus stations and terminals'' from the list of eligible 
projects contained in the proposed circular. Two commenters indicated 
that ``intercity bus stations and terminals'' is the only category of 
eligible projects which appears in Circular 9300.1B, but does not 
appear in draft Circular 5100.1A few commenters suggested that FTA 
revise section 5 to specify that intercity bus stations and terminals 
are eligible for funding as joint development improvements. Other 
commenters suggested FTA revise section 6 to ensure that joint 
development improvements may include intercity bus stations and 
terminals, including the outfitting of those stations and terminals. In 
response, FTA notes that intercity facilities are an eligible activity 
under the Section 5339 program as part of a joint development project. 
The FTA has revised section 6 to ensure joint development improvements 
expressly include intercity facilities. For more information on the 
eligibility of intercity facility joint development projects see FTA 
Circular 7050.1 ``Federal Transit Administration Guidance on Joint 
Development,'' pages I-3 section f., III-5 section 2, and III-7 section 
    A few of the commenters indicated that the new ``fair share of 
revenue'' threshold detailed in FTA Circular 7050.1 makes use of 
Section 5339 funds difficult, if not impossible, because there would be 
no way for intercity bus operators to make the required payments. 
Specifically, the commenters asked FTA to ensure that the ``fair share 
of revenue'' threshold (page VI-4, section 5 of FTA Circular 7050.1) 
does not apply to intercity bus stations or terminals; and request FTA 
to use the ``publicly operated projects exception'' for such facilities 
so that the amount of revenue generated is less than the amount of the 
FTA investment. Chapter III of FTA Circular 7050.1 states that 
community service or publicly operated facilities can have a fair share 
of revenue less than the required federal threshold, but it must be 
based on actual revenue. In response, FTA concurs that in accordance 
with FTA Circular 7050.1, any intercity bus project that is within, or 
physically part of, a ``publicly operated'' facility (as in most 
cases), can have a fair share of revenue less than the federal 
threshold requirements (see FTA Circular 7050.1 ``Federal Transit 
Administration Guidance on Joint Development,'' page III-6 for 
additional information on FTA's fair share of revenue requirements).
    One commenter stated that the proposed guidance appears to exclude 
as an eligible expense the procurement of replacement or expansion vans 
used in revenue service and related maintenance and administrative 
facilities, including specialized vans and related facilities used to 
provide ADA complementary paratransit service. The proposed circular 
specified the eligibility of Section 5339 Program funds for the 
acquisition of ``buses'' for fleet and service expansion and for bus 
maintenance and administrative facilities, consistent with the 
statutory language. The list of eligible projects in both the proposed 
and final circular are

[[Page 20568]]

intended to be illustrative. Although the proposed guidance also 
included a more general statement that allowed the use of Section 5339 
Program funds for the ``acquisition of replacement vehicles,'' the 
eligibility to fund the procurement of vans to replace those that have 
reached or exceeded their useful life was not clearly defined. Another 
commenter recommended that the procurement of expansion or replacement 
vans and related maintenance and administrative facilities used by vans 
in revenue service (including those used in ADA required complementary 
service) be considered eligible expenses. In response, FTA notes that 
the procurement of expansion or replacement vans and related 
maintenance and administrative facilities used by vans in revenue 
service is an eligible activity under Section 5339. Therefore the 
eligible capital project language of the circular has been adjusted to 
include these activities.
    Two commenters asked FTA to revise the definition of eligible 
capital projects in section 5 to expressly state that use of Section 
5339 funds is not limited to projects undertaken on fixed routes. The 
FTA notes that the list of eligible capital projects did not expressly 
limit Section 5339 funds to fixed route bus purchases. However, FTA is 
amending the circular to clarify that eligible projects as authorized 
in Section 5339(a)(1) and (2) are not limited to fixed route only. The 
reference to fixed route only applies to determining recipient 
eligibility of Section 5339 program funds.
    One commenter sought clarification regarding whether general 
administrative expenses that a designated recipient incurs are eligible 
as an indirect cost. The FTA notes that only project administrative 
costs are allowable, not program administrative costs. The same 
commenter suggested that FTA include the federal share for project 
administration costs. The Federal share of project administrative costs 
is 80 percent since it is considered a capital expense.
    One commenter sought clarification regarding whether eligible 
capital projects includes only expansion of existing services or 
whether Section 5339 funds can be used to fund new vehicles for new 
transportation services. The FTA notes that Section 5339 funds can be 
used for both the expansion of existing services and to fund vehicles 
for implementation of new transportation services.
    One commenter indicated that section 5 is missing information on 
the percent of eligible costs based on the different possible types of 
bus operating contracts. Specifically, the commenter asserted that the 
circular should contain a schedule similar to Exhibit IV-1 in Circular 
9030.1E, showing for various contract types the percentage presumed to 
be eligible without requiring further documentation. In response, FTA 
notes that only some categories of capital cost of contracting are 
eligible for Section 5339 funding; specifically contract types that 
include preventative maintenance are not eligible. Therefore, FTA has 
updated information on capital cost of contracting in section 5 and 
included Exhibit III-1: ``Percent of Contract Allowed for Capital 
Assistance Without Further Justification.''
    Section 10 proposed additional sources of local share that 
recipients may use as part of local match for a capital project. Two 
commenters expressed appreciation for FTA's provision of clear 
instructions regarding how the use of Transportation Development 
Credits (toll credits) should be indicated in a grant application.
    Regarding local match, one commenter suggested that FTA allow the 
guaranteed annual savings of an energy savings performance contract 
(ESPC) to be used to offset the local match. Grantees interested in 
ESPC as match should contact their FTA regional office for additional 
    One commenter suggested that the circular should state that for ADA 
or CAA activities the federal share may not exceed those applicable 
shares. Specifically, the commenter stated that the circular should not 
remove a recipient's flexibility to not go above 80 percent Federal 
share for a project. The FTA notes that there is no loss in 
flexibility. While recipients must meet certain percentages of local 
match as a statutory requirement, it is a local decision as to whether 
to provide overmatch. Another commenter sought clarification regarding 
whether grantees will need to itemize those components of the vehicles 
(i.e. the lift at 90 percent and the bus itself at 80 percent) or use 
the 85 percent Federal share for ADA and CAA compliant vehicles. In 
response, the purpose of the 85 percent was to codify the previously 
used application of 83 percent, which was set by FTA for administrative 
purposes. Recipients may use the 85 percent Federal share for ADA/CAA 
compliant vehicles. In cases where the grantee is replacing just a 
piece of equipment for purposes of complying with one or both of these 
acts, the grantee can itemize that individual piece of equipment for 90 
    One commenter asserted that the match requirement should be 
eliminated on all formula grants and only required on competitive 
grants. 49 U.S.C. Chapter 53 requires a local match for all FTA formula 
funded projects. The FTA does not have any discretion to relax this 
    One commenter sought clarification regarding Section 5323(i)(2), 
which permits recipients to count as local match amounts that are 
expended by a private provider of the public transportation by vanpool 
for the acquisition of rolling stock to be used by the provider in the 
recipient's service area. The proposed circular elaborates further by 
observing that the effect of this provision is to allow revenues 
received in the operation of public transportation service by vanpool 
that exceed operating expenses to be re-invested in capital equipment 
and to be counted towards a recipient's local match requirement under a 
capital cost of contracting grant agreement. The FTA's policy on 
vanpool provisions was addressed in the FY 2015 Annual Apportionment 
notice. However, FTA has responded to the specific questions raised by 
the commenter in previous correspondence as the comments were specific 
to the commenter rather than FTA's vanpool policy.

E. Chapter IV--Planning and Program Development

    In this chapter, FTA proposed guidance on metropolitan and 
statewide planning requirements. The chapter also addresses programming 
guidelines, environmental considerations, transfer provisions, and 
capital project requirements. One commenter expressed appreciation for 
the language FTA included in the proposed circular regarding the 
Governor's ability to allocate formula fund apportionments to small 
UZAs located within or designated as Transportation Management Areas 
(TMAs) that are different from the allocations FTA publishes. However, 
the commenter would like FTA to return to pre-MAP-21 practices to make 
it clear that apportionments for these TMA small urbanized areas must 
be allocated to these areas. In response, FTA notes that MAP-21 
mandated that States and the designated recipients have the discretion 
as to how these funds are distributed. A change to have apportionments 
to go directly to small urbanized areas would require a change in the 
law. Therefore, such a change cannot be included in this circular. 
Pursuant to section 5336(e), the Governor exercises the authority to 
allocate section 5339 formula

[[Page 20569]]

apportionments to all small UZAs within the State--including those that 
lie within the planning areas of MPOs serving TMAs. Federal law clearly 
states that it is up to the State to determine the distribution method 
for section 5339 funds among small UZAs, and inclusion of small UZAs 
within the planning area of an MPO that serves a transportation 
management area (TMA) does not change the status of those small UZAs. 
They are still small UZAs and subject to the Governor's allocation. As 
for the funding apportioned by formula, for small UZAs, the Governor 
has flexibility to allocate the funds among the small UZAs to meet the 
capital bus needs in those areas.
    Regarding FTA's proposal that Section 5339 recipients develop a 
program of projects (POP), two commenters asserted that MAP-21 does not 
specifically require a ``program of projects'' to be submitted to the 
Secretary for the 5339 program and would like FTA to relax the 
requirements for the POP. The same commenters also recommended that FTA 
consider adding language to the circular that allows FTA to approve 
whole categories of projects immediately upon filing of the POP by a 
grantee. The FTA notes that Section 5339(b) requires that recipients 
comply with Section 5307 grant requirements, and the program of 
projects is a requirement at 49 U.S.C. 5307(b). Further, given the 
statutory provision relates to recipients, FTA expects recipients to be 
applying on behalf subrecipients, and therefore the grant should be 
accompanied by a POP. Another commenter sought clarification on how the 
designated recipient is to notify FTA prior to making revisions to the 
POP. The circular instructs designated recipients to work with their 
FTA regional office when developing the POP. This is consistent with 
other FTA program circulars, particularly for programs that require 
    In the proposed circular, FTA provided guidance on FTA's useful 
life policy. One commenter recommended that FTA increase the asset 
limit for useful life determinations to 50 percent of the asset's 
original value. Revisiting the standards would require extensive 
research and is beyond the scope of this program circular; thus, FTA 
cannot address this cross-cutting issue in this circular.
    Another commenter urged FTA to continue the exemption of Section 
5311 operators from the rolling stock spare ratio of 20 percent. 
Furthermore, the commenter asked FTA to adopt an exemption for 
contingency fleets from the spare ratio calculation and allow vehicles 
that still have a federal interest or useful life be an eligible 
vehicle for contingency fleets. These comments are outside the scope of 
this particular circular as they are cross-cutting issues that apply to 
other FTA programs. However, recipients are reminded that the rolling 
stock spare ratio policy only applies to fleets of 50 or more vehicles.
    One commenter asserted that FTA's proposed guidance to 
competitively procure rebuilding work from the private sector would 
restrict a transit agency's ability to use its staff and would also 
create conflicts with labor unions. The commenter recommended that FTA 
allow subrecipients that have a qualified labor force to use that labor 
force for vehicle rebuilds instead of procuring the service from the 
private sector. The commenter also sought clarification regarding what 
may constitute a ``mitigating circumstance'' and what FTA would 
consider an interference with ``normal maintenance activities'' if 
rebuild work is done in-house. In addition, the commenter recommended 
that FTA specify in its final guidance that overhaul and rebuild work 
conducted by in-house labor are eligible expenses. Overhaul and rebuild 
work conducted by in-house labor are eligible expenses. The circular 
does not restrict the use of a qualified labor force for vehicle 
rebuilds and overhauls. The use of a grantee's own labor force to 
accomplish a capital project is force account labor and is eligible 
under the program. See the current version of circular 5010 for more 
information and force account requirements for capital projects. Please 
note that force account requirements do not apply to overhaul 
activities as those projects are considered to be preventive 
    Finally, one commenter requested clarification in response to FTA's 
proposal in section 7 of this chapter indicating that Section 5339 
funds are not available to be transferred between FHWA and FTA for 
transit or highway projects. Section 5334(i) of title 49, U.S.C. 
provides that FHWA funds used for transit projects may be transferred 
to FTA, and FTA funds used for highway projects shall be transferred to 
FHWA for program administration. Since funds available under Section 
5339 are not available for highway projects, they may not be 
transferred to FHWA.

F. Chapter V--Program Management and Administrative Requirements

    This chapter outlines the requirements to which Section 5339 
recipients must certify compliance, including legal, technical, and 
financial capacity. Recipients (including subrecipients and 
contractors) of Section 5339 program funds are required by statute to 
submit data to the National Transit Database (NTD).
    One commenter asserted that NTD reporting requirements should not 
apply to Section 5339 recipients that are not providers of public 
transportation or are not also recipients of Section 5307 or Section 
5311 funds. Two commenters recommended that the section on NTD 
reporting include language that confirms that if Section 5339 funds are 
awarded by the State to a Section 5307 recipient (i.e., the Section 
5307 recipient becomes a subrecipient of the State under the Section 
5339 program), the Section 5307 recipient retains all NTD reporting 
obligations, including reporting for the Section 5339 funds. The 
commenters also recommended that FTA consider revising the reporting 
requirements for the Section 5311 program such that NTD reporting is 
rolled up at the State level and individual subrecipient reporting 
ends. The same commenters also expressed concerned that the proposed 
circular includes language that requires recipients or beneficiaries of 
Section 5339 funding to file monthly safety and security reports in the 
NTD system that contain increased reporting obligations. Although NTD 
reporting requirements dictate that certain grantees report, monthly 
safety and security reports are not required under the 5339 Program.
    One commenter asked FTA to increase the limit for small purchases 
to $150,000 as is currently proposed in the Office of Management and 
Budget (OMB) Super Circular in order to allow agencies the opportunity 
to purchase one or two vehicles without having to complete an onerous 
competitive procurement for small purchases. On December 26, 2013, OMB 
issued final guidance 2 CFR part 200 ``Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards'' also known as the ``Super Circular.'' 78 FR 78590. The 
guidance, which will take effect with new grants obligated on or after 
December 26, 2014, will supersede and apply in lieu of the common grant 
rule (49 CFR parts 18 and 19), and will change the simplified 
acquisition threshold from $100,000 to $150,000 to match the Federal 
Acquisition Regulation. See 2 CFR 200.88. We have amended the circular 
to reflect this change.

G. Chapter VI--State and Program Management Plans

    This chapter begins by providing a general overview of State and 
Program Management Plans (SMP and PMP)

[[Page 20570]]

which are intended to facilitate both recipient management and FTA 
oversight by documenting the State's and designated recipient's 
procedures and policies for administering the Section 5339 program. One 
commenter expressed concern that FTA is proposing a PMP for a program 
that does not warrant this high level of management. The commenter 
strongly suggested the FTA reconsider the requirement for a PMP. In 
response, FTA notes that a PMP or SMP, for the case of a State 
recipient, is required for any program in which the recipient will be 
managing subrecipients, as it facilitates both recipient management and 
FTA oversight by documenting the designated recipient's procedures and 
policies for administering the Section 5339 program. The primary 
purpose of the PMP/SMP is to serve as the basis for FTA to perform 
recipient-level management reviews of the program, and to provide 
public information on the recipient's administration of the Section 
5339 program. It may also be used internally by the recipient as a 
program guide for local project applicants.
    One commenter sought clarification regarding whether a PMP is 
required from a single designated recipient within a large Urbanized 
Area. If there is only one designated recipient, then a PMP is not 
required. However, if the designated recipient is managing and 
overseeing multiple subrecipients, then a PMP is required.

H. Chapter VII--Other Provisions

    This chapter describes cross-cutting Federal requirements that 
apply to the Section 5339 Program. The FTA did not receive any 
substantive comments on this chapter and did not make any substantive 

I. Appendices

    The appendices include instructions for preparing a grant 
application and a budget, an application checklist, and several forms 
and representative documents that recipients will need when applying 
for Section 5339 funds. One commenter recommended including a sample 
sub-agreement between designated recipients and potential 
subrecipients. The FTA notes that the designated recipient must still 
manage the grant in TEAM. The FTA has no role in the relationship 
between subrecipients and designated recipients other than determining 
if the subrecipient is eligible for FTA funding. Therefore, there is 
not a ``one-size fits all'' sample agreement between subrecipients and 
designated recipients.

Therese M. McMillan,
Acting Administrator.
[FR Doc. 2015-08773 Filed 4-15-15; 8:45 am]

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