Rural Areas Formula Grant Programs Guidance, Final Circular, 79345-79350 [2024-22163]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 89, Number 188 (Friday, September 27, 2024)]
[Notices]
[Pages 79345-79350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22163]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2024-0004]


Rural Areas Formula Grant Programs Guidance, Final Circular

AGENCY: Federal Transit Administration (FTA), Department of 
Transportation (DOT).

ACTION: Notice of availability of final circular and response to 
comments.

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SUMMARY: The Federal Transit Administration (FTA) has finalized an 
updated circular, to assist recipients in their implementation of the 
Rural Areas Formula Program and the rural component of the Grants for 
Buses and Bus Facilities Program. The update and consolidation of the 
circulars incorporates provisions from the Fixing America's Surface 
Transportation (FAST) Act; the Infrastructure Investment and Jobs Act 
(IIJA), also known as the Bipartisan Infrastructure Law (BIL); the 
Uniform Administrative Requirements for Federal awards to non-Federal 
entities; and current FTA policies and procedures. This notice responds 
to the comments FTA received on the proposed circular, which was 
published in the Federal Register on April 4, 2024.

DATES: The applicable date of this circular is November 1, 2024.

ADDRESSES: One may view the comments at docket number FTA-2024-0004. 
For access to the docket, please visit https://www.regulations.gov or 
the Docket Operations office located in the West Building of the United 
States Department of Transportation, Room W12-140, 1200 New Jersey 
Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m. Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: For Rural Formula program questions, 
Matt Lange, Office of Transit Programs, Federal Transit Administration, 
US DOT Volpe Center, 220 Binney Street, Room-940, Cambridge, MA 02142, 
phone: (617) 494-6308, or email, [email protected]. For Bus and Bus 
Facilities program questions, Kirsten Wiard-Bauer, Office of Transit 
Programs, Federal Transit Administration, 1200 New Jersey Ave. SE, 
Washington, DC 20590, phone: (202) 366-7052, or email, [email protected]. For Tribal Transit Program questions, Elan Flippin, 
Office of Transit Programs, phone: (202) 366-3800, or email, 
[email protected]. For legal questions, Bonnie Graves, Office of 
Chief Counsel, phone: (202) 366-0944, or email, [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Overview
II. Responses to Public Comments
    A. Disposition of Comments for Which No Changes Were Made
    B. Changes Made as a Result of Public Comments
    C. 2 CFR Part 200 Updates

I. Overview

    The Federal Transit Administration's (FTA) final circular, ``Rural 
Areas Formula Grant Programs Guidance,'' C 9040.1H, is a consolidation 
of guidance for Rural Areas Formula Grants Program under 49 U.S.C. 5311 
(Circular 9040.1) and the rural area component of the Grants for Buses 
and Bus Facilities Program under 49 U.S.C. 5339(a) (Circular 5100.1). 
Additionally, this updated circular incorporates provisions of the FAST 
Act (Pub. L. 114-94), the Infrastructure Investment and Jobs Act (IIJA) 
(Pub. L. 117-58), and other changes in law, and includes program-
specific guidance for these formula programs. Additional requirements 
for all grant programs are identified in FTA's Award Management 
Requirements (Circular 5010.1).
    The update to Circular 9040.1 consolidates and summarizes 
programmatic information, streamlines pre-existing guidance from the 
two program circulars, and reduces duplication of information provided 
between the Rural Areas Formula Program circular and FTA's other topic-
specific circulars, including by moving certain text applicable to most 
or all FTA grant programs to Circular 5010.1. Furthermore, the circular 
incorporates statutory changes and clarifies policies as applied by 
FTA. Statutory changes for Section 5311 include additional sources of 
local share; in-kind match for intercity bus service; and fund 
allocations for tribes. Statutory changes for Section 5339(a) include 
the application of Section 5311 requirements to Section 5339 grants in 
rural areas; additional source for local share; additional eligible 
entities; and use of procurement tools authorized under Section 3019 of 
the FAST Act. Policy clarifications address topics in the existing 
program circulars, including consolidation of grants to

[[Page 79346]]

insular areas; eligible projects and activities for each program; 
operating assistance limitations and exceptions; capital cost of 
contracting; the role of transportation network companies in providing 
public transportation services; and period of availability to obligate 
funds flexed to FTA formula programs from the Federal Highway 
Administration (FHWA).
    In addition to statutory and policy updates, the Office of 
Management and Budget (OMB) issued 2 CFR part 200, Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards, also known as the Uniform Guidance, in December, 
2013, which superseded the Common Grant Rule, formerly codified at 49 
CFR parts 18 and 19. Due to the timing of the last circular update and 
the effective date of the Uniform Guidance, FTA Circular 9040.1G 
continued to reference 49 CFR parts 18 and 19. FTA has updated these 
references, including definitions, in Circular 9040.1H. Further, on 
April 22, 2024, OMB issued a final rule updating 2 CFR part 200 (89 FR 
30046). Two of those updates resulted in changes to the draft C. 
9040.1H, and those changes are discussed in this notice.
    This notice provides a summary of comments received and FTA's 
response to those comments.

II. Response to Public Comments

    FTA published a notice for comment on this circular in the Federal 
Register on April 4, 2024 (89 FR 23618), describing the consolidation 
and updates and seeking public comment on the proposed circular. FTA 
received eighty-three (83) comments from sixteen (16) unique 
commenters. FTA reviewed the comments and addresses below the 
categories of comments for which no changes to the proposed circular 
were made, as well as the changes FTA made in the final circular in 
response to public comments.

A. Categories of Comments for Which No Changes Were Made

    Comment: Three commenters requested an extension of the sixty (60) 
day review period.
    FTA Response: FTA determined, based on the agency's preexisting 
decision-making schedule; two other draft circulars published for 
public comment prior to proposed C. 9040.1H which included similar 
information; and the updates and consolidations to the existing 
circulars include limited statutory changes resulting from FAST Act and 
BIL, regulatory updates to 2 CFR part 200, and policy clarifications; 
that an extension was not warranted. FTA considered all comments 
received.
    Comment: Several commenters requested increasing the period of time 
during which governors can, without local consultation, transfer funds 
between the Section 5307 and 5311 programs from ninety (90) days to one 
(1) year.
    FTA Response: The ninety (90) day period for transferring state 
apportionments of formula grants without local consultation is set 
statutorily under 49 U.S.C. 5336(f) and FTA does not have the authority 
to increase the time period for these transfers.
    Comment: One commenter requested a change to allow direct 
recipients of FTA Section 5307 funds to serve as direct recipients of 
Section 5311 funds.
    FTA Response: Under 49 U.S.C. 5311(a)(1) the only eligible 
recipients of formula funds for rural areas are States and Indian 
Tribes. Local government authorities are eligible subrecipients.
    Comment: One commenter requested the addition of language 
specifying that Section 5311(f) funds may be used to build all parts of 
an urbanized area intercity bus terminal serving both rural and urban 
passengers regardless of the proportion of such service that would 
benefit rural users.
    FTA Response: Rural transit program funds are intended to primarily 
benefit rural transit users; while urban users may also benefit from 
services funded by the rural transit programs, they should not be the 
primary beneficiaries. The use of rural transit program funds should be 
proportional to the benefits realized by rural users.
    Comment: One commenter requested an increase to the Federal share 
of operating expenses for Section 5311 funds.
    FTA Response: FTA does not have the authority to change the Federal 
share as it is set by statute--49 U.S.C. 5311(g)(2) provides the 
Federal share shall not exceed 50 percent of the net operating cost of 
the project.
    Comment: One commenter requested the relaxation of, or provision of 
waivers for, the Buy America requirements in situations where the costs 
were onerous.
    FTA Response: No changes to Buy America are possible as this is a 
statutory requirement. FTA encourages interested stakeholders to review 
49 U.S.C. 5323(j) for a list of waivers permitted by statute, one of 
which is when including domestic material will increase the cost of the 
overall project by more than 25 percent. FTA's Buy America rule at 49 
CFR part 661 describes how to request a waiver. Additionally, Buy 
America requirements are discussed in depth in Circular 5010.1.
    Comment: One commenter requested that up to ten percent (10%) of 
transferred flexible funds from FHWA may be used for State 
administration.
    FTA Response: Flexed funds are only eligible for State 
administration to the extent that FHWA permits. Recipients should 
contact their FTA Regional Office for information on eligible 
activities when accepting transferred FHWA funds.
    Comment: One commenter requested a ``more streamlined process that 
all States must adhere to'' related to State oversight of intercity bus 
service.
    FTA Response: The guidance provided in this circular is 
intentionally broad to address a variety of circumstances, geographies, 
and types of recipients and subrecipients while allowing maximum 
flexibility to the States in administering Federal grants programs. Due 
to this dynamic and the reality that the provided guidance is based on 
existing statutes, policies, and regulations, FTA cannot provide a 
single process for all recipients; nor can FTA streamline the process 
by removing or waiving any requirements.
    Comment: Two commenters requested formatting changes related to 
page numbering and removal of blank pages.
    FTA Response: FTA appreciates these comments; however, the layout 
of the circular is deliberate and intended to make printed versions 
readable.
    Comment: One commenter recommended that references to circulars and 
other documents be as broad as possible to make them easier to update, 
which FTA interpreted to mean that, for example, the Rural Areas 
circular would be referred to as ``C 9040.1'' and not as ``C 9040.1H'' 
and statutory provisions would be referred to as ``49 U.S.C. 5311'' 
instead of ``49 U.S.C. 5311(b).''
    FTA Response: Where appropriate, FTA already endeavors to make 
references in the broad fashion suggested here. In addition, FTA is 
able to update guidance documents with statutory or regulatory citation 
changes without undergoing further notice and comment.
    Comment: One commenter requested that links be provided wherever 
possible throughout the document.
    FTA Response: FTA has included links where appropriate and when the 
corresponding web address can be expected, with relative certainty, to 
remain the same into the future.
    Comment: One commenter requested the inclusion of ``contract'' and 
``contractor'' in the definitions list.

[[Page 79347]]

    FTA Response: The terms ``third-party contract'' and ``third-party 
contractor'' are defined in Circular 5010.1 and FTA declines to include 
definitions of these terms in this circular.
    Comment: One commenter requested that the term ``urban areas'' in 
the definition of ``intercity bus'' be more thoroughly defined or 
explained.
    FTA Response: FTA includes the statutory definition of urbanized 
areas in the definitions section: ``Urbanized Area (UZA). An area 
encompassing a population of not less than 50,000 people that has been 
defined and designated in the most recent decennial census as an `urban 
area' by the Secretary of Commerce (49 U.S.C. 5302).'' FTA notes the 
Census now defines some areas with populations of less than 50,000 as 
``urban,'' however, for purposes of FTA's programs, areas with a 
population of less than 50,000 are defined as rural. For consistency we 
have changed ``urban area'' to ``urbanized area'' in the definition of 
intercity bus.
    Comment: One commenter requested that the threshold at which 
recipients must revise their Program of Projects (POP) change, from a 
20% increase in total funds reflected on the POP to a 25% increase in 
total funds reflected on the POP, in order to coincide with the 
commenter's practices.
    FTA Response: The threshold is set at 20% as a matter of policy and 
FTA declines to make this change.
    Comment: One commenter requested that FTA remove the requirement to 
submit an annual POP Status Report. Another commenter requested that 
FTA add language stating that if the most recent POP in TrAMS is 
current, the annual POP Status Report may reference the date of the 
current POP in lieu of uploading a POP.
    FTA Response: FTA considers the POP Status Report necessary to 
ensure the POPs are tracked at least annually. Annual reports for the 
POP provide the opportunity for comprehensive updates based on the 
progress of the award, in a holistic way than an individual FFR or MPR.
    Comment: Several commenters expressed concern regarding the 
requirement that a Section 5311(f), intercity bus Governor's 
Certification Letter be sent to the FTA Regional Administrator and not 
the FTA Administrator. Commenters asserted this was a change in policy 
reducing the level of oversight from FTA's Administrator to a Regional 
Administrator.
    FTA Response: The Governor's Certification Letter has always been 
sent to the Regional Administrators for approval. The additional 
language simply makes this review process more apparent to 
stakeholders.
    Comment: One commenter asked FTA to remove any references to 
procedure when discussing State oversight in the context of the State 
Management Plan (SMP).
    FTA Response: States are required to perform oversight activities 
in order to properly manage the Federal programs they are responsible 
for, and FTA is required to monitor how States manage these programs to 
ensure this oversight is taking place. As a result, discussions of 
State program management and State monitoring are necessary to ensure 
compliance with all relevant statutory and regulatory requirements.
    Comment: One commenter requested new requirements be added to the 
State Management Plan (SMP), including a requirement that States 
address what their policies are toward ``high-risk'' subrecipients.
    FTA Response: The guidance is written to provide maximum 
flexibility to the States. Monitoring is already addressed via the SMP, 
and a State is not prohibited from increased monitoring of any 
subrecipient they deem to be high-risk. As the recipient, it is up to 
the State to determine the best approach to ensure subrecipient 
compliance. FTA declines to add this proposed requirement to the 
circular.
    Comment: One commenter requested additional language further 
emphasizing that intercity city bus services that cross state 
boundaries are eligible for Section 5311 funding.
    FTA Response: The request for eligibility emphasis is not needed 
given the enabling language already present in the circular. Section 
5311 eligibility language included under ``General Program Information, 
Chapter III 1.c., states that for Section 5311 projects, ``The service 
area may include destinations across a State line.'' This applies to 
intercity bus service as well as Section 5311 public transit service. 
Further, the intercity bus language in Chapter IX provides, ``FTA 
encourages the State to look at the intercity bus transportation needs 
of the entire State and to work with neighboring States to adopt a 
program that will support a network of intrastate services and provide 
connections with a national network of interstate service.'' It is 
reasonable to expect service may need to cross State lines in order to 
provide access to neighboring State service as well as the national 
network of intercity bus service.
    Comment: Several commenters asked FTA to provide additional 
examples, or lists of examples, to further illustrate requirements and 
processes. For example, one commenter requested a complete list of 
other public transportation-related Federal programs that may provide 
support for Section 5311 and Section 5339 projects. One commenter 
requested that FTA clarify whether rural transit activities for RTAP 
assistance include Section 5310-funded activities in rural areas.
    FTA Response: FTA declines to provide additional non-exhaustive 
lists of examples as the elements could vary from case to case and 
programs change over time such that a list could become out of date. 
For those seeking information on other Federal programs that provide 
funding for transportation, FTA invites interested stakeholders to 
review FTA's web page on the Coordinating Council on Access and 
Mobility and view the ``CCAM Program Inventory,'' located at https://www.transit.dot.gov/coordinating-council-access-and-mobility. Finally, 
RTAP funds may be used to support Section 5310 projects in rural areas.
    Comment: One commenter requested the addition of language to the 
definition of ``Joint Development Activities,'' emphasizing the role of 
intermodal transportation centers as hubs for intercity bus facilities.
    FTA Response: FTA has included only a streamlined definition of 
joint development and referred readers to FTA's Joint Development 
Circular 7050.1C. FTA notes that intercity bus is specifically included 
as an eligible joint development project on page IV-9 of circular. 
Thus, additional language about its eligibility is not needed.
    Comment: One commenter noted that there are instances in the 
circular where projects are listed as eligible public transit projects 
when those projects are also eligible intercity bus projects. The 
commenter requested that FTA add ``intercity bus'' where such projects 
are also eligible.
    FTA Response: FTA generally declines to accept this suggestion, as 
in some cases, intercity bus projects are not eligible for Section 5311 
funds except for the Section 5311(f) set-aside. Under the statute, 
eligible activities are ``public transportation capital projects; and 
operating costs of equipment and facilities for use in public 
transportation;'' 49 U.S.C. 5311(b)(1). Given intercity bus is not 
considered public transportation under 49 U.S.C. 5302, intercity bus 
projects are not eligible except where they are considered ``capital 
projects'' under 49 U.S.C. 5302, including joint development projects 
that include intercity bus, and intermodal facilities. This discussion 
is included in Chapter

[[Page 79348]]

IX. As discussed below, FTA has added ``intercity bus'' to flex fund 
discussions, as intercity bus projects are eligible for some funds 
transferred to FTA from FHWA. FTA encourages intercity bus operators to 
work with the States and FTA Regional Offices if there are questions 
about eligible activities.
    As stated in the Federal Register notice accompanying the proposed 
circular, FTA proposed moving cross-cutting requirements and guidance 
to Circular 5010.1, as an effort to streamline the program circulars. 
Three commenters asked FTA to retain some of that information in the 
updated C 9040.1.
    Comment: Two commenters requested additional guidance on minimum 
useful life of vehicles and other capital assets, to include either 
examples or links to lists.
    FTA Response: As this information is cross-cutting, it is included 
in the C 5010.1 Award Management Requirements Circular, to which the C 
9040.1H refers users. Therefore, the inclusion of that same information 
here would be redundant.
    Comment: One commenter requested additional information about the 
use of Transportation Development Credits (TDCs) for local match.
    FTA Response: As this information is cross-cutting, it is included 
in the C 5010.1 Award Management Requirements Circular, to which the C 
9040.1H refers users. Therefore, the inclusion of that same information 
here would be redundant.
    Comment: Several commenters requested changes that are outside the 
purview of the circular update process. For example, two commenters 
requested changes to the ALI system in TrAMS. One commenter requested a 
consolidation of certain ALI codes within the existing ALI tree. 
Another requested that language be added stating that mobility 
management activities are eligible as administrative expenses in the 
ALI codes.
    FTA Response: FTA is updating the ALI tree, but this is not related 
to the process of updating the circulars. However, the comments related 
to ALI trees and ALI codes have been shared with staff involved with 
that update. Mobility management is an eligible capital expense, not an 
administrative expense.
    Comments: Several comments were of a general nature, such as those 
expressing support of rural transit funding or concern for potential 
impacts of requirements on small rural providers.
    FTA Response: FTA appreciates these statements and, while no action 
or change was requested, the comments have been read, recorded, and 
discussed.
    Comment: One commenter noted that questions arose on whether FTA 
would use 'smoothed' UZA boundaries that have been adjusted from the 
raw 2020 UZA boundaries for FHWA roadway classification purposes to 
determine eligibility of UZA vs. rural FTA formula program funds. The 
commenter requested that FTA include guidance on this topic in the 
circular that has been provided through other FTA resources.
    FTA Response: Post-delineation UZA smoothing adjustments made for 
FHWA roadway classification purposes do not have the effect of changing 
the geographic coverage of UZAs or any other UZA characteristics for 
any aspects of FTA program administration. Because such adjustments are 
administered by another Federal agency for purposes that are irrelevant 
to FTA programs, FTA does not feel it is necessary to include related 
guidance in the circular.
    Comment: One commenter requested that language be added to say that 
intercity bus and related facilities are eligible under Section 
5339(a).
    FTA Response: FTA disagrees--per Section 5339, eligible recipients 
are designated recipients that allocate funds to fixed route bus 
operators or State or local governmental entities that operate fixed 
route bus service. Section 5339 further specifies that eligible 
subrecipients must be public agencies or private nonprofit 
organizations engaged in public transportation. Intercity bus projects 
are eligible under Section 5311(f).
    Comment: One commenter requested more specific program/project 
management oversight activities required for States that award FTA 
Section 5311(f) funding to private intercity bus providers and the 
applicable requirements for private intercity bus service providers.
    FTA Response: The requested information is provided in various 
places throughout Chapter IX. State certification requirements and 
procedures are discussed on page IX-1. The Intercity Bus Consultation 
Requirement is discussed on page V-3 and the consultation requirements 
are discussed in Section 4 of Chapter IX. Documentation requirements 
are discussed on page IX-5; the State's role in reviewing and 
processing applications is discussed on page IX-6. Transportation 
Improvement Plan (TIP) and State Transportation Improvement Plan (STIP) 
inclusion requirements are discussed on page IX, State POP. Budgeting, 
labor protection, and enforcement of compliance are discussed in 
Section 13.
    Comment: One commenter requested that FTA ``explicitly identify the 
cognizant agency for providers who receive Section 5307 and 5311 
funding.''
    FTA Response: The cognizant agency as it would apply to an indirect 
cost rate is determined by the largest amount of funding a recipient 
receives from a Federal agency. FTA encourages recipients with 
questions about cognizant agencies for indirect costs to contact their 
FTA Regional Office.
    Comment: One commenter questioned the need to discuss Title VI 
civil rights requirements in both the State Management Plan (SMP) and 
the Title VI Plan.
    FTA Response: This is a necessary element of the required state 
management review. Information is frequently required in multiple 
reports as the reports serve different functions and have different 
audiences. The information provided in the SMP may be identical to that 
in the Title VI Plan, so this requirement is not difficult to meet. 
This also ensures civil rights considerations are included at all 
stages of FTA-funded projects.
    FTA received several comments requesting FTA provide outreach on 
circular changes, as well as requests for more targeted technical 
assistance. FTA will provide external training on changes made to this 
and the other circulars that FTA is revising and will go into effect at 
the same time (C 9040.1H, C 9070.1H, C 5010.1F) soon after publication 
of the final circulars.
    Comment: One commenter offered an alternative example for 
calculating the allowable in-kind match cost of the private operator as 
they felt the provided example was confusing.
    FTA Response: FTA declines to replace the existing example with the 
one provided by the commenter and will further providing training to 
assist with any confusion on the topic.

B. Changes to the Final Circular as a Result of Public Comments

    A portion of the comments that FTA received were requests for 
clarification or more specificity on various requirements. FTA revised 
language in the circular to address these comments, as explained below.
    Use of the terms ``grant'' and ``award.'' FTA ensured that the 
terms ``award'' and ``grant'' are used in a consistent and 
understandable way throughout the document.
    Incidental Use. In Chapter I, FTA updated the definition for Shared 
Use to match the definition in Circular 5010.1

[[Page 79349]]

and other program circulars to better differentiate between ``shared 
use'' and ``incidental use.'' In addition, in the discussion of 
incidental use in Chapter III, FTA included a sentence directing 
readers to Circular 5010.1 for additional information. FTA amended the 
section on incidental use to clarify that FTA-funded public 
transportation service should be coordinated with other rural 
transportation services, including intercity bus service. The purpose 
of a public transit bus stop or station may be for public 
transportation and an intercity operator using the stop or station a 
few times a day would be incidental to the public transportation 
purpose. Consistent with 49 U.S.C. 5323(r), FTA expects recipients to 
grant reasonable access to such stops or stations to intercity bus 
operators. An intercity bus operator using a stop or station that is 
part of a joint development or other intermodal project would not be 
incidental, as such use would meet the purpose of the project.
    Program of Projects (POP). In Chapter I, FTA removed the word 
``annual'' from the definition of Program of Projects (POP) and in 
Chapter II removed ``annually'' from the POP reporting procedures; the 
POP is not required to be submitted every year if a State is not 
receiving an award in a given year. It must be submitted for any year 
in which the State requests FTA funds.
    The Role of the State Agency. In Chapter II, FTA added ``Ensure an 
accurate and complete list of projects are included in the Statewide 
Transportation Improvement Program (STIP)'' to the list of roles of a 
State agency in administering the Section 5311 and 5339 programs.
    Conducting State Management Reviews (SMRs). In Chapter II, FTA 
added language that FTA conducts SMRs in accordance with the most 
recent Comprehensive Oversight Review and Technical Assistance Program 
(CORTAP) Manual. FTA also added language to make it clear that FTA may 
perform SMRs in addition to, or in lieu of, Triennial Reviews where 
appropriate.
    Transfer of FHWA Flexible Funds. In Chapter III, FTA added language 
stating a State may transfer certain funds from FHWA to FTA to use for 
transportation planning or intercity bus projects (in addition to 
transit projects, which were already noted as eligible).
    Eligibility of Regional Development Organizations (RDOs) as Section 
5311 Subrecipients. In Chapter III, FTA added language that regional 
development organizations (RDOs) may be eligible subrecipients as local 
governmental authorities.
    Intercity bus terminals in urban areas using Section 5311(f) funds. 
Intercity bus terminals or the intercity bus portions of intermodal 
terminals in urbanized areas that serve both rural and non-rural 
passengers may be built with Section 5311(f) funds. The Section 5311 
program is primarily intended to benefit rural transportation needs. 
While Section 5311(f) funds can sometimes be applied to projects and 
services that collocate in urbanized areas, the funds must be used in 
proportion to the benefit to rural transportation needs. FTA does not 
specify the exact methodology to be used, to allow flexibility to the 
States and designated recipients in urbanized areas. A reasonable 
method must be used to ensure the funds are spent proportionally to the 
benefits to rural transportation needs. FTA has added language on page 
III-9 to clarify this policy.
    Employee Training Expenses. In Chapter IV, FTA added language 
clarifying the 0.5% cap on FTA funds used for employee training 
expenses applies only to Section 5339 funding, as employee training 
expenses are eligible under Section 5311.
    Eligibility of oil as a preventive maintenance expense. In Chapter 
IV and Chapter XI, FTA removed ``oil'' from the list of operating 
expenses eligible under Section 5311; oil is an eligible preventive 
maintenance expense. Please note operating and preventative maintenance 
are not eligible under Section 5339.
    Eligibility of 5339(a) funded projects that do not support fixed 
route only. FTA added language in Chapter IV clarifying that Section 
5339(a) funds are not limited to projects that only support fixed 
route. This language addressed a commenter's concern about the 
statement, ``Eligible recipients for Section 5339 funds include 
designated recipients that allocate funds to fixed route bus operators, 
and States and local governmental authorities that operate fixed route 
service.'' While the statute provides funds are allocated only to fixed 
route operators, the funds may be used to support demand-response 
vehicles and facilities.
    ADA Complementary Paratransit. In Chapter IV, FTA added language 
and made changes to existing language to clarify the requirements for 
using formula funds at an 80 percent Federal share for ADA 
complementary paratransit: the percentage caps are applied at the 
State, not the subrecipient level, and there are additional 
requirements for applying the higher twenty percent (20%) cap of the 
apportionment. Additionally, FTA corrected the spelling of 
``complimentary'' to ``complementary.''
    Metropolitan, Statewide, and Non-Metropolitan Planning 
Requirements. In Chapter V, FTA added language regarding projects 
receiving rural funding and located within Metropolitan Planning Area 
(MPA) boundaries but not within a UZA boundary to state that they may 
or may not need to be included in the Metropolitan Transportation Plan 
and TIP for the respective MPO. Also in Chapter V, FTA added language 
specifying that rural areas outside MPAs (and therefore not included in 
a metropolitan STIP) may receive FHWA flex funds.
    Recordkeeping Requirements. In Chapter VI, FTA added language that 
States are not required to keep all supporting documentation received 
from subrecipients on file, but this documentation must be maintained 
by each subrecipient.
    State Management Plans (SMPs). In Chapter VII, FTA added a 
reference to the planning statute at 49 U.S.C. 5304 to differentiate 
between the SMP and the long-range statewide transportation plan. FTA 
also added language to Chapter VII stating that the SMP must be 
approved by and filed with the FTA Regional Office. FTA added language 
which reflects statutory amendments to 49 U.S.C. 5304 resulting from 
the FAST Act, which require States to describe their processes for 
developing and integrating intermodal facilities that support intercity 
transportation, including intercity buses and intercity bus facilities, 
and for consideration of the role that intercity buses may play in 
reducing congestion, pollution, and energy consumption in a cost-
effective manner and strategies and investments that preserve and 
enhance intercity bus systems, including systems that are privately 
owned and operated.
    Reasonable Access to Federally Funded Transportation Facilities for 
Intercity Bus Providers. In Chapter IX, FTA added language specifying 
that recipients of FTA funds may not deny reasonable access for a 
private intercity or charter transportation operator to federally 
funded public transportation facilities. FTA also provided guidance for 
determining when access is reasonable.
    Meaningful Connections to the Intercity Bus Network. In Chapter IX, 
FTA added examples of factors that determine whether connections 
between services funded by Section 5311(f) and the intercity bus 
network are ``meaningful.'' However, we declined to add the word 
``scheduled'' as requested by a commenter, as the word is already

[[Page 79350]]

included in the discussion of meaningful connections.
    Eligibility of New Intercity Bus Facilities. In Chapter IX, FTA 
specified that constructing new intercity terminal facilities for rural 
passengers is an eligible activity under Section 5311(f), in addition 
to improvements for existing facilities.
    Eligible Subrecipients of Section 5311 funds. FTA amended language 
in Chapter IX regarding when an intercity bus operator elects to be a 
contractor or a subrecipient. A ``contract'' is a legal instrument by 
which a recipient or subrecipient purchases property or services needed 
to carry out its project or program under a Federal award. In contrast, 
a ``subaward'' is an award provided by a pass-through entity to a 
subrecipient for the subrecipient to carry out part of a Federal award 
received by the pass-through entity. The requirements for each are 
similar but the terms and conditions, including oversight and 
enforcement, may be different.
    ADA Regulations for Intercity Bus Service Operated by Private 
Entities Using Over-the-Road Buses (OTRBs). In Chapter IX, FTA added 
language clarifying that vehicles used by intercity bus services 
provided by a public entity or under contract or other arrangement or 
relationship to a public entity must be compliant with both 49 CFR 
38.23 and subpart G of 49 CFR part 38, as well as 49 CFR part 37.
    Update to the Capitalization Threshold for Equipment. FTA received 
several comments inquiring about the $5,000 capitalization threshold 
for equipment, with some commenters requesting the threshold be raised. 
In its recent final rule, codified at 2 CFR 200.1, OMB increased the 
threshold for the definition of equipment to $10,000, and FTA has made 
this change in the final circular.
    State Planning Requirement for Intercity Bus. FTA received three 
comments from one commenter requesting language reflecting new State 
planning requirements as updated in FAST Act. FTA added a section to 
Chapter IX, Intercity Bus, emphasizing that transportation plans and 
transportation improvement programs must provide for intermodal 
facilities that support intercity transportation, including intercity 
buses and intercity bus facilities. Chapter V, Planning & Program 
Development, subsection 2 (``Metropolitan, Statewide, and Non-
Metropolitan Planning'') already specifies that States requesting 
Section 5311 or Section 5339(a) assistance must comply with the 
planning requirements of 49 U.S.C. 5303, 5304 and 5306.
    Tribal Transit Matching Funds. Consistent with a recent Tribal 
consultation (89 FR 48593, June 10, 2024), no local match is required 
for the Tribal Transit Competitive Program. FTA has updated Chapter XI 
to reflect this change.

C. 2 CFR Part 200 Updates

    As stated above, OMB's 2024 update to 2 CFR part 200 increased the 
threshold, from $5,000 to $10,000, for the value of equipment, which 
impacts how a recipient may retain, sell, or dispose of the equipment 
at closeout. Items under $10,000 are considered supplies. In addition, 
the threshold for expenditures at which recipients of Federal awards 
are required to have independent audits conducted annually increased 
from $750,000 to $1,000,000. FTA has updated the final circular to 
reflect these changes.

Veronica Vanterpool,
Deputy Administrator.
[FR Doc. 2024-22163 Filed 9-26-24; 8:45 am]
BILLING CODE 4910-57-P