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Payroll and Related Expenses of Public Employees; General Administration and Other Overhead; and Cost Accumulation Centers and Distribution Methods

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Information about this document as published in the Federal Register.

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Federal Highway Administration (FHWA), DOT.


Final rule; rescission of regulation.


This document rescinds the regulation for payroll and related expenses of public employees; general administration and other overhead; and cost accumulation centers and distribution methods. This rescission stems from a provision in the Transportation Equity Act for the 21st Century (TEA-21) that allows for eligibility of administrative costs of a State department of transportation (State DOT). The provision permits State transportation departments to request Federal reimbursement for various indirect costs, such as administrative overhead. Previously, Federal reimbursement was only available for direct costs, such as project construction and engineering expenses. States may claim indirect costs in accordance with the provisions of Office of Management and Budget (OMB) Circular A-87.


This rule is effective July 26, 2000.

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Mr. Max Inman, Federal-aid Financial Management Division, (202) 366-2853 or Mr. Steve Rochlis, Office of the Chief Counsel, (202) 366-1395, Federal Highway Administration, 400 Seventh Street SW., Room 4310, Washington, D.C. 20590. Office hours are from 7:45 a..m. to 4:45 p.m., e.t., Monday through Friday, except Federal holidays.

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Electronic Access

An electronic copy of this document may be downloaded using a modem and suitable communications software from the Government Printing Office's Electronic Bulletin Board Service (202) 512-1661. Internet users may reach the Office of the Federal Register's home page at​fedreg and the Government Printing Office's database at​nara. Start Printed Page 45884


Section 1212(a) of the TEA-21, Public Law 105-178, 112 Stat. 107, at 193 (1998), amended 23 U.S. Code 302. Section 302 has long been interpreted to mean that a State could not claim Federal-aid highway funds for its costs associated with administering its highway department even though a State agency's indirect costs are generally allowable in accordance with directives issued by the OMB. This new provision in the TEA-21 clarifies that 23 U.S.C. 302 does not limit reimbursement of eligible indirect costs and thereby makes the Federal-aid highway program consistent with other federal programs under OMB Circular A-87, as revised May 4, 1995, and further amended on August 29, 1997. The change reduces the administrative burden caused by requiring States to develop separate accounting systems.

The OMB Circular A-87 provides principles for determining the allowable costs of programs administered by State and local governments under grants from, and contracts with, the Federal government. These principles are designed to provide the basis for a uniform determination of costs and generally to provide that federally assisted programs bear their fare share of costs.

Those States desiring to claim administrative overhead costs for the Federal-aid highway program may do so by developing an indirect cost rate proposal in accordance with the criteria provided in OMB Circular A-87, whereby the costs may be distributed to the various departments and programs in an equitable and consistent manner.

Rulemaking Analyses and Notices

This final rule makes technical changes to existing regulations mandated by law to provide greater uniformity of treatment of indirect costs as applied to the Federal-aid highway program and reduces the burden on State and local governments. This action eliminates outdated language by rescinding the regulation for payroll and related expenses of public employees, general administration and other overhead, and cost accumulation centers and distribution methods. Rescission of the regulation is more consistent with current statutory authority under the TEA-21 that allows for eligibility of various indirect costs, such as, administrative overhead costs of a State DOT. Therefore, the FHWA finds good cause to take this action without prior notice or opportunity for public comment [5 U.S.C. 553(b)]. The DOT's regulatory policies and procedures also authorize promulgation of the rule without prior notice because it is anticipated that such action would not result in the receipt of useful information. The FHWA is making the rule effective upon publication in the Federal Register because it imposes no new burdens and merely corrects or clarifies exiting regulations [5 U.S.C. 553(d)].

Executive Order 12866 (Regulatory Planning And Review) and DOT Regulatory Policies And Procedures

The FHWA has determined this action is not a significant regulatory action within the meaning of Executive Order 12866 or significant within the meaning of Department of Transportation regulatory policies and procedures. This rulemaking action makes only technical corrections to the current regulations by rescinding a rule to eliminate outdated language due to current statutory authority under the TEA-21. It is anticipated that the economic impact of this rulemaking will be minimal; therefore, a full regulatory evaluation is not required.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act [5 U.S.C. 601-612], the FHWA has evaluated the effects of this action on small entities. Based on the evaluation and since this rulemaking action merely removes an outdated regulation, the FHWA hereby certifies that this action will not have a significant economic impact on a substantial number of small entities. Furthermore, States are not included in the definition of “small entity” as provided in 5 U.S.C. 601.

Executive Order 13132 (Federalism)

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999, and it has been determined that this action does not have substantial direct effect or sufficient federalism implications on States that would limit the policymaking discretion of the States. Nothing in this document directly preempts any State law or regulation.

Executive Order 12372 (Intergovernmental Review)

Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.

Unfunded Mandates Reform Act of 1995

This action does not impose a Federal mandate resulting in the expenditure by State, local, tribal governments, in the aggregate, or by the sector, of $100 million or more in any year. (2 U.S.C. 1531 et seq.)

Paperwork Reduction Act

This action does not contain a collection of information requirement for purposes of the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq.

Executive Order 12988 (Civil Justice Reform)

This action meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

We have analyzed this action under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule, involved here is not economically significant and does not concern an environmental risk to health of safety that may disproportionately affect children.

Executive Order 12630 (Taking of Private Property)

This action will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

National Environmental Policy Act

The FHWA has analyzed this action for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has determined that this action would not have any effect on the quality of the environment. Therefore, an environmental impact statement is not required.

Regulation Identification Number

A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN number contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.

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List of Subjects in 23 CFR Part 140

  • Accounting
  • Grants programs—transportation
  • Highways and roads
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Issued on: July 18, 2000.

Kenneth R. Wykle,

Federal Highway Administrator.

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In consideration of the foregoing, the FHWA amends title 23, Code of Federal Regulations, part 140, as set forth below:

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1. Revise the authority citation for part 140 to read as follows:

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Authority: 23 U.S.C. 101(e), 106, 109(e), 114(a), 120(g), 121, 122, 130, and 315; and 49 CFR 1.48(b).

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Subpart G—[Removed and Reserved]

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2. Remove and reserve subpart G of part 140.

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[FR Doc. 00-18776 Filed 7-25-00; 8:45 am]