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Capital Investment Program: Availability of Final Circular

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Federal Transit Administration (FTA), DOT.


Notice of Availability of Final Circular.


The Federal Transit Administration (FTA) has placed in the docket and on its Web site, guidance in the form of a circular to assist grantees in implementing the Capital Investment Program. Principally, the Capital Investment Program provides Federal funding for buses and bus facilities, new fixed guideway systems, and fixed guideway modernization, as authorized by statute.


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

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Kimberly Sledge, Office of Program Management, Federal Transit Administration, 1200 New Jersey Ave., SE., East Building, Washington, DC 20590, phone: (202) 366-2053, fax: (202) 366-7951, or e-mail,; or Bonnie Graves, Office of Chief Counsel, same address, phone: (202) 366-0944, fax: (202) 366-3809, or e-mail,

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Availability of Final Circular

The final circular is not included with this document. You may download an electronic copy of the circular from FTA's Web site, at From the home page, click on “Legislation, Regulations and Guidance” and on that page click on “Circulars.” Circulars are listed in numerical order; the Capital Investment Circular is number 9300.1. Paper copies of the circular may be obtained by calling FTA's Administrative Services Help Desk, at 202-366-4865.

You may retrieve the circular and comments online through the Federal Document Management System (FDMS) at: Enter docket number FTA-2007-29123 in the Start Printed Page 56889search field. The FDMS is available 24 hours each day, 365 days each year. Electronic submission and retrieval help and guidelines are available under the help section of the Web site.

Table of Contents

I. Overview

II. Chapter-by-Chapter Analysis

A. Chapter I—Introduction and Background

B. Chapter II—Program Overview

C. Chapter III—Buses and Bus Facilities

D. Chapter IV—Fixed Guideway Modernization

E. Chapter V—New Starts/Small Starts Program

F. Chapter VI—Other Provisions

G. Appendices

I. Overview

This notice provides a summary of changes to FTA Circular 9300.1A, Capital Program: Grant Application Instructions, and addresses comments received in response to the September 28, 2007, Federal Register notice (72 FR 55624). Originally, the comment period was scheduled to close on November 27, 2007; however, in response to comments to the docket, the comment period was subsequently extended until January 25, 2008. FTA received comments from twelve parties, including industry associations, transit agencies, metropolitan planning organizations, and one private transportation provider.

This final Circular 9300.1B supersedes the Circular 9300.1A, issued in 1998.

FTA has adopted all of the proposed formatting changes published in the proposed circular. For example, we have changed the name of the circular to “Capital Investment Program” to reflect a focus on the capital investment nature of eligible activities in 49 U.S.C. 5309 (“Section 5309”), as amended by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). In addition, we changed the format to make this circular consistent with the style of other circulars FTA is updating. At the same time, we have tried to maintain some consistency with the previous document; for example, information about the Bus program is still in Chapter III, Fixed Guideway Modernization continues to be in Chapter IV, with New Starts/Small Starts information in Chapter V. Substantive changes in content, as well as comments to the proposed circular, are discussed in the chapter-by-chapter analysis.

II. Chapter-by-Chapter Analysis

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

One commenter thought the title “Capital Investment Program” was misleading since we have included a brief description of the Clean Fuels program (49 U.S.C. 5308) in the Bus chapter. We included information about the Clean Fuels program because buses purchased under Section 5309 may be Clean Fuels buses, and some recipients under Section 5309 may also seek funding under the Clean Fuels program for additional buses. It is therefore appropriate to include information about this related program in the Bus chapter. One commenter suggested that if FTA amends or updates the circular due to changes in other circulars or regulations that undergo notice and comment, that there be further public notice and comment. FTA disagrees. When the revision of a circular or regulation requires an opportunity for notice and comment, there is no need to satisfy that requirement again just to update a reference to that revised document in this circular. We have clarified this language in the circular.

A. Chapter I—Introduction and Background

Chapter I of the proposed circular is an introductory chapter and covers general information about FTA and how to contact us, briefly reviews the authorizing legislation for the Capital Investment program (“Section 5309 program”), provides information about, includes definitions applicable to the program, and provides a brief program history. The definitions section is new to this circular and includes definitions related to the Section 5309 program, as well as the Section 5308, Clean Fuels grant program. Where applicable, we have used the same definitions found in statutes, rulemakings or other circulars and guidance documents to ensure consistency.

One commenter suggested that the definition of “Alternatives Analysis” should not require alternatives analysis studies to include sufficient information to provide a rating for project justification and local financial commitment. FTA refers the commenter and others to 49 U.S.C. 5309(a)(1)(B), which requires that alternatives analysis studies include this information. Since this information is in the statute, we did not change the definition in the circular.

Two commenters had questions about the definitions of “Eligible Applicant” and “Designated Recipient” as used in this circular. The term “Eligible Applicant,” as used in this circular, applies only to the Capital Investment program, and not to the Clean Fuels bus program; similarly, the definition of “Designated Recipient,” as used in this circular, applies only to the Clean Fuels program, as it specifically addresses the nonattainment and maintenance area requirements of the Clean Air Act. We have used the term “Recipient” when referring to a designated recipient or an eligible applicant, but when those specific terms are used in this circular, they apply to either the Clean Fuels or the Capital Investment program, as defined. One commenter suggested that FTA change the Clean Fuels definition to state, “* * * the Administrator of EPA has certified sufficiently or significantly reduces harmful emissions.” Since the statute at 49 U.S.C. 5308(a)(1)(B) uses the term “sufficiently,” FTA will use the same terminology.

One commenter suggested we add the word “streetcar” to the definition of fixed guideway and we made that change. One commenter suggested we add a definition of “Urbanized Area,” and we have done so. One commenter suggested that we change the acronym for urbanized area from “UZA” to “UA,” which is the Census Bureau's acronym. We decline to make that change. The acronym UZA is familiar to the transit industry, is used in virtually every FTA document, and has become a term of art. At the request of a commenter, we have added a definition of “Intelligent Transportation Systems,” but decline to add a definition of “Eligible Projects,” as eligible projects are included in Chapters II through V. One commenter objected to the inclusion of a definition of “Very Small Starts;” we will address that objection and other comments received regarding Very Small Starts in the analysis of Chapter V.

In addition to the changes described above, FTA has added several Start Printed Page 56890definitions to this chapter, including “Capital Asset,” “Capital Lease,” “Discretionary Funding,” “Facilities,” “Grant,” “Intelligent Transportation Systems,” “Preventive Maintenance,” “Public Transportation,” and “Useful Life.”

B. Chapter II—Program Overview

Chapter II provides more detail about the Capital Investment program. The first few sections of the chapter were re-ordered for readability and consistency. This chapter starts with the statutory authority for the Capital Investment program, followed by apportionments, funds availability, the goals of the program and a list of eligible projects. Also included in Chapter II is information on Federal/local matching requirements, relationship to other FTA programs, and the requirements to ensure a recipient has the legal, financial and technical capacity to carry out a Capital Investment project.

There were some changes to eligible projects under 49 U.S.C. 5309 with the enactment of SAFETEA-LU. Under the previous authorization statute (The Transportation Equity Act for the 21st Century (TEA-21)), there were eight categories of eligible projects in 49 U.S.C. 5309. These included bus and bus facilities, new fixed guideways, fixed guideway modernization, development of corridors to support fixed guideway systems, projects designed to meet the needs of elderly and disabled passengers, projects to introduce new technology, the capital costs of coordinating public transportation with other transportation, and capital projects needed for an efficient and coordinated public transportation system. Under SAFETEA-LU, there are only four categories of eligible projects in 49 U.S.C. 5309: bus and bus facilities, new fixed guideways, fixed guideway modernization, and corridor improvements. Therefore, the list of eligible projects in the circular changed, as well. We defined the four categories of eligible projects as “capital investment projects” and listed them in this chapter as “assets for which FTA provides assistance.” In addition to these “capital investment projects,” however, we have included a list of projects that, “when integral to a capital investment project,” are eligible for Section 5309 funding. One commenter asked us to clarify whether Intelligent Transportation Systems (ITS) is eligible as a stand-alone project. Since the statute permits the purchase of “buses and related equipment” and ITS projects are directly related to buses and bus facilities, ITS is eligible as a stand-alone project. In addition, bus purchases to meet the needs of elderly persons and persons with disabilities continue to be eligible, since bus purchases generally are eligible. We note that the purchase of buses to meet the special transportation needs of these populations is the purpose of the Section 5310 program, and funding is available from that program to private non-profit organizations where public transportation is unavailable, insufficient or inappropriate.

We proposed removing two previously eligible projects from the circular: the capital cost of contracting and preventive maintenance for the bus program. We noted that both of these capital expenditures are eligible for funding under other FTA programs, including the Urbanized Area Formula program (49 U.S.C. 5307) and the Nonurbanized Area Formula program (49 U.S.C. 5311). Three commenters expressed concern about removing the capital cost of contracting from the list of eligible expenses, and three commenters expressed concern about removing preventive maintenance as an eligible expense. After careful consideration of the comments, we have returned both the capital cost of contracting and preventive maintenance to the list of eligible activities.

Two commenters suggested that FTA include “intercity bus and intercity rail stations and terminals” as eligible projects. We have added this language where appropriate. One commenter requested that we add a paragraph on Joint Development under the “Relationship to Other Programs” section of this chapter. We decline to add an additional paragraph, as there is an extensive discussion in Chapter III, at section 8, “Requirements Related to Facilities,” including a reference to FTA's policy on joint development, published in the Federal Register on February 7, 2007 (72 FR 5788).

C. Chapter III—Buses and Bus Facilities

Chapter III addresses buses and related equipment, commonly known as “the bus program.” This chapter contains information on how funds are allocated, a new section describing eligible recipients, examples of eligible bus projects, environmental considerations, requirements related to vehicles, equipment, and facilities, and information about a complementary program, the Clean Fuels grant program.

Two commenters suggested including intercity bus and rail terminals and stations as eligible projects. We have added this language where appropriate, and specified that funding of intercity bus stations and terminals are eligible when part of a joint development project, in accordance with FTA's guidance on joint development (72 FR 5788, Feb. 7, 2007).

One commenter recommended that FTA include a reference to the Federal Highway Administration's (FHWA) guidance on the Congestion Mitigation and Air Quality (CMAQ) Improvement program in the paragraph, “Clean Air Act.” We have added the hyperlink to FHWA's guidance on this program. One commenter suggested that FTA require recipients to include the planning justification in FTA's Transportation Electronic Award and Management (TEAM) system grant application. We have modified the circular to reflect this suggestion. We have also updated the Charter Bus information, since the final rule became effective on April 30, 2008.

Four commenters raised concerns about the paragraph describing “Mixed-Use Projects” in the section, “Requirements Related to Facilities.” Commenters were concerned about FTA's characterization of when a project would qualify as a joint development project, and were concerned that FTA had an overbroad interpretation of “program income.” In addition, one commenter requested that FTA include language on intercity bus terminals in this section. We have revised this section to address the commenter's concerns by more clearly describing joint development projects and clarifying when revenue is “program income.” Further, we added language about intercity bus terminals.

Two commenters suggested that FTA edit the section, “Environmental Considerations,” which describes the requirements under the National Environmental Policy Act (NEPA). In the proposed circular, we included examples of projects that are considered “categorical exclusions”; however, FHWA and FTA jointly published a notice of proposed rulemaking in the Federal Register (72 FR 44038, Aug. 7, 2007), and therefore, that list may change. In order to keep the circular current even after the rule has been finalized, we have removed the list of items that are considered categorical exclusions and addressed NEPA requirements in general terms.

Two commenters suggested that FTA revise its like-kind exchange policy. One commenter suggested that proceeds from vehicles disposed of prior to the end of their useful lives should be able to be used for any federally funded activity. FTA's long-standing like-kind exchange policy requires assets disposed of prior to their useful lives to be replaced in kind, or the proceeds of such disposition returned to FTA. We Start Printed Page 56891believe this policy protects the Federal interest and should not be changed. Another commenter suggested that FTA's ability to direct the proceeds of any sale should be limited to its remaining interest, and the use of proceeds in excess of the Federal interest should be up to the recipient. FTA declines to make this change because 49 U.S.C. 5334(h)(4)(B) requires that “the net income from asset sales, uses, or leases (including lease renewals) * * * shall be used by the recipient to reduce the gross project cost of other capital projects carried out under this chapter.” One commenter suggested that FTA develop useful life standards for sedans and pick-up trucks which are commonly purchased by transit agencies. FTA has added sedans used in revenue service to the list that includes small buses and vans, and we have added useful life standards for trolleys and ferryboats. Vehicles used in non-revenue service are considered “equipment” and the reader is directed to FTA circular 5010, Grants Management Requirements, for useful life requirements for equipment.

Two commenters made suggestions about the language in the section on Buy America; we have streamlined this paragraph in Chapter III as well as in other chapters that contain information on Buy America. One commenter requested that FTA permit a “phase-in” period for the requirements of the Presidential Coin Act. FTA does not have a role in the implementation of this statute. We provide the information in the circular simply to make recipients aware of their responsibilities. FTA has moved the section discussing the Presidential Coin Act to Chapter VI, Other Provisions, since it applies to all Section 5309 projects.

D. Chapter IV—Fixed Guideway Modernization

Chapter IV addresses fixed guideway modernization, and the chapter has been re-ordered for readability and consistency. One commenter disagreed with the statement in the section, “Relationship to Urbanized Area Formula Funding,” that for projects using both Section 5307 and Section 5309 funding, “it may be efficient to submit the grant applications at the same time.” We decline to remove this sentence. It is not a requirement that these applications be submitted at the same time, but in many cases, it may in fact be more efficient to do so. As we state in the circular, the grant applicant should discuss the best approach with the appropriate FTA regional office.

Similar to Chapter III's section on “Environmental Considerations,” we have edited the section, “Requirements of Fixed Guideway Modernization Projects” to remove the list of categorically excluded projects. This section now includes general information about NEPA requirements as they relate to fixed guideway modernization.

One commenter noted that FTA has adopted a general policy that rail vehicles have a minimum useful life of 25 years, but a recipient may measure lifespan by hours of operation or another measure, and requested that these alternative methodologies be referenced in subsequent paragraphs. We decline to make that change primarily because we note in the circular that “A recipient * * * may develop an appropriate methodology for converting its system to years of service.” Once converted, it is appropriate to discuss useful life in terms of years rather than in hours of service or other measure of useful life.

One commenter suggested that FTA clarify, in the subsection, “Major Capital Projects,” whether a project management plan must be approved by FTA as a prerequisite to having the grant approved, and set a time period for FTA review of any submissions. We have made this change.

E. Chapter V—New Starts/Small Starts Program

Chapter V addresses the New Starts/Small Starts program, and we have added a section, “Allocation of Funds and Period of Availability.” In addition to the information found in Chapter V of the circular, FTA maintains a New Starts Web page, at​planning/​planning_​environment_​5221.html, which contains the most up-to-date guidance for this program.

In this circular, FTA draws a distinction between a “New Start”—a project that has a total cost of $250 million or more, or for which the project sponsor is requesting more than $75 million in Federal funds; and a “Small Start”—a project that has a total cost of less than $250 million that requests less than $75 million in Federal funds. The various requirements for these two different types of projects are described throughout the chapter.

Two commenters requested that FTA include the statutory list of characteristics that make a corridor-based bus capital project a “fixed guideway capital project.” The list of characteristics found in 49 U.S.C. 5309(e)(10)(B) is neither prescriptive nor exhaustive. The statute uses the words “such as” when listing those features that represent a “substantial investment in a defined corridor.” The discussion of Small Starts set forth in the circular reflects the proposed and final policy guidance on New Starts and Small Starts developed through public notice and comment. See, 73 FR 21170, Apr. 18, 2008 and 73 FR 46352, Aug. 8, 2008.

Two commenters questioned FTA's authority to establish requirements for “Very Small Starts” that differ from those for Small Starts since “Very Small Starts” are not defined or established by statute or regulation. FTA interprets 49 U.S.C. 5309(c)(3) to provide the Federal Transit Administrator with broad discretion to award grants for disparate types of New Start and Small Start projects on such “terms, conditions, requirements, and provisions” as the Administrator determines “necessary or appropriate” to carry out the New Starts and Small Starts programs authorized by 49 U.S.C. 5309(d) and (e). The discussion of Very Small Starts set forth in the circular reflects the proposed and final policy guidance on New Starts and Small Starts developed through public notice and comment. See, e.g., 71 FR 45100, Aug. 8, 2006; 72 FR 6663, Feb. 12, 2007; 72 FR 30912, June 4, 2007; and the Updated Interim Guidance on Small Starts issued in July 2007. Although FTA has not yet promulgated a final regulation for New Starts and Small Starts, the Administrator continues, in his discretion, to award discretionary grants under both programs, and this circular reflects the basis on which the Administrator will award grants for Very Small Starts.

Two commenters indicated that FTA should revise its definition of “financially constrained,” found in the section, “Planning and Project Development Process.” We have revised this definition so that it is identical to the definition found in the FHWA/FTA planning regulation at 23 CFR 450.104. Two commenters suggested that in the section, “Environmental Protection,” the circular should not state that environmental regulations “prohibit FTA from taking a final action * * *.” We have revised the section to include language from the joint FHWA/FTA environmental regulations. One commenter indicated that we only addressed New Starts in this section; we have added the terms Small Starts and Very Small Starts, as the environmental protection requirements are likely to apply to those projects, as well.

F. Chapter VI—Other Provisions

This chapter is similar to the “Other Provisions” chapters in other FTA circulars, and summarizes a number of FTA-specific and other Federal Start Printed Page 56892requirements that FTA grantees are held to in addition to the program-specific requirements and guidance provided in the circular. We revised this chapter to alphabetize the provisions, and we moved the Presidential Coin Act to this chapter.

Two commenters asked FTA to clarify whether the public hearing requirements described in the section, “Public Hearing Requirements” apply to projects that are categorical exclusions under NEPA. The circular states that NEPA public hearing requirements are sufficient to meet the requirements of 49 U.S.C. 5323(b), which requires public involvement for any capital project that will “substantially affect a community or the public transportation services of a community.” Therefore, whether or not NEPA public hearing requirements apply, the provisions of 49 U.S.C. 5323(b) require public involvement for most capital projects. In response to comments, we have edited this section to clarify the requirements.

We have revised the section, “Environmental Reviews,” since each chapter contains specific information about environmental requirements that apply to specific types of projects, and an extensive discussion in this chapter is repetitive and unnecessary. One commenter suggested that in the section, “Clean Air Act,” we include as an appendix the list of exempt transit projects in the EPA regulation that do not require any analysis. We decline to include this list, but we have included the direct regulatory citation for this information.

We have updated the section, “Charter Bus Services” to reflect the new regulation on charter service. (73 FR 2326, Jan. 14, 2008).

G. Appendices

The appendices are intended as tools for developing a grant application. Appendix A specifically addresses steps and instructions for preparing a grant application, including pre-application and application stages. Appendix A also includes an application checklist and information for registering with the Electronic Clearing House Operation's (ECHO's) electronic payment system. One commenter suggested we include information as to where one can find the TEAM User Guide; we have included the hyperlink to the Web site for this information. One commenter suggested that FTA request planning justification information in the “project description” section of TEAM. While this information is not required in the project description, we note that recipients must include the date and page number of the most recently approved Statewide Transportation Improvement Plan (STIP) for the projects listed in the application.

Appendix B provides budget information, including several sample budgets. Appendix C contains samples of an Authorizing Resolution, a Fleet Status Report, Like-Kind Transaction for Mid-life Sale of a Transit Bus, an Opinion of Counsel, a Project Milestone Schedule, and Proceeds from the Sale of Assets. Appendix D contains contact information for all of FTA's regional and metropolitan offices, and a new Appendix E contains a listing of all legal citations found in the circular.

With the substantive exceptions noted in the chapter-by-chapter analysis above, as well as non-substantive and clarifying edits, FTA adopts the final circular as proposed.

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Issued in Washington, DC, this 22nd day of September, 2008.

James S. Simpson,


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[FR Doc. E8-22840 Filed 9-29-08; 8:45 am]