Federal Highway Funding Under Surface Transportation Extension Act of
2004, Part III

Through the end of July, the funding for the Federal Highway
Administration will be based on two legislative acts: The Surface
Transportation Extension Act of 2003 (STEA03, P.L. 108-88), as amended
by the Surface Transportation Extension Act of 2004 (STEA04, P.L.
108-202), the Surface Transportation Extension Act of 2004, Part II
(STEA04-II, P. L. 108-224), and the Surface Transportation Extension Act
of 2004, Part III (STEA04-III, P.L. 108-263), signed June 30, 2004) and
the Consolidated Appropriations Act, 2004 (P.L. 108-199).

# Contract Authority

STEA04-III authorizes contract authority for the first 10 months of FY
2004 for FHWA programs. In most cases, the amounts authorized are for
10/12ths of the amounts authorized for FY 2003. The amounts authorized
include the amounts previously authorized by STEA03, STEA04, and
STEA04-II for each program. The highway contract authority made
available under STEA04-III, except for the portion of Minimum Guarantee
that is exempt from the obligation limitation, is subject to a
0.59 percent across-the-board reduction found in the Consolidated
Appropriations Act. The dollar amounts in the discussion below are the
full amounts authorized, before the 0.59 percent deduction.

*Formula Programs*.---Contract authority is authorized for the FHWA's
formula programs. A separate authorization is provided for metropolitan
planning, but a single lump sum of contract authority is authorized for
all other formula programs. This lump sum will be apportioned among the
states based on the FY 2003 formula obligation limitation distribution.
The amount for each State will then be programmatically distributed
among the formula programs, including minimum guarantee, based on the
amounts the State received for each program for FY 2003. The
apportionments will be subject to the various penalty provisions. The
metropolitan planning funds will be distributed under the usual formula.

*Allocated Programs*.---Amounts are also authorized for individual
allocated programs and for FHWA's administrative expenses. In most
cases, the amounts authorized are for 10/12ths of the amount authorized
for FY 2003. Programs normally funded by deductions off the top of the
authorizations for apportioned programs, like FHWA administrative
expenses and the Bridge Discretionary Program, are authorized separately
under STEA04-III.

*Administrative Funding*.---The amounts authorized for FHWA
administrative expenses include funds for the administrative expenses of
the Appalachian Regional Commission (ARC) for the Appalachian
Development Highway System and to reimburse the Office of the Inspector
General (OIG) for audit costs. *The amount authorized is expected to be
the total available to FHWA for the full year*. It is equal to the
Limitation on Administrative Expenses set in the Consolidated
Appropriations Act plus the amounts usually provided to the ARC and OIG.

# Obligation Limitation

The Consolidated Appropriations Act, 2004 set the obligation limitation
for Federal-aid highway and highway safety construction at
\$33,843,000,000, subject to a 0.59 percent across-the-board cut. Under
STEA04-III, within the full year obligation limitation set in the DOT
Appropriations Act, obligations for all Federal-aid highway programs
during the 10-month period (October 1, 2003 through July 31, 2004) are
limited to \$28,202,500,000, not including \$532,500,000 for Minimum
Guarantee that is exempt from the obligation limitation.

[Transfers of Unobligated Apportionments]{.underline}

STEA04-III makes no changes to the transfer flexibility allowed by
STEA03 as amended by STEA04. States may transfer apportioned funds
subject to the obligation limitation among programs and suballocations.
Available for transfer are NHS, IM, STP, Bridge, and STP, except that
STP funds setaside for safety, transportation enhancements and for
urbanized areas over 200,000 population may not be transferred. CMAQ
funds are not eligible for transfer as they were under STEA03 as
originally enacted. Transferred funds are subject to the provisions of
the program to which transferred (except transfers to STP are not
subject to suballocation). Funds so transferred are subject to repayment
to the programs from which transfers are made as soon as practicable
after enactment of a reauthorization bill.

**Section Analysis**

**P.L. 108-263 - The Surface Transportation Extension Act of 2004, Part
III**

The highway provisions in the legislation amend the Surface
Transportation Act of 2003 (P.L. 108-88), the Transportation Equity Act
for the 21^st^ Century (P.L. 105-178) and Title 23, United States Code.

**Sec. 1. Short title.**

This act may be cited as the Surface Transportation Extension Act of
2004, Part III.

**Sec. 2. Advances.**

[Advance Authorizations of Contract Authority]{.underline}

The bill provides funding for Federal-aid highway apportioned programs
except Metropolitan Planning (see section 4) for 10 months (from October
1, 2003, through July 31, 2004). Funding is provided as an extension of
TEA-21 (thus, TEA-21 conditions such as DBE will apply), and as an
advance against full year funding for 2004 that will eventually be
provided in a longer-term reauthorization bill. No new programs are
authorized in the extension bill.

For Federal-aid highways and highway safety construction programs,
\$26,998,288,667 in contract authority is authorized, to be apportioned
as a lump sum to each State based on the State's relative share of the
2003 formula obligation limitation. Each State's lump sum of contract
authority is to be divided programmatically based on the State's
relative share of the FY 2003 apportionment for each of the following
categories

-   National Highway System (NHS)

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-   Interstate Maintenance (IM)

-   Surface Transportation Program (STP)

-   Bridge Program

-   Congestion Mitigation and Air Quality Improvement Program (CMAQ)

-   Recreational Trails

-   Appalachian Development Highway Program (ADHS)

-   Minimum Guarantee (Minimum Guarantee funds in excess of
    \$2,333,333,333 will be programmatically distributed to the IM, NHS,
    STP, Bridge, and CMAQ programs; the remainder will remain as Minimum
    Guarantee funds with STP eligibilities as in current law.)

The following deductions and set-asides will **not** apply to these
funds, because these activities are separately authorized in STEA04-III
\--

-   Federal Highway Administration Administrative Expenses
    \[104(a)(1)(A)\]

-   Federal Motor Carrier Safety Administration \[104(a)(1)(B)\]

-   Territorial Highway Program \[104(b)(1)(A)\]

-   Alaska Highway \[104(b)(1)(A)\]

-   Operation Lifesaver \[104(d)(1)\]

-   Rail Crossing/Hazard Elimination in High Speed Rail Corridors
    \[104(d)(2)\]

-   Metropolitan Planning \[104(f)(1)\]

-   Recreational Trails Program Administration \[104(h)(1)\]

-   Interstate Maintenance Discretionary Program \[118(c)(1)\]

-   On-the-Job Training/Supportive Services \[140(b)\]

-   DBE Training \[140(c)\]

-   Bridge Discretionary Program \[144(g)(1)\]

Separate contract authority is provided for the above activities and
other allocated programs (see Sections 3-5).

# Obligation Limitation

Within the full year obligation limitation set in the DOT Appropriations
Act for FY 2004, STEA04-III limits obligations from the Federal-aid
highway program during the 10-month period to \$28,202,500,000, not
including \$532,500,000 for Minimum Guarantee that is exempt from the
obligation limitation. The limitation applies to formula programs,
allocated programs and administrative expenses.

Generally, STEA04-III directs that the available obligation limitation
be distributed according to section 110 of Division F of the
Consolidated Appropriations Act, except that the obligation limitation
for each program, project, or activity will be the greater of the amount
made available under STEA04-III or 10/12ths of the amount made available
under the DOT Appropriations Act.

No obligations may be made after July 31, 2004 until enactment of a law
reauthorizing the Federal-aid Highway Program.

**Sec. 3. Administrative Expenses.**

STEA04-II authorizes \$343,628,000 in contract authority for
administrative expenses of the Federal Highway Administration, including
the Appalachian Regional Commission's administrative costs for the
Appalachian Development Highway System and audit cost reimbursement for
the Office of the Inspector General.

**Sec. 4. Other Federal-aid Highway programs.**

Contract authority is provided for other programs for the 10-month
period of October 1, 2003, through July 31, 2004, as follows:

-   Indian Reservation Roads (IRR) - \$229,166,667 (with a minimum
    \$10,833,333 for IRR bridges) \*

-   Public Lands Highways - \$205,000,000 \*

-   Park Roads and Parkways - \$137,500,000 \*

-   Refuge Roads - \$16,666,667 \*

-   Borders and Corridors. - \$116,666,667

-   Ferry Boats & Terminals - \$31,666,667, with setasides for projects
    on the NHS in Alaska (\$8,333,333), New Jersey (\$4,166,667), and
    Washington (\$4,166,667).

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-   Scenic Byways - \$22,916,667

-   Value Pricing - \$9,166,667

-   Highway Use Tax Evasion - \$4,166,667

-   Commonwealth of Puerto Rico Highway Program - \$91,666,667

-   Bicycle/Pedestrian Clearinghouse - \$416,667

-   Transportation and Community and System Preservation Pilot Program -
    \$20,833,333

-   Transportation Infrastructure Finance and Innovation (TIFIA) -
    \$116,666,667, with up to \$1,666,667 for TIFIA administrative
    costs. The principal amount of credit instruments made available
    during the 10-month period is limited to \$2,166,666,667.

-   Surface Transportation Research - \$87,500,000

-   Technology Deployment Program - \$45,833,333, with \$4,142,083 for
    the Advanced Technology Pilot Program (low-speed Maglev)

-   Training and Education - \$17,500,000

-   Bureau of Transportation Statistics - \$25,833,333

-   Intelligent Transportation System (ITS) Standards, Research,
    Operational Tests, and Development. - \$95,833,333

-   ITS Deployment - \$103,333,333

-   University Transportation Research - \$22,500,000

-   Metropolitan Planning - \$200,000,000

-   Territorial Highway Program - \$30,333,333

-   Alaska Highway - \$15,666,667

-   Operation Lifesaver - \$416,667

-   Bridge Discretionary Program - \$83,333,333

-   Interstate Maintenance Discretionary Program - \$83,333,333

-   Recreational Trails Program Administrative Costs - \$625,000

-   Railway-highway Crossing Hazard Elimination in High Speed Rail
    Corridors \$4,375,000, with \$208,333 to be available for
    improvements to the Minneapolis/St. Paul -- Chicago segment of the
    Midwest High Speed Rail Corridor

-   DBE Training - \$8,333,333

-   On-the-Job Training/Supportive Services - \$8,333,333

\* There will be no administrative takedown (FHWA or FMCSA) from Federal
Lands Highways funds.

**Sec. 5. Extension of Highway Safety Programs**.

Extends from October 1, 2003 through July 31, 2004, the two safety grant
programs that are within the Federal-aid highway program:

-   Safety Incentive Grants for Use of Seat Belts - \$93,333,333

-   Safety Incentives to Prevent Operation of Motor Vehicles by
    Intoxicated Persons - \$100,000,000

**Sec. 6. Sport Fishing and Boating Safety**.

This section extends provisions related to programs funded from the
Aquatic Resources Trust Fund.

**Sec. 7. Extension of Federal Transit Programs.**

This section extends from October 1, 2003 through July 31, 2004 the
programs of the Federal Transit Administration.

**Section 8. National Highway Traffic Safety Administration Programs.**

This section extends National Highway Traffic Safety Administration
program from October 1, 2003 through July 31, 2004.

**Sec. 9. Federal Motor Carrier Safety Administration Program.**

This section extends from October 1, 2003 through July 31, 2004 the
programs of the Federal Motor Carrier Safety Administration.

Sec. 10. Extension of Authorization for Use of Trust Funds for
Obligations under TEA-21.

This section amends the Highway Trust Fund provisions of the Internal
Revenue Code to authorize expenditures from the HTF before August 1,
2004, and authorizes expenditures to carry out this Act. The section
also adopts a temporary rule that says, for Byrd Test purposes, the
imposition of relevant taxes are assumed to have been extended through
the end of FY 2006 along with the deposit of such taxes in the Highway
Trust Fund.

> 06-23-2004

HPLS-10