To provide flexibility of certain transit functions to local entities.

Summary: Local Flexibility for Transit Assistance Act - Authorizes the Secretary of Transportation (DOT) to make urbanized area formula grants for the operating costs of equipment and facilities for use in public transportation in an urbanized area with a population over 200,000 to a designated recipient, direct recipient, or subrecipient that provides public transportation in the area operating less than 100 buses in fixed-route service in the area during peak service hours.

Authorizes a designated recipient or direct recipient that operates at least 100 buses in fixed-route service during peak service hours in an urbanized area with a population of more than 200,000 to use grant funds for the operating costs of public transportation equipment and facilities in such projects if: (1) the recipients are certified by the Secretary as being in a crisis period; and (2) the recipients' percentage of revenue for the operating costs of public transportation equipment and facilities from non-federal sources (excluding system-generated revenue) is equal to the previous fiscal year's revenue, or the revenue is derived from dedicated sources.

Specifies percentage limitations on the use of funds for urbanized areas with populations between 200,000 and 500,000, between 500,000 and 1 million, and over 1 million.

Defines "crisis period" to mean that: (1) the unemployment rate within the recipients' service area is 7% or higher for the preceding month, or (2) the national average retail price of regular gasoline during a quarter has increased by more than 10%.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Local Flexibility for Transit 
Assistance Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) While transit ridership has increased in the face of 
        falling disposable income, transit agencies are being forced to 
        implement some of the deepest service cuts, sharpest fare 
        increases and layoffs as a result of declining revenues and 
        increasing fuel prices.
            (2) According to the American Public Transportation 
        Association, over the past 2 years, 84 percent of transit 
        systems have raised fares, cut service, or are considering 
        either of these measures in the near future.
            (3) Additionally, over the same period of time, transit 
        systems across the country have seen a 56-percent reduction in 
        rush hour service, a 62-percent reduction in off-peak service, 
        and a 40-percent reduction in geographic coverage leaving 
        thousands of transit drivers without a job.
            (4) These cuts have left thousands of transit dependent 
        Americans without a way to get to work.
            (5) It is the policy of the Government to significantly 
        increase the number of individuals who have access to viable 
        public transportation systems and services in order to maximize 
        Americans' ability to access jobs and economic opportunity.
            (6) It is the policy of the Government that the ability of 
        all citizens to move quickly and at a reasonable cost shall be 
        increased, especially in light of the growth in highway traffic 
        congestion and the resulting cost to our Nation's productivity 
        and economic strength.

SEC. 3. URBANIZED AREA FORMULA GRANTS.

    Section 5307(b)(1) of title 49 is amended--
            (1) by redesignating subparagraphs (E) and (F) as 
        subparagraphs (G) and (H), respectively; and
            (2) by inserting after subparagraph (D)--
                    ``(E) operating costs of equipment and facilities 
                for use in public transportation in an urbanized area 
                with a population of more than 200,000 for a designated 
                recipient, direct recipient, or subrecipient under 
                section 5311, providing public transportation in the 
                area and operating less than 100 buses in fixed-route 
                service in such area during peak service hours.''.

SEC. 4. TARGETED AND TEMPORARY FLEXIBILITY FOR DESIGNATED RECIPIENTS IN 
              CRISIS.

    Chapter 53 of title 49, United States Code, is amended by adding at 
the end the following:

``SEC. 5341. TARGETED AND TEMPORARY FLEXIBILITY FOR DESIGNATED 
              RECIPIENTS OR DIRECT RECIPIENTS IN CRISIS.

    ``(a) Definition.--For purposes of this section the term `crisis 
period' means that the unemployment rate, as defined by the Bureau of 
Labor Statistics, of any metropolitan statistical area located within a 
designated recipient's or direct recipient's service area is at or 
higher than 7 percent for the preceding month or the national average 
retail price of regular grade gasoline during a quarter, as reported by 
the United States Energy Information Administration, has increased by 
more than 10 percent compared to the same quarter during the previous 
year.
    ``(b) Conditions for Flexibility.--
            ``(1) In general.--If a designated recipient or direct 
        recipient operates at least 100 buses in fixed-route service 
        during peak service hours, in an urbanized area with a 
        population of more than 200,000, and is certified under 
        paragraph (3) as being in a crisis period, the agency may use 
        funds provided under section 5307 for operating costs of 
        equipment and facilities, subject to the conditions set forth 
        in paragraphs (2) and (3).
            ``(2) Limitation on use of funds.--A designated recipient 
        or direct recipient that meets the criteria set forth in 
        paragraph (1) may use--
                    ``(A) 50 percent of funds provided under section 
                5307 if it operates in an urbanized area with a 
                population of more than 200,000 but less than 500,000;
                    ``(B) 45 percent of funds provided under section 
                5307 if it operates in an urbanized area with a 
                population of more than 500,000 but less than 
                1,000,000; or
                    ``(C) 40 percent of funds provided under section 
                5307 if it operates in an urbanized area with a 
                population of more than 1,000,000.
            ``(3) Certification by secretary.--To be eligible to use 
        funds for operating costs of equipment and facilities under 
        this section, a designated recipient or direct recipient shall 
        request that the Secretary certify, not later than 30 days 
        after such request is made, that the agency is in a crisis 
        period. After each quarter, the Secretary shall monitor each 
        designated recipient or direct recipient in a crisis period to 
        determine if the agency no longer qualifies as being in a 
        crisis period. When the Secretary determines that an agency is 
        no longer in a crisis period, the agency has 3 additional 
        consecutive quarters to use the funds for operating costs of 
        equipment and facilities.

``SEC. 5342. LOCAL CONTROL OF TRANSIT OPERATING FLEXIBILITY.

    ``(a) General Eligibility Requirements.--If a designated recipient 
or direct recipient operates at least 100 buses in fixed-route service 
during peak service hours and is in an urbanized area with a population 
of more than 200,000 and--
            ``(1) such recipient's percentage of revenue for the 
        operating cost of equipment and facilities for use in public 
        transportation from non-Federal sources, excluding system-
        generated revenue, is at least equal to such revenue from the 
        previous fiscal year; or
            ``(2) the recipient receives revenue for the operating cost 
        of equipment and facilities for use in public transportation 
        derived in whole or in part from dedicated sources of revenue;
the designated recipient or direct recipient may use funds provided 
under section 5307 for operating costs of equipment and facilities, 
subject to the percentage limitations in subsection (b).
    ``(b) Limitations on Use of Funds.--A designated recipient or 
direct recipient that meets the criteria set forth in subsection (a) 
may use--
            ``(1) 30 percent of such funds if the area served has a 
        population of more than 200,000 but not more than 500,000;
            ``(2) 25 percent of such funds if the area served has a 
        population of more than 500,000 but not more than 1,000,000; or
            ``(3) 20 percent of such funds if the area served has a 
        population of more than 1,000,000.
    ``(c) Conditional Increase in Percentage Limits.--If the designated 
recipient's or direct recipient's percentage of revenue for the 
operating cost of equipment and facilities for use in public 
transportation from non-Federal sources, excluding system-generated 
revenue, is greater than such revenue from the previous fiscal year, 
the designated recipient or direct recipient may increase the 
applicable percentage specified in subsection (b) by a percentage that 
is not greater than the year-over-year increase in such amount.''.