SAFETEA-LU authorized a total of $45.3 billion for a variety of transit programs, including financial assistance to states and localities to develop, operate, and maintain transit systems from fiscal year 2005 through fiscal year 2009. Under one program, New Starts, FTA identifies and selects fixed guideway transit projects for funding—including heavy, light, and commuter rail; ferry; and certain bus projects (such as bus rapid transit). The New Starts program serves as an important source of federal funding for the design and construction of transit projects throughout the country. FTA generally funds New Starts projects through FFGAs, which establish the terms and conditions for federal participation in a New Starts project and also define a project’s scope, including the length of the system and the number of stations; its schedule, including the date when the system is expected to open for service; and its cost. For a project to obtain an FFGA, it must progress through a local or regional review of alternatives and meet a number of federal requirements, including requirements for information used in the New Starts evaluation and rating process (see fig. 1). As required by SAFETEA-LU, New Starts projects must emerge from a regional, multimodal transportation planning process. The first two phases of the New Starts process—systems planning and alternatives analysis—address this requirement. The systems planning phase identifies the transportation needs of a region, while the alternatives analysis phase provides information on the benefits, costs, and impacts of different corridor-level options, such as rail lines or bus routes. The alternatives analysis phase results in the selection of a locally preferred alternative—which is intended to be the New Starts project that FTA evaluates for funding, as required by statute. After a locally preferred alternative is selected, project sponsors submit a request to FTA for entry into the preliminary engineering phase. Following completion of preliminary engineering and federal environmental requirements, the project may be approved by FTA to advance into final design, after which the project may be approved by FTA for an FFGA and proceed to construction, as provided for in statute. FTA oversees grantee management of projects from the preliminary engineering phase through construction and evaluates the projects for advancement into each phase of the process, as well as annually for the New Starts report to Congress. To help inform administration and congressional decisions about which projects should receive federal funds, FTA assigns ratings on the basis of various financial and project justification criteria, and then assigns an overall rating. For the fiscal year 2007 evaluation cycle, FTA primarily used the financial and project justification criteria identified in TEA-21. These criteria reflect a broad range of benefits and effects of the proposed project, such as cost-effectiveness, as well as the ability of the project sponsor to fund the project and finance the continued operation of its transit system (see fig. 2). Projects are rated at several points during the New Starts process—as part of the evaluation for entry into preliminary engineering and final design, and yearly for inclusion in the New Starts annual report. FTA assigns the proposed project a rating for each criterion and then assigns a summary rating for local financial commitment and project justification. Finally, FTA develops an overall project rating. The exceptions to this process are statutorily “exempt” projects, which are those with requests for less than $25 million in New Starts funding. These projects do not have requirements for submitting project justification information—although FTA encourages their sponsors to do so—do not receive ratings from FTA and are not eligible for FFGAs; thus, the number of projects in preliminary engineering or final design may be greater than the number of projects evaluated and rated by FTA. As required by statute, the administration uses the FTA evaluation and rating process, along with the stage of development of New Starts projects, to decide which projects to recommend to Congress for funding. Although many projects receive a summary rating that would make them eligible for FFGAs, only a few are proposed for FFGAs in a given fiscal year. FTA proposes projects for FFGAs when it believes that the projects will be able to meet certain conditions during the fiscal year for which funding is proposed. These conditions include the following: All non-New Starts funding must be committed and available for the project. The project must be in the final design phase and have progressed to the point where uncertainties about costs, benefits, and impacts (e.g., environmental or financial) are minimized. The project must meet FTA’s tests for readiness and technical capacity, which confirm that there are no cost, project scope, or local financial commitment issues remaining. FTA’s Annual Report on New Starts: Proposed Allocations of Funds for Fiscal Year 2007 (annual report) identified 24 projects in preliminary engineering and final design (see fig. 3). FTA evaluated and rated 20 of these projects, and 4 projects were statutorily exempt from being rated because their sponsors requested less than $25 million in New Starts funding. FTA evaluated and rated fewer projects during the fiscal year 2007 cycle than in fiscal year 2006. According to FTA, this decrease occurred because 12 proposed projects are no longer in preliminary engineering or final design. FTA stated in its annual report that the sponsors of these projects have either (1) fully implemented the project; (2) received the total New Starts funding requested to implement the project; (3) terminated or suspended project development activities; (4) withdrawn from the New Starts process while they address outstanding issues; or (5) decided not to pursue New Starts funding. Of the 20 projects that were rated in the fiscal year 2007 evaluation cycle, 1 was rated as “high,” 17 were rated as “medium,” and 2 were rated as “low.” Under TEA-21, during fiscal years 2000 through 2006, FTA designated projects as highly recommended, recommended, or not recommended, based on the results of FTA’s evaluation of each of the criteria for project justification and local financial commitment. SAFETEA-LU replaced this rating scale with a 5-point scale of high, medium-high, medium, medium- low, and low. To help transition to the new rating scale, FTA used a 3-point scale of high, medium, and low for the fiscal year 2007 evaluation cycle, but used the same decision rules to determine overall project ratings as it did in previous years (see table 1). According to FTA officials, FTA intends to work closely with the industry to implement the SAFETEA-LU provisions so that they can be applied in subsequent annual project evaluation cycles. In addition, FTA’s current schedule anticipates that the final rule will be completed in time to use the 5-point scale for the fiscal year 2010 evaluation cycle. FTA’s evaluation process informed the administration’s recommendation to fund 12 projects. FTA recommended five projects for new FFGAs. The total capital cost of these five projects is estimated to be $3.3 billion, of which the total federal New Starts share is expected to be $1.9 billion. In addition, FTA recommended funding for two projects with pending FFGAs. The total capital cost of these two projects is estimated to be $8.2 billion, of which the total federal New Starts share is expected to be $2.8 billion. FTA also recommended reserving $101.9 million in New Starts funding for five “other projects.” In its annual report, FTA stated that four of the five other projects (1) were in or nearing final design, (2) received overall medium or higher ratings, and (3) had medium or better cost- effectiveness ratings, or (4) were exempt from the requirement to achieve a medium cost-effectiveness rating. According to FTA, no other project in preliminary engineering or final design met these criteria. The fifth project—Washington, D.C., Largo Metrorail Extension—did not meet these criteria but was congressionally designated for funding in SAFETEA- LU. Similar to last year, FTA did not specify funding levels for the five other projects because it wanted to ensure that the projects were moving forward as anticipated before making specific funding recommendations to Congress. FTA also notes in its annual report that some projects may encounter unexpected obstacles that slow their progress. For example, FTA stated that some of the projects must still complete the environmental planning process and address FTA-identified concerns related to capital costs or project scope. Reserving funds for these projects without specifying a particular amount for any given project will allow the administration to make “real time” funding recommendations when Congress is making appropriations decisions. FTA does not expect that all five other projects will be recommended for funding in fiscal year 2007. (See table 2 for more information about the 12 projects recommended for funding.) The administration’s fiscal year 2007 budget proposal requests that $1.47 billion be made available for the New Starts program. This total includes funding for 16 projects already under an FFGA. Figure 4 illustrates the planned uses of the administration’s proposed fiscal year 2007 budget for New Starts, including the following: $571.9 million would be shared among the 16 projects with existing $355 million would be shared between the 2 projects with pending FFGAs, $302.6 million would be shared by the 5 projects proposed for new FFGAs, $101.9 million would be shared by as many as 5 “other” projects to continue their development, and $100 million would be used for new Small Starts projects. In January 2006, FTA proposed nine procedural changes for the New Starts program beginning with the fiscal year 2008 evaluation cycle. These changes include linking the New Starts and NEPA planning requirements and processes and capping New Starts funding when projects enter the final design phase.