1. (a) Purpose. Section 5311, Federal Transit Act, (49 USC §5311), authorizes the Secretary of the U.S. DOT to make grants for public transportation projects in nonurbanized areas. The department has been designated by the governor to administer the Section 5311 program.

2. (b) Goal and objectives. The Department's goal in administering the Section 5311 program is to promote the availability of professional, cost-effective, efficient, and coordinated passenger transportation services to the general public in nonurbanized areas using the most efficient combination of financial and other resources. To achieve this goal, the objectives of the department are to:

   1. (1) promote the development and maintenance of a network of general public transportation services in nonurbanized areas throughout the state, in partnership with local officials;
   2. (2) fully integrate the Section 5311 program with other federal, state, and local resources that are designed to serve nonurbanized populations;
   3. (3) improve the efficiency, effectiveness, and safety of Section 5311 systems through the provision of technical assistance; and
   4. (4) include private sector operators in the overall plan to provide public transportation services.

3. (c) Department role. The department acts as the designated recipient for all Section 5311 funds appropriated to the state and has an oversight responsibility for all nonurbanized transit services within the state. The department, however, recognizes the subrecipients as partners who shall retain control of daily operations. As the administering agency, the department will:

   1. (1) develop application materials and disseminate information to prospective applicants and other interested parties;
   2. (2) allocate the available program funds in a fair and equitable manner as described in subsection (g) of this section (the department will not provide Section 5311 funds to more than one transit system in a geographical area);
   3. (3) develop evaluation criteria and select projects for funding;
   4. (4) prepare the state's annual program of projects and funding application and submit that material to the FTA for approval;
   5. (5) negotiate and execute contracts with local Section 5311 subrecipients;
   6. (6) prepare requests for federal reimbursement, and process payment requests from Section 5311 subrecipients;
   7. (7) monitor and evaluate the progress of ongoing transportation operations, including compliance with federal regulations; and
   8. (8) provide technical assistance to Section 5311 subrecipients to aid them in improving transit services.
4. (d) Eligible subrecipients. State agencies, local public bodies, private nonprofit organizations, Native American tribes and organizations, and operators of public transportation services are eligible to receive Section 5311 funds through the department. Private for-profit operators of public transportation services may participate in the program through contracts with eligible subrecipients. An entity must be a rural transit district to receive Section 5311 funds except that private for-profit operators of public transportation services and entities that are not rural transit districts are eligible to receive Section 5311 funds through the department under the intercity bus program, as set forth in subsections (g)(1) and (i) of this section.

5. (e) Eligible assistance categories. The following categories of expenses are eligible for federal reimbursement under the Section 5311 program.

   1. (1) State administrative expenses. The department may use up to 15% of the annual federal apportionment to defray its expenses incurred for the administration of Section 5311 program. These funds may also be used to provide technical assistance to subrecipients. Technical assistance may include project planning, program development, management development, coordination of public transportation projects, and related research. Projects are solicited from subrecipients and other interested parties. State administrative and technical assistance expenses do not require a non-federal match.

   2. (2) Capital expenses.

      1. (A) Eligible items include, but are not limited to:

         1. (i) buses;
         2. (ii) vans or other paratransit vehicles;
         3. (iii) radios and communications equipment;
         4. (iv) passenger shelters, bus stop signs, and similar passenger amenities;
         5. (v) wheelchair lifts and restraints;
         6. (vi) vehicle rehabilitation, remanufacture, or overhaul;
         7. (vii) preventive maintenance, including all maintenance costs;
         8. (viii) extended warranties that do not exceed the industry standard;
         9. (ix) the mass transit portion of ferry boats and terminals;
         10. (x) operational support such as computer hardware or software;
         11. (xi) installation costs and vehicle procurement, testing, inspection, and acceptance costs;
         12. (xii) construction or rehabilitation of transit facilities, including design, engineering, and land acquisition;
         13. (xiii) facilities to provide access for bicycles to mass transit facilities and equipment for transporting bicycles on mass transit vehicles;
         14. (xiv) the lease of equipment or facilities, provided that the local subrecipient, with the concurrence of the department, determines that a lease is more cost effective than the purchase of equipment or facilities after considering management efficiency, availability of equipment, staffing capabilities and guidelines on capital leases as contained in 49 CFR Part 639;
         15. (xv) the capital portions of costs for service under contract;
         16. (xvi) joint development projects (FTA Circular 9300.1A, or its latest version, provides guidelines for joint development projects);
         17. (xvii) the introduction of new technology, through innovative and improved products, into mass transportation;
         18. (xviii) transit-related intelligent transportation systems;
         19. (xix) the provision of ADA paratransit service, which shall not exceed 10% of the state's annual apportionment of Section 5311 funds and shall be used only by subrecipients that are in compliance with ADA requirements for both fixed route and demand responsive service;
         20. (xx) mobility management consisting of short-range planning, management activities and projects for improving coordination among public transportation, and other transportation service providers carried out through an agreement entered into with a person, including a governmental authority, but excluding operating expenses; and
         21. (xxi) crime prevention and security.
      2. (B) The capital cost of contracting includes depreciation, interest on facilities and equipment, and those allowable capital costs that would otherwise be incurred directly, including maintenance. No capital assets (vehicle, equipment, or facility) that have any remaining federal interest in them and no items purchased with state or local government funds may be capitalized under the grant agreement.
      3. (C) Based on funding availability, federal funds may be used to reimburse up to 80% of eligible capital expenditures. The federal share may increase to up to 90% for bicycle facilities projects or for incremental costs related to compliance with the Clean Air Act or with the Americans with Disabilities Act of 1990. The federal share may also increase in accordance with 23 U.S.C. 120(b)(2) as determined by FTA regarding the area of nontaxable Indian land, public domain lands (reserved and unreserved), national forest, and national parks and monuments. Eligibility standards for the higher federal share are defined in FTA Circular 9040.1F, or its latest version.
   3. (3) Project administrative expenses. Costs not directly tied, but essential, to the operations of passenger transportation systems may be reimbursed at up to 80% with federal funds. The federal share may also increase in accordance with 23 U.S.C. 120(b)(2) as determined by FTA regarding the area of nontaxable Indian land, public domain lands (reserved and unreserved), national forest, and national parks and monuments. Eligibility standards for the higher federal share are defined in FTA Circular 9040.1F, or its latest version.
   4. (4) Operating expenses. Those costs directly tied to systems operations, such as fuel, oil, drivers', mechanics', and dispatchers' salaries, and replacement parts may be reimbursed at 50% of net operating costs. The federal share may also increase in accordance with 23 U.S.C. 120(b)(2) as determined by FTA regarding the area of nontaxable Indian land, public domain lands (reserved and unreserved), national forest, and national parks and monuments. Eligibility standards for the higher federal share are defined in FTA Circular 9040.1F, or its latest version. The local subrecipient must provide a match, either in cash or with in-kind donations.
6. (f) Local share requirements. FTA program funds cannot be used as the local share required for Section 5311 grants. Eligible match sources include local or state programs, or unrestricted federal funds. At least half of the local share for both net operating and non-operating expenses must be cash or cash equivalent. In-kind contributions, volunteer services, and donations are eligible as local share if the value is documented.

7. (g) Allocation of funds. As part of its administration of the Section 5311 program, the department is charged with ensuring that there is a fair and equitable distribution of program funds within the state (FTA Circular 9040.1F, or its latest version). The department will allocate Section 5311 funds to local subrecipients in the following manner.

   1. (1) Reserve. Unless the governor certifies to the Secretary of the U.S. DOT that the intercity bus service needs of the state are being adequately met, the department will reserve not less than 15% of the Section 5311 federal apportionment for the development and support of intercity bus transportation to be allocated under subsection (i) of this section. If it is determined that all or a portion of the set-aside monies is not required for intercity bus service, those funds will be applied to the formula apportionment process described in paragraph (2) of this subsection. Procedures for determining if a certification of adequacy is warranted are as follows.

      1. (A) The department will review all data on intercity bus service availability, including outstanding requests from intercity operators, and levels of service.
      2. (B) The department will consult with affected intercity bus service providers.
      3. (C) The department will consult with other state agencies that have jurisdiction with respect to intercity bus regulation and seek their recommendations as to the adequacy of current service.
      4. (D) Based on the findings of subparagraphs (A), (B), and (C) of this paragraph, the commission may certify or recommend that the governor certify to the adequacy of intercity bus service.

   2. (2) Remaining balance allocation. Except as provided in paragraph (1) of this subsection, the balance of the annual Section 5311 federal apportionment, plus the remaining balance of previous Section 5311 federal apportionments, and any state funds appropriated specifically for the purpose of funding nonurbanized public transportation services will be allocated to transit providers as described in subparagraphs (A) and (B) of this paragraph.

      1. (A) The need based allocation is determined as follows: 80% will be awarded for fiscal year 2008, and 65% for each fiscal year thereafter giving consideration to population weighted at 75% and on land area weighted at 25% by using the latest census data available from, and as defined by, the U.S. Census Bureau for each nonurbanized area relative to the sum of all nonurbanized areas.
      2. (B) The performance based allocation will be 20% for fiscal year 2008, and 35% for each fiscal year thereafter. The subrecipient is eligible for funding under this subparagraph if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the funding by giving equal consideration to local funds per operating expense, ridership per revenue mile, and revenue miles per operating expense. These criteria may be calculated using the subrecipient's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.
   3. (3) Funding stability. Subject to available appropriation, no award to a transit district under this section will be less than 90% of the award to that transit district for the previous fiscal year. All allocations under paragraphs (1) and (2) of this subsection are subject to revision to comply with this standard. If available funding exceeds $20,104,352, additional funding will be awarded by the commission on a pro rata basis, competitively, or a combination of both. Consideration for the award of these additional funds may include, but is not limited to, coordination and technical support activities, compensation for unforeseen funding anomalies, assistance with eliminating waste and ensuring efficiency, maximum coverage in the provision of public transportation services, adjustment for reductions in purchasing power, and reductions in air pollution. These additional awards are not subject to the funding stability allocation process in succeeding fiscal years.

   4. (4) Adjustments to allocation.

      1. (A) If part of a transit district's service area is changed due to declaration by the United States Census Bureau or the service area is otherwise altered, the department and that subrecipient shall negotiate an appropriate adjustment in the funding year or any subsequent year, as appropriate. This negotiated adjustment is not subject to the minimum and maximum standards set forth in paragraph (3) of this subsection.
      2. (B) If a previously designated urbanized area is declared nonurbanized by the United States Census Bureau, a public transportation subrecipient serving that area must apply for funds in accordance with paragraph (5) of this subsection.
   5. (5) Application and contract. Prior to receiving funds a subrecipient must complete and comply with all application requirements, rules, and regulations applicable to the Section 5311 program. A completed application must be submitted, in a form prescribed by the department, to the appropriate district office, and document the need and demand for general public passenger transportation services. A contract shall be for no less than 12 months unless authorized by the department.
8. (h) Program of projects. All projects for a fiscal year will be identified in accordance with the allocation rules included in subsection (g) of this section. After commission approval of the allocation, these projects will be submitted to the FTA as the annual program of projects for the fiscal year.
9. (i) Intercity bus. If the governor does not certify to the adequacy of intercity bus transportation within the state, funds will be made available in accordance with subsection (g)(1) of this section. An annual request for proposals will be issued for projects complying with FTA definitions of intercity bus transportation.

Source Note:The provisions of this §31.36 adopted to be effective September 21, 1989, 14 TexReg 4601; amended to be effective July 20, 1992, 17 TexReg 4891; amended to be effective September 23, 1993, 18 TexReg 6109; amended to be effective January 13, 1994, 19 TexReg 90; amended to be effective August 11, 1994, 19 TexReg 5876; amended to be effective March 22, 1996, 21 TexReg 2096; amended to be effective December 11, 1997, 22 TexReg 12092; amended to be effective February 15, 2001, 26 TexReg 1365; amended to be effective April 17, 2003, 28 TexReg 3080; amended to be effective September 1, 2004, 29 TexReg 6734; amended to be effective June 20, 2005, 30 TexReg3606;amended to be effective July 20, 2006, 31 TexReg 5675; amended to be effective February 21, 2008, 33 TexReg 1380.