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

2. (b) Goal and objectives. The department's goal in administering the §5311 program is to promote the availability of cost-effective, efficient, and coordinated passenger transportation services to the general public in rural 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, including intercity services, in rural areas throughout the state, in partnership with local officials;
   2. (2) fully integrate the §5311 program with other federal, state, and local resources that are designed to serve rural populations;
   3. (3) improve the efficiency, effectiveness, and safety of §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 §5311 funds apportioned to the state and has an oversight responsibility for all rural 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 §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 §5311 subrecipients;
   6. (6) prepare requests for federal reimbursement, and process payment requests from §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 §5311 subrecipients to aid them in improving transit services.
4. (d) Eligible subrecipients. State agencies, local public entities, private nonprofit organizations, Native American tribes and organizations, and operators of public transportation services are eligible to receive §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 §5311 funds except that private for-profit operators of public transportation services and entities that are not rural transit districts are eligible to receive §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 §5311 program.

   1. (1) State administrative expenses. The department may use up to 10 percent of the annual federal apportionment to defray its expenses incurred for the administration of the §531l 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:

         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 C.F.R. Part 639;
         15. (xv) the capital portions of costs for service under contract;
         16. (xvi) joint development projects (FTA Circular 9300.1B, 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 percent of the state's annual apportionment of §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) For reimbursement:

         1. (i) federal funds may be used to reimburse up to 80 percent of eligible capital expenditures;
         2. (ii) the federal share may increase up to 85 percent of the net project cost for a project that involves acquiring vehicles for the purpose of complying with the Americans with Disabilities Act or the Clean Air Act;
         3. (iii) the federal share may increase to up to 90 percent for bicycle equipment or facilities projects or for incremental costs related to compliance with the Clean Air Act or with the Americans with Disabilities Act of 1990; and
         4. (iv) 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 Native American lands, individual and tribal, public domain lands (reserved and unreserved), national forest, and national parks and monuments, with eligibility standards for the higher federal share being 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 percent 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 Native American lands, individual and tribal, 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. Costs directly tied to systems operations, such as costs for fuel, oil, and replacement parts, and driver, mechanic, and dispatcher salaries, may be reimbursed at 50 percent 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 Native American lands, individual and tribal, 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.

   5. (5) Planning expenses may be reimbursed at up to 80 percent with federal funds. FTA Circular 8100.1C or its latest version has a complete list of eligible activities, which include:

      1. (A) studies relating to management, planning, operations, capital requirements, and economic feasibility;
      2. (B) evaluation of previous planning projects;
      3. (C) work elements and related activities preliminary to and in preparation for constructing, acquiring, or improving the operations of facilities and equipment;
      4. (D) safety, security, and emergency transportation and evacuation planning; and
      5. (E) coordinated public transit-human service transportation planning.

6. (f) Local share requirements.

   1. (1) FTA program funds cannot be used as the local share required for §5311 grants.
   2. (2) Cash from local or state programs, donations, or unrestricted federal funds is allowed.
   3. (3) In-kind contributions, volunteer services, and donations are eligible as local share if the value is documented.
   4. (4) For an intercity bus project that includes both feeder service and an unsubsidized segment of intercity bus service to which the feeder service connects, in-kind match may be derived from the costs of a private operator for the unsubsidized segment of intercity bus services for the operating costs of connecting rural intercity bus feeder services. The private operator must agree in writing to the use of the costs of the unsubsidized segment of intercity bus services as in-kind match.
   5. (5) Subrecipients may request transportation development credits be used for all or part of the local match.

7. (g) Allocation of funds. As part of its administration of the §5311 program, the department is charged with ensuring that there is a fair and equitable distribution of funds within the state (FTA Circular 9040.1F or its latest version). After subtracting funds for state administrative expenses in accordance with subsection (e)(1) of this section, the department will allocate §5311 funds to local subrecipients in the following manner and order.

   1. (1) Intercity bus allocation. Unless the chief executive officer of the state or the executive officer's authorized designee 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 allocate not less than 15 percent of the annual §5311 federal apportionment for the development and support of intercity bus transportation facilities and services providing access and connections to rural areas. 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 rural transit districts, and levels of service.
      2. (B) The department will consult with affected intercity bus service providers and rural transit districts.
      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, the chief executive officer of the state or the executive officer's authorized designee may certify to the adequacy of intercity bus service.

   2. (2) Need and performance allocation. Excluding the amounts allocated under paragraph (1) of this subsection, the balance of the annual §5311 federal apportionment, plus the remaining balance of previous §5311 federal apportionments, not to exceed $20,104,352, will be allocated to transit providers as described in subparagraphs (A) and (B) of this paragraph.

      1. (A) The need based allocation is 65 percent giving consideration to population weighted at 75 percent and on land area weighted at 25 percent by using the latest census data available from, and as defined by, the U.S. Census Bureau for each rural area relative to the sum of all rural areas.
      2. (B) The performance based allocation is 35 percent. 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 vehicle revenue mile, and vehicle 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. (C) Funding stability.

         1. (i) Subject to the available apportionment, no award to a transit district under this paragraph will be less than 90 percent of the award to that transit district for the previous fiscal year. All allocations under subparagraphs (A) and (B) of this paragraph are subject to revision to comply with this standard.
         2. (ii) If a rural transit district experiences a negative impact in its performance factor calculations due to the acquisition or loss of service area, a natural disaster, such as wind, fire, or flood, or unforeseen anomaly, the department may mitigate that impact with an alternate calculation addressing the specific situation. This calculation may be repeated in subsequent years at the discretion of the department.
   3. (3) Discretionary allocation. If the amount of the §5311 federal apportionments exceeds the maximum amount that may be allocated under paragraph (2) of this subsection, a part of that excess, not to exceed 10 percent of the amount computed by subtracting, from the annual §5311 federal apportionment, the funds for state administrative expenses under subsection (e)(1) of this section and funds allocated for intercity bus transportation under paragraph (1) of this subsection, will be available to the commission for award at any time during the fiscal year 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, furtherance of the department's goals, and reductions in air pollution. An award under this subparagraph will not be considered for the purpose of applying the funding stability allocation process under paragraph (2)(C) of this subsection in succeeding fiscal years.
   4. (4) Vehicle revenue mile allocation. Any amount of the annual §5311 federal apportionment that is not otherwise allocated under this subsection will be allocated to rural areas, with the amount allocated to a rural area based on the proportion of vehicle revenue miles for that rural area to the total of vehicle revenue miles for all rural areas.

   5. (5) 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 (2)(C) of this subsection.
      2. (B) If a previously designated urbanized area is declared rural by the United States Census Bureau, a public transportation subrecipient serving that area must apply for funds in accordance with paragraph (6) of this subsection.
   6. (6) Application and contract. Prior to receiving funds a subrecipient must complete and comply with all application requirements, rules, and regulations applicable to the §5311 program. A completed application must be submitted, in a form prescribed by the department, 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. For funding from allocations made under subsection (g)(1) of this section, an annual request for proposals will be issued for projects complying with FTA definitions of intercity bus transportation. To ensure a balanced investment in access and connectivity to intercity bus travel, the department may establish investment targets among eligible applicant groups or project types prior to solicitation of project proposals.

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 TexReg 3606;amended to be effective July 20, 2006, 31 TexReg 5675; amended to be effective February 21, 2008, 33 TexReg 1380; amended to be effective October 21, 2010, 35 TexReg 9372; amended to be effective November 21, 2013, 38 TexReg 8253.