Section 1437 of the Fixing America's Surface Transportation Act (FAST Act) allows the Governor of a State that shares a land border with Canada or Mexico to designate for each fiscal year not more than 5 percent of Surface Transportation Block Grant (STBG) Program funds made available for any area of the State under section 133(d)(1)(B) of title 23, United States Code, for border infrastructure projects eligible under section 1303 of SAFETEA–LU, the Coordinated Border Infrastructure (CBI) Program.
Question 1: How does the Governor make a set-aside designation?
Answer: First, the Governor of the State (or the Governor's designee) must consult with relevant planning organizations. Second, the Governor must certify that the designation is consistent with transportation planning requirements in Title 23. Then, the State submits the designation to the Secretary of Transportation via email with a letter signed by the Governor (or the Governor's designee) with the designated percentage to be set aside (up to 5%). The designation notification to the Secretary must be submitted no later than 30 days before the first of the fiscal year. A memorandum outlining the procedures for FY 2016 designations is located here. [FAST Act § 1437(c) and (d)]
Governors will be given the opportunity to elect a set-aside designation on an annual basis. In future fiscal years, FHWA anticipates that the call for set-aside designations will be included as part of the annual Advance Notification of Federal-Aid Highway Funds to be Apportioned, which is issued no later than 90 days prior to the beginning of each fiscal year.
Question 2: What is the deadline for a Governor to make a designation for the set-aside?
Answer: The Governor's designation shall be submitted no later than 30 days before the first day of the fiscal year to the Secretary. The funds are available for border infrastructure projects until the Governor of the State notifies the Secretary of the termination of the designation. [FAST Act § 1437(f)]
Question 3: Can a Governor designate less than the 5% set-aside for border projects?
Answer: Yes, Section 1437 allows the Governor the option of setting aside up to 5% of its STBG Program (Any Area) funding for eligible border infrastructure projects. [FAST Act § 1437(a)]
Question 4: What is the effect of the Governor designating and setting aside up to 5% of the State's STBG Program (Any Area) funds?
Answer: The set-aside provision ensures that a certain percentage of STBG Program (Any Area) funds will be available for border infrastructure projects. The designation under Section 1437 allows the Governor to set a minimum amount for border infrastructure funding for border projects.
Question 5: What is the deadline for the Governor to notify the relevant transportation planning organizations within the border region of any suballocated or distributed amount of funds available by jurisdiction?
Answer: The Governor shall submit written notification no later than 30 days after making the designation to the relevant transportation planning organizations within the border region for border infrastructure projects. [FAST Act § 1437(d)]
Question 6: What transportation planning requirements have to be met in order to obligate funds set aside by the State for border infrastructure projects?
Answer: The obligation of funds under this section for projects shall be consistent with the requirements of 23 U.S.C. 134 and 135. Before obligating the funds, a State shall consult metropolitan planning organizations (MPOs) and/or regional transportation planning organizations (RTPOs) that represent the area, if any. [FAST Act § 1437(a)-(d)]
Question 7: What types of projects are eligible to be funded with the set-aside?
Answer: Allocations to States and Metropolitan Planning Organizations may be used in a border region for the following projects, as allowed under the SAFETEA-LU Section 1303 Coordinated Border Infrastructure Program:
These items are consistent with project eligibilities under the prior CBI Program.
Question 8: Can a State use STBG Program funds for border projects without the Governor designating a set-aside?
Answer: Yes, the State may use any available STBG Program funds for eligible border infrastructure projects (for domestic projects at or along the U.S. border). [23 U.S.C. 133(b)(1)(F)] The designation under Section 1437 allows the Governor to set a dedicated and minimum amount of funding specifically for border infrastructure projects. Further, if the Governor does elect a designation, the STBG Program funds that remain undesignated are also eligible to be used for border infrastructure projects. Electing a designation sets a minimum amount that will be used on these projects, but does not prevent other STBG Program funds from being used as well.
Question 9: Can a Governor terminate a previous designation for border infrastructure projects?
Answer: Yes, Section 1437 allows the Governor the option of terminating the designation via a formal letter notification to the Secretary of Transportation. If a Governor elects to terminate the designation, the remaining unobligated funds that were designated for the fiscal year – as of the date of termination – would be eligible for any STBG Program purposes. Note that if the Governor has designated set-asides for multiple fiscal years, the Governor may terminate the designation for a fiscal year without terminating the set-aside designation for other fiscal years. [FAST Act § 1437(f)(2)]
Question 10: How will the set-aside be implemented in the Fiscal Management Information System (FMIS)?
Answer: Upon the designation of a set-aside, the applicable amount based on the percentage designated will be placed in FMIS program code Z500 for obligation. This will result in a lower amount in the STBG (Any Area) program code (Z240) based on the set-aside amount. The set-aside funds will remain in Z500 until they are obligated, the set-aside designation is terminated by the Governor, or the funds lapse.
Upon any termination of the designation by the Governor, remaining unobligated balances that were designated for the fiscal year will be moved from program code Z500 to program code Z240. Note that unobligated balances resulting from deobligations and unobligated balances that were never obligated will be treated in the same manner. Also, since a set-aside designation for a fiscal year may be terminated without terminating the set-aside designation for other fiscal years, the remaining unobligated balances to be moved from Z500 to Z240 based on the termination will be determined on a first-in, first-out basis.
