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DOT Logo Memorandum
U.S. Department of Transportation
Federal Highway Administration

INFORMATION: Interstate Construction Funds and
Availability of Unobligated Balances of Interstate Substitute
Funds, Section 1106(b) of TEA-21, Implementing Guidance
August 7, 1998

Chief, Federal-Aid and Design Division


Regional Administrators
Division Administrators

The enactment of the Transportation Equity Act for the 21st Century (TEA-21) has changed or added several provisions regarding the transfer of Interstate Construction (IC) funds and the use of unobligated balances of Interstate Substitute funds. The purpose of this memorandum is to provide written guidance regarding the provisions in the TEA-21 dealing with these issues.

Prior to TEA-21, 23 U.S.C. 119(d) provided for the transfer of IC funds in a State to the State's Interstate Maintenance (IM) or National Highway System (NHS) accounts in an amount equivalent to the Federal share of the cost to complete Interstate segments included in the 1991 Interstate Cost Estimate (ICE) for open-to-traffic segments. This provision is retained under TEA-21 but was renumbered as 23 U.S.C. 119(b) [see Section 1107(a)(3) of TEA-21].

Section 1106(b) of TEA-21 amended 23 U.S.C. 103(d) with provisions for two additional transfers of IC funds:

    Interstate Construction Funds NOT in Surplus

    The provision of new 23 U.S.C. 119(b) as described above is essentially repeated in new 23 U.S.C. 103(d)(1) with two important differences: (1) Section 103 permits the transfer of an amount equivalent to the Federal share of cost of any unfinished Interstate segment including gap segments not open to traffic, and (2) IC funds may only be transferred to NHS under this section. The Interstate completion work represented by the transferred funds loses its eligibility for IC funding.

    Surplus Interstate Construction Funds

    Before the enactment of TEA-21 a State which had completed its Interstate System components and, therefore, had no Interstate completion needs was unable to use any unobligated balance of IC funds (except for minimum one-half percent apportionments) under existing law for any purpose other than Interstate completion. Section 1106 of TEA-21 establishes 23 U.S. C. 103(d)(2) and provides that, if a State has fully financed all work eligible under the 1991 ICE, upon application by the State and approval by the Secretary, surplus IC funds apportioned to the State may be transferred to the NHS account. Surplus funds that are transferred are subject to the laws (including regulations, policies, and procedures) relating to the apportionment to which the funds are transferred.

Thus, there are three provisions for transfer of IC funds, one for unfinished open-to-traffic segments, one for unfinished not open to traffic, and one for completed segments.

Section 1106 of TEA-21 also provides that unobligated balances of Substitute Highway funds apportioned to a State under 23 U.S.C. 103(e)(4)(H), as in effect on the day before the date of enactment of TEA-21, shall be available for obligation by the State under the law (including regulations, policies and procedures) relating to the obligation and expenditure of the funds in effect on that date. This provision is essentially a restatement of existing law and is not a change in actual practice.

Requests from a State for approval of tranfers under these provisions are to be directed to the Division Administrator for approval and upon approval, forwarded to the Director, Office of Budget and Finance, for processing. The Federal-Aid and Design Division, HNG-12, should be furnished a copy of the approval memorandum and the supporting papers.

Questions regarding these transfers may be directed to Mr. Cecilio Leonin, HNG-12, at 202-366-4651. This guidance will be updated in the future if further clarifications are found necessary.

Signed by
Dwight A. Horne

This page last modified on October 2, 1998
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