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Q&A Regarding FY 2017 Earmark Repurposing

The purpose of these questions and answers is to provide technical advice to the Federal Highway Administration's (FHWA) division offices and State departments of transportation (State DOTs) on matters associated with the repurposing of earmarked funding for Federal-aid projects pursuant to section 422 of the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2017, division K of Public Law (Pub. L.) 115-31 (hereinafter “provision”).


Question 1: What is the purpose of this provision?
Answer 1: The purpose of the provision is to make funding available from earmarks and designated projects that have not been advanced by State DOTs.  The limitations in the provision are to ensure the projects are obligated promptly and used in the same geographic area as the original earmark to provide funding for other needed projects eligible under the Surface Transportation Block Grant Program (STBG) (23 U.S.C. §133(b)), or the Territorial and Puerto Rico Highway Program (THP) (23 U.S.C. §165).   
Question 2: Must earmarks be repurposed?
Answer 2: No.  If an earmark is not repurposed, then it will remain unchanged and available for obligation.
Question 3: Does the list of earmarks and allocated funds prepared by the FHWA’s Office of the Chief Financial Officer (OCFO) identify the only earmarks and allocated funds that can be considered for repurposing?
Answer 3: No.  The list may not include all the earmarks and funding programs that may be eligible under the provision. However, it will give States a summation of the projects that could be considered. States should work with their FHWA division offices to ensure all earmarks and allocated funds listed or otherwise identified meet the repurposing eligibility criteria and the amount of funds is available.  If a State identifies an earmark that is not listed, it should provide the name, the original amount, and the legislation for the earmark. The funds must be allocated in FMIS before the repurposing process can take place. In addition, if an earmark is not on the list, it may require the FMIS Team to establish a new program code for the repurposed funding.
Question 4: How long are the funds and obligation authority available for obligation? 
Answer 4: From the date a repurposing request is submitted by the State, funds may be obligated up to 3 years after the fiscal year of the request.  Therefore, repurposed funds from requests submitted in FY 2017 must be obligated by September 30, 2020.  Unobligated balances will lapse on that date but the properly obligated contract authority funds will remain available for expenditure.  23 U.S.C. 118(c)(2) will apply to contract authority from the Highway Trust Fund.  Any General Funds (Budget Authority) will be cancelled 5 years after the funds expire.
Question 5: Is obligation limitation associated with repurposed funds subject to August Redistribution?
Answer 5: No.  While some obligation limitation may be subject to August Redistribution prior to repurposing, such as the limitation for allocated programs, once funds are repurposed they are no longer subject to August Redistribution.
Question 6: Must all earmark repurposing requests be submitted this Federal Fiscal Year?
Answer 6: Yes.  States may submit a request to repurpose earmarks at any time prior to September 12, 2017.  Any earmarks not repurposed will remain unchanged with the same original period of availability. 
Question 7: If Congress changed the description of an earmark at any point prior to this provision, can it still be repurposed?
Answer 7: Yes.  The repurposing should be based on the latest project description, including applicable earmarks for which the original description was subsequently revised by Congress.
Question 8: If an earmark was repurposed under the FY 2016 provision or is repurposed under this provision, can it be changed again?
Answer 8: No.  Once repurposed under the FY 2016 provision or this provision, the project description no longer meets the requirement of the provision that the project be described in applicable legislation or a report identified by Congress and, as such, cannot be further repurposed.
Question 9: Can the repurposed funds be used to replace previously obligated funds on an existing project?
Answer 9: No.  Pursuant to 23 CFR 630.110(a), properly obligated funds may not be replaced.  A State may use repurposed funds to add additional funds to a project due to a need for additional obligations or to convert advance construction as long as that project is identified at the time the repurposing is originally requested.
Question 10: What does the requirement that the project be within the same geographic area and within 100 miles of the earmark mean?
Answer 10:   The repurposed funds may be obligated only on a new or existing project within 100 miles of the original earmark designation in the State.  One hundred miles can be considered from any reasonable point from the location of the earmark, but the new or existing project must remain within the State. 
Question 11: Who has the authority to request repurposing of an earmark that appears to be for a local agency?
Answer 11: The provision provides the authority for a State to repurpose any earmark that was designated on or before September 30, 2006 “located within the boundary of the State or territory”.  The only requirement for the State is that the repurposed project must be within 100 miles of the designation, within the State, and eligible for STBG.
Question 12: What is the basis for the requirement that applicable earmarks be designated before October 1, 2006?
Answer 12: The provision states that an earmark must be “more than 10 fiscal years prior to the current fiscal year.”  The provision became effective in FY 2017.  As such, 10 years before FY 2017 is FY 2007, which began on October 1, 2006.  Thus, for an earmark to be eligible it must be in a law or a Congressional report for a law passed before the end of FY2006, i.e., Pub. L. 109-293 or lower.
Question 13: Can discretionary awards made by the Secretary without Congressional identification be repurposed?
Answer 13: No.  If the project was not identified by Congress in applicable legislation or report and the Secretary used discretion to select projects in a discretionary program, the funds may not be repurposed under this provision.
Question 14: If a repurposed project is completed, can excess funds that we deobligated from the project due to cost underruns be re-obligated on another project?
Answer 14: If a repurposed project is completed and excess funds are deobligated, the unobligated funds may be used only on another project from the same earmark identified on the modified transfer request form submitted before September 12, 2017.  In addition, for contract authority funding after the period of availability, the reobligation must occur in the same fiscal year as the deobligation.  Moreover, the original obligation must have been proper (an amount was not obligated in excess of the estimate to complete the project authorized or before the project was ready to proceed), and the deobligation must have been for a valid reason complying with 23 CFR 630.110(a).
Question 15: Can the repurposed funds be transferred to another agency or Federal Lands to carry out a project or projects?
Answer 15: Yes, based upon authorized transfer procedures as described in FHWA Order 4551.1.
Question 16: Can earmarked funds that were transferred to another agency be repurposed under this provision?
Answer 16: No.  The provision applies only to funds being administered by FHWA.
Question 17: Are earmarks that are not subject to obligation limitation required to use annual formula limitation after repurposing?
Answer 17: No.  Only funds that are subject to obligation limitation and do not have obligation limitation remaining available will need to use annual formula obligation limitation.
Question 18: If earmarked funds were deobligated after October 1, 2016, does the project then qualify under the “less than 10%” provision and not require project closeouts?
Answer 18: No.  The provision provides a specific cut-off date for the 10% requirement, which is October 1 of the current fiscal year, October 1, 2016.  The earmark still must be treated as 10% obligated.  Earmarks that are obligated 10% or more as of October 1, 2016, must be closed in FMIS and final vouchered before they can be considered for repurposing.  All of the funds deobligated from the closed project(s) for the earmark may be considered for repurposing.  Project closure may occur at any time before the deadline for repurposing earmarks.
Question 19: Can funds deobligated after October 1, 2016, also be repurposed?
Answer 19: Yes.  But if the obligation amount exceeded 10% on October 1, 2016, the earmark project(s) must still be final vouchered and closed in FMIS.
Question 20: What does “have been closed and for which payments have been made under a final voucher” really mean for earmarks that are 10% or more obligated?
Answer 20:  A closed project means closed in FMIS.  If the project is not a FMIS project, the State must certify the project is closed.  Final voucher paid means the State has requested final payment from FHWA based on final project estimates.  The State should consider if additional funding is needed to make the started earmark project functional before it considers repurposing the remaining earmark funds.  All projects related to the earmark must have a final voucher and be closed for the funds to be eligible for repurposing.
Question 21: How detailed does the new project description on the repurpose request need to be?
Answer 21: The project description should clearly define the scope of work and the project location that the funds will be obligated on before the end of the availability period.  Please see the HCF memo titled “Project Funds Management Guide for State Grants” dated October 29, 2014, for additional information.   The project description does not need to specify the phase of work, i.e., preliminary engineering (PE), right-of-way activities, or construction.
Question 22: Can the State choose an “area wide” project, such as a guardrail replacement program project in a specific city or county?
Answer 22: Yes; however, to ensure the integrity of the earmark and use of funds, the “area wide” project must be limited to work within the 100-mile area of the original earmark, and the project description must be clearly defined and eligible under FHWA project authorization guidance.  For example, the State may not repurpose an earmark for an unidentified list of resurface projects in the 100-mile area.
Question 23: If the earmark was for ‘Highway xx in an identified city,’ is the 100-mile range from anywhere in the city?
Answer 23: No.  The 100-mile radius is from any point on the specified highway or work location in the identified city.
Question 24: Does preliminary engineering or right-of-way payback apply to the original earmark?
Answer 24: If the earmark, as written, was specifically for PE (e.g., design activities) or right-of-way acquisition, then consistent with the FHWA PE Order, the project is not subject to PE or right-of-way reimbursement to FHWA because the earmark had a specific limited purpose.  If the State did use part of earmarked funds for PE or right-of-way activities that were intended to include construction prior to repurposing and the amount obligated was less than 10% of the earmark, the earmark may be repurposed, but the expended funds for PE or right-of-way activities will be subject the applicable reimbursement provisions.  If the State spent 10% or more of the earmark intended for construction for PE or right-of-way activities, the project cannot be considered complete.  If the State promptly pays back those activities, the funds could be considered for repurposing.
Question 25: How can the State determine how much obligation limitation is available for the earmark?
Answer 25:  If the funds have not been allocated in FMIS, the relevant program office should be able to provide that information.  If the funds have been allocated, first go to the “Fund Control Menu” in FMIS and look up the applicable program code.  See the “Limitation Type” column.  Then go back to the “Fund control” menu, select “Limitation – Balances”.  Select the appropriate limit type and determine if the limit is “Limit by Demo”.
Question 26: If a portion of the funds for an earmark was previously transferred to another agency, can the remaining balance retained by FHWA be used for repurposing? 
Answer 26:  Yes.  The State must certify that the project is closed and may repurpose the remaining balance that is administered by FHWA.  Stated differently, if funds were previously transferred to another agency, only funds returned to FHWA (currently administered by FHWA) can be repurposed under this provision.
Question 27: Why are there negative unobligated balances on the FMIS N25A report for some earmarks (or Demo IDs)?
Answer 27:  Some Demo contract authority was permitted to be used on other demos for various reasons, including advance funding authority under the High Priory Projects program.  If your State has a Demo with a negative unobligated balance, you must identify which Demo was used to balance the funds.  A State cannot transfer funds if the funds were used under a different Demo even if the balance appears on the N25A as unobligated.
Question 28: What is FHWA’s role in determining which earmarks to repurpose and on what projects to utilize the repurposed funds? 
Answer 28:  The Division Administrator’s (DA) approval represents the FHWA’s concurrence on eligibility of each earmark requested for repurposing and the identified project is qualified.  The FHWA divisions work with States to ensure the provision’s requirements are met for repurposing, such as:  if an eligible earmark has less than 10% of the funds obligated or the State demonstrated that it was complete; and, if the repurposed project is for an eligible activity within 100 miles of the original location and is in the same State as the original earmark.  However, it is a State’s decision as to which eligible earmarks to repurpose and on which qualified projects to utilize those repurposed funds.  
Question 29: What are the requirements to obligate funds repurposed under this provision?
Answer 29:  Standard Federal-aid requirements will apply for obligation.  The obligation of the funds must be for the project identified during repurposing.  Please see the HCF memo titled “Project Funds Management Guide for State Grants” dated October 29, 2014, for additional information.
Question 30: Can the DA delegate approval of these requests?
Answer 30:  The DA can delegate the approval to the Assistant Division Administrator (ADA) or Chief Operating Officer (COO).  The DA’s signature is required to ensure the appropriate level of and multi-discipline review has been completed.  The DA’s approval of a State’s repurposing request constitutes FHWA’s concurrence that (1) the repurposed earmark request meets the criteria for repurposing, and (2) any new proposed projects are STBG (or THP) eligible, within 100 miles of the earmark description, and within the State.
Question 31: Can States request an extension beyond September 12, 2017, to submit earmark repurposing requests?
Answer 31:  No.  Extensions cannot be considered beyond September 12, 2017.  For requests to be processed before the end of the fiscal year and to be considered valid for processing, FHWA division offices must submit repurposing requests to HCF’s “FHWA Transfers” e-mail address by September 12, 2017.  To ensure repurposed funds are available for obligation before the end of the fiscal year, the request must be submitted by August 29, 2017.   
Question 32: What is the purpose of the earmark certification box?
Answer 32:  The certification statements for both the State DOTs and the FHWA DA provide clearly defined and consistently applied assurance that the requested repurposing meets the eligibility criteria set forth in the provision.
Question 33: Must the State use the transfer form to request repurposing?
Answer 33:  Yes.  This form was slightly modified for the earmark repurposing requests and to ensure the necessary information is provided for the OCFO to efficiently complete the repurposing process and meet the requirements of the provision.  Please be sure to use the most recent version (ERP 2017) as the form has been slightly updated for the FY 2017 provision.
Question 34: Must the State do any quarterly reporting?
Answer 34:  Yes.  States must submit quarterly reports as required by repurposing provision.  However, FHWA will facilitate these reports by providing the States a consolidated report covering each quarter containing the project identified and approved for repurposing.  The State will provide the FHWA division office a letter certifying the accuracy of the list.  The reports are required only from States that made a request to repurpose earmarks.  Later this fiscal year, FHWA will provide additional information to the States about the exact process and timeline.
Question 35: Why are some of the demo ID’s repeated on the earmark lists?
Answer 35:  Some demo ID have multiple program codes and were identified from more than one law, so the report filter created more than one line for the demo ID.  Please refer to the FMIS N25A report for details on the correct program code and the amount of funding available for each program code.
Question 36: Is there a limited time period to expend obligations?
Answer 36:  For funds from the Highway Trust Fund (i.e., contract authority), the obligated funds are available until expended, but the project can become inactive if it is not proceeding.  For funds from the General Fund (i.e., budget authority), the funds will be cancelled 5 years after the period of availability, September 30, 2025, and will no longer be available for expenditure.
Question 37: Can the repurposed funds be used to convert advance construction (AC)?
Answer 37: Yes.  As long as the project was properly identified during the repurposing process, the funds may be used to convert AC.
Question 38: Can “placeholder” or “backup” projects be identified during repurposing process?
Answer 38:  No.  The actual projects the State plans to obligate funds on must be identified with the amount of repurposed funds to be obligated on that project.  Token amounts of funding for a project will not be considered.

The State should identify the amount they intend to obligate to each project, understanding that some adjustments might occur due to estimates.  For example, if the earmark has $300,000 available and the State identifies 3 projects they intend to obligate $100,000 on each, the intent is that each project should get $100,000, with minor adjustments for estimates.  They should not distribute the funds to multiple projects and then, for example, obligate all the funding on one of them.  Also, see questions #49 to #51.
Question 39: Does the Federal-aid number need to be identified at the time of repurposing?
Answer 39:  No, the Federal-aid number can be identified later at the time of obligation.
Question 40: Does the FMIS N25A report show if the earmark was from an eligible public law?
Answer 40:  Yes, public laws are identified on the N25A report.   For an earmark to be eligible it must be in a law or a Congressional report for a law passed before the end of FY2006, i.e., Pub. L. 109-293 or lower.
Question 41: Do any Federal-aid requirements need to be met before the funds can be repurposed to the new project, including being on the STIP?
Answer 41: No.  Federal-aid requirements must be addressed before obligation, but not before the earmark funds are approved for repurposing.  The only requirement is identifying the eligible project(s) for use of the earmark funds.
Question 42: Earmark funds are obligated on two different Federal-aid project agreements, each for 5% of the earmark amount.  Must both project agreements be closed to repurpose the balance?
Answer 42: Yes.  If the total amount obligated from the earmark meets or exceeds the 10% limit, then all projects must be final vouchered and closed.
Question 43: Some earmarks are missing from the published list on FHWA’s website compared to the lists we obtained from other sources.  Where are those projects?
Answer 43:  A few earmarks were allocated under two different program codes, specifically SAFETEA-LU HPP earmarks.  In some instances, one program code was obligated more than 10% and the other program code was not.  If the earmark, in total, has obligations 10% or greater, then it is not eligible unless the FMIS project agreement(s) has been final vouchered and closed.  Such instances will not be on the FHWA published list of projects less than 10% obligated.  Please review the FMIS N25A report to ensure the earmark meets the less than 10% obligated requirement.  The projects may be on the list of earmarks obligated greater than 10%.
Question 44: Do earmarks that are final vouchered and closed need to have been authorized before FY 2007?
Answer 44: Yes.  All earmarks must have been authorized in legislation before FY 2007 to be considered for repurposing.
Question 45: We are confused by the repurposing of obligation limitation.  Can you explain the various types of obligation limitation that could be affected?
Answer 45:  Please see the Attachment 1 for an explanation of the obligation limitation. 
Question 46: If an earmark was revised during the 2012 repurposing activity for specific 2003 to 2006 earmarks carried out by the Secretary, can the earmark be repurposed under this action?
Answer 46:  No.  The description of the earmark has been changed by that action and is no longer as “identified” in applicable legislation.
Question 47: Can toll credits be used with the repurposed funds?
Answer 47: If the earmark was previously eligible to use toll credits as non-Federal share, then the repurposed funds may also use toll credits as the non-Federal share.
Question 48: If an earmark is described as “Statewide” or “anywhere in the State” in the authorizing legislation, how does the 100-mile rule apply?
Answer 48: Because the earmark is already authorized to be used anywhere in the State, the 100-mile rule has no application.  The repurposed funds are only limited for use within the State for which the funds were earmarked.
Question 49: How specific should the amount be for the project identified to receive the repurposed funds? 
Answer 49: The amount should be a realistic amount the State intends to obligate for the project based upon the current project cost estimate.  “Token” amounts may not be identified with the intent to provide options for the earmark funding use.  See Question 38.
Question 50: If the project estimate is more than was anticipated when the repurpose form was submitted, can a State DOT obligate more funds to a repurposed earmark project from other projects identified on the repurpose transfer form?   
Answer 50:   Question #38 specifies that the amount and projects identified on the transfer form need to be specific. Thus, only minor modifications should be made between identified projects on a transfer form. The State should use other funding sources if the final estimate significantly exceeds the funds identified for a project rather than significantly redistributing earmark funds identified for another project.
Question 51: What is the difference between Contract Authority (CA) and Obligation Limitation (or authority)? How does it impact the ability to obligate these repurposed funds?
Answer 51:   The CA (also referred to as the “funds”) is the actual amount of funding authorized to be used for a purpose by Congress in the applicable legislation and may be obligated in advance of appropriations.  The CA is typically provided in multi-year laws.  To limit the CA from multi-year legislation into the annual budget and appropriations process, Congress establishes a maximum amount of the CA that can be obligated in each fiscal year in an appropriation act.  This is referred to as obligation authority (OA) or obligation limitation (used interchangeably in FHWA). The States receive annual formula OA based upon a ratio of the amount of CA the State receives that must be used in conjunction with apportioned funds.  States may also receive OA in conjunction with certain allocated program funds.  “Special OA” may be provided for an extended period, such as the fiscal year plus 3 years or may be provided as “available until expended.”  The amount of OA is typically less than the CA.  For this reason, many of the earmarks have more CA available than OA.  In this case, the State must use annual formula OA for any excess CA if they wish to obligate the balance exceeding the OA originally provided for the earmark.  Annual formula OA will not be impacted when the funds are repurposed.  The annual formula OA will only be impacted in the FY the funds are obligated.

Finally, some CA is provided as “exempt” from obligation limitation and is not subject to any limitation when obligated.

It should be noted that most Federal funds, other than those from the Highway Trust Fund, are provided as budget authority (BA). The BA typically does not require additional OA to be obligated because traditional BA is limited directly by the appropriations which made it available by appropriation. BA is typically one year or available until expended.
Question 52: If the earmark has more CA than OA, and the State does not wish to use the formula OA of the repurposed funds, does the State need to repurpose the full amount available for the earmark?
Answer 52: Yes, the State must repurpose the full amount of CA even if it does not plan to use formula OA to obligate the excess CA.  This is an acceptable variance from Question #38 to take into account the excess CA.
Question 53: The State wants to transfer repurposed funds to another agency, e.g., the Federal Transit Administration.  Do we need to submit two transfer forms?
Answer 53:  Yes, the State must submit both the FHWA-1575 (ERP 2017) to repurpose the earmark to the new purpose and submit the FHWA-1576 to transfer the funds to the other agency.  Both forms may be submitted at the same time if the receiving agency will obligate in the current fiscal year.  The FHWA-1576 will show the repurposed funds program code.
Question 54: To whom should the State send the certification letter and what does it need to include?
Answer 54:  The State or territory should send the certification letter to the DA.  The letter should state that the funds from the earmark projects shown in the attachment [HCF will provide the attachments] will be obligated only for the respective projects which are eligible under the repurposing provision (section 422 of the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2017, division K of Pub. L. 115-31).  The letter may address any corrections that are consistent with and that do not change the original request as submitted on the transfer form.  Please ensure the list of projects is attached to the letter.
Question 55: Can FHWA prioritize certain projects for processing?
Answer 55:  Repurposing requests will be processed on a first-come-first-serve basis.  If the State needs a request processed early, it should submit early.  If a project is advancing before the repurpose request can be processed, the State DOT should use an advance construction authorization for the project.  Other funds may not be obligated as a placeholder.
Question 56: Does the 2017 repurposing provision change the time by which 2016 repurposed earmarks must be obligated?
Answer 56:  No.  The 2016 repurposed earmarks still must be obligated by September 30, 2019.
Question 57: Can earmark project funds from expired programs be repurposed?
Answer 57:  Earmark funds that are in an expired fund category for a program can be repurposed only in limited circumstances.  The funds must be from the Highway Trust Fund and have been deobligated in the current fiscal year.  The repurposed project must then be obligated in the same fiscal year (e.g., before the end of FY 2017).  The expired status of the funds cannot be changed, which means that they will lapse at the end of the fiscal year if not properly obligated.  Examples of programs to which this may apply are the Public Lands Highways Discretionary Program and the Transportation, Community, and System Preservation Program (TCSP) where Congress designated the projects from these discretionary programs.  If the project was not specifically designated by Congress, then it is not eligible for repurposing.  A new program code will need to be identified and a demo ID provided, after which the State will follow the standard repurposing process.  Due to the need to obligate these funds by the end of the FY 2017, such requests must be identified for priority processing.

 


Page last modified on August 10, 2016.
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