Memorandum
U.S. Department of Transportation Federal Highway Administration

The American Recovery and Reinvestment Act of 2009, Public Law 111-5 (Recovery Act), provided the Federal Highway Administration (FHWA) with $27.5 billion for highway infrastructure investment. The purpose of this guidance is to provide information regarding the availability of the appropriated funds and to establish the process by which existing obligations of Recovery Act funds may be adjusted after September 30, 2010.

Background

According to the provisions of the Recovery Act, funds apportioned and allocated to the States and other grantees are available for obligation until September 30, 2010. Obligated balances are available for expenses incurred until September 30, 2015, at which point any remaining balance will be canceled.

Unlike Federal-aid highway program contract authority, Recovery Act funds cannot be deobligated and reobligated after the period of availability. Recovery Act funds are general fund appropriations of budget authority and subject to the provisions of Title 31 of the United States Code (U.S.C.). Section 1553 of Title 31, U.S.C., allows a very limited use of appropriations after the period of availability has ended to make adjustments to existing obligations. After September 30, 2010, obligations of Recovery Act funds can be made only for costs associated with timely obligations related to legitimate cost overruns within the scope of work and purpose associated with the original obligation.

Section 1553 of Title 31, U.S.C. also imposes a $25 million annual ceiling on the amount that can be obligated in an appropriation account after the period of availability has ended.

Process for Adjustments

In order to implement the statutory requirements regarding the availability of lapsed funds for obligation, ensure consistency, and comply with the ceiling for adjustments, it is necessary to provide guidance on the upward adjustment process. After September 30, 2010, deobligated Recovery Act funds will be withdrawn from individual program accounts monthly to a centrally controlled account managed by the FHWA Office of the Chief Financial Officer. If a State has an existing Recovery Act project that experiences a within scope increase requiring an upward adjustment to the amount obligated, the State, the Division, and/or the Program office shall process a request for an upward adjustment to the amount obligated as follows:

For Appropriated and Allocated funds (Program codes C200 - C250, C490, C950, CP10, and CT10):

1. States submit a request for an upward adjustment (increasing the obligated amount on the project) to the Division for concurrence utilizing a transfer request form (FHWA-1576 - ARRA Obligation Adjustment). Submission by the State constitutes a certification that the upward adjustment(s) requested is/are not associated with a disputed contract claim or an increase under an escalation clause (as excluded by 31 U.S.C. 1553(c)(3)). Upward adjustments cannot exceed the total amount of Recovery Act funds apportioned to the State[1].
2. The Division will either reject the transfer request form and notify the State OR approve the transfer request form and submit to the OCFO official mailbox for review.
3. After review, the OCFO sends a memo of approval or disapproval to the Division official mailbox.

For Federal Lands Highway Program funds:

These funds will be managed centrally in coordination by the OCFO and Federal Lands Highway.

The ceiling on use of lapsed funds for upward adjustments may result in a delay in receiving the OCFO approval. FHWA must notify Congress if the total amount of upward adjustments during a fiscal year will exceed $25 million. The approval may be delayed a minimum of 30 days after the notice is submitted.

Please contact Mr. Dale Gray at 202-366-0978 or dale.gray@dot.gov if you have any questions or need assistance.

¹ This approach may be revised if a State(s) does not have any upward adjustments and agree that recovered funds may be permanently withdrawn.

Questions & Answers to ARRA Lapsed Funding Guidance - Economic Recovery