What is the purpose of this Notice? This Notice is to advise the States of the distribution of the limitation on Federal-aid highway program obligations pursuant to the Department of Transportation Appropriations Act, 2018, title I of division L, Public Law (Pub. L.) 115-141.  This Notice reflects the full-year distribution of obligation limitation for FY 201.

Does this Notice cancel FHWA Notice 4520.252? Yes, this Notice cancels FHWA Notice 4520.252, Distribution of Federal-aid Highway Program Obligation Limitation for the Period Beginning on October 1, 2017, and Ending on           March 23, 2018, dated February 22, 2018.

What is the overall limitation on obligations, and what provision determines its distribution?

1. Department of Transportation Appropriations Act, 2018, provides an overall limitation on Federal-aid highway program obligations for FY 2018 of $44,234,212,000.

2. Section 120 of the Department of Transportation Appropriations Act, 2018, provides the distribution methodology for the overall limitation on   Federal-aid highway program obligations.

3. Unless otherwise specified, all obligation limitation is available for 1 fiscal year and will expire at the end of FY 2018.

What funds are exempt from the limitation on obligations? The obligation limitation does not apply to obligations for projects covered under:

• (1) section 125 of title 23, U.S.C.;

• (2) section 147 of the Surface Transportation Assistance Act of 1978;

• (3) section 9 of the Federal-Aid Highway Act of 1981;

• (4) sections 131(b) and 131(j) of the Surface Transportation Assistance Act of 1982;

• (5) sections 149(b) and 149(c) of the Surface Transportation and Uniform Relocation Assistance Act of 1987;

• (6) sections 1103 through 1108 of the Intermodal Surface Transportation Efficiency Act of 1991;

• (7) section 157 of title 23, U.S.C., as in effect on the day before the date of enactment of the Transportation Equity Act for the 21^st Century;

• (8) section 105 of title 23, U.S.C, as in effect for fiscal years 1998 through 2004, but only in an amount equal to $639,000,000 for each of those fiscal years;

• (9) the Federal-aid highway programs for which obligation authority was made available under the Transportation Equity Act for the 21st Century or subsequent public laws for multiple years or to remain available until used, but only to the extent that the obligation authority has not lapsed or been used;

• (10) section 105 of title 23, U.S.C., but only in an amount equal to $639,000,000 for each of fiscal years 2005 through 2012;

• (11) section 1603 of the SAFETEA-LU, to the extent that funds obligated in accordance with that section were not subject to a limitation on obligations at the time at which the funds were initially made available for obligation; and

• (12) section 119 of title 23, U.S.C., but only in an amount equal to $639,000,000 prior to sequestration for each of fiscal years 2013 through 2018.

How are the obligation limitation amounts associated with allocated programs determined?

1. Obligation limitation is provided for administrative expenses and programs authorized under section 104(a) of title 23, U.S.C., and amounts authorized for the Bureau of Transportation Statistics.  Pursuant to the Department of Transportation Appropriations Act, 2018, the limitation on Federal Highway Administration administrative expenses is $439,443,925 and the limitation for transfer to the Appalachian Regional Commission for administrative activities is $3,248,000 (which combined are equal to the    FY 2018 contract authority for administrative expenses).  For the other programs for which funding is authorized under section 104(a) of title 23, U.S.C., and the Bureau of Transportation Statistics, obligation limitation is provided equal to the contract authority for each such program.

2. Obligation limitation is provided for the unobligated balances of contract authority for allocated programs (or for the apportioned Tribal Transportation Program and the Federal Lands Access Program) that are carried over from previous fiscal years and for which obligation limitation had been provided in a previous fiscal year.  The obligation limitation provided is equal to such unobligated balances of contract authority.

3. The ratio between the remaining obligation limitation and the remaining  FY 2018 contract authority subject to obligation limitation is determined.  The ratio calculated for FY 2018 under the Department of Transportation Appropriations Act, 2018, is 91.7 percent.

4. Obligationlimitation is distributed for each of the allocated programs (other than those allocated programs for which obligation limitation has already been provided) and for the Tribal Transportation Program and the Federal Lands Access Program.  The amount of obligation limitation for each such program is determined by multiplying the amount of contract authority authorized for FY 2018 by the above ratio.  The authorized contract authority that is not provided associated obligation limitation is “lopped off” (deducted), resulting in equal amounts of contract authority and obligation limitation available for such programs (except for the Tribal Transportation Program, which is not subject to the “lop off” of contract authority).

How is the distribution of formula obligation limitation to the States determined?

1. After obligation limitation is provided for the allocated programs (and for the Tribal Transportation Program and the Federal Lands Access Program) as described above, the remaining amount of obligation limitation is distributed among the States as formula obligation limitation.  The formula obligation limitation is distributed among the States in the proportions that the FY 2018 apportionments subject to the obligation limitation for each State bear to the total FY 2018 apportionments subject to the obligation limitation for all States.

2. The attached Table 1 shows the amount of FY 2018 formula obligation limitation distributed to each State, net of any obligation limitation associated with transfer penalty funding, or set aside under the high risk rural roads special rule, or set aside for the minimum condition of National Highway System bridges penalty (see paragraphs 7, 9, and 10 of this Notice below).

Is there any obligation limitation associated with transfer penalty funds?

1. Yes, obligation limitation is associated with transfer penalty funds for those States that failed to meet the provisions of section 154 of title 23, U.S.C. (Open Container Requirements) or section 164 of title 23, U.S.C. (Minimum Penalties for Repeat Offenders for Driving While Intoxicated or Driving Under the Influence) for FY 2018 as determined by the National Highway Traffic Safety Administration.

2. Along with the transfer penalty funds under section 154 and section 164 of title 23, U.S.C., the associated obligation limitation will be reserved and then released for use on eligible Highway Safety Improvement Program activities under section 148 of title 23, U.S.C., or transferred to the State's safety program under section 402 of title 23, U.S.C.

3. The amount of obligation limitation associated with the transfer penalty funds is determined by multiplying the amount of the transfer penalty funds by the ratio of a State’s formula obligation limitation to that State’s apportionments subject to the obligation limitation.

4. The amounts of transfer penalty funds and associated obligation limitation for FY 2018 are shown in Table 2.

How is the distribution of the obligation limitation affected by a penalty that requires that funds be withheld from apportionment to a State, such as required by 23 U.S.C. 159? The formula obligation limitation associated with any funds withheld from apportionment due to such a penalty is distributed to the States pursuant to the Department of Transportation Appropriations Act, 2018.  See paragraph 6 for how obligation limitation is distributed to the States.

Is there any obligation limitation set aside under the special rule for high risk rural roads?

1. Section 148(g)(1) of title 23, U.S.C., contains a special rule for high risk rural road safety.  The special rule requires that, if the fatality rate on rural roads in a State increases over the most recent 2-year period for which data are available, the State must obligate during the next fiscal year for projects on high risk rural roads an amount at least equal to 200 percent of its FY 2009 high risk rural roads set-aside.

2. The requirement to obligate such amounts during the next fiscal year is implemented by a set-aside of both Highway Safety Improvement Program funds and an equal amount of formula obligation limitation.

3. The amounts of high risk rural roads special rule funds and associated obligation limitation for FY 2018 are shown in Table 3.

Is there any obligation limitation set aside for the minimum condition of National Highway System bridges penalty?

1. Section 119(f)(2)(A) of title 23, U.S.C., provides for a penalty if a State for 3 consecutive years fails to maintain its National Highway System structurally deficient deck area at or below 10 percent. For the fiscal year after such a failure is determined, such a State must have an amount equal to 50 percent of its FY 2009 Highway Bridge Program apportionment set aside for use only on National Highway System bridge projects.

2. Part 490.413(a)(1) of title 23, Code of Federal Regulations, requires such penalty funds to be obligated in the year in which they are set aside.

3. The requirement to obligate such amounts during the next fiscal year is implemented by a set-aside of both National Highway Performance Program funds and an equal amount of formula obligation limitation.

4. The amounts of minimum condition of National Highway System bridges penalty funds and associated obligation limitation for FY 2018 are shown in Table 4

What other provisions apply that are related to the distribution of obligation limitation?

1. Contractauthority for transportation research programs under chapter 5 of title 23, U.S.C., or title VI of the Fixing America’s Surface Transportation Act is subject to obligation limitation that remains available for a period of 4 fiscal years.  Obligation limitation made available for transportation research in future fiscal years will be in addition to amounts made available for FY 2018.

2. The amounts of contract authority “lopped off” from the allocated programs and the Federal Lands Access Program due to the imposition of the obligation limitation will be redistributed to the States.  The redistribution will be provided via a separate notice to be issued no later than 30 days after the distribution of the obligation limitation.

3. After August 1, 2018, the Secretary will revise the distribution of obligation authority made available if a State does not plan to obligate the amount distributed during FY 2018 and redistribute such amount to those States able to obligate amounts in addition to those previously distributed during FY 2018.  Procedures for this process (known as August Redistribution) will be provided via a separate notice to be issued in July.

What action is required? Division Administrators should ensure that copies of this Notice are provided to the State departments of transportation.