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U.S. Departmentof Transportation
Federal Highway Administration

Subject: ACTION: Use of Excess Funds and Funds for Inactive Projects Date: March 9, 2007
From: /Original signed by/
A. Thomas Park
Chief Financial Officer
In Reply Refer To: HCFM-10

Directors of Field Services
Division Administrators


Section 1603 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, (SAFETEA-LU), Public Law 109-59, establishes this section to improve efficiency in the administration of Federal-aid highway programs.

The funds that are eligible were designated for a specific surface transportation project or activity under a public law or a report accompanying a public law prior to fiscal year 1991. If the funds are determined to be excess or inactive they may be converted, if requested by a State, and used for any project eligible under the Surface Transportation Program (STP).

The following definitions apply to section 1603:

Excess funds are funds obligated for a specific transportation project or activity that remain available for the project or activity after the project or activity has been completed or canceled; or an unobligated balance of funds allocated for a transportation project or activity that the State in which the project or activity was to be carried out certifies are no longer needed for the project or activity.

Inactive funds are an obligated balance of Federal funds for an eligible transportation project or activity against which no expenditures have been charged during any 1-year period beginning after the date of obligation of the funds; and funds that are available to carry out a transportation project or activity in a State, but, as certified by the State, are unlikely to be advanced for the project or activity during the 1-year period beginning on the date of certification.

Period of Availability: The funds in this section are available for obligation in accordance with Title 23, U.S.C., section 133 through fiscal year 2008. The obligation limitation recovered with excess contract authority is only available to be used in the fiscal year (FY) of recovery. Thus, while the recovered contract authority is available for obligation through FY 2008, the timing of the recovery of contract authority and obligation limitation and reobligation of contract authority and use of obligation limitation is critical; in order to use the obligation limitation associated with the recovered contract authority, both the contract authority and obligation limitation must be reobligated in the fiscal year of recovery. The recoveries in FY 2007 should be reobligated in FY 2007 consistent with 23 U.S.C. 118(d), and the recoveries in FY 2008 should be reobligated in FY 2008.

Procedures: To convert funds under these provisions, the State must submit a written request to the FHWA Division Office providing the following information: A description of the project as cited in the public law; the public law or report accompanying the public law; the amount to be converted; and the description and geographic location of the STP project where the converted funds will be reobligated. The Division Office must review the request and determine if the request meets the criteria before submitting to the Office of the Chief Financial Officer for coordination and approval. The requests should be submitted by the 15th of December, March, and June.

A Fiscal Management Information System program code will be assigned, based on the source of the funds to be reprogrammed, when the reprogramming is approved. These program codes will be used for reporting purposes.

Restrictions: This provision does not apply to funds for Discretionary or Emergency Relief projects allocated by the Secretary for which the Secretary has the authority to withdraw for other projects. The funds are not subject to the limitation on obligations if they were originally exempt from the limitation.

This provision will expire at the end of fiscal year 2008 and any funds reprogrammed and not obligated within this timeframe will lapse.

Reporting Requirements: Each State is required to submit an annual certification reporting the status of and the estimated completion date for all projects reprogrammed under this section to the Office of the Chief Financial Officer (HCFM-30) by July 15. A comprehensive report will be submitted to Congress not later than August 10 each year.

If there are questions concerning this provision, please contact Dale Gray at (202) 366-0978.

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