Federal-Aid Highway Program (FAHP):
An Overview

Robert S. Kirk
Specialist in Transportation Policy
October 26, 2012
Congressional Research Service
7-5700
www.crs.gov
R42793
CRS Report for Congress
Pr
epared for Members and Committees of Congress

Federal-Aid Highway Program (FAHP): An Overview

Contents
Federal-Aid Highway Program (FAHP) .......................................................................................... 1
How the Program Works ........................................................................................................... 1
The Highway Trust Fund ........................................................................................................... 2
Funding Federal-Aid Highways ................................................................................................ 4
Formulas and Apportionments................................................................................................... 4
Core Highway Formula Programs ............................................................................................. 6
National Highway Performance Program (NHPP; MAP-21 §1106) ................................... 6
Surface Transportation Program (STP; MAP-21 §1108) .................................................... 6
Highway Safety Improvement Program (HSIP; MAP-21 §1112) ....................................... 7
Congestion Mitigation and Air Quality Improvement Program (CMAQ; MAP-21
§1113) ............................................................................................................................... 7
Transportation Alternatives Program (TA; MAP-21 §1122) ............................................... 7
Transferability Among the Core Programs .......................................................................... 8
Other Highway Programs .......................................................................................................... 8
Emergency Relief (ER) Program ........................................................................................ 8
Territorial and Puerto Rico Highway Program .................................................................... 8
Appalachian Development Highway System Program (ADHS) ......................................... 8
Projects of National and Regional Significance (PNRS) .................................................... 8
Construction of Ferry Boats and Ferry Terminal Facilities ................................................. 9
Federal Lands and Tribal Transportation Programs ............................................................ 9
Transportation Infrastructure Finance and Innovation Act (TIFIA) Program ..................... 9
Tolling...................................................................................................................................... 10

Figures
Figure 1. Federal-Aid Highway Funding: 1998-2014 ..................................................................... 3

Tables
Table 1. Highway Authorizations: MAP-21 .................................................................................... 4
Table 2. Apportioned Programs (Contract Authority) ...................................................................... 5

Contacts
Author Contact Information........................................................................................................... 10

Congressional Research Service

Federal-Aid Highway Program (FAHP): An Overview

Federal-Aid Highway Program (FAHP)
The federal government has provided some form of highway funding to the states for roughly 100
years. The major characteristics of the federal highway program have been constant since the
early 1920s. First, most funds are apportioned to the states by formula and implementation is left
primarily to state departments of transportation (state DOTs). Second, the states are required to
provide matching funds. Until the 1950s, each federal dollar had to be matched by an identical
amount of state and local money. The federal share is now 80% for non-Interstate System road
projects and 90% for Interstate System projects. Third, generally, federal money can be spent only
on designated federal-aid highways, which make up roughly a quarter of U.S. public roads.
How the Program Works
The Federal-Aid Highway Program (FAHP) is an umbrella term for the separate highway
programs administered by the Federal Highway Administration (FHWA). These programs are
almost entirely focused on highway construction, and generally do not support operations (such
as state DOT salaries or fuel costs) or routine maintenance (such as mowing roadway fringes or
filling potholes). Each state is required to have a State Transportation Improvement Plan, which
sets priorities for the state’s use of FAHP funds. The state DOTs largely determine which projects
are funded, let the contracts, and oversee project development and construction. More recently,
Metropolitan Planning Organizations (MPOs) have played a growing role in project decision
making in urban areas, but federal project funding continues to flow through state DOTs.
Under the 2012 surface transportation reauthorization act, the Moving Ahead for Progress in the
21st Century Act (MAP-21; P.L. 112-141), 92% of FAHP funding is distributed through five core
programs.1 All five are formula programs, meaning that each state’s share of each program’s total
annual authorization is based on a mathematical calculation set out in the law. The remaining
programs, generally referred to as discretionary programs, are administered more directly by
FHWA, but MAP-21 has made the funding distribution of some of these programs formulaic also.
The FAHP does not provide money in advance. Rather, a state receives bills and often pays
upfront for work completed, and then submits vouchers for reimbursement to FHWA. FHWA
certifies the claims for payment and notifies the Treasury Department, which disburses money
electronically to the state’s bank, often on the same day the voucher is submitted by the state.2
The FAHP, unlike most other federal programs, does not rely on appropriated budget authority.
Instead, FHWA exercises contract authority over monies in the highway trust fund (HTF) and
may obligate (promise to pay) funds for projects funded with contract authority prior to an
appropriation. This approach shelters highway construction projects from annual decisions about
appropriations. A distinctive terminology is used to describe highway program financing.


1 See CRS Report R42762, Surface Transportation Funding and Programs Under MAP-21: Moving Ahead for
Progress in the 21st Century Act (P.L. 112-141)
, coordinated by Robert S. Kirk.
2 Federal Highway Administration, Financing Federal-Aid Highways, FHWA-PL-07-017, Washington, DC, March
2007, pp. 17-18, http://www.fhwa.dot.gov/reports/financingfederalaid/financing_highways.pdf.
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Federal-Aid Highway Program (FAHP): An Overview

Highway Program Terminology
Distribution of funds is FHWA notification of the availability of federal funds, usually for four years. The states do
not actual y receive federal money for highway project spending up front.
Apportionment is the distribution of funds among the states as prescribed by a statutory formula.
Allocation is an administrative distribution of funds (often for specific projects) under programs that do not have
statutory distribution formulas.
Reimbursement occurs once a project is approved, the work is started, costs are incurred, and the state submits a
voucher to FHWA. The reimbursable structure is designed to curb waste, fraud, and abuse.
Contract authority is a type of budget authority that is available for obligation even without an appropriation
(although appropriators must eventual y provide liquidating authority to pay the obligations).
Obligation of contract authority for a project by FHWA legally commits the federal government to reimburse the
state for the federal share of a project. This can be done prior to an appropriation.3
Limitation on obligations, known as ObLim or Oblimit, is used to control annual FHWA spending in place of an
appropriation. The ObLim sets a limit on the total amount of contract authority that can be obligated in a single fiscal
year. For practical purposes, the ObLim is analogous to an appropriation.4
The Highway Trust Fund
The highway trust fund is financed from a number of sources, including sales taxes on fuels, tires,
truck and trailer sales, and a weight-based heavy vehicle use tax.5 However, approximately 90%
of trust fund revenue comes from excise taxes on motor fuels, 18.3 cents per gallon on gasoline
and 24.3 cents per gallon on diesel. The HTF consists of two separate accounts—highway and
mass transit. The highway account receives an allocation equivalent to 15.44 cents of the gasoline
tax and the mass transit account receives the revenue generated by 2.86 cents of the tax.6 Because
the fuel taxes are set in terms of cents per gallon, rather than as a percentage of the sale price,
their revenues do not increase with inflation. The fuel tax rates were last raised in 1993.
Sluggish economic growth and improved vehicle efficiency have depressed fuel consumption and
therefore fuel tax revenue (Figure 1). Since FY2008, the revenues flowing into the highway
account of the HTF have been insufficient to fund the expenditures authorized under the federal-
aid highway program. Resolving this discrepancy required three transfers from the general fund
totaling $29.7 billion,7 without which FHWA might have faced delays paying states for completed
work.

3 For a more detailed discussion see Federal Highway Administration, Financing Federal-Aid Highways (Washington,
2007), pp. 9-10, http://www.fhwa.dot.gov/reports/financingfederalaid/approp.htm#b.
4 Ibid., pp. 19-22. To be contract authority the authorization must refer to Title 23, Chapter 1 of the U.S. Code, and it
must be funded out of the highway trust fund.
5 Federal Highway Administration, Highway Statistics 2010: Federal Highway-User Fees; Table FE-21B, Washington,
DC, 2011, http://www.fhwa.dot.gov/policyinformation/statistics/2010/fe21b.cfm.
6 Non-fuels taxes accrue only to the highway account. A separate 0.1 cents per gallon tax on all fuels goes into the
leaking underground storage tank (LUST) trust fund, which is administered by the Environmental Protection Agency
and the states. The authorization of this fund is not addressed in surface transportation legislation.
7 In late FY2008, $8 billion was transferred to carry the highway account into the 2009 fiscal year (P.L. 110-318,
September 15, 2008). In FY2009 the transfer was $7 billion (P.L. 111-46, August 7, 2009). The Surface Transportation
Extension Act of 2010 (P.L. 111-148, March 18, 2010) transferred $14.7 billion more to the highway account.
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Federal-Aid Highway Program (FAHP): An Overview

Figure 1. Federal-Aid Highway Funding: 1998-2014
$60,000
$50,000
rs $40,000
$30,000
of Dolla
$20,000
Millions
$10,000
$0
8
9
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
FY9
FY9
FY0
FY0
FY0
FY0
FY0
FY0
FY0
FY0
FY0
FY0
FY1
FY1
FY1
FY1
FY1
Authorizations
Obligations
ARRA

Source: Federal Highway Administration and CRS.
Notes: FY2009 authorization figure reflects rescission of $8.708 billion and the FY2010 figure reflects the
restoration of the rescission.
To fund the difference between HTF revenues and authorized spending, MAP-21 provides for
general fund transfers of $6.2 billion and $12.6 billion for FY2013 and FY2014 respectively.8
$2.4 billion of the accrued balance of the leaking underground storage tank fund was also
transferred to the HTF for FY2012. According to Congressional Budget Office estimates, the
highway account of the HTF will retain a prudent balance of $4.1 billion at the end of FY2014.9
Projections indicate that HTF revenues will continue to be inadequate to support baseline
spending on surface transportation after MAP-21 expires at the end of FY2014. If that occurs,
Congress will face the need to approve some combination of new taxes, an increase in existing
fuel taxes, continuing expenditures from the general fund, increased federally supported debt
financing, or reductions in the scope of the federal surface transportation program.

8 Joint Committee on Taxation, Estimated General Fund and Trust Fund Effects of the Conference Agreement for the
Revenue Provisions Contained in Division D of MAP-21, committee print, 112th Cong., 2nd sess., June 28, 2012, JCX-
58-12, pp. 1-3. For an explanation of the transfers and offsets see, Senate Finance Committee. H.R. 4348: MAP-21,
available at http://www.finance.senate.gov/legislation/details/?id=d923f3c4-5056-a032-52f9-cc852968f453
9 Congressional Budget Office, Highway Trust Fund Projections: CBO August FY2012 Baseline 2011-2012, August
22, 2012. Because requests for reimbursement from the HTF may occur at any time and because Treasury transfers to
the HTF occur only twice each month, FHWA deems it prudent to maintain a $4 billion minimum in the highway
account to prevent having to delay payments to states due to insufficient funds.
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Federal-Aid Highway Program (FAHP): An Overview

Funding Federal-Aid Highways
After 10 years of increasing authorizations, the insufficiency of the HTF led to a leveling off of
federal spending under the authorization extensions that funded highways from October 1, 2009,
to enactment of MAP-21 in July 2012.10 MAP-21 supports highway funding at a baseline level
with a modest adjustment for inflation. The Federal-Aid Highway and research titles authorize
$41 billion annually for FY2013-FY2014 (see Table 1). The act included no project earmarks.
Table 1. Highway Authorizations: MAP-21
(contract authority from the highway account of the HTF, except as noted, in millions of dollars)
Program FY2013
FY2014
Total
Title I: Federal-Aid Highways
37,477
37,798
75,275
Transportation Infrastructure Finance and Innovation
750 1,000 1,750
Program (TIFIA)
Tribal Transportation Program
450
450
900
Federal Lands Transportation Program
300
300
600
Federal Lands Access Program
250
250
500
Territorial and Puerto Rico Highway Program
190
190
380
Federal Highway Administration Administrative Expenses
454
440
894
Emergency Relief
100
100
200
Projects of National & Regional Significance [Gen. Fund]
500
-
500
Construction of Ferry Boats and Ferry Terminal Facilities
67
67
134
Tribal High Priority Projects Program [Gen. Fund]
30
30
60
Total Authorizations: Division A
40,568 40,625 81,193
Federal-Aid Highway Program Obligation Limitation
39,699
40,256
79,955
Title II Research and Education
400 400 800
Total Authorizations
40,968 41,025 81,993
Source: Federal Highway Administration, MAP-21: Federal Highway Administration; Funding Tables, Washington,
DC, 2012, http://www.fhwa.dot.gov/map21/funding.cfm. For breakout of formula programs, see Table 2.
Notes: The $500 million authorized for Projects of National and Regional Significance for FY2013 and the annual
$30 million for Tribal High Priority Projects can be expended only with an appropriation.
Formulas and Apportionments
Unlike earlier surface transportation authorization acts, MAP-21 does not use separate formulas
to determine each state’s apportionments under each core program. Instead, MAP-21 has an
annual authorization for each major program determined by a single funding formula, as follows.

10 This does not take into account the $27.5 billion provided for highways in FY2009 under the American Recovery
and Reinvestment Act of 2009 (P.L. 111-5).
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Federal-Aid Highway Program (FAHP): An Overview

First, for FY2013, each state’s “initial amount” is determined by multiplying the total amount
available for apportionment for the year by each state’s share of total nationwide apportionments
and allocations received for FY2012. For FY2014, the total amount available for distribution is
also divided among the states based on their FY2012 shares of the whole. However, for FY2014,
should any state receive less than 95 cents for every dollar contributed to the highway account of
the HTF the state’s share is raised to that level. Given the excess of federal highway spending
over HTF revenues in recent years, it is unlikely that any adjustments will have to be made.
Second, an amount for each state’s apportionments for the Metropolitan Planning and Congestion
Management and Air Quality Improvement (CMAQ) programs is set aside from its initial
amount, based on the relative size of the state’s apportionments for FY2009 for these programs.
Third, the remainder of each state’s “initial amount” is divided among the three remaining core
programs as follows: 63.7% is apportioned to the National Highway Performance Program,
29.3% to the Surface Transportation Program, 7% to the Highway Safety Improvement Program
(from which $220 million annually is set aside for the Rail-Highways Crossings Program).
The Transportation Alternatives (TA) Program is then funded via a series of set asides at a level of
2% of all MAP-21 authorized federal-aid highway and highway research funds. Each state’s core
formula program and Metropolitan Planning apportionments are reduced proportionally to fund
each state’s TA. Under MAP-21, the five core programs plus Metropolitan Transportation
Planning are authorized at $37.4 billion for FY2013 and $37.8 billion for FY2014.
Table 2 shows the dollar amounts of the aggregate programmatic split.11
Table 2. Apportioned Programs (Contract Authority)
(millions of dollars)
Program FY2013
FY2014
Total
National Highway Performance Program (NHPP)
21,752
21,936
43,687
Surface Transportation Program (STP)
10,005
10,090
20,095
Highway Safety Improvement Program (HSIP)
2,390
2,411
4,801
Congestion Mitigation & Air Quality Improvement Program
2,209 2,228 4,437
(CMAQ)
Metropolitan Transportation Planning
312
314
626
Transportation Alternatives (TA)
809
820
1,629
Total 37,477
37,798
75,275
Source: Federal Highway Administration.

11 Federal Highway Administration, MAP-21: Federal Highway Administration; Funding Tables, Washington, DC,
2012, http://www.fhwa.dot.gov/map21/funding.cfm. This site includes tables that set forth the estimated
apportionments over the life of MAP-21 on a state-by-state basis.
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Federal-Aid Highway Program (FAHP): An Overview

Core Highway Formula Programs
MAP-21 reduced the number of discrete funding programs by two-thirds to roughly 30 programs.
Most of this reduction was accomplished by absorbing formerly separate activities and
eligibilities into the new core programs discussed below. The core programs also have many areas
of overlapping eligibility.
National Highway Performance Program (NHPP; MAP-21 §1106)
NHPP has become the largest of the restructured federal-aid highway programs, with
authorizations of approximately $22 billion annually for FY2013-FY2014. The program supports
improvement of the condition and performance of the National Highway System (NHS),12 which
includes the Interstate System highways and bridges as well as virtually all other major highways.
NHPP includes projects to achieve national performance goals for improving infrastructure
condition, safety, mobility, or freight movement, consistent with state or metropolitan planning;
construction, reconstruction, or operational improvement of highway segments; construction,
replacement, rehabilitation, and preservation of bridges, tunnels, and ferry boats and ferry
facilities; inspection costs and the training of inspection personnel for bridges and tunnels;
bicycle transportation infrastructure and pedestrian walkways; intelligent transportation systems;
and environmental restoration, as well as natural habitat and wetlands mitigation within NHS
corridors. If Interstate System and NHS bridge conditions in a state fall below the minimum
conditions established by the Secretary of Transportation, certain amounts would be transferred
from other specified programs in the state. NHPP funds may be used for Appalachian
Development Highway System projects with no state match.
Surface Transportation Program (STP; MAP-21 §1108)
STP is the federal-aid highway program with the broadest eligibility criteria. Funds can be used
on any federal-aid highway, on bridge projects on any public road, on transit capital projects, on
non-motorized paths, and on bridge and tunnel inspection and inspector training. MAP-21
authorized about $10 billion annually for FY2013-FY2014 for STP. Although “transportation
enhancement” type activities, such as bike paths and footpaths, are funded under the new
Transportation Alternatives program, these types of projects can also be funded under STP if a
state wishes. STP funds may be used for Appalachian Development Highway System projects
with no state match.
Half of each state’s STP funds are to be distributed within the state based on population. The
remainder may be spent anywhere in the state. STP funds equal to 15% of the state’s highway
bridge apportionment for FY2009 are to be set aside for off-system bridges. Some STP funds
reserved for rural areas may be used on minor collector roads.

12 §1104 redefines the components of the National Highway System (NHS), which already included all Interstate
highways and most major roads, allowing for the incorporation of additional principal arteries not previously included
in the NHS and eliminating the national mileage limit on the designations. It also adds the strategic highway network to
the NHS and clarifies rules for modifications to the National Highway System and the Interstate System.
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Federal-Aid Highway Program (FAHP): An Overview

Highway Safety Improvement Program (HSIP; MAP-21 §1112)
HSIP supports projects that improve the safety of road infrastructure by correcting hazardous road
locations, such as dangerous intersections, or making road improvements such as adding rumble
strips. Under MAP-21, HSIP is funded at roughly $2.4 billion annually for FY2013-FY2014. The
Rail-Highway Grade Crossing Program was continued through a $220 million annual set aside.13
Congestion Mitigation and Air Quality Improvement Program
(CMAQ; MAP-21 §1113)

CMAQ was established to fund projects and programs that may reduce emissions of
transportation-related pollutants. Historically, about $1 billion of the annual CMAQ funding has
been transferred to the Federal Transit Administration. Under MAP-21, CMAQ is authorized at
roughly $2.2 billion for FY2013 and $2.4 billion for FY2014. Eligibility was expanded by MAP-
21 to include demand-shifting projects such as telecommuting, ridesharing, and road pricing. The
act also expands eligibility to allow funding for turning lanes, electric and natural gas
infrastructure, and for public transportation operating costs in certain cases.
Transportation Alternatives Program (TA; MAP-21 §1122)
In MAP-21, Congress combined three programs, funding such things as highway beautification,
non-motorized transportation routes, recreational trails, and safe routes to schools into an
umbrella program called Transportation Alternatives (TA).14 TA funds also may be used for
“planning, designing, or constructing boulevards and other roadways largely in the right-of-way
of former Interstate System routes or other divided highways.” TA is a set-aside from each state’s
NHPP, STP, HSIP, CMAQ, and Metropolitan Planning apportionments amounting to roughly 2%
of total highway funding.15
There is no specific funding level for any of the programs within this group.16 States are required
to allocate 50% of the funds to local entities for obligation. Bicycle facilities and pedestrian
walkways also are eligible expenses under the National Highway Performance Program, the
Surface Transportation Program, and the Highway Safety Improvement Program.

13 For a discussion of funding of safety spending outside the Federal-Aid Highway Program umbrella, see CRS Report
R42762, Surface Transportation Funding and Programs Under MAP-21: Moving Ahead for Progress in the 21st
Century Act (P.L. 112-141)
, coordinated by Robert S. Kirk, click on Safety Programs.
14 MAP-21 made transportation museums, scenic or historic highway programs, acquisition of scenic or historic
easements and sites, and pedestrian and bicycle safety and education programs ineligible for federal funding.
15 The states are allowed to use a portion of this funding for other purposes, under a particular circumstance: 50% of the
funds are to be suballocated to local government authorities, and if the state does not use the remaining 50%, then in
subsequent years it may use the amount in excess of one year’s funding for any project eligible under CMAQ. As an
example, if the Transportation Alternative set-aside for a state is $20 million, the state must suballocate $10 million to
local governments, and may use any funds in excess of the remaining $10 million balance for other CMAQ projects.
16 Each state is required to obligate the same amount for recreational trails that it was apportioned for recreational trails
in FY2009—but states are allowed to opt out of that requirement.
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Federal-Aid Highway Program (FAHP): An Overview

Transferability Among the Core Programs
States may transfer up to 50% of any apportionment to any other apportioned program. However,
no transfers are permitted of funds that are suballocated to areas by population (such as STP) or
of Metropolitan Planning funds. The broad areas of eligibility overlap among the core programs
under MAP-21 should make it easier for states to operate within the 50% restriction on transfers.
Other Highway Programs
Emergency Relief (ER) Program
ER funds are made available following natural disasters or catastrophic failures (from an external
cause) for both emergency repairs and restoration of federal-aid highway facilities to pre-disaster
conditions. The program is funded by an annual authorization of $100 million from the HTF and
general fund appropriations authorized on a “such sums as necessary” basis. MAP-21 codified
some existing regulations regarding project eligibility. The act also reiterates that ER funds can
only be used on federal-aid highways. MAP-21 specifies that the Federal Emergency
Management Agency, not FHWA, will fund debris removal after major disasters.17
Territorial and Puerto Rico Highway Program
The Puerto Rico and Territorial Highway programs are funded at $150 million and $40 million
annually, respectively, for both FY2013 and FY2014.
Appalachian Development Highway System Program (ADHS)
The Appalachian Development Highway System is made up of designated corridors in the 13
participating Appalachian states. The ADHS program is a road building program intended to
break Appalachia’s isolation and encourage economic development. Construction has been
ongoing since the mid-1960s. MAP-21 eliminates the ADHS program as a freestanding program
with a separate authorization, incorporates its eligibilities into NHPP and STP, and provides for a
100% federal share for ADHS projects to encourage states to complete the ADHS.18
Projects of National and Regional Significance (PNRS)
The purpose of PNRS is to fund critical high-cost surface transportation infrastructure projects
that are difficult to complete with existing funding but would generate national and regional
economic benefits, increase global competitiveness, reduce congestion, improve roadways vital to
national energy security, improve the movement of freight and people, and improve transportation
safety. Budget authority, not contract authority, of $500 million is provided for FY2013. This
discretionary program would require an appropriation before funds could be made available.

17 CRS Report R42021, Emergency Relief Program: Federal-Aid Highway Assistance for Disaster-Damaged Roads
and Bridges
, by Robert S. Kirk.
18 Federal Highway Administration, Appalachian Development Highway System (ADHS): Fact Sheet, Washington, DC,
2012, http://www.fhwa.dot.gov/map21/adhs.cfm.
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Federal-Aid Highway Program (FAHP): An Overview

Construction of Ferry Boats and Ferry Terminal Facilities
The Ferry Boats and Ferry Terminal Facilities Program is a formula program that includes no set-
asides for specific states.19 MAP-21 provides $67 million annually for FY2013 and FY2014 for
the construction of ferry boats and terminal facilities. The funding is to be apportioned according
to a formula based on passengers and vehicles carried as well as total route miles. Ferry boats and
facilities are also eligible for formula funds under the National Highway Performance Program.20
Federal Lands and Tribal Transportation Programs
MAP-21 restructured several programs to create the Federal Lands and Tribal Transportation
Program. The new program has three main components:
• The Tribal Transportation Program, authorized at $450 million annually,
distributes funds among tribes mainly under a statutory formula based on road
mileage, tribal population, and relative need. MAP-21 also authorizes the Tribal
High Priority Projects Program to fund important projects that cannot be
completed with a tribe’s regular annual allocation or are needed due to an
emergency or disaster. This is a discretionary program, for which MAP-21
authorizes $30 million from the general fund for FY2013 and FY2014.
• The Federal Lands Transportation Program, authorized at $300 million annually,
provides $240 million annually to the National Park Service and $30 million to
the Fish and Wildlife Service for transportation activities. The remaining funding
will be allocated among three other federal land management agencies, the Forest
Service, the Corps of Engineers, and the Bureau of Land Management.
• The Federal Lands Access Program, authorized at $250 million annually,
supports projects that are on, adjacent to, or provide access to federal lands.
Funding is allocated among the states by a formula based on the amount of
federal land, the number of recreational visitors, federal road mileage, and the
number of federally owned bridges.
Transportation Infrastructure Finance and Innovation Act (TIFIA) Program
The TIFIA program provides secured loans, loan guarantees, and lines of credit for major surface
transportation projects. Loans must be repaid with a dedicated revenue stream, typically a project-
related user fee. MAP-21 greatly increased TIFIA funding from $122 million annually to $750
million in FY2013 and $1 billion in FY2014. DOT estimates that after administrative costs and
application of the obligation limitation it will have $690 million for credit subsidy support in
FY2013 and $920 million in FY2014.21 Assuming an average subsidy cost of 10%, this may

19 The program is part of the Federal-Aid Highway Program because it is designed to permit federal participation in the
construction of ferry boats and terminals where it is not feasible to build a bridge, tunnel, or other highway structure.
20 Federal Highway Administration, Construction of Ferry Boats and Ferry Terminal Facilities: MAP-21 Fact Sheet,
Washington, DC, 2012, http://www.fhwa.dot.gov/map21/ferry.cfm.
21 U.S. Department of Transportation, “Letters of Interest for Credit Assistance Under the Transportation Infrastructure
Finance and Innovation Act (TIFIA) Program,” 77 Federal Register 45411-45415, July 31, 2012,
http://www.fhwa.dot.gov/ipd/pdfs/tifia/fy2013_tifia_nofa_073112.pdf.
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Federal-Aid Highway Program (FAHP): An Overview

provide DOT with the capacity to lend $6.9 billion in FY2013 and $9.2 billion in FY2014.22
MAP-21 also increases the maximum share of project costs that TIFIA may provide from 33% to
49%, probably lowering the share of nonfederal resources leveraged with federal loans.
The minimum amount of TIFIA assistance for a single project is $50 million, except for
intelligent transportation system projects ($15 million) and rural projects ($25 million).23 Ten
percent of program funds are set aside to assist rural projects. Additionally, whereas loans for
urban projects must be charged interest not less than the Treasury rate, projects assisted by the
rural set aside are offered loans at half the Treasury rate. Rural projects are defined very
expansively to include any project in an area other than a city with 250,000 or more inhabitants.
TIFIA assistance is permitted for any eligible project, subject to certain eligibility criteria. One of
the key criteria is creditworthiness. To be eligible, a project’s senior debt obligations and the
borrower’s ability to repay the federal credit instrument must receive an investment-grade rating
from at least one nationally recognized credit rating agency. The TIFIA assistance must also be
determined to have several beneficial effects: fostering a public-private partnership, if
appropriate; enabling the project to proceed more quickly; and reducing the contribution of
federal grant funding. Other eligibility criteria include satisfying planning and environmental
review requirements and being ready to contract out construction within 90 days after the
obligation of assistance. Applications for assistance must be accepted by DOT on a rolling basis.
Tolling
Tolling of non-Interstate federal-aid highways has been allowed since 1992. MAP-21 provides for
a modest broadening of tolling of currently toll-free Interstate Highways. Totally new Interstate
routes or extensions of existing routes may be built as toll roads. Toll lanes may be added to an
existing Interstate route as long as the number of “free” lanes is maintained. The law allows up to
three toll-free Interstate Highway segments nationally to be subject to tolls when that is the only
way to provide funding for rehabilitation or reconstruction. States may use congestion pricing on
tolled road segments. Tolls are important revenue streams for many public-private partnerships
and alternative financing mechanisms, which have received strong support in Congress.

Author Contact Information

Robert S. Kirk

Specialist in Transportation Policy
rkirk@crs.loc.gov, 7-7769


22 The subsidy cost is “the estimated long-term cost to the government of a direct loan or a loan guarantee, calculated
on a net present value basis, excluding administrative costs,” Federal Credit Reform Act of 1990 (FCRA), §502 (5A).
23 The law also provides eligibility for projects whose total expected costs are 33.3% of the amount of federal highway
assistance apportioned in the most recent fiscal year to the state in which the project is located.
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