23 U.S.C. § 120 — Federal share payable

(a) Interstate System Projects. (1) In general. Unless this chapter says otherwise, the federal government normally pays 90 percent of the total cost of an Interstate System project. This includes projects adding high-occupancy-vehicle (HOV) lanes or auxiliary lanes, but not projects adding any other kind of lane. In a state where more than 5 percent of the land is unappropriated, unreserved public land or nontaxable Indian land (individual or tribal), the federal share of the remaining 10 percent goes up — by the same percentage that this land makes up of the state's total area. Either way, the federal share on any project can never go above 95 percent. (2) A state may choose a lower federal share than what paragraph (1) would otherwise give it. (b) Other Projects. For any other project or activity under this title (one not covered by subsection (a)), unless this title says otherwise, the federal share is: (1) 80 percent of the cost — except that in a state where more than 5 percent of its land is nontaxable Indian land (individual or tribal) or public domain land (reserved or unreserved, but not counting national forests, parks, or monuments), the federal share goes up by the percentage that this land makes up of the state's total area; or (2) 80 percent of the cost — except that in a state where more than 5 percent of its land is nontaxable Indian land, public domain land, national forests, and national parks or monuments combined, the federal share goes up the same way — except that, again, the federal share on any project can never exceed 95 percent. A state that picks option (2) must sign at least a one-year agreement with the Secretary to spend the extra money — the difference between what it would pay under (2) versus (1) — only on other eligible purposes under this title (not on paying its own share of approved projects). A state may also choose a lower federal share than these paragraphs would otherwise require. (c) Increased Federal Share. (1) Certain safety projects. The federal share for specific safety projects — such as traffic signals, keeping road signs and pavement markings reflective, roundabouts, safety rest areas, pavement marking, rumble strips, carpool and vanpool programs, closing rail-highway crossings, and installing traffic signs, lights, guardrails, crash barriers, breakaway utility poles, vehicle-to-infrastructure communication equipment, or priority signals for emergency and transit vehicles — can go up to 100 percent of construction cost. But no more than 10 percent of all the money apportioned nationwide for Federal-aid highway programs in a fiscal year (under section 104) can be used this way. A "safety rest area" here means a place where drivers can park and rest — without food, fuel, or lodging services — located where the Secretary finds there's a shortage of such parking areas. (2) CMAQ projects. For congestion mitigation and air quality (CMAQ) projects funded under section 149 with money obligated in fiscal year 2008 or 2009, the federal share must be at least 80 percent, and a state can choose to raise it up to 100 percent. (3) Innovative project delivery. (A) In general. Except as limited by (C), a state can choose a federal share of up to 100 percent for a project, program, or activity funded under certain apportionment categories (paragraphs (1), (2), (5)(D), or (6) of section 104(b)) if the Secretary finds that it: uses innovative delivery methods that improve work-zone safety or quality; uses innovative technology, design, manufacturing, financing, or contracting methods that improve quality, extend service life, or cut long-term maintenance costs; speeds up delivery while still following other federal laws and avoiding significant environmental harm; or reduces congestion caused by highway construction. (B) Examples. This can include things like: prefabricated bridge parts and systems that shorten construction time; innovative construction equipment, materials, or techniques (including in-place recycling and 3D digital modeling); innovative contracting methods (including design-build, construction-manager/general-contractor methods, and alternative bidding); intelligent compaction equipment; pavement materials designed to last 75 years or more, made with lower greenhouse-gas emissions, and that cure quickly to reduce construction-related traffic; contract terms setting aside safety contingency funds for work-zone safety improvements; and contract terms offering a bonus payment for finishing early, as long as that bonus is accounted for in the project's financial plan. (C) Limitations. Each fiscal year, a state can use this higher-federal-share authority for up to 10 percent of its combined apportionment under those same categories of section 104(b). And where it applies, the federal share can only be increased by up to 5 percent of the total project cost. (4) Pooled funding. Despite any other law, the Secretary may waive the non-federal share of a project or activity's cost under section 502(b)(6), if it's funded with money apportioned under section 104(b)(2), after weighing whether reducing or eliminating that share would serve the Federal-aid highway program's interests, and whether the project addresses a high-priority national or regional research, development, or technology-transfer problem benefiting multiple states or metropolitan planning organizations. (d) The Secretary may rely on the Secretary of the Interior's statement about how much land, described in subsections (a) and (b), a state has — and the Secretary of the Interior must provide that statement every year. (e) Emergency Relief. The federal share for emergency repairs or reconstruction funded under section 125, for a project on a Federal-aid highway (including the Interstate System), normally can't exceed the shares set in (a) and (b). But: repairs made within 270 days of a natural disaster or catastrophic failure, to limit damage, protect facilities, or restore essential traffic, can get a 100 percent federal share; repairing or rebuilding federal land transportation facilities, other federally owned public roads, or tribal transportation facilities can also get 100 percent; the Secretary must extend that 270-day window to account for any delay in a state's ability to reach and assess damaged facilities; and repairs that restore a facility to its pre-disaster condition can get a 90 percent federal share if the state's eligible disaster-related expenses in a fiscal year exceed its annual highway funding apportionment under section 104 for that year. (f) The Secretary can work with state transportation departments and the Department of the Interior to build Federal-aid highways inside Indian reservations and national parks and monuments run by the Department of the Interior, paying the assumed cost from the state's section 104 funds. (g) In the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands, the federal share for any project under this title is 100 percent. (h) Increased Non-Federal Share. Subject to whatever criteria the Secretary sets, a state may voluntarily pay more than its required non-federal share, which lowers the federal share correspondingly. (i) Credit for Non-Federal Share. (1) Eligibility. A state can use toll revenue — generated and spent by public, quasi-public, or private agencies to build, improve, or maintain highways, bridges, or tunnels that serve interstate commerce — as credit toward its non-federal share requirement (for funds under this title, other than the emergency relief program in section 125, or under chapter 53 of title 49). If federal funds were used to build, improve, or maintain that toll facility, the credit is reduced by the percentage of the facility's cost that came from federal funds. "Federal funds" here doesn't include loans or other assistance that has to be repaid. (2) Maintenance of effort. This credit can't be used to reduce or replace the state matching funds a program under this title already requires. To get the credit, a state must sign an agreement with the Secretary promising to keep its non-federal transportation capital spending, for that fiscal year, at or above the average of the previous three fiscal years — unless one of those three years was unusually high (more than 130 percent of the average of the other two), in which case the state must instead match the average of just the other two years. "Non-federal transportation capital expenditures" includes payments the state makes on transportation-related bonds. (3) Treatment. Using this credit doesn't expose the public, quasi-public, or private agency that generated the toll revenue to extra liability, regulation, oversight, or federal design standards beyond what it was already subject to. If the credit comes from a multistate agency created by interstate charter, it must be applied equally across all the states in that charter. (j) Use of Federal Agency Funds. Despite any other law, federal funds from outside this title and title 49 can be used to pay the non-federal share of a transportation project's cost, if the project is within, next to, or provides access to federal land, and its federal share comes from this title or title 49's chapter 53. (k) Use of Federal Land and Tribal Transportation Funds. Despite any other law, money set aside for the tribal transportation program (section 202) and the federal lands transportation program (section 203) can pay the non-federal share of a project's cost, if that project is funded under this title or title 49's chapter 53 and provides access to or within federal or tribal land. (l) Federal Share Flexibility Pilot Program. (1) Establishment. Within 180 days of the Surface Transportation Reauthorization Act of 2021 becoming law, the Secretary had to set up a pilot program giving states more flexibility on federal-share rules. (2) How the program works. A participating state can set the federal share on a project-by-project, multi-project, or program-wide basis, for projects under: the national highway performance program (section 119), the surface transportation block grant program (section 133), the highway safety improvement program (section 148), the congestion mitigation and air quality program (section 149), the national highway freight program (section 167), the carbon reduction program (section 175), or part of the PROTECT program (section 176(c)). Under the pilot, an individual project's federal share can go as high as 100 percent, but can never be 0 percent. However, across all the projects a state runs through the pilot under one of these programs, the average annual federal share can't be higher than the average maximum federal share those projects would have gotten without the pilot. (3) Selection. A state that wants to join must apply to the Secretary in whatever form and with whatever information the Secretary requires, and must show it has the financial controls needed to track its average annual federal share under the pilot. For each of fiscal years 2022 through 2026, the Secretary can select no more than 10 states to participate.