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SEC. 3009. CAPITAL INVESTMENT GRANTS AND LOANS.

    (a) Section Heading.--Section 5309 is amended in the section
heading by striking ``Discretionary'' and inserting ``Capital
investment''.
    (b) Conforming Amendment.--The item relating to section 5309 in the
table of sections for chapter 53 is amended by striking
``Discretionary'' and inserting ``Capital investment''.
    (c) General Authority.--Section 5309(a)(1) is amended--
        (1) by redesignating subparagraphs (F) and (G) as subparagraphs
    (G) and (H), respectively; and
        (2) by striking subparagraph (E) and inserting the following:
        ``(E) capital projects to modernize existing fixed guideway
    systems;
        ``(F) capital projects to replace, rehabilitate, and purchase
    buses and related equipment and to construct bus-related
    facilities;''.
    (d) Consideration of Decreased Commuter Rail Transportation.--
Section 5309(c) is amended to read as follows:
    ``(c) [Reserved.]''.
    (e) Criteria for Grants and Loans for Fixed Guideway Systems.--
Section 5309(e) is amended to read as follows:
    ``(e) Criteria for Grants and Loans for Fixed Guideway Systems.--
        ``(1) In general.--The Secretary may approve a grant or loan
    under this section for a capital project for a new fixed guideway
    system or extension of an existing fixed guideway system only if
    the Secretary determines that the proposed project is--
            ``(A) based on the results of an alternatives analysis and
        preliminary engineering;
            ``(B) justified based on a comprehensive review of its
        mobility improvements, environmental benefits, cost
        effectiveness, and operating efficiencies; and
            ``(C) supported by an acceptable degree of local financial
        commitment, including evidence of stable and dependable
        financing sources to construct, maintain, and operate the
        system or extension.
        ``(2) Alternatives analysis and preliminary engineering.--In
    evaluating a project under paragraph (1)(A), the Secretary shall
    analyze and consider the results of the alternatives analysis and
    preliminary engineering for the project.
        ``(3) Project justification.--In evaluating a project under
    paragraph (1)(B), the Secretary shall--
            ``(A) consider the direct and indirect costs of relevant
        alternatives;
            ``(B) consider factors such as congestion relief, improved
        mobility, air pollution, noise pollution, energy consumption,
        and all associated ancillary and mitigation costs necessary to
        carry out each alternative analyzed, and recognize reductions
        in local infrastructure costs achieved through compact land use
        development;
            ``(C) identify and consider mass transportation supportive
        existing land use policies and future patterns, and the cost of
        urban sprawl;
            ``(D) consider the degree to which the project increases
        the mobility of the mass transportation dependent population or
        promotes economic development;
            ``(E) consider population density and current transit
        ridership in the corridor;
            ``(F) consider the technical capability of the grant
        recipient to construct the project;
            ``(G) adjust the project justification to reflect
        differences in local land, construction, and operating costs;
        and
            ``(H) consider other factors that the Secretary determines
        appropriate to carry out this chapter.
        ``(4) Local financial commitment.--
            ``(A) Evaluation of project.--In evaluating a project under
        paragraph (1)(C), the Secretary shall require that--
                ``(i) the proposed project plan provides for the
            availability of contingency amounts that the Secretary
            determines to be reasonable to cover unanticipated cost
            increases;
                ``(ii) each proposed local source of capital and
            operating financing is stable, reliable, and available
            within the proposed project timetable; and
                ``(iii) local resources are available to operate the
            overall proposed mass transportation system (including
            essential feeder bus and other services necessary to
            achieve the projected ridership levels) without requiring a
            reduction in existing mass transportation services to
            operate the proposed project.
            ``(B) Considerations.--In assessing the stability,
        reliability, and availability of proposed sources of local
        financing under subparagraph (A), the Secretary shall
        consider--
                ``(i) existing grant commitments;
                ``(ii) the degree to which financing sources are
            dedicated to the purposes proposed;
                ``(iii) any debt obligation that exists or is proposed
            by the recipient for the proposed project or other mass
            transportation purpose; and
                ``(iv) the extent to which the project has a local
            financial commitment that exceeds the required non-Federal
            share of the cost of the project.
        ``(5) Regulations.--Not later than 120 days after the date of
    enactment of the Federal Transit Act of 1998, the Secretary shall
    issue regulations on the manner in which the Secretary will
    evaluate and rate the projects based on the results of alternatives
    analysis, project justification, and the degree of local financial
    commitment, as required under this subsection.
        ``(6) Project evaluation and rating.--A proposed project may
    advance from alternatives analysis to preliminary engineering, and
    may advance from preliminary engineering to final design and
    construction, only if the Secretary finds that the project meets
    the requirements of this section and there is a reasonable
    likelihood that the project will continue to meet such
    requirements. In making such findings, the Secretary shall evaluate
    and rate the project as `highly recommended', `recommended', or not
    `recommended', based on the results of alternatives analysis, the
    project justification criteria, and the degree of local financial
    commitment, as required under this subsection. In rating the
    projects, the Secretary shall provide, in addition to the overall
    project rating, individual ratings for each criteria established
    under the regulations issued under paragraph (5).
        ``(7) Full funding grant agreement.--A project financed under
    this subsection shall be carried out through a full funding grant
    agreement. The Secretary shall enter into a full funding grant
    agreement based on the evaluations and ratings required under this
    subsection. The Secretary shall not enter into a full funding grant
    agreement for a project unless that project is authorized for final
    design and construction.
        ``(8) Limitations on applicability.--
            ``(A) Projects with a section 5309 federal share of less
        than $25,000,000.--A project for a new fixed guideway system or
        extension of an existing fixed guideway system is not subject
        to the requirements of this subsection, and the simultaneous
        evaluation of similar projects in at least 2 corridors in a
        metropolitan area may not be limited, if the assistance
        provided under this section with respect to the project is less
        than $25,000,000.
            ``(B) Projects in nonattainment areas.--The simultaneous
        evaluation of projects in at least 2 corridors in a
        metropolitan area may not be limited and the Secretary shall
        make decisions under this subsection with expedited procedures
        that will promote carrying out an approved State Implementation
        Plan in a timely way if a project is--
                ``(i) located in a nonattainment area;
                ``(ii) a transportation control measure (as defined by
            the Clean Air Act (42 U.S.C. 7401 et seq.)); and
                ``(iii) required to carry out the State Implementation
            Plan.
            ``(C) Projects financed with highway funds.--This
        subsection does not apply to a part of a project financed
        completely with amounts made available from the Highway Trust
        Fund (other than the Mass Transit Account).
            ``(D) Previously issued letter of intent or full funding
        grant agreement.--This subsection does not apply to projects
        for which the Secretary has issued a letter of intent or
        entered into a full funding grant agreement before the date of
        enactment of the Federal Transit Act of 1998.''.
    (f) Letters of Intent and Full Funding Grant Agreements.--Section
5309(g) is amended--
        (1) in the subsection heading by striking ``financing'' and
    inserting ``funding'';
        (2) by striking ``full financing'' each place it appears and
    inserting ``full funding'';
        (3) in paragraph (1)(B)--
            (A) by striking ``30 days'' and inserting ``60 days'';
            (B) by inserting before the first comma ``or entering into
        a full funding grant agreement''; and
            (C) by striking ``issuance of the letter.'' and inserting
        ``letter or agreement. The Secretary shall include with the
        notification a copy of the proposed letter or agreement as well
        as the evaluations and ratings for the project.''; and
        (4) in paragraph (4), by striking ``50 percent'' and all that
    follows through ``obligated)'' and inserting ``an amount equivalent
    to the total authorizations under section 5338(b) for new fixed
    guideway systems and extensions to existing fixed guideway systems
    for fiscal years 2002 and 2003''.
    (g) Allocating Amounts.--Section 5309(m) is amended to read as
follows:
    ``(m) Allocating Amounts.--
        ``(1) In general.--Of the amounts made available by or
    appropriated under section 5338 for grants and loans under this
    section for each of fiscal years 1998 through 2003--
            ``(A) 40 percent shall be available for fixed guideway
        modernization;
            ``(B) 40 percent shall be available for capital projects
        for new fixed guideway systems and extensions to existing fixed
        guideway systems; and
            ``(C) 20 percent shall be available to replace,
        rehabilitate, and purchase buses and related equipment and to
        construct bus-related facilities.
        ``(2) Limitation on amounts available for activities other than
    final design and construction.--Not more than 8 percent of the
    amounts made available in each fiscal year by paragraph (1)(B)
    shall be available for activities other than final design and
    construction.
        ``(3) Bus and bus facility grants.--
            ``(A) Consideration.--In making grants under paragraph
        (1)(C), the Secretary shall consider the age of buses, bus
        fleets, related equipment, and bus-related facilities.
            ``(B) Funding for bus testing facility.--Of the amounts
        made available under paragraph (1)(C), $3,000,000 shall be
        available in each of fiscal years 1998 through 2003 to carry
        out section 5318.
        ``(4) Funding for clean fuels.--Of the amounts made available
    under paragraph (1)(C), $50,000,000 shall be available in each of
    fiscal years 1999 through 2003 to carry out section 5308.
        ``(5) Funding for ferry boat systems.--
            ``(A) Of the amounts made available under paragraph (1)(B),
        $10,400,000 shall be available in each of fiscal years 1999
        through 2003 for capital projects in Alaska or Hawaii, for new
        fixed guideway systems and extensions to fixed guideway systems
        that are ferry boats or ferry terminal facilities, or that are
        approaches to ferry terminal facilities.
            ``(B) Of the amounts appropriated under section 5338(h)(5),
        $3,600,000 shall be available in each of fiscal years 1999
        through 2003 for capital projects in Alaska or Hawaii, for new
        fixed guideway systems and extensions to fixed guideway systems
        that are ferry boats or ferry terminal facilities, or that are
        approaches to ferry terminal facilities.''.
    (h) Conforming Amendments.--
        (1) Repeal.--Section 5309(f) is amended to read as follows:
    ``(f) [Reserved.]''.
        (2) Cross reference.--Section 5328(a)(2) is amended by striking
    ``5309(e)(1)-(6) of this title'' and inserting ``5309(e)''.
        (3) References to full funding grant agreements.--Chapter 53 is
    amended--
            (A) in section 5320--
                (i) by striking ``full financing'' each place it
            appears and inserting ``full funding''; and
                (ii) in subsection (e) in the subsection heading, by
            striking ``Financing'' and inserting ``Funding''; and
            (B) in section 5328(a)(4) by striking ``full financing''
        each place it appears and inserting ``full funding''.
    (i) Reports.--Section 5309 is amended by adding at the end the
following:
    ``(o) Reports.--
        ``(1) Funding levels and allocations of funds for fixed
    guideway systems.--
            ``(A) Annual report.--Not later than the first Monday in
        February of each year, the Secretary shall submit to the
        Committee on Transportation and Infrastructure of the House of
        Representatives and the Committee on Banking, Housing, and
        Urban Affairs of the Senate a report that includes a proposal
        on the allocation of amounts to be made available to finance
        grants and loans for capital projects for new fixed guideway
        systems and extensions to existing fixed guideway systems among
        applicants for those amounts.
            ``(B) Recommendations on funding.--The annual report under
        this paragraph shall include evaluations and ratings, as
        required under subsection (e), for each project that is
        authorized or has received funds under this section since the
        date of enactment of the Federal Transit Act of 1998 or October
        1 of the preceding fiscal year, whichever date is earlier. The
        report shall also include recommendations of projects for
        funding based on the evaluations and ratings and on existing
        commitments and anticipated funding levels for the next 3
        fiscal years and for the next 10 fiscal years based on
        information currently available to the Secretary.
        ``(2) Supplemental report on new starts.--The Secretary shall
    submit a report to Congress on the 31st day of August of each year
    that describes the Secretary's evaluation and rating of each
    project that has completed alternatives analysis or preliminary
    engineering since the date of the last report. The report shall
    include all relevant information that supports the evaluation and
    rating of each project, including a summary of each project's
    financial plan.
        ``(3) Annual gao review.--The General Accounting Office shall--
            ``(A) conduct an annual review of--
                ``(i) the processes and procedures for evaluating and
            rating projects and recommending projects; and
                ``(ii) the Secretary's implementation of such processes
            and procedures; and
            ``(B) shall report to Congress on the results of such
        review by April 30 of each year.''.
    (j) Project Defined.--Section 5309 is amended by adding at the end
the following:
    ``(p) Project Defined.--In this section, the term `project' means,
with respect to a new fixed guideway system or extension to an existing
fixed guideway system, a minimum operable segment of the project.''.

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