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SEC. 1108. SURFACE TRANSPORTATION PROGRAM.

    (a) Eligibility of Projects.--Section 133(b) of title 23, United
States Code, is amended--
        (1) in paragraph (1) by inserting after ``magnesium acetate''
    the following: ``, sodium acetate/formate, or other environmentally
    acceptable, minimally corrosive anti-icing and de-icing
    compositions'';
        (2) in paragraph (2) by striking ``and publicly owned intracity
    or intercity bus terminals and facilities'' and inserting ``,
    including vehicles and facilities, whether publicly or privately
    owned, that are used to provide intercity passenger service by
    bus'';
        (3) in paragraph (3)--
            (A) by striking ``and bicycle'' and inserting ``bicycle'';
        and
            (B) by inserting before the period at the end the
        following: ``, and the modification of public sidewalks to
        comply with the Americans with Disabilities Act of 1990 (42
        U.S.C. 12101 et seq.)'';
        (4) in paragraph (4) by inserting ``infrastructure'' after
    ``safety'';
        (5) in paragraph (9) by striking ``section 108(f)(1)(A) (other
    than clauses (xii) and (xvi)) of the Clean Air Act'' and inserting
    ``section 108(f)(1)(A) (other than clause (xvi)) of the Clean Air
    Act (42 U.S.C. 7408(f)(1)(A))'';
        (6) in paragraph (11)--
            (A) in the first sentence--
                (i) by inserting ``natural habitat and'' after
            ``participation in'' each place it appears;
                (ii) by striking ``enhance and create'' and inserting
            ``enhance, and create natural habitats and''; and
                (iii) by inserting ``natural habitat and'' before
            ``wetlands conservation''; and
            (B) by adding at the end the following: ``With respect to
        participation in a natural habitat or wetland mitigation effort
        related to a project funded under this title that has an impact
        that occurs within the service area of a mitigation bank,
        preference shall be given, to the maximum extent practicable,
        to the use of the mitigation bank if the bank contains
        sufficient available credits to offset the impact and the bank
        is approved in accordance with the Federal Guidance for the
        Establishment, Use and Operation of Mitigation Banks (60 Fed.
        Reg. 58605 (November 28, 1995)) or other applicable Federal law
        (including regulations).''; and
        (7) by adding at the end the following:
        ``(13) Infrastructure-based intelligent transportation systems
    capital improvements.
        ``(14) Environmental restoration and pollution abatement
    projects (including the retrofit or construction of storm water
    treatment systems) to address water pollution or environmental
    degradation caused or contributed to by transportation facilities,
    which projects shall be carried out when the transportation
    facilities are undergoing reconstruction, rehabilitation,
    resurfacing, or restoration; except that the expenditure of funds
    under this section for any such environmental restoration or
    pollution abatement project shall not exceed 20 percent of the
    total cost of the reconstruction, rehabilitation, resurfacing, or
    restoration project.''.
    (b) Transportation Enhancement Activities.--Section 133 of such
title is amended--
        (1) in subsection (d)(3)(D) by striking ``any State'' and all
    that follows through the period at the end and inserting ``Hawaii
    and Alaska''; and
        (2) in subsection (e)--
            (A) in paragraph (3)(B)(i) by striking ``if the Secretary''
        and all that follows through ``activities''; and
            (B) in paragraph (5) by adding at the end the following:
            ``(C) Cost sharing.--
                ``(i) Required aggregate non-federal share.--The
            average annual non-Federal share of the total cost of all
            projects to carry out transportation enhancement activities
            in a State for a fiscal year shall be not less than the
            non-Federal share authorized for the State under section
            120(b).
                ``(ii) Innovative financing.--Subject to clause (i),
            notwithstanding section 120--

                    ``(I) funds from other Federal agencies and the
                value of other contributions (as determined by the
                Secretary) may be credited toward the non-Federal share
                of the costs of a project to carry out a transportation
                enhancement activity;
                    ``(II) the non-Federal share for such a project may
                be calculated on a project, multiple-project, or
                program basis; and
                    ``(III) the Federal share of the cost of an
                individual project to which subclause (I) or (II)
                applies may be up to 100 percent.''.

    (c) Program Approval.--Section 133(e) of such title is amended by
striking paragraph (2) and inserting the following:
        ``(2) Program approval.--
            ``(A) Submission of project agreement.--For each fiscal
        year, each State shall submit a project agreement that--
                ``(i) certifies that the State will meet all the
            requirements of this section; and
                ``(ii) notifies the Secretary of the amount of
            obligations needed to carry out the program under this
            section.
            ``(B) Request for adjustments of amounts.--Each State shall
        request from the Secretary such adjustments to the amount of
        obligations referred to in subparagraph (A)(ii) as the State
        determines to be necessary.
            ``(C) Effect of approval by the secretary.--Approval by the
        Secretary of a project agreement under subparagraph (A) shall
        be deemed a contractual obligation of the United States to pay
        surface transportation program funds made available under this
        title.''.
    (d) Payments.--Section 133(e)(3)(A) of such title is amended by
striking the second sentence.
    (e) Surface Transportation Program Obligations in Urban Areas.--
Section 133 of such title is amended to read as follows:
    ``(f) Obligation Authority.--
        ``(1) In general.--A State that is required to obligate in an
    urbanized area with an urbanized area population of over 200,000
    individuals under subsection (d) funds apportioned to the State
    under section 104(b)(3) shall make available during the period of
    fiscal years 1998 through 2000 and the period of fiscal years 2001
    through 2003 an amount of obligation authority distributed to the
    State for Federal-aid highways and highway safety construction
    programs for use in the area that is equal to the amount obtained
    by multiplying--
            ``(A) the aggregate amount of funds that the State is
        required to obligate in the area under subsection (d) during
        the period; and
            ``(B) the ratio that--
                ``(i) the aggregate amount of obligation authority
            distributed to the State for Federal-aid highways and
            highway safety construction programs during the period;
            bears to
                ``(ii) the total of the sums apportioned to the State
            for Federal-aid highways and highway safety construction
            programs (excluding sums not subject to an obligation
            limitation) during the period.
        ``(2) Joint responsibility.--Each State, each affected
    metropolitan planning organization, and the Secretary shall jointly
    ensure compliance with paragraph (1).''.
    (f) Division of STP Funds for Areas of Less Than 5,000
Population.--
        (1) Special rule.--Notwithstanding section 133(c) of title 23,
    United States Code, and except as provided in paragraph (2), up to
    15 percent of the amounts required to be obligated under section
    133(d)(3)(B) of such title for each of fiscal years 1998 through
    2003 may be obligated on roads functionally classified as minor
    collectors.
        (2) Suspension.--The Secretary may suspend the application of
    paragraph (1) if the Secretary determines that paragraph (1) is
    being used excessively.
    (g) Encouragement of Use of Youth Conservation or Service Corps.--
The Secretary shall encourage the States to enter into contracts and
cooperative agreements with qualified youth conservation or service
corps to perform appropriate transportation enhancement activities
under chapter 1 of title 23, United States Code.

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