Two percent of the sums apportioned to a State for fiscal year 1998 and each fiscal year thereafter under paragraphs (1) through (5) of section 104(b) shall be available for expenditure by the State, in consultation with the Secretary, only for the following purposes:

(1) Engineering and economic surveys and investigations.

(2) The planning of future highway programs and local public transportation systems and the planning of the financing of such programs and systems, including metropolitan and statewide planning under sections 134 and 135.

(3) Development and implementation of management systems, plans, and processes under sections 119, 148, 149, and 167.

(4) Studies of the economy, safety, and convenience of surface transportation systems and the desirable regulation and equitable taxation of such systems.

(5) Research, development, and technology transfer activities necessary in connection with the planning, design, construction, management, and maintenance of highway, public transportation, and intermodal transportation systems.

(6) Study, research, and training on the engineering standards and construction materials for transportation systems described in paragraph (5), including the evaluation and accreditation of inspection and testing and the regulation and taxation of their use.

(7) The conduct of activities relating to the planning of real-time monitoring elements.

Subject to paragraph (2), not less than 25 percent of the funds subject to subsection (a) that are apportioned to a State for a fiscal year shall be expended by the State for research, development, and technology transfer activities described in subsection (a), relating to highway, public transportation, and intermodal transportation systems.

(1) In general.— Subject to paragraph (2), not less than 25 percent of the funds subject to subsection (a) that are apportioned to a State for a fiscal year shall be expended by the State for research, development, and technology transfer activities described in subsection (a), relating to highway, public transportation, and intermodal transportation systems.

(2) Waivers.— The Secretary may waive the application of paragraph (1) with respect to a State for a fiscal year if the State certifies to the Secretary for the fiscal year that total expenditures by the State for transportation planning under sections 134 and 135 will exceed 75 percent of the funds described in paragraph (1) and the Secretary accepts such certification.

(3) Nonapplicability of assessment.— Funds expended under paragraph (1) shall not be considered to be part of the extramural budget of the agency for the purpose of section 9 of the Small Business Act (15 U.S.C. 638).

A State shall make available to the Secretary to carry out section 503(c)(2)(C) a percentage of funds subject to subsection (a) that are apportioned to that State, that is agreed to by ¾ of States for each of fiscal years 2013 and 2014.

(1) Funds.— A State shall make available to the Secretary to carry out section 503(c)(2)(C) a percentage of funds subject to subsection (a) that are apportioned to that State, that is agreed to by ¾ of States for each of fiscal years 2013 and 2014.

(2) Treatment of funds.— Funds expended under paragraph (1) shall not be considered to be part of the extramural budget of the agency for the purpose of section 9 of the Small Business Act (15 U.S.C. 638).

The Federal share of the cost of a project carried out using funds subject to subsection (a) shall be 80 percent unless the Secretary determines that the interests of the Federal-aid highway program would be best served by decreasing or eliminating the non-Federal share.

Funds subject to subsection (a) shall be combined and administered by the Secretary as a single fund and shall be available for obligation for the period described in section 118(b).

(Added Pub. L. 105–178, title V, § 5105, June 9, 1998, 112 Stat. 432; amended Pub. L. 109–59, title V, § 5205, Aug. 10, 2005, 119 Stat. 1795; Pub. L. 112–141, div. E, title II, § 52005, July 6, 2012, 126 Stat. 882; Pub. L. 114–94, div. A, title I, § 1104(e)(6), Dec. 4, 2015, 129 Stat. 1332.)