Federal Highway System & Federal-Aid Highways

The federal highway system — governed by 23 U.S.C. §§ 101–171 and administered by the Federal Highway Administration (FHWA) within the Department of Transportation — encompasses over 160,000 miles of the National Highway System (including the 47,000-mile Interstate Highway System), funded primarily through the Highway Trust Fund fed by the federal gas tax. The federal-aid highway program is a cost-sharing partnership: the federal government covers 80% of eligible project costs (90% for Interstate projects), with states providing the 20% match and managing project delivery. The Infrastructure Investment and Jobs Act (IIJA, 2021) — also called the Bipartisan Infrastructure Law — authorized $350 billion in federal highway and bridge investment over five years (FY2022–2026), the largest single highway investment in U.S. history, including $40 billion specifically for bridge replacement and repair. States receive federal highway funds through a complex formula-based apportionment system, with additional discretionary grants administered through competitive programs like INFRA, BUILD, and RAISE. The National Environmental Policy Act (NEPA) review process — requiring environmental impact assessments for federally funded highway projects — is the most frequent source of project delays, with major projects routinely taking 10+ years from planning to construction, a timeline IIJA and subsequent legislation sought to compress to 2 years for routine projects.

Current Law (2026)

Legal Authority

• 23 U.S.C. § 101 — Definitions and declaration of policy (Congress authorizes the construction and maintenance of a nationwide highway system; federal-state partnership; state DOTs administer projects with federal oversight)
• 23 U.S.C. § 104 — Apportionment (formula distribution of highway funds to states; National Highway Performance Program, Surface Transportation Block Grant, Highway Safety Improvement, Congestion Mitigation, National Highway Freight)
• 23 U.S.C. § 106 — Project approval and oversight (FHWA approves plans, specifications, and estimates for federal-aid highway projects; engineering and environmental review)
• 23 U.S.C. § 109 — Standards (federal-aid highways must be designed to standards adequate for expected traffic; geometric design, safety, access control)
• 23 U.S.C. § 119 — National Highway Performance Program (NHPP) (preservation and improvement of the National Highway System; performance targets; bridge condition)
• 23 U.S.C. § 133 — Surface Transportation Block Grant Program (STBGP) (flexible funding for roads, bridges, transit, bicycle/pedestrian infrastructure; most flexible federal highway program)
• 23 U.S.C. § 148 — Highway Safety Improvement Program (HSIP) (data-driven investments to reduce traffic fatalities and serious injuries; Strategic Highway Safety Plans)
• 23 U.S.C. § 129 — Toll roads (states may toll new Interstate capacity and reconstruct/replace toll facilities; tolling of existing free Interstate lanes generally prohibited with exceptions)
• 23 U.S.C. § 166 — HOV lanes (high-occupancy vehicle lane policies; state designation; exceptions for alternative fuel vehicles, motorcycles)

Implementing Regulations

• 23 CFR Part 1 — General federal-aid highway program provisions: FHWA policies, state certifications, and administrative requirements

• 23 CFR Part 450 — Transportation planning: statewide and metropolitan transportation planning processes, long-range plans, and transportation improvement programs (TIPs)

• 23 CFR Part 625 — Highway design standards: geometric design, pavement, and safety standards for federal-aid highway projects

• 23 CFR Part 630 — Preconstruction procedures and construction/maintenance requirements: plans, specifications, estimates, and contractor oversight

• 23 CFR Part 635 — Construction and Maintenance (55 sections — FHWA rules governing how states must procure and administer federally assisted highway construction contracts; four subparts cover competitive bidding requirements, force account and design-build exceptions, authorization to proceed, and miscellaneous contract administration):

  Competitive Bidding Requirements (Subpart A, §§ 635.101–635.135):

  • § 635.104 — Competitive bidding required: all federally assisted highway construction contracts above the micro-purchase threshold must be awarded through sealed competitive bidding; negotiated contracting is not permitted for FHWA-assisted work except as specifically authorized under Subpart B (design-build, force account)
  • § 635.107 — DBE participation: state DOTs must schedule DBE participation goals for individual contracts in accordance with their approved DBE program (see 49 CFR Part 26); contract solicitations must state the DBE goal and require prime contractor good-faith efforts to meet it; failure to document good-faith efforts is grounds to reject the bid
  • § 635.112 — Advertising for bids: contracts must be publicly advertised for a reasonable period (minimum 3 weeks for contracts over $100,000); the advertisement must describe the project, the location, and where bid documents can be obtained; the state may use online advertising platforms
  • § 635.114 — Contract award: the state must award to the lowest responsive, responsible bidder; the state must obtain FHWA concurrence before awarding contracts where FHWA participation is involved; if the lowest bid exceeds the state's estimate by more than 10%, the state must justify award to FHWA or reject and rebid
  • § 635.116 — Subcontracting: prime contractors must perform a minimum of 30% of the original contract amount with their own organization (not counting materials or specialty items subcontracted with FHWA approval); subcontracts must be in writing; primes may not subcontract more than 70% of the work without FHWA approval
  • § 635.117 — Davis-Bacon prevailing wages: all laborers and mechanics on federally assisted highway projects must be paid at least the prevailing wage rates as determined by the Secretary of Labor under the Davis-Bacon Act; wage determinations must be incorporated into every contract
  • § 635.118 — Certified payrolls: prime and subcontractors must submit certified weekly payroll records documenting worker classifications, hours worked, and wages paid; states must maintain payroll records for 3 years after final payment; FHWA may audit payrolls at any time
  • § 635.119 — False statements notice: contractors must post a notice at the project site and include a notice in every subcontract warning that false statements on federal-aid projects are a federal criminal offense under 18 U.S.C. § 1020
  • § 635.120 — Changes and extra work: contract modifications for changed conditions or extra work must be authorized by the state engineer; changes not ordered before work is performed are generally not compensable; FHWA must approve supplemental agreements that increase the federal share
  • § 635.121 — Time extensions: states may grant contract time extensions for owner-caused delays, unusually severe weather, acts of God, or other conditions beyond the contractor's control; time extension requests must be documented and approved before the contract completion date
  • § 635.125 — Termination for default: contracts of $10,000 or more must contain termination-for-default and termination-for-convenience clauses meeting FHWA's standard requirements; states must notify FHWA before terminating a federally assisted contract for default
  • § 635.127 — Liquidated damages: contracts must include liquidated damages provisions for time overruns; the daily liquidated damages rate must be specified in the contract and must be a reasonable pre-estimate of the state DOT's actual damages for each day of delay (including traffic control, inspection, and inconvenience costs)

  Force Account and Design-Build Exceptions (Subpart B, §§ 635.201–635.205):

  • §§ 635.201–635.205 — States may use force account (state employees performing construction work) or design-build contracting as alternatives to traditional competitive sealed-bid procurement; design-build contracts combine design and construction in a single procurement with performance specifications; FHWA approval is required before using these procurement methods; force account is generally limited to emergency repairs, specialized work, and situations where competitive bidding is impracticable

  Authorization to Proceed (Subpart C, §§ 635.301–635.309):

  • §§ 635.301–635.309 — States must obtain FHWA authorization before advertising for bids, awarding contracts, or authorizing work to proceed on federally assisted projects; work performed before authorization is ineligible for federal reimbursement regardless of how otherwise compliant the work is; authorization is project-specific and stage-specific

  The competitive bidding requirement in §635.104 is among the most strictly enforced conditions of FHWA program participation. State DOTs that award contracts through negotiation, sole-source, or other non-competitive methods — even for legitimate policy reasons — must have FHWA approval in advance or risk losing federal reimbursement for the entire project. The Davis-Bacon and certified payroll requirements (§§635.117-635.118) are independently monitored by DOL Wage and Hour Division investigators, who can visit project sites and review payroll records without prior notice; underpayments discovered through investigation trigger back-wage assessments and can result in debarment from future federal contracting.

• 49 CFR Part 26 — Participation by Disadvantaged Business Enterprises in DOT Financial Assistance Programs (49 sections across 6 subparts — the DOT's uniform DBE rule applying to all federally assisted contracting under FHWA, FTA, and FAA programs; implements 49 U.S.C. § 47113 (airports), 23 U.S.C. § 101 (highways), and the civil rights requirements of 42 U.S.C. § 2000d; protects small businesses owned and controlled by socially and economically disadvantaged individuals from discrimination in transportation contracting):

  • § 26.21 — Who must have a DBE program: any state DOT, transit agency, airport sponsor, or other recipient of DOT financial assistance that lets DOT-assisted contracts must maintain a DBE program meeting Part 26's requirements; the program is non-optional — receipt of DOT funding triggers the obligation
  • § 26.13 — Assurances: every DOT financial assistance agreement must include an assurance that the recipient will comply with Part 26; every contract the recipient lets to prime contractors must include a non-discrimination clause and a requirement that the prime contractor pass the obligation to subcontractors; these assurances create a compliance chain through the entire contracting hierarchy
  • § 26.11 — Reporting: recipients must submit annual reports to their DOT Operating Administration (FHWA, FTA, or FAA) showing DBE participation — the dollar amounts and percentage of DBE contract participation for the fiscal year; recipients that miss their DBE goals must explain why and what good faith efforts they made
  • §§ 26.41–26.55 — Overall goals and contract goals (Subpart C): recipients must set an overall annual DBE goal expressed as a percentage of DOT-assisted contracting dollars; the goal is based on the relative availability of DBEs in the relevant market area (using census data, licensing records, and DBE directory information); in setting goals, recipients should use a race-neutral approach first — broad outreach, unbundling large contracts, removing unnecessary bonding/insurance requirements — and may set contract-specific DBE goals only when race-neutral measures alone are insufficient to meet the overall goal; the Supreme Court's Adarand decision (1995) requires that any race-conscious goal-setting survive strict scrutiny — most programs include both race-conscious and race-neutral components
  • §§ 26.61–26.87 — Certification standards (Subpart D): to count toward DBE goals, a firm must be certified as a DBE by a state or metropolitan Unified Certification Program (UCP); certification requires that the firm be (1) a small business under SBA size standards, (2) at least 51% owned and controlled by one or more socially and economically disadvantaged individuals, (3) with personal net worth of each disadvantaged owner not exceeding $1.32 million (excluding primary residence and business equity — a 2024 updated threshold); social disadvantage is presumed for women and specified racial minority groups (Black, Hispanic, Native American, Asian Pacific, Subcontinent Asian); others may rebut the presumption or seek certification by demonstrating actual disadvantage
  • §§ 26.61–26.65 — Ownership and control standard: the disadvantaged owner must hold real (not nominal) ownership interest and must control management and daily business decisions; a firm where the disadvantaged owner holds 51% equity but a larger company or non-disadvantaged manager runs operations does not qualify; certifiers examine board composition, voting rights, key employee authority, and business relationships to assess genuine independence from large, non-disadvantaged firms
  • § 26.111 — Annual reevaluation (added effective October 3, 2025): each Unified Certification Program must systematically review all currently certified DBE firms to verify continued eligibility; firms that no longer meet size, disadvantage, or ownership standards must be decertified

  The 2024 rulemaking (89 FR 55089, July 2024) was the most significant revision to Part 26 in over a decade — it updated the personal net worth threshold, strengthened the certification reevaluation requirement, clarified the social disadvantage standards in light of recent litigation (including SBA v. Ultima Services Corp.), and added requirements for more rigorous documentation of good faith efforts when contract DBE goals are not met. A 2025 interim final rule (90 FR 47982) made technical amendments following the initial July 2024 rule.

  Recent rulemakings: 89 FR 55089 (July 2024) — major revision updating PNW threshold, reevaluation requirements, and good faith effort documentation; 90 FR 47982 (2025) — technical corrections.

• 23 CFR Part 636 — Design-Build Contracting (57 sections — FHWA's rules for approving and administering federally assisted design-build highway projects; design-build combines design and construction under a single contract, allowing construction to begin before final design is complete):

  • § 636.101 — Scope: Part 636 governs the policies and procedures FHWA uses to approve design-build project delivery on federal-aid highway projects; it does not require or promote design-build — state DOTs choose whether to use it on a project-by-project basis (§ 636.105)
  • § 636.104 — Applicability: applies to all federal-aid design-build projects (including those funded through IIJA formula programs and discretionary grants); state DOTs must obtain FHWA approval of their design-build project delivery plan before procuring a design-build contractor
  • § 636.107 — No geographic preference: contracting agencies may not give preference to local or in-state contractors in design-build solicitations; geographic preference clauses violate federal procurement law and are ineligible for FHWA participation
  • § 636.109 — NEPA and design-build timing: FHWA will not authorize a design-build contract advertisement until the NEPA process has progressed far enough to define the project scope, location, and design concept; for complex projects requiring an EIS, FHWA may authorize procurement as early as the draft EIS stage but requires the contract to include provisions prohibiting construction in environmentally sensitive areas until NEPA is complete
  • § 636.116 — Organizational conflict of interest: contractors who were involved in developing the project's design criteria, preliminary engineering, or environmental documents are generally disqualified from competing as the design-build contractor; the same firm cannot develop the RFP requirements and then bid on them
  • § 636.119 — Public-private partnerships (P3s): design-build may be combined with P3 delivery (where a private partner finances and operates the facility); FHWA oversight requirements apply even when a private concessionaire is the contracting authority; tolling and revenue-sharing arrangements must comply with 23 U.S.C. § 129 and FHWA's Value for Money analysis requirements
  • § 636.201 — Selection procedures: contracting agencies should use a two-phase selection process — Phase 1 screens proposers based on qualifications (financial capacity, design-build experience, key personnel); Phase 2 solicits technical proposals and price from shortlisted firms; award is to the proposer offering the best value (not necessarily the lowest price)
  • § 636.202 — When two-phase selection is appropriate: FHWA recommends two-phase procurement when the contract value exceeds $50 million, when the project involves complex engineering challenges, or when the agency lacks the in-house capacity to manage a large field of proposers
  • § 636.203 — Two-phase elements: Phase 1 evaluates firm qualifications, teaming arrangements, and past performance; Phase 2 develops detailed proposals including design approaches and pricing; the Phase 2 shortlist is typically 3–5 firms

  Design-build significantly compresses project delivery schedules compared to traditional design-bid-build — a project that would take 8–12 years through sequential design, environmental review, bidding, and construction phases can sometimes be delivered in 5–7 years through concurrent design-build. This schedule compression comes with trade-offs: less owner control over design details, higher proposal preparation costs for contractors, and more complex quality assurance requirements (because the owner cannot review final design before construction begins). FHWA's approval requirement (§ 636.101) ensures that design-build delivery is being used because it offers genuine advantages on that specific project, not merely because it shifts risk to the contractor.

• 23 CFR Part 655 — Traffic Operations: FHWA's implementing regulations for the Manual on Uniform Traffic Control Devices (MUTCD) — the national standard governing all signs, signals, pavement markings, and other traffic control devices on public roads in the United States. Part 655 makes MUTCD standards mandatory on federal-aid highways and establishes the compliance framework for state and local adoption. Key provisions:

  • § 655.601 — Purpose: prescribe policies and procedures for basic uniformity of traffic control devices on all streets and highways, fulfilling FHWA's statutory mandate under 23 U.S.C. §§ 109(d) and 402(a) to establish uniform standards for traffic control on federally aided roads
  • § 655.602 — Definitions: terms are defined by reference to the MUTCD itself and 23 U.S.C. § 101(a), linking Part 655's regulatory requirements directly to the MUTCD's technical specifications
  • § 655.603 — Standards: the MUTCD approved by the Federal Highway Administrator is the national standard for all traffic control devices on any street, highway, or bicycle trail open to public travel; states that receive federal-aid highway funding must adopt the MUTCD (or a state manual in substantial conformance with the MUTCD) and apply it on all public roads; states may adopt more restrictive standards but not less restrictive; the MUTCD is incorporated by reference into federal law through this provision, making its specifications — stop sign reflectivity, pavement marking retroreflectivity, signal timing intervals, work zone taper lengths — binding requirements rather than guidelines
  • § 655.604 — Achieving basic uniformity: state DOTs must develop programs for systematic upgrading of existing traffic control devices based on highway safety inventories; the FHWA Division Administrator may require a corrective action plan if a state's inventory shows systematic non-conformance with MUTCD standards
  • § 655.605 — Project procedures: federal-aid projects involving traffic control device installation must follow the project authorization procedures of 23 CFR Part 630 Subpart A; traffic control devices on federal-aid highways are subject to FHWA approval requirements
  • § 655.606 — Higher-cost materials: use of premium signing, pavement marking, or signal materials with distinctive performance characteristics but higher cost requires approval from the FHWA Division Administrator based on demonstrated life-cycle cost advantages
  • § 655.607 — Funding: 23 U.S.C. § 104(b) funds may participate in traffic control device installation on reconstructed or resurfaced highways; on-system and off-system federal-aid roads follow different funding eligibility rules

  The MUTCD's incorporation into 23 CFR Part 655 has significant practical consequences. Every road sign, traffic signal, crosswalk marking, and work zone cone arrangement on a federally aided highway must conform to MUTCD specifications — dimensions, colors, retroreflectivity standards, placement heights, and message content. FHWA published a major MUTCD update in 2023 (the 11th Edition) that included new standards for automated and connected vehicle signage, accessible pedestrian signals, and updated roundabout signage requirements. State DOTs have three years from MUTCD update publication to adopt the new edition; the 2023 update compliance deadline runs through 2026. Non-conforming signs and signals discovered during FHWA program reviews can trigger federal-aid funding withholding for the affected highway segment.

• 23 CFR Part 771 — NEPA environmental review procedures for FHWA/FTA actions: categorical exclusions, environmental assessments, and environmental impact statements

• 23 CFR Part 490 — National Performance Management Measures (57 sections across 8 subparts): the complete regulatory framework implementing MAP-21's (2012) and the FAST Act's (2015) requirement that state DOTs and MPOs use performance-based planning — setting measurable targets, tracking progress, and reporting to FHWA. Part 490 covers seven program areas, each with its own measures, calculation methodology, and target-setting requirements:

  • Subpart B — Highway Safety Improvement Program (HSIP) measures: five safety measures that state DOTs must set annual targets for: (1) number of fatalities; (2) rate of fatalities per 100 million VMT; (3) number of serious injuries; (4) rate of serious injuries per 100 million VMT; (5) number of combined nonmotorized fatalities and serious injuries; targets must be consistent with the Strategic Highway Safety Plan; FHWA evaluates whether states make "significant progress" — defined as meeting or making measurable improvement toward four of the five measures
  • Subpart C — NHPP pavement condition measures: state DOTs must measure and report Interstate and non-Interstate NHS pavement condition using IRI (International Roughness Index), cracking percentage, rutting depth, and faulting; a minimum condition threshold applies — the percentage of Interstate lane-miles in "good" condition must not fall below a set floor; if the percentage of Interstate pavements in "poor" condition exceeds 5%, FHWA requires that 100% of NHPP apportionments be spent to address the poor-condition Interstate lanes (§ 490.317)
  • Subpart D — NHPP bridge condition measures: three condition categories — good, fair, poor; minimum level: no more than 10% of NHS bridge deck area may be in structurally deficient condition; if a state exceeds the 10% threshold (§ 490.413), FHWA applies a penalty requiring that 100% of federal-aid apportionments be used to repair or replace structurally deficient bridges until the state returns to compliance; the IIJA's $40 billion Bridge Investment Program was in part designed to help states with the highest share of structurally deficient deck area accelerate toward compliance
  • Subpart E — NHS System Performance: state DOTs must measure travel time reliability on the Interstate System and non-Interstate NHS using the Level of Travel Time Reliability (LOTTR) index — the ratio of the 80th percentile travel time to the 50th percentile travel time for a given segment-hour combination; a segment is "reliable" when LOTTR < 1.50; the NHS performance measure is the percentage of person-miles traveled on reliable NHS segments, reported biannually
  • Subpart F — Freight reliability: the Truck Travel Time Reliability (TTTR) Index measures whether trucks on Interstate segments can reliably complete their trips — comparing the 95th percentile truck travel time to the normal (50th percentile) travel time for five time periods (AM peak, midday, PM peak, overnight, weekend); a segment with TTTR ≤ 1.50 is "reliable"; states report the percentage of Interstate mileage with reliable truck travel times
  • Subpart G — CMAQ Traffic Congestion: Peak Hour Excessive Delay (PHED) measures the hours of delay experienced per capita by travelers in urbanized areas (population > 1 million) that exceed a 20 mph threshold; the second CMAQ traffic congestion measure is the percentage of non-single-occupancy vehicle (non-SOV) travel — carpools, transit, walking, cycling — as a share of all person miles; these measures target the highest-congestion metros and require biennial targets
  • Subpart H — CMAQ Emissions: Total Emissions Reduction measures the mass of NOx and PM2.5 (in kg/day) reduced by projects funded through the Congestion Mitigation and Air Quality Improvement Program; state DOTs and MPOs with active CMAQ programs must report emissions reductions achieved by completed CMAQ projects on a biennial cycle

  Part 490 created the first binding performance target framework for federal highway programs — a significant shift from the prior system where federal aid was distributed with no accountability for outcome. Target-setting is collaborative: state DOTs set biennial targets independently, but MPOs may either establish their own matching targets or agree to planning targets consistent with state DOT targets. There is no direct financial penalty for missing targets, but FHWA publishes target progress publicly and can apply fund restrictions through the "significant progress" determination (currently limited to NHPP safety and pavement/bridge minimums). The Trump administration in 2018 delayed implementation of some measures and the Biden administration reinstated them — the target-setting cycle for 2022-2026 is the first full implementation cycle for all seven measure sets.

• 23 CFR Part 750 — Highway Beautification: Outdoor Advertising Control (39 sections — the implementing regulations for the Highway Beautification Act of 1965 (23 U.S.C. § 131), which conditions receipt of federal highway funds on state control of outdoor advertising signs visible from the Interstate and primary federal-aid highway systems; a state that fails to maintain effective control loses 10% of its FHWA apportionments):

  • § 750.104–750.108 — Sign classification system: signs adjacent to Interstate and primary highways within 660 feet of the right-of-way are categorized into four classes: Class 1 (official signs — government notices, traffic control); Class 2 (on-premise signs — identifying the establishment or its products on-site); Class 3 (directional signs — pointing to services like gas, food, lodging, or areas of public interest); Class 4 (advertising signs — commercial billboards). Only Class 1 and Class 2 are permitted in protected areas without restriction. Class 3 and Class 4 signs require state implementation of size, lighting, and spacing controls
  • § 750.105 / § 750.706 — Permitted commercial signs: commercial billboards may only be erected in areas zoned commercial or industrial by state or local authority at the time of application; signs in unzoned areas adjacent to commercial or industrial activities may also qualify under state agreements, but FHWA must concur that the area is genuinely commercial; size, lighting, and spacing standards apply — maximum size is typically 1,200 square feet (with exceptions for certain large-format structures); spacing between billboard structures is generally 500 feet on Interstates and 300 feet on primary highways (measured along the highway)
  • § 750.709 — On-premise sign exemption: signs that identify only the business at the location, its name, or its products or services offered on-site are exempt from the spacing and size controls; this is the key exemption for gas stations, restaurants, hotels, and other roadside businesses whose own signage is not regulated as "outdoor advertising" — but signs visible from the highway that advertise products not sold or services not offered at that location are treated as billboards subject to full controls
  • § 750.707 / § 750.712 — Nonconforming signs (legal nonconforming, grandfathered structures): signs that were lawfully erected before the state adopted its Highway Beautification control program and do not conform to current standards are "nonconforming" and may remain in place but may not be substantially repaired, enlarged, or moved; states must maintain inventories of nonconforming signs and prohibit new nonconforming signs from being erected; reclassification of a sign from conforming to nonconforming triggers just compensation requirements if the state seeks removal
  • §§ 750.301–750.305 — Federal cost participation in sign removal: when a state lawfully removes a nonconforming sign under its control program, federal funds may pay for up to 75% of just compensation paid to sign owners — but only if the removal is based on a compliant state program and proper documentation (FHWA Form 1424) is maintained; states may not use federal funds to pay above fair market value for sign removal or to acquire signs that could simply be screened or otherwise brought into compliance
  • §§ 750.501–750.503 — Exemptions from acquisition requirements: FHWA may grant a state exemption from the requirement to remove (with compensation) certain directional signs if the state can demonstrate that the signs are in a defined area where removal would be impractical or disproportionately costly; the exemption is discretionary and case-by-case
  • §§ 750.701–750.713 — Effective control requirements: to maintain its FHWA apportionments, a state must have a state-federal agreement governing outdoor advertising control and must demonstrate "effective control" — meaning it prohibits erection of new nonconforming signs, maintains accurate inventories, and enforces its program with inspections and enforcement actions; FHWA conducts periodic reviews; states with persistent enforcement gaps risk the 10% fund penalty

  The Highway Beautification Act is the primary federal tool for controlling billboard sprawl along the highway network — but the 10% funding penalty has rarely been invoked, and billboard industry lobbying has resulted in numerous exemptions and grandfathering provisions that have significantly eroded the law's practical reach. The Act explicitly protects on-premise signs (critical to the lodging, gasoline, and food service industries along interstates), and its size/spacing limits grandfather many existing large signs. Scenic byway designations under the National Scenic Byways Program provide additional restrictions for designated routes. State programs vary significantly in stringency: some states (Vermont, Hawaii, Maine, Alaska) have banned billboards entirely and do not participate in the federal outdoor advertising control program for those roads, relying instead on complete prohibition under state law — accepting the 10% penalty and sometimes receiving federal exemptions under negotiated agreements.

• 23 CFR Part 1200 — Uniform Procedures for State Highway Safety Grant Programs (34 sections — the NHTSA grant administration rules implementing 23 U.S.C. § 402 (State and Community Highway Safety) and 23 U.S.C. § 405 (National Priority Safety Programs); these are the two principal federal grant streams that fund state-level highway safety programs — seat belts, impaired driving, distracted driving, motorcyclist safety, and pedestrian/bicycle safety):

  • § 1200.10–1200.12 — Highway Safety Plan (HSP) requirement: every state must submit an annual HSP electronically to its NHTSA regional office no later than July 1 preceding the fiscal year; the HSP must describe the state's data-driven process for identifying safety problems, setting performance targets (using FAR Fatality Analysis Reporting System data), selecting evidence-based countermeasure strategies, and projecting how grant funds will reduce fatalities and serious injuries; failure to meet the July 1 deadline may result in delayed grant approval or disqualification from Section 405 national priority grants
  • § 1200.13 — Section 402 special conditions: federal participation in the state's planning and administration (P&A) activities cannot exceed 50% of total P&A costs and cannot exceed 13% of total Section 402 funds; territories (Virgin Islands, Guam, American Samoa, CNMI) receive 100% federal share under 23 U.S.C. § 120(i); Indian Country is exempt from P&A requirements
  • § 1200.14 — NHTSA review: within 60 days of receiving the HSP, NHTSA must issue either an approval (with any conditions) or a disapproval requiring resubmission; states must respond promptly to information requests or risk delayed funding
  • § 1200.21 — Section 405(b) Occupant Protection grants: states qualify by achieving high seat belt use rates (90% or higher) or adopting primary enforcement seat belt laws covering all occupants; a "high use rate state" that drops below 90% in a subsequent year loses eligibility for that year's grant
  • § 1200.23 — Section 405(d) Impaired Driving grants: states qualify based on their average impaired driving fatality rate (FARS data) — high-rate states must implement comprehensive impaired driving programs; all applicants must enact per se DUI laws with BAC thresholds of 0.08 (below the national standard is also acceptable) or laws authorizing ignition interlock devices for all DUI offenders
  • § 1200.24 — Section 405(e) Distracted Driving grants: states must enact laws prohibiting texting while driving — a primary enforcement ban on handheld cell phone use while driving qualifies for the larger distracted driving grant allocation; the law must be primary offense (officer can stop and cite without another violation) and apply to all drivers
  • § 1200.25 — Section 405(f) Motorcyclist Safety grants: states qualify by implementing a NHTSA-accepted motorcycle rider training program or a NHTSA-accepted motorcyclist awareness program reducing motorcycle fatalities

  The Section 402 and Section 405 programs together channel approximately $550–600 million per year to states for behavioral traffic safety programs — enforcement campaigns (Click It or Ticket, Drive Sober or Get Pulled Over), public awareness, training, and data system improvements. Unlike the formula-driven NHPP and STBGP programs, Section 405 grants are competitive and performance-conditioned: states that enact stronger safety laws qualify for larger awards. The Governor's Representative for Highway Safety (GR) in each state is responsible for signing the HSP and all grant assurances — the state's single point of accountability to NHTSA for program performance and financial management.

• 23 CFR Part 680 — National Electric Vehicle Infrastructure (NEVI) Standards and Requirements: the federal standards for EV charging infrastructure built with NEVI program funds or other Title 23 funds, implementing the IIJA's $5 billion NEVI Formula Program:

  • § 680.102 — Applicability: applies to all NEVI Formula Program projects and all federally-funded publicly accessible EV chargers built with Title 23 funds, including charging infrastructure along Alternative Fuel Corridors (AFCs); states must comply regardless of whether the state itself or a private company is building the charger
  • § 680.104 — Definitions and charger standards: DC Fast Chargers (DCFC) funded under NEVI must be at least 150 kW capable (enough to add approximately 100 miles of range in 20 minutes for most EVs); chargers must support the Combined Charging System (CCS) connector — the North American standard connector (now also required to be compatible with Tesla's NACS connector after NHTSA's 2023 direction); chargers must be accessible 24 hours per day, 7 days per week
  • § 680.106 — Qualified technician installation: NEVI-funded chargers must be installed, operated, and maintained by workers who meet the Alternative Fuels Infrastructure Training and Workforce Development guidelines; labor standards are intended to ensure installation quality and create skilled trades jobs in the EV sector; the procurement process for EV charging station operation must be transparent to the public
  • § 680.108 — Interoperability: chargers must comply with ISO 15118 (the vehicle-to-charger communication standard enabling Plug & Charge — automatic authentication and billing without a separate app), OCPP 2.0.1 (the standard communication protocol between chargers and charging networks), and open-network data sharing standards; the interoperability requirements prevent vendor lock-in and ensure drivers can use any charging network
  • § 680.114 — Charging network connectivity: chargers must communicate with a charging network via secure communication and the charging network must be accessible to all drivers regardless of affiliation (no exclusive memberships required for access); chargers must allow payment by credit card or contactless payment — no account required to charge
  • § 680.116 — Price transparency: the price for charging must be displayed before initiating a charging transaction; pricing must be shown on a per-kWh basis (not per minute) where state law permits, enabling consumers to compare costs meaningfully; real-time availability information must be publicly accessible through mapping applications (Apple Maps, Google Maps, etc.) via data feeds

  Part 680 represents the federal government's attempt to set technical floors for the EV charging buildout that will determine whether the U.S. achieves reliable nationwide EV charging coverage. The 150 kW minimum power level, 24/7 accessibility, credit card payment requirement, and Open Charge Point Protocol (OCPP) mandate collectively address the most common complaints about public EV charging: chargers that are too slow, require specific apps, are offline, or won't accept straightforward payment. The NEVI program requires chargers every 50 miles along designated Interstate Alternative Fuel Corridors — the backbone of the national charging network. The Trump administration's 2025 pause on NEVI funds slowed the buildout, though chargers under already-awarded contracts continue to be installed.

• 23 CFR Part 515 — Asset Management Plans: requires each state DOT to develop and maintain a risk-based asset management plan for the National Highway System (NHS), and to maintain bridge and pavement management systems for determining asset condition and prioritizing investment:

  • § 515.7 — Plan development process: the asset management plan must be developed using a process that includes: an inventory of NHS assets; assessment of current asset conditions using performance measures; analysis of options and tradeoffs for investment; long-range investment strategies; short-range program development; and performance gap analysis showing the difference between current condition and targets
  • § 515.9 — Required plan content: the plan must include: the current state of NHS assets (pavement condition, bridge condition, and other national performance measures); performance targets for these measures aligned with 23 U.S.C. § 150 national performance goals; the estimated investment to maintain current condition; the investment strategy to achieve performance targets; and a financial plan identifying federal and state funding sources
  • § 515.13 — FHWA process certification: FHWA must certify that each state DOT's asset management processes meet the minimum standards in this Part; certification occurs at least every 4 years; a state without a certified process loses its maximum federal cost share — the maximum share drops from 80% federal / 20% state to 50% federal / 50% state for NHS projects until the state achieves certification; this 30-point swing in federal share is a significant financial penalty
  • § 515.17 — Bridge and pavement management systems: states must develop and operate management systems for bridges and pavements that include: data collection on condition and performance; analysis of maintenance, rehabilitation, and replacement tradeoffs; life-cycle cost analysis; risk assessment; and prediction of future condition under various investment scenarios; the pavement and bridge management systems feed the asset management plan's investment prioritization

  Part 515 represents a significant evolution in federal transportation policy — from project-by-project funding to long-range system management. The requirement to document the investment needed to maintain current condition and the investment to achieve targets creates transparency about the gap between available funding and actual infrastructure needs, which FHWA publishes in its biennial "Conditions and Performance" report to Congress. States that have the most disciplined asset management systems tend to make the most cost-effective infrastructure investments, as they can identify and treat deterioration before it reaches the more expensive stage requiring full reconstruction.

• 23 CFR Part 772 — Procedures for Abatement of Highway Traffic Noise and Construction Noise: the federal standards that state DOTs must follow in analyzing traffic noise and determining whether to build noise walls (sound barriers) on federal highway projects:

  • § 772.7 — Applicability: the regulation applies to all federal or federal-aid highway projects — new highway construction on new alignments and major widening of existing highways; Type I projects (new construction or significant alteration of existing highways) trigger noise analysis; Type II (standalone noise wall projects on existing highways) may also receive federal funding where states have established retrofit noise abatement programs
  • § 772.9 — Traffic noise prediction: any noise analysis must use the FHWA Traffic Noise Model (TNM) — the agency's validated computer model that predicts noise levels from specific highway configurations, traffic volumes, and speeds; the TNM models the physical acoustics of sound propagation from highway to adjacent receptors; using the TNM (rather than informal estimates) creates a defensible, standardized basis for comparing predicted noise impacts across projects
  • § 772.11 — Traffic noise impact determination: the highway agency must determine whether predicted design-year noise levels approach or exceed the Noise Abatement Criteria (NAC) for each Activity Category: Category A (lands requiring serenity and quiet — land NAC 57 dB[A] Leq) through Category E (residential and certain commercial — 67 dB[A] Leq); if predicted levels approach or exceed the NAC, the project has a traffic noise impact that must be analyzed for abatement
  • § 772.13 — Noise abatement analysis: when traffic noise impacts are identified, the highway agency must evaluate feasible and reasonable noise abatement measures; feasibility is engineering-based (can a noise wall be constructed to provide meaningful noise reduction — at least 5 dB[A] to at least one benefited receptor?); reasonableness is cost-benefit-based (is the cost per benefited receptor reasonable? FHWA guidance suggests $25,000–$50,000 per benefited receptor as a typical threshold); sound barriers (noise walls) are the most common abatement measure and the most common federal highway infrastructure that is not the roadway itself
  • § 772.17 — Local official notification: to prevent future noise impacts on currently undeveloped land, the highway agency must inform local officials of predicted noise levels and noise-compatible land use concepts; this notification is designed to discourage construction of new noise-sensitive development (houses, schools, hospitals) in corridors that will be close to a new highway's expected noise contours

  Part 772 is the regulatory basis for the highway noise walls that line many urban freeways. The cost-per-benefited-receptor reasonableness standard means that noise walls are more likely to be built where receptors are dense (urban residential areas close to the highway) and less likely in sparse rural areas where the per-receptor cost is prohibitive. The most contested abatement decisions involve homes that were built after a highway was built (no noise impact when they moved in) — these "no build" situations typically don't qualify for abatement because the residents assumed the noise when they purchased.

• 23 CFR Part 950 — Electronic Toll Collection: the federal interoperability requirements for toll facilities that operate under authority granted by Section 1604 of SAFETEA-LU (Pub. L. 109-59, 2005). SAFETEA-LU's Section 1604 programs — the Value Pricing Pilot Program, the Express Lanes Demonstration Program, and the Interstate System Construction Toll Pilot Program — authorized tolling on federally funded highways that would otherwise be prohibited by federal law; in exchange for that tolling authority, Part 950 requires that facilities use electronic technology and ensure that transponders from other systems work on the facility:

  • § 950.5 — Mandatory electronic toll collection: any toll agency operating a 1604-program facility must use an electronic toll collection (ETC) system as the primary collection method; cash toll collection is permitted only if the toll agency can demonstrate to FHWA that cash is more economically efficient or safer than ETC for the specific facility; facilities already collecting tolls under a separate legal authority (not a 1604 program) may maintain their existing collection method
  • § 950.7 — Interoperability requirements: each 1604 toll agency must identify the projected users of its facility, the predominant toll collection systems those users are likely to already have (e.g., E-ZPass, SunPass, TxTag), and the noncash electronic technology likely to be in use in the area within five years; based on this analysis, the agency must reach an agreement with the predominant system operators ensuring that transponders issued by those systems function on the new facility — this is the regulatory foundation for the interoperability arrangements that allow a single E-ZPass account to work on toll roads in 19 states from Maine to Illinois
  • § 950.9 — Enforcement: if a toll agency falls out of compliance with the ETC or interoperability requirements, FHWA issues a written notice; if compliance is not achieved within 6 months, the agency's tolling authority under the 1604 program is suspended — it can no longer collect tolls, which eliminates the revenue stream that justified the program; FHWA may grant additional time if the agency demonstrates it is actively working toward compliance; FHWA may also take other administrative or legal action

  Part 950 reflects a deliberate federal policy bargain: states and toll operators receive the flexibility to toll highways that federal law would otherwise prohibit tolling, but the price is operating those facilities in a technologically open way that serves drivers holding transponders from any participating system. The practical result is the E-ZPass network — one of the largest interoperable payment systems in the U.S., covering facilities from Maine to North Carolina on the East Coast and extending westward through the Ohio Turnpike, Indiana Toll Road, and Illinois Tollway. Drivers do not need to open a new account for each state's toll system. The interoperability requirement has also pushed license-plate-based tolling (where no transponder is used) toward interoperable back-office systems that can locate a registered owner across state lines. No major rulemakings since the original 2009 rule (74 FR 28441); the operational interoperability standards have evolved through FHWA guidance and agreements among toll agencies rather than formal rulemaking.

• 23 CFR Part 661 — Tribal Transportation Facility Bridge Program (TTFBP) (29 sections): the FHWA regulations governing a dedicated federal grant program for the replacement and rehabilitation of structurally deficient bridges on the tribal transportation network — bridges on roads serving tribal communities that are in poor condition, have low load capacity, or have unsafe geometry. The TTFBP was established under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU, 2005) and reauthorized under MAP-21 and the FAST Act (23 U.S.C. § 202); it sets aside a portion of the Tribal Transportation Program specifically for bridge work, administered by FHWA's Office of Federal Lands Highway. Key provisions:

  • § 661.11 — Fund availability: TTFBP funds are authorized at the start of each fiscal year subject to OMB apportionment; funds for each fiscal year remain available for obligation for a total of 4 years (the authorization year plus 3 additional years), giving tribes a reasonable window to complete planning, design, and environmental review before funds expire (§ 661.13)
  • § 661.15 — Eligible activities: TTFBP funds cover the full project lifecycle — planning, safety inspection, design, engineering, pre-construction, and construction; both bridge replacement (building a new bridge) and bridge rehabilitation (repairing an existing structure) are eligible; up to 15% of annual TTFBP funds are available for preliminary engineering (PE), and the remaining 85% (at minimum) for construction (§ 661.33)
  • § 661.17 — Bridge eligibility criteria: for replacement or rehabilitation, a Tribal Transportation Facility (TTF) bridge must be: (a) in poor condition; (b) have low load capacity (structurally insufficient for normal traffic loads); or (c) need geometric improvements for safety; bridges are classified using the National Bridge Inspection Standards rating system; a Sufficiency Rating below 50 typically qualifies a bridge as eligible for replacement
  • § 661.19 — Replacement eligibility: a TTF bridge is eligible for replacement if it is in poor condition, has low load capacity, or needs highway geometric improvements; replacement is the higher-cost intervention and requires a more detailed justification in the application package
  • § 661.21 — Rehabilitation eligibility: a TTF bridge in poor or fair condition, or with load-capacity or geometric deficiencies, qualifies for rehabilitation; rehabilitation may be the preferred option when the structure is fundamentally sound but needs significant repair or upgrade
  • § 661.23 — Project programming: all projects are ranked and prioritized for funding after the application is evaluated; FHWA scores projects based on the bridge's condition rating, the traffic volume it serves, whether the bridge is the only access point for a community, and economic impact of closure; ranking is updated annually as new bridge inspection data is collected
  • § 661.25 — PE application package: the PE application must include a bridge inspection report, preliminary cost estimate, and description of the project; approved PE funding allows the tribe to hire engineers to develop final plans, specifications, and estimates (PS&E) for construction
  • § 661.27 — Construction application: the construction application requires completed PS&E, NEPA clearance, and all required right-of-way and utility agreements; FHWA approves the construction application and authorizes the tribe to advertise for bids
  • § 661.29 — Ownership priority: primary consideration is given to bridges on BIA-owned or tribally owned TTF roads; a smaller percentage of available funding is allocated to bridges on state or county roads that serve as primary access to tribal communities — addressing the reality that many bridges serving Indian country are owned by state DOTs or counties, not by BIA or tribes, but are critical transportation links
  • § 661.31 — TTP TIP requirement: all TTFBP bridge projects must be listed in an approved Tribal Transportation Improvement Program (TTP TIP) before funding can be obligated; the TIP requirement coordinates TTFBP investment with the tribe's overall transportation program priorities

  The TTFBP addresses a documented infrastructure crisis: the Federal Lands Highway Program's bridge inventory shows that a disproportionate share of structurally deficient bridges in the United States are on tribal transportation networks, where federal-aid formula funding has historically been insufficient for major bridge replacement. Many tribal communities have bridges that are load-restricted (weight limits posted that exclude school buses, ambulances, and fire trucks at full load) or are one replacement away from community isolation. The TTFBP's dedicated set-aside — separate from the state bridge formula program — ensures that tribal bridge needs compete within a tribal pool rather than against much larger state and urban transportation systems. The Infrastructure Investment and Jobs Act (2021) significantly increased TTFBP funding as part of the overall increase in Tribal Transportation Program appropriations.

• 23 CFR Part 668 — Emergency Relief Program (15 sections across two subparts — the FHWA rules governing emergency federal reimbursement for repair and reconstruction of Federal-aid highways and Federal roads damaged by natural disasters or catastrophic failures; authority: 23 U.S.C. § 125):

  Subpart A — Emergency Relief for Federal-Aid Highways (State-Owned Roads):

  • § 668.105 — Policy: the Emergency Relief (ER) program aids state highway agencies in repairing roads that have suffered widespread, serious damage from a natural disaster over a wide area or a catastrophic failure from any cause; the program is not triggered by routine maintenance needs or normal storm damage — "widespread" and "catastrophic" thresholds distinguish disaster recovery funding from the normal federal-aid program
  • § 668.107 — Federal share: the federal share is 100% for emergency repairs performed during or immediately after the disaster to restore essential traffic; for permanent restoration work (rebuilding the facility to its pre-disaster design or better), the standard federal-aid matching ratios apply (typically 80% federal, 20% state, or 90%/10% for Interstate work); the 100% immediate emergency share incentivizes states to act quickly to restore access before the full federal partnership rate kicks in for long-term reconstruction
  • § 668.109 — Eligibility: work is eligible if it restores the highway to pre-disaster conditions or better; "betterments" — upgrades that improve the facility beyond its prior design — are eligible only when necessary to reduce the likelihood of future damage; purely elective improvements added during disaster repair are not reimbursable
  • § 668.111 — Application procedures: states must notify the FHWA Division Administrator as soon as possible after the disaster; following a damage survey and cost estimate, the state submits a formal ER application; FHWA approves or denies the application, approves a program of projects, and authorizes the state to proceed with repair
  • § 668.113 — Program and project procedures: after application approval, the state prepares a repair program identifying each eligible project; FHWA must approve the program; individual projects must comply with the same design, environmental, and procurement standards as normal federal-aid projects — federal-aid competitive bidding requirements, Davis-Bacon prevailing wages, and NEPA review apply even for disaster repairs

  Subpart B — Emergency Relief for Federal Roads (Federally Owned Roads):

  • § 668.205 — Policy: this separate subpart covers federal roads (owned by federal agencies such as the Forest Service, National Park Service, BLM, or military — not state DOTs); for damage caused by natural disasters or catastrophic failures on these roads, 100% federal funding covers repair costs; the applicable federal agency is the applicant
  • § 668.207 — Federal share: 100% — there is no non-federal match requirement for federal agency roads; this reflects that the owning agency has no state counterpart to share costs
  • § 668.211 — Notification and damage assessment: federal agencies must notify the FHWA Division Federal Engineer (DFDE) during or immediately after the disaster; a joint damage survey team (agency + FHWA) assesses the extent and cost of damage

  Part 668 is distinct from FEMA's Public Assistance program (which covers eligible damage to local roads and non-federal infrastructure). The FHWA ER program is the primary mechanism for federal-aid highway repair after natural disasters; FEMA PA is the mechanism for local roads. The two programs coordinate under a joint FHWA-FEMA framework to avoid duplication of benefits — a state cannot receive both FHWA ER and FEMA PA reimbursement for the same project. Major activation examples include Hurricane Katrina (2005), Sandy (2012), and California flood events; the program's 100% federal emergency repair provision enables state DOTs to begin debris removal and temporary restoration within hours of a disaster without waiting for federal cost-share approval. No major amendments to Part 668 since the 1980s; the post-Sandy appropriations process (2013) prompted procedural guidance updates but did not change the regulatory text.

• 23 CFR Part 645 — Utilities (23 sections — FHWA rules governing utility relocations, accommodation, and broadband deployment on federal-aid highway rights-of-way; implementing 23 U.S.C. § 101 and 47 U.S.C. § 1504):

  Subpart A — Utility Relocations, Adjustments, and Reimbursement (§§ 645.101–645.119):

  • § 645.107 — Federal reimbursement eligibility: federal-aid funds may participate in utility relocation costs when highway construction forces a utility to relocate, provided: (1) the utility holds a property right (not merely a permit) in its existing location; or (2) applicable state law requires the highway agency to reimburse the utility for relocation costs; without a property right or applicable state law obligation, the utility bears its own relocation cost and federal funds do not participate
  • § 645.111 — Replacement right-of-way: federal funds may participate in purchasing replacement ROW for a relocated utility if the utility held a property interest in its original location; replacement ROW must be of equivalent utility and appropriate character
  • § 645.113 — Written agreements required: before relocation work begins, the utility and state DOT must execute a written agreement specifying each party's cost responsibilities, the scope of relocation work, and cost-sharing terms; FHWA authorization must be in place before the state can commit federal funds; work performed before authorization is ineligible for reimbursement
  • § 645.117 — Cost documentation: all utility relocation costs must be recorded through work orders in the utility's established accounting system; the utility bills the state DOT based on actual documented costs (labor, materials, equipment, overhead at approved rates)
  • § 645.119 — Lump-sum alternative: as a simplified option, the state DOT and utility may agree on a lump-sum payment based on an engineering estimate rather than work-order billing; this reduces administrative burden for small or routine relocations

  Subpart B — Accommodation of Utilities (§§ 645.201–645.215):

  • § 645.205 — Public interest policy: FHWA policy favors accommodating utilities within federal-aid highway ROW when consistent with safety — shared corridors reduce total land requirements and lower infrastructure costs for ratepayers
  • § 645.209 — Safety paramount: highway and traffic safety are the primary (but not sole) consideration; exclusion zones near traffic lanes, interchange ramps, and high-voltage transmission lines apply regardless of accommodation policy
  • § 645.213 — Use and occupancy agreements: utilities must execute a written permit with the state DOT specifying facility location, installation method, maintenance responsibilities, and relocation obligation upon future highway expansion; the state DOT — not FHWA — issues and administers these permits under a state accommodation policy that FHWA has reviewed and approved

  Subpart C — Broadband Infrastructure Deployment (§§ 645.301–645.309):

  • § 645.307 — State broadband coordinator: each state DOT must designate a broadband utility coordinator to consult with broadband providers during project planning and identify "dig-once" opportunities to install conduit or fiber alongside federally assisted construction; the coordinator role was created by the Broadband Conduit Deployment Act (47 U.S.C. § 1504, enacted in the FAST Act) to prevent the recurring waste of excavating newly paved roads for broadband installation
  • § 645.309 — No mandate: Subpart C requires coordination, not installation; states retain full authority to decline broadband installations in specific corridors based on safety, operational, or ROW constraints

• 23 CFR Part 646 — Railroads (16 sections — FHWA rules for federally assisted railroad-highway projects, implementing 23 U.S.C. § 109; covers contractor insurance requirements for work near rail and federal-aid procedures for grade crossing improvements):

  • § 646.107 — Railroad protective insurance: contractors performing highway work on or adjacent to active railroad rights-of-way must obtain railroad protective liability insurance — a policy that names the railroad as the insured and protects against claims arising from the contractor's operations near the rail corridor; standard contractor general liability policies typically exclude railroad-related claims; federal-aid funds reimburse the premium up to FHWA's approved coverage cap
  • § 646.206 — Eligible grade crossing projects: federal-aid funds may support: (1) grade separation construction (overpasses and underpasses eliminating at-grade crossings); (2) installation of active warning devices (crossing gates, lights); (3) crossing closures; (4) sight distance improvements; and (5) crossing surface improvements; grade separations receive priority treatment and the highest federal cost share
  • § 646.210 — Railroad cost share: state law governs the railroad's required contribution to grade crossing improvement costs; federal funds participate only in the non-railroad share (the portion borne by the highway agency and federal program); FHWA does not override state-law cost-sharing requirements
  • § 646.212 — Federal fund limits: federal funds are ineligible for costs incurred solely for the railroad's benefit (e.g., track upgrades beyond the immediate crossing); at grade separations, federal funds cover the full federal-aid share of highway structure costs (the bridge deck, approaches, and pavement)
  • § 646.218 — Simplified processing: for straightforward single-location grade crossing improvements, states may use a simplified procedure to accelerate FHWA review and obligation of federal funds without the full project development documentation required for complex projects

• 23 CFR Part 140 — Reimbursement (32 sections — FHWA rules governing reimbursement of specific non-standard costs on federal-aid projects, including railroad work expenses, bond-financed construction, state DOT audit expenses, and contract dispute settlement costs):

  • §§ 140.501–140.503 — Contract dispute settlement costs: federal funds may reimburse state DOTs for administrative costs incurred in defending or settling contractor claims on federally assisted projects; reimbursable costs include salaries of contracting officers, attorneys, and arbitrators allocable to claim resolution, but not general administrative overhead; the claim must arise from a valid contract dispute clause
  • Subpart F — Bond-financed projects: procedures for reimbursing states that advance-construct federally eligible projects using bond proceeds; the state may proceed with bond financing and receive federal reimbursement as annual federal-aid apportionments become available, enabling states to accelerate project delivery ahead of federal appropriation cycles
  • Subpart H — State agency audit expenses: federal funds may reimburse state DOTs for the cost of auditing contractors on cost-type contracts (where payment is based on incurred costs rather than lump-sum or unit prices); auditing verifies that costs billed to the project are allowable, allocable, and reasonable under the contract
  • Subpart I — Railroad work reimbursement: when a highway-rail grade crossing project requires the railroad's own forces (employees and equipment) to perform safety-critical work within the rail corridor, federal-aid funds may reimburse the railroad for that work at the highway agency's request; railroad force account is generally required where contractor access to the active rail corridor poses unacceptable safety risks

  Utility relocation is consistently one of the largest cost and schedule risks in urban highway reconstruction. A typical Interstate highway project through a developed corridor may require relocating miles of buried water mains, gas distribution lines, electrical transmission, telecommunications, and sewer infrastructure — often with conflicting claims about which utilities hold property rights and which hold mere permits, determining who bears the relocation cost. The Part 645 written agreement and pre-authorization requirements protect the federal investment by ensuring FERC has verified cost eligibility before states commit federal funds. For broadband, the dig-once coordination mandate in Subpart C emerged from a recognition that federal highway spending was repeatedly disturbing newly paved roads for broadband installations that could have been installed during the original construction at minimal incremental cost.

• 23 CFR Part 751 — Junkyard Control and Acquisition (FHWA — implements the Highway Beautification Act of 1965 (23 U.S.C. § 136), which requires states to exercise effective control over junkyards located within 1,000 feet of the right-of-way of federal-aid primary, Interstate, and federal-aid Urban System highways that are visible from the main traveled way; junkyard control is a condition of federal highway funding):

  • § 751.3 — Applicability: the Part 751 requirements apply to all areas within 1,000 feet of the nearest edge of the highway right-of-way and visible from the main traveled way of covered federal-aid highways; a junkyard that is beyond 1,000 feet or screened from highway visibility is not subject to federal control — states may still regulate it under state law
  • § 751.11 — Nonconforming junkyards: junkyards that were lawfully established under state law before the highway beautification standards applied must either be screened from highway view or relocated; states may allow continued operation with effective screening (vegetative screening, fencing, landscades) if the screening is maintained; nonconforming junkyards that cannot be screened must be removed
  • § 751.13 — Control measures: consistent with NEPA policies on recycling, junk and scrap recycling is encouraged; states must develop and implement control measures that eliminate the public nuisance and aesthetic harm of visible junkyards; demolition yards and automobile graveyards are included within the definition of "junkyard" subject to control
  • § 751.15 — Just compensation: when a junkyard that was lawfully established under state law is required to be relocated or removed under the federal requirements, the junkyard owner is entitled to just compensation (a constitutional requirement under the Takings Clause); the amount of compensation is determined by state law and fair market value principles; federally illegally established junkyards are not entitled to compensation
  • § 751.17 — Federal participation in costs: federal funds may participate in 75 percent of the costs of junkyard control measures, including screening, relocation, removal, and necessary studies; the 25 percent state match applies; federal participation is available for both the physical control measures and the just compensation payments to junkyard owners
  • § 751.19 — Documentation requirements: for each eligible junkyard where federal cost participation is sought, the state must maintain files documenting: date of establishment, establishment under state law, whether just compensation was paid, what control measure was implemented, and the costs incurred; this documentation is essential for FHWA audit purposes
  • § 751.21 — Relocation assistance: junkyard operators forced to relocate under the Highway Beautification Act are eligible for relocation assistance benefits under 49 CFR Part 24 — the Uniform Relocation Assistance Act's standard provisions covering moving expenses, replacement site acquisition, and business reestablishment costs

  The Highway Beautification Act junkyard provisions were championed by Lady Bird Johnson as part of her broader highway beautification initiative — the same effort that produced billboard control regulations (23 CFR Part 750). By conditioning federal highway funds on state junkyard control, Congress created a powerful incentive for states to clean up visible blight along major travel corridors. The most difficult implementation challenge has been the just compensation requirement: courts have broadly interpreted "lawfully established" to include junkyards that predated state licensing laws, entitling operators to compensation even when the community interest in removal is clear. States typically opt for screening rather than removal to avoid the compensation costs.

How It Works

The federal highway program is the largest infrastructure investment the federal government makes — spending approximately $45-60 billion annually to build, maintain, and improve the nation's road network. It operates as a federal-state partnership: the federal government provides funding and sets standards, while state DOTs design, build, and maintain the roads.

Federal highway spending is funded primarily through the Highway Trust Fund (HTF), which receives revenue from federal motor fuel taxes — $0.184 per gallon of gasoline and $0.244 per gallon of diesel. Those rates have not been raised since 1993, and the growing fuel efficiency of the vehicle fleet — plus the rise of electric vehicles — has steadily eroded the HTF's purchasing power; since 2008, Congress has transferred over $275 billion from the general fund to keep the HTF solvent. HTF revenues are apportioned to states by formula, weighted primarily on lane miles, vehicle miles traveled, and contributions to the fund. The major formula programs are the National Highway Performance Program (NHPP, ~$29B/year, for the National Highway System), the Surface Transportation Block Grant Program (STBGP, ~$15B/year, the most flexible — usable on any federal-aid highway, bridge, transit, or bicycle/pedestrian project), the Highway Safety Improvement Program (HSIP, data-driven safety investments), and the Congestion Mitigation and Air Quality Improvement Program (CMAQ, for areas not in attainment with air quality standards). States must provide matching funds — typically 20% for most projects, 10% for Interstate work.

At the center of the system sits the Interstate Highway System — authorized by the Federal-Aid Highway Act of 1956, approximately 48,000 miles of limited-access highways connecting every major U.S. city. Though it represents only about 1% of total highway mileage, the Interstate system carries roughly 25% of all vehicle miles traveled; the system is functionally complete but requires constant investment in maintenance, reconstruction, and capacity. The Infrastructure Investment and Jobs Act (IIJA, 2021) was the largest federal highway investment in history — approximately $350 billion over five years. See Infrastructure Spending for the broader IIJA context. It increased all major formula program levels, created the Bridge Investment Program, added new programs for EV charging infrastructure, carbon reduction, and resilience, and significantly expanded discretionary grant programs including INFRA, RAISE, and Bridge.

How It Affects You

State Variations

Pending Legislation

• HR 8186 — Establishes an interagency working group on weather impacts on transportation infrastructure and operations. Status: Introduced.
• S 4245 — Enhances safety protections for roadside workers, including highway construction and maintenance crews. Status: Introduced.
• HR 6503 — Broadband for Americans through Responsible Streamlining Act. Streamlines permitting for broadband deployment along federal highway rights-of-way. Status: Introduced.

Recent Developments

• The IIJA (2021) provided historic funding levels but the Highway Trust Fund's long-term solvency remains unresolved

• Electric vehicle charging infrastructure buildout is a major new program under the National Electric Vehicle Infrastructure (NEVI) formula program

• Highway safety has worsened — traffic fatalities increased to ~40,000+/year post-pandemic, the highest levels in decades (see Commercial Motor Vehicle Safety for the truck safety dimension)

• Climate resilience and carbon reduction have become explicit federal highway program goals for the first time

• The federal gas tax has not been increased since 1993, and alternative funding mechanisms (vehicle-miles-traveled fees, congestion pricing) are under active study and pilot programs

• Trump administration redirecting IIJA highway funds — deemphasizing climate and equity (2025): The Trump FHWA issued guidance in early 2025 directing states to deemphasize climate resilience, carbon reduction, and environmental justice requirements in IIJA-funded highway projects. The Biden-era FHWA rule requiring states to set carbon pollution reduction targets for highways was rescinded; the Reconnecting Communities program (which funded removal of highways that divided minority neighborhoods) funding was placed under review. Core IIJA highway formula apportionments (approximately $66 billion over 5 years) continue flowing to states, but discretionary grants from IIJA that Biden FHWA awarded for multimodal and climate-resilient projects have been reviewed for rescission or redirection.

• EV charging network build-out slowed by Trump FHWA (2025): The IIJA's National Electric Vehicle Infrastructure (NEVI) program — $5 billion to build out EV charging corridors along Interstate highways — has been slowed under Trump. FHWA froze NEVI funds in early 2025 pending program review; most states had already obligated substantial NEVI funds, but new NEVI grants were paused. The administration's energy policy emphasizes oil, gas, and hydrogen — EV charging infrastructure built with NEVI funds is a lower priority. States that had awarded NEVI contracts are proceeding with construction; states still in planning phases face uncertainty about the program's continuation.

• Highway Trust Fund solvency — OBBBA and gas tax (2025): The Highway Trust Fund depends on the federal gas tax (18.4 cents/gallon for gasoline, 24.4 cents for diesel — unchanged since 1993) supplemented by periodic general fund transfers. As EVs grow as a share of the fleet, gas tax revenues stagnate while highway maintenance needs grow. The OBBBA does not include a gas tax increase; House Republicans have resisted the politically toxic step of raising fuel taxes. The Transportation Research Board estimates the Highway Trust Fund faces a structural shortfall of $50+ billion over the next decade without either tax increases or spending cuts. Federal highway investment beyond FY2026 remains uncertain as IIJA's authorization expires and reauthorization is required.