This Act may be cited as the “Transportation Alternatives Enhancements Act”.

(a) Set-Aside.—Section 133(h)(1) of title 23, United States Code, is amended—

(1) in the heading, by striking “Reservation of funds” and inserting “In general”; and

(2) in the matter preceding subparagraph (A), by striking “for each fiscal year” and all that follows through the period at the end of subparagraph (B)(ii) and inserting “for fiscal year 2022 and each fiscal year thereafter, the Secretary shall set aside an amount equal to 10 percent to carry out this subsection.”.

(b) Allocation.—Section 133(h) of title 23, United States Code, is amended by striking paragraph (2) and inserting the following:

“(2) ALLOCATION WITHIN A STATE.—

“(A) IN GENERAL.—Except as provided in subparagraph (B), funds set aside for a State under paragraph (1) shall be obligated within that State in the manner described in subsection (d), except that, for purposes of this paragraph (after funds are made available under paragraph (5))—

“(i) for fiscal year 2022 and each fiscal year thereafter, the percentage referred to in paragraph (1)(A) of that subsection shall be deemed to be 66 percent; and

“(ii) paragraph (3) of subsection (d) shall not apply.

“(B) LOCAL CONTROL.—A State may allocate up to 100 percent of the funds referred to in subparagraph (A)(i) if—

“(i) the State submits to the Secretary a plan that describes—

“(I) how funds will be allocated to counties, metropolitan planning organizations, regional transportation planning organizations as described in section 135(m), or local governments;

“(II) how the entities described in subclause (I) will carry out a competitive process to select projects for funding and report selected projects to the State;

“(III) how input was gathered from the entities described in subclause (I) to ensure those entities are able and willing to comply with the requirements of this subsection; and

“(IV) how the State will comply with paragraph (8); and

“(ii) the Secretary approves the plan submitted under clause (i).”.

(c) Eligible projects.—Section 133(h)(3) of title 23, United States Code, is amended by striking “reserved” and inserting “set aside”.

(d) Access to funds.—Section 133(h)(4) of title 23, United States Code, is amended—

(1) by striking subparagraph (A);

(2) by redesignating subparagraph (B) as subparagraph (A);

(3) in subparagraph (A) (as so redesignated)—

(A) by redesignating clauses (vii) and (viii) as clauses (viii) and (ix), respectively;

(B) by inserting after clause (vi) the following:

“(vii) a metropolitan planning organization that serves an urbanized area with a population of 200,000 or fewer;”;

(C) in clause (viii) (as so redesignated), by striking “responsible” and all that follows through “programs”; and

(D) in clause (ix) (as so redesignated), by inserting “that serves an urbanized area with a population of over 200,000” after “metropolitan planning organization”; and

(4) by adding at the end the following:

“(B) COMPETITIVE PROCESS.—A State or metropolitan planning organization required to obligate funds in accordance with paragraph (2) shall develop a competitive process to allow eligible entities to submit projects for funding that achieve the objectives of this subsection.

“(C) SELECTION.—A metropolitan planning organization for an area described in subsection (d)(1)(A)(i) shall select projects under the competitive process described in subparagraph (B) in consultation with the relevant State.

“(D) PRIORITIZATION.—The competitive process described in subparagraph (B) shall include prioritization of project location and impact in high-need areas as defined by the State, such as low-income, transit-dependent, rural, or other areas.”.

(e) Continuation of certain recreational trails projects.—Section 133(h)(5)(A) of title 23, United States Code, is amended by striking “reserved under this section” and inserting “set aside under this subsection”.

(f) State flexibility.—Section 133(h)(6) of title 23, United States Code, is amended—

(1) in subparagraph (B), by striking “reserved” and inserting “set aside”; and

(2) by adding at the end the following:

“(C) IMPROVING ACCESSIBILITY AND EFFICIENCY.—

“(i) IN GENERAL.—A State may use an amount equal to not more than 5 percent of the funds set aside for the State under this subsection, after allocating funds in accordance with paragraph (2)(A), to improve the ability of applicants to access funding for projects under this subsection in an efficient and expeditious manner by—

“(I) providing to applicants for projects under this subsection application assistance, technical assistance, and assistance in reducing the period of time between the selection of the project and the obligation of funds for the project; and

“(II) by providing funding for 1 or more full-time State employee positions to administer this subsection.

“(ii) USE OF FUNDS.—Amounts used under clause (i) may be expended—

“(I) directly by the State; or

“(II) through contracts with State agencies, private entities, or nonprofit entities.”.

(g) Federal share.—Section 133(h) of title 23, United States Code, is amended—

(1) by redesignating paragraph (7) as paragraph (8); and

(2) by inserting after paragraph (6) the following:

“(7) FEDERAL SHARE.—

“(A) REQUIRED AGGREGATE NON-FEDERAL SHARE.—The average annual non-Federal share of the total cost of all projects for which funds are obligated under this subsection in a State for a fiscal year shall be not less than the non-Federal share authorized for the State under section 120(b).

“(B) FLEXIBLE FINANCING.—Subject to subparagraph (A), notwithstanding section 120—

“(i) funds made available to carry out section 148 may be credited toward the non-Federal share of the costs of a project under this subsection if the project—

“(I) is an eligible project described in section 148(e)(1); and

“(II) contributes to the annual safety performance targets of the State;

“(ii) the non-Federal share for a project under this subsection may be calculated on a project, multiple-project, or program basis; and

“(iii) the Federal share of the cost of an individual project in this section may be up to 100 percent.”.

(h) Improved transparency.—Paragraph (8)(A) of section 133(h) of title 23, United States Code (as redesignated by subsection (g)(1)), is amended—

(1) in the matter preceding clause (i), by striking “describes” and inserting “includes”; and

(2) by striking clause (ii) and inserting the following:

“(ii) a list of each project selected for funding for each fiscal year, including, for each project—

“(I) the fiscal year during which the project was selected;

“(II) the fiscal year in which the project is anticipated to be funded;

“(III) the recipient;

“(IV) the location, including the congressional district;

“(V) the type; and

“(VI) a brief description.”.

(i) State transferability.—Section 126(b)(2) of title 23, United States Code, is amended—

(1) by striking the period at the end and inserting “; and”;

(2) by striking “for a fiscal year may” and inserting the following: “for a fiscal year—

“(A) may”; and

(3) by adding at the end the following:

“(B) may only be transferred if the Secretary certifies that the State—

“(i) held a competition in compliance with the guidance issued to carry out section 133(h) and provided sufficient time for applicants to apply;

“(ii) offered to each eligible entity, and provided on request of an eligible entity, technical assistance; and

“(iii) demonstrates that there were not sufficiently suitable applications from eligible entities to use the funds to be transferred.”.

(j) Effective date.—This section and the amendments made by this section shall take effect on October 1, 2021.