The bill inserts a statutory definition of "transportation demand management" (TDM) into 23 U.S.C. 101 and explicitly authorizes TDM activities as eligible uses across several federal programs—including CMAQ, National Infrastructure Project Assistance (INFRA/NIP), local project assistance, and certain IIJA grant programs. It also amends the congestion relief program to open eligibility beyond the largest metros and creates two $20,000,000 annual set‑asides: one dedicated to rural TDM projects and one for smaller congestion relief projects capped at $10 million.
Why it matters: the measure shifts federal policy toward funding operational, behavioral, and technology‑driven strategies (car/vanpooling, trip planning, pricing, telework support, MaaS and gamified incentives) rather than exclusively capital projects. The statutory changes lower legal barriers to using federal dollars for TDM and carve out dedicated funding for rural and small projects—changes that will affect state DOTs, MPOs, transit agencies, tribes, and private mobility vendors that deliver shared‑mobility and trip‑planning services.
At a Glance
What It Does
Adds a new definition of TDM to 23 U.S.C. 101 that explicitly lists operational, pricing, technology, and behavioral tools. It amends eligibility across CMAQ, 49 U.S.C. 6701/6702, and IIJA grant language to allow TDM as an eligible purpose and activity. The bill creates two $20 million annual set‑asides: a rural TDM grant pool and a small‑project congestion relief pool ($500K–$10M projects).
Who It Affects
State departments of transportation, metropolitan planning organizations, local governments, Tribal governments, public transit agencies, nonprofits and institutions of higher education engaged in rural mobility, employers that run commuter programs, and private vendors of MaaS, ITS, vanpool and ridematching services.
Why It Matters
This is a statutory normalization of demand‑side interventions at the federal level—operations, incentives, and software are explicitly fundable across major programs. For professionals, that means new federal revenue streams for non‑capital projects, novel compliance questions about eligible costs, and new funding paths for rural mobility and small‑scale congestion interventions.
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What This Bill Actually Does
The core technical change is a new paragraph (32) in 23 U.S.C. 101(a) that defines "transportation demand management" and enumerates the kinds of activities Congress intends to treat as TDM. The definition is broad: it covers employer fringe benefits, incentives and gamified engagement tools, congestion pricing and parking management, carpools and vanpools, trip planning and ridematching, HOV/HOT lane use, telecommuting support, micromobility and pedestrian infrastructure, active transportation, and other actions that shift or disperse travel demand.
That list matters because it frames what kinds of projects federal agencies can interpret as eligible TDM expenditures.
The bill then threads that definition into multiple statutory grant authorities. It makes TDM an explicit purpose under the Congestion Mitigation and Air Quality (CMAQ) program, adds TDM to the eligible purposes for the National Infrastructure Project Assistance program and local/regional project assistance, and inserts TDM into the list of allowable activities under the Strengthening Mobility and Revolutionizing Transportation (SMART) grant provisions of the IIJA.
Those cross‑references mean operational and programmatic expenses—like real‑time traveler information, mobility platforms, and even staff salaries—are squarely within the universe of federal‑eligible project costs in those programs.Section 4 establishes a permanent rural TDM set‑aside within 23 U.S.C. 173: $20 million per fiscal year for development and implementation of TDM in rural areas. The statutory language lists eligible recipients (state DOTs, MPOs that cover rural areas, local governments, Tribes, public transit agencies, regional planning organizations, nonprofits, and institutions of higher education) and enumerates eligible activities from plan development and outreach to vanpool and MaaS deployment.
The provision explicitly permits operating costs and staff salaries to be charged to the grant, and it requires reallocation of unused set‑aside funds to other projects in the program.Section 5 changes the congestion relief statute by removing the previous >1,000,000 population limitation from certain eligibility clauses—broadening which urbanized areas can apply—and by creating a $20 million small‑project set‑aside for congestion relief projects with estimated costs between $500,000 and $10,000,000. Like the rural set‑aside, any unspent amounts may be reallocated to other projects under the program.
Taken together, these changes reduce statutory barriers to funding smaller, operational, and behavior‑change projects and place a modest recurring federal funding floor under rural TDM activity.
The Five Things You Need to Know
The bill adds paragraph (32) to 23 U.S.C. 101(a) to define 'transportation demand management' and explicitly lists 13 categories of activities (from employer fringe benefits to gamified incentives, MaaS, HOV/HOT use, telecommuting support, and active transportation).
It amends CMAQ (23 U.S.C. 149(b)(7)) to allow funds to be used for implementing transportation demand management strategies.
Section 173 of title 23 gains a new subsection (p) establishing a $20,000,000 annual rural TDM set‑aside and an explicit list of eligible recipients—including tribes, nonprofits, and institutions of higher education—and permits grant funds to cover staff salaries and operating costs.
The congestion relief statute (23 U.S.C. 129(d)) drops the 'population over 1,000,000' eligibility text in two clauses, broadening program access, and adds a $20,000,000 small‑project set‑aside for grants costing between $500,000 and $10,000,000.
The bill amends 49 U.S.C. 6701 and 6702 and IIJA STRM language to make TDM implementation activities explicitly eligible for National Infrastructure Project Assistance and local/regional project assistance grants, including counting TDM activities in eligible project costs where specified.
Section-by-Section Breakdown
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Findings on TDM and rural needs
This section collects evidence and policy rationales: Congestion costs, rural mobility shortfalls, and the role of car/vanpooling and other TDM techniques. The findings do not create legal obligations, but they frame congressional intent that follows in later substantive amendments—useful for statutory interpretation in rulemaking and grant guidance.
Statutory definition of 'transportation demand management' (23 U.S.C. 101)
Creates a new paragraph (32) defining TDM and enumerating included activities. Practically, this is the bill's enabling move: once defined at the top of title 23, agencies and grant programs can point to that definition when determining whether an activity is eligible. The long list of inclusions—ranging from pricing and parking management to gamification and active transportation—reduces ambiguity about whether behavioral, software, and operating costs qualify.
Make TDM an eligible use across major federal programs
Edits to CMAQ (23 U.S.C. 149), National Infrastructure Project Assistance (49 U.S.C. 6701), local/regional assistance (49 U.S.C. 6702), and IIJA STRM language insert TDM as an explicit eligible purpose or activity. For implementers, the practical effect is expanded legal authority to obligate federal funds for TDM work, including integration with larger capital projects or standalone operational grants. The amendments also adjust eligible cost language so that certain TDM activities can be included in project cost calculations where applicable.
Rural TDM set‑aside added to 23 U.S.C. 173
Adds subsection (p) requiring the Secretary to reserve $20 million annually for rural TDM grants. It defines eligible recipients broadly (state DOTs, MPOs serving rural areas, tribes, transit agencies, local governments, regional orgs, nonprofits, and universities) and explicitly permits funds for planning, marketing, data, MaaS deployment, smart hubs, ITS, and operating costs including salaries. The provision also instructs FHWA to reallocate unspent set‑aside dollars to other program projects—an administrative backstop that limits carryover.
Congestion relief eligibility and small‑project set‑aside (23 U.S.C. 129)
Removes a population threshold that had limited certain congestion relief program clauses to urban areas over one million people, thereby widening who may apply. It also creates a $20 million small‑project set‑aside for grants sized between $500,000 and $10,000,000 and includes a similar reallocation rule for unused funds. This changes the program’s scale mix by reserving federal money for more modest projects that are often operational or technology‑driven.
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Explore Transportation in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Rural residents with limited car access — the rural set‑aside funds car/vanpool programs, trip‑planning tools, and shared mobility options that can increase access to jobs, healthcare, and services in places with limited transit.
- Small and mid‑sized MPOs and local governments — the small‑project congestion set‑aside and expanded eligibility let smaller urbanized areas pursue lower‑cost, high‑impact interventions without competing directly with large capital projects.
- Transit agencies and vanpool operators — explicit eligibility for operating, ITS, and mobility‑as‑a‑service deployments creates new federal funding routes to sustain or scale shared‑ride services.
- Nonprofit organizations and universities engaged in rural transportation — listed as eligible recipients for rural grants, enabling community groups and research partners to lead pilot programs and evaluations.
- Private mobility and technology vendors — the statute’s recognition of MaaS, trip‑planning apps, and real‑time information systems creates demand for vendors supplying these operational services to grant recipients.
Who Bears the Cost
- State departments of transportation — while federal funds expand, states will still manage matching, application administration, and oversight; they may need to reallocate planning staff and resources to administer new program categories.
- Federal agencies (FHWA, DOT) — program management, guidance development, and monitoring for TDM‑focused grants will increase agency workload without explicit new administrative funding.
- Parking owners and some municipal revenue streams — promotion of parking pricing and other demand management tools could reduce parking revenues or require policy changes that local governments or private operators must manage.
- Employers offering commuter programs — while incentives are encouraged, employers may incur administrative and financial costs to stand up qualified fringe benefit programs or to participate in employer‑based incentives.
- Small project applicants — the $500,000 minimum excludes micro‑projects and may force bundling of activities or seeking alternative funding, which can increase project complexity and up‑front administrative burden.
Key Issues
The Core Tension
The central dilemma is funding operations and behavior change versus funding capital: the bill makes a deliberate choice to enable and encourage low‑cost, flexible TDM measures, but federal transportation policy and budgeting have long prioritized tangible infrastructure outputs. Supporting ongoing operating costs, software platforms, and incentives can be cost‑effective, yet it shifts scarce federal dollars away from durable capital investments and raises questions about long‑term program sustainability, performance measurement, and equitable distribution across rural and urban communities.
The bill emphatically broadens what federal law treats as an eligible transportation activity, but it leaves several practical questions unresolved. It does not define 'rural' within the new 173(p) language, so eligibility disputes may arise about which MPOs or areas qualify as rural without administrative guidance.
The statutory permission to use funds for operating expenses and salaries is significant—federal programs have historically favored capital investments—and FHWA will need to craft grant conditions and performance requirements to reconcile O&M funding with statutes and current apportionment practices.
Measurement and oversight present a second practical friction. Many TDM interventions (incentives, gamification, telework promotion) produce diffuse, behavior‑driven outcomes that are harder to measure than lane miles built.
Grant recipients will need clear metrics, data collection standards, and privacy safeguards—especially when grants fund trip‑matching or real‑time traveler data. The bill allows reallocation of unspent set‑aside money to other projects, which provides administrative flexibility but also creates uncertainty for prospective grantees who may plan programs around an expected recurring $20 million pool that could be diverted in any year the Secretary finds insufficient demand.
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