(a) All ITS projects that are funded in whole or in part with the highway trust fund, including those on the National Highway System (NHS) and on non-NHS facilities, are subject to these provisions.

(b) The Secretary may authorize exceptions for:

(1) Projects designed to achieve specific research objectives outlined in the National ITS Program Plan under section 5205 of the TEA-21, or the Surface Transportation Research and Development Strategic Plan developed under 23 U.S.C. 508; or

(2) The upgrade or expansion of an ITS system in existence on the date of enactment of the TEA-21, if the Secretary determines that the upgrade or expansion:

(i) Would not adversely affect the goals or purposes of Subtitle C (Intelligent Transportation Systems Act of 1998) of the TEA-21;

(ii) Is carried out before the end of the useful life of such system; and

(iii) Is cost-effective as compared to alternatives that would meet the conformity requirement of this rule.

(c) These provisions do not apply to funds used for operations and maintenance of an ITS system in existence on June 9, 1998.