Amends subsection (d) by revising punctuation in paragraph (1)(A) clauses (i) and (ii), modifying paragraph (5)(D) to make grants subject to a new paragraph (8), and adding paragraph (8) to establish an annual $20,000,000 small project set-aside for projects costing between $500,000 and $10,000,000 with reallocation of unutilized amounts to other program projects.

Modifies section 173 by (1) inserting 'Except as provided in subsection (p),' before references to the Secretary in subsection (c) and before 'an eligible entity' in subsection (f); (2) amending subsection (e)(1) in the matter preceding subparagraph (A) by inserting text (as shown: 'by inserting after ;'); and (3) adding new subsection (p) establishing a rural transportation demand management set-aside of $20,000,000 per fiscal year to provide grants for development and implementation of transportation demand management strategies in rural areas, and specifying eligible recipients and activities and treatment of unutilized funds.

Redesignates existing paragraphs (32) through (36) as (33) through (37) and inserts a new paragraph (32) defining the term "transportation demand management" and enumerating included strategies and activities.

Amends paragraph (b)(7) to add language making the program explicitly "for the purpose of implementing transportation demand management strategies."

Amends subsection (d) to add an explicit purpose for implementing transportation demand management strategies and amends subsection (h)(1) to add activities related to implementation of transportation demand management strategies.

Inserts a new subparagraph authorizing projects to implement transportation demand management strategies and adjusts subparagraph designations accordingly.

Amends the Strengthening Mobility and Revolutionizing Transportation grant program provisions to add transportation demand management as an eligible activity and to authorize activities related to implementing transportation demand management strategies.