Federal Legislation
History and Provisions of the Federal Transit Act and Other Major Laws Affecting Public Transportation
In 1964 the United States Congress found that "the welfare and vitality of urban areas, the satisfactory movement of people and goods within such areas, and the effectiveness of housing, urban renewal, highway, and other federally aided programs were being jeopardized by the deterioration or inadequate provision of urban transportation facilities and services. . . ." In response, Congress enacted the Urban Mass Transportation Act of 1964, which provided federal aid to transit agencies for capital equipment purchases.
Continuing this commitment into its fifth decade, Congress enacted the Safe, Accountable, Flexible, Efficient Transportation Equity Act - A Legacy for Users (SAFETEA-LU) in 2005. SAFETEA-LU authorizes higher levels of funding for public transportation than any previous law. It continues and improves provisions of prior authorizing laws that are important to the continuing Federal commitment to improve public transportation service throughout America.
Landmarks in the evolution of the federal public transportation assistance program over the years include:
1961: The Housing Act of 1961 [Public Law 87-70, June 30, 1961] provided public transportation demonstration funding and mass transportation project loans.
1964: The Urban Mass Transportation Act of 1964 [Public Law 88-365, July 9, 1964] established a transit aid program under the Administrator of the Housing and Home Finance Agency (HHFA). Programs under the Housing Act of 1961 were continued, a program of grants for capital projects was established, and job protection provisions were provided for affected transit employees.
1965: The Department of Housing and Urban Development Act, [Public Law 89-174, September 6, 1965] merged HHFA into newly created Department of Housing and Urban Development (HUD), the implementation of the law took effect on January 13, 1966.
1966: The Urban Mass Transportation Act of 1966 [Public Law 89-562, September 8, 1966] expanded capital funding and allowed funding for research, planning, and training.
1968: Reorganization Plan No. 2 of 1968 [33 Fed. Reg. 6965, February 26, 1968] transferred the transit program from HUD to the Department of Transportation (DOT) effective July 30, 1968, creating the Urban Mass Transit Administration (UMTA).
1968: The Housing and Urban Development Act of 1968 [Public Law 90-448, August 1, 1968] increased authorized funding levels.
1969: The Housing and Urban Development Act Amendment [Public Law 91-152, December 24, 1969] increased authorized funding levels.
1970: The National Environmental Policy Act of 1969 [Public Law 91-190, January 1, 1970] required environmental impact statements for federally assisted transit and highway projects.
1970: The Urban Mass Transportation Assistance Act of 1970 [Public Law 91-453, October 15, 1970] authorized a $3.1 billion program of capital grants.
1973: The Federal-Aid Highway Act of 1973 [Public Law 93-87, August 13, 1973] increased the federally funded portion of public transportation capital projects from 66 2/3% to 80% and authorized the use of Federal-Aid Urban Systems highway funds and Interstate Highway Transfers for qualifying public transportation projects and created a rural public transportation demonstration program.
1974: The National Mass Transportation Assistance Act of 1974 [Public Law 93-503, November 26, 1974] increased authorizations for discretionary capital funding and created a formula grant program to allocate funding directly to urbanized areas that could be used for either operations or capital projects.
1975: The Federal-Aid Highway Amendments of 1974 [Public Law 93-643, January 4, 1975] established federal policy in Section 105 that "elderly and handicapped persons have the same right as other persons to utilize mass transportation facilities."
1978: The Federal Public Transportation Act of 1978, Title III of the Surface Transportation Assistance Act of 1978 [Public Law 95-599, November 6, 1978] divided the formula grant program into categorical programs that included capital grants for bus purchases, new starts, and fixed guideway modernization; established additional formula grant tiers for bus purchases and operating funds for fixed guideway systems; and added a formula program for rural places outside of urbanized areas.
1981: The Omnibus Budget Reconciliation Act of 1981 [Public Law 97-35, August 13, 1981] reduced authorization levels for FY 1982 from those set in the Federal Public Transportation Act of 1978.
1982: The Federal Public Transportation Act of 1982, Title III of the Surface Transportation Assistance Act of 1982 [Public Law 97-424, January 6, 1983] provided that 1 cent of a 5 cents per gallon increase in the Highway Trust Fund tax on motor fuels would be placed into a Mass Transit Account for capital projects, increased the portion of all funding allocated through the formula grant program, and altered the formula grant program allocation formula to include public transportation service data as well as population data.
1984: The Tax Reform Act of 1984 [Public Law 98-396, July 18, 1984] allowed employees to receive a de minimis, up to $15 per month, tax-free fringe benefit in the form of an employer-provided public transportation subsidy or pass.
1987: The Federal Mass Transportation Act of 1987, Title III of the Surface Transportation and Uniform Relocation Assistance Act of 1987 [Public Law 100-17, April 2, 1987] provided that a portion of the Highway Trust Fund Mass Transit Account would be allocated by formula for capital purposes.
1990: The Omnibus Budget Reconciliation Act of 1990 [Public Law 101-508, November 5, 1990] raised to 1.5 cents per gallon the portion of the Highway Trust Fund tax on motor fuels to be placed in the Mass Transit Account.
1990: The Americans with Disabilities Act of 1990 (ADA) [Public Law 101-336, July 26, 1990] required transit agencies to provide service accessible to persons with disabilities.
1990: The Omnibus Budget Reconciliation Act of 1990 [Public Law 101-508, November 5, 1990] raised to 1.5 cents per gallon the portion of the Highway Trust Fund tax on motor fuels to be placed in the Mass Transit Account.
1990: The Clean Air Act Amendments of 1990 [Public Law 101-549, November 15, 1990] recast transportation planning to provide for improved air quality.
1991: The Omnibus Transportation Employee Testing Act of 1991 [Public Law 102-143, October 28, 1991] mandated the establishment of anti-drug and alcohol misuse programs for safety-sensitive employees of recipients and contractors to recipients of Major Capital Investment, Urbanized Area Formula, and Rural Area Formula public transportation funds.
1991: The Federal Transit Act Amendments of 1991, Title III of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) [Public Law 102-240, December 18, 1991] extended public transportation assistance through FY 1997, increased the amounts authorized, re-named the transit law the Federal Transit Act and the Urban Mass Transportation Administration the Federal Transit Administration, and converted the rail modernization portion of Section 5309 major capital funds to a formula basis. Surface Transportation, Title I of ISTEA provided that specific funds authorized through Federal-Aid Highways programs may be used for either public transportation or highway projects. These flexible funds are to be used for the mode of transportation best suited to meeting the needs of individual areas and states.
1992: The Energy Policy Act of 1992 [Public Law 102-486, October 24, 1992] increased the tax-free amount of the public transportation commuter fringe benefit to $60 per month with an inflation provision, removed the cliff provision which had made the entire benefit taxable if the monthly limit was exceeded, and extended the benefit to vanpools.
1993: The Omnibus Budget Reconciliation Act of 1993 [Public Law 103-66, August 10, 1993] raised to 2 cents per gallon the portion of the Highway Trust Fund tax on motor fuels to be placed in the Mass Transit Account, effective October 1, 1995.
1994: The Federal Transit Act was codified as Title 49, Chapter 53--Mass Transportation, of the United States Code [Public Law 103-272, July 5, 1994].
1997: The Taxpayer Relief Act of 1997 [Public Law 105-34, August 5, 1997] raised to 2.86 cents per gallon the portion of the Highway Trust Fund tax on motor fuels to be placed in the Mass Transit Account, effective October 1, 1997.
1998: The Federal Transit Act of 1998, Title III of the Transportation Equity Act for the 21st Century (TEA 21) [Public Law 105-178] extends the public transportation program. TEA 21 increased public transportation funding authorizations, up to 70 percent above ISTEA appropriation levels if all authorized amounts are appropriated. A total of $41 billion is authorized for the six-year period, of which $36 billion was guaranteed. The definition of eligible uses of Urbanized Area Formula capital funds was expanded to include preventive maintenance and ADA related expenditures for all urbanized areas and to include operating expenditures for urbanized areas under 200,000 population. The public transportation commuter benefit is expanded to include employee purchase of public transportation passes with pre-tax dollars. Two new programs were created: the Clean Fuels Formula Grant program which provides funds for adoption of clean fuel technologies and the Job Access and Reverse Commute program funds projects that improve job access for current and former welfare recipients and other eligible low-income individuals.
2005: The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) [Public Law 109-59, August 10, 2005] reauthorizes federal transit law. Including funds authorized in TEA 21 extension acts, over the six year period FY 2004 through FY 2009, it provides a record level of federal transit investment, $52.6 billion. A new tier is added to the Urbanized Area Formula program directing funds to Small Transit Intensive Cities. Additional funds are provided for the Urbanized Area and Rural Formula programs through amounts authorized by new Growing States and High Density States programs. New programs are created: Transit on Indian Reservations to provide transit improvements on Indian reservation, New Freedom to provide transportation for persons with disabilities beyond the requirements of the Americans with Disabilities Act, Small Starts specifying amounts within the New Starts Program for smaller projects, Alternatives Analysis providing specified funds in addition to New Starts funds for this function, and Alternative Transportation in Parks and Public Lands to improve mobility in National Parks. New eligible expenses include intercity bus and rail stations, crime prevention and security, and mobility management.
Funding Provisions of the Federal Transit Act
Funds for federal public transportation assistance come from two sources: general governmental revenues and the Mass Transit Account of the Highway Trust Fund. Transit agencies receive funds from several Federal Transit Act programs, which allocate funding to urbanized areas or states by formula or for specific projects through discretionary processes. The largest are:
Capital Investment, 49 U.S.C. 5309: Begun in FY 1964, it provides capital assistance to eligible public transportation projects in three categories: (1) construction of new fixed-guideway systems or extensions of existing systems called "New Starts," (2) modernization of existing fixed-guideway systems called "Rail Modernization," and (3) major bus related construction projects or equipment acquisition called "Bus Capital."
Recipients of Funds: State or local public bodies and agencies.
Eligible Expenditures: Capital projects only.
Method of Apportionment or Allocation: Rail Modernization funds are distributed to urbanized areas with fixed-guideway systems in operation for at least seven years on a formula basis. New Start and Bus Capital funds are allocated to specific projects at the discretion of the Congress or the Federal Transit Administration if the Congress does not specify a distribution. Eligible New Start projects for FY 2005 through FY 2009 and some Bus Capital projects for FY 2006 and FY 2009 are authorized in SAFETEA-LU. Amounts for individual projects are specified in annual appropriations laws.
Matching Ratio: Maximum of 80% federal, minimum of 20% non-federal.
Urbanized Area Formula (UAF), 49 U.S.C. 5307 and 5336: Apportions operating and capital assistance on a formula basis to urbanized areas. The original urbanized area formula program was established by the National Mass Transportation Assistance Act of 1974 and redone with the current overall structure by the Federal Public Transportation Act of 1982.
Recipients of Funds: Directly to urbanized areas of at least 200,000 population, through state governors to urbanized areas under 200,000 population. Eligible Expenditures: For urbanized areas of at least 200,000 population, capital expenditures by local decision. Eligible capital expenditures include acquisition of public transportation vehicles, construction of facilities including fixed-guideway rights-of-way, purchase of equipment, rehabilitation of buses, overhaul of rail vehicles, preventive maintenance, up to 10 percent of the apportioned amount for non-fixed-route ADA paratransit service, and other uses. For urbanized areas under 200,000 population, capital expenditures as for larger urbanized areas and operating expenditures.
Method of Apportionment: By seven formulas based on urbanized area population, mode of public
transportation service, and comparative operating statistics. These formulas are:
(1) Bus operations in urbanized areas of at least 1,000,000 population, basic formula, 39.91% of the
UAF beginning in FY 2006. The formula is 50% bus revenue vehicle miles operated, 25% urbanized area population, and 25% urbanized area population density weighted by population.
(2) Bus operations in urbanized areas from 200,000 to 999,999 population, basic formula, 14.47% of the UAF beginning in FY 2006. The formula is 50% bus revenue vehicle miles operated, 25% urbanized area population, and 25% urbanized area population density weighted by population.
(3) Bus operations in urbanized areas of at least 200,000 population, incentive formula, 5.51% of the UAF beginning in FY 2006. The formula is the number of bus passenger miles traveled multiplied by the number of bus passenger miles traveled per dollar of operating cost.
(4) Mass transportation operations in urbanized areas under 200,000 population, 9.23% of the UAF beginning in FY 2006. The formula is 50% urbanized area population and 50% urbanized area population density weighted by population.
(5) Fixed guideway operations in urbanized areas of at least 200,000 population, basic formula, 28.57% of the UAF beginning in FY 2006. The formula is 60% fixed guideway revenue vehicle miles operated and 40% fixed guideway route miles. Urbanized areas of at least 750,000 population that have commuter rail operations receive a minimum of 0.75% of this formula.
(6) Fixed guideway operations in urbanized areas of at least 200,000 population, incentive formula, 1.31% of the UAF beginning in FY 2006. The formula is the number of fixed guideway passenger miles traveled multiplied by the number of fixed guideway passenger miles traveled per dollar of operating cost. Urbanized areas of at least 750,000 population that have commuter rail operations receive a minimum of 0.75% of this formula.
(7) Mass transportation operations in urbanized areas under 200,000 population with Small Transit Intensive Cities, 1.00% of the UAF beginning in FY 2006. The formula is the number of six different measures where a small urbanized area has values in excess of the average value for all urbanized areas from 200,000 to 999,999 population. Newly created in SAFETEA-LU.
Matching Ratios: Operating assistance: 50% federal, 50% non-federal. Capital assistance: 80% federal, 20% non-federal.
Elderly and Disabled Persons, 49 U.S.C. 5310: Established by the UMT Act of 1970 to assure mass transportation availability to elderly and disabled persons.
Recipients of Funds: Private, non-profit corporations and associations providing mass transportation services for elderly and disabled persons or public bodies coordinating such service or providing service where no non-profit service is available, through state governors.
Eligible Expenditures: For capital equipment and cost of leased or contracted service.
Method of Apportionment: Apportioned by formula to states based on elderly and disabled population.
Matching Ratio: 80% federal, 20% non-federal.
Rural Area Formula (RAF), 49 U.S.C. 5311: Established by the STA Act of 1978 to apportion funds for mass transportation in rural areas outside of urbanized areas.
Recipients of Funds: Mass transportation providers outside of urbanized areas through state governors.
Eligible Expenditures: Operations or capital projects.
Method of Apportionment: Formula based 80% on non-urbanized area population of each state and 20% on non-urbanized land area of each state.
Matching Ratio: Operating assistance: 50% federal, 50% non-federal. Capital assistance: 80% federal, 20% non-federal.
Growing States and High Density States Formula Program, 49 U.S.C. 5340: Established by SAFETEA-LU to apportion additional funds to the Urbanized Area Formula and Rural Area Formula programs.
Recipients of Funds: Funds are distributed as an integral part of the Urbanized Area and Rural Area formula apportionments.
Eligible Expenditures: Operations or capital projects.
Method of Apportionment: Growing States funds are apportioned among states based on population projections for 15 years beyond the most recent Census of Population. Within each state funds are distributed among urbanized and nonurbanized areas based on population.
High Density States funds are distributed by formula among states that have population densities greater than 370 persons per square mile. Within states the funds are distributed among urbanized areas based on population.
Matching Ratio: The same as Urbanized Area Formula and Rural Area Formula funds.
Job Access and Reverse Commute Program, Section 3037 of TEA 21: Established by TEA 21 to improve job access for current and former welfare recipients and eligible low-income individuals.
Recipients of Funds: Local governmental authorities and agencies or nonprofit organizations selected by Metropolitan Planning Organizations in urbanized areas of at least 200,000 population and selected by the chief executive officer of the state for urbanized areas under 200,000 population.
Eligible Expenditures: Capital and operating costs of equipment, facilities, and associated capital maintenance items related to providing access to jobs, promoting public transportation use by workers with non-traditional work schedules, promoting the use of vouchers by appropriate agencies, the purchase or lease of vehicles for shuttle service at suburban locations, costs associated with adding reverse commute service or to otherwise facilitate transportation to suburban job opportunities, and promoting the use of employer provided transportation and public transportation pass benefits. Planning and coordination activities are not eligible.
Method of Apportionment: Beginning in FY 2006, distribution based on number of eligible low income persons and welfare recipients with 60% of funds to urbanized areas with 200,000 or more population, 20% to urbanized areas with fewer than 200,000 population, and 20% to rural areas.
Matching Ratio: 50% federal, 50% non-federal.
Rural Transit Assistance Program, 49 U.S.C. 5311(b)(2): Established by the FMT Act of 1987 to provide research, technical assistance, and training grants and related support services to non-urbanized areas. Allocated separately from funds in remainder of section 5311.
New Freedom Program, 49 U.S.C. 5317: Established by SAFETEA-LU, effective FY 2006, to provide funding for transportation for persons with disabilities.
Recipients of Funds: State or local public bodies or agencies and nonprofit organizations.
Eligible Expenditures: New transportation services and public transportation alternatives beyond those required by ADA to assist persons with disabilities.
Method of Apportionment: Apportioned using a formula based on the population of disabled people in a state, with 60 percent of the national funds apportioned to urbanized areas with populations larger than 200,000, 20 percent to states for use in urbanized areas of fewer than 200,000 persons, and 20 percent to states for use in rural areas.
Matching Ratio: Operating assistance: 50% federal, 50% non-federal. Capital assistance: 80% federal, 20% non-federal.
Alternative Transportation in Parks and Public Lands, 49 U.S.C. 5320: Established by SAFETEA-LU to develop public transportation in National Parks and other federal lands, this program is effective in FY 2006. The program is intended to improve mobility and reduce congestion and pollution. The Departments of Transportation and Interior will work cooperatively to develop and select capital or planning projects.
Alternatives Analysis, 49 U.S.C. 5339: Established by SAFETEA-LU and effective in FY 2006, the Alternatives Analysis program provides funding for alternatives analysis of new fixed guideway investment projects.
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