SWTA Legislative News

Federal Transit Authorization, Funding, Grants, and Regulatory Updates

Federal lawmakers and transportation agencies continue to advance legislation, funding programs, and regulatory initiatives that could have significant impacts on public transit agencies across SWTA Nation. Recent actions in Congress, along with new grant opportunities and proposed federal rule changes, are shaping the future of public transit funding, operations, and compliance requirements.

House Transportation & Infrastructure Committee Approves Five-Year Authorization Bill

On May 22, the House Committee on Transportation and Infrastructure approved H.R. 8870, the BUILD America 250 Act (BA250) following a 14-hour markup session. The bill passed by a vote of 62-2 and authorizes approximately $580 billion over five years.

The legislation includes modest increases over the previous Infrastructure Investment and Jobs Act (IIJA) authorization levels and provides incremental growth for the Mass Transit Account. Transit formula programs, including Sections 5307, 5310, 5311, and 5340, would receive funding increases ranging from approximately 5 to 10 percent in Fiscal Year 2027, followed by annual increases of 1 to 2 percent over the remaining four years of the authorization period.

The bill also increases the Small Transit Intensive Cities (STIC) set-aside within Section 5307 to 5 percent beginning in FY 2027.

FTA's Bus and Bus Facilities Program (Section 5339) would receive funding increases above FY 2026 levels. The legislation preserves and expands the competitive grant component of the program while maintaining formula funding distributed nationally and allocated according to population:

• 50% to large urbanized areas
• 30% to medium urbanized areas
• 15% to small urbanized areas
• 5% to rural areas

While the bill repeals the dedicated Low or No Emission set-aside within the Bus and Bus Facilities Program, low- and no-emission bus projects remain eligible for funding under the broader program.

Key Policy Changes Included in the Authorization Bill

The legislation contains several policy provisions that may be of particular interest to transit agencies across SWTA Nation:

• Allows grantees to retain the full proceeds from the sale of assets with no remaining federal interest, provided those proceeds are reinvested in eligible capital projects under Sections 5307, 5308, 5310, or 5311.
• Prohibits FTA from issuing mandates regarding spare ratios within transit fleets.
• Allows agencies to address National Environmental Policy Act (NEPA) compliance after land acquisition has occurred.
• Expands projects eligible for NEPA Categorical Exclusions, including public transit bus shelters.
• Calls for streamlined FTA triennial reviews and establishes waiver opportunities for agencies with favorable compliance histories.
• Requires USDOT to begin allowing hair-based testing for controlled substances once the U.S. Department of Health and Human Services certifies testing protocols and equipment.
• Requires driver compartment barriers on all newly manufactured fixed-route buses measuring 30 feet or longer beginning two years after enactment.
• Creates a new option allowing states to bundle FTA formula funding into annual block grants while allowing designated recipients to opt out and receive direct allocations.
• Permanently allows states to waive the Federal Motor Carrier Safety Administration's Commercial Driver's License "Under the Hood" testing requirement for public transit operators.

House Appropriations Committee Advances FY27 Transportation Funding Bill

On June 3, the House Appropriations Committee approved its Fiscal Year 2027 Transportation, Housing and Urban Development (THUD) Appropriations Bill.

Because FY 2026 represents the final year of the Infrastructure Investment and Jobs Act's advance appropriations and Congress has not yet enacted a new long-term authorization bill, public transit funding would effectively remain at current contract authority levels rather than receiving the increases anticipated under IIJA.

The bill provides approximately $16.5 billion for public transit in FY 2027, representing a reduction of approximately $4.6 billion (22 percent) compared to FY 2026 enacted levels.

Key provisions include:

• Maintaining public transit contract authority funding at FY 2026 levels.
• Providing $10 million for Bus and Bus Facilities competitive grants dedicated to driver protection barriers on new and existing buses.
• Providing $86.7 million in Congressionally Directed Spending for designated public transit projects.
• Funding the BUILD (Better Utilizing Investments to Leverage Development) Grant Program at $550 million for multimodal transportation projects, including public transit.

Federal Grant Opportunities

Transit-Oriented Development Planning Program

FTA recently announced approximately $28.5 million in available funding through the Fiscal Year 2026 Pilot Program for Transit-Oriented Development Planning.

The program supports comprehensive planning efforts that improve economic development, multimodal connectivity, housing opportunities, and community access around public transit investments.

Applications are due July 10.

Innovative Finance Asset Concession Program

The Build America Bureau recently announced awards to 45 recipients across 27 states through the Innovative Finance and Asset Concession (IFAC) Program.

IFAC grants help agencies explore public-private partnership opportunities where private-sector partners assume larger roles in project planning, financing, construction, maintenance, and operations.

The program supports projects across multiple transportation modes, including public transit, rail, highways, bridges, ports, and airports.

Regulatory News

Proposed Changes to Federal Grant Administration Rules

On May 29, the Office of Management and Budget published a Notice of Proposed Rulemaking that would substantially revise 2 CFR Part 200, commonly referred to as Uniform Guidance.

Uniform Guidance establishes the federal framework governing how grants are awarded, administered, monitored, and audited across all federal agencies.

One of the most significant proposed changes would create a discretionary "termination for changed priorities" authority allowing federal agencies to terminate discretionary grants if they no longer align with agency priorities or the national interest at the time of review.

While entitlement, block, and statutory formula grants would be exempt from this provision, discretionary and competitive grant programs beginning in FY 2027 could face increased scrutiny.

Programs potentially affected include:

• Bus and Bus Facilities Competitive Grants
• Capital Investment Grants (CIG)
• RAISE Grants
• Other discretionary transportation funding programs
  
  

The proposal also appears to formalize actions that have already been observed under the current Administration, including the review, pause, and in some cases termination of certain grants and programs authorized under the Infrastructure Investment and Jobs Act (IIJA) that were determined to be inconsistent with Administration priorities or Executive Orders. The proposed rule would provide a clearer regulatory framework for those actions moving forward.

Importantly, the proposal would grandfather awards issued before the regulation's effective date.

Comments are due July 13. The proposed effective date is October 1.

USDOT Revises Title VI Regulations

On June 11, USDOT issued a final rule removing disparate-impact review requirements from its Title VI regulations.

Historically, FTA's Title VI program required transit agencies to conduct service and fare equity analyses evaluating potential disparate impacts and disproportionate burdens on protected populations.

The final rule removes the "effects" component of those reviews.

Additional guidance from FTA is expected as agencies work to understand how the changes will impact future compliance requirements.

FTA Requests Input on Measuring Public Transit Quality

FTA has issued a Request for Information (RFI) seeking stakeholder feedback on measuring public transportation quality through the lens of "family-friendly service."

The initiative focuses primarily on transit agencies serving urbanized areas of 200,000 or more residents and seeks to establish service-quality performance measures that make public transit welcoming and accessible to a broad range of users—not solely commuters or adults traveling alone.

FTA is requesting feedback in five key areas:

• Safety and security
• Cleanliness
• Universal accessibility, including for individuals outside ADA-related definitions
• Real-time service data availability
• System reliability

The agency is also evaluating whether existing National Transit Database (NTD) measures, including injury rates, fatality rates, and mean distance between mechanical failures, should be incorporated into future service-quality metrics.

FTA's Request for Information includes 13 questions examining how agencies currently measure performance, assess customer satisfaction, define success, and use data to improve service delivery. Agencies and stakeholders may respond to any or all of the questions included in the Request for Information.

Comments are due August 3.

Looking Ahead

As Congress continues work on surface transportation reauthorization and federal agencies move forward with regulatory changes and new funding opportunities, these developments will play an important role in shaping public transit policy, investment, and operations nationwide.

SWTA will continue monitoring these issues, advocating on behalf of our members, and providing timely legislative updates that impact rural, urban, and Tribal transit systems throughout SWTA Nation.