October 2026 | Updates from Washington, D.C.

Federal transportation policy continues to evolve, with significant developments affecting transit funding, capital projects, regulatory requirements, and the future of public transportation.

In the latest legislative update prepared for the South West Transit Association (SWTA), Katie Kachel, Principal at Blank Rome Government Relations LLC, outlines several important developments from Washington, D.C., including proposed changes to the Federal Transit Administration's (FTA) Capital Investment Grants program, congressional funding negotiations, new Disadvantaged Business Enterprise (DBE) requirements, and upcoming federal grant opportunities.

The report covers developments from August 14 through October 2, 2026, and identifies several issues SWTA members should be watching closely.

FTA Proposes Major Overhaul of Capital Investment Grants Program

One of the most significant developments is FTA's October 1 publication of proposed new Capital Investment Grants (CIG) Policy Guidance, Docket FTA-2026-0331.

The proposal represents what analysts describe as the most substantial change to the CIG program in more than two decades.

Under the proposed guidance, changes to the federal funding-share methodology could create additional uncertainty for agencies developing major capital projects.

Of particular concern, the guidance would take effect immediately upon final publication, without grandfathering projects already in the pipeline.

For agencies managing long-term capital improvement plans, these changes could complicate financial planning and potentially affect project eligibility and advancement.

Public comments are due November 16, 2026.

SWTA encourages members with current or planned CIG projects to review the proposal and consider how the changes could affect their capital programs.

Federal Funding and Surface Transportation Authorization Extended Through December 11

Congress approved a continuing resolution (CR) on September 1, avoiding an October 1 federal government shutdown and extending surface transportation authorities through December 11, 2026.

The extension maintains prorated contract authority but does not continue the advance appropriations provided under the Infrastructure Investment and Jobs Act (IIJA).

The legislation also temporarily prevents the Office of Management and Budget (OMB) from implementing its new federal grants-management rules while the continuing resolution remains in effect.

Congress is expected to return in November to continue negotiations over FY 2027 appropriations and surface transportation authorization.

Another continuing resolution and temporary surface transportation extension remain possible outcomes.

For transit agencies, these discussions underscore the importance of predictable federal investment and continued engagement with policymakers.

USDOT Finalizes New DBE Rule

The U.S. Department of Transportation published its final Disadvantaged Business Enterprise (DBE) rule on September 25, replacing the October 2025 interim final rule.

Under the final rule, race- and sex-based presumptions of disadvantage remain eliminated. Business owners must establish disadvantage through individualized narratives.

DBE goal-setting and participation counting remain suspended until state Unified Certification Programs complete required reevaluations.

States generally have 90 days to complete those reviews, with one additional 90-day extension available.

Transit agencies and other federal funding recipients should begin preparing for the potential return of DBE goals, including updates to overall goals and program plans.

The report anticipates that DBE goals could resume during the first quarter of 2027.

Additional Federal Policy Developments

Environmental Review Changes

USDOT has finalized revisions to joint environmental review regulations administered by FHWA, FRA, and FTA.

The changes revise how environmental impacts are evaluated and expand certain categorical exclusion thresholds, potentially affecting the federal review process for transportation projects.

Safe Transit Act

The administration has expressed support for proposed legislation that would establish additional transit safety requirements and potentially link federal transit funding to local public safety policies.

The proposal includes provisions addressing fare enforcement, transit-related crime, safety expenditures, and equipment requirements.

While immediate passage appears uncertain, elements of the legislation could become part of future surface transportation reauthorization discussions.

Federal Transit Grant Awards

FTA is expected to announce awards under several competitive programs, including:

• Bus and Bus Facilities / Low-No Emission Program: $610 million available.
• Innovative Coordinated Access and Mobility Pilot Program: $12 million available.
• Transit-Oriented Development Planning Program: $28.5 million available.

Applications for these programs have already closed, with award announcements pending as of the October 8 report.

Rail and Infrastructure Developments

The Federal Railroad Administration has announced approximately $5.32 billion in National Railroad Partnership Program awards supporting 41 projects across 23 states.

The funding includes investments in new Amtrak trainsets, locomotive improvements, grade crossing projects, and rail infrastructure.

Additional developments include discussions surrounding a potential Amtrak restructuring and continued federal review of the proposed Union Pacific–Norfolk Southern merger.

The Surface Transportation Board has established a November 18, 2026, public comment deadline for the merger review, providing an opportunity for affected passenger rail operators and other stakeholders to raise concerns.

The Build America Bureau has also launched its America's Great Corridors of Commerce initiative, exploring public-private partnerships that could support utility infrastructure development along highway and rail corridors.

Important Dates for SWTA Members

• November 9: Congress returns for its lame-duck session.
• November 16: Comments due on proposed FTA CIG Policy Guidance.
• November 18: Comments due on the Union Pacific–Norfolk Southern merger.
• December 11: Federal continuing resolution and surface transportation extension expire.
• Approximately December 24: State Unified Certification Programs reach the initial DBE reevaluation deadline, subject to extensions.

SWTA Continues Monitoring Federal Developments

As federal transportation funding and policy discussions continue, SWTA remains committed to keeping members informed about developments that could affect transit operations, capital investments, workforce needs, and long-term planning.

Members are encouraged to review the issues outlined in this update, evaluate potential impacts on their organizations, and remain engaged in opportunities to provide input.

This legislative update was prepared by Katie Kachel, Principal, Blank Rome Government Relations LLC, for the South West Transit Association.

For additional information about Blank Rome Government Relations, visit https://www.blankromegr.com/.

SWTA will continue sharing legislative and regulatory developments affecting public transportation throughout SWTA Nation.