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Grant Compliance Requirements

Contents of this Section

Introduction

The Section 5311 program (Formula Grants for Rural Areas) provides federal funding to states to support public transportation in rural areas with populations of less than 50,000.  Funds from the Federal Transit Administration (FTA) are awarded to states, as well as American Indian tribes.  States in turn award funds for local projects to “subrecipients,” which can include local governments, tribes, transit authorities, and private nonprofit organizations that provide rural public transportation. 

Subrecipients of federal funding must agree to certain terms, conditions and grant requirements that are tied to FTA grants such as Section 5311 funding.  This section begins by explaining the role of the FTA and the state in Section 5311 program administration, and it summarizes each requirement with which subrecipients are expected to be in compliance.  

Section 5311 is the focus of this section of the toolkit because Section 5311 is the federal grant program that specifically supports rural public transportation (as well as National RTAP).  In addition to Section 5311, rural transit systems may receive other FTA grant funding that is administered through the state, such as Section 5310 (Enhanced Mobility of Seniors and Individuals with Disabilities Program) or Section 5339 (Bus and Bus Facilities Program). Rural transit systems that operate services into an urbanized area (population 50,000 or more) may also receive Section 5307 (Urbanized Area Formula Program).  Each of these programs is subject to a common set of federal grant management requirements, as well as requirements that are unique to the Section 5311, 5310, and 5307 programs. 

This section of the toolkit begins with a summary of the role of the FTA in funding rural transit, followed by a discussion of the role of the state in administering the Section 5311 program.  The FTA grant compliance requirements common to most FTA grants are then presented, with an emphasis on how these apply to Section 5311 program.  Next, requirements that are unique to Section 5311 subrecipients are introduced, along with requirements specific to the Section 5310 program that may support some rural transit systems.  The section concludes with a summary of what a rural transit system can expect as part of a Section 5311 compliance review conducted by their state DOT.  (Note that the additional requirements specific to Section 5307 are not covered in this toolkit.) 

Sources of information in this section include the following FTA documents:

  • Circulars C 5010.1E, 9040.1G, and 9070.1G (see the FTA Circulars section of this toolkit)
  • FY18 Comprehensive Review Guide, which the FTA uses to ensure direct recipients (such as states) manage their FTA grants in compliance with federal requirements (including ensuring that local subrecipients comply with these requirements)
  • FY2018 Master Agreement for FTA Grants - The Master Agreement is the official FTA document containing FTA and other cross-cutting federal requirements applicable to the FTA recipient (i.e., the state for Section 5311) and its grant agreement. The Master Agreement for each federal fiscal year is effective the first day of the fiscal year (October) and is incorporated by reference as part of the grant agreement. The FTA recipient is responsible for ensuring that its subrecipients comply with requirements in the Master Agreement.   
  • FY2018 Certifications and Assurances - Certifications and assurances are a consolidated group of federal requirements the applicant must agree to comply with before the FTA may fund its project.  Subrecipients must submit signed certifications and assurances with each FTA grant application to the state. Each state submits its own certifications and assurances for each grant with FTA, essentially providing the subrecipients’ documents to the FTA on their behalf. In doing so, both the subrecipient and the state are agreeing to comply with FTA’s terms.  The required certifications and assurances are published each fiscal year in the Federal Register and are updated in the Transit Award Management System (TrAMS) system (which the state uses to apply for and report on FTA grants), and the Federal Register notice details which certifications and assurances apply to all grantees and which are specific to the type of award or grant section.  Most of the requirements for a Section 5311 subrecipient have been summarized above.  Please check each year’s list of certifications and assurances for any changes that might be made, available here: FTA Certifications & Assurances web page.

NOTE: The requirements introduced on this page are based on the most recent authorizing legislation (FAST Act), and may change with the next federal reauthorization.  We strongly advise referring to each grant agreement with the state for the requirements that apply to that grant, and consulting with the state program manager for the most current requirements within the state.  Contact info@nationalrtap.org for any questions.

FTA Role in Section 5311 Program Administration

At its highest level, the Section 5311 program is administered by the U.S. Department of Transportation’s (U.S. DOT) Federal Transit Administration (FTA). The role of FTA headquarters is broad, and it deals with program-level concerns about the administration of the program as explained in the 9040.1G Circular.  For example, FTA:

  1. provides overall policy and program guidance for the Section 5311 program;
  2. apportions funds annually to the states;
  3. develops and implements financial management procedures;
  4. initiates and manages program support activities; and
  5. conducts national program reviews and evaluations.

The role of FTA regional offices is closer to the ground as they take care of the day-to-day concerns of the administration of the program.  According to Circular 9040.1G, FTA regional offices are responsible for the following:

  1. reviewing and approving state grant applications;
  2. obligating funds; managing grants; overseeing the state’s implementation of the annual program including revisions to the program of projects;
  3. receiving state certifications;
  4. reviewing and approving State Management Plans (SMPs);
  5. providing technical assistance, advice and guidance to the states as needed; and 
  6. performing state management reviews every three years, or as circumstances warrant.

Contact information is available on FTA regional offices on the FTA website.  

To read more, see page II-4 of Circular 9040.1G

As a Section 5311 subrecipient, unless a transit agency is also a Section 5307 (urban) grantee or Tribal Transit Program direct recipient, the transit manager will most likely interact with the state-administered Section 5311 program rather than the FTA regional office.

State Role in Section 5311 Program Administration

Section 5311 grants are awarded by states, as sub-grants of the state’s grant from the FTA.  The FTA gives the states a great deal of freedom to design and manage 5311 programs (and other FTA programs) that address their specific public transportation needs.   Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR part 1201 allows states to use their own, rather than federal, laws and procedures for financial management systems, equipment and procurement.  (See “Basic Grant Management Requirements under MAP-21 and the FAST Act” below for additional information.)  State laws and procedures can be passed down to subrecipients that are public agencies and to private providers of public transportation services that enter into third party contracts with a state or subrecipient.  Subrecipients should be aware that a state policy, law or procedure may sometimes supersede a published federal policy, law or procedure.  In order to find this information, consult the contract or grant agreement with the state agency that administers the 5311 program.  The contract/grant agreement will give detailed instructions on the regulations with which the transit agency will be expected to be in compliance.  Federal regulations will be introduced later in this section.  

Each state’s governor has designated a state agency (typically the state’s department of transportation) to administer the 5311 program and that state agency is responsible for the following tasks found in Circular 9040.1G:

  1. document the state’s procedures in a State Management Plan (SMP);  
  2. notify eligible local entities of the availability of the program;  
  3. plan for future transportation needs, and ensure integration and coordination among diverse transportation modes and providers;  
  4. solicit applications;
  5. develop project selection criteria;
  6. review and select projects for approval;  
  7. forward an annual program of projects and grant application to FTA;  
  8. certify eligibility of applicants and project activities;  
  9. ensure compliance with federal requirements by all subrecipients;  
  10. monitor local project activity;  
  11. oversee project audit and closeout; and  
  12. file a National Transit Database (NTD) report each year for each subrecipient.        

To read more about the state’s role in 5311 program administration, see page II-3 of Circular 9040.1G.   

State Management Plan

A State Management Plan (SMP) is a good source of information on how a state administers its Section 5311 program.  The SMP is a document that describes the state’s policies and procedures in administering the Section 5311 program, including the state’s objectives, policies, procedures, and administrative requirements.  All states are required to have an approved SMP for the Section 5311 program on file with FTA, and to provide an opportunity for review by stakeholders (such as subrecipients) when it develops a new SMP or significantly revises an existing SMP. The Section 5310 and 5339 programs also require SMPs. Some states choose to combine two or more of these FTA programs into a single SMP.

Other state-specific sources of information, which vary from state to state, can include the Section 5311 grant application package, local grants management handbooks or manuals, sample policies and templates, and the checklist used by the state to ensure compliance by subrecipients.

Basic Grant Requirements under MAP-21 and the FAST Act

Background

Part of the U.S. Department of Transportation (U.S. DOT) regulations, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” 2 CFR Part 1201 adopts the basic federal grant management requirements for state and local governments under the Office of Management and Budget’s (OMB) 2 CFR Part 200.  Commonly referred to as the “Super Circular,” 2 CFR Part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” took effect December 26, 2014.  2 CFR Part 1201 superseded and repealed the U.S. DOT “Common Grant” rules under the former: 

  • 49 CFR Part 18, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments” and
  • 49 CFR Part 19, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.”  

States and subrecipients of FTA grants are subject to the provisions of 2 CFR Part 1201 and Part 200, which are summarized in this portion of the toolkit. 

A state enters into a written agreement with a subrecipient, stating the terms and conditions of assistance for the project, and this agreement also states which federal and/or state requirements for which the subrecipient must be in compliance.  The state is responsible for assuring the federal government that all of its subrecipients are in compliance with the federal requirements that are explained below. In this section of toolkit, the federal requirements are introduced and generally grouped by FTA compliance areas in the FY 18 Comprehensive Review Guide. (These are the areas for which FTA conducts oversight of states and which states are required to ensure subrecipient compliance.)

Please note that this section is merely an introduction to each requirement.  Some of these requirements are expanded upon in other sections of this toolkit, in which case a reference is made to the appropriate section. For more information, or to view the source of all information and quotes in the text, refer to page numbers in the circulars cited under each requirement. It is important to note that as of the latest revision of this toolkit section in 2019, many FTA circulars have not yet been updated since the passage of the FAST Act in December 2015. In some cases they have not been updated since the Super Circular superseded and repealed the Common Grant rules (December 26, 2014), and circulars may contain outdated language. 

As a general rule, best source of guidance on the requirements that apply to a specific FTA grant(s) is the state program that awarded the grant.

Legal Matters

Debarment and Suspension

As stated on page V-8 of Circular 9040.1G, federal grant funds cannot be provided to anyone who has been “debarred, suspended, determined ineligible or voluntarily excluded from participation in federally-assisted transactions.”  Before awarding a contract or grant subagreement of $25,000 or more, the subrecipient must ensure that they are not entering into an agreement with someone who has been excluded or disqualified. (See also Procurement – Day 1, “Awarding to a Qualified and Responsible Contractor.”) More information can be found on page V-8 of Circular 9040.1G, 2 CFR Part 180, Subpart C, and 2 CFR Part 1200.

Lobbying Restrictions

Recipients and subrecipients are prohibited from using federal funds to lobby for federal funds. As stated on page XI-12 of Circular 9040.1G, “federal financial assistance may not be used to influence any Member of Congress or an officer or employee of any agency in connection with the making of any Federal contract, grant or cooperative agreement.”  Included in the prohibition is indirect lobbying, “such as by contributing to a lobbying organization or funding a grass-roots campaign to influence legislation.”  General advocacy for transit is not prohibited, such as “providing information to legislators about the services a recipient provides in the community.”  Nonfederal (local) funds may be used to lobby for transit purposes if this information is reported quarterly through OMB Standard Form LLL. 

If the subrecipient or any of its contractors receive more than $100,000 of FTA funding, a certification must be signed saying the subrecipient (and applicable contractors) will not participate in federally-funded lobbying activities, and disclose the use of non-federal funds for the activities listed above. For more information about lobbying restrictions, see FTA Circular 9040.1G page XI-12, FTA FY2018 Comprehensive Review Guide page 1-3 question L-3, 49 CFR Part 20.

Financial Management and Capacity

Financial Management

As stated in Circular 5010.1E, pages VI-4 to VI-5, the financial management systems of each recipient or subrecipient (other than a state, which must follow its own laws) must meet standards for financial reporting, accounting records, internal control, budget control, allowable cost, source documentation, and cash management. Financial reporting must provide for “accurate, current, and complete disclosure of the financial results of federally assisted activities... made in accordance with financial reporting requirements.” Accounting records must “adequately identify the source and application of funds provided for federally assisted activities” and “contain information pertaining to the Award or subawards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income.”  Effective control and accountability must be maintained; recipients and subrecipients must adequately safeguard the grant funds, property, and other assets and ensure they are used only for the authorized purposes.  Actual expenditures must be compared with the grant award budget and financial information must be related to performance or productivity data. Costs allowable under the grant are subject to applicable OMB principles, as detailed in the Super Circular, specifically 2 CFR Section 200.403 - Factors Affecting Allowability of Costs.  First and foremost, the cost must "be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles" (Section 200.403 (a)). 

As stated in Circular 5010.1E, “accounting records must be supported by such source documentation as cancelled checks, paid bills, payrolls, time and attendance records, contracts, and subrecipient documents.”  Subrecipient financial reports are necessary for states to meet their financial reporting and grant cash draw-down requirements—necessary to reimburse their subrecipients. As required in 2 CFR Section 200.333, “financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report.” As a subrecipient, upon close-out of your subgrant with the state, you should check with your state as to when this three-year period begins, since your sub-grant is likely one of several sub-grants within the state’s grant, and may be closed out long before the state submits its final expenditure report on the grant to the FTA.

More information on financial management requirements for recipients and subrecipients of federal grants can be found in FTA Circular 5010.1E pages VI-4 to VI-5 and 2 CFR Part 200 Subpart D as well as Section 200.331. More information can also be found in the Budgeting and Finance 101 section this toolkit.

Indirect Costs

To charge indirect costs to a federal grant award, a subrecipient must meet requirements for indirect costs rate as detailed in 2 CFR Section 200.414.  The subrecipient must either have a cost allocation plan (CAP) or indirect cost rate proposal (ICRP) that has been approved by the cognizant agency (which is the federal agency that provides the highest portion of federal grants, which may or may not be the FTA. If the subrecipient has never had an approved indirect cost rate, a de minimis rate of 10 percent may be charged. Cost allocation concepts are introduced under Budgeting and Finance 101 in this toolkit. For more information on the indirect cost rate requirement, see FTA Circular 501.1E pages VI-9 to VI-11 and 2 CFR Section 200.414.

Audit

Subrecipients that spend $750,000 or more in a year in federal assistance from all sources must have a federally-compliant audit conducted in accordance with 2 CFR Part 200 Subpart F, submit documentation required (by the state for their subrecipients) including reporting any audit findings related to the FTA subgrant, and resolve identified issues.  For more information, see 2 CFR Part 200 Subpart F (as well as Section 200.331), and pages VI-14 to VI-15 of Circular 5010.1E.

Technical Capacity

Reporting Requirements

Each State DOT determines the reporting requirements for its subrecipients.  At a minimum, the state will need to collect subrecipient information needed for the reports that the state is required to submit to the FTA:

  • Annual Program of Projects Status Report—The state must submit to FTA a program status report for each active grant, and this may include notes about Section 5311 subrecipients.
  • Milestone Activity Reports—The state must enter any revised milestone dates in the annual report.  These are based off of activity line items (ALIs) for which milestones were required at the time of grant application (for example, for vehicle procurements, construction projects, and program reserve).
  • Financial Status Report—The state must electronically submit an annual financial status report for each active grant, and a grant is considered “active” when subrecipients sign their agreements with the state.  
  • National Transit Database (NTD) Reports—All recipients, subrecipients and beneficiaries of FTA’s Section 5311 program grants are required to submit data to the NTD.  For subrecipients that benefit from the Section 5311 grant program, states will report on their behalf, and the state determines how subrecipients will submit the required data. The NTD section of the FTA website provides details on what information is collected. Each year, the NTD publishes a series of reporting manuals https://www.transit.dot.gov/ntd/manuals LINK.  Section 5311 subrecipients are considered “reduced reporters,” and for FY2018 data, states used the 2018 NTD Reduced Reporting Policy Manual for their Section 5311 subrecipients. Section 5310 subrecipients are only required to complete the transit asset management reporting requirements (see Transit Asset Management section of the toolkit). For more information on NTD reporting requirements, see page III-11 to III-12 of Circular 5010.1E, 49 CFR Part 630, and the NTD section of the FTA web site
  • Disadvantaged Business Enterprise (DBE) Reports—States are required to report progress on their DBE goals (see the Civil Rights section of this toolkit), and include FTA-funded subrecipient procurements within their state-level DBE reports.   
Closeout

FTA requires that grantees (states) close out projects on a timely basis, generally 90 days after the end of the “period of performance” of the grant.  To do this, states must close out sub-grants with subrecipients on a timely basis.  As stated in Circular 9040.1G (page V-13), “FTA expects grants awarded for a specific program of projects to be completed within a reasonable, specified time frame, generally two to three years. If small amounts of funds remain in an inactive grant, the state should request that the funds be deobligated and the project closed out.”  Subrecipients need to be aware that they have a finite amount of time to spend their grant awards, after which, the funds may be deobligated.  According to the FTA FY2018 Comprehensive Review Guide (page 3-13), for the Section 5311 program, the period of performance is limited to the year of federal apportionment plus two years (three years total).

For information on closeout requirements for FTA recipients, see pages III-19 to III-20 of Circular 5010.1E and 2 CFR Section 200.343.

Satisfactory Continuing Control

Recipients and subrecipients must ensure that FTA-funded property (including equipment and real property) will remain available to be used for its originally authorized purpose throughout the property’s useful life or until disposition.  When acquiring, building, or improving capital equipment or facilities with FTA funds, you must have a system that can “assure the satisfactory continuing control of that capital and facilities.”  Subrecipients of the funds must maintain this responsibility unless control and responsibility was transferred to another subrecipient (as authorized by a designated state agency), even if vehicles or equipment are operated by a contractor. This includes:

  • maintaining inventory records on the status of property
  • conducting a physical inventory of property and equipment with the results reconciled at least once every two years
  • submitting required reports
  • using property solely for its originally authorized purpose (potentially allowing real property  to be used in part under an FTA-approved incidental use arrangement)
  • maintaining bus fleets in accordance with FTA requirements for spare ratios and contingency fleets
  • disposing of FTA-funded property in accordance with 2 CFR 200 and FTA requirements,
  • only using FTA capital assistance to lease of any transit facilities or equipment if a cost-effectiveness determination was conducted with certification provided to FTA

For more information about the requirements for satisfactory continuing control, see Circular 9040.1G pages V-1 to V-3, Circular 5010.1E pages IV-13 to IV-33, FTA FY18 Comprehensive Review Guide pages 6-1 to 6-35, and 2 CFR Part 200, Subpart D Property Standards.

Property and Equipment Management

Disposition

FTA-funded property must usually achieve minimum useful life standards before disposal. Circular 9040.1G (page V-1) states that “states may use, manage, and dispose of equipment acquired under a Section 5311 grant according to state law and procedures.”  Subrecipients must consult the grant agreement or contract to find out whether they will be following state or federal procedures.  The following are the federal regulations regarding equipment management.  Under federal regulations, states can transfer Section 5311-funded facilities and equipment to another entity that provides public transportation as long as that new entity complies with state and federal 5311 requirements in their use of the facilities and equipment.   For all vehicles purchased with 5311 funds, the states establish and implement their own requirements.  This includes the following list from Circular 9040.1G:

  1. establish their own minimum useful life standards for vehicles;
  2. use their own procedures for determining fair market value; and  
  3. develop their own policies and procedures for maintenance and replacement of vehicles.  

Subrecipients must follow any established state laws and procedures for disposing of equipment and real property. As stated in Circular 5010.1E, page IV-21, “FTA retains a federal interest in any federally assisted property financed with FTA assistance until, and to the extent that, FTA relinquishes its federal interest in that federally assisted property. This applies to real property, equipment and supplies.” If a transit agency disposes of any FTA-funded property before it achieves minimum useful life, the agency may be required to return to FTA the federal share of the proceeds from the disposition of equipment.

Maintenance and Warranty

As stated in Circular 5010.1E, page IV-34, “recipients must maintain federally assisted property in good operating order” and “must have a written vehicle maintenance plan and a facility/equipment maintenance plan. These plans should describe a system of periodic inspections and preventive maintenance to be performed at certain defined intervals.”  Recipients must also maintain maintenance records and pursue warranty claims.

Vehicle Spare Ratio

As stated in Circular 5010.1E, page IV-28, “the number of spare buses in the active fleet for recipients operating 50 or more fixed-route revenue vehicles should not exceed 20 percent of the number of vehicles operated in maximum fixed-route service. FTA does not set a specific spare ratio for smaller operators, but expects the number of spare buses to be reasonable, taking into account the number of vehicles and variety of vehicle types and sizes.” The spare ratio is the total number of spare vehicles available for fixed-route service divided by the total number of fixed-route vehicles required for peak service, typically expressed as a percentage. 

Transit Asset Management

FTA grantees are required to collect and use asset inventory and condition data, set “state of good repair” performance targets, develop strategies to prioritize investments, and prepare a plan to meet those targets. “State of good repair” is defined in the implementing regulations (49 CFR Part 625) as “the condition in which a capital asset is able to operate at a full level of performance.” “Capital assets” include vehicles, other equipment, and facilities.  Annual reports must be submitted on the status of each category of capital asset into the NTD. The state DOT develops a group plan in which its Section 5311 and 5310 subrecipients can participate, and submits annual reports on their behalf.  See the Transit Asset Management section of the toolkit for more information.

Procurement

Subrecipients’ procurement policies and procedures must comply with FTA requirements, which are described in the Procurement sections of this toolkit. A state may require that subrecipients also comply with state procurement requirements.  To the extent permitted by federal statutes and regulations, the state can use the same policies and procedures for procurements funded by both federal and non-federal sources.  It may also set a threshold for micro-purchases and/or small purchases that is lower than the federal threshold for itself and subrecipients. 

Buy America

Under this requirement, explained on pages V-6 to V-7 of Circular 9040.1G, all steel, iron and manufactured products used in federally-funded public transportation projects must be produced in the United States.  This applies to all Section 5311 recipients and subrecipients.  Buy America requirements apply to any purchase that exceeds $150,000. See the Procurement 101 of this toolkit for more information.

Capital Leases

If a grantee finds that it is more cost effective to lease capital assets rather than purchase or construct them, capital funds may be used for this purpose.  The subrecipient should consult with their state about this topic as the state may have a policy in its State Management Plan about leasing versus buying capital assets.  For more information on this FTA requirements related to capital leases, see pages IV-30 to IV-33 of Circular 5010.1E.

Bus Testing

Buses and vans acquired with FTA funds must be tested for weight rating, durability, performance, compliance with manufacturer’s specifications, reliability, safety, and structural integrity in accordance with the requirements in 49 CFR part 665, and grantees must obtain a copy of the resulting test report before FTA funds can be released.  This testing is sometimes referred to as “Altoona testing,” because the testing site has historically been located in Altoona, Pennsylvania.

FTA’s website currently addresses bus testing requirements through a page of frequently asked questions.  For more information, until the Section 5311 circular has been updated to reflect current requirements, consult the regulatory language in 49 CFR part 665.

Pre-award and Post-delivery Reviews

As indicated on pages V-5 to V-6 of Circular 9040.1G, FTA requires grantees that are purchasing more than 20 passenger buses or modified vans for serving rural areas and small urbanized areas to conduct reviews of vendor compliance with Buy America requirements, the grantee’s bid specifications, and Federal Motor Vehicle Safety Standards (FMVSS). These reviews include pre-award and post-delivery audits.  If 20 or fewer vehicles are procured to serve a rural area (or urbanized area with a population less than 200,000), the procurement is exempt from both pre-award and post-delivery reviews. There is also no review requirement when procuring unmodified vans, regardless of the quantity that is purchased.  More information about this requirement is found on the FTA Buy America Pre-Award and Post-Delivery Review Requirements web page. Guidance on conducting pre-award and post-delivery audits is provided in FTA’s Conducting Pre-Award and Post-Delivery Audits for Rolling Stock Procurements.  

Civil Rights Requirements
 

As stated on pages 36-37 of the FY 2018 Master Agreement, “The Recipient agrees that it must comply with applicable federal civil rights laws, regulations, and requirements, and follow applicable federal guidance, except as the Federal Government determines otherwise in writing. Therefore, unless a Recipient or a federal program, including the Indian Tribe Recipient or the Tribal Transit Program, is specifically exempted from a civil rights statute, FTA requires compliance with each civil rights statute, including compliance with equity in service requirements.”  By signing the Master Agreement, the grantee agrees that it will “prohibit discrimination based on race, color, religion, national origin, sex (including gender identity), disability, or age.” The civil rights requirements for FTA grantees are introduced in two sections of this toolkit: Civil Rights and Americans with Disabilities Act, as indicated in each of the following categories of requirements.

Title VI

Title VI of the Civil Rights Act of 1964 states that “no person in the United States shall, on the ground of race, color or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance” (see 42 USC Section 2000d).  All organizations receiving FTA funding are subject to Title VI and DOT’s implementing regulations (49 CFR Part 21) There are specific Title VI requirements related to overall policy, handling of complaints, service delivery, planning, public outreach, providing information for people with limited English proficiency, and location selection for facilities. For more information, see the Civil Rights section of this toolkit as well as FTA Circular 4702.1B.

Environmental Justice

As stated in FTA Circular 4703.1, Environmental Justice Policy Guidance for Federal Transit Administration Recipients, Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, requires federal agencies to “address disproportionately high and adverse human health or environmental effects of ... programs, policies and activities on minority populations and/or low income populations.”  The circular notes the following three guiding principles of environmental justice for FTA:

  • To avoid, minimize, and mitigate disproportionately high and adverse effects
  • To ensure the full and fair participation by all potentially affected communities
  • To prevent the denial of, reduction in, or significant delay in the receipt of benefits by minority and low-income populations

The circular provides recommendations for how to fully engage environmental justice populations in the transportation decision-making process (as part of public involvement efforts, involving a demographic analysis), determine adverse effects of a public transportation project, policy, or activity on environmental justice populations, and how to avoid, minimize, or mitigate these effects.  FTA recommends in the circular that environmental justice principles be included as part of statewide, metropolitan, and local long- and short-range planning process, as well as local planning activities and service delivery of local transit providers. 

U.S. DOT requires consideration of environmental justice issues during preparation of an Environmental Impact Statement (EIS).  An EIS is developed as part of a project subject to National Environmental Policy Act of 1969 (NEPA) review process.  For rural transit agencies, the NEPA review process is most likely to be required when planning for a project involving new construction, major rehabilitation or renovation of a facility, because other types of FTA-funded rural transit projects are generally considered “categorical exclusions” under the NEPA requirements.  

A State DOT may also require that principles of environmental justice be considered by their subrecipients when planning transit service changes or new services, potentially in conjunction with the Title VI analysis that is required for some transit agencies. Transit managers should refer to the transit planning requirements of their State DOT before planning major service changes or new services. For more information, see the Civil Rights section of this toolkit as well as FTA Circular 4703.1.

Equal Employment Opportunity (EEO)

Equal Employment Opportunity (EEO) refers to statutes and regulations that prohibit employment discrimination and provide employees and job applicants with protections and remedies against employment discrimination. FTA grantees are prohibited from discriminating against a person because of race, color, religion, national origin, sex, disability, or age (49 U.S.C. Section 5332(b)). To ensure non-discrimination in employment, FTA requires that grant applicants, recipients, subrecipients, and contractors that employ 50 or more transit-related employees and 1) request or receive capital or operating assistance in excess of $1 million in the previous Federal fiscal year, or 2) request or receive planning assistance in excess of $250,000 in the previous federal fiscal year to prepare and maintain an EEO Program.  Those organizations that do not meet these thresholds must still have an EEO complaint process and post EEO notices visible to employees, applicants for employment and union members. For more information, see the Civil Rights section of this toolkit as well as FTA Circular 4704.1A.

Disadvantaged Business Enterprise (DBE)

The U.S. DOT DBE requirements are intended to create a level playing field for DBEs in competing for federally-funded contracts. A DBE is a for-profit small business owned and controlled by a socially and economically disadvantaged individual.  FTA grantees that receive FTA planning, capital or operating assistance and award prime contracts exceeding $250,000 in FTA funds in a federal fiscal year (excluding vehicle purchases) must develop a DBE program. Subrecipients participate in the State DOT’s DBE program and report to the state on DBE contracting activity. Also, FTA-funded vehicle procurements must require transit vehicle manufacturer bidders to certify that they have complied with FTA DBE program requirements. For more information, see the Civil Rights section of this toolkit as well as 49 CFR Part 26.

Americans with Disabilities Act (ADA)

The Americans with Disabilities Act of 1990 (ADA) is a civil rights law that protects the rights of individuals with disabilities to equal opportunity and access to employment, public services, and public accommodations and services operated by private entities.  The ADA regulations that focus on FTA grantees and transportation providers are found in 49 CFR Parts 27, 37, 38, and 39.  For more information, see the ADA section of this toolkit, the standalone ADA Toolkit, and FTA Circular 4710.1.

Private Sector Protections

Charter Service

The FTA Charter Service Rule, 49 CFR Part 604, protects private charter operators from unauthorized competition from FTA recipients.  The rule defines “charter services,” specifies exceptions when charter services may be provided, established a registry and notification system for private charter operators, and established a process for private charter operators to file complaints against the rule. For more information about charter service restrictions, see the FTA Charter Bus Service webpage. Note that the 9040.1G circular does not include complete information about the Charter Service Rule.  Refer directly to the 49 CFR Part 604 regulations or the FTA Charter Bus Service webpage for more information.  

School Transportation

As detailed in 49 CFR Part 605, FTA grantees are prohibited from using FTA funds (or FTA-funded vehicles) to provide service that is exclusively for school students and school personnel.  A transit agency can, however, modify regular service to accommodate school students as well as the general public.  As stated on page XI-13 of Circular 9040.1G, for this regulation, Head Start is considered a social service, not a school program.

Employee Protections

Requirements related to employee protections are listed on pages 57 to 59 of the FY 2018 Master Agreement.  These include requirements under the:

Under 49 U.S.C. Section 5333(b) of the Federal Transit Laws, when FTA funds are used to “acquire, improve, or operate” a public transportation system, the funds come with an obligation to preserve “the rights and benefits of employees under existing collective bargaining agreements, the continuation of collective bargaining rights, the protection of individual employees against a worsening of their positions in relation to their employment, assurances of employment to employees of acquired transit systems, priority of reemployment, and paid training or retraining programs.”  The Section 5311 program involves a Section 5333(b) Special Warranty established at the federal level that protects existing transit employees in the service area of the rural transit system.  The FTA does not generally apply the conditions of 49 U.S.C. Section 5333(b) to Section 5310 subrecipients. More information is provided in the Human Resources section of this toolkit, with details found on the Department of Labor Special Warranty web page

Drug-Free Workplace

Under the Drug-Free Workplace Act of 1988, federal grant recipients are required to maintain a drug-free workplace for all award-related employees, report any convictions occurring in the workplace, and have an ongoing drug-free awareness program.  These provisions, detailed in 49 CFR Part 32, only apply to FTA’s direct grantees (for example, states and tribes receiving Tribal Transit Program funding); they do not apply to subrecipients (although some State DOTs extend drug-free workplace requirements to their subrecipients). For more information, see pages XI-6 to XI-7 of FTA Circular 9040.1G.

Drug and Alcohol Testing

FTA drug and alcohol regulations (49 CFR Part 655) require Sections 5307, 5309 and 5311 recipients or subrecipents to establish a drug and alcohol program and to conduct drug and alcohol testing of safety-sensitive employees.  The drug and alcohol testing procedures must comply with DOT regulations in 49 CFR Part 40.  Page XI-6 of FTA Circular 9040.1G introduces these requirements.  See the section on of this toolkit on Drug and Alcohol Programs for more information.

Note: Although Section 5310 are not subject to the FTA drug and alcohol requirements under Part 655, if they employ Commercial Driver’s License (CDL) drivers, the U.S. DOT requirements under 49 CFR Part 382 may apply.  For more information on 49 CFR Part 382 requirements for employers, see the Overview of Drug and Alcohol Rules for Employers web page on the Federal Motor Carrier Safety Administration web site.

Planning

Project Inclusion in STIP/TIP

As noted on page IV-1 of FTA Circular 9040.1G, in order to receive an FTA grant for a project, it must be a product of the metropolitan planning process and/or the statewide planning process.  The State DOT prepares and updates the Statewide Transportation Improvement Program (STIP) which incorporates Section 5311 subrecipient projects.  The STIP is a statewide prioritized listing/program of transportation projects covering a period of four years that is consistent with the long-range statewide transportation plan, metropolitan transportation plans, and metropolitan area Transportation Improvement Programs (TIPs). For projects outside metropolitan planning boundaries (which is typically the case for Section 5311 projects), they are only required to be in the STIP. 

Projects within metropolitan planning boundaries must be included in the metropolitan planning organization’s (MPO) TIP.  (Subrecipients that serve metropolitan areas should consult regional, county, or metropolitan transportation planning agencies to find out how to ensure their projects are included in the TIP.)  

For more information about Metropolitan, Statewide & Non-Metropolitan Planning requirements, see pages IV-1 to IV-2 of FTA Circular 9040.1G as well as the section of the FTA website on this topic.

Public Hearing Requirements

As stated in the FTA Title VI circular (FTA C 4702.1B, Title VI Requirements and Guidelines for Federal Transit Administration Recipients), all recipients of federal funding are required to comply with the public participation requirements of 49 U.S.C. Sections 5307(b), which requires an opportunity for a public hearing on a proposed program of projects included in an FTA grant application.  As part of the Section 5311 subrecipient grant application process, State DOTs typically require a public participation process that includes a public hearing (or opportunity for one upon request) about the proposed grant application.  For more information, see the Planning and Evaluation section of this toolkit.

Intelligent Transportation Systems (ITS) – National ITS Architecture

As stated on page IV-53 of FTA Circular 5010.1E, FTA recipients that have transportation projects that include ITS must be participants in a regional or statewide ITS Architecture process and their ITS projects must be included in the locally approved Regional ITS Architecture. For more information, see the FTA web page on its National ITS Architecture Consistency Policy for Transit Projects.

Private Sector Participation

As part of the federal requirements for public involvement in the transportation planning process, private providers must be afforded an opportunity for consultation when developing transportation plans and programs (in both urban and rural areas), as noted on page XI-10 of FTA Circular 9040.1G.  As part of the Section 5311 subrecipient grant application process, State DOTs typically require notice to the private sector with an opportunity to formally comment on the proposed grant application. 

Environmental Protections

The National Environmental Policy Act (NEPA) was signed into law on January 1, 1970, and its purpose is to ensure that environmental issues are considered alongside social, economic, and other competing concerns that arise when planning a project.  As stated on page 50 of FTA Circular 4703.1, many transit projects are considered “categorical exclusions” that do not have a significant environmental effect. Most Section 5311 projects are categorical exclusions, and the State DOT should screen potential projects to determine which projects clearly meet the Federal Highway Administration (FHWA) / FTA criteria for categorical exclusions. For more information, see the Environmental Programs section of the FTA web site and the National Environmental Policy Act website.

Clean Air Act (CAA)

Clean Air Act (CAA) requirements apply only in areas (generally urbanized areas) that have violated or continue to violate National Ambient Air Quality Standards (NAAQS), which are generally a result of transportation-related pollutants. As noted on page XI-5 of FTA Circular 9040.1G, the conformity process is the main requirement with which FTA-funded projects must comply, and these requirements can be found in Environmental Protection Agency (EPA) regulation 40 CFR Part 93. Clean Air Act requirements are not typically relevant to Section 5311 projects. 

Safety

In the FY 2018 Master Agreement, Sections 32, 33 and 34 (pages 64 to 66) list specific safety requirements for FTA grantees.

Public Transportation Agency Safety Plan

FTA grantees must comply with applicable federal laws, regulations, and requirements and follow applicable guidance that implement the Public Transportation Safety Program provisions of 49 U.S.C. § 5329.  On July 19, 2018, FTA published the Public Transportation Agency Safety Plan (PTASP) Final Rule, 49 CFR Part 673. This regulation requires Section 5307-funded urban transit systems to develop safety plans that include the processes and procedures to implement Safety Management Systems (SMS).

Section 5310 and/or 5311 funded agencies are not required at this time to develop an FTA compliant safety plan; however, the safety plan requirements for Section 5307 systems should be considered as best practices for 5310 and/or 5311 funded agencies.  For more information, see the toolkit section on Safety, Security and Emergency Management.

Motor Carrier Safety

FTA grantees must comply with the following Federal Motor Carrier Safety Administration (FMCSA) requirements:

  • Minimum insurance requirements: FTA Section 5311, 5310, and 5307 grantees that cross state lines must generally obtain the highest amount of insurance required by any state in which the public transportation provider operates.
  • Federal Motor Carrier Safety Regulations: FTA grantees must comply with FMCSA regulations within 49 CFR Parts 390 to 397. Some of these requirements are described in the section of the toolkit on Driver Recruitment, Training, and Retention.
  • Commercial driver’s license (CDL) requirements (49 CFR Part 383): FTA grantees that employ drivers of vehicles designed to seat 16 or more passengers including the driver or with a gross vehicle weight rating (GVWR) exceeding 26,000 pounds required to ensure these drivers have valid CDLs.  Mechanics who drive these vehicles must also have a CDL.
  • Section 5310 subrecipients that employ CDL drivers must also comply with the FMCSA drug and alcohol testing requirements under 49 CFR Part 382. (Section 5311 subrecipients are subject to the more rigorous FTA drug and alcohol testing requirements under 49 CFR Part 655.)
Safe Operation of Motor Vehicles

FTA grantees agree to adopt and promote on-the-job seat belt use policies and programs and include a “seat belt use” provision in each third party agreement related to the grant.  Grantees also agree to adopt and enforce workplace safety policies related to districted driving including a ban on text messaging while driving.  For more information, see Section 34 (pages 65-66) of the FY 2018 Master Agreement.

Construction Projects

Real Property Acquisition

Real property acquisition standards can be found in the most current FTA Circular 5010.E Award Management Requirements and in Chapter X, Other Provisions.  Subrecipients may use their state’s staff appraisers to prepare required independent appraisals.

Construction Management and Oversight

The state has responsibility for Section 5311-funded construction management and oversight, and FTA does not approve subrecipients’ design plans for construction projects.

FTA-funded construction projects must comply with the prevailing wage requirements of the Davis-Bacon Act.  They must also comply with the Contract Work Hours and Safety Standards Act, the Copeland “Anti-Kickback” Act, and the following the US DOL regulations: Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction (also Labor Standards Provisions Applicable to Nonconstruction Contracts Subject to the Contract Work Hours and Safety Standards Act) (29 CFR Part 5), Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States (29 CFR Part 3), Recording and Reporting Occupational Injuries and Illnesses (29 CFR Part 1904), Occupational Safety and Health Standards (29 CFR Part 1910), and Safety and Health Regulations for Construction (29 CFR Part 1926).

Requirements Specific to Section 5311

Use of 5311 Funds for Public Transportation Projects

Section 5311 funds support public transportation projects (services which are open to the public on a regular and continuing basis) in rural areas. As stated on page III-6 of FTA Circular 9040.1G, Section 5311 service may be designed to maximize use by members of the public who are transportation disadvantaged, including seniors, people with disabilities, and low-income individuals. Page 20-1 of the FTA FY 2018 Comprehensive Review Guide states that coordinated human service transportation that primarily serves seniors and persons with disabilities, but that is not restricted from carrying other members of the public, is considered open to the general public if it is promoted as public transportation service.

Although there are no federal requirements specifying how a public transportation service is to be promoted, many states require that their subrecipients educate the public about their services.  National RTAP’s Marketing Toolkit is a great resource for developing a marketing plan and public education materials for rural public transit.

Meal Delivery and Incidental Service

As stated on page III-6 FTA Circular 9040.1G, a rural transit provider may use a Section 5311 vehicle for non-passenger transportation on an occasional or regular basis, such as package delivery.  This is referred to as “incidental use” which must not result in a reduction of service quality or availability of public transportation service.  Section 5311 transit providers may also coordinate and assist in providing meal delivery service for homebound people on a regular basis, if the meal delivery services do not conflict with the provision of transit services or result in a reduction of service to transit passengers. As stated on page III-6 FTA Circular 9040.1G, FTA expects that the nutrition program will pay the operating costs attributable to meal delivery, and Section 5311 capital assistance may not be used to purchase vehicles or equipment used solely for meal delivery.

Requirements Specific to Section 5310

Use of 5310 Funds for Public Transportation Projects

Section 5310 funds support the provision of transportation services to meet the specific needs of seniors and individuals with disabilities. As stated on page III-9 of FTA Circular 9070.1G, Section 5310 projects must be targeted toward meeting the transportation needs of seniors and individuals with disabilities, although they may be used by the general public.

Coordination and Vehicle Use

Section 5310 subrecipients are encouraged to the extent feasible to provide service to seniors and people with disabilities not affiliated with their agency, and on an incidental basis to the general public, if such service does not interfere with transportation services for seniors and people with disabilities (page VI-4 of FTA Circular 9070.1G).

FTA encourages maximum use of Section 5310-funded vehicles. Page VI-4 of FTA Circular 9070.1G states that the subrecipient “must, when practicable, make the vehicle itself available to provide transportation service to other seniors and people with disabilities at times the agency is not using the vehicle for grant-related purposes. The recipient shall use the vehicle in the project or program for which it was acquired as long as needed, even if the project does not continue to receive federal funding.”  The circular also states, “During the period the vehicle is used to serve the project or program needs for which it was acquired, the recipient or subrecipient shall make it available for use on other projects or programs, as long as such other use does not interfere with the service for which the vehicle was originally acquired. First preference for such other use will be given to other projects or programs sponsored by FTA, and second preference will be given to projects or programs sponsored by other federal agencies. Finally, vehicles may be used by non-federally funded providers, first to meet the needs of seniors and people with disabilities, and then to serve the transportation needs of the general public on an incidental basis.”

Page VI-4 of FTA Circular 9070.1G also states that subrecipients “may coordinate and assist in providing meal delivery services for homebound people on a regular basis if the meal delivery services do not conflict with the provision of transit services or result in a reduction of service to transit passengers.”  However, FTA funding will not fund vehicles and equipment needed for meal delivery capacity.

Coordinated Planning Requirement

Section 5310 projects must be included in a locally developed, coordinated public transit-human services transportation plan.  More information about this requirement can be found in the Planning and Evaluation section of the toolkit, as well in Chapter V of FTA Circular 9070.1G.

Ensuring Compliance

State Review of Subrecipient Compliance

States are required to ensure that their subrecipients comply with all of the federal requirements that apply to the FTA grant.  Each State DOT determines its own oversight requirements for Section 5311 and 5310 subrecipients.  Many states conduct periodic compliance reviews of their subrecipients. Although each state’s process is different, subrecipients can expect the compliance review process to include:

  • A review of the subrecipient’s written policies and procedures.  This is sometimes called the “desk review” portion of the compliance review.  The state may require that these be submitted In advance of a site visit.  Submitting all requested items by the state’s deadline will help minimize the amount of time involved with on-site portion of the review.
  • A site review that involves interviews with key members of a transit agency staff and sometimes governing board members, spot inspections of vehicles and vehicle maintenance records, spot inspections of procurement files, and a tour of the facility during which the reviewer will check to verify that required notices and certain policies are posted.  The state will typically schedule this in advance and may send the detailed questionnaire that the site reviewer will be using to help the organization prepare for the interviews.  The transit manager should also gather questions in advance on any compliance requirements which challenge the organization, and ask for the state for technical assistance for coming into compliance.  Rural transit systems can expect a site visit to take as long as two full days to complete, particularly if an organization is a new grantee or is experiencing challenges with compliance.
  • Identification of any deficiency findings identified during the “desk review” and site visit, along with a timeline in which to correct each deficiency. 
  • Follow-up communications with the state demonstrating that each deficiency has been corrected.  This is an important step, since future funding may be contingent upon satisfactorily achieving full compliance the FTA requirements (as well as any state-specific requirements that come with the grant).

State DOTs can provide information on the state’s compliance review process for subrecipients.

FTA State Management Reviews

As stated earlier in this section, FTA has little involvement in the day-to-day 5311 program activities, and it is not regularly involved in the review of individual applications from subrecipients. In order to ensure that Section 5311 program funds are being used appropriately, FTA employs contractors to conduct state management reviews every three years (or as necessary).  According to Circular 9040.1G, the review includes the following: 

  • inspection of documentation on file at the regional office 
  • visit to the state offices to examine the procedures the state uses in administering the program 
  • local subrecipient site visits 

If a state undergoes an FTA State Management Review, subrecipients could be randomly selected for a site visit to evaluate the state’s effectiveness in meeting federal requirements and its own State Management Plan (SMP). According to Circular 9040.1G, FTA also conducts more specific compliance reviews of recipients and subrecipients in particular areas, for example financial management, procurement, drug and alcohol testing compliance, and the various aspects of civil rights compliance, usually in response to a risk assessment or other indication of a possible problem.  This is done through questionnaires and supporting documents providing the details of required programs, and this is coordinated through the state. 

Section Sources

Updated May 1, 2019