FTA Rescinds 2018 Capital Investment Grant 'Dear Colleague' Letter

The Department of Transportation (DOT) Federal Transit Administration (FTA) has made a change in policy regarding the Capital Investment Grants (CIG) program. FTA Acting Administrator Nuria I. Fernandez today issued a “Dear Colleague” letter stating that FTA is rescinding a June 29, 2018, “Dear Colleague” letter that the agency issued regarding the CIG program.

Federal statutes at 49 U.S.C. 5309 provide for a phased process through which CIG projects must advance before being eligible for funding, as well as FTAs evaluation criteria. The June 2018 “Dear Colleague” letter stated that FTA bases its CIG allocation decisions on various factors, including the extent of the local financial commitment, project readiness and geographic diversity. It also explained that FTA considered DOT loans in the context of all federal funding sources requested by the project sponsor when completing the CIG evaluation process, and not as separate from federal funding sources. It “strongly encouraged project sponsors to consider innovative financing and funding approaches, including value capture and private contributions.”

The June 2018 letter, developed under the prior presidential administration, further noted that if FTA decided to proceed with a construction grant agreement, FTA would not sign the agreement committing CIG funding until after the project sponsor had demonstrated that the project is ready for such an agreement, including assurance that the project’s development and design have progressed to the point where its scope, costs, benefits and impacts are considered firm and final; the project has obtained all non-CIG funding commitments; and the project sponsor has completed all critical third-party agreements.

The agency now has rescinded all of this language in its most recent “Dear Colleague” letter, simply stating that it will rely on the statutory framework to ensure proposed projects have met the requirements of federal public transportation law (49 U.S.C. § 5309), the regulation (the Major Capital Investment Projects final rule (49 C.F.R. Part 611)), and the “CIG Final Interim Policy Guidance” published in June 2016.

We can expect agencies to continue revamping guidance, including those affecting grant programs, over time to match the priorities under the Biden administration.