Capital Investment Grants Program: FTA Should Address Several Statutory Provisions

FTA's Capital Investment Grants program is the primary source of federal financial assistance to support transit projects that are locally planned, implemented, and operated. FTA evaluates and rates projects seeking funding through this program according to statutory criteria and recommends to Congress which projects to fund. The funding that project sponsors receive is subject to congressional appropriation.

MAP-21 includes a provision for GAO to biennially review FTA's implementation of the Capital Investment Grants program. This report discusses: (1) FTA's progress in addressing statutory provisions contained in MAP-21 and the FAST Act and (2) how the evaluation and rating process FTA has established for Core Capacity Improvement projects enables FTA to verify that statutory requirements are met before recommending such projects for funding. GAO reviewed the relevant laws and FTA's guidance. GAO also interviewed FTA officials and six project sponsors, representing seven of the eight Core Capacity Improvement projects in the Capital Investment Grants program at the time of GAO's review.

The Federal Transit Administration (FTA) has not addressed three statutory provisions concerning the Capital Investment Grants program contained in the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Fixing America's Surface Transportation Act (FAST Act). Specifically, FTA has not:

issued regulations regarding the evaluation and rating process for Core Capacity Improvement projects, which are a category of eligible projects within the program;

established a program of interrelated projects designed to allow for the simultaneous development of more than one transit project within the Capital Investment Grants program; or

implemented a pilot program designed to create a fast-track approval process for transit projects that meet specific statutory criteria.

Throughout this review, FTA officials told GAO they do not have immediate plans to address these three statutory provisions. Officials cited a proposal by the President to phase out the Capital Investment Grants program as one of the factors influencing this decision. However, in March the Consolidated Appropriations Act, 2018, provided the program with more than $2.6 billion and required FTA to continue to administer the program in accordance with the procedural and substantive requirements specified in statute. Subsequently, FTA officials told GAO that they are reviewing the Act and determining next steps. However FTA officials did not indicate that they intend to address these provisions. If FTA does not implement the outstanding provisions, FTA and project sponsors—that is, local transit agencies—may be missing opportunities to deliver transit projects more efficiently.

Based on a review of FTA's policy guidance, on FTA's instructions for applying to the Capital Investment Grants program, and on other documentation supporting the two Core Capacity Improvement projects that FTA has recommended for funding as of June 2017, GAO found that FTA has established a process to verify that proposed Core Capacity Improvement projects meet statutory requirements before recommending projects for funding. Core Capacity Improvement projects are capital investments designed to increase the capacity of an existing transit system and must meet specific statutory requirements to be eligible for funding through the program. GAO found that prior to recommending a project for funding FTA works with project sponsors to verify that their proposed project includes elements that will increase transit system capacity versus maintaining the current system, that the required amount of local funding is committed to the project, and that sponsors have the technical and financial capacity to complete the project they are proposing, among other statutory requirements.

FTA should initiate a rulemaking regarding the evaluation and rating process for Core Capacity Improvement projects and take steps to address two other statutory provisions. FTA agreed with the recommendations but disagreed with certain findings on which they are based. GAO believes these findings are valid, as discussed in this report.

Since the 1970s, the Federal Transit Administration’s (FTA) Capital  Investment Grants program has been the primary source of federal  financial assistance to new “fixed-guideway” projects or extensions to  existing fixed-guideway systems across the United States. Projects that  compete for funding through this program are planned and implemented  locally, and include capital investments in heavy and light rail, commuter  rail, streetcars, and ferries as well as bus rapid transit. FTA evaluates and  rates projects seeking funding through this program based on statutory  criteria, recommends to Congress which projects to fund, and awards  funding to projects. Program funding is provided through the annual  appropriations process, and over the last 10 fiscal years FTA has  awarded over $19 billion to cities, states, and other localities across the  country.

In March 2017, the President’s fiscal year 2018 budget proposed phasing  out the program, stating that future investments in new transit projects  should be funded by the localities that use and benefit from those  projects, and the administration reiterated that intent as part of its fiscal year 2019 budget proposal in February 2018. Consequently, FTA  recommended that Congress limit future funding for the Capital  Investment Grants program. However, in March 2018 the Consolidated  Appropriations Act, 2018, provided the program with more than $2.6  billion, and required FTA to continue to administer the Capital Investment  Grants program in accordance with the program’s procedural and  substantive requirements.

The Moving Ahead for Progress in the 21st Century Act (MAP-21),  enacted in 2012, included a provision for us to biennially review FTA’s  processes and procedures for evaluating and rating projects seeking  funding through the Capital Investment Grants program. In April 2016,  we issued our most recent report in response to the provision, focusing  on FTA’s efforts in implementing changes that MAP-21 made to the  program’s processes, changes that were aimed at expediting project  delivery. We reported that FTA was taking steps to implement MAP-21,  such as by implementing a provision directing FTA to issue policy  guidance outlining the review and evaluation process for new fixed- guideway projects and Core Capacity Improvement projects (hereafter  Core Capacity projects), and reported that FTA intended to take action to  address other provisions over the next few years. However, we also  reported that the Fixing America’s Surface Transportation Act (FAST  Act), enacted in 2015, contained new provisions for FTA to address.

FTA’s progress in addressing outstanding statutory provisions as  amended by MAP-21 and the FAST Act, and how FTA’s evaluation and rating process enables it to verify that  statutory requirements are met before recommending a Core Capacity  project for funding.

In conducting this review, we focused on reviewing FTA’s progress  addressing statutory provisions that were outstanding at the time of our  previous biennial review as well as the evaluation and rating requirements  specified in statute for Core Capacity projects. To address our objectives,  we reviewed the relevant provisions of MAP-21 and the FAST Act. We  also reviewed FTA’s policy guidance; other pertinent agency  documents, such as FTA’s instructions for applying to the program, its  templates for evaluating and rating projects in the program, and its annual  reports to Congress with funding recommendations; and prior GAO  reports. We also reviewed documentation, such as FTA’s assessments,  supporting the two grant agreements it had awarded for Core Capacity  projects at the time we initiated this review. For both objectives, we  compared the requirements specified in statute with FTA’s  implementation of those requirements. In addition, we interviewed FTA  officials, representatives of the American Public Transportation  Association, and representatives of six project sponsors in the Capital  Investment Grants program. The six project sponsors we interviewed  represented seven of the eight Core Capacity projects in the program at  the time we initiated this review. We also visited the sites of those seven  projects, which are located in California, Illinois, Indiana, New Jersey, and  Texas. During our visits we obtained information about the transportation  challenges that these projects are attempting to address and the  sponsors’ perspectives on FTA’s processes and procedures for  evaluating and rating Core Capacity projects. For a description of the  Core Capacity projects in the program at the time we initiated this review,  see appendix I.

We conducted this performance audit from June 2017 to May 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The primary source of federal funding for new fixed-guideway projects or  extensions to existing fixed-guideway systems is FTA’s Capital  Investment Grants program, which is a discretionary and competitive  grant program funded through annual appropriations. The program is  governed by statutory provisions, and funding is provided in the form of  a construction grant agreement, which is subject to congressional  appropriations.

Projects that compete for funding through the Capital Investment Grants  program are designed and implemented by project sponsors, which are  usually local transit agencies. Prior to 2012, project sponsors typically  applied for funding as either a New Starts or Small Starts project. New  Starts projects are capital investments whose sponsors request $100  million or more in Capital Investment Grants funding or have an  anticipated capital cost of $300 million or more. Small Starts projects are  capital investments whose sponsors request less than $100 million in  Capital Investment Grants funding and have an anticipated capital cost of  less than $300 million.

In 2012, Congress created a third category of eligible projects called Core  Capacity projects. Unlike New Starts and Small Starts, for which the  amount of funding project sponsors request and the anticipated capital  cost of a project are key factors, Core Capacity projects are not defined  by cost. Instead, Core Capacity projects are “corridor-based capital  investments” in existing fixed-guideway systems that increase the  capacity of a corridor by not less than 10 percent, in a corridor that is at or  above capacity or is expected to be within 5 years. Examples of Core  Capacity projects include capital investments to expand a transit system’s  platforms and acquire real property, rights of way, or rail cars associated  with corridor improvements increasing capacity.

To enter the Capital Investment Grants program, project sponsors submit  an application to FTA with information on the proposed project, such as a  description of the transportation problem the project seeks to address,  among other requirements. If accepted into the program, project sponsors  must then follow a multi-step, multi-year development process outlined in  statute during which FTA determines if the project is eligible for funding  through the Capital Investment Grants program. The development  process that project sponsors must follow varies depending on whether  the project is a New Starts or Core Capacity project, or a Small Starts  project. For example, New Starts and Core Capacity projects are required  to complete a two-phase development process. During the first phase,  called Project Development, project sponsors must complete an  environmental review process outlined in the National Environmental  Policy Act of 1969 and address other statutory requirements. Project sponsors must also provide FTA with sufficient information for FTA to  evaluate and rate the project, among other FTA requirements. To  complete the second phase, called Engineering, project sponsors must,  among other requirements, develop a firm and reliable cost, scope, and  schedule for their project and obtain all non-Capital Investment Grants  program funding commitments. Small Starts projects complete a  development process that is similar but consists of only one phase, called  Project Development.

During the development process, FTA is required to evaluate and rate  projects using a number of statutory criteria designed to assess the merit  of a project (i.e., project justification). For example, for Core Capacity  projects, FTA is required to evaluate and rate a project against six criteria:  (1) mobility improvements, (2) environmental benefits, (3) cost- effectiveness, (4) the congestion relief associated with the project, (5) the  economic development effects associated with the project, and (6) the  existing capacity needs of the corridor. FTA is also required to evaluate  and rate the local financial commitment to a project, including evidence of  stable and dependable financing sources, as well as the project sponsor’s  ability to operate the project and continue to operate any related transit  system. FTA’s ratings are “point-in-time” evaluations—meaning that  they can change—as a project progresses through the development  process.

To receive funding, project sponsors must complete the development  process outlined in statute and meet all statutory eligibility requirements.  Projects must also address all FTA requirements, and FTA must  recommend the project for funding to Congress. FTA’s recommendations  are based on its evaluation and rating of the project using the criteria  specified in statute, the availability of Capital Investment Grants program  funds, and the readiness of the project, such as whether the project’s  cost, scope, and schedule are advanced enough to be considered  reliable. As mentioned earlier, the funding that projects receive is subject  to congressional appropriations.

As we previously reported, both MAP-21 and the FAST Act made  numerous changes to the Capital Investment Grants program. For  example, in addition to establishing Core Capacity projects as a new  category of eligible projects, MAP-21 reduced the number of phases in  the development process that projects in the Capital Investment Grants  program must follow to be eligible for and receive funding. According to  FTA officials, changes the FAST Act made to the program include raising  the dollar threshold for eligibility for New Starts and Small Starts projects  and increasing the number of projects that are eligible for funding by  allowing joint public transportation and intercity-passenger-rail service to  compete for funding.

FTA Has Not Addressed Three Out of Four Outstanding Statutory Provisions

FTA has not addressed three of four outstanding statutory provisions  concerning the Capital Investment Grants program. As shown in table 1,  three of these provisions stem from MAP-21, which was enacted in 2012,  and the fourth stems from the FAST Act, enacted in 2015.

When we initiated our review, FTA officials told us FTA did not have  immediate plans to address the outstanding statutory provisions due to  the administration’s stated intent to phase out the Capital Investment  Grants program. As mentioned earlier, in 2017 the President’s Fiscal  Year 2018 budget first proposed phasing out the program, stating that  future investments in new transit projects should be funded by the  localities that use and benefit from those projects. Since then, FTA’s  annual reports to Congress, which contain funding recommendations for  the program, have reflected this direction. For example, FTA’s Fiscal Year  2018 report recommended that Congress only fund those projects that  had already received a grant agreement through the program, and FTA’s  Fiscal Year 2019 report stated that FTA neither requests nor  recommends any funding for projects in the Capital Investment Grants  program beyond those that have already received a grant agreement.  However, as also mentioned earlier, in March 2018 the Consolidated  Appropriations Act, 2018, provided the program with more than $2.6  billion, and also directed FTA to continue to administer the Capital  Investment Grants program in accordance with the program’s procedural  and substantive requirements. Following the enactment of the  Consolidated Appropriations Act, 2018, FTA officials told us that they are  reviewing the law and determining next steps. However, they did not  indicate that they have any immediate plans to address those provisions.  Moving forward, if FTA does not take steps to address the outstanding  provisions, FTA runs the risk of violating federal law.

During our review, FTA officials told us that other factors have also  influenced FTA’s decisions. For example, FTA officials noted that since  our last report, issuing regulations regarding the evaluation and rating  process for Core Capacity projects was not identified as one of the  Department’s regulatory priorities and, currently, FTA has no plans to  issue such regulations. However, issuing regulations to address this  provision is important. FTA’s policy guidance notes that aspects of the  development process, such as the steps to get into and through the  development process, were not subject to public outreach and are open  to be discussed in future updates to the Major Capital Projects rule.  While FTA officials emphasized that the agency’s policy guidance is  intended to serve as a guide for running the program until such time that  FTA initiates further rulemaking, FTA’s policy guidance also notes that  further rulemaking is needed to fully implement the changes MAP-21 and  the FAST Act made to the Capital Investment Grants program. Until FTA  initiates this rulemaking, it is unclear when if at all, FTA might address  most of these outstanding provisions.

With respect to addressing the program of interrelated projects  provisions, FTA officials reiterated their concerns, as we noted in our last  report, that establishing an evaluation and rating process for a program of  interrelated projects is difficult. As an example, FTA officials noted that as  part of the New Starts, Small Starts, and Core Capacity evaluation  process, FTA takes into account factors such as a corridor’s current  ridership estimates and future ridership projections. According to FTA  officials, evaluating and rating projects that encompass multiple corridors  is challenging because it requires that FTA establish new measures and  breakpoints—that is, thresholds for FTA’s ratings. Both FTA officials and  the American Public Transportation Association representatives we spoke  with told us that FTA has sought input from the transit industry in the past  to help address these concerns. However, FTA officials also told us that  addressing their concerns requires additional research and public  outreach on FTA’s part and that undertaking that work has not been a  priority of the Department of Transportation. Representatives from two of  the sponsors we spoke with, as well as representatives of the American  Public Transportation Association, told us that the transit industry is  interested in seeing FTA implement the program of interrelated projects  provisions and that doing so could help transit agencies deliver projects  more efficiently. For example, according to one sponsor, implementing  those provisions could help this sponsor purchase materials in bulk and  reduce costs. Until FTA takes steps to address this provision, the federal  government or project sponsors may be missing opportunities to deliver  transit projects more efficiently.

In the case of the FAST Act’s provision establishing a pilot program— called the “Expedited Project Delivery for Capital Investment Grants Pilot  Program,” designed to create a fast-track approval process for projects  that meet specific statutory criteria, such as having a maximum federal  share of 25 percent—FTA published a notice in the Federal Register in  2016 stating that it would publish guidance describing the process project  sponsors should follow to apply for consideration as a pilot project.  However, at the time of our review, FTA had not provided sponsors with  information that describes the process they should follow to apply for  consideration as a pilot project. FTA officials told us that project sponsors  have generally not expressed interest in participating in the program  under the FAST Act, and most of the project sponsors that we spoke  with agreed. Specifically, four of the six Core Capacity project sponsors  told us that some FAST Act requirements, such as a requirement that  projects in the program be supported in part by a public-private  partnership, made participating in the program less attractive. According  to two of the sponsors, private investors do not have an incentive to  invest in public transit projects unless they can profit from their  investment, but the FAST Act limits that opportunity by requiring that  projects participating in the pilot program be operated and maintained by  employees of an existing public transportation provider. Nonetheless, in  February 2018, the President’s infrastructure plan recommended  restructuring this program, with changes, to better achieve the goals of  expediting project delivery. Among the changes recommended are  allowing the pilot program to be available to all projects and not just on a  pilot basis, and increasing the federal share from 25 to 50 percent. Taking  steps to describe the steps project sponsors should follow to apply for  consideration as a pilot project under this program could help FTA better  understand whether further changes are needed.

The statutory provision FTA has addressed relates to a MAP-21 provision  directing FTA to use an expedited technical-capacity review process for  certain experienced project sponsors. At the time of our 2016 report,  FTA was in the process of finalizing the development of a tool to address  this provision, and since then, FTA has implemented that tool.  Specifically, the tool helps FTA staff determine the level of review  required of project sponsors based on a number of risk factors, such as  the complexity of a proposed project and the sponsor’s experience level.  According to FTA, this tool helps FTA staff develop project-specific  oversight plans that specify the resources FTA should devote when  overseeing a particular project. Projects that FTA determines are at lower  risk have fewer oversight resources allocated to them, and FTA officials  told us that they have been using this tool on all projects in the program  since mid-2017.

FTA Has a Process to Verify That Requirements Are Met before Recommending a Core Capacity Project for Funding

Based on our review of FTA’s policy guidance, instructions for applying to  the Capital Investment Grants program, and interviews with FTA  officials and six Core Capacity project sponsors, we found that FTA has  established a process to verify that proposed Core Capacity projects  meet statutory requirements before recommending projects for funding.  In addition, based on our review of documentation supporting FTA’s  funding recommendations for the two Core Capacity projects with grant  agreements as of June 2017, as well as interviews with FTA officials and  both project sponsors, we found that FTA took steps to verify that the  statutory requirements were met before recommending those two projects  for full funding grant agreements. Representatives of the other four  sponsors we spoke with also confirmed that FTA is taking steps to verify  that their projects meet the statutory requirements. Such requirements  include specific project eligibility and other requirements that projects  must meet during the Project Development and Engineering phases of  the development process.

Project Eligibility: Under statute, Core Capacity projects must meet  specific eligibility requirements. For example, along the lines previously  noted, statutory provisions require that a Core Capacity project be a  substantial corridor-based capital investment located in a corridor that is  at or over capacity, or projected to be at or over capacity within the next 5  years. These projects must also increase the corridor’s capacity in the  peak hour and direction of travel by not less than 10 percent. To verify  that projects meet these requirements, project sponsors and FTA officials  told us that FTA staff assisted project sponsors in refining their project’s corridor (see fig. 1), and reviewed information provided by the sponsors  on such things as the corridor’s current ridership estimates; the type,  configuration, and capacity of light- and heavy-rail cars; and the number  of seats on commuter rail cars. FTA’s policy guidance outlines the criteria  that FTA uses, criteria that FTA developed after consulting industry  standards and reaching out to the transit industry. FTA officials  emphasized that they apply these criteria consistently across projects  when evaluating whether a project’s corridor is at capacity.

As another example, under statute, Capital Investment Grant funding for  Core Capacity projects may not be applied to “state of good repair”  improvements to the transit system. “State of good repair”  improvements include, among other things, the replacement or  rehabilitation of existing rail cars, tracks, or communications equipment  due to normal wear and tear or preventive maintenance. Core Capacity  projects are likely to be intertwined with state of good repair  improvements, however, and FTA staff work with project sponsors to  identify which project costs within the project corridor are eligible to  receive Core Capacity funding and which are related to maintaining a  state of good repair.

Project Development Phase: As with the project eligibility requirements  discussed above, statutory provisions identify specific requirements that  must be met during the Project Development phase, and we found that  FTA has a process to verify that those requirements are met. For  example, under statute, Core Capacity projects have 2 years after the day  on which they enter into Project Development to complete the activities  required to obtain a project rating by FTA. Completion of the Project  Development phase is marked by the completion of the environmental  review process required under the National Environmental Policy Act of  1969 and FTA’s assignment of a project rating. FTA’s policy guidance  encourages project sponsors to perform whatever work they feel is  necessary prior to requesting entry into Project Development to enable  them to complete this phase within 2 years. According to both FTA  officials and representatives from each of the six Core Capacity project  sponsors, FTA staff work closely with project sponsors to assist them with  preparations to enter Project Development, review their documentation,  and complete this phase on time. Further, each of the six Core Capacity  project sponsors we spoke with told us that FTA follows up with sponsors  to ensure that all statutory and FTA requirements for the Project  Development phase are met. For example, the project sponsors reported  that FTA officials hold a variety of periodic (e.g., weekly, monthly,  quarterly) meetings with project sponsors during which they discuss  various aspects of the sponsor’s progress toward meeting the statutory  requirements.

Under statute, to assign a project rating, FTA must evaluate and rate  Core Capacity projects against specific project justification criteria and  local financial commitment criteria, as well as ensure that the project has satisfied the project eligibility and other statutory requirements, such as  having been selected as the locally preferred alternative and adopted into  the appropriate regional transportation plans. To obtain the information  needed to make these evaluations, FTA provides project sponsors with  reporting instructions and templates on its website specifying its  documentation requirements. These instructions and templates allow for  the standardized review of the project eligibility requirements previously  discussed, as well as aspects of the project justification and local financial  commitment criteria. Representatives of two of the six Core Capacity  project sponsors described these instructions and templates as helpful,  and said the templates enable them to gauge what their project’s potential  rating might be. Representatives of four sponsors also reported that when  completing the templates they are in frequent contact with FTA officials to  help ensure they are appropriately providing all required information. FTA  officials inform sponsors that the agency reviews completed templates  along with other information to assign project ratings.

Pursuant to statute, once FTA determines that a Core Capacity project  meets the specified project eligibility requirements, assigns the project a  rating, and determines that the environmental review process has been  completed, among other requirements, the project is ready to enter the  Engineering phase. Before advancing the project to Engineering, FTA  requires project sponsors to provide proof that at least 30 percent of the  non-Capital Investment Grants funding necessary to complete the project  is committed, as well as a variety of other documentation, such as a 20- year financial plan; a detailed cost estimate; a detailed project  management plan and project schedule; a preliminary safety hazard,  threat, and vulnerability analysis; and a draft “before and after” study  plan. Once a project sponsor indicates it is ready to advance its project to the Engineering phase, FTA assigns oversight contractors, who take a  prominent role in overseeing the day-to-day management of the project in  order to provide FTA with ongoing reports of the project sponsor’s  financial and technical progress.

Engineering Phase: Based on our review of documentation for the two  Core Capacity projects that have received a grant agreement, we found  that FTA also has a process to verify that the requirements specified in  statute applicable to the Engineering phase are met before  recommending a Core Capacity project for funding. Pursuant to statute,  during the Engineering phase the project sponsor must continue to show  the financial capability to complete the project and maintain and operate  the future transit system with stable and dependable funding sources.  FTA requires that project sponsors show increasing financial capacity  during the first 3 years in this phase by providing proof of commitments  for at least 50 percent of all non-Capital Investment Grants funding.  Pursuant to statute, project sponsors must also continue to show the  technical capability to complete the project. FTA requires that project  sponsors show increasing technical capacity during this phase by making  sufficient progress advancing the level of project design.

According to representatives from the two Core Capacity projects that  have received a grant agreement, FTA’s oversight contractors interact  with project sponsors frequently throughout the Engineering phase, and  are responsible for assisting FTA in determining whether sponsors have  the technical and financial capacity to complete their projects. Both FTA  officials and the two project sponsors reported that these oversight  contractors review project documentation throughout the Engineering  phase to verify that the sponsor meets FTA requirements to execute a  grant agreement, and are otherwise acceptable for advancing a project.  In reviewing documentation for the two Core Capacity projects that have  received a grant agreement, we found these oversight contractors  provided FTA with their comprehensive assessments of the project  sponsor’s technical and financial capacity. FTA officials said they use  these assessments when evaluating whether a project should be  recommended for a grant agreement.

For years, the Capital Investment Grants program has served as the  primary source of federal financial assistance to new transit projects  across the United States. During this review, however, the future of that  program has been unclear, given the administration’s stated intent to  phase out the program and FTA’s actions, which have reflected that  direction. The Consolidated Appropriations Act, 2018, provided FTA with  both the funding to continue awarding grants through the program and the  direction to administer the program in accordance with the requirements  specified in law. FTA stated that it is reviewing the law and determining  next steps but did not indicate that it has specific plans or timeframes for  addressing the three outstanding provisions discussed in this report. By  not addressing those provisions, FTA runs the risk of failing to implement  provisions of federal law, and the federal government or project sponsors  may be missing opportunities to deliver transit projects more efficiently.

We are making the following three recommendations to the Department  of Transportation:

The FTA Administrator should initiate a rulemaking regarding the  evaluation and rating process for Core Capacity Improvement  projects, consistent with statutory provisions. (Recommendation 1)

The FTA Administrator should take steps, such as undertaking  additional research or public outreach, to enable FTA to evaluate and  rate projects in a program of interrelated projects, in a manner  consistent with statutory provisions. (Recommendation 2)

The FTA Administrator should take steps to describe the process  project sponsors should follow to apply for consideration as a pilot  project under the Expedited Project Delivery for Capital Investment  Grants Pilot Program. (Recommendation 3)

We provided a draft of this report to the Department of Transportation for  review and comment. In its comments, which are reproduced in appendix  II, the Department concurred with our recommendations. However, the  Department also stated in its letter that our report did not adequately  describe the steps FTA has completed to implement the statutory  provisions discussed in this report. Further, the Department stated that  FTA has demonstrated its intent to address the outstanding provisions.

We agree with the Department that FTA has taken numerous actions  toward addressing various statutory provisions of the Capital Investment  Grants program, provisions contained in either MAP-21 or the FAST Act.  As noted above in this report, we discussed many of those actions in our  April 2016 review of the Capital Investment Grants program. At that time,  we reported that FTA was making progress implementing MAP-21 and  that FTA intended to take action over the next 2 years toward addressing  the remaining provisions of MAP-21 and the new requirements of the  FAST Act. However, as of this report, FTA has still not addressed all the  provisions, and as the Department stated in its letter, FTA cannot specify  when action will be taken to address the outstanding provisions.  Accordingly, we believe that our assessment is an accurate reflection of  FTA’s progress in addressing the outstanding statutory provisions of the  Capital Investment Grants program as amended by MAP-21 and the  FAST Act.

We are sending copies of this report to interested congressional  committees and the Secretary of the Department of Transportation. In  addition, this report will be available at no charge on GAO’s website at  http://www.gao.gov.

If you or your staff have any questions or would like to discuss this work,  please contact me at (202) 512-2834 or GoldsteinM@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this report. GAO staff who made key  contributions to this report are listed in appendix III.

Appendix I: Core Capacity Improvement  Projects Project description  The Metropolitan Transportation Authority proposes to implement capacity  improvements to the Canarsie L Line, which operates between South Brooklyn  and Manhattan. Improvements include three new power substations and other  upgrades necessary to increase capacity on the line. The Metropolitan  Transportation Authority estimates that when the project is complete, capacity in  the corridor will be increased 10 percent.

The Dallas Area Rapid Transit is proposing to extend and modify platforms along  two existing light rail lines to accommodate longer trains. The Dallas Area Rapid  Transit estimates that when the project is complete, capacity in the corridor will be  increased 12 percent.

The Dallas Area Rapid Transit is proposing to implement a second light-rail  alignment through the central business district of Dallas to supplement the  existing alignment. The Dallas Area Rapid Transit estimates that when the project  is complete, capacity in the corridor will be increased 100 percent.

The Northern Indiana Commuter Transportation District is proposing to construct  a second track and make additional improvements along a 26.6-mile segment of  its South Shore commuter rail line between Gary and Michigan City.

The Joint Powers Board (also known as Caltrain) is implementing capacity  improvements that include upgrading and electrifying a 51-mile commuter rail line  extending from San Francisco to San Jose. Caltrain estimates that when the  project is complete, capacity in the corridor will be increased 11 percent.

The New Jersey Transit Corporation, in cooperation with the Port Authority of New  York and New Jersey, the Gateway Program Development Corporation, and  Amtrak are proposing to replace an over 100-year-old drawbridge across the  Hackensack River in Hudson County, New Jersey, with a new, two-track bridge,  among other capacity improvements. The sponsors estimate that when the project  is complete, capacity in the corridor will be increased 10 percent.

The Chicago Transit Authority is implementing capacity improvements along a  5.6-mile corridor on the north side of Chicago. Improvements include the  reconstruction of four stations, the installation of a new higher-capacity signal  system, and the procurement of 32 new railcars. The Chicago Transit Authority  estimates that when the project is complete, capacity in the corridor will be  increased 15 percent.

The Bay Area Rapid Transit District is proposing to implement capacity  improvements between Oakland and Daly City in South San Francisco.  Improvements include implementing communication-based train control  equipment, the procurement of 252 rail cars, additional power substations, and  the expansion of a maintenance facility. The Bay Area Rapid Transit District  estimates that when the project is complete, capacity in the corridor will be  increased 37 percent.

Appendix II: Comments from the Department of Transportation

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact above, Brandon Haller (Assistant Director);  Melissa Bodeau; Kelsey Burdick; Geoffrey Hamilton; Wesley A. Johnson;  Elke Kolodinski; Malika Rice; and Elizabeth Wood made key contributions  to this report.

The Federal Transit Administration's Capital Investment Grants program is the main source of federal funds for local transit projects such as light rail and street cars. FTA decides which projects to recommend to Congress for funding based on criteria set by Congress, such as the level of economic benefit and congestion relief.

We found that the agency had not addressed three congressional requirements for the grants program, in part because the program was slated to be cut. However, funding was restored. We recommended that FTA start developing the regulations and meet the requirements.


Tribal Broadband: FCC's Data Overstate Access, and Tribes Face Barriers Accessing Funding

This testimony summarizes the information contained in two GAO reports: Broadband Internet: FCC’s Data Overstate Access on Tribal Lands , ( GAO-18-630 ) and Tribal Broadband: Few Partnerships Exist and the Rural Utilities Service Needs to Identify and Address Any Funding Barriers Tribes Face ( GAO-18-682 ). Specifically, it addresses (1) the extent to which FCC’s approach to collecting broadband availability data accurately captures broadband access on tribal lands, (2) the extent to which FCC obtains tribal input on the data, (3) partnerships tribes have formed with entities to deploy broadband infrastructure on tribal lands, and (4) barriers tribes face in obtaining federal funding. For these reports, GAO analyzed FCC and RUS data, and interviewed agency officials as well as a non-generalizable sample of stakeholders representing tribes and broadband providers.

The Federal Communications Commission’s (FCC) approach to collecting data on broadband availability causes it to overstate broadband access—the ability to obtain service—on tribal lands. In FCC’s approach, broadband is considered to be “available” for an entire census block if the provider could serve at least one location in the census block. FCC, tribal stakeholders, and providers have noted that this approach leads to overstatements of broadband availability. Because FCC uses these data to measure broadband access, it also overstates broadband access on tribal lands. By developing and implementing methods for collecting and reporting accurate and complete data on broadband access specific to tribal lands, FCC would be better able to target federal broadband funding to tribal areas that need it the most.

FCC does not have a formal process to obtain tribal input on the accuracy of provider-submitted broadband data. Most of the tribal stakeholders GAO interviewed stated FCC should work more directly with tribes to improve the accuracy of FCC’s data. Establishing a formal process to obtain input from tribal governments could help improve the accuracy of FCC’s broadband data for tribal lands.

Tribes have formed partnerships with different types of entities to deploy broadband infrastructure on tribal lands, but such partnerships are not widespread. The partnerships GAO identified included private providers, a community access network provider, an electric cooperative, a regional consortium, and tribally owned broadband providers.

GAO reviewed four federal programs to deploy broadband services and found that from 2010 to 2017, less than 1 percent of funding has gone directly to tribes or tribally owned providers. The tribal entities GAO contacted cited barriers to obtaining funds from the Rural Utilities Service (RUS) grant funding, such as preparing network design, demonstrating financial sustainability of the broadband project within 5 years, and obtaining matching funds required to apply for federal grants. However, according to RUS officials, RUS has not taken steps to identify or address the barriers tribes face when applying for RUS grant funding due to limited resources and multiple competing priorities for those resources. By identifying and addressing regulatory barriers that may impede tribal entities’ access to RUS funding, RUS could help tribes obtain funding to expand broadband deployment on tribal lands.

In GAO-18-630 , GAO made three recommendations to FCC, two of which related to improving its collection of broadband data. In GAO-18-682 , GAO made one recommendation to RUS to address regulatory barriers. FCC agreed and RUS neither agreed nor disagreed and both agencies described actions planned to address the recommendations.

I am pleased to be here today to discuss our September 2018 reports on  the Federal Communications Commission’s (FCC) data regarding  broadband access on tribal lands and barriers tribes face in obtaining  federal funding for broadband deployment. Broadband infrastructure is  critical for economic development, educational and job opportunities, and  public health and safety. However, residents of tribal lands continue to  have lower levels of broadband access than other Americans.

Policy-makers have noted the need for accurate information in order to  target funding to areas lacking broadband access, and FCC has identified  the need to work with tribes to ensure such information is accurate for  tribal lands. Currently, the primary source of information regarding where  broadband is and is not available is the FCC, which collects this  information from broadband providers. FCC collects this data by requiring  that fixed and mobile broadband providers report on their broadband  deployment by filing a form twice a year (Form 477). FCC uses data from  this form to determine which areas qualify for broadband funding.

One barrier to increasing access to broadband on tribal lands is the cost  to providers of deploying infrastructure to tribal lands located in rugged,  sparsely populated areas. In an attempt to address this and other issues,  the federal government administers a number of programs to subsidize  broadband deployment in areas in which the return on investment has not  attracted private investment. For example, FCC administers the Connect  America Fund—a Universal Service Fund program—which provides  subsidies to fixed and mobile providers of telecommunications and  broadband services in rural, insular, and other remote areas where the  cost of providing service is high. To be eligible to receive subsidies under  the Connect America Fund, a provider must be designated an eligible  telecommunications carrier. In addition, the Rural Utilities Service (RUS)  has a current program and had a prior program and the National  Telecommunications and Information Administration (NTIA) had a prior  program that provided funding to improve broadband service in unserved  or underserved areas. The RUS and NTIA prior programs were  authorized by the American Recovery and Reinvestment Act of 2009  (Recovery Act) to expand high-speed Internet service in unserved areas,  and there is no current funding for these programs.

My statement today discusses: (1) the extent to which FCC’s approach to  collecting broadband availability data accurately captures the ability of  Americans living on tribal lands to access broadband Internet services;  (2) the extent to which FCC obtains tribal input on the data; (3) examples  of partnership arrangements that tribal entities have used to increase  broadband deployment on tribal lands; and (4) barriers that tribal entities  face in obtaining federal funding for broadband deployment. This  statement is based on two reports that we issued in September 2018. To  perform the work for our report on FCC’s broadband data, we analyzed  FCC’s broadband availability data for tribal lands as well as FCC’s  processes for collecting and using those data. We interviewed FCC  officials as well as a non-generalizable sample of tribal and industry  stakeholders and reviewed relevant FCC rulemaking proceedings. To  perform the work for our report on tribal partnerships and barriers to  federal funding, we reviewed program documentation from FCC, RUS,  and NTIA. We also interviewed FCC, RUS, and NTIA officials and a non- generalizable sample of representatives from tribal governments, tribally  owned broadband providers, and tribal associations. More detailed  information about our scope and methodology can be found in our  reports.

The work upon which this testimony is based was conducted in  accordance with generally accepted government auditing standards.

FCC’s Data Overstate Broadband Access on Tribal Lands

In our September 2018 report on broadband access on tribal lands, we  found that FCC collects broadband availability data from broadband  providers, but its method for collecting the data does not accurately or  completely capture broadband access—the ability to obtain service—on  tribal lands. Specifically, FCC directs fixed broadband providers to  submit a list of census blocks where service is available on their Form  477 filings. In the Form 477 instructions, FCC defines “available” as  whether the provider does—or could, within a typical service interval or  without an extraordinary commitment of resources—provide service to at  least one end-user premises in a census block. Thus, in its annual  reports and maps of fixed broadband service, FCC considers an entire  block to be served if a provider reports that it does, or could offer, service  to at least one household in the census block. As shown in figure 1,  FCC’s definition of availability leads to overstatements of fixed broadband  availability on tribal lands by: (1) counting an entire census block as  served if only one location has broadband, and (2) allowing providers to  report availability in blocks where they do not have any infrastructure  connecting homes to their networks if the providers determine they could  offer service to at least one household. FCC has noted that  overstatements of availability can be particularly problematic in rural  areas, where census blocks cover larger areas.

According to FCC officials, FCC requires providers to report fixed  broadband availability where they could provide service to: (1) ensure that  it captures instances in which a provider has a network nearby but has  not installed the last connection to the homes, and (2) identify where  service is connected to homes, but homes have not subscribed. FCC  officials also told us that FCC measures availability at the census block  level because sub-census block data may be costly to collect. However,  FCC acknowledged that by requiring a provider to report where it could  provide service, it is not possible to tell whether the provider would be  unable or unwilling to take on additional subscribers in a census block it  lists as served. In addition, when reporting on broadband access in  tribal lands, FCC uses the broadband availability data described above,  and does not collect information on factors that FCC and tribal  stakeholders have stated can affect broadband access. These factors  include affordability, service quality, and service denials.

By developing and implementing methods for collecting and reporting  accurate and complete data on broadband access specific to tribal lands,  FCC would be better able to target federal broadband funding to tribal  areas that need it the most. We recommended FCC develop and  implement methods for collecting and reporting accurate and complete  data on broadband access specific to tribal lands. FCC agreed with this  recommendation and stated that it is exploring methods to collect more  granular broadband deployment data.

FCC Does Not Have a Formal Process to Obtain Tribal Input on its Broadband Data

As we reported in September 2018, FCC does not have a formal process  to obtain input from tribes on the accuracy of the data and tribal  stakeholders can face difficulties obtaining information from providers.  FCC’s 2010 National Broadband Plan noted the need for the federal  government to improve the quality of data regarding broadband on tribal  lands and recommended that FCC work with tribes to ensure that any  information collected is accurate and useful. Although the Plan also  noted that tribal representatives should have the opportunity to review  mapping data and offer supplemental data or corrections, FCC lacks a  formal process to obtain tribal input on its broadband data. FCC officials  told us that they address questions and concerns regarding providers’  coverage claims submitted to FCC’s Office of Native Affairs and Policy.  However, about half of the tribal representatives we spoke to stated that  they were not aware of the Form 477 data or corresponding maps, or  raised concerns about a lack of outreach from FCC to inform tribes about  the data. Most of the tribal stakeholders we interviewed told us that FCC  should work more directly with tribes to obtain information from them to  improve the accuracy of FCC’s broadband deployment data for tribal  lands. These stakeholders identified several ways in which FCC could  work with tribes on this issue, including onsite visits, increased outreach  and technical training, and opportunities for tribes to collect their own data  or submit feedback regarding the accuracy of FCC’s data.

FCC’s National Broadband Plan also noted the importance of supporting  tribal efforts to build technical expertise with respect to broadband issues.  A few of the stakeholders we interviewed noted that tribes have faced  difficulties when they attempt to challenge FCC’s broadband availability  data. For example, in 2013, all of the tribal entities that challenged FCC’s  data on mobile service availability were unsuccessful in increasing the  number of eligible areas. A few tribal stakeholders provided varying  reasons for this, one of which was the need for more technical expertise  to help the tribes meet FCC’s requirements regarding the information  needed to support a challenge. Because FCC lacks a formal process to  obtain tribal input on its broadband data, FCC is missing an important  source of information regarding areas in which the data may overstate  broadband service on tribal lands.

By establishing a process to obtain input from tribal governments on the  accuracy of provider-submitted broadband data as recommended in the  National Broadband Plan, FCC could help tribes develop and share  locally-specific information on broadband access and improve FCC’s data  for tribal lands. However, the success of such an effort may rely on the  tribes’ knowledge of, and technical ability to participate in, the process.  Thus, we recommended FCC develop a formal process to obtain tribal  input on the accuracy of provider-submitted broadband data that includes  outreach and technical assistance to help tribes participate in the  process. FCC agreed with this recommendation and stated that it will  work with stakeholders to explore options for implementing such a  process.

Finally, some tribes face challenges accessing data from providers. In  2011, FCC required that providers receiving funds to serve tribal lands  meaningfully engage with the tribes and discuss broadband deployment  planning. In 2012, FCC issued guidance on meeting this requirement  and stated that the guidance would evolve over time based on the  feedback of both tribal governments and broadband providers.  However, FCC has taken limited steps to obtain such feedback and has  not updated the guidance. About half of the tribal stakeholders we  interviewed raised concerns about difficulties accessing information from  providers regarding broadband deployment on their tribe’s lands (which  providers may consider proprietary), and some providers told us that they  attempt to engage with tribes, but the level of responsiveness they  receive from tribes varies. Thus, we recommended, and FCC agreed, that  FCC obtain feedback from tribal stakeholders and providers to determine  whether it needs to clarify its tribal engagement guidance.

In our September 2018 report on tribal partnerships, we found that  partnership arrangements between tribes and other entities to increase  broadband deployment on tribal lands are not widespread. Because of  the greater costs associated with deploying broadband on unserved tribal  lands that are generally rural, with possibly rugged terrain, there may be  little to no private sector incentive to deploy broadband or enter into a  partnership arrangement to do so. The partnership examples we  identified were ones that obtained federal funding under past programs  funded by the Recovery Act. Among these examples, tribes partnered  with several different types of entities, including private providers, a  community access network provider, an electric cooperative, a regional  consortium, and tribally owned providers.

Tribes Face Barriers to Obtain Federal Funding for Broadband Deployment

We also reported in September 2018 that FCC and RUS are the primary  sources of federal funding to deploy broadband infrastructure in rural and  remote areas where the cost of providing service is high, including tribal  lands. Based on our review of the funding provided by four federal  programs targeted to increase deployment in unserved areas, very little  has gone directly to tribes or to tribally owned broadband providers.  Specifically, we found that from 2010 to 2017, less than 1 percent of FCC  funding and about 14 percent of RUS funding went directly to tribes and  tribally owned providers. Combined, FCC and RUS funding totaled $34.6  billion during that time period and tribes and tribally owned providers  received $235 million, or about 0.7 percent.

FCC’s 2010 National Broadband Plan stated that tribes needed  substantially greater financial support than was available to them at the  time and that accelerating tribal broadband deployment would require  increased funding. Furthermore, the National Congress of American  Indians expressed concerns that the needs for federally funded  broadband projects are greater on tribal lands but tribes do not receive  the appropriate share of federal funding aimed at increasing broadband  deployment. Several of the tribes we visited told us they were trying to  deploy broadband infrastructure or offer service because the private  providers were not building out on their lands.

Through our analysis, we found that from 2010 to 2017, 14 tribal entities  received federal funding from FCC and RUS to increase broadband  deployment (see fig. 2).

The tribal officials, tribal associations, and tribally owned broadband  providers we interviewed cited several barriers that tribes may face when  seeking federal funding for broadband deployment. The two primary  barriers these interviewees cited were (1) the statutory requirement for  the eligible telecommunications carrier (ETC) designation and (2) grant  application requirements. Regarding the statutory requirement for ETC  designation, FCC officials told us there were 11 tribes that have providers  designated as ETCs and therefore would be eligible to receive support  from FCC’s Connect America Fund (CAF)—the largest source of federal  funding for broadband deployment in unserved and underserved areas.  Although FCC adopted rules in 2011 to create CAF and modernize the  program so that it could support broadband capable networks, FCC  officials told us that most ETCs are the telephone companies that were in  existence when the Telecommunications Act of 1996 was enacted into  law. According to FCC officials, FCC has explored whether it has  authority to allow non-ETC providers to receive CAF support payments  but determined that the statute is clear that only ETCs can receive  program support. Between 2012 and 2017, FCC officials said FCC  received nine ETC applications, four of which were from tribally owned  providers. Of those four, only one tribally owned provider was designated  as an ETC.

According to representatives from a tribal association we contacted, FCC  has provided ETCs with billions of dollars to deploy service to unserved  areas, but FCC’s efforts have not always been successful in the hardest  to reach areas, particularly tribal lands. The representatives stated that  FCC’s competitive market approach does not work where competition  cannot be supported and that there needs to be a different approach.  Similarly, tribal officials from Idaho told us that although the provider in  their area has received millions of dollars in CAF subsidies, it has not  deployed broadband on the tribal lands. Other tribal officials from Idaho  told us that although private providers received CAF subsidies to deploy  broadband service to their reservation, the private providers told the tribe  it would be years before they offer service on tribal lands.

Additionally, the tribal officials, tribal associations, and tribally owned  broadband providers we interviewed said tribes may face barriers  completing federal grant applications to obtain funding for broadband  deployment. For example, they said tribes face regulatory barriers in  applying for RUS’s grant funding, including preparing existing and  proposed network design, demonstrating financial sustainability of the  broadband project within 5 years, and obtaining matching funds.

The National Broadband Plan recommended that federal agencies  facilitate tribal access to broadband funding opportunities. Furthermore,  recognizing the need to reduce barriers to expand broadband  deployment, the Broadband Opportunity Council, established in March  2015, issued a memorandum stating that federal agencies should use all  available and appropriate authorities to identify and address regulatory  barriers that may unduly impede either broadband deployment or the  infrastructure to augment broadband deployment. However, according  to RUS officials, RUS has not taken steps to identify or address the  barriers tribes face when applying for RUS grant funding due to limited  resources and multiple competing priorities for those resources. We  recommended that RUS identify any regulatory barriers that may unduly  impede efforts by tribes to obtain RUS grant funds for broadband  deployment on tribal lands and implement any steps necessary to  address the identified barriers. By doing so, RUS could help tribes obtain  funding to expand broadband deployment on tribal lands. RUS neither  agreed nor disagreed with this recommendation.

Chairman Hoeven, Vice Chairman Udall, and Members of the Committee,  this completes my prepared statement. I would be pleased to respond to  any questions that you may have.

If you or your staff have any questions about this testimony, please  contact Mark Goldstein, Director, Physical Infrastructure Issues at (202)  512-2834 or GoldsteinM@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. GAO staff who made key contributions to this testimony  are Rose Almoguera, Katherine Blair, Keith Cunningham, Crystal  Huggins, Sally Moino, and Tina Paek. Other staff who made contributions  to the reports cited in this testimony are identified in the source product.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

Broadband provides high-speed Internet service, which can improve communications and drive economic growth. However, tribal lands have lower levels of broadband access than the rest of the nation. Congress has prioritized identifying unserved areas and targeting funds to increase broadband deployment, including on tribal lands.

this digital divide on tribal lands may be larger than estimated because FCC data overstate availability on tribal lands

tribes face barriers to obtaining funds to improve access. Less than 1 percent of broadband funding from programs we reviewed went directly to tribes from 2010 to 2017.