CAPITAL 

INVESTMENT 

GRANTS PROGRAM

FTA Should Address 

Several Statutory 

Provisions

Report to Congressional Committees

May 2018

GAO-18-462

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-462, a report to 

congressional committees

May 2018

CAPITAL INVESTMENT GRANTS PROGRAM

FTA Should Address Several Statutory Provisions

What GAO Found

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.

View GAO-18-462. For more information, 

contact Mark L. Goldstein at (202) 512-2834 

or GoldsteinM@gao.gov.

Why GAO Did This Study

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. 

What GAO Recommends

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.
Page i GAO-18-462 Capital Investment Grants Program

Letter 1

Background 4

FTA Has Not Addressed Three Out of Four Outstanding Statutory 

Provisions 7

FTA Has a Process to Verify That Requirements Are Met before 

Recommending a Core Capacity Project for Funding 12

Conclusions 18

Recommendations for Executive Action 18

Agency Comments and Our Evaluation 18

Appendix I Core Capacity Improvement Projects 20

Appendix II Comments from the Department of Transportation 21

Appendix III GAO Contact and Staff Acknowledgments 23

Tables

Table 1: Status of Selected Statutory Provisions Pertaining to the 

Capital Investment Grants Program, as of March 2018 8

Table 2: Core Capacity Improvement Projects in the Capital 

Investment Grants Program, as of June 2017 20

Figure

Figure 1: Example of a Core Capacity Improvement 

Project’s Corridor 13

Contents
Page ii GAO-18-462 Capital Investment Grants Program

Abbreviations

FAST Act Fixing America’s Surface Transportation Act

FTA Federal Transit Administration

MAP-21 Moving Ahead for Progress in the 21st Century Act

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Page 1 GAO-18-462 Capital Investment Grants Program

441 G St. N.W.

Washington, DC 20548

May 31, 2018

The Honorable Michael Crapo

Chairman

The Honorable Sherrod Brown

Ranking Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Bill Shuster

Chairman

The Honorable Peter A. DeFazio

Ranking Member

Committee on Transportation and Infrastructure

House of Representatives

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.1 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,2 and the administration reiterated that intent as part of its fiscal 

 1 The term “fixed-guideway” means a public transportation facility (1) using and occupying 

a separate right-of-way for the exclusive use of public transportation; (2) using rail; (3) 

using a fixed catenary system (i.e., a system using overhead power lines); (4) for a 

passenger ferry system; or (5) for a bus rapid transit system.

2 Office of Management and Budget, America First: A Budget Blueprint to Make America 

Great Again, Budget of the United States Government, Fiscal Year 2018.

Letter
Page 2 GAO-18-462 Capital Investment Grants Program

year 2019 budget proposal in February 2018.3 Consequently, FTA 

recommended that Congress limit future funding for the Capital 

Investment Grants program.4 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.5

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.

6 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.7 We reported that FTA was taking steps to implement MAP-21, 

such as by implementing a provision directing FTA to issue policy 

guidance8 outlining the review and evaluation process for new fixedguideway projects and Core Capacity Improvement projects (hereafter 

 3 Office of Management and Budget, Efficient, Effective, Accountable: An American 

Budget, Budget of the United States Government, Fiscal Year 2019.

4 See FTA, Annual Report on Funding Recommendations: Fiscal Year 2018 (Washington, 

D.C.: May 2017) and Annual Report on Funding Recommendations: Fiscal Year 2019

(Washington, D.C.: February 2018). FTA is required to issue an annual report to Congress 

with funding recommendations for the Capital Investment Grants program. FTA’s report 

helps inform the appropriations process for the upcoming fiscal year by providing 

Congress with information on the projects in the program.

5 Pub. L. No. 115-141, 132 Stat. 348 (2018).

6 Pub. L. No. 112-141, 126 Stat. 405, 674 (2012).

7 GAO: Public Transit: Observations on Recent Changes to the Capital Investment Grant 

Program, GAO-16-495 (Washington, D.C.: Apr. 28, 2016).

8 Under 49 U.S.C. § 5309(g)(5)(B), FTA is required to issue policy guidance regarding the 

review and evaluation process and criteria for the Capital Investment Grants program 

each time the Secretary makes significant changes to the review and evaluation process 

and criteria, but not less frequently than once every 2 years. Under 49 U.S.C. § 

5334(k)(1), FTA’s policy guidance must undergo the same type of notice-and-comment 

procedures that govern rulemakings under the Administrative Procedure Act . See 5

U.S.C. § 553.
Page 3 GAO-18-462 Capital Investment Grants Program

Core Capacity projects),9 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),10 enacted in 2015, contained new provisions for FTA to address.

This report examines:

• 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;11 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 

 9 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. A corridor is a 

largely linear geographic band defined by existing and forecasted travel patterns involving 

both people and goods.

10 Pub. L. No. 114-94, 129 Stat. 1312 (2015).

11 FTA periodically issues updates to its guidance for the Capital Investment Grants 

program. We used FTA’s June 2016 version, which was the most current version at the 

time we initiated this review. See FTA, Final Interim Policy Guidance Federal Transit 

Administration Capital Investment Grant Program (June 2016).
Page 4 GAO-18-462 Capital Investment Grants Program

the time we initiated this review.12 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,13 and funding is provided in the form of 

a construction grant agreement,14 which is subject to congressional 

appropriations.

 12 One of the seven project sponsors is the sponsor of two Core Capacity projects in the 

Capital Investment Grants program and another declined to respond to our questions.

13 At the time of our review, the Capital Investment Grants program was governed by 

statutory provisions in place as amended in 2015 by the FAST Act. Prior to the enactment 

of the FAST Act, the program was governed by statutory provisions in place as amended 

by MAP-21.

14 According to FTA, the construction grant agreement between FTA and the project 

sponsor defines the project, including its cost, scope, schedule, and level of service; 

commits to a maximum level of annual and total Capital Investment Grants program 

financial assistance (subject to congressional appropriations); establishes the terms and 

conditions of federal financial participation; defines the period of time for completion of the 

project; and helps FTA oversee and the project sponsor manage the project in accordance 

with federal law. Upon completion of the payment schedule outlined in the construction 

grant agreement, the Capital Investment Grants program funding commitment has been 

fulfilled.

Background
Page 5 GAO-18-462 Capital Investment Grants Program

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.15 Project 

 15 See Pub. L. No. 91-190, 83 Stat. 852 (1970), codified, as amended at 42 U.S.C. § 4321 

et seq. See also 40 C.F.R. § 1501.2; 23 C.F.R. Part 771. For more information on the 

environmental review process, see GAO, Public Transit: Length of Development Process, 

Cost Estimates, and Ridership Forecasts for Capital-Investment Grant Projects, 

GAO-14-472 (Washington, D.C.: May 30, 2014).
Page 6 GAO-18-462 Capital Investment Grants Program

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.16 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).17 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) costeffectiveness, (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.18 FTA’s ratings are “point-in-time” evaluations—meaning that 

they can change—as a project progresses through the development 

process.19

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 

 16 Non-Capital Investment Grants program funding commitments are part of the “local 

financial commitment” referred to in statute, which includes funding from local or state 

government authorities, the private sector, and other federal funds. 

17 49 U.S.C. § 5309(g)(2).

18 49 U.S.C. § 5309(f), (g)(2).

19 For more information on the evaluation and rating process, see GAO-16-495.
Page 7 GAO-18-462 Capital Investment Grants Program

reliable. As mentioned earlier, the funding that projects receive is subject 

to congressional appropriations.

As we previously reported,20 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 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.

 20 GAO-16-495.

FTA Has Not 

Addressed Three Out 

of Four Outstanding 

Statutory Provisions
Page 8 GAO-18-462 Capital Investment Grants Program

Table 1: Status of Selected Statutory Provisions Pertaining to the Capital Investment Grants Program, as of March 2018

Statutory provision Status

MAP-21 Issue regulations regarding the evaluation and rating process for Core Capacity 

Improvement projects.

Not addressed

Establish a program, referred to as a program of interrelated projects, designed to allow 

for the simultaneous development of more than one project within the Capital Investment 

Grants program.a

Not addressed

Use an expedited technical-capacity review process for project sponsors that have 

recently and successfully completed at least one new fixed-guideway project or Core 

Capacity Improvement project under specified circumstances.b

Addressed

FAST Act Implement a pilot program, called the “Expedited Project Delivery for Capital Investment 

Grants Pilot Program,” designed to create a fast-track approval process for no more than 

eight projects that meet specific statutory criteria, such as having a maximum federal 

share of 25 percent.

Not addressed

Legend:

MAP-21:Moving Ahead for Progress in the 21st Century Act (2012)

FAST Act: Fixing America’s Surface Transportation Act (2015)

Source: GAO analysis. | GAO-18-462

a

MAP-21 defined a program of interrelated projects as the simultaneous development of (1) two or 

more new fixed-guideway capital projects or Core Capacity Improvement projects or (2) one or more 

new fixed-guideway capital projects and one or more Core Capacity Improvement projects. Under this 

definition, Small Starts were not eligible to be included in a program of interrelated projects. The 

FAST Act amended this definition and specified that Small Starts are eligible to be included in a 

program of interrelated projects.

b

MAP-21 required FTA to use such a process if project sponsors have recently and successfully 

completed at least one new fixed-guideway capital project or Core Capacity Improvement project if 

the sponsor achieved budget, cost, and ridership outcomes for the project that are consistent with or 

better than projections and demonstrated that it continues to have the staff expertise and other 

resources necessary to implement a new project.

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 
Page 9 GAO-18-462 Capital Investment Grants Program

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.21

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 

 21 See 78 Fed. Reg. 1992 (Jan. 9, 2013). For more information on FTA’s previous 

rulemaking efforts for the Capital Investment Grants program, see GAO-16-495.
Page 10 GAO-18-462 Capital Investment Grants Program

breakpoints—that is, thresholds for FTA’s ratings.22 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.23

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,24 and most of the project sponsors that we spoke 

 22 49 U.S.C. § 5309(g)(2)(A) requires that FTA rate projects on a 5-point scale (high, 

medium-high, medium, medium-low, or low). FTA, in turn, determines the thresholds for 

those ratings.

23 See 81 Fed. Reg. 7894, 7906 (Feb. 16, 2016).

24 See Pub. L. No. 114-94, 129 Stat. 1312, 1454-62 (2015). MAP-21 included a provision 

establishing a similar pilot program but with different requirements. See Pub. L. No. 112-

141, 126 Stat. 405, 674 (2012). We did not discuss the MAP-21 provision in our April 2016 

report because the FAST Act repealed it. See Pub. L. No. 114-94, 129 Stat. 1312, 1496 

(2015). FTA took steps to address the MAP-21 provision, such as by soliciting interest via 

the Federal Register. See 80 Fed. Reg. 38801 (July 7, 2015). However, according to FTA 

officials, none of the sponsors interested in participating in the pilot program under MAP21 were eligible to participate in the pilot program under the FAST Act.
Page 11 GAO-18-462 Capital Investment Grants Program

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.25 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.26 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.27 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 

 25 Of the other two sponsors, one was interested in participating in the program and the 

other did not comment on whether or not it would be interested in participating in the 

program.

26 The White House: Legislative Outline for Rebuilding Infrastructure in America (February 

2018).

27 Specifically, as mentioned previously, MAP-21 required FTA to use an expedited 

technical-capacity review process for project sponsors that have recently and successfully 

completed at least one new fixed-guideway capital project or Core Capacity Improvement 

project if the sponsor achieved budget, cost, and ridership outcomes for the project that 

are consistent with or better than projections, and demonstrated that it continues to have 

the staff expertise and other resources necessary to implement a new project. Pub. L. No. 

112-141, 126 Stat. 405, 658-59 (2012).
Page 12 GAO-18-462 Capital Investment Grants Program

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.

Based on our review of FTA’s policy guidance, instructions for applying to 

the Capital Investment Grants program,28 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.29

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.30 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.31

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.32 These projects must also increase the corridor’s capacity in the 

peak hour and direction of travel by not less than 10 percent.33 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 

 28 FTA, Final Interim Policy Guidance Federal Transit Administration Capital Investment 

Grant Program (June 2016).

29 As mentioned previously, for the purpose of this review, we focused on the evaluation 

and rating requirements specified in statute for Core Capacity projects.

30 A full funding grant agreement is a type of construction grant agreement.

31 49 U.S.C. § 5309(a)(2), (e)(2)(A)(iii).

32 49 U.S.C. § 5309(a)(2), (e)(2)(A)(iii).

33 49 U.S.C. § 5309(a)(2).

FTA Has a Process to 

Verify That 

Requirements Are 

Met before 

Recommending a 

Core Capacity Project 

for Funding
Page 13 GAO-18-462 Capital Investment Grants Program

corridor (see fig. 1),34 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.35

 34 The Core Capacity project corridor comprises the project’s location along the fixedguideway’s route and the peak hours and directions of travel.

35 The industry standard that FTA consulted is: Transit Cooperative Research Program, 

Transit Capacity and Quality of Service Manual, Report 165 (Washington, D.C.: 2013). 
Page 14 GAO-18-462 Capital Investment Grants Program

Figure 1: Example of a Core Capacity Improvement Project’s Corridor

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.36 “State of good repair”

improvements include, among other things, the replacement or 

rehabilitation of existing rail cars, tracks, or communications equipment 

 36 49 U.S.C. § 5309(b)(2).
Page 15 GAO-18-462 Capital Investment Grants Program

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,37 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.38 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.39 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 

 37 49 U.S.C. § 5309(b)(2).

38 49 U.S.C. § 5309(e)(1)(C)(ii). If project sponsors are unable to complete Project 

Development within 2 years, they may request an extension that FTA will consider and 

render a decision on.

39 Pub. L. No. 91-190, 83 Stat. 852 (1970), codified at 42 U.S.C. §§ 4321-4347.
Page 16 GAO-18-462 Capital Investment Grants Program

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.40 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,41 assigns the project a 

rating,42 and determines that the environmental review process has been 

completed,43 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.44 Once a project sponsor indicates it is ready to advance its project 

 40 The statute and FTA guidance require that project sponsors ensure that the project 

being proposed for Core Capacity funding is the locally preferred project among the 

existing alternatives; subsequently, the proposed locally preferred alternative must be 

adopted into metropolitan and long-range statewide transportation plans. 

41 49 U.S.C. § 5309(a),(b)(2),(e).

42 49 U.S.C. § 5309(g).

43 49 U.S.C. § 5309(e)(2)(A).

44 49 U.S.C § 5309 (k)(2)(E) requires full funding grant agreements to, in turn, require that 

project sponsors who receive a grant through the Capital Investment Grants program to 

conduct “before and after” studies. These studies are designed to allow project sponsors 

the opportunity to assess the outcomes of a project after it is completed by comparing 

predicted versus actual construction costs, service levels, project scope, and ridership.
Page 17 GAO-18-462 Capital Investment Grants Program

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.45

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.46

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.

 45 49 U.S.C. § 5309 (c)(1)(B)(i), (f)(1)(C), (g)(1).

46 If a project sponsor does not make sufficient progress obtaining funding commitments 

or advancing the level of design, FTA may withdraw the project from the Capital 

Investment Grants program.
Page 18 GAO-18-462 Capital Investment Grants Program

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 

Conclusions

Recommendations for 

Executive Action

Agency Comments

and Our Evaluation
Page 19 GAO-18-462 Capital Investment Grants Program

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.

Mark L. Goldstein

Director, Physical Infrastructure Issues
Appendix I: Core Capacity Improvement 

Projects

Page 20 GAO-18-462 Capital Investment Grants Program

Table 2: Core Capacity Improvement Projects in the Capital Investment Grants Program, as of June 2017

Project Project description

Canarsie Line Power and Station Improvements, 

New York

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.

Dallas Area Rapid Transit Red and Blue Line 

Platform Extensions, Texas

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.

Dallas Central Business District Second Light 

Rail Alignment, Texas

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.

Double Track—Northwest, Indiana 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.

Peninsula Corridor Electrification Project, 

Californiaa 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.

Portal North Bridge, New Jersey The New Jersey Transit Corporation, in cooperation with the Port Authority of New 

York and New Jersey, the Gateway Program Development Corporation,b 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.

Red and Purple Modernization Phase One 

Project, Illinoisa 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.

Transbay Corridor Core Capacity Project, 

California

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.

Source: GAO and the Federal Transit Administration (project descriptions). | GAO-18-462

Note: Project descriptions are as of February 2018.

a

Denotes projects for which the Federal Transit Administration has awarded a grant agreement.

b

The Gateway Program Development Corporation is a non-profit that was established to oversee a 

series of infrastructure projects between Newark, New Jersey, and Pennsylvania Station in New York 

City known as the Gateway Program.

Appendix I: Core Capacity Improvement 

Projects
Appendix II: Comments from the Department 

of Transportation

Page 21 GAO-18-462 Capital Investment Grants Program

Appendix II: Comments from the Department 

of Transportation
Appendix II: Comments from the Department 

of Transportation

Page 22 GAO-18-462 Capital Investment Grants Program
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 23 GAO-18-462 Capital Investment Grants Program

Mark L. Goldstein, (202) 512-2834 or GoldsteinM@gao.gov

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.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(102124)
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