a

GAO

United States General Accounting Office

Report to Congressional Requesters

November 2001 TRANSIT LABOR 

ARRANGEMENTS

Most Transit Agencies 

Report Impacts Are 

Minimal

GAO-02-78

Page i GAO-02-78 Transit Labor Arrangements

Contents

Letter 1

Results in Brief 2

Background 5

Section 13(c) Has Had Minimal Impact on Labor Costs at Most 

Transit Agencies 7

Section 13(c) Has Had No Influence on Most Transit Agencies’ 

Decisions Whether to Adopt New Technologies 8

Section 13(c) Minimally Influenced Transit Agencies’ Operations, 

Except for Contracting 11

Section 13(c) Can Delay Grant Awards, But Transit Agencies Were 

Generally Satisfied With the Timeliness of Grant Application 

Processing 14

Section 13(c) Identified As a Burden Less Often Than Other Federal 

Grant Requirements 14

Observations 19

Agency Comments 19

Scope and Methodology 20

Appendixes

Appendix I: GAO’s Survey Instrument and Overall Results 23

Appendix II: GAO Contacts and Staff Acknowledgments 36

GAO Contacts 36

Acknowledgments 36

Tables Table 1: Mean Top-Wage Rates for Transit Bus Operators 8

Figures Figure 1: The Impact of Section 13(c) on the Adoption of New 

Technologies 10

Figure 2: The Impact of Section 13(c) on the Modification of 

Transit Operations 12

Figure 3: The Difficulty in Fulfilling Federal Requirements 16

Figure 4: DOT and FTA Actions That Transit Agencies Said Would 

Be Useful in Fulfilling Section 13(c) Requirements 18
Page 1 GAO-02-78 Transit Labor Arrangements

United States General Accounting Office

Washington, D.C. 20548

A

November 19, 2001 Letr

The Honorable Phil Gramm

Ranking Minority Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Wayne Allard

Ranking Minority Member

Subcommittee on Housing and Transportation

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Mike Crapo

United States Senate

Over the last several years, there has been renewed concern about the 37-

year old statutory provision commonly known as Section 13(c)— codified 

as section 5333(b) of title 49 U.S. Code. Before the Federal Transit 

Administration (FTA) may make grants to transit applicants, Section 13(c) 

requires that the Department of Labor (DOL) certify that fair and equitable 

arrangements are in place to protect mass transit employees affected by 

federal assistance. Section 13(c) requires that the arrangements contain 

provisions for, among other things, the continuation of collective 

bargaining rights and the protection of employees against a worsening of 

their positions. Once certified, the arrangements are incorporated into the 

grant agreement between FTA and the grantee. Critics of Section 13(c) 

have claimed that it greatly increases the cost of transit operations, hinders 

transit agencies’ efforts to adopt new technology, and creates constraints 

on the efficient operation of transit systems. However, supporters have 

claimed that Section 13(c) has enhanced labor-management stability and 

has on occasion helped to improve communication and working 

relationships between management and labor.

You requested that we assess the impact of Section 13(c). We agreed with 

your office to assess the impact of Section 13(c) on labor costs and the 

technological and operational management of transit agencies—aspects of 

transit operations industry officials identified as most likely to be affected 

by Section 13(c). We also agreed to assess the impact of Section 13(c) on 

the timely receipt of federal transit grants, as well as the burden of 

complying with Section 13(c) relative to other federal grant requirements. 

To address this request, we reviewed relevant studies and the legislative 
Page 2 GAO-02-78 Transit Labor Arrangements

history of Section 13(c), interviewed federal agency and union officials, and 

conducted a nationwide mail survey of the 105 largest transit agencies in 

April 2001. We received responses to our survey from 92 transit agencies 

for a response rate of 88 percent. Our survey instrument and overall results 

are included in appendix I. 

Results in Brief Except for their ability to contract out for transit services, the transit 

agencies we surveyed generally reported that Section 13(c) has had a 

minimal impact on their (1) labor costs, (2) ability to adopt new 

technologies, and (3) ability to modify transit operations. Transit agencies 

reported that Section 13(c) has delayed the award of federal grants and has 

presented a burden regarding time, efforts, and resources. Transit officials 

said that growth in the transit industry may act to mitigate the effects of 

Section 13(c).

• Most transit agencies that responded to our survey indicated that 

Section 13(c) had a minimal impact on labor costs. Although labor costs 

account for the largest share of operating costs in the transit industry, 

and critics have suggested that Section 13(c) raises labor costs, 68 

percent of the transit agencies reported that Section 13(c) did not affect 

their labor costs. Twenty-seven percent reported that Section 13(c) had 

somewhat increased their labor costs, and 4 percent reported that 

Section 13(c) had greatly increased labor costs. 

• Similarly, most transit agencies reported that Section 13(c) had a 

minimal effect on their ability to adopt new technologies. Eighty-five 

percent of the agencies reported that, in general, Section 13(c) did not 

affect their decisions whether to adopt new technologies. Further, 

Section 13(c) had a minimal impact on their decisions whether to adopt 

specific technologies. For example, of the 76 agencies that considered 

adopting a computer assisted dispatching and scheduling system, only 2 

indicated that Section 13(c) influenced their decisions whether to adopt 

that technology. 

• Most agencies reported that Section 13(c) was not a factor in their 

decisions whether to modify operations. When agencies indicated that 

they had considered changes in their transit operations, on average 81 

percent of those decisions were not influenced by Section 13(c). 

Further, 63 percent of the transit agencies reported that Section 13(c) 

did not have any effect on their relations with the unions representing 

their employees. Thirty-four percent of the transit agencies reported 

that Section 13(c) made relations with their unions more contentious, 
Page 3 GAO-02-78 Transit Labor Arrangements

and 3 percent of the transit agencies reported that Section 13(c) made 

their labor relations more amicable. 

Transit officials we interviewed suggested that growth in the transit 

industry may act to mitigate the impact of Section 13(c) by allowing transit 

agencies to adopt labor-saving technology and modify transit operations 

without displacing or dismissing employees. In addition, 85 percent of the 

transit agencies we surveyed reported that they would be required to 

engage in collective bargaining independent of Section 13(c) and its 

requirement to continue collective bargaining rights. Some collective 

bargaining agreements contain provisions similar to those found in Section 

13(c) arrangements and thus make isolating the impact of Section 13(c) 

difficult.

Although transit agencies generally reported that Section 13(c) had a 

minimal impact on their management of operations, many reported that 

Section 13(c) impeded their ability to contract out for fixed-route transit 

services. Historically, one of the major concerns of Section 13(c) critics is 

that it impairs the ability of transit agencies to contract out for transit 

services. Forty-six percent of the transit agencies responded that Section 

13(c) made it somewhat or much more difficult to contract out for fixedroute services. However, some of the officials we interviewed suggested 

that Section 13(c) does not directly limit an agency’s actual ability to 

contract out; instead, the threat of problems related to Section 13(c) 

discourages agencies from pursuing the use of contracting out for transit 

services. 

Transit agencies have argued that Section 13(c) requirements result in 

delays in grant application processing. Fifty-seven percent of the transit 

agencies responding to our survey reported that Section 13(c) greatly or 

somewhat delayed the award of a transit grant. However, transit agencies’ 

experiences with delays did not always correspond to satisfaction with 

grant application processing, as only 24 percent of transit agencies were 

either somewhat or greatly dissatisfied with the timeliness of FTA’s grant 

processing; and only 29 percent were either somewhat or greatly 

dissatisfied with the timeliness of DOL’s grant processing.

When asked about the difficulty imposed by Section 13(c) compared to 

other standard federal requirements for transit grant applicants regarding 

time, effort, and resources, 30 percent of the transit agencies surveyed 

reported that it was either somewhat or very difficult to meet Section 13(c) 

requirements. However, a larger percentage of transit agencies indicated 
Page 4 GAO-02-78 Transit Labor Arrangements

that certain other federal requirements were burdensome. For example, 

over 70 percent of the survey respondents reported that it was somewhat 

or very difficult to comply with the requirements of the Disadvantaged 

Business Enterprise program and the Americans with Disabilities Act. 

In the returned questionnaires, we observed that transit agencies’ 

responses concerning difficulties with contracting, delays in the receipt of 

federal grants, or fulfilling Section 13(c) requirements did not show any 

pattern regarding agency size, structure, or location.1

Generally, the transit agencies we surveyed indicated that it would be 

useful for FTA and DOL to undertake some actions to ease the burden of 

fulfilling Section 13(c) requirements, such as providing information on best 

practices in transit agencies and providing information about Section 13(c) 

on FTA and DOL Web sites. DOL has advised us that compliance 

information on the Section 13(c) program is included on its Web site, as 

well as on the FTA Web site.

We provided a draft of this report to the Secretary of Transportation and 

the Secretary of Labor. Neither agency had substantive comments; 

however, both provided technical comments that we incorporated into this 

report as appropriate.

1

 The number of responses we received does not support a reliable statistical assessment of 

the characteristics of transit agencies who reported difficulties.
Page 5 GAO-02-78 Transit Labor Arrangements

Background In 1964, Congress passed the Urban Mass Transportation Act to provide 

financial assistance to states and local governments to extend and improve 

urban mass transportation systems beleaguered by rising costs and 

declining ridership. The provisions commonly called Section 13(c) were 

included to protect employees who might be adversely affected by industry 

changes resulting from financial assistance under the act. One specific 

concern was that if municipalities and other public entities used federal 

assistance to purchase failing private transportation providers, the 

employees could lose their jobs, collective bargaining rights, or other rights 

they had gained through collective bargaining.2

 For example, prior to the 

passage of the act, transit employees in Dade County, Florida lost their 

collective bargaining rights; and subsequent decisions regarding wages, 

hours, and working conditions were made unilaterally after their employer 

was acquired by a public transit authority. Another concern leading to 

Section 13(c) was that technological advances made with federal 

assistance would reduce the need for transit labor.

Section 13(c) is unusual in that two federal agencies administer it: DOT and 

DOL. Section 13(c) requires that DOL certify that fair and equitable labor 

protection arrangements are in place before DOT makes grants to transit 

applicants. Such labor protection arrangements are to provide for (1) the 

preservation of rights, privileges, and benefits under existing collective 

bargaining agreements; (2) continuation of collective bargaining rights; (3) 

protection of employees against a worsening of their positions with respect 

to their employment; (4) assurances of employment to employees of 

acquired mass transportation systems and priority of reemployment for 

employees terminated or laid off; and (5) paid training or retraining 

programs. 

2

As public employees, they would not be covered under the National Labor Relations Act 

(NLRA). Because states and municipalities are exempt from NLRA, public transit agencies 

would not be required to bargain collectively with the transit unions or honor existing 

collective bargaining agreements unless required to do so under state laws. In addition to 

collective bargaining rights, employees could potentially lose the right to strike and lose 

pension and retirement benefits. 
Page 6 GAO-02-78 Transit Labor Arrangements

In carrying out its responsibilities, DOL ensures that the protective terms 

are in place through Section 13(c) arrangements, which are incorporated 

within a transit agency’s grant agreement with DOT. The DOL certification 

process begins when FTA forwards a grant application to DOL.3

 DOL refers 

the grant application and recommended terms and conditions to the unions 

representing transit employees in the service area of the project and the 

transit agency applying for the grant. No referral is made when (1) 

employees in the service area are not represented by a union or (2) the 

grant is for routine replacement items.4

 After DOL referral, the parties 

review the proposed terms and conditions and submit objections, if any. If 

no objection is submitted, DOL issues a final certification based on the 

terms and conditions recommended to the parties. If an objection is 

submitted, DOL considers its validity. If DOL determines that the objection 

is not valid, it issues a certification that is based on the recommended 

terms and conditions. If it determines that the objection is valid, and it 

cannot be resolved through a technical correction, the parties are provided 

an opportunity to resolve disputed matters through negotiations. If they 

are unable to do so, DOL makes a determination after considering the 

objections of the parties. If the terms and conditions applied by DOL are 

not acceptable to the grant applicant, it may choose not to accept federal 

transit assistance. 

After the certification process, employees who believe they have been 

adversely affected as a result of federal transit assistance may file claims 

under the procedures set forth in the Section 13(c) arrangements certified 

by DOL. The procedures for filing and resolving Section 13(c) claims vary 

according to each agreement, but they typically set forth (1) a time period 

for filing claims; (2) an informal process under which the parties can 

resolve disputes over claims; and (3) a formal dispute resolution process, 

such as binding arbitration, in the event that an informal settlement is not 

reached.

3

 DOL has developed simplified processes for certain grant programs, such as for 

nonurbanized area formula grants. In addition, certain grants and loans for special needs of 

elderly individuals and individuals with disabilities do not require a labor protection 

certification. 

4

 If there is no union representing employees, DOL sets forth employee protective 

arrangements in a standard certification. For grants for the routine replacement of 

equipment of like kind and character, DOL applies preexisting terms and conditions unless 

the grant has a potential for a material effect on transit employees. 
Page 7 GAO-02-78 Transit Labor Arrangements

Section 13(c) Has Had 

Minimal Impact on 

Labor Costs at Most 

Transit Agencies 

The agencies we surveyed generally reported Section 13(c) had a minimal 

impact on their labor costs. Critics have expressed concern that Section 

13(c) hinders transit agencies’ ability to lower labor costs, which, 

according to the American Public Transportation Association, account for 

over 80 percent of the operating expenses in the public transportation 

industry. In addition, some critics have stated that Section 13(c) has 

caused inflated wages and benefits in the transit industry. However, 68 

percent of the transit agencies that responded to our survey reported that, 

in general, Section 13(c) had no effect on their labor costs. Twenty-seven 

percent reported that Section 13(c) had somewhat increased their labor 

costs, and 4 percent reported that Section 13(c) had greatly increased labor 

costs. 

Moreover, a study by Rutgers University found that hourly transit wages for 

operators and mechanics rose very little in real terms and substantially less 

than average earnings per employee in other sectors of the economy from 

1982 to 1997.5

 When compared within metropolitan areas, transit wages (1) 

rose less than average earnings per employee in the manufacturing and 

government sectors, (2) were about the same as average earnings per 

employee in the transportation and public utilities sectors, (3) and rose 

much less than average earnings per employee in all other sectors of the 

economy. In addition, using data from 130 transit agencies, the Rutgers 

study found that mean top-wages for transit bus operators hovered at 

roughly the same level over the 1982 to 1997 period. (See table 1.)

5

 Neal A. Denno and Martin E. Robins, The Trend of Transit Labor Costs: 1982-97. (New 

Brusnwick, NJ: Alan M. Voorhees Transportation Center, Rutgers University, 2000), p.1.
Page 8 GAO-02-78 Transit Labor Arrangements

Table 1: Mean Top-Wage Rates for Transit Bus Operators

Note: Amounts in constant 1999 dollars.

Source: Neal A. Denno and Martin E. Robins, The Trend of Transit Labor Costs: 1982-1997. (New 

Brunswick, NJ: Alan M. Voorhees Transportation Center, Rutgers University, 2000), p. 5., calculated 

from APTA wage reports.

Section 13(c) could also affect a transit agency’s costs through Section 

13(c) claims. Section 13(c) arrangements typically establish a process 

whereby employees adversely affected by federal assistance can file claims 

against transit agencies, for example, for a dismissal allowance when 

employees lose their jobs. Claims may be filed for an individual or for a 

group of employees and claims filed in the last 5 years covered an average 

of 37 employees per claim. Eighty-seven percent of the transit agencies we 

surveyed reported that they have not had any Section 13(c) claims in the 

last 5 years. The remaining 12 agencies had an average of 3 claims filed 

during this period. Only eight of these agencies had Section 13(c) claims 

reach settlement, arbitration, or DOL decision. For those agencies, the 

average total amount paid per agency was $188,067. 

Section 13(c) Has Had 

No Influence on Most 

Transit Agencies’ 

Decisions Whether to 

Adopt New 

Technologies

Critics of Section 13(c) have asserted that it creates disincentives for 

transit agencies to examine and adopt innovative technologies. However, 

85 percent of the transit agencies surveyed reported that, in general, 

Section 13(c) did not affect their decisions on whether to adopt new 

technologies. In addition, we asked the transit agencies whether Section 

13(c) had influenced their decisions whether to adopt specific 

technologies, including automatic passenger counters and electronic fare 

payment systems. For each technology we identified, few or none of the 

transit agencies surveyed indicated that Section 13(c) had influenced their 

decisions on whether to adopt the technology. For example, of the 65 

agencies that had considered adopting onboard electronic security 

monitors, 4 indicated that Section 13(c) influenced their decisions whether 

to adopt that technology. Only 1 of the 30 agencies that had considered 

using articulated buses indicated that Section 13(c) influenced their 

decisions whether to adopt that technology. Of the 71 agencies that 

1982 1987 1992 1997

All agencies (N=130) $15.07 $15.33 $14.95 $15.13

Large agencies (N=53) $16.74 $16.85 $16.37 $16.54

Small agencies (N=77) $13.92 $14.28 $13.97 $14.15

Agencies with rail service (N=22) $17.56 $17.59 $17.17 $17.33
Page 9 GAO-02-78 Transit Labor Arrangements

considered using a global positioning system, 2 indicated that Section 13(c) 

influenced their decision whether to adopt that technology; however, 

officials who identified Section 13(c) as influencing their decisions did not 

offer any explanation for why Section 13(c) proved problematic in these 

cases. (See fig. 1.)
Page 10 GAO-02-78 Transit Labor Arrangements

Figure 1: The Impact of Section 13(c) on the Adoption of New Technologies

Source: GAO.

0

10

20

30

40

50

60

70

80

Computer assisted dispatching

and scheduling system (N=90)

Advanced technology buses (e.g., low

floor, low emission buses) (N=91)

Global Positioning System (e.g., automatic

vehicle location system) (N=90)

Electronic fare payment

system (N=91)

On-board electronic security

monitoring (N=89)

Number of agencies whose decisions were influenced by Section 13(c)

Number of agencies that considered adopting the technology

Computerized or Internet traveler

information system (N = 89)

Automatic passenger

counter (N=91)

Automated demand response dispatching

(onboard equipment) (N=90)

Bus Rapid Transit system (e.g. dedicated

lanes, automatic guidance system) (N=89)

Articulated buses (N=90)
Page 11 GAO-02-78 Transit Labor Arrangements

In addition, some officials suggested that the impact of Section 13(c) on 

transit agencies’ decisions concerning technology may be limited because 

many transit systems are experiencing growth. According to the American 

Public Transportation Association (APTA), over the past 5 years, transit 

ridership has grown 21 percent. Consequently, transit agencies may be able 

to adopt labor-saving technologies without dismissing or displacing 

employees. Of the transit agencies we surveyed, 10 percent reported that 

they have fewer employees now than 5 years ago; and 84 percent reported 

that they have more employees now than 5 years ago. The remaining 

transit agencies reported no change in the number of employees.

Section 13(c) 

Minimally Influenced 

Transit Agencies’ 

Operations, Except for 

Contracting

The transit agencies we surveyed generally reported that Section 13(c) had 

a minimal impact in some selected areas of their operations, including their 

decisions to modify transit operations and their relations with their unions. 

However, the agencies reported a greater impact due to Section 13(c) on 

their ability to contract for transit services.

Critics of Section 13(c) have stated that it creates disincentives for transit 

agencies to modify their operations. However, transit agencies generally 

reported that Section 13(c) did not influence their decisions in this area. 

We asked transit agencies to identify which of nine operational areas they 

had considered modifying, and whether Section 13(c) had influenced their 

decisions on whether to implement changes. When agencies indicated that 

they had considered changes in their transit operations, on average 81 

percent of those decisions were not influenced by Section 13(c). (See fig. 

2.)
Page 12 GAO-02-78 Transit Labor Arrangements

Figure 2: The Impact of Section 13(c) on the Modification of Transit Operations

Source: GAO.

0

10

20

30

40

50

60

70

80

90

Expansion of existing

services (N= 91)

Routing and scheduling

(N=90)

Maintenance program

(N=90)

Fare collection methods

(N=90)

General personnel policies

(N=91)

Use of part-time employees

(N=92)

Addition of new services; for

example, light rail (N=90)

Employee(s) moved to alternative

position(s) (N=91)

Elimination of position(s) with

employee(s) dismissed (N=91)

Number of agencies whose decisions were influenced by Section 13(c)

Number of agencies that considered modifying transit operations
Page 13 GAO-02-78 Transit Labor Arrangements

The majority of transit agencies we surveyed also reported that Section 

13(c) generally did not affect their relations with the unions that 

represented their employees. For example, when asked whether Section 

13(c) had caused their relations with the unions to become more amicable 

or more contentious, 63 percent of the agencies reported that Section 13(c) 

had not had any effect. Thirty-four percent of the agencies reported that 

Section 13(c) had made relations with the unions more contentious, and 

the remaining 3 percent reported that Section 13(c) had made their labor 

relations more amicable. In addition, 85 percent of the transit agencies we 

surveyed reported that they would be required to engage in collective 

bargaining independent of Section 13(c) and its requirements to continue 

collective bargaining rights. Some collective bargaining agreements 

contain provisions similar to those found in Section 13(c) arrangements 

and thus make isolating the impact of Section 13(c) difficult.

Although Section 13(c) had a minimal impact on most areas of transit 

operations we identified, many transit agencies we surveyed indicated that 

it had affected their ability to contract for fixed-route transit services. 6 

For example, 46 percent indicated that Section 13(c) made it somewhat or 

much more difficult to contract out for fixed-route services. In contrast, 17 

percent of the transit agencies indicated that Section 13(c) made it 

somewhat or much more difficult to contract out for paratransit services.7

A transit official we interviewed explained this difference by noting that 

employees represented by labor unions have historically operated fixedroute service, but paratransit services have historically been contracted 

out; thus, the continuation of contracting out paratransit services does not 

pose a problem. 

In addition, some transit industry officials reported that although 

provisions of Section 13(c) arrangements may directly limit contracting out 

for services, more often agencies are discouraged from contracting out 

because of their perception that such action will cause problems, such as 

Section 13(c) claims or delays in the receipt of grants. 

6

 APTA defines fixed-route services as those provided on a repetitive, fixed-schedule basis 

along a specific route with vehicles stopping to pick up and deliver passengers to specific 

locations; each fixed-route trip serves the same origins and destinations.

7

 APTA defines paratransit services as those involving passenger cars, vans, or buses with 

fewer than 25 seats, operating in response to calls from passengers or their agents to the 

transit operator. Paratransit is sometimes also referred to as “Demand Response” and “DialA-Ride.”
Page 14 GAO-02-78 Transit Labor Arrangements

Section 13(c) Can 

Delay Grant Awards, 

But Transit Agencies 

Were Generally 

Satisfied With the 

Timeliness of Grant 

Application Processing

Transit agencies have argued that Section 13(c) causes delays in 

application processing and the award of federal grants. As noted in our 

August 2000 report,8

 when transit applications are not processed in a timely 

manner, transit benefits are delayed. In addition, a lack of predictability 

and consistency in processing times can make planning and project 

execution difficult for transit agencies. As we detailed previously, 93 

percent of DOL’s applications processed from January 1996 through April 

2000 met DOL’s internal 60-day processing goal.9

 As we noted in the August 

2000 report, because of inconsistencies in DOL and FTA databases we were 

unable to determine whether Section 13(c) labor certification requirements 

delayed the award of transit grants. However, 57 percent of the transit 

agencies we surveyed indicated that Section 13(c) had caused such delays. 

Although a majority of the transit agencies indicated that Section 13(c) had 

caused delays, the transit agencies were generally satisfied with the 

processing of federal transit grant applications. Forty-eight percent of the 

transit agencies were either somewhat or very satisfied with the timeliness 

of FTA’s grant processing, where 24 percent were either somewhat or very 

dissatisfied. The remaining were neither satisfied nor dissatisfied. Fortytwo percent were either somewhat or very satisfied with the timeliness of 

DOL’s grant processing, and 29 percent were either somewhat or very 

dissatisfied with the timeliness of DOL’s grant processing. The remaining 

were neither satisfied nor dissatisfied. 

Section 13(c) Identified 

As a Burden Less Often 

Than Other Federal 

Grant Requirements

Some of the transit agencies we surveyed indicated that Section 13(c) 

requirements for receiving financial assistance were a burden regarding 

time, effort, and resources. However, more agencies identified other 

requirements as burdensome. All of the transit agencies indicated that FTA 

and DOL could undertake some actions to ease the burden of fulfilling 

Section 13(c) requirements, such as providing information on best 

practices in transit agencies and providing information about Section 13(c) 

on FTA and DOL Web sites. DOL has advised us that compliance 

8 Transit Grants: Need for Improved Predictability, Data, and Monitoring in Application 

Processing (GAO/RCED-00-260, Aug. 30, 2000).

9

 The percentage of certifications processed by DOL within 60 days is based on DOL 

processing time from the receipt of an application from FTA. DOL’s calculation differs 

slightly because DOL does not start its 60-day clock until the agency finalizes initial 

processing and refers employee protective terms and conditions. 
Page 15 GAO-02-78 Transit Labor Arrangements

information on the Section 13(c) program is included on its Web site, as 

well as on the FTA Web site.

The transit agencies were presented with a list of 10 different federal 

requirements for receiving federal transit assistance and asked to indicate 

how easy or difficult it was to fulfill those requirements regarding time, 

effort, and resources. Thirty percent of the transit agencies we surveyed 

indicated that fulfilling Section 13(c) requirements was either somewhat or 

very difficult. Fifty-six percent indicated that fulfilling Section 13(c) 

requirements was neither easy nor difficult, and 14 percent indicated that 

fulfilling the requirements was somewhat or very easy. 

More transit agencies we surveyed indicated that other federal 

requirements were burdensome. For example, 79 percent of the transit 

agencies indicated that complying with Americans with Disabilities Act 

requirements was somewhat or very difficult. Seventy-four percent of the 

transit agencies indicated that fulfilling Disadvantaged Business Enterprise 

program requirements was somewhat or very difficult. Figure 3 shows the 

percentage of agencies that indicated that the requirements were difficult 

to fulfill.
Page 16 GAO-02-78 Transit Labor Arrangements

Figure 3: The Difficulty in Fulfilling Federal Requirements

Source: GAO.

0

10

20

30

40

50

60

70

80

90

100 Percent

Complying with ADA

requirements

Complying with Disadvantaged

Business Enterprise Program

(DBE) requirements

Complying with drug- and

alcohol-testing procedures

specified in FTA regulations

Fulfiling procurement requirements,

including justification for award to

other-than-low-bidder

Complying with environmental

protection requirements

Complying with Buy

America Provisions

Fulfilling the Clean Air Act

conformity requirements

Fulfilling Section

13(c) requirements

Complying with Davis-Bacon

prevailing wage requirements

for transit constructions projects

Justifying the lease versus

purchase of transit capital assets
Page 17 GAO-02-78 Transit Labor Arrangements

In the returned questionnaires, we observed that transit agencies’ 

responses concerning difficulties with contracting, delays in the receipt of 

federal grants, or fulfilling Section 13(c) requirements did not show any 

pattern regarding agency size, structure, or location.10

Our survey respondents were provided a list of actions that FTA and DOL 

could undertake to help transit agencies with Section 13(c), and agencies 

were asked to indicate whether the actions would be useful or not useful. 

More than 50 percent of the transit agencies indicated that each of the nine 

actions listed would be definitely or probably useful. For example, 86 

percent of the transit agencies we surveyed indicated that it would 

definitely or probably be useful if FTA were to provide information on 

delays in application processing. Similarly, 85 percent of the transit 

agencies we surveyed indicated that it would be definitely or probably 

useful if DOL were to provide reasons for delays in processing an 

application. Eighty percent indicated that it would be definitely or 

probably useful if DOL and FTA were to provide information about Section 

13(c) on their Web sites. Figure 4 shows the percentage of agencies that 

indicated that the actions would be useful.

10 See footnote 1.
Page 18 GAO-02-78 Transit Labor Arrangements

Figure 4: DOT and FTA Actions That Transit Agencies Said Would Be Useful in Fulfilling Section 13(c) Requirements

Source: GAO.

 Provide reasons for FTA delay

in processing an application

Provide information on DOL

delay in certification labor

protection arrangements

Provide information on best

practices of transit agencies

Provide additional factual

and legal explanations for

DOL certification decisions

Provide information about 13(c)

on FTA and DOL Web sites

Increase the guidance from FTA

Publish DOL certification letters

Increase the guidance from DOL

Provide funding for research

on transit labor relations

0

10

20

30

40

50

60

70

80

90

100 Percent
Page 19 GAO-02-78 Transit Labor Arrangements

Observations The transit agencies we surveyed generally reported that Section 13(c) has 

had a minimal impact on labor costs, adoption of technologies, and 

operations. However, a notable number of transit agencies reported that 

Section 13(c) has discouraged them from contracting for fixed-route transit 

services and has delayed their receipt of federal grants. In addition, 

although 30 percent of the transit agencies indicated that Section 13(c) is a 

burden on their time, efforts, and resources, more transit agencies 

indicated that certain other federal transit requirements were burdensome. 

In the returned questionnaires, we observed that transit agencies’ 

responses concerning difficulties with contracting, delays in the receipt of 

federal grants, or fulfilling Section 13(c) requirements did not show any 

pattern regarding agency size, structure, or location.11

Two factors are relevant to understanding the impact of Section 13(c) on 

transit agencies. First, 85 percent of the transit agencies we surveyed 

reported that they would be required to engage in collective bargaining 

independent of Section 13(c) and its requirements to continue collective 

bargaining rights. Some collective bargaining agreements contain 

provisions similar to those found in Section 13(c) arrangements and thus 

make isolating the impact of Section 13(c) difficult. Second, 84 percent of 

the transit agencies reported that they have more employees now than 5 

years ago. Officials we interviewed suggested that the growth of many 

transit agencies has reduced or eliminated the need to dismiss or displace 

employees when making technological or operational changes, thus 

potentially reducing the concern over the implications of such changes 

under Section 13(c).

Finally, the transit agencies indicated that some actions FTA and DOL could 

take, such as providing information about Section 13(c) on their Web sites 

and providing additional information about processing delays, would be 

helpful in fulfilling Section 13(c) requirements. 

Agency Comments We provided a draft of this report to the Secretary of Transportation and 

the Secretary of Labor. Neither agency had substantive comments; 

however, both provided technical comments that we incorporated into this 

report as appropriate.

11See footnote 1.
Page 20 GAO-02-78 Transit Labor Arrangements

Scope and 

Methodology

To determine the impact of Section 13(c), we reviewed relevant studies, 

interviewed federal agency and union officials, and surveyed the 105 

largest transit agencies. To obtain background information on Section 

13(c), we reviewed the legislative history of the Urban Mass Transportation 

Act of 1964 and interviewed officials at the APTA, FTA, DOL’s Employment 

Standards Administration, the Amalgamated Transit Union, and the 

Transportation Workers Union. These officials shared their views on the 

costs and benefits of Section 13(c) as well as key information on the 

Section 13(c) certification process, the characteristics of transit agencies 

most likely to be affected by Section 13(c), and the history of Section 13(c). 

To obtain the list of transit agencies to survey, we analyzed data from FTA’s 

National Transit Database (NTD). From our interviews, we determined 

that larger transit authorities were more likely to have had relevant and 

reportable experiences with Section 13(c). First, larger transit agencies 

generally receive more federal financial assistance than smaller agencies. 

Second, the officials we interviewed reported that larger agencies were 

more likely to have employees represented by unions. Finally, DOL has 

simplified certification requirements for transit authorities not located in 

urbanized areas. Consequently, we requested that FTA officials provide us 

with a list of all transit providers that serve populations greater than 

200,000 and that annually operate 100 or more revenue vehicles in 

maximum service.12 In commenting on a draft of this report, FTA noted that 

smaller and nontraditional grantees that were not included in our list may 

also experience some difficulties in complying with Section 13(c).

We used the NTD, Internet searches, and telephone calls to exclude the 

following from our initial list: (1) transit agencies operating as subsidiaries 

of other transit agencies on our list, (2) transit agencies not receiving 

federal financial assistance, and (3) private organizations that provide 

purchased transit services to transit agencies already on our list. We also 

added to our list transit agencies that met our criteria but were not 

12he number of revenue vehicles available to the general public and operated to meet the 

maximum service requirement for the fiscal year; based on 1999 data filed with the NTD
Page 21 GAO-02-78 Transit Labor Arrangements

included in the list provided from FTA because they had not filed with the 

NTD.13 Our final mailing list contained 105 transit agencies.

After we developed the list of 105 transit agencies to survey and developed 

a preliminary questionnaire, we pretested the survey with officials from 

nine transit agencies. The pretest participants were selected from transit 

agencies of different sizes operating in a variety of geographic areas. 

During the pretesting, we simulated the actual survey experience by asking 

the transit agency officials to complete the survey. We then interviewed the 

officials after they had completed the survey to ensure that (1) the 

questions were understandable and clear, (2) the terms used were precise, 

(3) the survey did not place an undue burden on agency officials, and (4) 

the survey was unbiased. On the basis of the pretesting, we incorporated 

appropriate changes into the final questionnaire.

After mailing the questionnaire in April 2001, we sent three additional 

reminders in order to increase our response rate. First, we sent a postcard 

1 week after the survey. Second, we sent a follow-up letter and a 

replacement questionnaire to nonrespondents 1 month after the initial 

mailing. Finally, we sent E-mail messages and placed telephone calls to 

nonrespondents during June and July 2001. We received questionnaires 

from 92 transit agencies, for a response rate of 88 percent.

We performed our review from December 2000 through October 2001 in 

accordance with generally accepted government auditing standards.

As arranged with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after the 

date of this report. At that time, we will send copies to the Secretary of 

Transportation, the Secretary of Labor, and interested congressional 

committees. Copies will also be made available to others on request.

13Urbanized Area Formula Grant recipients are required to submit a report to the NTD. In 

addition, FTA encourages all transit agencies, regardless of whether they receive federal 

assistance, to file with NTD so that FTA will have a more complete depiction of mass transit 

in the United States.
Page 22 GAO-02-78 Transit Labor Arrangements

If you have any questions about this report, please call me at (202) 512-2834 

or contact me at heckerj@gao.gov. Major contributors to this report are 

listed in appendix II.

JayEtta Z. Hecker

Director

Physical Infrastructure Issues
Page 23 GAO-02-78 Transit Labor Arrangements

Appendix I

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Appendix II

GAO Contacts and Staff Acknowledgments ApendxiI

GAO Contacts JayEtta Hecker, (202) 512-2834

Ronald Stouffer, (202) 512-4416

Acknowledgments In addition to those named above, the following staff members made key 

contributions to this report: Casey Brown, Helen Desaulniers, Curtis 

Groves, Lynn Musser, and Yvonne Pufahl. 

(392000) Letr
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