Legislative and administrative activities in Washington, D.C., over the past few weeks have changed how cities and transit agencies interact with federal funding and processes.

Most notably, the President signed into law H.R. 1 (One Big Beautiful Bill Act), a budget reconciliation bill that had been approved by the Senate 51-50 and by the House 218-214 earlier in the week. The law contains numerous provisions that will directly and indirectly impact city transportation departments and transit agencies. A few immediate and direct impacts include:

Recissions to discretionary grant programs

• Unobligated funds from the Neighborhood Access and Equity Program (Reconnecting Communities grants) have been zeroed out, including $900 million from NACTO member agencies. The impacts on projects with signed grant agreements are unclear at this time.
• Up to $1.9 billion in unobligated funding allocated to the Low-Carbon Transportation Materials Program was also rescinded. The majority of the program ($1.2 billion) was awarded in December 2024, and the new administration did not move to obligate those funds before this recision.

Changed incentives for environmental reviews

• A $100 million program to help states and local governments improve their ability to conduct and file more timely environmental reviews was also rescinded. Instead, project sponsors may pay a fee equal to 125% the cost of an environmental assessment or impact statement to expedite environmental review timelines by adding more aggressive deadlines.

Transportation benefits

• The bike commuter tax benefit, which allowed employers to reimburse employees up to $20 per month tax-free, was permanently eliminated. Transit and parking pre-tax benefits were untouched.

Though discussed, the following issues did not make it into law:

• Artificial Intelligence regulation prohibition—The Senate removed a controversial provision in the House version of the bill that would have banned states and local governments from enacting or enforcing laws regulating AI systems, including those used in autonomous vehicles, for ten years. 
• Electric and hybrid vehicle registration fees—While the House version of the bill included new registration fees of $250 on EVs and $100 on hybrid vehicles, these fees were removed in the Senate version. The new fees are expected to be part of reauthorization conversations.

Administrative actions

On Monday, June 30, the U.S. DOT released significant revisions to the Department’s National Environmental Policy Act (NEPA) implementing procedures across the modal administrations. The changes create uniform deadlines, enforce deadlines, and explicitly limit NEPA application to major federal actions only. NACTO members can read more details on our community forum.

A week later,  changes to the Transportation Infrastructure Finance and Innovation Act credit program were announced. Now, all types of transportation infrastructure projects may finance up to 49% of eligible costs as authorized by TIFIA legislation. Previous U.S. DOT policy capped most projects at 33%, allowing the full 49% for rural projects and certain transit and transit-oriented development projects.

Secretary Duffy also sent a letter to each state governor, requesting their participation in a new Safe Arterials for Everyone through Reliable Operations and Distraction-Reducing Strategies (“SAFE ROADS”) initiative. The program asks that state departments of transportation, in coordination with metropolitan planning organizations, develop a list of arterial segments, including intersections, with the highest safety, operational, or compliance concerns within 60 days. The program targets non-freeway arterial roads, where more than half of U.S. roadway deaths occur. At this point, the specifics of the program are unclear. No new funding or additional resources have been identified to support changes to these roads and intersections. 

The press release also added additional language not included in the letter, claiming that asphalt art in intersections and crosswalks caused distractions. This conflicts with both existing research and published changes in the 11th Edition of the Manual on Uniform Traffic Control Devices.