Transit Labor Arrangements: Most Transit Agencies Report Impacts 
Are Minimal (19-NOV-01, GAO-02-78).				 
								 
Concerns have arisen about the 37 year old statutory provision	 
commonly known as Section 13(c). Before the Federal Transit	 
Administration (FTA) may make grants to transit applicants, the  
Department of Labor (DOL) must certify that fair and equitable	 
arrangements are in place to protect mass transit employees	 
affected. Section 13(c) requires that the arrangements contain	 
provisions for 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 claim	 
that Section 13(e) 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. Supporters claim that Section 13(c) has enhanced
labor-management stability and has helped to improve		 
communication and working relationships between management and	 
labor. The transit agencies GAO surveyed reported that Section	 
13(c) 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).					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-78						        
    ACCNO:   A02475						        
  TITLE:     Transit Labor Arrangements: Most Transit Agencies Report 
Impacts Are Minimal						 
     DATE:   11/19/2001 
  SUBJECT:   Mass transit operations				 
	     Mass transit funding				 
	     Labor force					 
	     Employment 					 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Testimony.                                               **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-02-78
     
A

Report to Congressional Requesters

November 2001 TRANSIT LABOR ARRANGEMENTS Most Transit Agencies Report
Impacts Are Minimal

GAO- 02- 78

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

Lett er

November 19, 2001 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 37year
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

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,

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

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.

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.

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.

Section 13( c) Has Had The agencies we surveyed generally reported Section
13( c) had a minimal Minimal Impact on

impact on their labor costs. Critics have expressed concern that Section 13(
c) hinders transit agencies? ability to lower labor costs, which, Labor
Costs at Most

according to the American Public Transportation Association, account for
Transit Agencies 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.

Table 1: Mean Top- Wage Rates for Transit Bus Operators 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 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 Critics of Section 13( c) have asserted that it
creates disincentives for

No Influence on Most transit agencies to examine and adopt innovative
technologies. However, 85 percent of the transit agencies surveyed reported
that, in general, Transit Agencies? Section 13( c) did not affect their
decisions on whether to adopt new

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

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

technologies, including automatic passenger counters and electronic fare
Technologies 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

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.)

Figure 1: The Impact of Section 13( c) on the Adoption of New Technologies
80

70 60 50 40 30 20 10

0 90)

low 91)

90) 91)

89) 89)

91) 90)

89) 90)

(N= (e. g., (N= (N= payment (N= security

(N= traveler = (N= (N= (N= (N= dispatching

automatic (N passenger

dispatching dedicated

buses) g., fare (e. g. buses system buses (e. system) system electronic
Internet system counter system) assisted System Electronic monitoring or
Automatic response equipment) system Articulated scheduling technology
emission location board guidance Computer and low vehicle On- Computerized
information demand (onboard Transit Advanced floor, Positioning Rapid
automatic Global Automated Bus lanes, Number of agencies whose decisions
were influenced by Section 13( c) Number of agencies that considered
adopting the technology

Source: GAO.

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

Minimally Influenced a minimal impact in some selected areas of their
operations, including their decisions to modify transit operations and their
relations with their unions.

Transit Agencies? However, the agencies reported a greater impact due to
Section 13( c) on Operations, Except for

their ability to contract for transit services. Contracting

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.)

Figure 2: The Impact of Section 13( c) on the Modification of Transit
Operations 90

80 70 60 50 40 30 20 10

0 91)

90) 90)

90) 91)

92) for

90) 91)

with 91)

existing (N= (N= program

(N= methods (N= policies

(N= (N= (N= (N= s) (N= of s) scheduling employees

services; rail alternative and time light to position( services collection
personnel new position( of dismissed Expansion Maintenance part- of moved s)
Routing Fare General of example, s) Use Addition Employee( Elimination
employee( Number of agencies whose decisions were influenced by Section 13(
c)

Number of agencies that considered modifying transit operations Source: GAO.

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.?

Section 13( c) Can Transit agencies have argued that Section 13( c) causes
delays in application processing and the award of federal grants. As noted
in our

Delay Grant Awards, August 2000 report, 8 when transit applications are not
processed in a timely

But Transit Agencies manner, transit benefits are delayed. In addition, a
lack of predictability Were Generally

and consistency in processing times can make planning and project Satisfied
With the

execution difficult for transit agencies. As we detailed previously, 93
percent of DOL?s applications processed from January 1996 through April
Timeliness of Grant

2000 met DOL?s internal 60- day processing goal. 9 As we noted in the August
Application Processing 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 Some of the transit agencies we surveyed indicated
that Section 13( c) As a Burden Less Often requirements for receiving
financial assistance were a burden regarding

time, effort, and resources. However, more agencies identified other Than
Other Federal requirements as burdensome. All of the transit agencies
indicated that FTA

Grant Requirements 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.

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.

Figure 3: The Difficulty in Fulfilling Federal Requirements 100 Percent

90 80 70 60 50 40 30 20 10

0 ADA

and to

Buy Act

Bacon with Program

drug- award bidder with Provisions

Air Section projects

versus assets

requirements Disadvantaged

requirements with procedures

regulations requirements,

for low- environmental requirements

Clean requirements requirements

Davis- requirements lease capital with FTA than- with Complying the
Fulfilling c) with the Complying Enterprise (DBE) testing in other-
protection America 13( wage transit of Complying Business Complying alcohol-
specified procurement justification Complying Fulfilling conformity
Complying prevailing constructions Justifying including transit purchase
Fulfiling for Source: GAO.

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.

Figure 4: DOT and FTA Actions That Transit Agencies Said Would Be Useful in
Fulfilling Section 13( c) Requirements 100 Percent

90 80 70 60 50 40 30 20 10

0 DOL

best for

c) FTA

DOL delay

labor on factual

13( sites letters

FTA on agencies about Web from from research

relations for application

decisions for an information certification arrangements

information transit additional explanations DOL guidance certification
guidance labor reasons in of legal and the funding transit Provide
certification information FTA DOL the processing Provide delay protection
Provide and on Provide on in Provide practices DOL Provide Increase Publish
Increase Source: GAO.

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.

11 See footnote 1.

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

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 12 T
he 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 .

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.

13 Urbanized 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.

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

Appendi Appendi xes x I

GAO?s Survey Instrument and Overall Results      

   