Ms. Linda Finch
Director
Volunteer Wheels
1041 Fourth Street
Santa Rosa, California 95404-4329

RE: Incidental overlap; "pass through" State funding

Dear Ms. Finch:

Please accept my apology for our delay in responding to your letter asking about the application of FTA’s drug and alcohol rules to your transit program. You write that Volunteer Wheels provides paratransit service under contract for Sonoma County Transit and Santa Rosa Transit. You state that the State of California through its STA and TDA programs funds Volunteer Wheel’s operating costs; also, Volunteer Wheels receives section 16 funds (now called the formula program for elderly and disabled persons). All of the vans operated by Volunteer Wheels can carry nine passengers; thus, the drivers are not required to hold a Commercial Driver’s License. You ask whether, under FTA’s rules, the Volunteer Wheels program is required to implement a drug and alcohol testing program.

FTA’s drug and alcohol rules require that a recipient of funds under FTA’s discretionary capital grant program (formerly section 3), formula grant programs for urbanized and nonurbanized areas (formerly sections 9 and 18), or interstate transfer program (23 U.S.C. §103(e)(4)) implement a program requiring that safety-sensitive employees be tested for five controlled substances and for the misuse of alcohol. FTA’s rules apply not only to direct recipients of the above categories of FTA funding, but also to "any entity that provides mass transportation service . . . for such recipient or other entity." 49 CFR 653.7 and 654.7. The direct recipient is responsible for ensuring that any entity providing transportation service on its behalf is in compliance with the rules.

A recipient of FTA capital assistance may segregate FTA funding from other funding sources and thus limit the application of Federal requirements to the capital project funded by FTA. A recipient of operating assistance under FTA’s formula grant programs, however, cannot similarly segregate those funds; they generally affect the recipient's entire program, and are used for such costs as salaries, office equipment and supplies, and insurance premiums. In these cases, all of a recipient's operations are subject to Federal requirements, including those relating to drug and alcohol testing. There is one limited situation involving Federal operating assistance where Federal requirements might not apply; this is a case where the FTA-funded program only incidentally overlaps the non-FTA funded program. An example of "incidental overlap" is the shared use of a dispatcher. Also, incidental overlap may occur when a State uses an FTA recipient to "pass through" State funding to a transit provider. In this instance, the rules would not apply to the transit provider if the recipient played only a minimal or incidental role in the transit provider's transportation program.

In your case, it is difficult to determine from your letter if FTA’s rules apply, because you do not indicate whether the STA and TDA programs are funded solely by the State or whether the vehicles are purchased with any of the categories of FTA funding listed above. We can state, however, that the rules would not apply if the FTA recipient only administers the State funds for California and the vehicles are not purchased with funding under FTA’s discretionary capital grant program, formula grant programs for urbanized and nonurbanized areas, or interstate transfer program. Also, the rules would not apply if the FTA recipient only administers the State program and the vehicles were purchased with FTA’s formula funding for the elderly and persons with disabilities.

The rules would apply if the vehicles were purchased with a grant from FTA’s formula program for elderly and disabled persons and the FTA recipient's activities were more than administrative, for example, hiring and firing employees, selecting routes, or purchasing vehicles. The rules would also apply if the vans were purchased with the categories of FTA funding listed above; however, as noted above, capital assistance can be segregated, i.e., those employees assigned to the FTA-funded vehicles would be subject to drug and alcohol testing.

For your information, I have enclosed a letter on "pass through" State funding which may be of interest to you. If you have any additional questions or comments, please contact Nancy Zaczek of this Office at (202) 366-4011.

Very truly yours,
(Signed)
Gregory B. McBride
Acting Chief Counsel

Enclosure