Definition of "State" in FTA 4220.1F

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Q. How does FTA determine whether a specific entity is a State agency or State instrumentality for purposes of implementing FTA's procurement requirements?

A. Whether or not an entity is a State or qualifies for State privileges by virtue of being an agency or instrumentality of a State is important for federally assisted procurements because States and State agencies or instrumentalities may use State procurement, property management, and subgrant management procedures rather than the procedures imposed on other recipients of Federal assistance by the U.S. Department of Transportation regulations, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments" (Common Grant Rule), 49 C.F.R. Part 18 (Common Grant Rule).

Federal law and regulations acknowledge somewhat different meanings for "State instrumentality."

For example, Federal Transit Law at 49 U.S.C. 5302(a)(13) defines "State" to mean

...a State of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, Guam, American Samoa, and the Virgin Islands, but does not define state agency or State instrumentality.  The Common Grant Rule defines "State" to include "...any agency or instrumentality of a State exclusive of local governments. 

The definition goes on to state that, "The term does not include any public and Indian housing agency under United States Housing Act of 1937." 49 C.F.R. § 18.3.

As part of its application for Federal assistance, each applicant must select between one and three categories of "Type of Applicant" listed on the Federal Government's SF-424 (which is encompassed in FTA's TEAM system).  If an applicant identifies itself as a "State Government" as provided on the SF-424, but if it is not obvious to FTA that the applicant qualifies as a State agency or State instrumentality under the standards of the Common Grant Rule, FTA reserves the right to request that the applicant corroborate its claim for procurement privileges accorded to States under the Common Grant Rule by obtaining a positive opinion of the Attorney General or the highest ranking legal official of its State.  In general, it has been FTA's position that even if a State government provides financial support to a recipient's project, if an entity has attributes of a "local government," it does not qualify as a "State" for purposes of special privileges afforded States by the equipment management procedures of 49 C.F.R. § 18.32(b), the procurement procedures of 49 C.F.R. § 18.36(a), and the subgrant management under 49 C.F.R. §§ 18.37(a).

FTA recipients are also concerned about their status for purposes of section 5(b) of the Cash Management Improvement Act of 1990, as amended (CMIA), 31 U.S.C. § 6503(b).  This law authorizes the Secretary of the Treasury to enter into a specific agreement with each State establishing procedures by which transfers of Federal funds are made to States, including (with certain exceptions) interest penalties for

...from the time funds are deposited by the United States to the State's account until the time that funds are paid out by the State in order to redeem checks or warrants or make payments by other means for program purposes.

For purposes of the CMIA, the Secretary of the Treasury defines "State" at 31 C.F.R. § 205.2 as does 49 U.S.C. 5302(a)(13).  The CMIA definition, however, goes on to provide that "It includes any agency, instrumentality, or fiscal agent of a State that is legally and fiscally dependent on the State Executive, State Treasurer, or State Comptroller."  The Department of Treasury, which administers agreements negotiated with States under its "Rules and Procedures for Efficient Federal-State Funds Transfers," 31 C.F.R. Part 205, determines the status of entities for purpose of the CMIA. (Revised: May 2010

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