A federal highway funding bill which authorizes the surface transportation programs for highways, highway safety, and transit. Based on this authorizing legislation, Congress provides an annual appropriation to FTA which apportions and allocates these funds to both formula and discretionary grant programs. Financial assistance is available to transit systems to develop, improve, maintain and operate existing systems including buses, subways, light rail, commuter rail, monorail, passenger ferry boats, trolleys, inclined railways and people movers. FTA funds are provided under SAFETEA-LU to designated recipients that must be public bodies (states, cities, towns, regional governments, transit authorities, etc.) with the legal authority to receive and disburse funds. The grantees are responsible for managing their programs in accordance with federal requirements, and FTA is responsible for ensuring that grantees follow federal mandates along with statutory and administrative requirements.

SAFETEA-LU was signed into law in August 2005. It authorized three new programs: New Freedom; Transit in the Parks; and Alternatives Analysis. The Jobs Access Reverse Commute (JARC¬) program became a formula program. Many transit programs such as Sections 5307, 5309, 5310 and 5311 were largely unchanged by SAFETEA-LU. Capital costs were expanded including provisions that make mobility management, certain safety and security costs, and intercity bus features in intermodal terminals eligible for reimbursement as capital expenses. In addition, new provisions related to Buy America, bus dealer requirements, and labor protections were added. Under SAFETEA-LU additional emphasis was placed on public participation, coordination, environmental considerations, and security. Rural reporting to the National Transit Database was added as well as pre-award and post-delivery audits.