Please find the detailed talking points linked below. We encourage you to review them carefully and use them to engage with stakeholders and your communities.

Defining Special Districts in Federal Law 

April 2025

The National Special Districts Association (NSDA) is aiming to pass legislation that would define special districts in federal law and is excited to announce the reintroduction on Friday, April 9, 2025. 

Background and Context

NSDA is currently working with our congressional partners on legislative efforts designed to establish a first-ever, formal definition of “special district” in the U.S. Code. 

In the House, Representative Pat Fallon (R-TX) is the Sponsor with Brittany Pettersen (D-CO) as the Co-Lead.

NSDA’s Legislative Objectives:

This legislation aims to:

1. Establish a first-ever, formal definition of “special district” in federal law
2. Direct OMB to issue guidance to federal agencies requiring special districts to be recognized as local governments for the purpose of federal financial assistance determinations. Federal agencies would have one year to implement OMB’s guidance.

A formal definition of “special district” would foster consistency and enhance special districts’ access to a number of federal programs. Moreover, having a formal definition of special district codified in law would help facilitate the inclusion of special districts in future legislative proposals on Capitol Hill.

Examples of Barriers to Federal Funding for Special Districts:

Many special districts face obstacles when applying for federal funding. Examples include:

• Transportation Alternatives / Rails-to-Trails: Many local park districts cannot access the U.S. Department of Transportation’s (USDOT) Transportation Alternatives (TA) program, as special districts are not Metropolitan Planning Organizations (MPOs) or do not meet USDOT’s TA eligibility criteria.
• USDOT’s Reconnecting Communities Program: Special districts are not listed in the program guidance as eligible entities. However, DOT staff has advised that special districts could qualify as a unit of local government or a non-profit organization depending on how the district is structured.
• U.S. Department of Agriculture (USDA) Rural Housing Preservation Grants: Similar to the above example, USDA staff has expressed uncertainty regarding special district eligibility for this grant program.
• U.S. Environmental Protection Agency’s (EPA) Clean-Heavy Duty Vehicles Program: Special districts are not explicitly listed as eligible entities in the program guidance, and it remains unclear if districts qualify under the program’s “municipality” umbrella.