After weeks of delay, Congressional negotiators at 9:30 p.m. released the text of the final House-Senate conference agreement on the National Defense Authorization Act (NDAA) of 2019 (S. 1790), which would ban mass transit agencies from using federal funds from purchasing rail cars or buses from Chinese-owned or Chinese-domiciled companies, and would penalize transit agencies that use their own funds for such procurements.

However, the final bill provides for a two-year delay before the funding bans take effect (except for the Washington DC Metro system, where the provisions would take effect immediately).

The bill has already made national headlines because it addresses topic completely unrelated to the Pentagon – a new mandate for up to 12 weeks of paid parental leave for federal employees, which the House put in its version of the bill and which President Trump agreed to accept in exchange for the creation of Space Force.  (See “Sausage, Making of.”)

The House Rules Committee has scheduled a meeting for 3:00 p.m. on Tuesday, December 10 to grant a special rule allowing the conference report to go straight to the House floor for a vote, which could happen as early as Wednesday. So many Democrats have already issued press releases praising the parental leave provision, and the White House is so enamored of Space Force, that passage seems assured. (Dec. 11 addendum: the House agreed to the conference report today at 5:38 p.m. by a roll call vote of 377 to 48. The Senate will consider the conference report next week.)

The final bill would prohibit transit agencies from using any federal funding assistance provided under chapter 53 of title 49, U.S.C. (which is just about all transit funding, except for the annual $150 million capital appropriation to WMATA) from being “used in awarding a contract or subcontract…for the procurement of rolling stock for use in public transportation” from any company that has a manufacturing facility in the U.S. but is “owned or controlled by, is a subsidiary of, or is otherwise related legally or financially to a corporation” based in the People’s Republic of China.

In addition, the bill provides a financial penalty to transit agencies that try to use their own non-federal funds to buy rolling stock from these companies – agencies that do so would forfeit their annual federal apportionment from the State of Good Repair formula program under 49 U.S.C. §5337 in the year that they signed the contract with the Chinese manufacturer. (To see how much money that is for each transit agency, see the FY 2019 apportionment table.)

Like the original versions of this language passed by the House and Senate, the final bill grandfathers transit agencies which already already have contracts to purchase rail transit vehicles from Chinese companies “if the manufacturer and the public transportation agency have executed a contract for rail rolling stock before the date of enactment of this subsection”  (of which there are currently four: Chicago CTA, Los Angeles Metro, Philadelphia SEPTA, and Boston MBTA). In 2017, per APTA, those four agencies operated a collective 19.0 percent of all of the heavy rail, light rail, and commuter rail mass transit cars operated in the U.S. The ban would lock Chinese railcar manufacturers out of any long-term role in the New York area mega-market (43.3 percent of the nation’s transit rail cars in 2017 for the NYC MTA and another 7.1 percent for New Jersey Transit and another 1.8 percent for PATH, totaling 52.2 percent of the U.S. fleet) forever.

Unlike the original House and Senate versions of the provision, both of which would have taken effect the moment the President signs the NDAA bill, the final version has a two-year delay, with application of the provisions not taking effect until two years after the enactment of the bill. But the final bill makes one exception to the delay – both the ban on the use of federal funds and the one-year SOGR funding penalty for signing a new contract with a Chinese manufacturer take effect immediately for the Washington D.C.-area WMATA agency, which has been moving to finalize a new contract for the purchase of its 8000-series cars, with its own local Senators opposing a possible contract with Chinese rail giant CRRC.

Another key point – the two-year delay in the funding ban and the penalty taking effect does not extend the grandfathering date. Any new contracts signed by transit agencies for Chinese rail rolling stock purchases after President Trump signs the NDAA into law will not allow those agencies to sign additional contracts to buy Chinese rolling stock after the two-year delay expires unless the transit agency was one of those that already had a rail rolling stock procurement contract in place prior to the enactment of the NDAA. (Last sentence amended after original publication.)

A short comparison between the House, Senate, and final provisions is below, and the legislative text of the final language is below that.