March 22, 2018

The big transportation story of the Trump Administration so far has been the $30 billion Gateway Program of rail projects in New Jersey and New York. Last June, the US Department of Transportation withdrew from its membership in the joint entity overseeing the project. The Administration has also backed away from a purported agreement between former Transportation Secretary Anthony Foxx and York and New Jersey lawmakers that promised that the federal government, either directly or through Amtrak, would finance half of the cost of the projects through grants (USDOT never put anything in writing on such an agreement).

(For a short history of Gateway, see this timeline.)

House Appropriations chairman Rodney Frelinghuysen (R-NJ) managed to put $900 million towards Gateway projects in the House version of the FY18 appropriations bill last year without violating the House’s ban on earmarks – $500 million towards a Federal Railroad Administration grant program with instructions to spend the money on Gateway-type projects, and $400 million as a set-asde in a Federal Transit Administration program for joint Amtrak-transit rail projects, of which there aren’t many other than Gateway. The word “Gateway,” or the names of any of its constituent projects, never appeared in the legislation. The Senate bill did not follow suit.

Transportation Secretary Chao has been very vocal in refusing to be pushed into approving the projects, and House Speaker Ryan told colleagues that President Trump had personally beseeched him no less than four times to pull the Gateway funding from the final appropriations bill, even personally threatening to veto the bill if the money was included.

This was a major item of disagreement in the House-Senate-WH negotiations, and one of the last items settled. (It is very strange from an institutional perspective for the Senate Minority Leader, Chuck Schumer (D-NY), to be fighting so hard in conference for a House Republican provision that was not in the Senate bill.)

Trump’s victory. The final bill, on its face, accedes to the Administration’s demands. The $400 million set-aside for Gateway in the mass transit capital grant program is removed (and the proposed new Hudson River Tunnel is not a good fit for that program unless specifically funded through the set-aside, because Amtrak is not considered mass transit). And the funding for the FRA grant program was cut in half from the House level and the language implicitly directing the money to Gateway projects removed. So the President can legitimately claim that the “Gateway money” that was in the House bill has been removed.

However… The omnibus bill does contain other provisions that appear designed to keep hope alive for the Gateway projects.

At FTA, the omnibus bill provides an extra $430 million for certain mass transit formula grant programs ($400 million for state of good repair and $30 million for bonus payments to high-density states). Under the existing formulas, about $153 million of that money will go to New York and New Jersey collectively, and they could, if they choose, put that money towards the Gateway program of projects without having to get permission from USDOT.

The agreement also includes report language ordering FTA to give new ratings to Capital Investment Grant project applicants whenever the project sponsor requests – a clear nod to the Gateway program, where FTA gave “medium-low” ratings to both the Portal North Bridge and the Hudson River Tunnel this year, rendering them ineligible for CIG funding unless revised project applications get re-rated to at least a “medium.”

And at FRA, the omnibus bill essentially doubles grants for Amtrak’s Northeast Corridor projects. A Democratic summary of the bill said that Amtrak estimates that $388 million of its $650 million in NEC grants could be used for projects in New York and New Jersey in the Gateway program. However, the Secretary also has a role in that process. Read 49 U.S.C. §24319 – the Secretary can disapprove proposals to spend Amtrak’s grant money, and §24319(g) prevents Amtrak grants from being used for “capital costs of commuter rail passenger or freight rail transportation” which, though vague, may give USDOT a justification for saying “no” to Gateway projects that will be primarily used by Jersey Transit.

$388 million in Amtrak NEC money plus $153 million in NY/NJ formula money equals $541 million which might eventually be applied to Gateway projects. But, as noted above, the Trump Administration does have a role in approving the spending of the $388 million. And Gateway sponsors are still wanting an eventual $7.5 billion in FTA capital grants and $4.6 billion in USDOT loans for just the first two Gateway projects (Hudson River Tunnel and Portal North Bridge), which would have to be approved by Secretary Chao or her successor. (The loan programs in particular are completely at the Secretary’s discretion.)

Late today, the Department of Transportation sent out a formal press statement regarding the treatment of Gateway in the omnibus bill:

Because of the President’s leadership, Congress is now considering a spending bill that provides billions in needed funding for infrastructure projects across the country and also removes preferential treatment for the New York and New Jersey Gateway projects, including complete removal of all language that earmarked or advantaged these local transit projects in earlier versions considered by Congress. The President’s infrastructure principles are reflected in many areas of the final bill including additional infrastructure for rural America and enhancing infrastructure finance programs. The increase in funding for several transportation infrastructure programs, including those for roads, bridges, airports, ports, rail, and transit among the various discretionary competitive grant programs that DOT administers, will assure that deserving projects from all sources can be considered on their individual merits and our entire country’s infrastructure can be improved.