September 14, 2016

Will Obama USDOT Try to Give Out FY17 Grants in January?

Fiscal year 2017 begins on October 1, and although it is now clear that appropriations for that year will be provided by some kind of temporary stopgap continuing resolution through mid-December, the entire year’s worth of contract authority to fund programs out of the Highway Trust Fund has already been provided by the FAST Act of 2015.

This puts the outgoing Obama Administration in an interesting situation – how far do they want to try to go in giving out discretionary grant funding from the FAST Act and other programs for fiscal year 2017 – since the Obama Administration will only be in place for the first 112 days of the fiscal year, and the next President and Administration will be in charge for the remaining 69 percent of the year?

It is unlikely the Department of Transportation will actually make discretionary grant announcements as long as it is operating under a less-than-full-year appropriations bill. This is for two reasons. First of all, USDOT won’t know exactly how much of its FAST Act contract authority will actually be usable until the appropriations law puts a full-year obligation limitation on the highway program. (The FY 2016 FASTLANE contract authority of $800 million, for example, was reduced by 5.1 percent by the obligation limitation, to $759.2 million.) And a CR extends the prior year’s obligation limitation amounts, pro-rated, which means that the year-to-year increases assumed in the FAST Act can’t take effect under a CR.

Second, each year’s stopgap continuing resolution contains language designed to prevent federal agencies from making irrevocable grant announcements during a “CR.” Here is the language from the FY 2016 CR (Public Law 114-53), which will almost certainly be duplicated word-for-word in the FY 2017 CR to be negotiated this week:

SEC. 109. Notwithstanding any other provision of this Act, except section 106, for those programs that would otherwise have high initial rates of operation or complete distribution of appropriations at the beginning of fiscal year 2016 because of distributions of funding to States, foreign countries, grantees, or others, such high initial rates of operation or complete distribution shall not be made, and no grants shall be awarded for such programs funded by this Act that would impinge on final funding prerogatives.

SEC. 110. This Act shall be implemented so that only the most limited funding action of that permitted in the Act shall be taken in order to provide for continuation of projects and activities.

But nothing in the above actually prevents the Department from requesting that applications be submitted for a discretionary program authorized by the FAST Act – only that they can’t give out the money under a CR.

Indeed, one such solicitation has already gone out. The FAST Act provided a one-time slug of $199 million in contract authority in fiscal 2017 for grants to commuter railroads for implementation of positive train control (PTC) technology. The Federal Railroad Administration and Federal Transit Administration jointly issued a Notice of Funding Opportunity (NOFO) on July 29 of this year directing that applications for the FY 2017 money be submitted by September 27 – four days before the fiscal year actually begins.

But that NOFO does state that “Funding allocations made under this notice are subject to the availability of funds.” And the Department has made clear that none of the selectees will be announced until after a full-year appropriations bill has been enacted and the final amount of contract authority for the full year is formally available under an obligation limitation. (This is also in case the Appropriations Committees decide to “tweak” the eligibility criteria for a discretionary grant program in the appropriations act, which they have been known to do from time to time.)

This raises questions about the biggest discretionary program given contract authority under the FAST Act – the $850 million provided for fiscal 2017 for the FASTLANE grant program (legally, it’s the Nationally Significant Freight and Highway Projects (NSFHP) program, but try pronouncing that acronym).

Rumors are building in the stakeholder community that USDOT will issue a Notice of Funding Opportunity for the FY 2017 FASTLANE money fairly soon, which could give the Department the ability to set an application deadline before Thanksgiving.

Under this scenario, if a full-year DOT Appropriations Act is signed into law by Christmas, USDOT could conceivably send Congress the proposed list of $800 million or so in FY 2017 FASTLANE grant selectees to Congress on the way out the door in January, depriving the next President of the opportunity to utilize the program until 2018.

Under the FASTLANE authorization statute (23 U.S.C. §117(m)), USDOT cannot actually announce FASTLANE grants until 60 days after submitting a list of selectees to Congress. This is to give Congress time to pass a joint resolution of disapproval (over the President’s veto if necessary) rejecting the entire slate of projects. (This year, USDOT cleverly submitted the list to Congress to the Hill right before Congress was taking a seven-week recess.)

The FASTLANE program was sold by its Congressional authors as a freight-focused program, but the Obama Administration’s selection of FY 2016 FASTLANE grants was criticized by freight stakeholders for failing to address the needs of the largest freight hubs that move the vast majority of freight traffic. (The fact that the two largest grants were for I-95 HOV lanes and a bridge into Washington DC from a road on which all commercial vehicles are banned is a particularly sore spot for the freight hub folks.)

Also, the five-year FAST Act authorization limited non-highway projects to no more than $500 million of the five-year $4.5 billion aggregate contract authority total. The Obama Administration used 35 percent of $500 million that in the first year, and if they continue at that pace, the next President would have little to use in 2018, 2019 and 2020.

Should the Administration pursue this approach, the only way for Congress to stop it would be to include language in the full-year appropriations bill delaying the submission of the project list.