Senators express concern over ballooning costs, excess grant funding for NY-NJ Gateway Program
WASHINGTON, D.C. – U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) and Republican committee members recently pressed Transportation Secretary Pete Buttigieg about the decision-making behind certain grants to the Amtrak NY-NJ Gateway Program and asked the Department of Transportation (DOT) to commit to giving fair consideration to the whole country for grants, rather than favoring the Northeast Corridor.
The letter, which follows up on multiple letters led by Sen. Cruz on this topic, highlights the project’s ballooning costs over the last decade from $13 billion (2012 estimate) to $37 billion (2022 estimate). In addition, Senators are seeking answers on the redirection of money from federal grant programs intended to help smaller communities to the Gateway Program, which has received the largest federal transportation grant in history.
In their letter to Secretary Buttigieg, Sen. Cruz and his fellow lawmakers wrote:
We write to follow up on letters to the Department of Transportation (DOT) earlier this year. In February, Senators Cruz, Thune, and Fischer sent a letter (“the February letter”) asking the administrators of the Federal Railroad Administration (FRA) and the Federal Transit Administration (FTA) about those agencies’ support and oversight of the Amtrak-New York-New Jersey Gateway Program (“the Gateway Program”). In April, Republican senators of the Committee on Commerce, Science, and Transportation wrote asking you to amend funding notices for a major rail grant program that had been drafted to unfairly favor the Northeast and the Gateway Program to the detriment of projects elsewhere in the country (“the April letter”).
You did not respond to the April letter, instead tasking the FRA administrator to respond. Moreover, the agency’s responses failed to either fully answer the questions posed or commit to improving DOT’s approach. DOT’s lack of transparency with Congress and potential misadministration of grant programs, particularly with respect to the billions of dollars in DOT funding for the Gateway Program, are deeply concerning. We request that you rectify the inadequate responses to our past letters by personally answering this letter, and including (1) a description of how DOT will use its authorities to provide oversight and (2)the commitments that we have requested or an explanation why you are refusing to make those commitments.
In February 2022, Amtrak’s Office of Inspector General (OIG) released a report finding that Amtrak lacked a comprehensive framework to manage its commitments to the Gateway Program. Among other concerns, Amtrak lacked an integrated master schedule; a program management plan; and mechanisms to collect and provide information regarding the program’s status, including its budget and schedule. The report indicated a risk to Amtrak’s ability to “meet its commitments in scope, on time, and in budget,” warning that “assessments of prior complex construction and acquisition programs found that when [Amtrak] did not put this framework in place early enough, it experienced cost increases, schedule delays, and stress on its partner relationships as projects matured.”
DOT has awarded more than $8 billion in federal funding to the Gateway Program, despite the Amtrak OIG’s serious concerns about potential cost overruns and schedule delays. Based on the latest estimates from the Gateway Development Commission, the nine projects that comprise the Gateway Program will cost $37 billion over the next 15 years. Grants that DOT has awarded to the Gateway Program include an unprecedent single grant of nearly $7 billion for the Hudson Tunnel project via a Capital Investment Grant (“CIG”), as well as:
You did not respond to the April letter, instead tasking the FRA administrator to respond. Moreover, the agency’s responses failed to either fully answer the questions posed or commit to improving DOT’s approach. DOT’s lack of transparency with Congress and potential misadministration of grant programs, particularly with respect to the billions of dollars in DOT funding for the Gateway Program, are deeply concerning. We request that you rectify the inadequate responses to our past letters by personally answering this letter, and including (1) a description of how DOT will use its authorities to provide oversight and (2)the commitments that we have requested or an explanation why you are refusing to make those commitments.
In February 2022, Amtrak’s Office of Inspector General (OIG) released a report finding that Amtrak lacked a comprehensive framework to manage its commitments to the Gateway Program. Among other concerns, Amtrak lacked an integrated master schedule; a program management plan; and mechanisms to collect and provide information regarding the program’s status, including its budget and schedule. The report indicated a risk to Amtrak’s ability to “meet its commitments in scope, on time, and in budget,” warning that “assessments of prior complex construction and acquisition programs found that when [Amtrak] did not put this framework in place early enough, it experienced cost increases, schedule delays, and stress on its partner relationships as projects matured.”
DOT has awarded more than $8 billion in federal funding to the Gateway Program, despite the Amtrak OIG’s serious concerns about potential cost overruns and schedule delays. Based on the latest estimates from the Gateway Development Commission, the nine projects that comprise the Gateway Program will cost $37 billion over the next 15 years. Grants that DOT has awarded to the Gateway Program include an unprecedent single grant of nearly $7 billion for the Hudson Tunnel project via a Capital Investment Grant (“CIG”), as well as:
- $91.5 million via a Federal-State Partnership for Intercity Passenger Rail (“Fed-State”) grant for the Portal North Bridge and Substation 41, awarded May 2020;
- $766.5 million via a CIG for the Portal North Bridge, awarded January 2021;
- $45 million via a Fed-State grant for the Sawtooth Bridges, awarded August 2022;
- $292 million via a National Infrastructure Project Assistance (Mega) grant for the Hudson Tunnel, awarded January 2023; and
- $25 million via a Local and Regional Project Assistance (RAISE) grant for the Tonnelle Avenue bridge and utility work (for the Hudson Tunnel), awarded June 2023.
In this period of historically high inflation, it is especially important that you be judicious with taxpayer dollars and resist political pressure to simply cut checks to this or any other project. Both the law and simple prudence demand a real evaluation of the huge cost estimates and verification that Gateway Program grantees have the capacity to deliver the planned infrastructure timely and on budget. The February letter inquired about the Gateway Program’s budget and readiness, but DOT failed to respond meaningfully. For example, FRA stated it would employ a “risk-based approach to targeted engagement” with Amtrak, without indicating what aspects of the Gateway Program, if any, would get independent review. Awarding billions of taxpayer dollars to projects that Amtrak and other grantees may not be capable of delivering is financially irresponsible—opening the door to fraud, waste, and abuse.
This recent string of awards reflects what appears to be a troubling effort to prioritize the Gateway Program above deserving projects elsewhere in the country. Indeed, your Department seems to be maximizing the funding for the Gateway Program in many grant programs, whether a good fit or not. As pointed out in the April letter, DOT and FRA manipulated the massive Fed-State grant program to ensure the absolute maximum amount of funding from the 2021 infrastructure law will go to the Northeast (and Gateway), effectively depriving projects from the rest of the country of the opportunity to compete for as much as $7 billion under that program. In his response, FRA Administrator Amit Bose refused to correct this.
This recent string of awards reflects what appears to be a troubling effort to prioritize the Gateway Program above deserving projects elsewhere in the country. Indeed, your Department seems to be maximizing the funding for the Gateway Program in many grant programs, whether a good fit or not. As pointed out in the April letter, DOT and FRA manipulated the massive Fed-State grant program to ensure the absolute maximum amount of funding from the 2021 infrastructure law will go to the Northeast (and Gateway), effectively depriving projects from the rest of the country of the opportunity to compete for as much as $7 billion under that program. In his response, FRA Administrator Amit Bose refused to correct this.
Joining Sen. Cruz on this letter were Sens. Thune (R-S.D.), Wicker (R-Miss.), Fischer (R-Neb.), Blackburn (R-Tenn.), and Budd (R-N.C.).
The signers requested the DOT provide a number of answers related to how the funding for the Hudson Tunnel project was awarded, how much could ultimately be awarded to the Gateway Program overall, what the level of oversight will be for the grant funding, and if the Department will commit to giving states outside the Northeast a real opportunity to compete for DOT-administered discretionary grant programs.
Read the full text of the letter HERE.
BACKGROUND:
In February, Sens. Cruz, Thune, and Fischer expressed deep concern about the anticipated significant federal funding awards for the Gateway Program and asked about DOT’s review of the proposed projects and planned oversight of any funding provided.
In April, Sens. Cruz, Wicker, Jerry Moran (R-Kan.), Todd Young (R-Ind.), Blackburn, J.D. Vance (R-Ohio), and Eric Schmitt (R-Mo.) highlighted how the Biden administration put the interests of the Northeast Corridor ahead of the rest of the country. The favoritism for the Northeast Corridor will effectively deprive the rest of the country (42 states) of even the opportunity to compete for more than $7 billion in funding under the Federal-State Partnership for Intercity Passenger Rail (Fed State) grant program, including $2.9 billion in just the most recent funding notices. It is clear that DOT intends to spend the maximum amount possible on the Northeast Corridor while only the minimum required amount will be spent on the rest of the country. The letter requested that the agency instead advertise the full range of amounts that could be awarded, then fairly evaluate applications from the Northeast and those from the rest of the country. Because the notices have not been updated, the new letter again requests this common-sense change.
In April, Sen. Cruz also sought a commitment from the Biden administration that states outside the Northeast will have “the opportunity to compete for the Fed-State and other discretionary grant programs administered by the Department of Transportation to the fullest extent consistent with the law.” The new letter again seeks this commitment from Secretary Buttigieg.
