As Trump Threatens to Kill New York Tunnel Project, Its Leader Responds

"There’s an important principle here that affects not just Gateway but every major project in the country," says the head of the project that advocates call one of the nation's most crucial.
by | March 9, 2018
The Hudson River tunnels are 107 years old and in need of replacement. (David Kidd)

U.S. Transportation Secretary Elaine Chao shocked lawmakers from New York and New Jersey recently when she harshly criticized the top item on their wish list: new Amtrak tunnels under the Hudson River to replace the deteriorating 107-year-old tunnels currently in use.

It would cost $13 billion to build new tunnels and replace a similarly aged bridge nearby, making it one of the most expensive infrastructure projects in the country.

But advocates say it is also one of the nation's most crucial projects right now because the economic consequences would be enormous if one of the existing tunnels were to fail.

This week, however, Chao confirmed that President Trump personally asked House Speaker Paul Ryan to stop the project from getting funding, as first reported by The Washington Post. A lawmaker from suburban New Jersey is trying to include $950 million in an upcoming spending bill to get the project off the ground. Trump has even threatened to veto Congress' omnibus spending bill if it includes any funding for the project, Politico reported Thursday.

“Yes,” Chao told a U.S. House committee this week. “The president is concerned about the viability of this project and the fact that New York and New Jersey have no skin in the game. They need to step up and bear their fair share. They are two of the richest states in the country. If they absorb all these funds, there will be no other funds for the rest of the country.”

The criticism was stinging for many proponents of the so-called Gateway Program, an effort to improve the Hudson River crossings along with New York’s Pennsylvania Station and rail service into midtown Manhattan over the next several decades. That’s because, after prodding from the Obama administration, officials from New York and New Jersey had finally agreed to a funding plan that would amount to a 50-50 split for the cost of the Hudson River tunnels between the states and the federal government.

The Trump administration has refused to honor the informal, but widely touted, 2015 deal.

“There is no such agreement,” a Trump transportation official told the states’ governors in December. “We consider it unhelpful to reference a nonexistent ‘agreement’ rather than directly address the responsibility for funding a local project where nine out of 10 passengers are local transit riders.”

Chao said last week that her department could find no record of the deal other than statement by her predecessor at a campaign rally.

After Chao’s testimony, Governing spoke with John D. Porcari, the interim executive director of the Gateway Program, about what the Trump administration’s criticisms meant for the initiative.

The following conversation has been condensed and edited for clarity.

 

Why should people from outside the New York region pay attention to the fate of the Gateway Program?

For the same reason that you should care about the international terminal in Miami’s airport or Interstate 80 through Wyoming. They’re serving a local function, but they’re also serving a national function.

We wouldn’t have the air cargo and passenger connections to the world, and especially South America, in the case of Miami. We wouldn’t have the east-west goods movements across the country without the interstate system through Wyoming, Nebraska and North Dakota.

Gateway on a day-to-day basis absolutely serves the region. But that’s a region that represents 10 percent of America’s GDP. And the Northeast Corridor is almost 30 percent of America’s GDP. So it’s clear that the transportation facilities are important to the nation as a larger system, and Gateway is one of the single most important pieces to a system that serves the national economy.

 

Has the Trump administration been receptive to that argument?

When we talk about the merits of the project, people agree and it has strong support.

If you don’t think it’s an urgent national priority to replace a tunnel and a bridge that were carrying passengers when the Titanic was under construction and Wilbur and Orville Wright were building their Model B flyers, then we have bigger issues. This is a national poster child for infrastructure renewal that is long overdue.

 

What about Secretary Chao’s argument that Gateway is so big that, if it did get that 50 percent match, it would basically crowd out all of the other infrastructure projects that are lined up around the country?

There is no question that it is a very big project. But there have been other very big projects in the past that the federal government has honored that 50-50 funding commitment for.

I can tell you from personal experience, from my days as [Maryland] state transportation secretary, one example of a project with regional and national significance was the Woodrow Wilson Bridge project, a new I-95 bridge over the Potomac River. It was a $2.4 billion project, and $1.5 billion was direct federal funding.

[The lack of available funding] underscores the larger issue that we’re not adequately funding in infrastructure across the board. Gateway may be the most urgent infrastructure project in America, but there are a lot of projects beside Gateway that are deserving of funding for economic development reasons, just like Gateway is.

 

Secretary Chao said that New York and New Jersey want to pay nothing for one of the initial phases of the Gateway Program, and have offered to pay only 5 percent for another phase. Specifically, she mentioned that “they’re going to use TIFIA loans, which they’re going to get from us, as part of their down payment.” 

[TIFIA, or Transportation Infrastructure Finance and Innovation Act, loans are federally subsidized loans or loan assistance initiatives for major projects. Federal grants typically require a match from a state or local entity, but federal law specifies that TIFIA loans can be applied to the non-federal share of a project’s costs.]

Is this a semantic difference or a deeper policy disagreement?

There’s an important principle here that affects not just Gateway but every major project in the country.

TIFIA was set up specifically to help finance the local portion of a project of regional or national significance. In projects like Gateway, which is nationally significant, it cannot go forward without a federal funding partner. Typically, that’s been 50-50. If you look at every other project around the country that has used [these loans], TIFIA, by statute and by practice, has been a finance mechanism for the local share. Rewriting history to say the federal loan programs count as part of the federal funding for the project is contrary to the way that every other project in the country has worked.

The larger point is that local jurisdictions – in this case, the states of New York and New Jersey – have made a very substantial financial commitment for their half of Phase 1. It is in anticipation that we will have a federal funding partner there.

 

Let’s go back to the president’s infrastructure proposal, which was announced last month. How do you think that plan would affect Gateway if it's passed?

Any proposal that is essentially a zero-sum game financially – that has no new funding source and would have to be funded at the expense of existing infrastructure programs – is not a net gain for the country. [Trump's proposal includes $200 billion in federal infrastructure spending, but most or all of that money would come from other existing transportation budgets, including Amtrak and other transit programs.]

 

The administration’s proposal includes money for “transformational projects” that use new technology. Do you think that, with the allure of technology like hyperloops or mag-lev trains as alternatives to this project, there is a possibility that people will think we don’t need a project like Gateway?

Gateway is the here and now. We have a replacement for a 107-year-old bridge that is 100 percent designed, ready to go, fully permitted and could be under construction this year. That’s opposed to discussions about projects that are only partly defined, are not designed at all and certainly don’t have the right-of-way in place.

I wish all these projects well. This is not a zero-sum game. But whatever you think about those projects for the future, you still have to take care of today and make sure we don’t have a catastrophic impact on the nation’s economy from an aging facility that should have been replaced generations ago.

 

Is Gateway being held up because of politics? Senate Minority Leader Chuck Schumer of New York has delayed votes on several presidential nominees for transportation positions to try to push this forward. President Trump has reportedly discussed exchanging his support for Gateway for Democrats supporting the construction of a wall on the U.S.-Mexican border. So is this dispute about politics or policy? 

I have no idea what the objections are. If you look at the merits of the project, they’re overwhelming. By any objective analysis, this project would be fully supported and under construction today. If transportation and infrastructure is foundational to economic development, this is a very compelling case.

For the life of me, I can’t understand why anyone who is charged with building and preserving the infrastructure for the United States wouldn’t be fully supportive of this project.

 

There has been a lot of discussion about the cost overruns and delays incurred by the New York subway system as it has constructed tunnels in and around Manhattan. How would Gateway avoid similar problems in the same area?

For the tunnel, one of the great advantages we have is being able to use whatever procurement method is most advantageous. We can do it through a public-private partnership. We can do it through a design-build contract. Or we can use a more traditional process like a design-bid-build. The [subway] projects you’re referring to have been more conventionally procured.

We held a request-for-information process over the last six months to get the best thinking from the private sector around the world on how to reduce or eliminate technical uncertainty and financial uncertainty, how to build it better and faster with less risk, and how the private sector could absorb some of those risks for cost increases or schedule delays.