Chao Defends FY21 USDOT Budget in House Hearing

Transportation Secretary Elaine Chao yesterday gave her first defense of the Trump Administration’s fiscal 2021 USDOT budget request, before the House Appropriations Committee.

The two-hour hearing (video here) covered a wide variety of topics. In her prepared statement, Sec. Chao pointed out that the $89 billion total USDOT budgetary request is a 2 percent increase over the fiscal 2020 enacted level, and criticized presentations of the budget which only focus on the portion of the USDOT budget that comes from annual discretionary appropriations (which would decrease under the budget request, from $25.0 billion to $22.1 billion, on a gross basis), instead of the portion that comes from multi-year mandatory funding, which would increase from $62.2 billion to $67.1 billion, also on a gross basis). However, since the Appropriations Committee only has jurisdiction over the annual discretionary appropriation portion of the USDOT, this was probably the wrong audience for that argument.

Her statement also teased that USDOT would be releasing the full text of its ten-year surface transportation reauthorization bill “in a few short months” and emphasized that “No major changes are envisioned to the current formula distributions for States and other recipients.” (Ed. Note: This likely means that the relative distribution of highway funding to states will continue to be based on population, lane-miles, VMT, bridge repair needs, local clean air attainment, and other factors as they existed in calendar year 2007 (the basis for the FY 2009 apportionments, which are still the basis of the shares used by the FAST Act through FY 2020), plus the FY 2009 tranche of the $22 billion in pork barrel highway earmarks from the 2005 SAFETEA-LU law, extended all the way to FY 2030. If any facts on the ground have changed since 2007, it doesn’t matter – the only post-FY09 variable is how much Texans pay into the Highway Account of the Trust Fund.)

Coronavirus. Befitting a day when the Dow was in the process of dropping nearly 1,200 points due largely to fears of the spread of the new variant coronavirus, Transportation-HUD Subcommittee chairman David Price (D-ND) led off the questioning asking for a broad overview of DOT’s responsibilities and actions. Chao said that DOT is part of the Administration coronavirus task force, of which the Department of Homeland Security is the lead agency, in bringing home U.S. nationals who have potential coronavirus exposure, working at 11 designated airports to screen potentially exposed passengers, working for sanitization in air cargo security, developing health protocols for aircraft crews, and distributing health messages for airlines to give to passengers. She said that, in cooperation with international counterparts, over 15,000 returning U.S. nationals have been tested or vetted. She also mentioned that while USDOT has some responsibilities in the maritime sector, things like cruise ships etc. are the responsibility of the Coast Guard.

Gateway. With Rep. Nita Lowey (D-NY) as chairman of the Appropriations Committee and Rep. Bonnie Watson-Coleman (D-NJ) a member of the THUD subcommittee, the subject of the Gateway program of high-priced rail projects in New York and New Jersey was bound to come up. In her oral statement, Sec. Chao said she was pleased that the Portal North Bridge replacement project had finally formalized all of the parts of its financing plan so that it was able to get a Medium-High rating from Federal Transit Administration career staff, which makes it eligible to move into the Engineering phase of the Capital Investment Grant program and thence to, possibly, getting an $811 million federal funding grant agreement (though Chao could not provide any timeline for that process).

With regards to the much-more-expensive (CIG share: $5.3 billion) proposal for a new Hudson River tunnel, Chao surprised the committee by volunteering that it might be a good idea to try to repair the existing twin-tube tunnels without taking them out of service, while the process of trying to fund and construct a new tunnel is still going on. Chao pointed out the new tack taken by New York Governor Andrew Cuomo, who brought outside engineers in to study the East River rail tunnels and found that they could be repaired without taking them out of service, which is the opposite of what the private sector engineering consultants had previously told New York.

Cuomo’s surprise actions on the East River tunnel obviously prompted a lot of questions about whether or not the same approach might be possible on the Hudson side, because if it were, it would eliminate the safety-related urgency of the need for a new twin-tube tunnel (Gateway proponents have long been pushing the horror story of the New Jersey Transit and Amtrak cancelations that would result if one of the existing tubes failed and had to be taken out of service before new capacity is ready). Lowey pushed back against Chao’s statement, saying that even if you could fix the existing tunnels without taking them out of service, that wouldn’t increase existing capacity, which is one of the bottlenecks on the Northeast Corridor. (One look at the Gateway timeline makes clear that the tunnel was originally all about new capacity and had nothing whatsoever to do with any need to fix the existing tunnels – the justification for the new tunnel were retconned after Almost-Hurricane Sandy flooded the existing tunnels in 2013.) In response to a question from Watson-Coleman, Chao could not give a timeline for the Federal Railroad Administration approving the long-delayed Environmental Impact Statement for the new tunnel.

Chinese rolling stock. Subcommittee ranking minority member Mario Diaz-Balart (R-FL) pointed out that he and full committee ranking member Kay Granger (R-TX) started the process of restricting transit agency purchases of mass transit rolling stock from Chinese-owned manufacturers (the eventual ban was signed into law in December 2019 in the annual defense authorization bill, but the first such ban to come up for a vote in either chamber was in 2018 on the THUD appropriations bill in the House). Diaz-Balart asked Chao about the implementation of the ban and USDOT efforts to increase awareness among transit agencies. She responded that the Federal Transit Administration is working with the U.S. Trade Representative to get an official legal opinion of which manufactures are included in the ban (the text of the law does not single out countries but makes reference to unnamed countries that are on various USTR hit lists) and that once that opinion is in-hand, they will begin the official notification of all transit agencies. She said FTA intends to use the annual grant certification process to enforce the ban.

5.9 Ghz spectrum. Rep. Mike Quigley (D-IL) questioned DOT’s assertion that the entire 75 Mhz of wireless bandwith currently reserved for transportation purposes in the 5.7 Ghz range should continue to be reserved for transportation, instead of reducing the transportation share to 30 Mhz as proposed by the Federal Communications Commission. He pointed out that the auto industry has had 20 years to develop applications for using the full 75 Mhz and has failed to do so. Chao responded that she wondered that as well, but that the mistakes of the past should not be carried into the future. She added that the “precious real estate” in the spectrum should be reserved for transportation, although there was not yet one single set of technologies that the government had identified to use that spectrum for safety that could be identified for deployment (yet).

Permitting reform. Granger through Chao a softball on the subject of permitting delays and the Trump Administration’s commitment to reducing permitting burdens. Chao said that the One Federal Decision order from the White House was a huge accomplishment in getting the executive branch’s internal policies synchronized, and that the December 2019 USDOT “rule of rules” was an attempt to synchronize all of DOT”s rulemaking processes in one place. With regards to the White House’s more recent proposal on redefining compliance procedures under the National Environmental Policy Act (NEPA), Chao simply said that there can be improvements in the process without compromising environmental impact or safety.

Rail safety. Rep. John Rutherford (R-FL), who represents the Jacksonville area (where CSX is based), asked why, after Congress repealed Federal Railroad Administration user fees for rail safety activities in 1995, the Administration’s budget proposed to re-establish such fees to offset $50 million per year of FRA overhead. Chao responded that railroads get direct and indirect benefits from government-enforced safety standards, so it is appropriate for railroads to bear some of the direct costs of enforcing those standards. Rep. Norma Torres (D-CA) asked about efforts to reduce trespassing on railroad right-of-way (a major cause of fatalities), and Chao assured her that it was a major focus of hers back in the 1990s when she was Deputy Secretary and was still a major focus today.

Later, Watson-Coleman asked about the final (?) December 2020 deadline for positive train control implementation, and whether or not New Jersey Transit (a perpetual problem child amongst commuter rail providers in this regard) was going to make the deadline. Chao did not have specific information on NJT’s status but gave an overall positive update on implementing the mandate.

Maritime. Rutherford also gave Chao an opportunity to pledge fealty to the Jones Act, which Chao gratefully accepted, saying that while DOT is a strong supporter of the Jones Act, other federal agencies might disagree, but the Jones Act is still the law of the land and will be enforced. Rep. Will Hurd (R-TX) asked about the requested fourth $300 million installment of funds to build new training vessels for the six state maritime academies (following $300 million per year in 2018, 2019, and 2020), and Chao assured Hurd that the FY 2021 installment was scheduled to build a ship for the Texas academy in Galveston.


BUILD grants. Rep. Brenda Lawrence (D-MI) complained about Michigan’s lack of any BUILD grants from the Office of the Secretary in 2019. (She was correct – Michigan was one of 14 states that did not receive any FY 2019 BUILD money, and while the Wolverine State did receive a large FY 2018 BUILD grant, that was for a rural area in Western Michigan, far from the metro Detroit area represented by Lawrence). However, Lawrence then wandered into criticism of Sec. Chao for alleged favoritism to Kentucky (home state of Chao and her husband, Senate Majority Leader Mitch McConnell) in the BUILD grant selection process, prompting a tense back-and-forth that was later taken up by Diaz-Balart on Chao’s behalf.

For the record: under the Trump Administration (the FY 2017, 2018, and 2019 grant cycles), Kentucky ranks sixth among states in total BUILD awards ($97.9 million, behind (in order) Texas, North Carolina, Florida, California, and Missouri). However, a better way to detect political favoritism in grant awards is by per capita distribution. In that analysis, the Bluegrass State ranks 14th, behind Iowa and just ahead of Louisiana. (We changed the presentation from DOT’s because a 2018 grant to WMATA that DOT scores as being for the District of Columbia actually went to upgrade seven Metro stations which were all in Virginia, so we altered the table to move that money from DC to VA – thanks to Matt Dickens for pointing that out). Kentucky does well, but it’s not a slam-dunk case of DOT obviously having a thumb on the scale in its favor:

Chao said that “the Senior Senator from Kentucky complains his state does not get enough” BUILD grants. (Ed. Note: If BUILD grants were all that mattered, McConnell could quit being Majority Leader, which would make him eligible to exercise his seniority on the Appropriations Committee and bump Susan Collins (R-ME) out of the chairmanship of the Transportation-HUD Subcommittee, in which case Kentucky’s share of BUILD grants would almost certainly increase, no matter who was Secretary.)

Regional accelerator pilot. Rep. Torres asked Sec. Chao about the status of the regional accelerator pilot program, authorized in 2015 to assist localities in accelerating the development of projects eligible for TIFIA loans, but not funded until the FY 2020 appropriations act ($5 million). Chao answered that they hoped to solicit applications this spring and select awards recipients later this year.  Possibly by coincidence, a request for information on this program on this program was published in the Federal Register this morning.

737 MAX. Chairman Price asked Chao about her responsibilities for overseeing the return to service of the Boeing 737 MAX. She responded that many of these authorities are vested in the FAA Administration, not the Secretary (this is true – when Congress passed the law creating DOT in 1966, part of the political give-and-take was that the Secretary was not allowed to overrule the FAA Administrator on most aviation safety regulatory decisions).  Chao responded that, while there was no deadline to return the MAX to service, her responsibility was to make sure that the FAA was free from outside influences as they work through the new airworthiness directives and consider whether or not to rescind the grounding order. She then added that she reserved the right to ensure that the FAA took any additional safety actions, as needed.

Grant processing. Price, as subcommittee chairman, took DOT to task for their slowness in issuing discretionary grants appropriated by the subcommittee, particularly railroad grants. In particular, he singled out $679 million in fiscal 2019 grants for various railroad programs that still hasn’t gone out, so Price later added a May 1, 2020 statutory deadline for DOT to put out the money. When asked if DOT would meet that deadline, Chao said “I sure hope so” and added that they were very aware of it. She went on to say that FRA was originally a safety regulator only, and they have suddenly become a large grant-making organization only in the last three years.

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