The FY20 Budget: USDOT Competitive Grant Programs

March 20, 2019

What a difference a year makes.

In its fiscal 2019 budget request, the Trump Administration requested zero dollars ($0.00) of general fund appropriations for new competitive grants where USDOT would be able to select new projects to receive grants from a field of applicants. Congress instead provided nearly $4 billion for such programs in the final 2019 appropriations bill.

In its new fiscal 2020 budget request, the Trump Administration has completely reversed course and requested almost $4 billion in general fund appropriations for such competitive grant programs, albeit distributed a bit differently than Congress did in 2019.

Major Competitive Grant Programs Where the Secretary of Transportation Picks Winners – General Fund Discretionary Only

Millions of dollars.
FY19 FY19 FY20
Request Enacted Request
OST BUILD Grants 0.0 900.0 1,000.0
OST INFRA Grants 0.0 0.0 1,035.0
FAA AIP Grants 0.0 500.0 0.0
FHWA Bridge Grants (Competitive) 0.0 0.0 300.0
FRA Fed-State Partnership Grants 0.0 400.0 0.0
FRA Consolidated Rail Grants 0.0 255.0 330.0
FRA Restoration/Enhancement Grants 0.0 5.0 550.0
FRA Magnetic Levitation Grants 0.0 10.0 0.0
FTA Buses (Competitive & No-Low) 0.0 190.0 250.0
FTA Capital Investment Grants 0.0 1,391.5 494.8
MARAD Assistance to Small Shipyards 0.0 20.0 0.0
MARAD Port Infrastructure Grants 0.0 292.7 0.0
Total, Competitive GF Disc. Grants 0.0 3,964.2 3,959.8

Now, in the area of contract authority provided by trust funds (outside the appropriations process), there are other competitive grant programs (INFRA grants, bus grants, and a competitive side of airport grants) that the appropriators did not tinker with in 2019 and which the Administration does not propose to alter in 2020. But in terms of the room that the Appropriations Committees would have to to find under their annual budget ceiling, the Trump 2020 budget is identical to Congress’s 2019 enactment.

Which again, is a far cry from the situation a year ago.

OST BUILD Grants. The Administration has requested an even $1.0 billion for BUILD grants (formerly known as TIGER grants), $100 million more than last year but twice as much as the ballpark of $500 million per year the program was receiving prior to the February 2018 budget deal. In its proposed appropriations bill language, the Administration does not want planning grants made eligible for funding. Much of the other bill language is similar to that in prior years, but the Administration is also proposing to get rid of the maximum grant award size limitation, which has been set at $25 million in recent years. (They are keeping last year’s restriction that no more than 20 percent of the money can go to projects in a single state, so that means that the maximum size of a BUILD project in a single state would be capped at $200 million, 20 percent of the total proposed appropriation. $200 million is also the maximum grant size allowable by Congress in the fiscal 2010, 2011, 2012, 2013, 2014 and 2015 TIGER programs, but after 2010 USDOT quickly shrank maximum grant sizes to the point that when Congress took the maximum allowable size down to $25 million, it was just a reflection of facts on the ground.)

The urban-rural balance of BUILD grants has been a point of contention between Congress and the Trump Administration – Congress traditionally set aside no less than 20 (later 30) percent of TIGER funding for projects in rural areas, but that was a floor, not a ceiling, and when the Trump Administration started putting two-thirds of BUILD money in rural areas, Congress mandated a 50-50 rural-urban split (no more, no less) in the 2019 bill. The Administration proposes to go back to a 30 percent rural minimum with no rural maximum.

National Infrastructure Investments (TIGER/BUILD Grants) Account
FY 2017 FY 2018 FY 2019 FY 2020
Enacted Enacted Enacted Request
Total Appropriation $500 million $1.500 billion $900 million $1.000 billion
Oversight Set-Aside $20 million $25 million $27 million $25 million
Remaining for Grants $480 million $1.475 billion $873 million $975 million
What is Eligible For Funding?
Highways and Bridges Under Title 23 Yes Yes Yes Yes
Mass Transit Under Title 49 ch. 53 Yes Yes Yes Yes
Passenger Rail Yes Yes Yes Yes
Freight Rail Yes Yes Yes Yes
Port Infrastructure Yes Yes Yes Yes
Planning Grants No Yes Yes No
Grant Sizes and Federal Shares
Max. Grant Size $25 million $25 million $25 million No max.
Min. Non-Rural Grant Size $5 million $5 million $5 million $5 million
Min. Rural Grant Size $1 million $1 million $1 million $1 million
Max. Non-Rural Fed. Share 80 percent 80 percent 80 percent 80 percent
Max. Rural Federal Share 100 percent 100 percent 100 percent 100 percent
Set-Asides For Types and Locations of Projects
Max. Set-Aside for Credit Subsidies 20 percent 20 percent 20 percent 20 percent
Max. Single-State Total Grants 10 percent 10 percent 10 percent 20 percent
Min. Rural Area Set-Aside (FY19 max) 20 percent 30 percent 50 percent 30 percent
Urbanized Area Set-Aside n/a n/a 50 percent n/a
Max. Set-Aside for Planning Grants n/a $15 million $15 million n/a

OST INFRA Grants. The INFRA grant program (formerly called FASTLANE, real statutory acronym the unpronounceable NSFHP) is governed by 23 U.S.C. §117 and makes competitive grants for large freight projects. The program is funded out of Highway Trust Fund contract authority and is scheduled to receive $1.0 billion in contract authority in 2020 (the usable amount will be reduced by the application of the highway program obligation limitation down to around $930-940 million). The Administration is requesting an additional $1.035 billion in general fund appropriations to supplement the program, which should take the usable 2020 total to around $2.0 billion.

The Administration proposes that the $1.035 billion in GF money requested for the program be spent in the exact same way as the Trust Fund portion of the program (after a $10 million oversight set-aside), save one. Because the Trust Fund INFRA program is paid for by highway users (particularly the trucking industry), there was a sensitivity about using highway user dollars for too many projects benefiting railroads. So Congress provided, in section 117(d)(2)(A), that no more than $500 million over the five-year 2016-2020 period could go towards non-highway (intermodal) freight projects.  Over three years, USDOT has used $300.3 million of that $500 million limitation, with the 2019 and 2020 Trust Fund installments of INFRA still to go:

INFRA Grants – the $500 Million Five-Year Cap on Intermodal, Rail Freight, and Private Facility Grants in 23 U.S.C. §117(d)(2)(A)
FY 2016 $173,445,075
FY 2017 1st Tranche $52,255,615
FY 2017-2018 2nd Tranche $74,647,471
Total Used to Date $300,348,161
Remainder for FY19-20 $199,651,840

Since the Administration proposes to find the $1.035 billion from general revenues, none of those truckers-vs-railroads user-pay arguments apply, so the Administration proposes appropriations bill language stating “That the limitation at 23 U.S.C. 117(d)(2)(A) shall not apply to the funding provided under this heading” so that DOT can give as much of the $1.035 billion as it wants to rail, port, and intermodal freight projects.

The Administration also proposes language to ensure that the disadvantaged business enterprise set-asides and certifications under section 1101(b) of the FAST Act will apply to the $1.035 billion.

FHWA Bridge Grants. The 2018 DOT Appropriations Act provided $225 million from the general fund for “a competitive highway bridge program for States that have a population density of less than 100 individuals per square mile.” The 2019 DOT Appropriations Act provided $475 million from the general fund for bridges, but made it a formula program (not competitive) for “qualifying States” (meaning “a State for which the percentage of total deck area of bridges classified as in poor condition in such State is at least 7.5 percent” – there are 19 such states, and they got the money on March 15, 2019).

The 2020 budget requests $300 million from the general fund “For a competitive highway bridge program” which shall be “used for discretionary grants to States (as defined in section 101(a)(26) of title 23, United States Code), for replacement or rehabilitation projects on highway bridges on public roads classified as rural in the 2018 National Bridge Inventory that demonstrate cost savings by bundling multiple highway bridge projects.” The proposed appropriations language would make the DBE requirements of section 1101(b) of the FAST Act apply to the $300 million, would also apply the usual “as if apportioned under chapter 1 of title 23” procedures to the money, and would provide that the $300 million not affect formula distributions. Interestingly, the budget language proposes to waive one requirement of 23 U.S.C. §144 – the requirement in §144(j)(5) that bridge projects to be “bundled” together in a single grant must be in the same funding category or subcategory and must have the same federal cost share.

FAA AIP Grants. The 2019 appropriations act provided $500 million in general funds to supplement the Airport Improvement Program, which is otherwise funded from the Airport and Airway Trust Fund. The $500 million was to be for discretionary grants only and “not be subject to apportionment formulas, special apportionment categories, or minimum percentages.” This followed a similar $1.0 billion appropriation in 2018. The Administration does not propose to make any such appropriation in 2020.

FRA Rail Grant Programs. The FAST Act of 2015 established three new competitive grant programs under the Federal Railroad Administration. After the February 2018 budget deal, Congress began appropriating some serious money into these programs, and the 2020 budget proposes to continue that, but mostly in way intended to promote its ideas on Amtrak reform.

New Intercity Rail Grant Programs Authorized by the FAST Act
FY 2019 FY 2019 FY 2020 FY 2020
49 U.S.C. Program FAST Approp. FAST Request
§22907 Consolidated Rail Grants 255.0 255.0 330.0 330.0
§24911 Good Repair Partnership Grants 300.0 400.0 300.0 0.0
§22908 Restoration/Enhancement Grants 20.0 5.0 20.0 550.0
Total, New Rail Grant Programs 575.0 660.0 650.0 880.0

The Federal-State Partnership for State of Good Repair grant program was funded handsomely in 2018 and 2019 because former House Appropriations chairman Rodney Frelinghuysen (R-NJ) and Senate Democrats wanted to put money into a program for which the proposed Hudson River Tunnel and other Gateway Program projects would at least be eligible (even if a veto threat from President Trump, along with Congress’s self-imposed earmark ban, prevented the appropriations bill from formally directing any money to those projects. The Administration proposes to zero out that program, but Congress is unlikely to agree.

The Consolidated Rail Infrastructure and Safety Improvements grant program, by statute, has broad eligibility, but number one on the list of eligible projects is “Deployment of railroad safety technology, including positive train control and rail integrity inspection systems.” In fiscal 2018, Congress appropriated $592.5 million for the program, of which $250 million was set aside for PTC (another $35 million was set aside to restore intercity passenger rail service and was clearly destined for the Gulf Coast and reconnecting the Sunset Limited). The fiscal 2019 appropriation was $255 million and did not have any specific set-aside amounts for any particular kinds of projects. The Administration requests $330 million for the program in 2020, the amount authorized by the FAST Act, with no deviations at all from the statutory criteria.

While the first two programs are capital grants, the Restoration and Enhancement grant program is an operating subsidy program – “a program for issuing operating assistance grants to applicants, on a competitive basis, for the purpose of initiating, restoring, or enhancing intercity rail passenger transportation.” Because operating subsidies are a touchy topic in Congress, and Republicans (who held both chambers of Congress as the FAST Act was written) usually oppose new operating subsidy programs, the authorization for this program in FAST was only $20 million per year. The Trump Administration is proposing to put $550 million into this program in 2020, even as they propose to cut subsidies for Amtrak’s National Network by 53 percent (from $1.292 billion to $611 million in 2020).

The two actions are related. The DOT Budget Highlights document says “The President’s FY 2020 Budget request will mark the end of the Government fully subsidizing operating losses on Amtrak’s long distance routes and transition decision-making and cost responsibilities to states.” The $550 million in R&E grants in the budget request should rightly be added to the $611 million request for the Amtrak National Network so that the “real” request for the Amtrak routes outside the Northeast Corridor is $1.161 billion, which is only a cut of $130.6 million from the 2019 enacted level.

The budget request envisions a gradual phase-out of the operating subsidies over five years. “$550.0 million to shift Federal support for long-distance services from Amtrak to the states. As they assume control over service choices, build ridership, and generate revenue, the Federal share of net operating costs will decline from 100 percent in FY 2020, to 80 percent in FY 2021, 60 percent in FY 2022, 40 percent in FY 2023, and phase out fully by FY 2024. States are encouraged to apply jointly with Amtrak for this funding in FY 2020 so they can begin to make informed decisions about their routes and the elements they value to continue operating in the future. The Department will collaborate with Amtrak, states, and affected local governments to rationalize the long distance network into regional corridors that meet market demand and customer expectations.”

Interestingly, under the FAST Act, the R&E grants are only supposed to provide up to 80 percent of net operating costs in year 1, then 60 percent in year 2 and 40 percent in year 3. The Administration’s proposal for 100 percent of the subsidy in year 1 followed by an 80%-60%-40% phaseout over years 2-3-4 is more generous than the statute requires, but it would also require legislative language in the appropriations paragraph. The proposed appropriations language also limits eligibility to routes of more than 750 miles between endpoints that Amtrak was operating prior to the enactment of the 2008 PRIIA rail law.

FTA Bus Grants. The fiscal 2019 appropriations act provided $160 million for the Federal Transit Administration to make grants to transit agencies for new buses and bus facilities, and an additional $30 million to make grants on a competitive basis to purchase low-emission or zero-emission buses. This is in addition to Highway Trust Fund contract authority provided by the FAST Act for the same programs. The Administration proposes to appropriate $250 million from the general fund in 2020 for competitive bus grants but does not propose to set aside any of the money for low/no emission grants.

FTA Capital Investment Grants. In both its 2018 and 2019 budget requests, the Trump Administration proposed to kill the FTA Capital Investment Grants program. They could not zero out the appropriations request, but they only requested the bare minimum needed to pay the annual installments of projects that had received formal grant agreements and were already underway. So it is notable that the new 2020 budget request (in the annual CIG report) asks for not just the $995.3 million necessary to make the FY 2020 installment payments on ongoing projects but also asks for $494.8 million for “other projects that may become ready for Section 5309 CIG or 3005(b) Expedited Delivery Pilot Program funding during FY2020.”

Projects that are in the “Engineering” phase of the CIG program, which are the ones that are closest to being ready to qualify for a potential construction grant agreement, are:

  • Los Angeles, CA Westside Purple Line Extension, Section 3 (future multi-year CIG cost: $1.32 billion).
  • Minneapolis, MN METRO Blue Line Extension (future multi-year CIG cost: $753 million).
  • Minneapolis, MN Southwest Light Rail Transit (future multi-year CIG cost: $929 million).
  • New York City, NY Canarsie Line Power and Station Improvements (future multi-year CIG cost: $100 million).
  • Dallas, TX DART Red and Blue Line Platform Extensions (future multi-year CIG cost: $61 million).
  • Plus numerous one-off “small start” projects listed here as being in the SSPD phase.

$495 million to start new projects is still a far cry from the $1.4 billion that Congress provided in 2019, but it’s a lot more than zero.

MARAD Grant Programs. The 2019 appropriations act created a new $293 million grant program at the Maritime Administration to make grants for port infrastructure. (It wasn’t in the House version of the bill, nor in the Senate version – it just appeared in the final conference agreement.) The budget request does not propose to continue this program – however, the budget request was put together before the program was created by the appropriations conference committee, and Secretary Chao used to be Deputy Administrator of MARAD back in the day and generally supports port infrastructure development, so it might be the kind of thing that DOT would want to continue if they were starting from a clean slate.

The budget does propose to kill the Aid to Small Shipyards grant program at MARAD, but every Administration proposes to kill that program, and the Senate Appropriations Committee keeps adding it back, which will doubtless happen again.

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