U.S. Transit Grants Questioned as Trump Plans Spending Surge

  • Award to N.J. Transit for power grid may not have qualified
  • Congressional inquiry says federal application reviews sloppy

As President Donald Trump calls for $1 trillion of spending on roads, rail, bridges and airports, the U.S. Transportation Department is being faulted for allocating billions for infrastructure upgrades despite “high-level concerns” raised by application reviewers.

The department has a documented history of loose oversight, runaway construction costs and lack of transparency. Now, the Government Accountability Office -- the investigative arm of Congress -- says the agency sloppily vetted $3.6 billion in grants aimed at preventing storm damage to mass-transit equipment in New York, New Jersey and four other states.

The Jan. 13 report comes as Trump needs political and investor support to enable a decade-long surge in infrastructure spending. His plan, which includes more public-private partnerships, faces skeptics who cite a planning and regulations morass and uncertain revenue gains, plus the potential for higher borrowing and project costs as foreign investors reduce U.S. debt as never before.

“Taxpayers would be happy if there was a pause in federal spending while these agencies were made to be more effective and efficient,” said Tom Schatz, president of Citizens Against Government Waste, a Washington-based non-profit group whose lobbying arm seeks to end wasteful practices.

Funding Available

Investigators recommended that the agency consider redistributing or revoking awards financed by the Disaster Relief Appropriations Act of 2013 that fall outside the program’s scope. As the review is pending, though, “there has been no change in the availability of funds awarded or allocated,” said Steven Kulm, a transportation spokesman.

Those counting on the biggest share of the $3.6 billion are New Jersey Transit, whose safety and finances are already under state and federal review, and New York City’s Metropolitan Transportation Authority, whose subway is vulnerable to catastrophic flooding. Together, the agencies received 80 percent of money allocated in 2014 to protect train yards, bus depots, subway tunnels, bridges and other property.

New Jersey Transit was promised $856 million for two projects that appear to fall beyond the funding’s scope, according to the report. The Metropolitan Transportation Authority scored at least $300 million for projects that will lack effectiveness because a crucial companion plan was turned down, investigators said.

Doubts Cast

The Transportation Department’s Federal Transit Administration made the grants despite “high-level concerns” raised by its reviewers and a lack of documentation for how the projects were chosen, according to the GAO. In its report, it noted that 26 of 40 approved applications had doubts cast on suitability, cost effectiveness and other concerns. Just 7 percent of the total was obligated as of August.

“FTA funded projects with unclear or unknown benefits and, as such, cannot be certain that it selected projects that reflect the program’s purpose,” the report stated. Inconsistencies and limited documentation leave the agency vulnerable to questions about integrity, it said.

The 45-page report was addressed to U.S. Representatives Bill Shuster of Pennsylvania and Sam Graves Jr. of Missouri, Republicans who in 2013 unsuccessfully voted against $51 billion in federal aid for states affected by Hurricane Sandy. They later asked Congress to investigate the spending. Shuster and Graves didn’t immediately return telephone calls or e-mails asking for comment on the report.

Grants Reviewed

The transit administration disagreed with the GAO, according to a two-page response by Jeff Marootian, a Transportation Department administrator. The administration moved “to ensure the accuracy and consistency of all project ratings,” he wrote, and carried out the program’s intentions. Still, Marootian wrote, the department will review the grants and tighten scrutiny.

In 2012, all levels of U.S. government spent $16.8 billion for transit capital improvements. To improve the condition of rail and bus systems, $26.4 billion a year is needed, according to a January department report.

In recent years, the department has been criticized by its own inspector general and the GAO for weak oversight of no-bid contracts, overruns on port projects and poor documentation for more than $3 billion in economic-recovery grants. In a November report outlining top DOT management challenges, the inspector general said it continues to find ways for the department to enhance internal controls.

New Jersey Transit, the nation’s third-biggest mass-transportation provider, applied to the FTA for 75 percent of the cost to build a $577 million, first-of-its-kind natural-gas power grid, which Governor Chris Christie called essential in an emergency evacuation of New York.

Bridge Work

The collaboration with the U.S. Department of Energy was awarded $410 million even after reviewers cited “implementation challenges,” according to the GAO’s report. New Jersey Transit is preparing a draft environmental impact statement for the project, spokeswoman Jennifer Nelson said in an e-mail Feb. 8. She declined to say whether the agency has identified other funding should the grant be revoked.

“The FTA’s competitive resilience funding is vital,” Nelson wrote.

Also at issue is New Jersey Transit’s $446 million replacement of the 109-year-old Raritan Bay drawbridge, swamped by Atlantic Ocean tides and struck by two tugboats during Sandy. That project and a new $161 million Norwalk River Railroad bridge in Connecticut, though, “were more routine infrastructure replacement necessitated by the structures’ age rather than resilience projects in response to Hurricane Sandy or in response to future major disasters and extreme weather,” investigators wrote.

Nelson called the New Jersey bridge a “vulnerable structure” and said Sandy moved its alignment, forcing a suspension of marine and rail traffic for three weeks.

“The long-term solution is to construct a new, resilient span above the base flood elevation that will also be able to withstand the wind and ocean surges that accompany severe weather,” Nelson said.

In all, New Jersey Transit received $1.27 billion for five projects. The MTA was allocated $1.59 billion, the biggest share of funds, for 14 projects; and the Port Authority of New York and New Jersey had six applications approved for a total $213 million. Mass-transit agencies in New Hampshire, Connecticut, Massachusetts, Pennsylvania and Washington got the rest.

Several New York grants drew scrutiny. In one case, the MTA was approved funding for two projects, but not a related one, although the reviewer found that “damages would be avoided or reduced only if all three projects are implemented.” In another, New York City appeared to have “exaggerated and overstated” a ferry resilience plan’s cost effectiveness. It still got $192 million.

Scott Gastel, a spokesman for the city’s transportation department, disagreed with the criticism.

“The ferry proved itself to be a vital transportation link during Sandy and other severe weather events in recent memory,” Gastel said in an e-mail.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE