Trump Seeks to Block Gateway Rail Tunnel Funding, Chao Says

(Bloomberg) -- President Donald Trump is trying to kill federal funding for a new commuter railroad tunnel under the Hudson River, saying New York and New Jersey must pay more, U.S. Secretary of Transportation Secretary Elaine Chao said.

Chao was asked during a House committee hearing Tuesday whether it is true, as reported over the weekend, that Trump asked Speaker Paul Ryan to block federal funding for the $12.9 billion tunnel project. She said, “it probably is.”

“Is the president of United States personally intervening with the speaker to kill this project?” said Democrat Sean Patrick Maloney of New York.

“Yes, 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,” Chao replied.

How Trump's Hudson Tunnel Feud Threatens the National Economy

Chao had sometimes-heated exchanges with New York and New Jersey representatives during the hearing over the Gateway program. The $30 billion series of projects includes a new tunnel to supplement a century-old tube that provides the only rail link between New Jersey and Manhattan and is regarded as critical for the Northeast economy.

Stepping Up

The existing tunnel was damaged by saltwater flooding from Hurricane Sandy in 2012. Even if funding comes through quickly, the earliest projected opening for a new tunnel is in 2025, and it's not a sure thing that the existing North River tunnel will hold out.

The states have pledged some $6 billion, mostly from federal loans, toward the proposed new tunnel and were counting on federal grants to cover the remainder. Federal authorities have said loans shouldn't count as the states' share.

“They need to step up and bear their fair share,” Chao said. “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.”

Null and Void

The issue isn't whether loans can be used as part of a funding package but that New York and New Jersey plan to rely entirely on federal loans and grants, a senior administration official said in a conference call with reporters after the hearing.

The administration also objects to earmarking $900 million for Gateway in the $1.2 trillion spending bill that Congress is considering to keep the government open after March 23 and believes it's premature and unfair without local funding, the official said.

Officials from the two states have said they had an agreement with former President Barack Obama's administration for the federal government to fund half the Gateway project, but Chao on Tuesday repeated Trump's contention that there is no agreement or evidence of one.

“There's never been an agreement,” Chao said. “There's no documentation, there's no paperwork, and in fact, there's no pending application.”

Republican Representative Peter King of New York and others have said they emerged from a September meeting at the White House with Trump, Chao and officials from the two states thinking Trump supported the agreement and project, but Chao said the administration was just being courteous.

“We were very polite, we were cordial. There was no commitment at all,” Chao said. “The attendees of that meeting exited that meeting and spun the results of that meeting as they wanted the meeting to be.”

Maloney demanded to know “why the president of the United States is killing the most important infrastructure project, certainly in the northeast, probably in the country.”

Chao said to ask the White House.

To contact the reporter on this story: Mark Niquette in Columbus at mniquette@bloomberg.net.

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Stephen Merelman, Justin Blum

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