The Gateway Program​’s core component – the Hudson Tunnel Project – will build a new, 21st century tunnel under the Hudson River and fully rehabilitate the existing tunnel that was badly damaged during Superstorm Sandy. This project – which will greatly improve service reliability – must be completed swiftly, or we risk a partial shutdown of the existing tunnel in the event that it must be repaired before the new tunnel is built.

This project is no small feat; it needs a Full Funding Grant Agreement (FFGA) from the Federal Transit Administration to secure billions of dollars in federal funding. But what exactly is an FFGA, and what do project partners have to do to secure it?

Key Agencies

Gateway Development Commission (GDC, Project Sponsor)
Port Authority of New York and New Jersey (PANYNJ, stakeholder and former Project Sponsor)
New Jersey Transit Corporation (NJ Transit)
National Railroad Passenger Corporation (Amtrak)
Federal Transit Administration (FTA)
Federal Railroad Administration (FRA)
United States Department of Transportation (USDOT)

Context

Transportation and infrastructure projects of this magnitude are complicated, expensive and lengthy. The Gateway Program relies on the coordination and cooperation of multiple agencies across New York, New Jersey and the Federal Government, along with a series of funding streams, each with their own application, negotiation and approval processes. Large scale factors – such as the 2016 and 2020 presidential elections, the COVID-19 pandemic and the supply chain crisis – also impacted progress on moving the program forward over the past six years.

The Full Funding Grant Agreement, which will fund a substantial portion of the Hudson Tunnel Project, is awarded by the Federal Transit Administration, an agency within the United States Department of Transportation, through its New Starts Capital Investment Grant Program. Projects that are eligible for FFGA consideration must have demonstrated critical importance – in this case, both regional and national. Securing the FFGA requires the Project Sponsor to commit to completing the project on time, within budget, and in compliance with all federal regulations. The Full Funding Grant Agreement is exactly that – an agreement – whereas the actual funds are paid out via Congressional appropriations. That said, ​“Congress well understands the purpose and value of the FFGA, and history shows its strong financial support for projects under these agreements.”

Governance

As owner of the existing North River Tunnel and much of the Northeast Corridor between Washington and Boston, Amtrak has provided key technical, financial and operational leadership of the project from its inception after the collapse of the ARC project. Urgency for the project increased following Superstorm Sandy in 2012. The PANYNJ served as the original Project Sponsor for The Hudson Tunnel Project to ensure the project had the local financial support necessary to qualify for federal funding. In September 2022, the Gateway Development Commission (GDC) assumed the Project Sponsor responsibility following appointment of their inaugural CEO, Kris Kolluri, and were bolstered by a completed Memorandum of Understanding (MOU) between New York Governor Kathy Hochul and New Jersey Governor Phil Murphy that outlined state funding commitments to the project. Investment from elected and appointed officials at the state and federal levels played an enormous role in moving the project through this process. Senators Schumer, Gillibrand, Booker and Menendez, Governors Hochul and Murphy, and President Biden, FTA Administrator Fernandez, Secretary Buttigieg and the USDOT have demonstrated an unwavering commitment to the Gateway Program, recognizing its national importance and working to secure the necessary funding. Yet, no one agency or politician can build a project the scale of the Hudson River Tunnel alone. It takes significant cooperation between all of the project partners, who must work in concert for the FFGA to be approved.

Additional funding streams

To do all of the critical work leading up to the FFGA, the Gateway Development Commission (GDC) and its project partners have secured a number of different funding streams to get the ball rolling and to complete necessary preliminary work. The project partners recently celebrated the first two contributions from the Federal Government, including a MEGA Grant – $292 million awarded to Amtrak to complete the Hudson Yards Concrete Casing – and a proposed allocation of $700 million to the Hudson Tunnel Project in President Biden’s proposed FY24 Executive Budget through the Capital Investment Grant program (CIG). Prior to the FFGA, the Project Sponsor will obtain all other non-CIG capital funding commitments.

Project Phases

There are five phases of the FFGA process:
Phase 1: Pre-FTA Project Development
Phase 2: FTA Project Development
Phase 3: FTA Engineering
Phase 4: Negotiation
Phase 5: FTA Full Funding Grant Agreement and Construction

✅Phase 1: Pre-FTA Project Development

In this phase, between March and July of 2016, $70 million from Amtrak and PANYNJ was secured for preliminary engineering, with additional funding from Amtrak, NJ TRANSIT served as local co-lead on development of an EIS, the Federal Railroad Administration pledged to streamline the environmental review process, and an agreement was enacted to create a non-profit development corporation, which would eventually become the GDC.

✅Phase 2: FTA Project Development

Project development is the first phase that the project must complete before a construction grant can be awarded. The Hudson Tunnel Project was moved into Project Development for New Starts, a type of Capital Investment Grant (CIG) program offered through the FTA, in July 2016. Since then, a number of critical advancements have been made in this phase:

Gateway Development Corporation is Founded at its First Board Meeting in Early 2017: With the support of Amtrak and the states of New York and New Jersey, the Gateway Development Corporation was officially launched as a non-profit entity at its first Board meeting on January 12th. In 2019, the GDC would become the Gateway Development Commission – a bi-state public authority with a seven-member Board of Commissioners. This development was closely followed by the PANYNJ Board approving a 10-Year Capital Plan that included $2.7 billion to support the Gateway Program.

(NEPA) Final Environmental Impact Statement/ROD: After four years and multiple draft reviews, the final Environmental Impact Statement (EIS) for the Hudson Tunnel Project was completed in May of 2021. Under the Trump Administration, no attention or funding consideration was given to the Hudson Tunnel Project, and as a result, the draft EIS and expected Record of Decision sat on shelves for nearly three years, from February 2018 when the draft was submitted through the end of 2021. When President Biden took office, the project began advancing again, and his administration has repeatedly echoed the project’s importance.

(CIG) GDC Becomes Project Sponsor: On September 13, 2022, the Gateway Development Commission became the official Project Sponsor for the Hudson Tunnel Project, transferring responsibilities from the PANYNJ, and moving to manage responsibilities for overseeing and completing the project on time and within budget, in compliance with federal requirements. This followed the announcement from Governors Hochul and Murphy that New York and New Jersey would split the remaining costs for the Hudson Tunnel Project not covered by the Federal Government – a big step forward, as it meant the states took ownership of the outlying costs, and the GDC could move forward with applying for an FFGA.

FTA Project Evaluation and Rating: On January 20, 2022, the FTA updated the rating for the Hudson Tunnel Project, as requested by PANYNJ, to Medium-High. A project needs to be rated Medium or higher to qualify for federal funding; the project had previously been rated Medium-Low by the USDOT during the Trump Administration.

Application to Enter Engineering Phase: In late 2022, the GDC submitted a request to enter into the Engineering Phase of the CIG program. The Engineering Phase officially qualifies the project for federal funding, determines a federal funding level and commences the process of finalizing a Full Funding Grant Agreement.

Phase 3: Engineering

The Hudson Tunnel Project will soon enter into the FTA CIG New Starts Engineering Phase, which will include obtaining all non-CIG capital funding commitments, completing all critical third-party agreements, such as property easements, and a review of all financial documents.

Phase 4: Negotiation

Once the FTA has completed its review and evaluation of the project and negotiated and prepared the CIG construction grant agreement with the GDC, the package of information must be reviewed and approved by FTA executive leadership, USDOT leadership, and others within the Administration.

Phase 5: Construction

Once the FFGA has been made and the annual CIG appropriations approved by Congress, construction on the Hudson Tunnel Project can begin. The FFGA is estimated to be reached by 2024, and construction is slated to begin the same year.