The single largest hard infrastructure investment in American history has become law. The Infrastructure Investment and Jobs Act’s (IIJA) roughly $1.2 trillion, $550 billion of which is new money, will direct most of its investments, nearly 52%, toward modernizing and making improvements to transportation infrastructure, with the majority of funding reserved for highways, roads and bridges.

The IIJA makes generational investments in priorities such as:

The legislation also includes a domestic content provision that adds construction materials in addition to manufactured products and centralizes Buy American oversight at the White House Office of Management and Budget by creating a new “Made in America Office.”

To access this historic spending the IIJA contains formulaic allocations of funds as well as discretionary and competitive grants. Some categories and sub-categories contain both non-competitive and competitive grants. New programs will require the publication of new guidelines and rules.

Funding Mechanisms

Non-competitive funding allocation processes

• Formulas dictated by the bill are based on criteria like state population, or, potentially for specific items, users (ex: transit funds potentially determined by ridership).
• Once the money is directed to the states, local officials are able to make the important decisions about which projects deserve the funding.
• States can also decide to allocate some of the funding to county or city governments within their state.

Discretionary and competitive grant processes

• Discretionary grants are made at the direction of the department or agency head and in some cases can override state plans for how infrastructure funds should be spent.
• Localities must compete for competitive grants via an application process. The U.S. Department of Transportation’s discretionary grant process is officially outlined on its website.

The measure includes provisions to offset some of the spending, such as extending the annual sequestration of mandatory funding, blocking a drug rebate rule that hasn’t taken effect, selling oil from the Strategic Petroleum Reserve, and requiring transactions of digital assets such as cryptocurrency to be reported to the IRS.

Impact

It is important to consider that the IIJA is not another stimulus effort. This is not a sugar high. Instead, it represents a generational shift in how government approaches infrastructure funding. Federal agencies—from DOT, Agriculture and Commerce to DOE and EPA—will now have to oversee the surge in funding, including administering new grants and designing new programs.

As we saw during the implementation of the American Recovery and Reinvestment Act a decade ago, expediency matters.”  Projects, such as resurfacing or improving roads, happen faster than more sophisticated capital projects, such as new system expansions.  Existing federal programs tend to move faster than funding in new competitive grant programs, which involve new rulemaking.

The dollars come amid disbursing and overseeing other expanded funding from the American Rescue Plan earlier this year. In fact, estimates from the Congressional Budget Office and Congressional Research Service show that DOT spent only about 9% of its allocated ARRA funding in the first six months and around half of its funding in the first 18 months.

Next steps

The focus now shifts from legislating to implementing. Federal agencies like the Departments of Transportation and Energy will have the enormous responsibility to implement the law, standing-up new programs and establishing systems to efficiently get money out of DC and to States and localities. State and local officials will carry an even greater burden. As the owners and operators of most infrastructure, they must agree on priorities, design and build new assets, hire more workers, and even mobilize their own financial resources. And also track carefully every dollar spent.

It is important to view the IIJA as part one of a two-part legislative objective, enacting historic levels of spending in both “hard” and “soft” infrastructure. The Build Back Better (BBB) legislation is the “soft infrastructure” focusing on social spending programs. However, the current House version of the BBB also proposes roughly $500 billion in new infrastructure spending over 10 years. Combined with IIJA, that would push federal spending above New Deal investments in infrastructure—as measured by federal spending as a percentage of GDP—but likely to fall short of the historic federal peak around the late 1970s.

Below is a summary of the spending by category and the policy changes called for in the IIJA.

Highways, Roads and Bridges

• Authorizes Highway Trust Fund (HTF) contract authority for highways, roads and bridges for FY 2022 through FY 2026 $273.15 BILLION OVER FIVE YEARS
• Makes changes to the Surface Transportation Block Grant (STBG) $72 BILLION OVER FIVE YEARS
• Establishes new National Infrastructure Project Assistance Grants $15 BILLION OVER FIVE YEARS
• Increases funding for the Nationally Significant Freight and Highway Projects (INFRA) grant program $8 BILLION OVER FIVE YEARS
• Creates new Bridge Investment Program (BIP) $40 BILLION OVER FIVE YEARS ($27.5 BILLION FORMULA | $12.51 BILLION COMPETITIVE)
• Creates new Reconnecting Communities Pilot Program $1 BILLION OVER FIVE YEARS
• Establishes a new Wildlife Crossings Pilot Program $350 MILLION OVER FIVE YEARS
• Creates a new competitive grant program to address threats to pedestrians $25 MILLION OVER FIVE YEARS
• Establishes a new Rural Surface Transportation Grant Program $2 BILLION OVER FIVE YEARS
• Establishes a new Strengthening Mobility and Revolutionizing Transportation (SMART) grant program $500 MILLION OVER FIVE YEARS
• Requires evaluation and improvement of local infrastructure data analysis tools
• Establishes a new intergovernmental working group for electric vehicles (EVs)
• Establishes a risk and system resilience assessment intergovernmental process
• Authorizes the use of local hiring preference in federally funded infrastructure projects
• Establishes new criteria for Metropolitan Planning Organizations (MPOs) to consider when designating local representatives
• Addresses the Appalachian Regional Commission and the Denali Commission
• Significantly increases the cap on state incentive payments to local governments to address at-grade crossings
• Codifies the Rural Opportunities to Use Transportation for Economic Success (ROUTES) Council
• Addresses the Manual on Uniform Traffic Control Devices (MUTCD)

Permit Streamlining

• Codifies “One Federal Decision” permit streamlining provisions
• Expedites evaluations for projects within an operational right-of-way
• Increases cost thresholds eligible for categorical exclusions

Climate

• Charging and Fueling Infrastructure Grants $2.5 BILLION OVER FIVE YEARS
• Reduction of Truck Emissions at Port Facilities $250 MILLION OVER FIVE YEARS
• Carbon Reduction Formula Program $6.42 BILLION OVER FIVE YEARS
• PROTECT Grant Program $8.7 BILLION OVER FIVE YEARS ($7.3 BILLION FORMULA | $1.4 BILLION COMPETITIVE)
• Healthy Streets Program $500 MILLION OVER FIVE YEARS
• New competitive grant programs and state sub-allocation requirements for counties to address climate change would be created.

Rail

• Establishes a new competitive grant program for infrastructure $10 BILLION OVER FIVE YEARS
• Creates a new competitive grant program to eliminate at-grade rail-highway crossings $2.5 BILLION OVER FIVE YEARS
• Authorizes the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant program (formerly BUILD/TIGER) for the first time $7.5 BILLION OVER FIVE YEARS
• Establishes a new culvert removal, replacement and restoration grant program $1 BILLION OVER FIVE YEARS
• Authorizes additional funding for the Nationally Significant Freight and Highway Projects (INFRA) grant program $3 BILLION OVER FIVE YEARS
• Allows local public authorities to enter into multi-state freight compacts $25 MILLION OVER FIVE YEARS
• Expands eligibilities under the Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant program $5 BILLION OVER FIVE YEARS
• Extends Restoration and Enhancement grant (REG) program project timelines $250 MILLION OVER FIVE YEARS
• Establishes a new Railroad Crossing Elimination Program $3 BILLION OVER FIVE YEARS
• Reforms and renames the Federal-State Partnership for State of Good Repair grant program $42.5 BILLION OVER FIVE YEARS ($7.5 BILLION AUTHORIZATION | $36 BILLION APPROPRIATION)
• Establishes a new Safe Streets and Roads for All grant program $5 BILLION OVER FIVE YEARS
• Requires USDOT to establish an intergovernmental research group for freight
• Establishes a new rural assistance program through the Build America Bureau
• Requires consultation with local governments to develop new routes
• Creates new reporting requirements for some public transit agencies
• Establishes a new Corridor Identification and Implementation program
• Requires an evaluation of the Railway-Highway Crossings program
• Establishes a blocked crossing portal pilot program

Public Transit

• Authorizes Highway Trust Fund (HTF) contract authority for mass transit for FY 2022 - FY 2026 $69.9 BILLION OVER FIVE YEARS
• Makes changes to the Capital Investment Grant (CIG) program
• Increases rural set-aside for bus grants
• Creates new requirements for federal transit fund recipients

Funding and Financing

• Authorizes general fund transfer to fund the Highway Trust Fund
• Raises the cap on Private Activity Bonds
• Makes amendments to the TIFIA program
• Makes local governments eligible for the Surface Transportation System Funding Alternatives Program

Airports

• Funds the Airport Improvement Program $15 BILLION OVER FIVE YEARS
• Creates new “groundside” competitive grant program for airport improvements $5 BILLION OVER FIVE YEARS

Ports

• Increases funding for the Port Infrastructure Development Program $2.25 BILLION OVER FIVE YEARS

Energy and Environment

• Creates new competitive grant programs to enhance the resilience and reliability of the electric grid $11 BILLION OVER FIVE YEARS
• Establishes a new Transmission Facilitation Fund and provides FERC with backstop authority to override state objections to transmission lines $3 BILLION OVER FIVE YEARS
• Smart Grid Investment Matching Grant Program $3 BILLION OVER FIVE YEARS
• Establishes a new DOE credit subsidy program for existing nuclear reactors
• Extends and expands DOE incentives programs for hydropower
• Authorizes funding for the Weatherization Assistance Program $3.5 BILLION IN FY 2022
• Creates a new Carbon Utilization Grant Program $310.14 MILLION OVER FIVE YEARS
• Creates a new competitive grant program for modernizing energy infrastructure $3 BILLION OVER FIVE YEARS
• Establishes a Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) Program $2.1 BILLION OVER FIVE YEARS
• Makes grants to state and local governments for battery processing $3 BILLION OVER FIVE YEARS
• Enhances energy efficiency in public schools $500 MILLION OVER FIVE YEARS
• Expands Energy Efficiency and Conservation Block Grant Program eligibilities $550 MILLION IN FY 2022
• Funds Brownfields restoration projects $1.2 BILLION OVER FIVE YEARS
• Addresses needs of transmissions lines

Public Land and Western Water Storage

• Provides resources for wildfire risk mitigation $5.5 BILLION OVER FIVE YEARS
• Addresses U.S. Forest Service Legacy Roads and Trails $250 MILLION OVER FIVE YEARS
• Invests in western water infrastructure, expands eligible uses of American Rescue Plan county relief funds
• Extends the Secure Rural Schools (SRS) program for three years

Drinking Water and Waste Water

• Authorization for the Water Infrastructure Finance and Innovation Act (WIFIA) loan program through fiscal 2026 50,000,000 A YEAR
• Replaces lead service lines $15 BILLION
• Supports disadvantaged communities affected by emerging contaminants. $5 BILLION
• Lean and zero-emission school buses $5 BILLION
• Addresses emerging contaminants with a focus on per- and polyfluoroalkyl substances (PFAS) $4 BILLION
• Amends state revolving loan funds for water $29.3 BILLION OVER FIVE YEARS
• Addresses water contaminants

Broadband

• Makes grants to states for broadband deployment $42.45 BILLION IN FY 2022
• Creates new "middle mile" competitive grants to facilitate broadband deployment $1 BILLION OVER FIVE YEARS
• Creates a new competitive grant program for broadband $1.25 BILLION OVER FIVE YEARS
• Extends the Emergency Broadband Benefit program

Cybersecurity

• Creates a new competitive grant program for cybersecurity $250 MILLION OVER FIVE YEARS
• Establishes a new State and Local Cybersecurity grant program $1.3 BILLION OVER FOUR YEARS
• Requires USDOT to create a cybersecurity tool for state and local public transportation authorities

Domestic Content Provisions

• Buy America Preference: The law requires the iron, steel, manufactured products, and construction materials used in infrastructure projects to be produced in the U.S. Cement and aggregates such as stone, sand, and gravel, wouldn’t be covered.
• Permits waivers to the “Buy America” preference, including if there were insufficient supplies or meeting the requirement would increase costs by more than 25%.
• Requires publication of any waivers on a publicly available website and require review of waivers every five years for waivers granted 180 days before the legislation’s enactment.
• Federal Agency Duties: The measure directs the head of each federal agency to report to Congress and the Office of Management and Budget on all infrastructure financial assistance programs, applicable domestic content requirements, waivers to those requirements, projects receiving funding, and any projects that aren’t meeting requirements.
  
  OMB Documents: The measure directs OMB to issue:
• Regulations that standardize and simplify Buy American Act compliance, reporting, and enforcement.
• Materials to help with new “Buy America” preferences and reporting requirements under the bill.
• Guidelines for minimizing waivers that could reduce employment or inadvertently use dumped or subsidized foreign goods.

• End Product Definition: Within a year of enactment, the Federal Acquisition Regulatory Council must amend the definition of “end product manufactured in the United States” to ensure all processes involved in the production occur in the U.S. The law would express the sense of Congress that the domestic content requirement should generally be 75%, or 60% if there aren’t qualifying offers.
• New Office: OMB is directed to establish the “Made in America Office” to enforce compliance with domestic content statutes, review waiver requests, review reciprocal defense agreements with foreign governments, and report the percentage of federal procurements made in the U.S.
• Website: Requires the General Services Administration to create a “Buyamerican.gov” website or repurpose an existing one to be used to publish all information on waivers or exemptions to Buy American laws, audits, and contract violations.
• The GSA must create a mechanism for collecting information on waiver requests to provide an early notice on the website.
• PPE Contract Requirements: Any contracts for personal protective equipment (PPE) awarded by the Homeland Security, Health and Human Services, or Veterans Affairs departments must last at least two years and require the products to be made in the U.S., except in limited circumstances.
• The law would also allow the transfer of excess PPE or medical equipment from HHS during a public health emergency and allows for the sale of drugs, vaccines, medical devices, or other supplies from the Strategic National Stockpile.