States, Congress Upset With Federal Highway Spending Memo

The Infrastructure Investment and Jobs Act (IIJA) of 2021 was a landmark achievement of President Biden’s first year in office, representing a generational investment in transportation and infrastructure projects in every part of the U.S. and a political deal that had eluded several previous presidents.

But while it boosted the amount of money available to states, and created many new competitive grant programs aimed at promoting equity and climate resilience, it did not enact a major shift in how states can spend most of their federal funding. The federal highway funding programs that existed before the IIJA was passed also existed after it was enacted. Only they were bigger.

Nevertheless, a 2021 memo from Federal Highway Administration Deputy Administrator Stephanie Pollack outlining the administration’s progressive priorities for the program caused an outcry — first among some state departments of transportation and later among members of Congress. In December, the Government Accountability Office (GAO), which reviewed the memo at the request of Sen. Shelley Moore Capito (R-WV), announced that it constituted a “rule” that could be challenged under the Congressional Review Act.

Capito now says she’s planning to introduce a resolution of disapproval for the rule “to ensure the IIJA is implemented as written.” The Wall Street Journal pushed for Congress to challenge the rule in an editorial titled "Make Highways ‘Infrastructure’ Again." But what the controversy over the memo obscures is how vanishingly little impact it had in the first place.

Asking States to “Build a Better America”

The memo issued by Pollack described the Biden administration’s goals for IIJA spending in much the same terms the administration had been using for months to promote and then celebrate the passage of the bill. The goal of the guidance was “to ensure that the funding and eligibilities provided by the [Bipartisan Infrastructure Law] will be interpreted and implemented, to the extent allowable under statute, to encourage states and other funding recipients to invest in projects that upgrade the condition of streets, highways and bridges and make them safe for all users” while promoting climate resilience and other goals, Pollack wrote. The administration intended to make regulations that would promote those goals, she said.

The problem was that the guidance seemed to suggest that states should put certain kinds of projects ahead of others, like highway maintenance before highway expansion, when the law didn’t include any such requirements. Many state DOTs were surprised at the memo, says Jim Tymon, executive director of the American Association of State Highway and Transportation Officials (AASHTO), because “it contained a lot of policy positions or directions that were discussed as part of the legislative process but were not incorporated into the final version.” Some of those positions closely mirrored the language of provisions sponsored by Democratic members of Congress that were ultimately rejected in negotiations.

“I think there were a lot of folks when this [memo] initially came out that saw it as the administration maybe trying to achieve some victories that they did not achieve as part of the legislative process,” Tymon says.

Some states, particularly conservative states, bristled at what appeared to be “a bias against building additional highway capacity,” Tymon says. But in the weeks after the memo was issued, AASHTO and state DOT leaders met with administration officials and got assurances that the guidance didn’t indicate that there would be any changes to how federal highway funds were administered. In a letter to Pollack last January, AASHTO’s then-President, Shawn Wilson, who is also secretary of the Louisiana Department of Transportation and Development, wrote that the association “appreciates FHWA’s acknowledgment that this guidance does not suggest that the agency has the authority to require states to invest federal formula funds in certain types of projects nor restrict them from investing in other types of projects.”

States Stick to Their Transportation Plans

By the time AASHTO sent its letter, states had largely returned to business as usual.

“I don’t think anyone changed their routine,” says Wilson. “I don’t think projects disappeared. I don’t think programs were redirected … I know for Louisiana we didn’t do anything different from what we were doing before the memo.”

Some states welcomed the guidance because it seemed to reinforce their own priorities, including Colorado, which was in the process of completing a 10-year transportation plan. But even states with different priorities weren’t knocked off course. Asked whether the federal guidance changed the way the Texas DOT approached highway planning, a spokesperson wrote that TxDOT’s approach is “guided by our strategic goals to deliver the right projects, focus on the customer, foster stewardship, promote safety, preserve our assets, and optimize system performance.”

“I don’t think any states necessarily changed course based on the memo,” Tymon says. “I think we worked through a lot of the issues associated with this in the first, I don’t know, four to six weeks of the memo coming out.”

Congress Initiates GAO Review

While states seemed to move on quickly, the reaction to the memo was just heating up in Congress. Republican lawmakers took exception to aspects of the memo that seemed to promote policies they’d specifically negotiated out of the law. In February, Capito, ranking member of the Senate Committee on Environment and Public Works, asked the Government Accountability Office to review the guidance written by Pollack. Over the course of the year, Capito and other members of Congress questioned Secretary of Transportation Pete Buttigieg and other administration officials about the memo and how it would influence implementation of the IIJA.

In December, GAO determined that the guidance was a rule because it “has the effect of inducing changes to the internal policy or operations choices of the regulated community …” In a statement announcing her intention to challenge the rule, Capito said, “The Infrastructure Investment and Jobs Act was crafted and negotiated in a purposeful way, but through memos and guidance documents issued to states the administration has since attempted to contradict the law and impose policies that were specifically left out of the law.”

“Make No Small Plans”

If Capito goes through with a Congressional Review Act resolution and Congress overturns the rule, Biden would have to decide whether to veto it. The administration is now in the position of having to defend a memo that had little practical effect but has angered certain conservative members of Congress.

GAO’s determination that the memo constitutes a rule is a mistake, says Beth Osborne, director of Transportation for America, and it conflates “wishing and regulating.” But it points to the larger shortcomings of the IIJA as compared to the Biden administration’s early ambitions for infrastructure spending and the Build Back Better bill. Instead of implementing changes to highway spending that actually do promote the goals of equity, climate resilience and reducing greenhouse gas emissions, the administration is defending its characterization of a program that is basically “more of the same,” Osborne says.

The administration could take its policy priorities and “put it in a bottle and put it out to sea and have as much effect as this memo had,” she says. But at the same time that congressional Republicans are pushing back on the FHWA guidance, they’re also gearing up to fight actual regulations that the Biden administration is hoping to implement. Those include a proposed rule on tracking greenhouse gas emissions, which Capito and other Senate Republicans announced their opposition to last fall.

“What this proves is there is no benefit to making small plans,” Osborne says. “If you have to fight this hard over an ‘I wish’ document, then you might as well just do big things … Anything you’re going to have to fight over, you should be gaining something from it — something substantial.”