States to Feds: Don’t Tell Us How to Spend Infrastructure Money

State and local leaders from both parties are at odds with the Biden administration over how billions of dollars in new infrastructure money should be spent.

Republican governors are upset over a federal memo seeking to limit dollars for highway expansions. Western states and some progressive cities don’t like the feds’ plan for how to deploy electric vehicle chargers. Some construction groups fear that labor guidelines included in certain programs could hurt red states without a strong union presence.

And more conflicts are likely to surface as federal agencies continue to roll out details for the bill’s programs.

Last year’s $1.2 trillion infrastructure law was hailed by state leaders on all sides as a much-needed investment in roads and bridges, broadband internet, water systems and other priorities. But while the feds are signing the checks, state and local governments largely will decide how to funnel the money to specific projects—and they’ll need to put up some matching funds of their own. 

As local officials wait for the money, some worry that federal agencies will focus on priorities not specifically authorized by Congress that could limit their ability to use or access the funds.

Highway Funds

The most high-profile dispute centers on an internal Federal Highway Administration memo, distributed to top officials in that agency in December, that urges federal officials to prioritize existing repairs, public transit and bike lanes over new highway expansion projects.

Last month, 16 Republican governors sent a letter to the Biden administration asking agency leaders to “defer to the states and confer maximum regulatory flexibility.”

“Your administration should not attempt to push a social agenda through hard infrastructure investments and instead should consider economically sound principles that align with state priorities,” wrote the group, led by Tennessee Gov. Bill Lee.

While only Republican governors signed the letter, several states led by Democrats, including Washington, Nevada and North Carolina, also have prioritized highway expansions.

Tennessee officials say the state already is poised to meet many of the priorities outlined in the federal memo, but they raised philosophical objections about federal agency attempts to direct the funding.

“The law lays out what the funds can be used for, and that’s the flexibility that Congress gave states,” said Preston Elliott, environmental and planning bureau chief with the Tennessee Department of Transportation. “To have a memo that is not in law sends a conflicting message. It’s just the sheer point of adding additional perceived restrictions to something that Congress didn’t really tell them to do.”

Last week, U.S. Senate Minority Leader Mitch McConnell, a Kentucky Republican, told governors to ignore the memo about highway projects. 

“Nothing in the [law] provides [the Federal Highway Administration] with the authority to dictate how states should use their federal formula funding, nor prioritizes public transit or bike paths over new roads and bridges,” McConnell wrote in a letter to governors, along with GOP U.S. Sen. Shelley Moore Capito, the West Virginia Republican who is the ranking member of the Environment and Public Works Committee.

Federal officials have since said that the memo is not equivalent to a mandate, nor does it explicitly forbid new highway or bridge construction. Still, some groups that supported the infrastructure package say the memo caused confusion and undermined the efforts of the bipartisan coalition that came together to pass the bill.

“The law is very clear,” said Ed Mortimer, vice president of transportation and infrastructure at the U.S. Chamber of Commerce. “States have wide latitude to invest in the projects they need to invest in. [State transportation officials] want the flexibility to do what’s best for their state.”

Susan Howard, director of policy and government relations with the American Association of State Highway and Transportation Officials, said states won’t risk losing funding if they ignore the federal memo. 

“We share a lot of these priorities, and states are doing a lot in these areas already,” she said of the Biden administration’s priorities. “But a policy memo is fundamentally different than a change in the law. States have to use the money at their discretion.”

EV Chargers

Some leaders also have expressed concern over the Biden administration’s plan to spend $7.5 billion on electric vehicle chargers.

Officials with the federal Joint Energy and Transportation Office announced last week that the program’s first year of projects will prioritize federally designated alternative fuel corridors, focused on interstate highways. Those corridors are highway segments, nominated by state and local governments, with infrastructure to support charging stations and other alternative fuels.  

Some state and local leaders have said that strategy doesn’t fit their needs. 

“The guidance around the alternative fuel corridors program might not fit with what will need to be accomplished,” said Melissa Savage, environmental program director with the state transportation officials’ group. “In some areas, those corridors are built out. … Some states will need more flexibility.”

The federal agency’s guidance urges states to submit more highways for corridor designation, and it says focusing on the corridor strategy will “build out a convenient, reliable, affordable, and equitable public charging network.”

The corridor program requires charging stations at 50-mile intervals, which poses a challenge for rural states.

“A number of western states have experienced challenges in meeting these defined metrics due to lacking electric infrastructure and suitable charging locations in sparsely populated areas,” the Western Governors Association, comprised of 19 states in the region, wrote in a policy resolution submitted to federal transportation officials in December. 

The cities of Seattle and Denver also submitted comments to the feds asking for funding to be used beyond the federal corridor program. Seattle’s letter also asked officials to prioritize areas that use power from renewable energy sources to charge electric vehicles. Most of Seattle’s power is supplied by hydroelectricity, which would put it at an advantage over regions that rely on natural gas or coal.

Other Conflicts

Some construction industry groups have noted that other federal funding program guidelines, including some included in the infrastructure law, encourage project labor agreements, known as PLAs, that could benefit unionized contract companies. Such agreements are collectively bargained pre-hire terms for a specific project. 

Democrats often praise PLAs as a way to ensure strong labor standards and prevent work stoppages. Republicans claim the agreements are designed to steer contracts to union-friendly firms. Twenty-four states prohibit government-mandated PLAs for state and local construction projects. 

“This is sleight of hand by the federal agencies to boost union membership,” said Ben Brubeck, vice president of regulatory, labor and state affairs with Associated Builders and Contractors, a construction industry association. “They’re attaching strings to this outside of the legislative process, and it’s designed so that this money goes to blue states that support union labor.”

Republican governors, in their letter to the Biden administration, also cited union memberships, equity and climate as factors that should not be considered in awarding infrastructure funds.

Speaking to McClatchy news service late last month, Biden senior adviser Mitch Landrieu, the former mayor of New Orleans who is overseeing implementation of the infrastructure bill, expressed optimism that state and federal leaders could find common ground.

“Whatever challenges we have, whether they be politically or ideologically, the mission is to get this done,” he said. “We’re going to figure out a way to do it come hell or high water.”

More infrastructure disputes are likely. Federal guidance is still being crafted for many of the programs in the bill, especially the new ones. Howard, with the state transportation group, said many states are eager to see federal plans for implementing new climate resilience and carbon reduction programs. 

“There are questions and concerns about some of the programs,” she said. “There’s going to be no shortage of questions about eligibility and how this interacts with current practices.”