Venable LLP attorneys provide insights on the Infrastructure and Investment Jobs Act

With President Biden set to sign the Infrastructure and Investment Jobs Act into law later today, Logistics Management Group News Editor Jeff Berman recently caught up with two attorneys at Washington, D.C.-based Venable LLP—James H. Burnley IV, former U.S. Secretary of Transportation and one of the nation’s foremost authorities on transportation law and policy, and Fred Wagner, former chief counsel of the U.S. Federal Highway Administration (FHWA)—about the legislation and related things to monitor and keep an eye on. Their conversation follows below.

LM: In your opinion, what are the ramifications of this bill in terms of its bigger-ticket items, as well as what it may mean for the ongoing supply chain issues?

Burnley: This bill will have no discernible short-term impact on the supply chain. It does a few things with a broad brush. One is that it extends existing transportation programs for five years, which is very important. We were on the cusp of what could have turned into a series of very short-term extensions of the existing funds that work through the Highway Trust Fund (HTF) that has occurred in the past and when it goes on for a while it is very disruptive for the ability of states, transit agencies and other that depend on that federal flow of aid to do planning, much less execute contracts. It is also very good news that the bill includes a five-year set of extensions on those programs, at $110 billion on top of the five-year extensions. The extension matters; the overwhelming amount of the money in HTF is formula-driven and that keeps the spigot on for those programs. The new money, to a significant extent, does give DOT discretion, and that discretion will be different for different programs and defined differently.

LM: How will that work?

Burnley: What that means, in part, is that DOT needs to write new criteria and guidelines and signals will have to be given about how money will be spent. It is going to take months, maybe a year or so, for DOT to get the processes in place. There could be exceptions made to that as the DOT Secretary and White House will want to get the money flowing.

LM: What happens next, in terms of managing expectations, for this legislation?

Wagner: The real challenge for the administration is going to be managing the expectations of finally coming to this day and not necessarily seeing orange cones on the street next week. The extension is imperative, because so much of the pipeline of these projects is based on planning and budget and budgeting. What we heard over and over again with absolute certainty is that it is very difficult to do that and what really may be the biggest benefit of this extension is that it really does provide that level of certainty for planners and engineers to move well forward into the next decade or beyond and that cannot be understated.

LM: What about from a supply chain perspective?

Wagner: For the supply chain, there is going to be an interesting dynamic at play because when it comes to a great deal of the new funding, although not all of it is articulated this way, is this administration’s focus that centers on its policy objectives of private and equity such as a lot of new money for electric vehicle infrastructure, for connecting communities, for transit and alternative mobility, especially to deal with minority and disadvantaged communities.

And the challenge the administration is going to face is that so many of the basic projects and improvements necessary to enhance the supply chain are not necessarily at the top of the list from a policy objective. They are going to get a proposal to improve highway capacity for trucks in a certain place, or last mile connectivity to port and rail yards, for example, and at least as of right now, those sorts of projects are not favored and in fact may be viewed as just the opposite. They have been viewed as potential accelerants to climate problems and to equity problems, coupled with proposals for local communities for increased capacity at rail yards, ports, and truck depots are not very popular. This administration is going to have to walk a tightrope to say “not only are we listening to our constituency, whom rely on transit and different modes of mobility, but we are also sensitive to these traditional forms of transport upon which freight and the supply chain are most dependent on.” It is going to be interesting to see how it shakes out over time. What kind of projects are going to be advanced, knowing that some projects cannot be both things? It is not possible for a project that is going to bring more trucks to an area, increase rail and port capacity. There is going to be a lot of money for electrification for rail and port facilities, but there is a drop in the bucket for that compared to some of the other issues, and that is going to be the challenge we see but only over time. We will see notices of funding avail. For some of these programs, we will see additional discretionary grants and what those criteria will be. There is also the question of if there will be short term remedies or fixes for some of the supply chain facilities around the country in order to ease some of the problems that are happening now. That can happen quickly but the question is can they identify some projects like that? Time will tell.

LM: What are some of the obstacles in getting new infrastructure projects underway?

Burnley: As the Administration gets its act together and starts giving guidance and setting criteria and the money actually starts to flow, many of the projects—including those funded through the extension of the existing programs—will end up in litigation and there is nothing in this legislation that I am aware of which changes that…and that is the current present tense dynamic of major surface transportation projects. As you think about when the federal aid results in tangible and visible improvements in transportation infrastructure, you have to take that into account as well. CBO looks at a ten-year timeline, and in thinking about the impact of this bill on infrastructure—and that is not because it is the CBO timeline, but because it is a realistic timeline within which you should consider the impacts—as it is going to take years for us to see significant tangible improvements in transportation infrastructure as a result of this bill.

Wagner: That [litigation] will never go away in that projects that are controversial and that people don’t like could be subject to delay. The process of getting through the environmental review and permitting process is going to take some time for some of these major projects. This Administration is committed to additional public outreach, making sure affected communities have their say, and, for many projects, the clock has slowed down and is not accelerating. And that is for projects that are not necessarily controversial.