Federal Infrastructure Policy and Funding Update: 2023 No. 4

It has been a while since our last update. Travel schedules and other demands have pulled me away from providing these regular updates, so we’ve got a long one this week, and another one teed up for next week. This update focuses on announcements from the White House, the Environmental Protection Agency, and the Department of Transportation — all but one update focusing on equity and environmental justice. This administration has elevated the discussion around equity in federal investments and drawn attention to the inequities in how communities access and benefit from federal resources. As a continuation of that effort, the president signed an executive order to build greater organizational capacity with the agencies to tackle equity issues.

The EPA announced funding for climate pollution reduction plans and seeks input on its $3 billion environmental and climate justice block grant program. USDOT also seeks input on a refresh of its Equitable Transportation Community Explorer and has released new guidance on implementing IIJA/BIL funds through the federal-aid program. The one update that doesn’t fit within the equity theme this week is the release of updated proposed guidance for Build American, Buy America from the Office of Management and Budget. Not equity-focused, but the comments are due soon, and well, here we are. As always, feel free to contact me with any questions or comments about the updates. If you don't already get emails telling you these updates are published, subscribe now.

Key Recent Policy and Funding Happenings

White House & Executive Office of the President

• New Racial Equity Executive Order
• New Buy America Guidance Proposed

Environmental Protection Agency

• EPA Requests Information on the Environmental and Climate Justice Block Grant Program
• EPA Releases $250 Million to States, Tribes, Territories, and Cities for Climate Pollution Reduction Planning Grants

U.S. Department of Transportation

• USDOT Seeks comment on Updated Equitable Transportation Community Explorer
• Federal Highway Administration Issues Revised BIL Implementation Guidance

White House & Executive Office of the President

New Racial Equity Executive Order

The President signed Executive Order (EO) 14091, “Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” on February 16, 20223. This latest equity EO focuses on federal agency actions, “extending and strengthening equity-advancing requirements for agencies.” The EO takes several steps to further advance equity in agency operations. The discrete actions include:

• Directing cabinet secretaries and other agency heads to stand up “Agency Equity Teams” within their agencies, responsible for coordinating and implementing equity initiatives and ensuring that agencies deliver equitable outcomes.
• Establishing the White House Steering Committee on Equity, chaired by the Assistant to the Secretary for Domestic Policy. The Steering Committee is tasked with coordinating equity efforts across the government and promoting accountability among the agencies concerning each agency’s equity efforts
• Requiring each agency to develop an Equity Action Plan that describes actions to advance equity, leveraging all resources within the agency’s authority (e.g., budgetary, programmatic, service-delivery, procurement, data-collection processes, grantmaking, public engagement, etc.) The Action Plan will:
  • update on progress made by the agency on implementing the previous year’s Action Plan and include the agency’s performance on the annual Environmental Justice Scorecard,
  • identify potential barriers that underserved communities may face in accessing and benefitting from the agency’s policies, programs, and activities and strategies to address those barriers.
  • Describe how the agency intends to meaningfully engage with underserved communities
• Directing agencies to proactively engage with members of underserved communities while developing agency Equity Action Plans, annual budget submissions, grants and funding opportunities, and other actions.
• Creating economic opportunity in rural America and advancing equitable urban development by directing agencies to:
  • help rural communities identify and access federal resources, promoting equitable economic opportunity and advancing projects that build community wealth
  • strengthen equitable urban development policies, including advancing community wealth-building projects, preventing physical and economic displacement resulting from federal investment, facilitating the equitable flow of private capital, and incorporating outcome-based metrics focused on equitable urban development in designing and deploying federal programs and policies.
• Advancing equitable procurement strategies by establishing a government-wide goal of federal procurement dollars at 15% for small businesses owned and controlled by socially and economically disadvantaged individuals (SDBs)
• Affirmatively advancing civil rights by leveraging agency civil rights offices to prevent and advance discrimination and advance equity for all.

This EO is a continuation of equity and environmental justice-focused executive actions taken by the Biden Administration, elevating the discussion around justice and equity. Although the actions required by the EO are internally focused at the agencies, we should expect that the outward-facing implementation of this EO will result in more opportunities for disadvantaged communities to participate in federal programs and benefit from the federal investment.

New Buy America Guidance Proposed

The Office of Management and Budget recently published a proposed rule and proposed guidance implementing the Build America, Buy America Act provisions of the Infrastructure Investment and Jobs Act. The proposed rule and guidance followed quickly on the heels of the President’s statements during the State of the Union that appeared to double down on requiring domestic sourcing of materials for projects funded through federal grants. The proposed guidance generally aligns with previous guidance from OMB in memorandum M-22-11 but attempts to clarify the approach to determining the cost of manufactured products and proposes to use the definition of “cost of components” in the Federal Acquisition Regulation (48 CFR 25.003) that is used in federal procurement. The change is proposed by creating a new part 184 in title 2 of the Code of Federal Regulations. Through the notice of proposed rule and proposed guidance, OMB is seeking public comment on seven questions:

1. Cost of components – should OMB adopt a definition of cost of components based on the definition provided in the FAR at 48 CFR 25.003?
2. Other construction material standards – what additional construction materials should be included in the proposed guidance?
3. Proposed definition of construction materials – is additional guidance needed on the proposed definition of construction materials?
4. Definition for “predominantly” iron or steel items – should OMB adopt a definition of “predominantly” iron or steel items?
5. How to distinguish between categories of products – if further guidance is needed on how to distinguish between steel or iron products, manufactured products, and construction materials?
6. Meaning of composite building materials – the definition of “construction

Environmental Protection Agency

EPA Requests Information on the Environmental and Climate Justice Block Grant Program

The EPA opened a docket on regulations.gov seeking input on elements of the Environmental and Climate Justice Block Grant Program created by the Inflation Reduction Act. The program is appropriated with $2.8 billion for financial assistance and $200 million for technical assistance available to partnerships between a community-based nonprofit organization and an Indian tribe, local government, or an institution of higher education; a community-based no-profit organization or a partnership of community-based nonprofit organizations. Through the request for information (RFI), EPA seeks public comment on the program design, structure, and implementation. EPA expects to use the responses received to assist in developing program design, structure, and guidance included in the Notices of Funding Opportunities for the grants. Specifically, EPA seeks responses to questions under the following topical areas:

• Program Design
• Eligible Projects
• Eligible Recipients
• Reporting and Oversight
• Technical Assistance
• General Comments

Comments are due to the docket by April 10, 2023.

EPA Releases $250 Million to States, Tribes, Territories, and Cities for Climate Pollution Reduction Planning Grants

The EPA announced the release of planning grant funds for states, tribes, territories, and cities to support the development of climate plans. All 50 states, the District of Columbia, and Puerto Rico are eligible to receive $3 million in grant funds, while each of the 67 most populous metropolitan areas in the country is eligible to receive $1 million to develop plans to tackle climate pollution locally.

The Climate Pollution Reduction Grant Program was created through the Inflation Reduction Act. It will award funds in two stages: this first stage with planning grants to develop climate plans to tackle climate pollution and then a second stage with $4.6 billion to implement projects identified in the plans. Eligible activities under the planning grants include:

• Staffing and contractual costs necessary to develop the deliverables for the climate plan
• Planning and implementing meetings, workshops, and convenings to foster collaboration among and between levels of government, the public, and key stakeholders
• Outreach and education for stakeholders and members of the public
• Subawards to municipalities, air pollution control agencies, regional planning organizations, non-governmental organizations, academic institutions, etc.
• Modeling and analytical costs, including purchase or licensing of software, data, or tools
• Studies, assessments, data collection, etc. needed to develop the plans
• Evaluation and metrics-tracking activities
• Training and staff capacity-building costs
• Supplies

To access the planning funds allocated, states and territories must submit a Notice of Intent to Participate to the EPA before March 31, 2023 and must identify the lead agency within the state that will administer the planning funds. Cities allocated planning funds have until April 28, 2023, to submit their Notice of Intent to Participate.

U.S. Department of Transportation

USDOT Seeks Comment on Updated Equitable Transportation Community Explorer

In response to EO 14008, “Tackling the Climate Crisis at Home and Abroad,” and subsequent guidance on Justice40 from the Office of Management and Budget, USDOT developed the interim Transportation Disadvantaged Census Tracts (Historically Disadvantaged Communities) tool. The Department proposes to update and rebrand the tool as the U.S. DOT Equitable Transportation Community Explorer. This interactive web application explores the cumulative burden disadvantaged communities experience resulting from underinvestment in transportation in the following five component areas:

• Transportation Insecurity
• Climate and Disaster Risk Burden
• Environmental Burden
• Health Vulnerability, and
• Social Vulnerability.

The tool uses newly available 2020 Census Tracts and data, adds additional indicators reflective of disadvantage related to lack o transportation investment, and updates the methodology used to calculate disadvantage. With this update, USDOT seeks public input through a Request for Information (RFI). The RFI includes questions on methodology, datasets, and map usability and accessibility. Responses to the RFI are due March 18, 2023.

Federal Highway Administration Issues Revised BIL Implementation Guidance

Soon after the IIJA/BIL was enacted, Deputy Administrator Stephanie Pollock issued a Memorandum to all of FHWA detailing how the agency would prioritize funding authorized under IIJA/BIL. Notably, that memorandum outlined a policy that encouraged federal-aid recipients to prioritize state of good repair, safety, and resilience and effectively discouraged new capacity projects. The memo was met with resistance from state DOTs and from members of Congress. During his confirmation hearings, Administrator Shailen Bhatt was asked about the memo and effectively deflected, reassuring the committee members that the Federal-Aid program is a federally funded, state-administered program and that FHWA partners with State DOTs to deliver their priorities. Now we have an updated Memorandum from Administrator Bhatt that supersedes the previous memo and restates the administration’s priorities for use of BIL dollars, but avoids some of the more contentious points made in the 2021 memo.