Today, stakeholders representing state highway and transportation officials, builders, contractors, and others testified at a hearing on oversight of the Infrastructure Investment and Jobs Act (IIJA) and ensuring it is implemented as Congress intended.
Texas Department of Transportation Executive Director Marc D. Williams, on behalf of the American Association of State Highway and Transportation Officials, discussed how inflation drives up the costs of needed materials and how it has an outsized impact on the small businesses charged with absorbing these costs. Williams Testimony Highlights:
- “According to a 2022 analysis of government economic data by the Associated General Contractors of America, the prices of materials and services used in new, nonresidential construction leaped nearly 17 percent from the year prior. This figure indicates the lead times for procurement and delivery of many construction materials have dramatically increased, leading to mass unpredictability in the availability and price of some of these materials. Material cost increases have ranged from 15 percent to a doubling or tripling in some markets during this time.”
- “State DOTs and the construction industry are unable to foresee disruptive world events, spiking energy prices, and high inflation that impacts the work they do every day. This has been especially devastating to small and disadvantaged business enterprises (DBE) that lack the resources to absorb these unexpected costs.”
- “TxDOT finds discretionary grant programs to generally be an inefficient tool for administering federal funds. The overwhelming number of grants included in the IIJA continues to create challenges for states, localities, and even USDOT…. It may benefit Congress and USDOT to review whether the selected projects will achieve the desired objectives of the programs, and whether the distribution of awards are fair and equitable considering national performance needs and requirements.”
CRH Regional President Dwayne Boyd, on behalf of the National Stone, Sand & Gravel Association, spoke about sky-high inflation eroding the buying power of IIJA funds, implementation of new Build America Buy America (BABA) requirements, and the need for permitting reform. Boyd Testimony Highlights:
- “However, they [Departments of Transportation] have reported inflation has eroded the buying power of the increased funding levels, resulting in a smaller number of projects being let.”
- “We praise the bipartisan provisions in IIJA that seek to expand federal agency cooperation and reduce permitting decisions to two years. Unfortunately, from my experience, we have yet to see this take hold on the ground and planning for new projects still takes years.”
- “That is why our industry is even more concerned with administrative changes to National Environmental Permitting Act (NEPA) that broadens definitions, adds duplicative federal agency reviews, and allows more opportunities for outside activists to sue and stop project development.”
- “While the administration has discretion to shape grant notifications, we have concerns over the complexity and criteria added to the applications. Many times, DOTs and localities will have to devote significant resources, building teams to find the data and answer questions needed to apply to these opportunities. This takes precious resources away from delivering projects to the taxpayers.”
- “Unfortunately, even after a year of work to implement the new BABA requirements, just last month OMB issued a confusing and contradicting rule that revised previous guidance issued. This new rule introduces new requirements that were not included in the IIJA and places the congressionally mandated exclusion for aggregates-based products, like asphalt and concrete, at risk. If OMB proceeds with their rulemaking, it will upend years-long work to get the BABA requirements enacted, likely requiring DOTs and federal agencies to delay projects, further complicating implementation of the IIJA’s funding.”
Cianbro Assistant General Manager Aric Dreher, on behalf of the Associated Builders and Contractors, testified about the importance of the Biden Administration not taking executive actions that step outside the scope of IIJA’s bipartisan text. Dreher Testimony Highlights:
- “Since the bill was signed into law in 2021, the administration has taken executive regulatory action, departing from the congressional intent of the bill and showing clear and unnecessary favoritism toward unionized contractors and labor on taxpayer-funded infrastructure projects receiving federal funds. We have also seen significant changes in our economy that I believe will affect the overall success of this bipartisan effort, including record inflation, supply chain delays and workforce shortages.”
- “Inflation’s impact on construction cannot be understated. Since November 2021, when President Joe Biden signed the IIJA into law, input prices for construction projects have increased on average by 11.1%, and nonresidential construction materials prices are up more than 39% since February 2020. Combined with our current labor shortage and supply chain pressures, it is becoming increasingly difficult for construction projects to continue as originally planned.”
WSP USA Senior Vice President Paula Hammond, on behalf of the American Road & Transportation Builders Association, shared concerns about project delays, which drive up costs for taxpayers, including the Administration rolling back reforms that were designed with the specific intent of preventing project delays. Hammond Testimony Highlights:
- “The IIJA featured project delivery reforms, known as ‘One Federal Decision,’ which exemplified a bipartisan spirit. The current environmental review process takes an average of five to seven years to complete for a new federal-aid transportation project, and in some cases, ARTBA members have even experienced projects taking up to 14 years for review. These delays come at significant cost to taxpayers and illustrate the need for reform. However, in the time since IIJA’s enactment, there has been little visible progress.”
- “…the White House Council of Environmental Quality (CEQ) is currently rolling back recent National Environmental Policy Act (NEPA) reforms designed to reduce project delays. Reversing these improvements undermines the goal of saving time through streamlined project reviews and reinstates a NEPA process which often features excessive litigation over projects and procedural minutiae.”
