Feds stress state authority with highway funds in new guidance

The Biden administration this week released revamped guidance on how state departments of transportation spend federal transportation infrastructure funds in the wake of a controversial memo that opponents said tried to limit state flexibility.

The revised document from new Federal Highway Administration chief Shailen Bhatt, released Friday, emphasizes the authority that state departments of transportation have when it comes to spending federal infrastructure funds.

The memo replaces a controversial December 2021 memo from former acting FHWA director Stephanie Pollack, which opponents said tried to dictate how states should spend the $350 billion of infrastructure dollars under the FHWA's purview by outlining policies and goals such as "fix-it first" over highway expansion, that are not part of the IIJA.

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"States determine which of their projects shall be federally financed by federal-aid highway formula dollars," the new memo says. "FHWA recognizes and values the authority and role of the states in deciding how to prioritize the use of their federal-aid highway dollars and will continue to administer funds and programs consistent with all requisite statutory requirements and considerations."

The FHWA will continue to support projects that meet federal goals like addressing climate change and "future-proofing our transportation infrastructure by accommodating new and emerging technologies like electric vehicle charging stations," the memo added.
The FHWA guidance is important as state DOTs decide how to allocate new federal infrastructure dollars from the $1.2 trillion Infrastructure Investment and Jobs Act.

The new memo seeks to end a debate that's dogged Bhatt and Transportation Secretary Pete Buttigieg during various congressional hearings.

Bhatt's previous roles as a state transportation official likely played a role in the new guidance, said Jeff Davis, a senior fellow at the Eno Center for Transportation.

Davis noted that the previous memo was 2,200 words and the new one is only 680 words. "So there's much less going on," he said, adding that the FHWA was careful to adhere to the IIJA language in the new memo.

"When they say they support a goal, they cite the actual IIJA statute," Davis said. "There are other various word changes designed to stay on the good side of that line between guidance and rule."

The Government Accountability Office in December 2022 concluded that the original memo constituted a rule, not guidance, and as such subject to the Congressional Review Act. The finding prompted Republican opponents, including Sen. Shelley Moore Capito, R-W.Va., ranking member of the Senate Environment and Public Works Committee, to file a resolution to overturn the memo.

Capito and Rep. Sam Graves, R-Mo., chairman of the House Transportation and Infrastructure Committee, applauded the revamped guidance in a joint statement.

"FHWA admitted that it was wrong in their attempts to undo the flexibility provided to states in the law by establishing preferences for certain policies and projects," they said. "We're pleased FHWA recognized that when it comes to legislation of any kind that is passed and signed into law, an administration cannot ignore the role and will of Congress."

Separately, Pollack recently moved to a new position in the U.S. Department of Transportation, serving as coordinator for project delivery support.