As the second anniversary of the Infrastructure Investment and Jobs Act approaches, Transportation Secretary Pete Buttigieg sees the implementation of the landmark legislation, which provides $1.2 trillion for public works projects, moving into a new phase.

The IIJA rollout was a major topic at a wide-ranging House Transportation and Infrastructure Committee oversight hearing on Sept. 20. 

“One way to think about it is, if our first year was about the bill passing, and the second year was about the programs’ launching, this is about the money moving so we can get the dirt flying,” said Buttigieg, the sole witness at the hearing.

But as questions from committee members indicated—and Buttigieg acknowledged—the IIJA's rollout faces hurdles. They include the high costs of construction materials that have eaten away at federal dollars' purchasing power and the slower-than-hoped-for pace of turning federal appropriations into contracts and project groundbreakings.

'Impressive' IIJA Funding Flow

Committee Chairman Sam Graves (R-Mo.) said that according to DOT, it has distributed to states or announced more than $184 billion from the IIJA. But Graves said, “Many stakeholders have already expressed concerns about the implementation of the infrastructure law, including the pace of implementation [and] whether it’s following the intent of the law.”

He also said that DOT’s IIJA grant programs should "focus on projects that actually improve infrastructure network and mobility and not use guidance that undercuts congressional direction just to accelerate projects that fit the administration’s agenda.”

The committee's top Democrat, Rick Larsen of Washington, had a more positive reading of DOT's IIJA rollout, saying that in the law's first two fiscal years, its "pace of funding distribution has been impressive." Larsen said it provided more than $125 billion in highway funds, mostly to states, supporting more than 30,000 projects, plus $39 billion for transit and $10 billion for airports.

'Where's the Money?'

According to data DOT provided to the committee, much of DOT’s portion of the IIJA funding has yet to move from a funding allocation to the next steps in the process—being obligated to specific projects and then turned into actual dollars released in the form of outlays, said Rep. Rick Crawford (R-Ark.).

Only 35% of the fiscal year 2022 federal-aid highway funding has been obligated and just 11% has turned into outlays, he added.

“We continue to hear about the need for more money for infrastructure investment but it seems that you’re not spending the money you have already,” Crawford said, adding, “the feedback that we get from home all the time is: 'Where’s the money?'”

Buttigieg noted that an infrastructure project’s funding span can extend for years. “There is often a lag of one, two, three–sometimes more–years, between when funding is appropriated and authorized and when those dollars [are] assigned to a project,” he said, adding, "nobody’s sitting around and neither are the dollars, but the gap between the fiscal year in which it’s authorized or appropriated and the moment when construction takes place [is] very real.”

Eroding Purchasing Power

The longer that "gap," the greater the effect of inflation on project costs. "The way I look at it is, any perceived increase in investment under IIJA is actually a decrease," Rep. Garret Graves (R-La.) said.

But Sam Graves, Committee Chairman, noted that due to increased transportation construction costs there are concerns that the IIJA dollars’ purchasing power “is being eroded.” 

Buttigieg said, "The increase in project costs is a real concern. It's one of the main threats to the successful implementation of this bill and something we think about every day."

The lengthy hearing, which extended for more than six hours, counting a couple of breaks for votes, touched on many of DOT's broad responsibilities.

DBE, Buy America Regulations Still to Come 

Among non-IIJA, construction-related topics, Buttigieg said DOT is "close to finalizing" a pending regulation revising its disadvantaged business enterprise (DBE) program. 

The proposed version of the rule "represents the most comprehensive changes to date" for the DBE program, he said, "making it easier for eligible firms to become and remain certified," among other provisions.

Rep. John Garamendi (D-Calif.) urged Buttigieg to end a 1983 general waiver from Buy America requirements for manufactured products used on federal-aid highway projects. 

In response, Buttigieg said the Federal Highway Administration was "reviewing all of its existing general-applicability Buy America waivers that are not product-specific" and will publish a "determination on what to do next, taking into account comments received."

Regarding high-speed rail, which he supports, Rep. Troy Nehls (R-Texas) called for a "full audit" of the California High-Speed Rail project, which has had "billions of cost overruns."

Buttigieg noted that he also supports high-speed rail in general but did not comment on the California project, saying that it is "in active application" for "some processes"–presumably applying for DOT funds.