What are the best sources of funding for planning projects aimed at fulfilling NEPA environmental review requirements, outreach, or design? How should cities think about applying for IIJA funding if they will be applying for larger grants in the future?

Overview of IIJA

The Infrastructure Investment and Jobs Act (“IIJA”) introduces over 350 funding programs across more than a dozen federal departments and agencies. [1]

The IIJA authorizes $1.2 trillion in funding and is a combination of: (1) the reauthorization of many existing federal funding programs at the previous year’s funding levels; (2) multi-year funding increases in those existing programs; and (3) new funding programs. The new funding accounts for $550 billion and will be allocated to states, municipalities, and other eligible entities through either formula or competitive grants.[2] The White House Bipartisan Infrastructure Law Guidebook provides information about IIJA funding, eligibility, timelines, and other application considerations.[3]

Under the IIJA, municipalities seeking funding for major infrastructure projects must generally follow the environmental permitting process under the National Environmental Policy Act (“NEPA”).[4] The IIJA defines the NEPA process as:

the assessment and analysis of any impacts, alternatives, and mitigation of a proposed action, and any interagency participation and public involvement required to be carried out before the Secretary undertakes a proposed action.[5]

This process applies to all “major projects”[6] as defined under the NEPA. For further information regarding the NEPA process, award recipients should consult the IIJA as well as applicable federal agencies tasked with conducting the process for eligible major projects. [7] 

Part 1: Funding Sources for Planning Projects – Environmental Review, Outreach, and Design

Municipalities should analyze the various components of their projects to identify what aspects of their program may constitute an eligible use of grant funds. Municipalities can then consult the White House Bipartisan Infrastructure Law Guidebook[8] and the White House Guidebook Data Set,[9] which identifies each grant’s eligible uses, to identify grant opportunities under the IIJA that may fund environmental review, planning, outreach, and design projects. Below are select examples of grant opportunities that identify environmental review, planning, outreach, and design as eligible uses:

Environmental Review, Outreach, and Planning

The Railroad Crossing Elimination Grants, administered by the U.S. Department of Transportation (“USDOT”), is a competitive grant program that provides $3 billion for the funding of highway-rail or pathway-rail grade crossing improvement projects that focus on improving the safety and mobility of people and goods.[10] The planning, environmental review, and design of eligible projects are eligible uses of Railroad Crossing Elimination Grants.

Eligible projects include:

• A grade separation or closure, including through the use of a bridge, embankment, tunnel, or combination thereof;
• Track relocation;
• The improvement or installation of protective devices, signals, signs, or other measures to improve safety, provided that such activities are related to a separation or relocation project described previously;
• Other means to improve the safety and mobility of people and goods at highway-rail grade crossings (including technological solutions); and
• A group of related projects described previously that would collectively improve the mobility of people and goods.[11]

The 2022 Notice of Funding Opportunity for the Railroad Crossing Elimination Grants is anticipated in June 2022.[12] For further information on Railroad Crossing Elimination Grants, municipalities may refer to the USDOT Federal Railroad Commission website.[13]

Design

The Pumped Storage Hydropower Wind and Solar Integration and System Reliability Initiative, administered by the U.S. Department of Energy, is a cooperative agreement program that provides $10 million for financial assistance to eligible entities carrying out project design, transmission studies, power market assessments, and permitting for a pumped storage hydropower project to facilitate the long-duration storage of intermittent renewable electricity. Eligible projects must:

• Be designed to provide not less than 1,000 megawatts of storage capacity;
• Be able to provide energy and capacity for use in more than one organized electricity market;
• Be able to store electricity generated by intermittent renewable electricity projects located on Tribal land; and
• Have received a preliminary permit from the Federal Energy Regulatory Commission.[14]

Although an application date has not been announced as of May 2022, municipalities may refer to the Water Power Technologies Office of the Department of Energy for further information.[15]

Part 2: Application for Funding Under IIJA and Other Grants

Municipalities may have infrastructure needs that could be eligible for funding under both the IIJA and other federal grant programs.

Strategic Planning

Municipalities should conduct strategic planning to identify their specific local infrastructure needs and the corresponding IIJA programs that may provide funding. After identifying these needs and corresponding programs, municipalities should survey eligible uses and federal matching requirements to further narrow applicable programs. After identifying the programs relevant to local infrastructure needs, municipalities may review evaluation criteria and desired outcomes (e.g., social equity and environmental protection) of the IIJA and other grant programs to build a strategic foundation on which to pursue federal funding.

For example, under the American Rescue Plan Act of 2021, Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) may be used to support infrastructure-related initiatives, such as to: (1) train workers needed to build high quality infrastructure; (2) hire back public sector workers needed to help manage potential federal investments; and (3) improve water, sewer, and broadband initiatives.[16]

A recipient could potentially use these CSLFRF funds and other sources of funding (like the IIJA) to fund an infrastructure project, provided that the costs meet each program’s eligibility requirements and any other statutory and regulatory requirements and policies.

Municipalities should also review each funding source’s authorities and program requirements to determine whether they may be subject to any compliance and/or reporting obligations.

Additionally, award recipients should pay particular attention to “duplication of benefits”[17] when assessing grant opportunities for which to apply. Per guidance from the Stafford Act, 

duplication of benefits occurs when federal financial assistance is provided to a person or entity through a program to address losses resulting from a federally declared emergency or disaster, and the person or entity receives or would receive financial assistance for the same costs from any other source, and the total amount received exceeds the total need for those costs. Recipients must establish and maintain adequate procedures to prevent any duplication of benefits.[18]

Discretion

The IIJA does not provide discretion to state, local, and tribal governments to determine the best use of funds. Municipalities should identify grants, like the CSLFRF, that do provide such flexibility for recipients to determine the particular local needs of their communities. If a program cost qualifies for funding under both the IIJA and a discretionary grant like the CSLFRF, the municipality should consider applying for IIJA funding to preserve their discretionary spending capacity.

Last Updated: May 15, 2022