Updated January 27, 2023

How New and Expanded Federal Programs Can Deliver Good Jobs and Environmental Benefits

The Bipartisan Infrastructure Law (BIL)—also known as the Infrastructure Investment and Jobs Act (IIJA)—is a $1.2 trillion investment in repairing and modernizing the nation’s infrastructure that was signed into law on November 15, 2021. Together with the Inflation Reduction Act—a historic investment that utilizes the budget reconciliation process to fund important priorities to create good jobs, invest in infrastructure, revitalize the nation’s manufacturing sector, and fight climate change—the BIL will create good-paying, union jobs across the nation while fighting climate change, improving public health, and helping tackle income and racial injustice.

This moment is a long time coming. For years, voters have been calling for the types of investment included in the BIL and the Inflation Reduction Act. Poll after poll has shown broad support for action on the priorities encompassed in these bills. 

The BIL takes important and long-overdue steps to rebuild and modernize our nation’s crumbling infrastructure. With the BIL signed into law, now is the moment to start the work of making sure that implementation of the law truly delivers to workers and communities.

The purpose of this “user guide” is to act as an easy reference for a number of policies and programs included in the BIL in eight broad areas—clean energy projects and infrastructure; manufacturing and industrial transformation; water; buildings and schools; fairness for workers and communities; community resilience; transportation; and methane and natural gas distribution. We explore the policies, timelines, and implementation mechanisms for each of these policy areas. In doing so, we hope to help ensure that funds are maximized to benefit workers and their families and communities, delivering job quality, climate, health, and equity gains.

We also provide some background about the legislation, explore what can be done to ensure job quality and equity, break down the implementation mechanisms included in the bills and how they operate, provide a look at some key provisions in the bill, and provide easy to reference grids of key provisions and how they work.

Bipartisan Infrastructure Law

The $1.2 trillion BIL was passed by a bipartisan group of lawmakers in both chambers and signed into law by President Biden on November 15, 2021. The investments and policies included in this bill will rebuild and modernize our nation’s crumbling infrastructure and create good-paying, union jobs across the nation while making some important investments to address climate change. At the same time, there are concerns with some of the bill’s provisions, including the changes it makes to the National Environmental Policy Act (NEPA) process, and careful attention to implementation will be needed to ensure the bill translates into benefits for the environment and communities. 

It includes billions in reauthorizations and existing programs and $550 billion in new federal infrastructure funding over five years to repair, rebuild, and modernize America’s bridges, transit systems, water infrastructure, and more. While more than half of the bill’s funding is for transportation infrastructure—including surface transportation, airports, zero-emissions school buses, electric vehicle (EV) charging, ports, public transit, railways, and more—it also provides significant funding for broadband, the power grid, water infrastructure, resilience, and legacy pollution. 

This law will create high-quality union jobs, not only at construction job sites, but at manufacturing facilities down the supply chain through the use of strong Buy America and Buy American provisions.

Notable provisions in the bill include:

• The largest federal investment in public transit in history;
• The largest federal investment in passenger rail since the creation of Amtrak;
• The largest dedicated bridge investment since the creation of the interstate highway system;
• The largest investment in clean drinking water and wastewater infrastructure ever;
• The expansion of high-speed internet access;
• The largest investment in clean energy transmission and EV infrastructure in history;
• Robust funding to reclaim abandoned mine lands;
• The expansion of the electric school and transit bus fleet; and
• New funding and authorities to build a more climate-resilient and efficient electric grid.

Implementation Overview: How the Money Moves

Successfully navigating the federal funding made available by the BIL will require becoming familiar with the different mechanisms through which federal programs are implemented and the different ways federal funds flow from federal agencies, whether through states—and, ultimately, to communities—or directly to eligible entities. For each of the policies we explore in this guide, we have identified which mechanism will be used in the grids included in this document. Below, we provide more information on those mechanisms and how they generally operate. 

Grants

At its most basic, a grant provides government funding that is not expected to be paid back. However, within this broad category, there are several subtypes of grants that are used to distribute funding in the BIL. 

Mandatory Grant: 

A mandatory grant is any grant in which funds are automatically awarded to all eligible applicants. Mandatory grants are not typically given to private organizations or individuals. Rather, they are awarded to state or local governments. Mandatory grants are typically created by legislation that appropriates money for a specific program and determines eligibility for lower levels of government to receive the money to implement the program. Medicaid is a classic example of a mandatory grant; the federal government awards money to each state to implement its own Medicaid program in accordance with the authorizing statute.

Block grants and formula grants (defined below) are usually subsets of mandatory grants. Discretionary grants are mutually exclusive with mandatory grants.

Formula Grant:

A formula grant is a type of mandatory grant where funds are disbursed according to a “formula,” or a fixed set of criteria usually written into the enabling legislation. The formula dictates whether an entity is eligible for funds, and if so, how much. If an entity meets the formula, the award is automatic. The formula may be as simple as a flat dollar amount per unit of population, or it may be much more complex, including various funding, eligibility, program, and compliance criteria. However, it is always intended to be quantitative and objective.

Formula grants are typically awarded to either state or local governments. Large federal spending programs are often structured as formula grants to states, where every state receives an amount of funding based on its population and other characteristics, and then spends this funding to implement the program.

Formula grants are quite similar to block grants, and many programs qualify as both. When a distinction is made, block grants provide more flexibility and breadth to the awardees, while formula grants have more specific and quantitative funding structures and requirements. Formula grants that are not considered block grants may instead be considered as categorical grants. 

Block Grant: 

A block grant is a mandatory grant awarded to a government entity by a larger government entity to fulfill a broad set of government functions. In the case of a federal block grant, the government defines a set of functions to be carried out, and then awards grants to state or local governments to carry out those functions at their own discretion. A prominent example is the Community Development Block Grant (CDBG), where the federal government gives funds to cities and counties for a broad list of eligible activities aimed at providing affordable housing, economic development, and infrastructure.

Block grants are quite similar to formula grants, and many grant programs, including CDBG, qualify as both. Block grants are mutually exclusive with categorical grants, as block grants give broad discretion to awardees to spend their funds while categorical grants have highly specific requirements.  

Discretionary or Competitive Grant:

A discretionary grant, also called a competitive grant, is a grant where awardees are chosen among a pool of applicants based on a review process. The review process will generally involve a set of fixed criteria based on the grant program, funding agency, or specific Request for Proposal (RFP), but it will also most likely involve some degree of subjective judgment.

Federal discretionary grants are typically awarded by federal agencies. There may be enabling legislation that allocates money for a specific grant program, or the grant program may be created by the agency using its existing budget. Either way, the agency has control over how to evaluate applicants and award funds. State and local government agencies, private companies, nonprofits, labor unions, and individual people may be eligible applicants, depending on the grant program.

Mandatory grants are mutually exclusive with discretionary grants.  

Categorical Grant:        

A categorical grant is any grant from the federal government to state and local governments to fund a highly specific set of programs and activities. Head Start is a classic example of a categorical grant in which the U.S. Department of Health and Human Services (HHS) funds local awardees to operate childcare programs following a specific set of federal guidelines.

Categorical grants may be structured as either mandatory or discretionary grants, and they may be structured as formula or project grants. Categorical grants are mutually exclusive with block grants, as block grants give broad discretion to awardees to spend their funds while categorical grants have highly specific requirements. 

Project Grant:

A project grant is any grant awarded to fund a specific project, initiative, or service. These are typically competitive and may be awarded to government agencies, nonprofits, or private companies. Project grants are often considered a subset of categorical grants. The U.S. Department of Transportation’s (DOT) Capital Investment Grants are an example of a project grant program. The BIL includes a significant amount of project grant funding with $105 billion under the auspices of the DOT alone.

Loans 

Broadly, loans are pools of government funding that are expected to be paid back, unlike grants. There are a number of loan programs included in the BIL. The loans utilized by the provisions we explore in this guide are defined below.

State Revolving Fund

A State Revolving Fund (SRF) is a program that provides grants and low-interest rate loans for the purposes of building or repairing water and sanitation infrastructure. There are currently two federally funded SRF programs: the Clean Water State Revolving Fund (CWSRF) and the Drinking Water State Revolving Fund (DWSRF). For both of these SRFs, Congress appropriates funding, and the U.S. Environmental Protection Agency (EPA) then provides capitalization grants to every states’ SRF based on a needs assessment: the state then matches a portion. With this bank of funds, the state—which operates and manages the SRFs—issues loans or other financial assistance to appropriate applicants. Those applicants then make repayments on the loans. These repayments are recycled back into the states’ SRF, allowing it to redistribute that money as other loans—this is the “revolving” aspect of the program. 

The agencies that jointly administer the state-based SRF can vary depending on the nature of the SRF. For example, Minnesota’s CWSRF is administered by the Public Facilities Authority and the Pollution Control Agency, while their DWSRF is administered by the Public Facilities Authority and the Department of Health.

Loans, Loan Guarantees, and Other Financing

The BIL authorizes or funds the federal government to make loans for a variety of purposes. Particularly critical to the clean energy and manufacturing investments we highlight in this document are loans that would be administered by the U.S. Department of Energy (DOE) through their Loan Programs Office (LPO), which operates programs to provide financing for clean and advanced energy, industrial, and clean vehicle manufacturing projects. The benefit of working with the LPO for a project is that these loans are lower cost, the LPO is able to offer more flexible financing options, and the office remains involved in the project for its lifetime, offering access to DOE’s team of experts to help ensure the success of the project. 

In some instances, DOE is also able to provide loan guarantees—which reduce the risk of a project by having DOE agree to assume the debt for the loan should the borrower default—or coordinate with other parts of DOE or other agencies to provide a mix of grant, loan, or other financing.

Bonds

A bond is a security issued in exchange for a loan—essentially as an “IOU.” An entity can raise money by issuing a bond and selling it for cash to an investor. The bond typically stipulates a rate of interest to be paid over the life of the bond and a date of maturity when the principal is to be repaid in full.

There are a plethora of specific government bond programs designed for specific types of spending, projects, and circumstances, such as Qualified School Construction Bonds and Recovery Zone Economic and Facility Bonds. 

Other Investment Mechanisms

The BIL includes a couple of additional investment mechanisms that do not fit into the categories above. 

Cooperative Agreements

Cooperative agreements facilitate the transfer of something of value from federal executive agencies to states, local governments, and private recipients for a public purpose or benefit. While similar to grants, cooperative agreements differ in that they provide substantial involvement between the federal awarding agency or pass-through entity and the non-federal entity in carrying out the purpose of the agreement.

Technical Assistance

Technical Assistance—commonly referred to as consulting—is the process of providing targeted support to an organization with a development need or problem, which is typically delivered over an extended period of time.