The Infrastructure Investment and Jobs Act (IIJA, P.L. 117-58) and Inflation Reduction Act (IRA, P.L. 117-169) are massive pieces of legislation with a combined price tag of more than $1 trillion in new spending. Now, more than 1 and 2 years, respectively, after becoming law, many of the trillion dollars appropriated have gone out the door through grants, interest-free loans, and other forms of federal spending. For these pieces of legislation to be effective, we all need to understand exactly how the dollars are flowing.
Conducting implementation oversight of each IIJA and IRA spending line-item requires a variety of approaches. The IIJA and IRA include diverse methods of spending – they modify/expand existing programs, revive previously retired programs, and create new ones. Legislative direction on how to manage this spending varies greatly, from funding for long established programs with existing, detailed guidance to lump sums to be allocated as an agency sees fit.
Program Design
Federal agencies play a critical role in determining how our taxpayer money is actually spent. Nearly every line item of funding in the IIJA and IRA requires an implementing agency to determine, to varying degrees, the requirements that must be met for appropriated funds to go out the door.
In many cases, Congress gave agencies some discretion in determining the appropriate use of funds. One example of this is the $10 million appropriated to the Department of Energy’s Lithium-Ion Recycling Prize in the IIJA. The competition, originally launched in 2019, had already completed Phases I and II by the time the IIJA appropriated an additional $10 million. Congress directed the funds to be used to “increase the number of winners of Phase III”, “to increase the amount awarded to each winner of Phase III”, and “to carry out any other activity that is consistent with the goals of Phase III of the competition.” DOE plans to use $5 million of this IIJA funding for Phase IV of the competition. Phase IV is arguably “consistent with the goals of Phase III of the competition,” but it could equally qualify as an unexpected use of funds.
An overseeing agency may also re-evaluate program design in the middle of implementation. In September 2022, the Department of Energy announced the availability of $2.25 billion in funding through Section 40305 of the IIJA for Carbon Storage Validation and Testing via Phase III, III.5, and IV of the previously existing Carbon Storage Assurance Facility Enterprise (CarbonSAFE) Initiative. In May 2023, DOE expanded the funding announcement and made IIJA Section 40305 funding also available for Phase II, Storage Complex Feasibility, which DOE originally had announced would be funded through regular appropriations. Continuing to follow the implementation process, from original program design to final allocations, is necessary for proper oversight.
Funding Allocations
For some spending line items, little information exists about an agency’s implementation plan. One example of this is the $1 billion appropriated to the Appalachian Regional Commission (ARC) in the IIJA. On January 3, 2022, ACR approved Resolution 786, allocating fiscal year FY2022 appropriations under IIJA for Appalachian Regional Development Act Programs. However, this resolution containing the IIJA spending plan is not publicly available or, if it is, is not easily accessible.
In some cases, agencies have made an implementation plan public and easily accessible, but the plan’s organization does not directly align with the legislative text, creating barriers to effective oversight. The IRA appropriated $27 billion to the EPA’s Greenhouse Gas Reduction Fund in three initiatives: $7 billion for grants for low-income and disadvantaged communities to deploy zero-emission technologies; $11.97 billion for grants to reduce air pollution; and $8 billion for grants to reduce air pollution in low-income and disadvantaged communities. However, the EPA is implementing the section through 3 competitive grant programs that do not directly align with the legislative breakdown: $14 billion for the National Clean Investment Fund, $7 billion for the Solar for All Program, and $6 billion for the Clean Communities Investment Accelerator. This allocation makes it difficult to understand how much funding has been spent on each of the IRA initiatives as dictated by Congress.
Particularly for existing programs, TCS also had difficulty determining when funding from the IIJA or IRA was being spent, as opposed to funding from other sources. For example, the IIJA appropriated up to $60 million, $12 million annually from FY22-26, to the Wood Innovation Grants Program and Community Wood Energy Program. Funds may also be used for other programs “for the purposes of creating incentives for increased use of biomass from National Forest System lands.” USDA press releases state that some funding for FY22 and FY23 grantees came from the IIJA, but it is unclear if the full $12 million in annual IIJA appropriations were allocated or which projects were funded through the IIJA.
This issue became more prevalent after the passage of the IRA; often separate line items funded under the different bills are combined into larger programs. In 2023, IIJA funding for the Industrial Emission Demonstration Projects (Section 41008) and IRA funding for The Advanced Industrial Facilities Deployment Program (IRA 50161) shared the same Funding Opportunity Announcement (FOA). While the FOA distinguished which Topic Areas would be funded through each bill, it did not specify how the $6 billion available would be divided between Topic Areas or the bills. It is possible that award notifications will include this level of detail.
In addition to the IIJA and IRA providing appropriations, the IRA also included provisions creating and extending various energy and climate-related tax credits. Some tax breaks are new (such as the Clean Fuel Production Credit, for instance) while others were expanded or will be phased out and replaced with different tax credits over time. Tax credits provide unique challenges for proper oversight. Unlike appropriations, which dictate a specific amount of taxpayer funds to be spent on a program, the total costs of tax credits over their lifespan are unknown as they are often extended. We must rely on constantly updated and changing cost estimates, most notably from the Joint Committee on Taxation, to understand how much revenue is estimated to be forgone on a tax credit and how much is likely to be spent in the future. Further, tax filings are considered confidential and little information can be made publicly available about credit recipients and the activities they carry out, creating more barriers to oversight.
Federal Resources for Oversight
The Administration has made resources available in an effort to improve oversight of this spending, notably A Guidebook to the Bipartisan Infrastructure Law and the Inflation Reduction Act Guidebook. While a commendable step towards improving transparency of federal spending, these resources are incomplete and occasionally misleading or even incorrect. For example, the IRA Guidebook says funds for the Section 50145 Tribal Energy Loan Guarantee Program are available through FY2026, but the legislation says funds are available through FY2028.
There are a number of additional federal resources that provide information on implementation of IIJA and IRA spending on a smaller level, such as by agency, issue area, or even at the program level:
Agency-Level – The Natural Resources Conservation Service (NRCS), under the U.S. Department of Agriculture, manages an interactive map of projects funded through IIJA under three NRCS watershed programs: Watershed and Flood Prevention Operations, Watershed Rehabilitation Program, and Emergency Watershed Protection. The map does not include information on funding allocations.
Issue Area – The National Invasive Species Information Center published an overview of IIJA funding that is directly or indirectly tied to invasive species management across the Departments of Agriculture (USDA), the Interior (DOI), and Commerce. While not technically a cross-cut budget, having spending information from multiple departments in the same location allows taxpayers to better understand how IIJA funding is used to aid invasive species management.
Program-Level – Several existing and new programs funded through the IIJA and/or IRA have a dedicated website to track allocation of spending. The National Telecommunications and Information Administration (NTIA), under the Department of Commerce, runs a dashboard for Middle Mile Program Awards under Section 60401 of the IIJA. The dashboard has a map of all projects in the U.S., a list of selected grantees with the associated federal funding and total project costs, and the sum of total grants awarded and total project cost.
Conclusion
Oversight of federal spending is critical to ensure tax dollars are managed properly and deployed in a manner that achieves their intended purpose. The Infrastructure Investment and Jobs Act and The Inflation Reduction Act provide significant investments in a number of federal programs. Agencies need to improve their transparency in disclosing how these funds are being deployed and inform taxpayers of both obstacles and successes these funds have encountered.