Construction / 2 min read
The Federal Highway Administration (FHWA) recently released a new rule that could have significant impacts on infrastructure, civil and heavy highway focused construction companies. The rule, which aims to reduce greenhouse gas emissions, has been met with criticism and opposition from various organizations and multiple Departments of Transportation.
The New Rule
The new FHWA rule (the GHG Rule) directs states to set declining on-road carbon dioxide emission targets on the National Highway System and submit regular progress reports to the FHWA. While the GHG Rule does not mandate how low those targets must be, nor does it penalize states for failing to meet targets or reduce emissions, it does align with President Biden's executive orders pushing for the U.S. to reduce emissions by 50% below the 2005 levels no later than 2030.
The FHWA's goal with the GHG Rule is to promote a reduction in CO2 emissions by ensuring states have transparent information. The FHWA believes that transportation is the leading source of greenhouse gas emissions in the U.S. and that reducing emissions from this sector is critical to addressing the climate crisis.
Potential Impact of GHG Rule
Construction companies working on transportation projects could face significant challenges if the GHG Rule goes into effect. The rule could impose unplanned administrative costs on state transportation agencies and metropolitan planning organizations. It could also pressure state officials to shift funding away from needed new infrastructure projects to lower priority projects, so their reports can look better.
Criticism and Opposition by the Construction Industry
As a result of the potential impacts discussed above, the GHG Rule has been heavily criticized by construction trade groups like the American Road & Transportation Builders Association (ARTBA) and the Associated General Contractors of America (AGC). They argue that the FHWA overstepped its authority, and that Congress did not grant them the power to enact such a far-reaching emissions rule.
These groups point out that in the last three multi-year highway funding bills enacted by Congress, the FHWA was never granted the power to enact a rule like this. They believe that if Congress intended to grant the FHWA this authority, it would have been included in the legislation. In response, the FHWA defended its authority to establish measures for "performance" of the National Highway System, stating that this falls under the "national goals," which include "environmental sustainability." The FHWA also emphasizes that the GHG Rule imposes no consequences for a state's failure to meet emissions targets.
Despite the FHWA’s justifications, the State of Texas filed a lawsuit in federal court, alleging that the Biden administration is unconstitutionally imposing an extreme climate agenda through administrative agencies that don't have congressional authority to implement such actions. Earlier this year, House and Senate lawmakers also introduced a joint resolution of disapproval to nullify the GHG Rule, calling it "another example of irresponsible federal overreach."
Going Forward
The pending lawsuit in Texas, plus another filed in Kentucky, set the field for a showdown between the FHWA and various Departments of Transportation on the validity of the new GHG Rule. Because the impact of the GHG Rule could be significant to many civil-oriented construction companies, this is a matter that should be monitored going forward. In the meantime, however, companies should carefully review the GHG Rule and begin planning to implement policies and procedures to comply with the GHG Rule if it is approved.