Meeting

Renewing America Series: U.S. Infrastructure Investment

Friday, January 13, 2023
Speakers

Professor of Political Science, Northeastern University; Founding Director, Global Resilience Institute; CFR Member

Commissioner, New Jersey Department of Transportation

Undersecretary of Transportation for Policy, U.S. Department of Transportation

Presider

Adjunct Senior Fellow, Council on Foreign Relations; Partner, International Capital Strategies; Senior Advisor, America’s Frontier Fund; @heidirediker

 

Panelists discuss the implementation of the Infrastructure Investment and Jobs Act and the impact of infrastructure investment in the United States on economic growth and global competitiveness.

With its Renewing America initiative, CFR is evaluating nine critical domestic issues that shape the ability of the United States to navigate a demanding, competitive, and dangerous world.

 

CREBO-REDIKER: Thank you so much. And thank you, everybody, for joining today. This is our CFR virtual meeting on—part of our Renewing America Series, on U.S. Infrastructure Investment. And I think we’re going to try and keep the conversation—the discussion conversational. I’ll spend the first thirty minutes or so with the panel, and then open it up for audience Q&A. And so I’d like you to start thinking the questions you want to ask now, and we look forward to engaging with you in about a half an hour.

So today we are delighted to welcome Undersecretary Carlos Monje. He is the undersecretary of transportation for policy at the U.S. Department of Transportation.

Commissioner Diane Gutierrez-Scaccetti, who’s done many—several CFR panels on infrastructure over the years. She’s a commissioner for the New Jersey Department of Transportation.

And then also Stephen Flynn, who’s the professor of political science at Northeastern University, who’s the founding director of the Global Resilience Institute. He is also a former CFR senior fellow for national security studies, and has also worked with us on infrastructure investment.

So just a note, this is a very transportation-heavy panel today. But obviously the 1.2 trillion (dollars) of the Infrastructure Investment and Jobs Act, or bipartisan infrastructure law, is—it includes drinking water, and wastewater, infrastructure in broadband, and energy and resilience, climate and cyber. And it’s notable for a number of the other policy innovations, and I’m hoping that we can ask the undersecretary to speak to as well. This is a down payment. We are catching up on underinvestment in infrastructure. And the down payment is historic, but it’s still that.

With that, I’d like to ask Carlos to set the stage. We’re one year in. Given the scale and the scope, what are the lessons you’ve learned so far? Where are we now that we’re one year in?

MONJE: Well, thank you. And it’s an honor to be here. And I know you’ve done this a lot, but it really is a tickle—tickling for me, for USDOT, that the Council on Foreign Relations has invested in this space so much. And it’s so critically important for U.S. competitiveness. You know, we’re a year in, as you said. We’ve—you know, DOT has the biggest chunk of money, 600 billion (dollars), in additional investment. And that’s bigger than the GDP of twenty-three countries. You know, we have a map internally of all the projects that are funded through the bill. And my favorite thing about that map is if you took away the boundaries, if you took away the water, you’d know exactly what you’re looking at.

We’re literally rebuilding from the—you know, from the Alaska coast. And it’s 1,800 transportation projects from our discretionary dollars, the dollars that we control directly. That’s on top of more than eight-two billion (dollars) in formal funds. That’s money to goes directly to Diane and other states, and transit agencies. And that’s just in the first year alone. Seventy-six new or expanded programs. We’re helping local communities take these projects from the wish list to the construction schedule in a way that we haven’t seen in a really, really long time.

In terms of lessons learned, two I would bring up is that, you know, we haven’t had this kind of money for a really long time. It is a wonderful burden, but it is a challenge. It’s a challenge for us. We hired 850 additional folks. It’s about halfway to our goal. It’s even harder for our state and local partners who are just swimming in opportunity, and a two-fold challenge. One is that smaller governments who haven’t worked with us very much, including small towns and tribes, are getting money directly from us. They haven’t had to manage federal programs or our requirements.

And the other side of that is that even our most experienced state partners have to do, you know, really integrated, inclusive planning. They have to get their money together to get the big projects together, the cathedrals. That’s how we describe it, these projects that are multistate, multi—many multis of billions, multijurisdictional, multimodal. Really hard to pull off, and we’re all learning how to do them better. We’ve set

up a technical assistance program, what we’re calling Thriving Communities, to really focus on those lower resource communities, helping them apply for and win our dollars. We’ve simplified our application processes where we can. And we’ve launched a project delivery center of excellence.

The other lesson learned is we need a lot more employees. You know, that is a—and that’s not just us, but our state and local partners as well. And Moody’s estimates that we’re going to add 360,000 jobs by the end of this year through—because of the bill, and at its peak, because a lot of it’s going to be in 2025, of 660,000 jobs at the peak employment. The bill and Congress helped us out here by giving us additional takedowns for workforce development set-asides. And when it comes to highway dollars, we’re making our partners aware of those flexibilities, trying to help them use that.

We’re also partnering with the Department of Labor. We signed an MOU with them, but more importantly they’re putting out eighty million sometime early this year to do job training programs, get those construction managers, project managers, construction engineers, civil engineers. And we’re encouraging folks. And it’s, like, every employer these days. They need to make the job quality better to attract and retain folks. And that includes getting people who have been locked out of the system in the past, including, you know, things like registered apprenticeships, wrap-around services, and how do we incentivize that in our notices of funding opportunity?

So it has been a fun year. You know, we were just talking about a big transportation policy confab that was here in D.C. this week. This is the first time it happened in two, three years in person. Also really a lot of excitement because of all of the opportunity that’s out here. We’re hoping that this is not just a one-time blip that they talk about for ten years, but a foundation to build on. And we’ve seen with the Inflation Reduction Act, that Congress is willing to double down a little bit and hopefully make some additional progress in the two years ahead.

CREBO-REDIKER: Thank you. You said you did the—you signed an MOU with the Department of Labor. A lot of the multimodal and a lot of the funding is sort of—it’s innovative and it crosses over different silos and different agencies. Can you talk a little bit about how you’ve managed that, from the Department of Transportation? And we also had Mitch Landrieu speak a couple of weeks ago and, I think, just having somebody walk through how you are tackling the interaction on the federal side I think would be really, really helpful.

MONJE: Well, it plays out in a lot of different ways. And I think Mitch’s crew, Mayor Landrieu—I’m New Orleanian, actually, so I’m going to call him Mayor Landrieu for my life. But, you know, they’ve really played an important role in kind of bringing the interagency together and being thoughtful. And we’re trying to do better. We have a long way to go when it comes to dig wants, and better understanding, you know, when the Department of Commerce is digging to put down fiber line, when can we go in and be helpful there. But a lot of it is about permitting reform and making sure that we are being as thoughtful as we can within the department.

We’re trying to improve, and improving IT—this is my second stint at the department—our IT abilities are really substantially improved internally. Like, we have native ability to figure out where dollars are going so that we can make better decisions about where—about how to coordinate those funds. And the bigger the project, the more tender, loving care it gets from our team. And our Highways Administration is a really good example of that, creating a risk matrix for each project and figuring out how much resources need to be—need to be put on it. And, depending on how many modes, how can we simplify the processes? But it’s hard, you know?

And Diane has a lot of experience working with us. And, you know, when you have a big project that you’re trying to get, you’re—you know, you’re throwing your bag over the fence in the hope that you’ll get there and that the momentum carries you through the hard parts, so that you can actually get the commitments for dollars. And what we’re doing in addition to the—you know, the bureaucratic piece of this, is trying to lean in a little bit

more politically as well, you know? And kind of forcing some of those harder decisions about how we’re going to get this local support, how we’re going to get the funding, how we’re going to encourage the kind of public engagement that gives a project that is complicated the resilience to be able to get through what is often a long process.

CREBO-REDIKER: Thank you so much. And then I guess that’s a perfect segue over to commissioner, to Diana. Because I think, you know, the states are literally—you know, 90 percent of the funding is going to—you know, is redeployed through nonfederal partners. And the states and local governments are—you know, are critical. You are where the rubber literally hits the road. So can you tell me a little bit about your perspective, from the state of New Jersey? And not only your engagement with the federal government, but have you reprioritized projects? Have you thought differently about what’s going to come first, based on the new funding and the new—I guess, both the formula, but also the competitive programs that are coming out of the federal government right now?

GUTIERREZ-SCACCETTI: Absolutely, Heidi. And I think the undersecretary laid great groundwork for me in that conversation. So very important for us to first, you know, thank the White House and our congressional delegation, and the Congress generally, for having the foresight to pass such a meaningful infrastructure law. You are correct. It is a down payment but, you know, we always look at it with gratitude, because it really is helping us to do our job better, to get more done, and to change our focus, which I think has been important. DOTs are big entities that focus on building really big projects—you know, big roads, big bridges. And that’s a good thing.

But part of the bipartisan infrastructure law really asks us to shrink down to the community level as well to make sure that as we are bringing along those really important infrastructure projects—whether on the interstate and the state highway system—that we also look at the impact on our local communities and what we can do in our local communities to support them. So New Jersey Transportation received $12.2 billion over the five years. That’s $8.1 billion for New Jersey Department of Transportation and $4.1 billion for New Jersey transit. It's about a $1.5 billion increase over our typical formula funds.

And so we like to make sure people understand the $6.9 billion that we get going to our federal highway programs is just critically important to us. It boils down to maybe about 300 million (dollars) a year. And people go, well, that doesn’t seem so big. It is big, right? Most of our projects don’t reach that magnitude. So for us, this money is very meaningful year in and year out.

What has it allowed us to do? It has allowed us to look at our capital program and look at projects that may not be scheduled for construction till a year or two after design is completed, and pull them in. In other words, it gives us the—kind of the momentum to continue the project through completion as we finish each phase of project delivery, from concept development through the construction process. That’s important for us because it reduces what I’ll call the need for review of our design, right? If you wait a year or two, you might have to go off and do a little bit more work, spend a little bit more money just on the design.

We are getting rid of that with the money that we have, which we think is, again, critically important. We’re using our dollars better. But it’s also allowed us to look at some projects within communities that need to be done that we can add to our capital plan, and perhaps advance that we couldn’t. And it’s important to remember, many state highways—taking the interstate aside—many state highways go through small communities. We want to focus on them and make sure from a state perspective we address them. But when you look at the federal money, we know that we’ve heard over and over that the interstate itself has also cut communities in half.

And how can we then use that money to improve the quality of lives for those people, try to rejoin communities? Is it through collaboration with the communities? A hundred percent. I think what we’ve learned in terms of the environmental justice and social justice parts of bill and the requires for us to acknowledge that

is that we need to make sure that communities are part of our work in their town. At the end of the day, it’s their town. And so DOTs, which don’t always think that way, need to shrink themselves down a little bit and do good community work as they’re putting in these big projects. So we’re very happy about that.

One thing that we’re doing with our communities as well—and, again, the undersecretary touched on it—is this is, I think, maybe the first time local and county governments have had the opportunity to apply directly for grants outside of the Department of Transportation. So usually, we’re right in there with them. We know what they’re applying for. We understand the local match needs. But it is also true that because they’ve never done it before, they do require significant support. And so we have a local aid resource center that we’ve expanded to cover their opportunities for grants to help them. And we have worked very hard with our consultant community to get in and work with these local governments to help them develop strong, meaningful grants.

And under Mayor Landrieu’s leadership, we all have an Infrastructure Investment and Jobs Act coordinator for the state. They have held many webinars and they have done a lot of outreach to the towns in New Jersey when asked about to—how we can help support them as they are looking for funds. Obviously, the biggest area of support they need is the local match. But we do not use the money that the federal government provided to New Jersey DOT for the local match piece. We have grant programs here at the department that they can apply for that can help them meet that match. But we really focused on using our apportionments for the work we need to do on the—on the interstate system, to make sure that it is in the best state of repair it could be. Because when it is, then our economy thrives and we’re able to move more commerce through our state, and we’re also then also able to provide a better transportation system those who choose to work or visit New Jersey, work or live in New Jersey.

So the other big part of it for us that’s very important is we receive just over a billion dollars that is specifically dedicated to bridges. That is entirely new money New Jersey has never seen. And so we are pro—we have programmed out for the five years already the bridges that we know we are in most need of repair. And so what has that done? The idea that this is a five-year program has given tremendous support to all DOTs to plan, right? When you only get something year over year, it’s hard to know what is going to come in the future. This has given us, today, the ability to know how much we’re going to receive, plan those projects out, design them, bid them, build them, and move on. Which, in transportation, as we all know, is critical. Because we don’t do annual projects. We generally do multiyear projects. And so it has been incredibly beneficial to use to have this information today and, beyond the information, to have the financial commitment from the federal government that they’re going to provide this money year in and year out, for what is now the next four years.

The final thing I’ll say is there is one piece you mentioned and I think it’s important to talk about, is the collaboration amongst various departments of government. So, of course, that happens at the federal level, but it does then drop down to the state level. A good program to talk about that is NEVI, which is the National Electric Vehicle Infrastructure fund. New Jersey will get about $104 million to support the expansion of electric vehicle charging network along the interstate system, with chargers no less than fifty miles apart and no less than one mile off the interstate. But that is not strictly a DOT activity. We need our Board of Public Utilities to work with us, who has many supportive programs for electric vehicle purchases, as well as our Department of Environmental Protection, to help us as well make certain that they have some grant money coming out of prior settlement. BPU has the best relationships with the utilities to make sure as we put this program together it’s one that is, first, successful. Second, timely. And third, has sustainability over the course of time.

And so we have worked with our partners in a way that we’ve never worked before to deliver what essentially is a construction project, but has many more players at the table. And so, again, it has brought kind of a new twist to the way we deliver on what we look at as—you know, and will handle as a construction project in the state of New Jersey.

CREBO-REDIKER: That was excellent. I have so many questions I want to ask you on the back of that, but I want to turn it over to Steve, and welcome him back to this webinar. And you have spoken and written about

infrastructure, the imperative of investment in infrastructure for competitiveness and national security resilience, and whole host of other reasons. Are you—from outside government. Are you sleeping better at night, now that we have this money? Or is there still a long way to go?

FLYNN: Well, it certainly is a long ways to go but, yeah, I’m a little better sleeper. You know, fifteen years ago I ended up opening a book I wrote, The Age of Disaster: Rebuilding a Resilient Nation, with the following. I said: The United States has become a brittle superpower, where we increasingly behave like the occupants of a grand old mansion, but we’ve given up on investing in its upkeep. We depend on complex infrastructure built by the hard labor, capital, and ingenuity of forebearers, but we seem oblivious to the fact that it’s aging, and not very gracefully. Bridges are outfitted with the civil engineering equivalent of a diaper. Public works departments construct temporary patches for dams that leave those living downstream one major storm away from waking up with a lot of water rolling through their living rooms. Our electricity comes to us via a decades-old system of power-generators, transformers, and transmission lines that has utility executives holding their breath on every hot day in July or August.

You know, fifteen years later, in 2023, actually, that sounds kind of tame—(laughs)—given the kind of mayhem that we’ve been dealing with, and folks like right now in California are dealing with, you know, how—do we have the infrastructure we need for the challenges that confront us? The Biden administration deserves great credit for finally getting a major infrastructure bill over the goal line. It’s been too long in coming. But as important of a breakthrough as it is, we’re really dealing with decades of neglect in maintaining and upgrading the infrastructure. Here’s, I think, a very important thing that I hope we can really move forward on. Simply, without tapping private capital alongside with this historic public investment, we’re just going to end up only marginally better off.

You know, the good news is that there’s many trillions of dollars of capital, to include over $40 trillion in ESG funds, that could be potentially tapped to help rebuild America to thrive in this 21st century. The key will be, how do we leverage every public dollar we have to attract multiples of private investment alongside it, and essentially use the public funds to assure that the public goods, such as sustainability, security, and equity, are incorporated in those infrastructure projects. And we really also have to make sure that when we’re upgrading our critical infrastructure systems that we’re able to—that we do it in a way that we’re able to cope with both future risk and opportunities, as opposed to spending the funding primarily on maintaining legacy infrastructure.

I guess something—and I really applaud the Biden administration for doing is pushing us forward on that. But our infrastructure has to be able to adapt to climate change and sea level rise. And it needs to be more sustainable and secure, to include cybersecurity, given the trend toward digitalization. And we need to calibrate it support the economy of the 21st century, not the 20th. You know, and additionally we have to place issues of equity at the forefront. And I’m really pleased to hear from both the undersecretary and the commissioner how much that has gotten to be a part of it.

But here’s my real concern: That rural America, tribal nations, and economically distressed states and communities are potentially going to be left on the sidelines because they simply lack the planning and technical capabilities to submit competitive federal funding applications. It’s really great that the USDOT, and I know Mitch Landrieu and others, are recognizing this. But I can’t understate how difficult this is for smaller communities and rural America, folks who have not been planning because they’ve been distressed for so long. There aren’t planners, and there aren’t the pools there. They don’t have the access to the consultants and the big planning projects.

And my worry here is that a few years from now we’re going to look back and see that most of the money ended up going to the major metropolitan areas—like the Houstons, or Tampas, and Los Angeles and New York—but then the fly-over America ends up as being no better off than before, because this once in two generations investment that is being made sort of ended up sort of passing them by. This would clearly not help with our current political polarization problem.

The last point I want to make—and, again, it was very good to hear the commissioner talk about the sort of bringing all the different players together, and the undersecretary talking about, you know, the engagement, like with Mitch Landrieu, to try to mix this up. But here’s the real key, if anything I’ve learned about infrastructure and how we need to, you know, move forward and actually have the kind of infrastructure that America will need to prosper. We just have to get out of our current jurisdictional and sector silos. Modern infrastructure operates as a system of systems. And it does not—and that basically means it operates beyond most local, and even state, jurisdictions. But we’re still struggling. And we’re not organized to develop and manage it this way.

Let me provide one example to you from my fair city of Boston. The mayor of Boston, Michelle Wu, controls a single lifeline infrastructure. She basically has control of the wastewater. Boston Water and Sewage operates the Deer Island Wastewater Treatment Plant. But she doesn’t control the water, because that comes from the Quabbin Reservoir, which is sixty-five miles to the west of the city. She doesn’t control the transit system. That’s operated by the state. Doesn’t control the seaport or the airport, that’s overseen by a quasi-state agency, Massport. Ands he’s not in control of the energy or telecom, which are owned and operated by the major private sector—by major private sector entities, like National Grid, Eversource, Verizon, and so forth. But she does have oversight of sewage.

You know, what we need here is regional planning that deals with the interdependencies that exist among infrastructure sectors. Again, we’re nudging the right direction, but we’re not quite where we need to be. And so this is a historic level of investment that we’re making, but it really needs to be a catalyst for us to do things differently. We have to have infrastructure that’s going to be more safe, and secure, and equitable, and work for the 21st century, and the challenges that are coming ahead of us.

CREBO-REDIKER: So, Undersecretary, I’d like to just hand it over to you to respond to anything that the commissioner or Steve just said. I would say, in some of the webinars and the teach-ins that we at CFR have had with hundreds and hundreds of state and local government officials from—you know, from, as Steve described, flyover country. There have been lots of challenges with getting the right amount of funding to hire the civil engineers to put the bids together for the competitive part of the funding.

And I was really heartened that Diane said that she’s—that she’s helping, you know, support those initiatives. But I think a lot of other states and municipalities don’t have the in-house capacity to even do that. You know, they’re very stretched. So I’d be interested if you can talk to what other—you know, where are the—where are the places where municipalities can go and get that financial, civil engineering, and other support?

And then the other—the other thing is the question of the role of the private sector. I know in New Jersey there are a lot of good examples of where public-private partnerships for large projects have worked. And so, you know, Diane, please jump in as well. But I would love to hear the undersecretary just kind of take a stab at answering some of those questions.

MONJE: Yeah. And I think it’s—that we’re all circling around the same subjects. And I was taking notes as both Diane and Steve were talking. And, you know, I think the bill gives us a lot of tools here. You know, there are a lot of firsts in there—the first climate title, you know, the first money dedicating to stitching back communities that were torn apart, torn asunder, a ton of resources going directly to local governments.

And it’s important to have—because when you have the same amount of money, the decisions that Steve was really focusing on, you know, making those more resilient investments, being more climate friendly, more equity friendly, are much harder. And when you have that additional funding, it just gives you a little bit more wiggle room. You know, when you’re facing the voters and when you’re facing your governor, and when the pressure is there, you know?

And, you know, I think when it comes to public-private partnerships, we see that as an important tool. And we do. And, you know, I think for the first year the administration was about the poetry of getting the bill across the

finish line. Now into the second year and into the first step, the first year of funding, we are very much in the prose of saying no to a lot more people than we’ve got the opportunity to say yes to. There’s a program that’s called Mega, and it’s designed for big projects. But the projects that they’re talking about are $100 million projects. And—which is relatively small—and the amount of funding that’s going into it is 2 ½ billion (dollars) over the course of five years. It’s relatively small.

The place where it is not bounded, where there’s relatively unlimited dollars—and it’s hard to say—is in our loan programs. Our TIFIA, which is focused on multimodal but mostly roads, and RRIF, which is a rail program. And the challenge that I think both Diane and Stephen mentioned is that the local—the local project sponsors, not in places like the northeast and New York, New Jersey, but in what Steve called flyover America don’t have the capacity to put these products into place. And, you know, the big institutional players, the—just hold a lot more cards and a lot more resources. And so we’ve been thinking through, our organization, without my team, called the Build America Bureau, about how we—how do we extend that ability? We are actually bringing on contractors to help to loan out.

We’ve got a program called the Regional Infrastructure Accelerators, that has tripled now in size over the last couple years. We are putting—we are putting consultants in place for people who want to explore our loan programs in a way that enables them to move forward. I think this issue of resilience, I mean, you don’t have to wait too long to open the newspaper when you don’t see a road falling into the ocean, or another wildfire devastating—you know, devastating our infrastructure. We have to build for the future.

And so, you know, the two—Stephen also mentioned being a good sleeper. The two problems that I was—that kept me up was the issue of the technical assistance and the issue of workforce development. And I think we’re starting to get there. I think a lot of states are not able to take on the additional duties that New Jersey had. You know, we were hoping that—you know, that states would be willing, and across the country, to serve as a flow-through, so that they can do all the Davis-Bacon and the—you know, Buy America requirements, and all that. That are really important policy goals, but difficult for a community that may have one, one and half people dedicated to planning out their infrastructure systems.

So we’re all circling around the same issues. I think the difference now is that we’ve got the money to do it. And I think an important thing that Diane also mentioned the state infrastructure coordinators, is urging them not to just go, OK, all right, we’ve got 20 percent more money, let’s just go 20 percent further down the list. But really, to take a hard look at their systems and where can we invest in multimodal access so people can choose to take transit if they want to, or bike, or walk safely—or, roll safely to work. And where can they make their systems more resilient? And how can we empower more Americans to have the information to be advocates for a system that gives them better equity outcomes?

CREBO-REDIKER: Thank you so much. It is time for Q&A. And so I will hand it over to Sam to let us know who has hands raised in the system, and to ask those questions.

OPERATOR: Thank you so much.

(Gives queuing instructions.)

Our first question will be from Clifford Krauss. Please remember to state your affiliation.

Q: Good afternoon. Thank you for doing this. This is—my name is Clifford Krauss and I’m up at the New York Times.

I’m particularly interested—I cover energy, so this is a subject of quite interest to me. Mr. Undersecretary, I’m just wondering if you and the administration have a concern about copper in particular, because it is a mineral.

We’ve got lots of it in the world, but it seems to be hard to get. It seems to be hard to smelt, for an assortment of reasons. And I would love to hear your thoughts on copper.

MONJE: You know, the issue of domestic sourcing for an array of construction and particularly for electric vehicle batteries and charging equipment is front and center. You know, the National Economic Council released their industrial strategy, that wants—and I think the challenge we’re seeing in Ukraine, right, the supply chain crunch that we saw in 2021 and 2020 just demonstrated that we have to onshore, near-shore, friend-shore these minerals. And we saw the Department of Interior, you know, speeding up some of the efforts to get—you know, to get some of these critical minerals. We are working on a(n) interagency basis to try to figure out where the—where the capacity is, and where the need is. And that—and sometimes it feels like we’re struggling to get the good data that we need in order to make good decisions. And that’s true for raw materials, which is not directly something the department works on, but also for manufacturing.

And the challenge for us is we work with states. The states work with the contractors, the folks who are doing it. The contractors are then working with the folks that source that. And nobody has an exact picture of where the—where all these materials are available, where the manufacturing capacity is. But we’re working on it, you know? And I think the Department of Commerce deserves a lot of credit in terms of helping us get a broader, more granular picture of that. Department of Energy is very much leading the way. And Secretary Buttigieg and Secretary Granholm were on a panel together here in Washington yesterday, it might have been two days ago, talking about this very subject.

So, you know, our role is to—is to try to get—try to help that interagency team get a better picture of what’s needed, and when. To help our states get a better sense of how are they going to certify that something is made in America when it comes to manufacturing. And how do we use our tools to enable the projects to keep on—to keep on getting built, but over time squeeze and make those waivers that are needed now more and more specific, more and more time limited, so that we can follow the direction that Congress gave us, very clearly, that they’re willing to spend more money in order to improve and increase American manufacturing, and American sourcing of these materials. But this is one of the—one of the great challenges that we’re all facing together.

CREBO-REDIKER: Sam, do we have another question lined up?

OPERATOR: Our next question will be from Tara Hariharan.

Q: Thank you so much. My name is Tara Hariharan. I work for a hedge fund called NWI in New York.

The undersecretary actually started presaging my question, which is a broader one on how American infrastructure is going to balance the issues of cost competitiveness with national security. You’ve already talked a bit about, of course, the challenges relating to the labor force and the labor shortages right now. And in addition to just the supply of critical inputs and minerals, I would also argue that the cost component is an important factor. Is near-shoring, friend-shoring the answer? Are public-private partnerships going to be the answer to this question? Thank you.

MONJE: Well, I think I’ve answered from my perspective but, you know, Diane is on the front lines in terms of seeing the bids come in a lot higher. I think the uncertainty that the contractors face leads them to put some—you know, some contingencies in there to increase. And I know Dr. Flynn probably has a great deal to add to the conversation. But, you know, I do think that we are, across the board—and you’ve seen President Biden in his travels around the world, try to figure out how are we going to get these critical materials, how are we going to get them from places that share our values, and how do we make sure that we increase our resilience so that when the next shock happens—which, by the way, was many years in the making; it wasn’t just a COVID crisis. It was years and years of short-sighted decisions. That we’re better—that we’re better prepared for the next shock.

GUTIERREZ-SCACCETTI: So, Heidi, I can at least talk a little bit to the use of the public-private partnerships. Certainly public-private partnerships work well when you are comfortable with the fact that you’re going to make availability payments for a period of time. Most state DOTs are not in a position to commit to that, because our revenues are not—they’re based on tax receipts of some sort or another. So in New Jersey, we used a combination of sources to fund our state program, and then we rely on our federal funds for the federal side of our program. And we generally are programmed out on our own without the use of a private—a public-private partnership. So it would really be a major shift in our operations, but I think the one thing that we can do is start, as DOTs, to look at revenue sources that are different than those that come from the gross tax receipts on fuel, or whatever the source may be—local option sales taxes.

And so as we go forward with programs like the Electric Vehicle Infrastructure Charging Network, that will most likely be built as a concession not so much a P3, what we’re looking to do is be able to award a contract to one, or two, or three, perhaps, developers who go out and build those networks out. They are going to charge for the ability to someone to use. And DOTs, because we’re paying for them, and we’re paying for those systems, should get a return. And then we can use those funds differently, perhaps. In order for us to—you know, we’d love to build—to look at the ability to use managed lanes more frequently at DOTs. But that requires the addition of capacity. We can’t convert a current lane today to a managed lane to start to diversify our revenue stream.

And so P3s for us is—they’re not—they’re not unattractive, but they have to be carefully planned and they have to fit into your capital program. And they have to fit in your capital program for the long term. New Jersey doesn’t have, in and of itself today, projects that would fit the P3 model. But there are other projects that we are working on. Gateway is the biggest one that I’m dealing with. And for those of you who are familiar with Gateway, it is the replacement of the Hudson Tunnels for Amtrak and regional rail. That will be done as design build, with significant help from the undersecretary staff at the Build America Bureau.

Again, not necessarily—a huge project would be great, if it could be a P3. But again, you’re asking the state of New Jersey, the state of New York, Amtrak, and the federal government to commit long-term on that payment. And so two schools of thought is, you know, pay as you go or, you know, kind of take two hamburgers today and be willing to pay for them next week. I’m not a big fan of the latter, because it does become a taxpayer burden. And so we have to be always mindful of that. And so I think P3s have their place on toll facilities, with toll operators, where they’re getting that revenue stream and they have the ability to segregate revenues a little differently.

But when we’re getting them the way they’re coming in through gas tax and through the federal government—and especially because this is really the first time we’ve had such an influx of funding from the federal government, P3s would be something that I personally would look at very carefully before I would ever make a recommendation to the governor that that was a good idea. So we’ve been very fortunate. And, again, great thanks to the White House and our partners at the federal government and our congressional delegation, that we’re very comfortable with the fact that we’re going to get a tremendous amount of work done with the money that’s coming to use through the bipartisan infrastructure law.

And not to say we’re satisfied. We realize, as Stephen said, the road ahead is not clear. But to answer a couple of questions, Stephen, we are doing regional planning, especially when it comes to NEVI. States are talking to each other because that fifty-mile distance has to include crossing state lines. So we’re learning to plan together. That may be the first time we strongly learn to plan together. But it’s a good start. And as we work through our regional associations, as well as our national association, it is a conversation that we have regularly. And I am very pleased to see how fifty-two states and territories can sit down together and understand the need to coordinate across those state lines.

Roads don’t end at state lines. People sometimes don’t know they’re going from one state to the other. So we have to act the same way. And we have to be open-minded enough to understand when it’s important for us to 

rely on our partners—state partners—to participate with us in these kinds of projects. And Gateway, by the way, is also a fantastic example of how that is working.

CREBO-REDIKER: Sam, can we have another—sorry, go ahead.

FLYNN: Yeah, I really want to—I mean, I think there really is—oh, it was, you know, great models of how this regional planning can go. And of course, the Regional Port Authority of New York and New Jersey was precisely to deal with this regional challenge, with the harbor really spread across two states. Similarly, you know, really the capital region, the planning that happens between Maryland and the District and Virginia is a model for how you actually do this. We just have to figure out how we replicate that a bit more. And that capacity building, I think, that has to be applied, you know, especially in parts of the country that are more distressed. You know, how can we essentially redo this?

Just an area I want to be able to, you know, speak to a little bit on the private sector, that I think is still largely untapped private funding, and it is the ESG funds that are out there. Everybody that I’m hearing from in that world is saying there is much more funding than there are fundable projects to do. And that’s—you know, for folks who are looking for funding, that should be something that would raise their interest. Climate adaptation projects, projects that can support social equity issues, these things are things that could attract this capital at a much, therefore, lower cost often, because it is achieving ESG goals. And there’s this just more, I think, that could be done to explore how this could be leveraged in getting us to a better place.

Again, we can’t underestimate the costs that we have to invest. As big as these numbers, one potential risk is that it’s somewhat easier for old systems to just take the public money in the old way and spend it. And in five years from now, you know, we’ll be looking for that next in two generations investment. And we’re probably not going to get it. We have to think about how we really bring those dollars together. When the public puts the dollars in, it functions for a project as supporting sustainability, as supporting that it’s advancing climate adaptation goals, that it’s supporting equity goals. These things, therefore, should make it accessible for potentially those sources of funding. We just have to be more creative, I think, about how we bring those dollars to bear.

CREBO-REDIKER: So I think also, you know, those funds are not just—we have a very—as I started, we have a transportation-heavy panel today, but the funds that came out of the bipartisan infrastructure law span across energy, climate, water, wastewater, and resilience in many different ways. That I think those—the funds could be leveraged by exactly what you’re speaking to, Steve.

I think we have a—I see a number of hands up. So I’m going to ask Sam to go to the next question, please.

Q: Our next question is from Jeffery Laurenti.

Q: Hi, there. Jeff Laurenti with New Jersey’s Capital City Redevelopment Corporation.

One notable novelty in the infrastructure act, as I understand it, is the set-aside fund for undoing the infrastructure mistakes of the past. Like highways that in the ’50s and ’60s were driven through low-income neighborhoods, or that riverfront city centers off from their rivers. And Commissioner Scaccetti knows well they mislaid Route 29 in Trenton. How much interest has this new set-aside generated among state and local governments? And is this funding stream any more over-subscribed than perhaps other funding steams? How many such remediation projects in New Jersey, commissioner, are clamoring for your prioritization? And might the change in party control in the U.S. House put a torniquet on this funding stream before it’s barely begun?

CREBO-REDIKER: Good question.

MONJE: Yeah. That is a great question. And it is—in a world where a billion dollars is a small amount of money, it is a billion dollars and it’s a small amount of money. You know, and it is an oversubscribed program. And we’re in the final stages now of selecting the first bunch. And the good news is it’s the first dedicated funding, but states can use their dollars to do this. You know, and I’m a New Orleanian, I mentioned. And we have a project just like that, the Interstate, I-10, that ran right through the middle of Black middle-class neighborhood, Claiborne Avenue, and torn it asunder.

And, you know, but it isn’t just roads. It’s also railroads, and ports, and airports. And I think the good news is, is that there is a ton of creativity out there. That it isn’t always about getting rid of the highway or the resources. It’s sometimes about, you know, redesigning an on-ramp, or providing transit access across a place. So, you know, I think we’re hoping to get it out early this year, in terms of the first round. And the interesting challenge here too is that, as the commissioner mentioned, you know, these are really complicated politics, right, that, you know, some people really like to be very close to an asset.

And the levels of government disagree about the right piece. And that comes straight up at us. You know, for that program and for the Safe Streets for All Program. We get competing applications for the same facility. And so, you know, our job is to figure out what the truth is and to try to figure out how do we—how do we build momentum for this? And I think we are judging ourselves by the projects that we build, but also that the next re-up bill, which is coming in four years, creates more space for this, right? And that we—you know, Secretary Buttigieg to a lot of criticism for talking about racist highways, when that is a very common trope. And it’s not that concrete and steel is racist, but the decisions that were made and the outputs, and who was at the table when those decisions were being made, is—just reflected the values of that time. And we’re in a very different space now, luckily. And I think you’re seeing a lot more inclusive planning and a lot more thoughtfulness about the multimodal access, even as you’re expanding highways.

GUTIERREZ-SCACCETTI: And so, just to answer the New Jersey part of that question, Undersecretary, is we’re well aware of the capital city’s desire to reconnect the city of Trenton to its waterfront. And, yes, they have—we have supported the grant that they have submitted for the project. But we also understand that that demand for those grants will be significant. And the department has expressed that it will work with the city on the outcome. It will work with the city as they move forward, since it is a state highway that slices through there. It’s not a federal highway. But at the end of the day, we’ll support the community’s desire to study the ability to rejoin that highway.

You are absolutely right that these are not easy decisions. For the contingent that is as strong to move a project forward, there is also always a contingent that does not want to move a project forward. And it is a balancing act. And you are correct that there were decisions that were made whose outcomes were certainly, hopefully, unintended, but certainly detrimental to the development, equity amongst the communities, in any state. And so it is our job to do the best we can to repair that in a way that is both smart, from an implementation standpoint, and meaningful to the community that we’re working in.

And so always a challenge to balance all of those needs, but that is actually what we’re here to do. And we do rely on our federal partners in that regard for counsel. You know, we have a very strong relationship with FHWA that helps guide us in those discussions. But we also work with our communities and the leadership of our communities as we can to hopefully be very young, very beneficial to them. A project that New Jersey DOT will undertake that is a federal project is the replacement of the Route 3 bridge over the Hackensack River, which is directly at the Secaucus Transfer Station, the Frank Lautenberg Train Station, and looks across the river at both MetLife and—MetLife Stadium and the American Dream Experience.

And our goal there is to replace that bridge with a multimodal component, to not just build a bridge but build a bridge that will be able to handle an ultra-light rail system that could connect to the train station and connect to the mall and connect to the stadium, both for the purposes of people being able to use it for entertainment, to take them off the road and improve, hopefully, congestion and environmental impacts, but also to encourage

people who may be able to obtain jobs in those places if they have the ability to use public transit, which is really what we’re working on. Is to not look at projects anymore as single mode, right? Where we can build projects that have the ability to address many modes, whether it’s complete streets or transit, then we really need, as DOTs, to overlay that onto our capital programs.

It is somewhat of a new school of thought in some regards, at least here in New Jersey. But it’s something we’ve been working on for the last couple of years, to make sure that we build a state that is really for our future generations. As Stephen said, not for the 20th century, but for the 21st century, and beyond.

MONJE: If I could just say one—

CREBO-REDIKER: Sure, go ahead.

MONJE: The Inflation Reduction Act did give us three billion (dollars) on top of—on top of the one billion (dollars) that was in the bill for this. It’s a very similar program. And we just need to get the money out.

CREBO-REDIKER: So this is all, like, music to my ears that this is all—that this is heading in the right direction. But it’s also letting me—it’s also reminding me that the next time, undersecretary, that we have you on, we’re going to have somebody from, like, New Mexico, or from—you know, not just the northeast corridor represented here. So we can—but I think this is helpful, because there are a lot of lessons learned coming from New Jersey, in particular, right now that could be helpful for other states and municipalities.

Other—next hand—oh, sorry, go ahead, please.

GUTIERREZ-SCACCETTI: I was just going to say, Heidi, remember, as much as New Jersey is on the northeast corridor, there is a portion of New Jersey south of Exit 9 on the turnpike that is extraordinarily rural, with tribal nations and many rural communities. And so while that part never gets highlighted at this part in New Jersey, right, because we look at that tremendous population, you know, west the Hudson, and what we—the commerce that’s there, we are working as closely with those folks as we are with others. We made a commitment that when we received this money we would spread it equally throughout the state, so that all boats rise at high tide.

We’ve got to make sure that we’re looking at those communities and, you know, the governor’s decision to put a Wind Port in Salem County is hugely beneficial to them and the infrastructure that comes with that. So I welcome New Mexico, because I’ve been there and they’re doing great work in New Mexico. But certainly understand that, you know, it’s hard when you’ve got, you know, border states that just take—(laughs)—that take up so attention. But know that in New Jersey we do address that as well.

MONJE: I don’t want to pile on, because I know you want to move, but just—well, New Jersey has taught a lot—

CREBO-REDIKER: Louisiana too. We’ll get more—(laughs)—

MONJE: Louisiana too. Just a—we were looking at a safety map today, and New Jersey does really well because they’ve made smart decisions. Also, because it is highly organized and people drive slower in towns. But it’s a big country. You know, when you land on a little gravel runway in Alaska where, like, you know, twenty families rely on that as the only way to get goods in and out, and definitely New Mexico is an interesting place. And the great thing about this job is you get to travel, and then you get to travel with a big check, so people are happy to see you. Which is always fun.

CREBO-REDIKER: Can we go to the next question, please?

OPERATOR: Our next question is from Stephen Blank.

Q: Hello, Steve. It’s nice to see you again. It’s been a long time.

The question here is about coherence. There are a lot of hands in the pot, the infrastructure pot. From authorization, to appropriation, to multi-levels, until finally someone spends it. We know what you want to do at the top, but it often doesn’t look like that at the bottom. Look at what happened to ISTEA, the Intermodal Surface Transportation Act of 1991, or the subsequent acts after it. What we got at the end was not what we thought we were going to get at the beginning. How do we now maintain coherence of the program, particularly in an environment when so much more is nationalized? Energy is not state. Energy is national. Climate control is—climate change is not state. How do we come up at the end with something that looks roughly like what we started at the beginning?

FLYNN: Can I make, I guess, a pitch, at least, at one piece of that. I don’t know, that’s a great challenge, Stephen, to embrace here, because it really is the elephant in the room. You know, infrastructures are systems of systems. They sprawl across jurisdictions increasingly, not just national but clearly continental, when it comes to energy as well as global, as we saw with our supply chain disruptions and so forth. One of the issues that I’ve been advocating over on how we build capacity, you know, especially in places where there are limited capabilities, as we talked about. Whether it’s rural parts of the country or, you know, more distressed parts.

I think there’s a lot—and this may sound a little self-serving as somebody coming from a university, but I’ll make the pitch for it—we have land-grant universities. We have community colleges. We have major private and public universities that can help with developing these grants, and with providing—they’re complex. They require understanding of issues like equity, and sustainability, and how we project to do climate change. And when it comes to being able to work across multiple jurisdictions, you know, higher education can do that reasonably well.

I don’t think we’ve leveraged it. And especially since we need a workforce to ultimately do this work, you know, having that engagement is also helping to inform what the curricular needs are to make sure we have the manpower. But we really have not engaged the higher ed. I mean, why don’t we have a Manhattan Project-like approach to this, where we really have reached out to the folks who are out there doing this work and thinking about it, but not actually at the table when it comes to thinking about the implementation, as much as it should be. We tend to rely on either the Beltway bandits, or the national labs.

And it’s not to disparage those here, but it's just to say that if you want to have local, the anchors are the community colleges or the major university with this system can be a big assistance in helping to provide that coherence and continuity. We hope most universities will be around for a long time, so they’ve got to go through the one, two, three-plus years. So, again, a resource that I think could be more aptly tapped if we were—if we were more ambitious.

CREBO-REDIKER: Carlos, do you want to talk to workforce development? Because you said that was one of the things that kept you up at the very beginning. So what—

MONJE: Can I just build on something Stephen mentioned? And I know we’re running out of time here. But Secretary Buttigieg is an intellect and a wonk. And he is asking us these same questions. I’ll give you two examples. One is our supply chain. Everybody was looking at the Port of L.A., when the real problems were warehouse space in the middle of the country, and all the intermodal links along the way. And so we do have a system of systems. And so our—we had the opportunity to set up a freight office, because of the bipartisan infrastructure law. We see that as not only coordinating our investments, but asking: What does the system need? In the way the Department of Energy tries to get a better sense of what the energy market is, and can tell you right away. We’ve got a big foundation there with our Bureau of Transportation Studies, but we need—Statistics—but we got a long way to go.

Another just example, and one that has catalyzed a lot of our thinking internally, is that we had a lot of applications for one of our grant programs for wind farms—wind—offshore wind servicing port equipment. The question came back, what does this system actually need? Where are the investments going? And so our research team, which is in our shop, is trying to figure out, how do we elevate those questions of what does the system need and how can we target our investments to make it more coherent, to make the entire system more competitive when the decisions are being made at the MPO level, rolled up to the states, sand then rolled up to the national level. So we’re working at it.

CREBO-REDIKER: So we are at the witching hour. I would do sort of a lightning round with all three speakers. Are there any sort of the two cents about what the next year’s going to bring, starting with you, Carlos.

MONJE: A lot more money. I think we have a chance now to lick our wounds and figure out, you know, of these big projects that we know have regional and national significance in terms of the economy, how are we going to pull together all the dollars? You know, Diane mentioned the Hudson River Tunnel. It’s going to be the biggest infrastructure in the history of the country. And it’s going to happen. And we’re going to have to tie a lot of money to put together. And we’re getting smarter about how to do that.

CREBO-REDIKER: Fabulous. Steve.

FLYNN: If I’ll just make a final pitch that we need to embrace this effort as the national mission, like we did back in the Second World War, and we did with putting a man on the moon. We have to mobilize the nation to take this on. We’re a nation that has lost its way with a sense of purpose. We’re pessimistic when we’ve always been optimistic. These are challenges we can meet. We’re a wealthy nation, a smart nation, a capable nation. And let’s make—focus on building on American infrastructure, being the world leader at it, not the folks who are sort on the backwaters of it. Make that a national mission and get on with it.

CREBO-REDIKER: Diane.

GUTIERREZ-SCACCETTI: So I’ll make two quick points. And one I hope that makes Steve happy, is that at AASHTO, which is the American Association of State Highway Transportation Officials, we’re working on that next moonshot project. What is the next thing that DOTs do together to really move forward a national program, a national focus on transportation issues. And what you’re going to see next year, Heidi, is a lot of construction. Because we are behind the first year. We got projects now in the pipeline. And we’re looking for a really successful year. So get ready for some orange barrels. But at the end of the day, when they’re taken away, the work will be worth it.

CREBO-REDIKER: So thank you all for joining us today. Thanks to the participants joining us, as well as all the CFR members that called in. And I wish everyone here the best of luck, on our panel, with the year ahead. And to everyone listening, don’t get upset when you see those orange cones. They’re all—it’ll all—to Diane’s point—you’ll be very happy on the other end of it. So, thank you. Have a good weekend.

GUTIERREZ-SCACCETTI: Thank you.

FLYNN: Thank you.

MONJE: Thank you.

(END)

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