Trump funding freeze leaves IIJA, IRA projects in limbo
Last week, President Donald Trump told federal agencies to
stop disbursing Infrastructure Investment and Jobs Act and Inflation Reduction
Act funding, including money that Congress already authorized. The move has
thrown climate and infrastructure projects at various stages of development
into uncertainty, as his agenda regarding federal government contracts and
grants continues to rapidly evolve.
Trump’s Jan. 20 “Unleashing
American Energy” order to pause and review funding processes has
“significant implications for the implementation of the IIJA and IRA,”
according to Washington, D.C.-based law firm Crowell, and may
lead to project delays, terminations and broader economic
uncertainty.
Its precise implications may not be fully understood for
months, “and this uncertainty alone is likely to disrupt infrastructure
projects and give rise to claims,” according to an alert Crowell partners
shared with clients Monday.
“Whether the pause is temporary or becomes permanent, this
action potentially could halt billions of dollars in obligated funding for
infrastructure projects that already are underway, including those already
under construction,” according to Crowell.
Another major announcement this week around funding has led
to more confusion. A Monday internal memo
from the Office of Management and Budget ordered a pause on all
federal grants and loans, starting at 5 p.m. Tuesday. Federal agencies must
temporarily halt funding and agency activities that may be implicated by the
executive orders, “including, but not limited to, financial assistance for
foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the
green new deal,” according to the memo.
Nonprofit groups and a small-business organization
have already
filed a lawsuit challenging the directive and asking a judge to
temporarily block the funding freeze, CNBC reported. In addition, the
attorneys general of New York, California, Illinois, Massachusetts, New Jersey
and Rhode Island were planning an announcement related to the funding pause
this afternoon.
There are many open questions about the scope and effects of Trump’s orders and how they will be implemented, but it’s clear they will affect the contractual and other legal rights of federal contractors, Daniel Ramish, partner at Dallas-based law firm Haynes Boone, said in an email.
“This will have a broad effect on federal contracts, grants
and other assistance agreements in the specified areas and will take time to
unpack,” according to Ramish. “Contractors and assistance recipients should
follow these fast-moving actions closely and consider how their awards may be
affected.”
Orders and clarifications
Section 7 of Trump’s Unleashing American Energy order
directs federal agencies to halt all disbursements under the two laws while
they “review their processes, policies, and programs for issuing
grants, loans, contracts, or any other financial disbursements of such
appropriated funds for consistency with the law.” It gives
agencies 90 days to report how the frozen spending aligns with the new
administration’s energy goals.
The order’s wording was unclear to many, prompting the
Office of Management and Budget to issue a Jan. 21 memo
limiting the directive to programs that Trump has termed part of a
“Green New Deal” in Section 2, and noting that “agency heads may disburse funds
as they deem necessary after consulting with [OBM].”
However, Section 2 of the Unleashing American Energy order
does not discretely list portions of the two laws for which money should be
paused. Rather, it uses broad language to direct agency actions, touching on
issues like energy exploration, non-fuel minerals, protecting economic and
national security and “eliminating the electric vehicle mandate.”
Section 7 does specifically cite funds to build EV charging
stations, like the $2.5 billion Charging and Fueling Infrastructure
Discretionary Grant Program and the $5 billion National Electric Vehicle
Infrastructure Formula Program.
Provisions of Trump’s executive orders will likely face
legal challenges in the coming months, according to Ramish.
Project freeze scope still unclear
Even with the Jan. 21 clarifying memo, the scope of Trump’s
Unleashing American Energy directive is unclear as to whether it is limited to
certain types of infrastructure expressly identified in the order, or more
broadly to all projects funded under the IIJA and IRA, according to
Crowell.
“While OMB’s [Jan. 21] statement suggests that the Executive
Order will only impact funding of what it calls “Green New Deal” projects,
neither OMB nor the Executive Order clearly define the characteristics of such
projects, leaving open to interpretation whether infrastructure projects for
roads and bridges, broadband, and other traditional infrastructure could be
impacted, at least in part,” according to Crowell.
As of December, $294
billion in IIJA funds remained unallocated. While some experts expected the
Trump administration to halt spending that federal agencies have yet to dole
out, the executive order leaves unclear whether the freeze
will also encompass spending that is legally committed under contract,
according to a Canary Media article.
Indeed, Trump and incoming OMB Director Russell Vought have
argued that the president
has expansive power to cancel congressionally authorized spending, a
move known as impoundment, according to Forbes. That goes against the
prevailing interpretation of federal law: that presidents cannot unilaterally
cancel congressional funds.
While much is in flux at this stage, Trump’s first term and
his executive orders issued over the last week offer some clues for what
federal contractors can expect, according to Ramish. Historically Trump
emphasized efficiency and results-oriented accountability in federal grants,
and his administration has indicated that it intends to implement policies
favorable to American industry and to carry out a deregulatory agenda.
Hiring rules and the workforce shortage in construction will
become issues at the legislature this session, with numerous lawmakers drafting
bills to address Connecticut’s apprenticeship hiring regulations.
“We are exacerbating the skilled worker shortage,”
said Chris Fryxell, president of the Connecticut chapter of the Associated
Builders and Contractors. “And we’re making it more difficult for Connecticut
to meet our goals of improving our infrastructure and improving on things like
affordable housing, improving our roads and bridges.”
Fryxell was lamenting the state’s 1:3 apprenticeship hiring
ratio requirement on contracting companies in electrical, plumbing, pipe
fitting, HVAC and metal-working trades. The rule requires contractors to have a
certain number of licensed journeymen on staff for each apprentice they hire.
Contractors can hire up to three apprentices at a 1:1 ratio.
That means a company must have three licensed journeymen on staff if it wants
three apprentices. It would need two journeymen for two apprentices.
After the first three apprentice hires, the ratio increases.
So, a company with 12 licensed journeymen can only have six apprentices. To hire a seventh apprentice, the company must expand to 15 journeymen.
Smaller companies for whom this would be a burden are
supposed to be able to apply for a waiver through the state Department of
Labor, but many say the waiver process itself is lengthy, cumbersome and the
outcomes uncertain.
“It’s preventing new workers from going after their goal of
becoming a skilled craftsperson,” Fryxell said. “We would love to reduce that
apprenticeship hiring ratio to one-to-one.”
Several Republican lawmakers have proposed bills in the
Labor and Public Employees Committee that would lower or even eliminate the
hiring ratio. Another proposed bill aims to expedite the application process
for apprenticeship ratio relief.
Hands-on training
Fryxell’s organization represents about 250 companies in
what’s known as the “merit shop” side of the construction industry — that is,
non-union. It’s addressing the need for skilled workers with its own initiative
— an associated nonprofit school called the Construction Education Center.
Founded in Rocky Hill in 2007, the school moved to
Plainville in 2018 in search of larger premises.
“We weren’t able to offer the hands-on training portion of
the curriculum,” said the school’s education director Marcie Addy. “One of
the member companies took the lead on building this new facility for us. So now
our entire building is 8,000 square feet, and we have the hands-on training
rooms that are available for HVAC, electrical, plumbing, sheet metal and
carpentry.”
The school currently has 142 apprentices enrolled. It also
provides continuing education and certifications for people who are already in
the skilled trades.
Addy says they have no shortage of applicants, and plan to
continue expanding to as many as 280 apprenticeship places in the next four
years.
“I do see more parents who are open to their children
pursuing a career in the trades,” she said.
Tuition at the school runs about $2,500 a year, but Addy
says many students are able to get either scholarships or employer sponsorships
that cut the cost.
And the need does seem to be out there when they graduate.
“There are estimates that say more than one in five
construction workers is 55 or older,” said Fryxell. “We’re losing people to
retirement, and really we’re losing the most experienced skilled workers, and
we’re not filling them in quickly enough. I still feel like we’re losing ground
each year.”
Cyclical nature
Connecticut currently has 62,500 construction workers — one
of the higher levels of employment since the 2008 financial crisis, which
significantly reduced the industry’s workforce. The sector employed 69,000
workers in January 2008, according to state Department of Labor data.
Nationally, the federal Bureau of Labor Statistics forecasts
that total construction employment will rise from 7.03 million in 2021, to 7.28
million in 2031, for a net need of more than 25,000 workers per year.
“Our members are very hungry for workers right now,” Fryxell
said. “When we speak to ABC contractors, almost every single one of them are
looking for additional workers to help the business grow and also to meet
current demand in their backlog.”
And hence the dispute over the hiring ratio, which non-union
shops and trade associations like ABC see as an unnecessary bottleneck in the
workforce pipeline.
But not everyone agrees. Unions in the licensed trades, like
the International Brotherhood of Electrical Workers, have opposed any
fundamental changes to the ratio system.
Residential construction doesn’t offer the same level of
wages that industrial and commercial construction does, and Sean Daly, the
business manager of IBEW Local 90 in New Haven, believes that side of the
business simply wants the ability to hire more apprentices to keep costs down.
“To me, it’s just
a
search
for
cheap
labor,” Daly said.
He also points to the cyclical nature of construction. The
residential market has been hot in the recent past, but fluctuates with
interest rates.
“They want to have
as
many
apprentices
as
they
want,
and
then
as
soon
as
they’re not busy they get
rid
of
them,” he said. “Taking in too many
apprentices
would
only
put
twice
as
many
young
kids
out
of
work.”
And, he says, unscrupulous contractors sometimes don’t
educate those apprentices properly, or even credit them with the worksite hours
they need to become journeymen, keeping them trapped at a lower wage.
But Daly does agree that the waiver-request process — what’s
known as ratio relief — should be a lot easier. That’s the compromise he’d
rather see than legislation to change the ratio itself.
“Sometimes it takes 12 weeks,” he pointed out. “The
Department of Labor should just
set
up
a
website
where
a
contractor
can log in and ask — ‘I
have
this many
journeymen
and
this many
apprentices,
can I
get
another
apprentice?’ And they should be able to answer that real fast. We’ve been talking to the
department
for
three
years
about
doing
it.”
‘Primary pipeline’
Marc Okun, the business manager for Carpenters Local 326,
also believes that lower wages in the residential sector give an impression of
a more acute worker shortage than actually exists.
“There isn’t a lack of people for higher-end trades,” he
said. “I think where the people are lacking is probably in the residential or
subcontractor market like the home remodeling, because they’re lower paid.”
For Okun, instead of considering the hiring ratio, a more
helpful change the legislature could make this session would be to require that
contractors who win large public contracts, like school construction, include
apprentices in their bids.
He says young people’s interest in the trades is very high —
the union’s apprenticeship program is currently oversubscribed — but fewer
people make it through the selection process. He has about 250 active
apprentices in Connecticut, and about 30 to 40 graduate each year.
“I think what we end up seeing is people think that it’s a
way to make fast, easy money, and they don’t realize how hard it actually is,”
he said.
Nevertheless, the union is seeking ways to improve the
workforce pipeline. Last year it lowered the entry age for its apprenticeship
program from 18 to 17, meaning that current high schoolers can join.
Brent McCartney, an education consultant with the
Connecticut Technical High Schools system, says that change is exciting
because it allows the schools and unions to work together to mentor students in
the industry.
“Our goal is to be the primary pipeline for a lot of this
workforce,” McCartney said.
The technical high schools system recently debuted its CTECS
Career Center, a LinkedIn-style communication app for contractors and other
employers to communicate with staff and students about their hiring needs. And
the system’s work-based learning program allows students 16 and older to get
work experience with employers for both a wage and school credit.
McCartney also says CTECS’ curriculum is changing to
accommodate real-world developments in industry. Eli Whitney Technical High
School’s carpentry offering, for example, was recently expanded into a building
and civil construction program.
That change was prompted by the passage of the federal
Bipartisan Infrastructure Act, which is expected to bring $5.4 billion in
infrastructure funding to Connecticut — a boost to the construction industry.
“We couldn’t fit in those skills in a typical carpentry
program, so we needed to adapt,” McCartney said.
Solar farm with 12,000 panels proposed for Stonington-Ledyard border
Carrie Czerwinski
Stonington — A renewable energy company has proposed a
12,000-panel solar farm on Lantern Hill Road.
The proposal before the Connecticut Siting Council, by North
Haven-based Greenskies Clean Energy, LLC, would transform 28 acres near the
border of Ledyard into a 4.99-megawatt solar energy farm. Such a farm would
produce enough electricity to power about 700 homes per day, according to data
from the Solar Energies Industry Association.
The property located between 227 and 327 Lantern Hill Road,
known as Lantern Hill Farm and owned by Noreen Wienges of Arizona, encompasses
78 acres of land bounded by Whitford Brook to the east at the border with
Ledyard.
According to plans submitted to the Connecticut Siting
Council, the project would consist of almost 12,000 solar panels across 458
rows with 26 panels per row surrounded by a seven-foot-high fence.
Under state law, the siting council has jurisdiction over
siting, construction, and operation of solar farms.
The project has received a 20-year power purchase agreement
from the state’s Shared Clean Energy Program.
Greenskies has proposed an agricultural co-use plan for the
property, which includes growing herbs or plants for natural dyes that would be
harvested and sold and perennial grasses and pollinator-friendly plants.
A secondary plan would see sheep graze on the property.
The property, a former dairy farm and bottling facility, is
located in the Greenbelt Residential Zone, which allows agricultural uses such
as keeping livestock, and by special permit, schools, golf courses and
agricultural production, among other uses.
The Council on Environmental Quality has noted some concerns
with the project, including reports of an endangered species of turtle living
near the project area.
The council recommended Greenskies work with a herpetologist
to protect the animals as well as follow best practices and guidelines for
restoring farmland and for construction in an aquifer protection zone, as the
eastern portion of the project is located in an aquifer protection zone.
The company asserted in its application that no refueling of
vehicles or storage of hazardous chemicals would occur within the protection
zone, and less than one gallon of polyvinyl chloride glue and less than 25
gallons of fuel would be stored on-site.
Greenskies would construct a gravel access road off an
existing gravel road used by Aquarion Water Co. to access neighboring Aquarion
property.
In an email to First Selectman Danielle Chesebrough’s office
last week, Aquarion representative William Smith stated that the water company
had no concerns with the project.
“If this was proposed on steep slopes in a watershed it
would be more concerning. While we never want to see agriculture land go out of
production, there is probably less threat of herbicide and fertilizer use close
to the well if the land was to lay fallow with just a solar array. Also, in
regard to the types of development that could potentially get approved for this
site a solar array is better than housing with septics, fertilizers, fuels,
etc,” he wrote.
On Friday, Stonington Town Planner Clifton Iler said the
planning department had reviewed the application and had no comment for the
siting council.
The deadline for the siting council’s final decision is
March 26.