Source: United States Senator Kevin Cramer (R-ND)
WASHINGTON – U.S. Senator Kevin Cramer (R-ND), Ranking Member of the of the Senate Environment and Public Works (EPW) Transportation and Infrastructure Subcommittee, discussed the anti-inflationary impact of the bipartisan Infrastructure Investment and Jobs Act (IIJA) at an EPW Committee hearing.
“This five-year new bill [is so important] compared to the alternative, which would have been a one-year flat line extension of [the] status quo. In this inflationary time, I think it’s an important point because [it] would have exacerbated inflation. We don’t talk enough about the anti-inflationary impacts of infrastructure,” said Senator Cramer.
Senator Cramer addressed the ongoing supply chain breakdown and challenges with the panel of witnesses, representing a wide array of industries from transportation to construction and general contractors.
“The real challenge we have is the demand grew because there’s a bunch of free money thrown out into the marketplace. The supply chain got broken. You guys fix supply chains. You move commerce,” added Senator Cramer. “You’re already dealing with inflation. You’re dealing with a higher cost of borrowing money, buying equipment as well as materials, [and] labor certainly is a stress point.”
He then pivoted to a discussion on the importance of the One Federal Decision rule and called out the Biden Administration for failing to implement the IIJA in accordance with Congressional intent.
“We were rather prescriptive in the [IIJA] with One Federal Decision. That was a prescription [for] the complications. It was designed to simplify the environmental process not to further complicate it… The Administration—in many cases in implementing this law—[has] tried to add complication by considering things that [Congress] specifically excluded. That’s what [Federal Highway Administration’s memo] was all about: adding the Administration’s priorities into the guidance.”
Senator Cramer asked the witnesses for their expertise on the cost of complicating the regulatory side of permitting and building infrastructure projects and what needs to be done on the federal side to improve timelines.
“Inflation has driven the cost of construction drastically. I checked with a large concrete supplier in Southern California yesterday. The price of cement—which is the most important ingredient going into concrete—has gone up 30 to 40% in two and a half years. Liquid asphalt, which is the binder that we use to make the asphalt that we paved the roads with, in the last two years it has gone up 76%. So if we squelched the supply of cement and asphalt oil, it’s going to continue to drive the price up. On the permitting side, the longer it takes to permit something, the more regulations you have to go through, the longer the process that obviously drives the price up,” responded Granite Construction Company Vice President for Land & Quarry Gary Johnson. “We’ve got to get inflation down. The only way I know to do that is to increase supply [and] increase the ability of people to get things done quickly and easily.”
“The theme of your question is the time value of money. The longer things take, the more they’re going to cost. You’re right, that doesn’t get considered enough. It’s very hard to create policy to capture the time value of money,” added American Road and Transportation Builders Association President & CEO Dave Bauer. “The fact remains that without a commitment on the part of the federal agencies to try to [follow One Federal Decision], your policies are always going to miss the mark. There has to be a commitment on the part of our industry, project owners, and administrators too that we want to try to capture value and get projects out as soon as possible. That commitment is a huge component of success.”
Background:
At a Senate EPW hearing on the state and local perspective of the Bipartisan Infrastructure Law in September, Senator Cramer also discussed the importance of One Federal Decision in expediting project approvals and reining in the bureaucracy to cut down project timelines. Learn More Here.