The Federal Highway Administration (FHWA) failed to follow the regulatory process when it put forth guidance seeking to limit a state’s ability to build new roads and highways, setting up congressional and, perhaps, legal challenges.

On December 15, the Government Accountability Office (GAO), in response to an inquiry from Senator Shelley Moore Capito (R-W.Va.), determined that Federal Highway Administration (FHWA) failed to follow the regulatory process when it issued its controversial “policy memo” on the Bipartisan Infrastructure Law (BIL) a year ago. In the memo, FHWA resurrected policy ideas, like limiting a state’s ability to build new roads, that were not passed by Congress and ultimately not included in the BIL. AGC has repeatedly reported on this topic, first when AGC formally disapproved of the “memo,” later when Senate Republicans objected, and again when House Republicans disapproved.

So, what happens next? Based on GAO’s findings, at least two things could happen: (1) under the Congressional Review Act (CRA); and (2) another under the Administrative Procedures Act (APA).

First, GAO found that the FHWA “policy memo” constitutes a rule under the CRA. As a result, FHWA’s “policy memo” is subject to congressional review and disapproval under the CRA. As such, each chamber of Congress can vote to repeal it with just a simple majority vote (51 votes in the Senate and 218 votes in the House). Senate and House Republicans will very likely move to have these votes and stand a good chance of winning majority votes to repeal the “policy memo.” However, President Biden would likely veto this legislative effort for which Congress would unlikely have the two-thirds majorities of both the House and Senate to override that veto. In short, any legislative effort to repeal the “policy memo” will put members on Congress on record regarding their position on the memo but fail to actually repeal it.

Second, GAO found that the FHWA “policy memo” meets the definition of a rule under the APA. The significance of this finding is that one can argue that FHWA did not undertake the legally required process to issue the “policy memo” as a rule under the APA. As a result, this may open the door to possible litigation challenging the memo on APA grounds. In addition to objecting to the content of the memo, AGC has an issue with the process FHWA took in issuing the memo in which no stakeholder feedback was requested before it went into effect.

There are other things, however, that could happen regarding this “policy memo.” For example, FHWA could rescind it. The agency could also then move forward with a formal rulemaking process. Either way, the AGC will keep members posted on these important developments and press for the memo’s repeal or withdrawal.

For more information, contact Alex Etchen at [email protected].