On January 29, 2025, US Department of Transportation (USDOT) and Secretary Sean Duffy issued two significant documents: the Ensuring Reliance Upon Sound Economic Analysis in Department of Transportation Policies, Programs, and Activities Order and the Implementation of Executive Orders Addressing Energy, Climate Change, Diversity, and Gender Memorandum. In addition, an internal USDOT memorandum was leaked in March, directing staff to review certain programs and projects for potential modification, rescission or cancellation.
These directives provide critical insight into the current USDOT administration’s funding priorities. Five new priorities were listed for USDOT projects that now apply to all USDOT-funded projects, including grants, loans and contracts:
- Utilizing user-payer models (e.g., toll roads, congestion pricing);
- Directing funds to local economic Opportunity Zones;
- Providing benefits to communities with higher-than-average birth and marriage rates;
- Ensuring local compliance with federal immigration enforcement policies; and
- Prohibiting vaccine requirements or mask mandates as a condition for funding.
New economic evaluation criteria were also established for USDOT funding, emphasizing cost-benefit analysis, economic efficiency and alignment with federal interests. For local governments, this means new requirements for grant and loan applications and the elimination of certain previous requirements such as climate justice and social equity.
Local governments must now demonstrate that all their projects are supported by a positive cost-benefit analysis, regardless of project size. This is a significant change from the previous standard, which only applied to projects with an annual effect of $200 million or more. Further guidance explaining how the new cost-benefit analysis standard will be implemented is expected from USDOT.
USDOT has also initiated a review of all competitive grant selections made after January 20, 2021, that do not have fully obligated grant agreements or cooperative agreements in place. This review focuses on identifying and assessing active projects that include elements related to diversity, equity and inclusion activities, climate change, environmental justice, electric vehicles (EV), EV charging infrastructure and bicycle infrastructure (i.e., recreational trails and shared-use paths). Projects that do not align with the administration’s priorities may be revised with a modified scope or cancelled.
As USDOT shifts funding priorities, local governments must adapt their projects to align with federal economic and infrastructure objectives to secure funding. For a more in-depth analysis of these requirements, please refer to the memo provided by our federal government relations team, Strategics Consulting.
