On Wednesday, the White House Office of Management and Budget (OMB) issued a new guidance clarifying limits to the disbursement of Inflation Reduction Act (IRA) funds ordered by President Trump on Monday.
Trump directed federal agencies to “immediately pause the disbursement of funds” from the IRA and the bipartisan Infrastructure Investment and Jobs Act (IIJA).
This comes at a time when the road and bridge construction industry has embraced the approach of sustainability, and many equipment companies have invested in electric vehicles. Furthermore, halting funding from these two generational laws could be a setback to infrastructure projects across the nation. While federal funds can be held while the new administration reviews, President Trump would need Congress to help, as the IRA and IIJA have each been signed into law.
The order drew pushback from lawmakers such as House Energy and Commerce Committee ranking member Frank Pallone of New Jersey who denounced the move as illegal and “cost[ing] countless Americans their jobs.”
Idaho Sen. Mike Crapo told Politico it was a “concern, but again I don’t know how big a concern.” Crapo added: “that doesn’t mean payments aren’t going to be made.”
In the memo on Wednesday, the White House OMB clarified that the pause “only applies to funds supporting programs, projects or activities that may be implicated by the policy established in Section 2 of the order.” This includes funding related to climate change mitigation and incentives for electric vehicle charging — not road and bridge projects.
“For the purposes of implementing section 7 of the Order, funds supporting the ‘Green New Deal’ refer to any appropriations for objectives that contravene the policies established in section 2,” the memo states. “Agency heads may disburse funds as they deem necessary after consulting with the Office of Management and Budget.”
The Biden administration had said prior to Trump’s inauguration that most grants for clean energy programs appropriated under the IRA, for example, had already been obligated and were protected, with just $11 billion outstanding.
However, the bulk of the IRA’s support for clean energy and EVs derives from tax credits that can only be revoked with an act of Congress.
Robert Moczulewski, a director at tax advisory Baker Tilly, said Trump’s order could face legal hurdles if it delays any significant funding.
"Pausing funding already appropriated by Congress may prompt legal challenges, though the administration can impose interim review processes," he said.
The order requires U.S. agencies to consult OMB before disbursing the money.
Source: The Hill, Reuters
