Clawbacks of Transportation and Green Infrastructure Funding

June 19th, 2025 by Claudia Thomson

Green infrastructure captures stormwater and allows it to filter into the ground, reducing flooding and pollution. Green infrastructure can take many different forms, such as rain gardens, permeable pavements, and curb bump-outs. This curb bump-out captures rainwater and slows traffic, serving both as stormwater management and a pedestrian safety feature.

Despite New Jersey facing growing flood risks, the federal government is now targeting low-cost solutions like green infrastructure for funding cuts to reduce spending. Green Infrastructure absorbs and slows stormwater runoff, curbs flooding in communities, and reduces the pollution that reaches waterways; however, green infrastructure needs broad implementation to make a difference. The US Department of Transportation (USDOT) previously provided federal funding for projects that incorporated green infrastructure, but staff with the Urban Institute shared a leaked memo revealing new priorities. USDOT reviewed certain approved projects to potentially reduce or modify their scopes to align with the new administration’s goals, in part removing green infrastructure.

State and local governments need federal funding for infrastructure projects to plan and build at the necessary scale. The current projection for more intense rainfall in New Jersey will also strain stormwater infrastructure and demand solutions. The 117th Congress enacted the Infrastructure Investment and Jobs Act (IIJA, also known as the Bipartisan Infrastructure Law (BIL)) and the Inflation Reduction Act (IRA) to address this need.

New Jersey already saw a cut to an IIJA-funded project when Transportation Secretary Sean Duffy announced a $140 million reduction to the Dock Bridge rehabilitation project in North Jersey, even with construction underway. The bridge’s deteriorating infrastructure had long needed investment, and questions remain about why the scope was revised and where the unused money will go.

Initial Executive Orders

On Inauguration Day, President Trump made a clear break from the Biden administration’s infrastructure funding priorities by signing multiple executive orders rescinding Biden-era policies on diversity, equity, and inclusion (DEI), gender terminology, and climate, as well as pausing the disbursement of funds appropriated under the IRA and the IIJA. Soon after, Secretary Duffy signed a Secretarial Memorandum to incorporate this agenda into USDOT by directing agencies to identify internal policies that do not align with the orders and then restructure or cancel the policies. Duffy also released a Secretarial Order declaring that future grant-making policy would be based on economic principles and analysis supported by cost-benefit requirements.

Competitive discretionary grant programs are a specific topic of contention because of how the Biden Administration used these to advance its climate goals. The new administration inherited 3,200 unobligated grants announced by the Biden administration, which, through the “Build a Better America” memos, had eligibility requirements to support sustainability, equity, and climate resilience. Duffy rescinded these memos, citing the “meritless and costly burdens” related to Greenhouse Gas emission reductions and equity, and is now removing these requirements from these grants before distributing the funds.

Clawback of Funding

New Administrations always come with their own agenda, and restructuring funding serves as a way to implement new priorities, but retroactively imposing this agenda on already approved projects takes this Administration’s efforts one step further. The leaked March 12th USDOT memo, sent to senior staff at the Federal Transit Administration and the Federal Highway Administration, instructed them to review partially obligated grant agreements competitively selected after January 20, 2021. As a result, the Trump Administration will reevaluate federal funding promised to states to align with the new administration’s priorities on energy, climate change, diversity, gender, and economic analysis, despite grant applications originally asking for a different set of standards.

The first step in the process is program identification: USDOT staff will flag projects that include climate change, environmental justice (EJ), and bicycle infrastructure in their scope. Step two involves a project-by-project review for activities such as equity analysis, green infrastructure, bicycle infrastructure, electric vehicle infrastructure, or a project purpose that includes equity, climate, or a goal to “purposefully improve the conditions for EJ communities or actively reduce GHG emissions.” Based on that review, potential actions include canceling the project entirely, revising it with a reduced or modified scope, or continuing.

The Impact on New Jersey

Whether the funds awarded to New Jersey will reach the communities relying on them is now up in the air, despite the critical nature of these projects. Two grant programs under review are Safe Streets for All (SS4A), a competitive grant program to prevent roadway fatalities and serious injuries, and Rebuilding American Infrastructure with Sustainability and Equity (RAISE), a discretionary grant program to rebuild and repair critical infrastructure. Supporting building bike lanes, proven to improve riders’ safety, is an important technique to achieve the safety goals set out by SS4A, but is now something the administration has directly called out. Revoking these awards means federal dollars might not reach communities that have proven themselves in need of funding. New Jersey has 40 SS4A projects with nearly $48 million in federal funding awarded across all 12 congressional districts. There are 16 RAISE projects under IIJA, three awarded, totaling $64 million, and 13 still unfunded applications, totaling nearly $77 million. These projects represent an effort across the state to improve people’s safety and quality of life. Past projects in New Jersey created multimodal trails, improved the efficiency of roads, built bridges, and increased ferry services: expanding residents’ access to quality transportation and allowing more choices for how people move through life.

These up-for-review projects connect to the policy goals of Complete & Green Streets, which New Jersey’s state government has supported to improve the health and well-being of communities. In 2024, the Murphy administration launched a program with NJDEP to modernize stormwater infrastructure. As part of the program, each county had $75,000 available to plan a green street project along county roads. Equity is a focal point of the Complete & Green Streets Policy and NJDEP program, prioritizing project proposals within overburdened communities. There is a clear conflict between these State goals and the actions of the current federal administration, threatening infrastructure projects’ eligibility for federal financial support and the ability of municipalities in New Jersey to plan or construct these projects.

Green infrastructure solutions have proven effective in bolstering New Jersey’s climate resilience. In Hoboken, Hurricane Sandy caused over $110 million in property damage and left some residents without power for two weeks, a wake-up call for the city’s need for resilient infrastructure. In 2014, the city was awarded funding through Rebuild by Design to use green infrastructure to delay and store stormwater, along with enhancing existing infrastructure. The most notable projects are Hoboken’s Resiliency Parks, which serve as a national model by blending stormwater retention with community open space. Because of these infrastructure investments, the city can now capture higher volumes of stormwater and quickly recover from storms that would have previously shut down parts of the city.

Impoundments of Funds

This shake-up of funding, both through stopping funds appropriated by Congress and clawing back awarded grants, raised questions about the legality of these actions. Typically, a clawback, or recoupment of payment, happens because of an overpayment, an ineligible expense, or a breach of the terms and conditions of the grant agreement. Duffy claims that DEI policies violate federal law and that by breaking the law, projects are in breach of their grant agreement. He says singling out particular communities violates the law, which occurred when funding sources like the IRA and IIJA directed USDOT to favor ‘underserved communities’. What was previously encouraged within applications now serves as justification for their cancellation.

Despite the executive branch’s constitutionally defined obligation to administer funds appropriated by Congress, the Trump administration chooses not to spend money it deems wasteful or out of step with its goals. Canceling or delaying federal funding already enacted by Congress is called impoundment. Some say that Congress’s ‘power of the purse’ does not allow the executive to decide not to spend approved money. Russel Vought, Director of the Office of Management and Budget (OMB), defended the funding freezes as programmatic delays, rather than impoundments. During the Presidential campaign, Trump stated he would challenge the limits imposed by the Impoundment Control Act (ICA) on the executive to reduce wasteful spending further. In 1974, Congress passed the ICA to create a process for the president to impound funds, but it does not allow the executive to have unilateral control of the budget. A complication to this discussion is that the Supreme Court has not specifically ruled on the constitutionality of impoundment.

The current administration’s goals are at odds with efforts in New Jersey to invest in safe, climate-resilient infrastructure, and the clawback of federal funds will make it harder for towns to achieve these goals and plan for future infrastructure projects. The threat of increased rainfall and sea-level rise will put additional strain on New Jersey’s stormwater infrastructure, and measures to reduce this impact, like green infrastructure, are needed across the state to increase the amount of water absorbed where it falls.