Trump executive order could ‘halt billions’ worth of infrastructure projects

US President Donald Trump holds a signed executive order in the Oval Office of the White House in Washington D.C., US, on 23 January. (Image: REUTERS/Kevin Lamarque)

The executive order (‘Unleashing American Energy’) was among the first the president signed on his first day in office, 20 January.

It outlines the Trump administration’s policy goals and directives for energy and infrastructure development and directed an immediate pause (of 90 days) of funding allocated to infrastructure projects under the Infrastructure and Jobs Act (IIJA) and the Inflation Reduction Act (IRA).

“While the disbursements are paused, agencies are instructed to conduct a review of the use of funds and provide recommendations,” Crowell said. “Specifically, agencies are required to submit reports within 90 days detailing their review findings and recommendations to enhance alignment with the Administration’s policy objectives outlined in Section 2 of the executive order.

“No funds will be disbursed until the recommendations are reviewed and approved by the Director of the National Economic Council (NEC) and the Office of Management and Budget (OMB).”

The law firm suggested disruptions could be imminent.

What are the implications for construction?

“[The executive order] has significant implications for the implementation of the IIJA and IRA. Whether the pause is temporary or becomes permanent, this action potentially could halt billions of dollars in obligated funding for infrastructure projects that already are underway, including those already under construction,” said Crowell.

The lowering of the suspended span on the Derald Desmond Bridge in California, US. (Image: Kiewit Infrastructure West)

The firm also noted ongoing confusion regarding the language in the executive order. A memo by OMB suggested the executive order would only impact funding of what it calls ‘Green New Deal’ projects.

However, “neither OMB nor the executive order clearly define the characteristics of such projects, leaving open to interpretation whether infrastructure projects for roads and bridges, broadband, and other traditional infrastructure could be impacted, at least in part,” said Crowell.

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Disruption in funding could have immediate effects on grant and loan recipients and their contractors, suppliers, and other consultants engaged on infrastructure projects funded by the IIJA and IRA, said Crowell.

“Parties and stakeholders in projects funded under the IIJA or IRA will be well-served to work closely with agency representatives, review their agreement contract terms, notify their contracting/grants officer of any delays or increased costs, and keep detailed records of correspondence with the agency representatives, disruptions, costs and any other impacts arising out of the executive order,” Crowell added.

Potential legal implications of Trump’s energy executive order

A statue of Lady Justice holding a balance. (Image: Adobe Stock)

Crowell explained, “The government may issue stop-work orders while the government determines how to move forward amid the direction in the executive order.

“After the stop work period is complete, the government may be required to either resume performance under the contract or grant, or terminate the contract or grant either for convenience or default (if warranted).

“Contract and grant holders may claim entitlement to recover reasonable and allowable costs resulting from the stop-work order. If the contract is terminated for convenience, contract and grant holders may also seek to recover termination for convenience costs.

“However, if disruptive impacts caused by the implementation of the executive order are considered a constructive change to the contract, contractors may have additional bases to assert claims.

“Thus, contractors should carefully review notice requirements in their contracts in order to preserve their rights.”

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