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VTrans proposes reinstating pre‑IIJA payback rules for cancelled municipal grants
Summary
Agency of Transportation staff told the committee they want to remove Federal Highway language from grant repayment provisions so grants executed after passage would require payback if a municipal project is cancelled; the change is aimed at preventing funds from remaining encumbered and to recover state and federal money for other projects
Agency of Transportation staff and the committee discussed draft T‑bill language (section 3) aimed at clarifying payback requirements when municipal projects funded with state and federal grants are cancelled.
Jeremy, chief engineer for the Agency of Transportation, told the committee the proposal removes references to Federal Highway exceptions introduced after the Infrastructure Investment and Jobs Act (IIJA) so that repayment provisions in grant agreements align with the agency’s longstanding practice. “This basically just goes back to PIIJA conditions. This is not like a new effort. This just is what the status quo has been,” Jeremy said.
Committee members asked whether the proposed change would be retroactive and whether it would take effect while IIJA funds remain available. Jeremy responded that any change would not be retroactive and that the agency was proposing to apply the provision to grants executed after the bill’s passage. He said VTrans had seen an increase in cancelled projects and that the change sought to limit funds being encumbered by terminated projects and to recover state and federal shares for other uses.
On the scale of the problem, Jeremy told the committee the agency had seen “over 2 dozen projects canceled at various stages of development recently,” which drove the need to reconcile federal practice with state grant agreements. He said towns still have options for relief: “There’s still that opportunity for a town to receive that relief. Right? They can petition the secretary or the transportation board and state their case.”
Regional planners and stakeholders urged caution. Kennedy, director of community development at the Monosco Regional Commission, said many cancellations arise from extenuating circumstances and urged clear discretion for relief from payback when appropriate. “If there could be some extenuating circumstances where a town is relieved of having that payback provision, it could be helpful,” Kennedy said.
Multiple lawmakers asked for clearer effective dates in the draft language; staff said they would work with legislative counsel to specify whether the payback rule would apply to agreements executed after passage. Agency staff also proposed removing tight 30‑day deadlines for hearings and decisions on appeals to the Transportation Board, arguing the current language can be impractical for discovery and settlement.
No formal action was taken; the committee identified follow‑up tasks including drafting clearer effective‑date language, confirming appeal timelines and hearing procedures, and soliciting additional testimony from regional planning commissions.
