With just over a month until the surface transportation programs expire, the most likely outcome remains that Congress enacts a short-term extension, extending the programs funded with Highway Trust Fund (HTF) revenues along with the authority to expend HTF revenues until December 12. Placement of the extension on the short-term bill to keep the government funded makes near-term enactment highly likely. On Thursday, that outcome was made all the more likely when House Speak Mike Johnson (R-LA) added the Senate’s Continuing Resolution (CR) to the list of legislation that will be considered “under suspension” of the House rules. The White House has also issued offered support to passage of the Senate CR in a Statement of Administration Policy  that doesn’t mention transportation.

However, rumblings of discontent are also being heard over the effective cut in funding that would result from extending only those HTF programs and not the programs funded through the IIJA’s advance appropriations. Whether the concern will be elevated quickly enough to imperil passage of the CR remains to be seen.

At issue is the definition of what should be considered “baseline” transportation spending and what should be considered a “clean” extension of the Infrastructure Investment and Jobs Act (IIJA).

Where we are:

Shortly before leaving town for August, the House passed a Continuing Resolution (CR) of the FY 2026 appropriations bill, extending funding for appropriated programs until December 4^th. Then two weeks later, prior to their own departure for August recess, the Senate took up a different House-passed bill—one entirely unrelated to appropriations, but that included a revenue measure. The Senate then struck all the text from the House bill and replaced it with a CR of their own, extending funding until December 11 in a bill with three times the page length of the House version. The CR in Division A of the Senate-passed version addressed anomalies requested by the Administration and added constraints to prevent use of funding for certain immigration enforcement activities.

Also different from the House bill: Divisions B, C, and D of the Senate CR extends a variety of programs and taxes (hence the need for a revenue measure from the House to avoid running afoul of the Origination Clause.)

Division C of the CR is the surface transportation extension, however it is not a blanket extension of IIJA. Rather the CR extends “(A) Division A, division B, and division C of the Infrastructure Investment and Jobs Act” but notably does not extend Division J of IIJA. Since Division J is the advance appropriation, the Senate extension allows that funding to expire.

What is a “Clean Extension”?

Cleanliness, in the context of extensions and continuing resolutions, may be somewhat in the eye of the beholder. In general, a clean extension or CR includes no changes to funding levels or other policy changes and therefore enables the programs to continue operating without change for a defined timeframe during which a longer-term bill is negotiated.

When it comes to surface transportation, recent reauthorization extensions did not extend every title or division in those laws. For instance, the FAST Act includes 41 different titles, but when Congress extended the FAST Act for one year (also as part of a CR through December 11) it included only 10 of those titles. The only funding that was extended was the funding from the Highway Trust Fund. On the other hand, the 31 FAST Act titles that were not extended all were completely unrelated to USDOT programs and funding. Most importantly, the budget authority from the HTF was the only form provided in the FAST Act. In contrast, IIJA was a highly unusual authorization that included a mix of budget authority from the HTF (e.g. contract authority) as well appropriated budget authority in Division J. In fact, Division J’s advance appropriation provided nearly 30 percent of the total USDOT budget authority made available in IIJA, including 100 percent of the funding for the FRA and Office of the Secretary, and roughly a quarter of the FTA and NHTSA funding.

In other words, extensions have historically only extended contract authority programs because that was the only form of budget authority provided. An extension of the advance appropriations would make this extension different from past practice because the IIJA itself differed from past reauthorization laws by including advance appropriations in the first place. There’s no question though that letting those programs expire does effectively represent a change in funding levels and policy.

Impact of Division J Expiration

How much of a change will the expiration of Division J represent? The American Road and Transportation Builders Association (ARTBA) is calling it “the largest reduction in federal surface transportation investment since the creation of the Interstate Highway System in 1956.” The National Association of Counties has also clamored for federal action to avoid what they’re anticipating would be a “funding cliff.”

All told, discontinuing the Division J advance appropriation will mean that $31.2 billion made available for surface transportation grants in FY26 will not be extended in FY27. Specifically, Division J provided $9.5 billion for Federal Highway Administration programs in FY26, $6.75 billion of which was distributed by formula to state DOTs, as well as $4.25 billion in transit funding, $13.2 billion in railroad funding, $3.8 billion for grants managed by the Secretary’s office, $450 million for ports at Maritime Administration, and $322 million and $135 million for NHTSA and FMCSA respectively.

Some of these programs funded in Division J then also received additional funding in the FY26 bill, therefore those programs will continue to get the FY26 appropriations bill level of funding under the CR. For instance, in addition to the $1.5 billion from IIJA for the RAISE program, it received $145 million in FY26 annual approps, so under the CR – without Division J— the program will shrink from $1.645 billion to just that $145 million in grant funding.  Fed State Partnership similarly will continue to receive $25 million, while losing the $7.2 billion from IIJA, and CRISI will shrink from $1.007 billion to just $7 million. Other programs will be entirely zeroed out, including MEGA, Safe Streets for All, and Railroad Crossing Elimination.

It’s also likely the case that the IIJA advance appropriations crowded out annual appropriations for certain programs. For instance, the RAISE program was receiving $1 billion in annual appropriations in both FY20 and FY21. Starting in FY22, the IIJA advance appropriations began providing $1.5 billion every year, and the annual appropriations level began to fall. In FY22 and FY23 funding fell to $775 million and $800 million respectively, and then down to $345 million for both FY24 and FY25 and finally $145 million in FY26. Without the supplemental Division J funding, the program will shrink well below historic funding levels. The House THUD bill increased the annual RAISE funding to $550 million, which would still represent a two-thirds cut compared to the combined funding for FY26 from IIJA and the annual appropriations bill.

State DOT formula funding levels will also be affected. While they’ll continue to receive the apportionments of contract authority funded programs, they will see an average $125 million reduction in their total formula grant funding, primarily from the loss of the Bridge formula dollars in addition to not being able to apply for more than $15 billion in discretionary grant opportunities that will end. (Full chart of all Division J 2026 funding levels at USDOT included at end along with State formula distribution.)

But Division J includes much more than surface transportation advance appropriations. IIJA funded a wide range of non-surface transportation grants as well as extensive funding for non-transportation infrastructure grants and federal activities. This makes the impact of not extending much more significant; it also makes the possibility of an extension much more costly as well as politically and logistically complicated.

At USDOT, the non-surface portions included $5 billion in FY26 for airports and facilities that would be extended under a blanket extension of the USDOT appropriation, along with $200 million at PHMSA for natural gas pipeline modernization.

Outside of USDOT, some programs received supplemental appropriations in one lump sum rather than an advance appropriations with a specific amount available for FY2026 and therefore would not benefit from extending the FY2026 levels. One of the largest Division J funding programs for instance, was $42.45 billion for broadband provided as a one-time appropriation, as was the nearly $12 billion for Army Corps construction. Numerous other programs received advance appropriations for a limited number of fiscal years and already expired prior to 2026.

Nonetheless, a blanket extension of funds made available for FY 2026 in Division J would result in nearly $28 billion additional federal spending outside of USDOT programs. Some of the largest beneficiaries—and conversely the federal activities that will see the greatest reduction if not extended— are water programs. The Bureau of Reclamation received $1.66 billion in FY26 funding that will expire, as will the grant and loan programs at EPA, including nearly $6 billion in Safe Drinking Water grants and revolving loan program capitalization funds, as well as $2.8 billion in Clean Water State Revolving Fund capitalization and $1.6 billion in grants for Federal Water Pollution Control Act grants. With a blanket extension, EPA would also continue their $1 billion Clean School Bus Program and $300 million brownfields grants that will otherwise expire.

DOE spending will also see a significant decline absent an extension of Division J. Some of the largest FY26 advance appropriations to DOE included the $1.6 billion Regional Clean Hydrogen Hubs program and $1.2 billion for nuclear energy. Electric grid reliability and transmission grants were collectively funded at $2.61 billion for FY26 under IIJA. IIJA also provided nearly $1.3 billion collectively for carbon capture and storage technology last year.

Complications of Extension

Entirely outside the politics of determining which programs to extend, and the cost implications of extending any or all of them, Congressional procedural and jurisdictional issues may complicate the path for those seeking an extension of Division J.

Both the CR and IIJA itself are divided into “Divisions.” This is a structure that Congress started using a little over 20 years ago to include separate and legally distinct bills in the same enactment. This was done to allow appropriations bills and non-appropriations bills to be combined in the same enactment and have their budgetary effects scored separately, since appropriations and non-appropriations bills are scored using separate systems that are incompatible and cannot be combined. In the IIJA, Division J was an appropriations law and the rest of the bill was a non-appropriations law, so at the end of Division J, it says “This division may be cited as the ‘Infrastructure Investments and Jobs Appropriations Act’” and it specifies the budgetary treatment of the act, e.g. that the funding was “an emergency requirement”… that “shall not be entered on any PAYGO scorecard.”

The CR similarly separates out divisions, and only Division A is an appropriations bill. (The CR text also does already carries text that specifies that Divisions B, C, and D are exempt from PAYGO and will not count toward budget allocations.) This means that only Division A of the CR can amend or extend Division J of the IIJA.

Nonetheless, the question of who “owns” the advance appropriations from IIJA may hinder those groups interested in re-upping the funds. In 2021, the Biden Administration negotiated the supplemental funding directly with a group of 20 Senators, many of whom have since left Congress. The appropriations and authorizing committee staff then worked with the staff of those members and with the Biden Administration staff to translate those funding targets into the legislative text of Division J. That non-traditional process for developing Division J may now be making it more difficult for those advocates that would like to see the funding continue, as it wasn’t an original product of either the authorizing or appropriations committee leaders and staff and it remains unclear where responsibility lies for that funding.

Beyond that, there are committee jurisdictional challenges for appropriating on an authorizing bill and vice versa. THUD Appropriators may not have great solutions for dealing with the unmet funding needs— but that doesn’t mean they’re eager to have jurisdiction stolen by authorizers either.

At the end of the day, looking at the House’s BUILD America 250 Act in conjunction with their THUD Appropriations bill, that all modes of transportation face the potential for a significant reduction in federal spending compared to the spending levels enjoyed for the past five years. With the Senate THUD bill yet to be released, it’s not yet clear whether there will be appetite to restore funding for these infrastructure programs later in the year. But in the short-term, if the CR passes as is, it’s certain that many grant programs for state and local agencies will face cuts.

Table 1: USDOT Advance Appropriations from IIJA Division J, and Funding for those accounts in FY2026 appropriations

*NOTE: This table shows only the amounts made available in Division J (not Contract Authority Amounts) and shows only the amounts appropriated for these programs in FY26. The appropriations bill also provided funding to accounts not funded in Division J that are not shown here.

Table 2: Highway Formula Program Distributions under Division J FY2026