Under the agreement, the highway bill would be combined with another bill to prevent a doubling of student loan interest rates. Lawmakers plan to use pension law changes to help pay for both measures.
The deal would cut the amount of time it takes to finish a highway project from 15 years to about eight years.
Out is a provision that would have required a federal energy agency to approve the Keystone XL oil pipeline, which would transport oil from Canada's oil tar sands to Texas. President Obama had threatened to veto the bill if Keystone were included.
Another provision that's out would have blocked the Environmental Protection Agency from regulating the toxic ash from coal-fired power plants, according to the Associated Press.
While the current highway funding provision didn't expire until this weekend, negotiators had previously said they needed to get an agreement by today in order to get the actual paperwork done in time.
Senator Barbara Boxer (D-CA), chairman of the Senate Environment and Public Works Committee, said in a statement: "The bill is funded at current levels, and it will protect and create 3 million jobs.... We speed up project delivery, cut red tape, and do it without jeopardizing environmental laws."