$1.2 Trillion Bipartisan Infrastructure Bill Heads To President’s Desk – Government, Public Sector – United States – Mondaq News Alerts

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LANDMARK BILL REPRESENTS A MAJOR COMPONENT OF THE BIDEN
ADMINISTRATION'S BUILD BACK BETTER AGENDA

On November 5, the U.S. House of Representatives passed a
bipartisan $1.2 trillion "physical" infrastructure bill,
paving the way for enactment of a major component of President
Biden's "Build Back Better" domestic infrastructure
agenda. The Infrastructure Investment and Jobs Act (IIJA)
H.R. 3684 - also known as the Bipartisan Infrastructure Deal - was
passed by the House by a vote
of 228-206
, with 13 Republicans joining all but six Democrats
in supporting the measure. The bill now awaits the President's
signature, nearly three months after Senate passage.

The IIJA contains approximately $550 billion in new infrastructure
spending, over current spending levels, for a total of $1.2
trillion over the next five years. The bill covers roads and
bridges, public transit, freight and passenger rail, safety and
research programs that are typically included in five-year surface
transportation reauthorizations. Additionally, it makes major
investments in drinking and wastewater infrastructure;
pipelines; ports and airports; while funding "new
economy" infrastructure, such as broadband deployment and
adoption, grid security and resiliency, and clean energy programs
(e.g., electric vehicle infrastructure and carbon capture). The
bill also includes major domestic procurement ("Buy
America") requirements for infrastructure materials. The IIJA
includes supplemental appropriations to support many of its
authorized programs, while others are left to be funded via the
annual Congressional appropriations process.

A high-level summary of the bill is as follows:

SURFACE TRANSPORTATION AND PUBLIC TRANSIT

Highways and Bridges

The largest investment the IIJA makes is a 5-year (FY22-26)
reauthorization of federal-aid highway programs for a total of
$273.2 billion. The authorization covers state apportionments for
federal highway construction, as well as Surface Transportation
Block Grants and other programs.


The IIJA sets obligation limits on federal-aid highway and highway
safety construction programs, totaling $300.3 billion over the
five-year period. 

The bill also transfers $90 billion to the Highway Trust Fund (HTF)
for highways and $28 billion for mass transit, and it authorizes
$3.27 billion from both the HTF and the Treasury general fund over
five years for new grants to repair and replace bridges.

The IIJA authorizes the following amounts over five years, mostly
from the HTF:

  • $4.8 billion for renamed Nationally Significant Multimodal
    Freight and Highway Projects, also referred to as the
    Infrastructure for Rebuilding America (INFRA) grant program. An
    additional $6 billion is authorized from the Treasury general
    fund.
  • $2.56 billion for FHWA administrative expenses.
  • $2 billion for the Rural Surface Transportation Grant
    Program.
  • $1.25 billion for the Transportation Infrastructure Finance and
    Innovation Act (TIFIA) program.
  • $570 million to construct ferry boats and terminal
    facilities.
  • $500 million for a pilot program offering grants to explore
    removing or retrofitting transportation facilities that created
    community barriers to mobility or economic development.

The IIJA also authorizes $1 billion over five years from the
general fund for grants to connect walking and biking
infrastructure.

The IIJA codifies core elements of the "One Federal
Decision" policy for major surface transportation projects,
 including establishing a two-year goal for completion of
environmental reviews, as well as page limits for environmental
documents.

Rail and Public Transit

The IIJA makes an additional $66 billion in passenger and
freight rail investments over the next five-years and addresses
several recommendations included in the 2021 Infrastructure Report
Card, such as sustained investments in the Northeast Corridor,
providing funding for regional freight rail investments, and
funding to reduce hazards at railway crossings. Notably, within
these totals:

  • $22 billion would be provided as grants to Amtrak;
  • $24 billion for federal-state partnership grants for Northeast
    Corridor modernization;
  • $12 billion for partnership grants for intercity rail service,
    including high-speed rail;
  • $5 billion for rail improvement and safety grants; and
  • $3 billion for grade crossing safety improvements.



For public transit, the bill would provide $69.9 billion in
contract authority from the mass transit account from fiscal 2022
through 2026 for the main formula-based transit grant programs. The
fiscal 2022 allocation would be $13.4 billion.  Allocations of
grant funds over the five-year period would include:

  • $33.5 billion for Urbanized Area Formula Grants;
  • $18.4 billion for the State of Good Repair Grants Program for
    upgrading older rail and bus systems in urbanized areas;
  • $4.58 billion for public transportation in rural areas;
  • $3.16 billion for bus and facility formula grants; and
  • $2.34 billion for low- or zero-emission bus grants. 

DRINKING WATER AND WASTEWATER

Through a combination of supplemental appropriations and future
authorized annual spending, the, IIJA makes a massive investment in
the primary federal assistance programs for clean and drinking
water infrastructure. 

The IIJA reauthorizes the Environmental Protection Agency (EPA)
administered Drinking Water State Revolving Fund (DWSRF) and Clean
Water State Revolving Fund (CWSRF) programs each at the following
spending levels, respectively (subject to appropriations):

  • $2.4 billion for FY 2022;
  • $2.75 billion for FY 2023;
  • $3 billion for FY 2024; and
  • $3.25 billion for FY 2025 and FY 2026.

The IIJA authorizations for the DWSRF and CWSRF reflect $13.8
billion in new authorized spending (subject to annual fiscal year
appropriations).  For context, according to the Congressional
Research Service, for FY 2017 through FY 2021, Congress on average
appropriated $1.1 billion to the DWSRF and $1.6 to the CWSRF.

Notably, the IIJA provides $55 billion in supplemental
appropriations, which includes a massive $43 billion capital
infusion into the revolving loan funds over five years.
Specifically, the bill provides supplemental appropriations to both
the CWSRF's general program and the DWSRF general program,
respectively, at:

  • $1.902 billion for FY 2022;
  • $2.202 billion for FY 2023;
  • $2.403 billion for FY 2024; and
  • $2.603 billion for FY 2025 and FY 2026, respectively.

Almost half of the supplemental appropriations provided to the SRFs
is directed to be used as grants for principal forgiveness, a
notable contrast to the revolving loan funds' traditional
requirements of principal repayment and interest.

In addition to the supplemental appropriations for the SRFs general
programs, the IIJA provides supplemental appropriations to these
EPA programs to address emerging contaminants, with a focus on per
and polyfluoroalkyl substances (PFAS), and lead service line
replacements.  

The IIJA reauthorizes the EPA's lead reduction program and
increases its authorized spending level to $100 million annually
through 2026.  It also expands the EPA's Voluntary School
and Childcare Lead Testing Grant Program to expand grant
eligibility to public water systems and nonprofits for lead
monitoring and lead reduction projects. It also authorizes a host
of programs within EPA to provide technical and operational
assistance to public water systems, particularly those that are
small, as well as programs intended to assist rural and low income
communities.  The IIJA also authorizes the EPA to establish
new grant programs to address water system resiliency to natural
hazards and cybersecurity threats.

PORTS, WATERWAYS AND AIRPORTS

Overall, the IIJA invests approximately $17 billion in port
infrastructure and waterways and $25 billion in airports to address
repair and maintenance backlogs, reduce congestion and emissions
near ports and airports.

For ports, the bill provides $3.42 billion through the General
Services Administration to build and repair Customs and Border
Protection stations and land ports-of-entry as well as $2.25
billion for the Maritime Administration's port infrastructure
development program.  Additionally, eligible projects would be
expanded to include those that make ports more resilient to rising
sea levels, extreme weather, earthquakes, and tsunamis, as well as
those that reduce port-related greenhouse gas emissions.

Over the bill's 5-year period, $80 million per year is
allocated for a U.S. Department of Transportation (DOT)-led
competitive grant program to reduce port-related emissions from
idling trucks. The bill also provides more than $9.5 billion for
Army Corps of Engineers infrastructure priorities and another $429
million for Coast Guard infrastructure priorities.

For airports, the bill provides funding in several areas: $15
billion in formula funding for Airport Improvement Program
projects; $5 billion for airport terminal development projects; and
$5 billion for Federal Aviation Administration facilities and
equipment, including FAA-owned contract towers. The bill also
extends eligibility for Transportation Infrastructure Finance and
Innovation Act (TIFIA) loans to airport projects and economic
development projects related to rail stations.

BROADBAND DEPLOYMENT AND ADOPTION

The IIJA includes $65 billion in funding for broadband deployment
and affordability - funding the White House says will "help ensure every American has
access to reliable high-speed internet." The centerpiece of
the bill's broadband title is more than $42 billion allocated
for formula-based grants to states to speed broadband deployment,
with 10 percent of the funding set-aside for unserved high-cost
areas. Under this Broadband Equity, Access, and Deployment Program,
which will be administered by the Commerce Department's
National Telecommunications and Information Administration (NTIA),
states will submit a "5-year action plan" with their
initial request, and will be required to coordinate with local and
regional entities in distributing funding.  In addition, funds
will be prioritized to unserved areas - states must certify that
100% of unserved areas are met before they fund deployment projects
in underserved areas.  A 25% matching fund requirement will
apply, except that NTIA may waive the matching requirement for high
cost areas.  Additionally, new networks will be required to
meet minimum quality standards and provide at least one tier of
affordable service.

The bill allocates $14.2 billion to establish an Affordable
Connectivity Program (ACP), which expands the Emergency Broadband
Benefit (EBB) established to help low-income families afford
landline or mobile broadband services during the Covid-19 pandemic.
Under the new permanent program, low-income families will be
eligible for a $30 per month discount toward any broadband service
plan from a participating provider. While the monthly benefit is
reduced from $50 to $30, eligibility is expanded from households
with income at or below 135% of the Federal Poverty Guidelines to
200% and to include participants in the special supplemental
nutritional program for women, infants, and children (WIC). In
addition, participating providers are not limited to those
providers with a broadband offering as of December 1, 2020 like the
EBB program. The ACP is open to any broadband provider. The bill
provides for a 60-day transition from EBB to ACP benefits at the
end of this year, so the Federal Communications Commission will
need to conduct an expedited rulemaking for the transition to the
ACP.  

In addition, the bill includes $2.75 billion in funding for the
Digital Equity Act of 2021, which will establish two new
grant programs - one formula-based and one competitive - to promote
digital inclusion and equity in communities nationwide. Both grant
programs would be administered by NTIA and recipients will be able
to put the funding toward a variety of initiatives to accelerate
the adoption of broadband and increase digital literacy in
historically underserved communities. NTIA is also tasked with
evaluating the efficacy of digital inclusion projects and sharing
the results with policymakers at the national, state and local
level.

Other broadband initiatives include:

  • $1 billion for the establishment on a "Middle Mile"
    grant program for the construction, improvement, or acquisition of
    middle mile broadband infrastructure to help deploy affordable
    high-speed internet to unserved areas. Eligible entities include
    telecommunications / technology companies and utilities as well as
    non-profits. The amount funded under this program may not exceed
    70% of the project's total costs.
  • $2 billion for Tribal Broadband Connectivity Program grants for
    broadband deployment, digital inclusion, workforce development,
    telehealth, and distance learning.
  • $2 billion for the Department of Agriculture to support
    broadband deployment in rural areas.
  • A provision allowing states to issue private activity bonds to
    help finance qualified broadband projects in areas where access and
    quality is limited.
  • A provision requiring the Federal Communications Commission
    (FCC) to promulgate regulations to require the display of broadband
    consumer labels to disclose to consumers information regarding
    broadband internet access service plans. The labels were initially
    proposed by the Commission's Consumer Advocacy Committee in
    2015 pursuant to the 2015 Open Internet Order (net
    neutrality).
  • A provision requiring the FCC to adopt final rules to
    facilitate "equal access" to broadband internet access
    service. "Equal access" is defined as "the equal
    opportunity to subscribe to an offered service that provides
    comparable speeds, capacities, latency, and other quality of
    service metrics in a given area, for comparable terms and
    conditions."



And more broadly, the IIJA includes several communications
workforce provisions. The bill requires:

  • The establishment of an interagency working group - led by the
    FCC and the Department of Labor - to develop recommendations to
    address the workforce needs of the telecommunications
    industry;
  • The issuance of guidance on how states can address the
    workforce needs and safety of the telecommunications industry;
    and
  • A Government Accountability Office (GAO) assessment of the
    workforce needs of the nation's telecommunications
    industry.

GRID SECURITY, CLEAN ENERGY AND ENVIRONMENT

The IIJA includes in its entirety the Energy Infrastructure Act,
authored by Senate Energy and Natural Resources Committee Chairman
Joe Manchin (D-WV). The sweeping legislation funds investments in
grid resiliency and security; clean energy supply chains; carbon
capture and hydrogen fuels; and energy efficiency. Additionally,
beyond the Energy Infrastructure Act, the IIJA also includes major
investments to electrify the nation's transportation
sector.

Grid Resiliency and Security

The bill authorizes approximately $65 billion for grid
infrastructure, targeting reliability and resiliency,
including:

  • $5 billion in funding for a Department of Energy (DOE)-led
    grant program to enhance grid resiliency by reducing the impacts of
    extreme weather, wildfires, and natural disasters;
  • $5 billion in funding for a new "Upgrading Our Electric
    Grid Reliability and Resiliency" program to provide federal
    financial assistance to demonstrate innovative approaches to
    transmission, storage, and distribution infrastructure, as well as
    an additional $1 billion for reliability and resiliency efforts in
    rural or remote areas.
  • A $2.5 billion revolving loan fund to allow DOE to serve as an
    "anchor-tenant" for a new or upgraded transmission line.
    DOE may buy up to 50 percent of the planned capacity (that capacity
    can be sold later, once DOE determines the project has ensured
    financial viability). DOE is also authorized to issue loans to or
    enter into public private partnerships with eligible transmission
    projects.
  • $3 billion for a Smart Grid Investment Matching Grant Program
    to support the deployment of technologies to enhance grid
    flexibility.

Other provisions would fund initiatives to enhance both the
physical security and cyber security of the electricity sector.
These include the establishment of a program to promote and advance
the physical and cybersecurity of electric utilities and a new
voluntary Energy Cyber Sense program, as well as the development of
incentives for advanced cyber security technology investments. $250
million is authorized for grants and technical assistance for rural
and municipal utilities to detect, respond to, and recover for
cyber threats. Addition funding is allocated for the Cybersecurity
for the Energy Sector RD&D program; the Energy Sector
Operational Support for Cyberresilience Program; and Modeling and
Assessing Energy Infrastructure Risk.

Supply Chains

The bill also includes provisions to build out domestic supply
chains for clean energy technologies, funding initiatives ranging
from a DOE rare earth element extraction and separation facility
and refinery to funding for domestic battery processing,
manufacturing and recycling. The bill also aims to improve the
federal permitting process with respect to critical mineral
production on Federal land. Further, the bill expands DOE's
Innovative Energy Loan Guarantee (Title XVII) program to make
eligible projects that increase the domestic supply of critical
minerals.

Carbon Capture and Hydrogen

The IIJA - through the Energy Infrastructure Act - includes
funding to facilitate the buildout of carbon capture
infrastructure, including $100 million to expand DOE's Carbon
Capture Technology program to include front-end engineering and
design for carbon dioxide transportation infrastructure and $2.1
billion for the establishment of a new CO2 Infrastructure Finance
and Innovation Act (CIFIA) program to provide low-interest loans
for carbon dioxide transport infrastructure projects. Another $2.5
billion would help expand DOE's Carbon Storage Validation and
Testing program to include large-scale commercialization of carbon
sequestration and transport projects. And $3.5 billion is
authorized for regional direct air capture projects. The bill also
authorizes the Interior Department to permit geologic carbon
sequestration on the outer Continental Shelf.

Hydrogen is also a major focus of the legislation, with $8 billion
authorized for the establishment of clean hydrogen programs at DOE,
as well as $500 million for a clean hydrogen manufacturing and
recycling program. Another $1 billion would fund a demonstration,
commercialization and deployment program intended to decrease the
cost of clean hydrogen production from electrolyzers.

Energy Efficiency

The IIJA funds a number of initiatives to increase industrial
energy efficiency. The bill directs DOE to provide technical
assessments for manufacturers to, among other goals, maximize
energy and water efficiency. And $550 million is provided for
university-based industrial research and assessment centers to help
industrial facilities optimize energy efficiency. A related grant
program would help small- and medium-sized manufacturers make
efficiency upgrades.

Transportation Electrification

Electric vehicles (EVs) will receive a huge boost under the
IIJA, with $7.5 billion in funding to support the construction of
alternative fuel corridors and to build out a national EV charging
infrastructure network. The bill emphasizes deployment in rural,
disadvantaged and hard-to-reach communities. Other provisions in
the bill (incorporated as part of the Energy Infrastructure Act)
require a DOE study on the "cradle to grave"
environmental impacts of EVs as well as a DOE / State Department
study on the impact of forced labor in China on the EV supply
chain.

The IIJA bill allocates an additional $7.5 billion to support
further decarbonization of the transportation sector, with $5
billion of that targeting the replacement of existing school buses
with zero emission and clean school buses. The remaining $2.5
billion will go toward low-carbon ferries, in addition to funding
to help states fund the operations of rural ferries.

Environmental Initiatives

The IIJA authorizes a new $15 million per year Environmental
Protection Agency (EPA) grant program to educate households and
consumers about their residential and community recycling program,
aiming to support local recycling infrastructure and decrease
contamination in the recycling stream. An additional $200 million
would be allocated to NOAA's Marine Debris Program.

Additionally, the bill authorizes approximately $4.7 billion for
programs to plug, remediate and reclaim orphaned wells on federal,
state and Tribal lands; $1.5 billion for Brownfields investments;
and $3.5 billion for clean-up and remediation at Superfund
sites.

DOMESTIC PROCUREMENT

The bill also includes new statutory authorities to broaden the
application of various domestic content preferences in
infrastructure assistance and direct federal procurement. These
include:

  • Build America, Buy America: Requires new Buy America
    preferences for iron, steel, construction materials and
    manufactured products on federal infrastructure assistance
    awards.
  • Make It in America: Amends the Buy American Act (BAA)
    to improve and tighten waiver processes, codify a newly-established
    Made in America Office within the Office of Management and Budget
    and paves the way for the Administration's proposed increase to
    the BAA's domestic content requirements for direct federal
    procurement.
  • BuyAmerica.gov: Directs the establishment of a central
    and publicly available website related to Buy American
    waivers.

We will issue a separate advisory taking a deeper look at the
IIJA's potentially sweeping Buy American mandates.


OFFSETS

The measure includes provisions to offset some of the new spending,
such as:

  • extending certain highway taxes;
  • rescinding certain unobligated Covid-relief funds;
  • delay the Trump-era Medicare Part D rebate rule;
  • reinstating the long-expired Superfund tax (a per ton excise
    tax on the sale of approximately 40 chemicals);
  • extending the annual sequestration of mandatory funding;
  • selling oil from the Strategic Petroleum Reserve;
  • selling federal spectrum assets;
  • requiring transactions of digital assets such as cryptocurrency
    to be reported to the IRS; and
  • extending for five years the pension funding relief provision
    included in the American Rescue Plan Act enacted earlier
    this year.

Lawmakers also attributed approximately $56 billion to an estimated
33 percent return on investment in the bill's long-term
infrastructure projects. Overall, the non-partisan Congressional
Budget Office (CBO) estimates the new law would add $256 billion to
projected deficits over a ten-year period.

Please join us for a webinar on November 19th, where
we will be discussing the IIJA and it's implementation. 
You can register for the webinar here. 

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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