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What's in the Nation's New Infrastructure Law and How Soon Will We See Shovels in the Ground?

    Client Alerts
  • December 02, 2021

The bipartisan infrastructure package known as the “Infrastructure Investment and Jobs Act” will provide $550 billion in new spending on roads, bridges, highways, broadband, and water infrastructure. Of the $550 billion, $110 billion is allocated for roads, bridges, and other major projects. $66 billion is reserved for passenger rail and freight, and more than $39 billion is provided for public transit.

Beyond infrastructure’s typical roads and bridges, the legislation allocates $73 billion to power infrastructure (including grid authority), $65 billion to broadband, and $55 billion to water infrastructure — including $15 billion for lead service line replacement to remove lead from the drinking water supply. An additional $46 billion will go to resiliency, cybersecurity, and ecosystem restoration.

Funding for the legislation is at least partially offset by a wide range of sources, including $205 billion in unused COVID-19 relief, an estimated $56 billion in anticipated revenue from infrastructure investments, and $53 billion in unused unemployment supplements from states footing large parts of the bill.

A provision in the bill to apply reporting requirements to cryptocurrency will also generate about $28 billion. Tax compliance is considered a major problem with cryptocurrencies, and lawmakers are eager to use those uncollected revenues to finance their big-ticket spending plans.

Roads and Bridges
The infrastructure bill allocates $110 billion in new funding for roads and bridges, the large majority of which will run through long-established formulas that are funneled to state Departments of Transportation. That has energized states desperate for cash. Some states like California have reducing carbon emissions baked into their plans, but other states could just use them to build more roads.

Missing from the infrastructure bill is any requirement that would prioritize repairing things before building new. The House-passed surface transportation bill would have prioritized this kind of “fix it first” and would have made states measure and reduce their greenhouse gas emissions. But the House bill got sidelined in favor of the more bipartisan Senate version that passed in November.

Following calls for the states to prioritize maintenance of existing infrastructure, the legislation includes a $37 billion bridge repair program. This is a safety-critical initiative to address a problem that has long been neglected, even as major bridges in Cincinnati and Memphis have been forced to close for months due to safety problems rooted in their decrepitude.

Transit benefits from both the infrastructure bill and a reconciliation bill, which allocates $10 billion each for transit and high-speed rail on top of already large amounts for those modes included in the infrastructure bill. (More on the reconciliation bill toward the end of this alert). Amtrak will get $66 billion in new money, which could enable the rail line to build out its existing service not only along the popular Northeast Corridor but also in Colorado and the Midwest.

The legislation also reauthorizes Federal Transit Administration programs for five years. The Senate Banking, Housing and Urban Affairs Committee, which has jurisdiction over transit programs, released a section-by-section summary of the division, as well as a table on public transit funding and a formula breakdown by state. As an example, the legislation provides North Carolina for transit funding as follows: $133,305,237 in FY 2021; $173,951,559 in FY 2022; $177,633,437 in FY 2023; $182,290,718 in FY 2024; $186,070,606 in FY 2025; and $190,819,296 in FY 2026 for a total of $910,765,617.

The new law also includes language that seeks to incorporate housing into transportation facility planning, and it will allow metropolitan planning organizations to create housing coordination plans. It boosts the government’s share of project costs from 80% to 90% if the project would assist parts of urbanized or rural areas with low population densities or lower average income levels.

The legislation revises the definition of “small starts projects” to include larger projects for a streamlined approval process, and will, among other things, allow interrelated projects to bundle funding requests. It also revises the rural transit formula to increase funding attributed to transit service and increase tribal rural funding.

The measure authorizes the federal Department of Transportation (DOT) to award state of good repair grants to assist state and local governments in financing projects to replace rail rolling stock. The bill authorizes $69.9 billion total over five years from the Highway Trust Fund’s mass transit account, which is an increase of 43% over baseline levels for contract authority.

The bill requires DOT to establish a program to award grants for highway-rail or pathway-rail grade crossing improvement projects that focus on improving the safety and mobility of people and goods, a grant program to provide financial assistance to entities implementing interstate rail compacts, and a program to facilitate the development of intercity passenger rail corridors.

It increases the total amount for bus facility and fleet expansion grants to states and localities to $206 million per year, with each state receiving $4 million annually, and will increase the set aside for rural areas from 10% to no less than 15%. It will require that lower-emission buses and vehicles, including natural gas-powered buses and vehicles, receive at least 25% of program funds.

Multimodal and Freight Transportation
A section of the legislation requires DOT to establish an Office of Multimodal Freight Infrastructure and Policy. It also revises the national freight strategic plan and requirements for state freight plans to include greater consideration of environmental and equity impacts, and it requires DOT to provide grants to multistate freight mobility compacts to promote the improved mobility of goods.

Another subtitle establishes (and authorizes funding for) several DOT grant and research programs, including: $10 billion total over five years for a national infrastructure project assistance grant program, with eligible projects including certain highways and bridges, freight intermodals or freight rail projects that provide a public benefit, railway-highway grade separation or elimination projects, intercity passenger rail projects, and certain public transportation projects. It also provides $7.5 billion total over five years for a local and regional project assistance grant program that funds projects that have a significant local or regional impact and improve transportation infrastructure, as well as $4 billion total over five years for a national culvert removal, replacement, and restoration grant program that awards grants to meaningfully improve or restore fish passage for anadromous fish.

The legislation also makes changes to the Railroad Rehabilitation and Improvement Financing (RRIF) loan program, requires DOT to refund up-front premiums paid plus interest for loans made before enactment of the Fixing America’s Surface Transportation (FAST) Act and, for future loans, requires DOT to refund up-front premiums paid by borrowers once the loans are repaid.

Electric Vehicles
The infrastructure bill promises $7.5 billion to build electric vehicle charging stations, which will be enabled by the tax credits in the reconciliation bill and dwarfed by the $34 billion that piece has for electrification. The bill creates new programs for transit with connections to affordable housing, neighborhood equity, and carbon reduction, and it invests in low-emission aviation fuels.

It could take months or even years to start seeing shovels in the ground. The current labor shortage – compounding longtime workforce issues in the construction trades – could also slow down the pace of building and make projects more expensive, experts warn.

This is a long-term investment and it will take time for the funding to hit the streets, bridges, and railways. State DOTs and transit agencies will need to ramp up to oversee the massive flow of funds and implementation of projects.

There could also be supply chain issues as demand for materials and equipment increases on a finite number of vendors — especially vendors that satisfy “Buy America requirements.” However, lawmakers hope that the legislation will stimulate enough demand to overcome these issues.

Reconciliation Package
Also in November, the House approved a 2,135-page text for the reconciliation bill that includes $1.75 trillion in social spending and encompasses nearly all of President Joe Biden’s domestic agenda. The new text includes funding for items that had originally been cut, such as reducing prescription drug costs and immigration policies.

However, reconciliation funding for transportation — which includes electric vehicles tax credits, money for high-speed rail, affordable transit and port infrastructure, and supply chain resilience — among other policies, remains unchanged from earlier versions, despite the significant increase in pages.

An additional $10 billion for rail — high-speed rail, specifically — is also included in the reconciliation bill, but moving the country to high speed rail will likely take orders of magnitude more.

We will circulate another alert with details on the reconciliation package if it passes the Senate and becomes law. For more information, please contact me or your regular Parker Poe contact.