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What the infrastructure act means for business

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Bridge construction over valley President Joe Biden signed the Infrastructure Investment and Jobs Act (IIJA) on Nov. 15, bringing to fruition a long-awaited investment in America’s crumbling infrastructure. The IIJA represents an enormous bipartisan achievement on the part of the 117th Congress, as previous recent administrations have been unable to achieve a consensus on the country's growing infrastructure investment needs.

The main provisions of the new law are described below to help your business plan ahead as implementation unfolds.

What’s in the IIJA? The IIJA authorizes $1.2 trillion in funding for projects, with $550 billion in new funding, including:

  • $110 billion for roads, bridges, and other major projects
  • $73 billion to update the nation’s electricity grid
  • $66 billion for passenger and freight rail
  • $65 billion for broadband internet
  • $55 billion for water infrastructure, including $15 billion for removing lead pipes
  • $50 billion for climate resiliency projects
  • $39 billion for public transit
  • $25 billion for airports
  • $21 billion for environmental remediation projects
  • $17 billion for ports and waterways
  • $11 billion for transportation safety projects
  • $7.5 billion for low emissions buses and ferries
  • $7.5 billion to construct electric vehicle charging stations

How is the IIJA funded? There are a few provisions in the law intended to cover its costs. Among the provisions:

  • Repurposing unspent COVID-19 funding
  • Reducing unemployment insurance fraud
  • Auctioning additional spectrum frequencies through 2028
  • Requiring cryptocurrency transactions be reported to regulatory agencies
  • Extending fees on government-sponsored enterprises
  • Reinstating Superfund fees
  • Extending customs user fees

Long-term investments In talking about the IIJA, the Biden administration and Congress have stated the infrastructure investments are not designed as short-term economic stimulus, but rather the funds will be invested over a number of years. The structure of the law prioritizes long-term investments in resilience, cybersecurity, transportation infrastructure, and more.

A bulk of the IIJA’s funding is dedicated to reauthorizing existing programs or providing funding for new programs over the next five years – with estimates indicating that $973 billion of the funding will be spent between Oct. 1, 2022, and Sept. 30, 2026. However, a handful of programs have been authorized to receive funding running through 2036.

The IIJA is also being positioned as essential in addressing growing concerns surrounding inflation by providing for supply chain solutions that will lower costs over the long term. Furthermore, the infrastructure bill is projected to create hundreds of thousands of new jobs, which will provide for longer-term economic development opportunities across the U.S.

Coordination between federal and state/local governments is key Federal agencies are at the center of distributing funding contained in the IIJA, primarily to state and local governments. The departments of Energy, Transportation, and Homeland Security will play the largest role and, along with many others, will be responsible for the distribution and oversight of infrastructure investments. But most of the money will be directly spent by state and local governments, which will be able to make decisions on which projects are funded and which local communities receive the money – within a set of parameters.

The programs funded in the act are required to prioritize funding for infrastructure projects that will benefit disadvantaged communities, including communities of color and lower-income communities. This will necessitate close coordination between federal agencies and state and local recipients of funds to ensure the proper program planning and design as well as performance metrics are in place before the money starts flowing. Partly because of that, it is estimated that states could begin receiving their funding allocations within the next six months.

Larger federal oversight role In tandem with signing IIJA into law, the president issued an executive order regarding its implementation. The order laid out six key priorities for implementation of the legislation across the federal government:

  • Effectively investing public dollars while avoiding waste
  • Prioritizing Buy American opportunities that will support domestic manufacturing
  • Providing job opportunities for Americans with high labor standards
  • Equitably distributing investments to disadvantaged communities
  • Investing in resilient infrastructure that will survive the negative impacts of climate change for the long-term
  • Coordinating with state and local governments to distribute the funding

The White House appointed Mitch Landrieu – who served as mayor of New Orleans from 2010 to 2018 – to serve as the White House Infrastructure Implementation Coordinator. Landrieu and National Economic Council Director Brian Deese will serve as the co-chairs of the Infrastructure Implementation Task Force charged with overseeing the effective implementation of the IIJA.

The White House stated the task force is instructed to remain “committed to breaking down barriers and driving implementation of infrastructure investments across all levels of government.”

Climate-related investment The IIJA makes a range of investments in policies that aim to address the climate crisis – both directly and indirectly. This includes a large investment to protect infrastructure from climate-related events, allocating $50 billion toward making U.S. infrastructure more resilient against climate threats and extreme weather – including heat, flooding, wildfires, droughts and more. The IIJA contains the largest investment in resilient infrastructure enacted in the U.S. in history.

The legislation also makes investments that move the U.S. closer to a zero-emission economy. This includes $65 billion for clean energy transmission and renewable grid infrastructure, $21 billion for environmental remediation and legacy pollution, $7.5 billion for electric vehicle charging infrastructure, and other smaller investments. Additionally, the IIJA broadly requires that all infrastructure improvements and repairs focus on mitigating climate change and advancing climate resilience.

Shoring up the supply chain Congress and the administration were able to advance key Buy American and domestic manufacturing provisions within the IIJA, aiming to redirect manufacturing supply chains onto U.S. soil. In prioritizing improvements for the U.S. transportation infrastructure, the IIJA is being hailed as a significant win for making supply chain improvements that will address the challenges faced by businesses today. This includes $110 billion to improve roads and bridges, $25 billion to address maintenance backlogs in airports, $17 billion to enhance port infrastructure and waterways and more.

The IIJA also allocates approximately $100 billion toward grant programs that would address supply chain efficiencies. This amount includes several more targeted investments to support specific domestic manufacturing initiatives – including for battery processing, advanced energy, critical minerals, personal protective equipment, pharmaceuticals and broader sustainable manufacturing policies.

The IIJA promises to address the nation’s longstanding infrastructure needs while mitigating the consequences of climate change and benefiting traditionally underserved communities. It took years of deliberation and glimmers of bipartisanship to make the new law a reality. Effective implementation of new and existing programs is the government’s next big infrastructure challenge.

Contacts:
Adam Hughes
Director
Arlington, Va., office
T +1 703 637 4235

Robert Shea
National Managing Principal
Public Policy
Arlington, Va., office
T +1 703 637 2780

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