Update: The Infrastructure Investment and Jobs Act was signed into law November 15, 2021.
The Infrastructure Investment and Jobs Act makes generational investments in priorities such as repairing roads and bridges, boosting transit and rail funds, electrifying vehicles, replacing lead pipes, ensuring broadband deployment, resiliency, cybersecurity, and modernizing energy systems.
by Thomas Curtin, Richard Lukas, and Alex Whitaker
On Friday night, November 5, the House passed by a vote of 228-206 the Infrastructure Investment and Jobs Act (IIJA). The long-awaited infrastructure package, passed on a bipartisan basis by the Senate in August, was the product of President Biden’s Bipartisan Infrastructure Framework and a lengthy negotiation led by a group of 22 Senators who split the package among several working groups to draft the text.
In recent months, NGA has supported the bipartisan process; NGA Chairman Governor Asa Hutchinson of Arkansas and Vice Chairman Governor Phil Murphy of New Jersey applauded the vote, underscoring how Governors believe that “This historic investment will help fund states and territories’ core infrastructure priorities including: $300 billion in funding to state highway projects and programs; $73 billion investment in clean energy transmission upgrades; $40 billion in grants to states for broadband deployment and to make broadband more accessible for low-income families in rural and urban communities alike; and $17 billion in port infrastructure and $25 billion for airports to address repair and maintenance backlogs, reduce congestion and emissions near ports and airports, and drive electrification and other low-carbon technologies. This vital legislation should be sent to the President’s desk as soon as possible so that states and territories can deploy these crucial infrastructure funds.”
The IIJA makes generational investments in priorities such as repairing roads and bridges, boosting transit and rail funds, electrifying vehicles, replacing lead pipes, ensuring broadband deployment, resiliency, cybersecurity, and modernizing energy systems. Notably, the bill contains additional bipartisan provisions previously passed through the traditional committee process – namely the surface transportation reauthorizations passed unanimously by the Environment and Public Works and Commerce Committees, the bipartisan Energy Infrastructure Act passed by the Energy and Natural Resources Committee, and the bipartisan Drinking Water and Wastewater Infrastructure Act passed by the EPW Committee.
The $550 billion in new spending reflects Governors’ surface transportation priorities and wider infrastructure principles which call for long-term funding and financing; repairing investing in future assets; project streamlining; and embracing new technologies and innovations.
Ensuring Dedicated, Long-Term Funding And Financing
The nearly $550 billion in total new spending by sector includes topline amounts as follows:
- Transportation – $284 billion
- Power Infrastructure – $73 billion
- Broadband – $65 billion
- Water Infrastructure – $55 billion
- Resiliency and Cybersecurity – $50 billion
- Environmental Remediation – $21 billion
The package is financed through a combination of redirecting unspent Covid-19 relief funds, targeted corporate user fees, and other measures (click to view)
- $13.5 billion from Small Business Administration – Disaster Loans Program Account
- $17.6 billion from Small Business Administration – Targeted EIDL Advance
- $1.4 billion from Economic Stabilization Program
- $5.7 billion from Small Business Administration – Business Loans Program Account
- $3 billion from Pandemic Relief for Aviation Workers
- $353.4 million from Education Stabilization Fund and Higher Education Emergency Relief Fund
- $175 million from Small Business Administration—Salaries and Expenses
- Delaying Medicare Part D rebate rule until January 2026
- $53 billion from savings in projected cost of UI because certain states returned unused enhanced federal UI supplement
- $6 billion in sales from the Strategic Petroleum Reserve
- Funding from sales of future spectrum auctions and from proceeds of the February 2021 c-band auction
- Funding in economic growth resulting from a 33 percent return on investment in these long-term infrastructure projects
- Funding from applying information reporting requirements to cryptocurrency
- Funding from extending fees on GSEs
- Funding from reinstating certain Superfund fees
- Funding from the mandatory sequester
- Funding from extending Customs User Fees
- Savings from reducing Medicare spending on discarded medications from large, single-use drug vials
- Funding from extending available interest rate smoothing options for defined benefit pension plans
An amendment was added to require USDOT, in coordination with State departments of transportation, to carry out a highway cost allocation study to determine the direct costs of highway use by various types of users, including vehicles of different dimensions, weights, number of axles, etc., frequency of those vehicles in the traffic stream, and safety-, emissions-, congestion-, and noise-related costs of highway use by various types of users, and other costs. The study will look to determine the proportionate share of the direct costs that are attributable to each class of highway users, and USDOT is required to submit interim and final reports to Congress including recommendations for a set of revenue options to fully cover the costs occasioned by highway users, to include changes to existing revenue streams and any identification of new revenue streams based on user fees.
Fix Now And Invest In The Future
Utilizing the framework in both the EPW Surface Transportation Reauthorization and the Commerce Surface Transportation Investment Acts, plus direct advanced appropriations, the legislation increases spending for transportation. Total transportation funding in this five-year package is $567 billion.
NGA previously provided analysis of the EPW Surface Transportation Reauthorization Act as it passed out of committee in May, following a request by the Governors to include key NGA priorities and principles outlined in an April letter.
Additional spending for surface transportation includes $110 billion for roads and bridges, with a significant amount of direct advanced appropriations in the form of competitive grants (bridges at $36 billion; RAISE grants at $7.5 billion; INFRA grants at $3.2 billion; and a new $5 billion multimodal “National Infrastructure Project Assistance Grant Program” to support multi-modal, multi-jurisdictional projects of national or regional significance).
Funding for freight and passenger rail increases markedly under the IIJA. $66 billion in freight and passenger rail is made available for Amtrak ($16 billion, plus $6 billion for the Northeast Corridor), Intercity passenger rail ($36 billion), CRISI safety funds ($5 billion), and a competitive rail crossing elimination program ($3 billion).
Transit spending totaling $39.15 billion reflects an increase of 43% above baseline levels for contract authority, for $69.9 billion over the next five years. When combined with the supplemental appropriations of this section, this package provides an 83% increase for transit funding compared to FAST Act levels. Specific provisions include an $8 billion capital investment grant program and a $5.25 billion for a “Low-No” Program to provide funding for zero and low emission transit vehicles and associated infrastructure.
Ports and inland waterways will see an investment of $17.3 billion for waterway and coastal infrastructure, inland waterway improvements, port infrastructure, and land ports of entry through the Army Corps DOT, Coast Guard, GSA, and DHS. Airports will see $25 billion in formula funds and discretionary grant programs.
Included in the package is the bipartisan Energy Infrastructure Act, which invests heavily in America’s energy, western water, and public lands infrastructure needs. Specifically, the legislation provides funding for grid reliability and resiliency, invests in clean energy technology and critical energy technologies like carbon capture, hydrogen, direct air capture, and energy efficiency, and provides for energy demonstration projects from the bipartisan Energy Act of 2020.
Further, the agreement provides support for programs that Governors have long championed, including the State Energy Program and the Weatherization Assistance program. It also provides for significant investments in electric vehicle infrastructure expansion, and furthers the production and procurement of electric vehicles and low-carbon buses and ferries. Finally, the legislation also delivers assistance to states and tribal entities to continue the cleanup of brownfields and superfund sites.
The agreement also includes $23.4 billion for the bipartisan Drinking Water and Wastewater Infrastructure Act, which would provide new investment in water infrastructure across the country, and provides additional funding to address PFAS and for lead remediation.
The bipartisan infrastructure bill contains approximately $65 billion in investment across four main areas of focus. The largest investment provides $42.45 billion in grants directly to states. This represents the single largest investment in U.S. broadband service ever. The Department of Commerce, under the leadership of former Rhode Island Governor Gina Raimondo, will be charged with distributing funds to enable States and Territories to work with local governments, service providers, and anchor institutions to expand affordable broadband access and close the digital divide.
The bill also includes the Digital Equity Act, which contains $685 million for the State Digital Equity Capacity Grant Program and $625 million for the Digital Equity Competitive Grant Program. Middle mile investments ($1 billion) and affordability provisions are also included, as well as establishes a task force to look at workforce needs in the telecommunications industry.
Resiliency and Cybersecurity
The IIJA contains $50 billion in funding for resiliency and cybersecurity, including $1 billion over four years for a dedicated grant program for improving state, local, tribal and territorial (SLTT) government cybersecurity. NGA had previously worked with other SLTT organizations to advocate for this program and funding, and applauds Congress for recognizing and responding to this critical need. The bill also includes $100 million over five years towards a Cyber Response and Recovery Fund managed by the Cybersecurity and Infrastructure Security Agency to support impacted entities. An amendment was added to the legislation requiring the Department of Homeland Security to have a roll in carrying out cybersecurity efforts outlined in the legislation.
Additionally, an amendment was added to allow National Highway Performance Program funds to be used for resiliency of the National Highway System against wildfire damage. Another adopted amendment specifies that $2.5 billion of the funds allocated to the Army Corps of Engineers in the legislation shall be for construction, replacement, rehabilitation, and expansion of inland waterways projects in the Corps Capital Investment Strategy, and adds a general provision that projects in the Army Corps appropriation should not be limited by cost-benefit analysis when determining benefits to disadvantaged communities.
The legislation contains a number of investments in infrastructure resiliency, including:
- Disaster Relief Fund (DRF) – $1B
- National Flood Insurance Fund (NFIP) – $3.5B
- FEMA Flood Mitigation Assistance Program– $3.5B
This program helps provide financial and technical assistance to states and communities to reduce the risk of flood damage to homes and businesses through buyouts, elevation and other activities. These activities protect lives and property and help reduce future federal disaster expenditures.
- STORM Act – $500M (over 5 years)
STORM was signed into law in January and created a new program at FEMA to help states establish revolving loan funds that could be used by local governments to carry out mitigation projects that reduce natural disaster risk. These low-interest loans would allow local governments to invest in resiliency and mitigation projects that help reduce loss of life and property, the cost of insurance, and disaster recovery payments. These loans would reach communities more quickly than FEMA’s traditional grants and provide local communities with capital necessary to invest in more resilient infrastructure.
- Preventing Outages and Enhancing Resilience of the Electric Grid – $5B: directs the Department of Energy (DOE) to establish a grant program to support activities that reduce the likelihood and consequence of impacts to the electric grid due to extreme weather, wildfire, and natural disaster.
- Enhanced Grid Security – the bill creates a program to develop advanced cybersecurity applications and technologies for the energy sector, a program to enhance and test the emergency response capabilities of DOE, and a program to increase the functional preservation of electric grid operations or natural gas and oil operations in the face of threats and hazards. This section authorizes $250 million for the Cybersecurity for the Energy Sector RD&D program, $50 million for the Energy Sector Operational Support for Cyber Resilience Program, and $50 million for Modeling and Assessing Energy Infrastructure Risk.
Streamline Project Delivery
The legislation lifts the sunset on FAST-41, which has served to improve the federal infrastructure permitting process while leaving important environmental protections in place. The Act created the Federal Permitting Improvement Steering Council, which supports the coordination of federal agencies at the start and throughout the permitting process for major projects.
The IIJA also includes the codification of One Federal Decision, the President Trump-era Executive Order that set a two-year goal for completing the environmental review and permitting process for major projects. Notably, this provision had passed the Senate EPW Committee twice by unanimous vote in the last two years as part of surface transportation reauthorization bills.
The IIJA contains $10.5 billion in new funding for safety measures, including a $1.1 billion grant program to help states improve driver behavior and safety, $467.5 million to support State and local law enforcement efforts to mitigate crashes and hazardous materials incidents involving commercial motor vehicles, and $200 million to support a competitive high priority commercial vehicle safety plan. An amendment was added requiring the Federal Motor Carrier Safety Administration to issue a rule setting new safety standards for limousines within 2 years of enactment of the legislation.
Related to the use of public-private partnerships, the bill requires a value for money analysis for projects with an estimated total cost of more than $750 million. The analysis is required to take place prior to signing any project development agreement, and include an evaluation of the life-cycle costs and project delivery schedule, costs of using private versus public funding and financing, a forecast of user fees and other revenues to be generated by the project, and, along with any other information USDOT determines in evaluating these analyses, any analysis of federal grants, loans, etc., key terms of any proposed P3 and any known rate of return for private entities and major compensation events, a discussion of risk allocation costs and benefits, risk premiums assigned to different development scenarios, and an evaluation of public benefits generated by the project. Further, an amendment was added amending the TIFIA statute to require that TIFIA projects “shall have appropriate payment and performance security.”
An amendment was added to the legislation creating a Minority Business Development Agency within the Department of Commerce, to contain an Office of Business Centers, to engage on a regional basis with the goal of enabling the Federal Government to better serve the needs of minority business enterprises in the region served by the office.
The Path Forward
Once this milestone legislation is signed into law, Governors will begin to deploy the funding and resources in states and territories to ensure that the investments create economic development opportunities, improve our global competitiveness, enhance our quality of life, enact environmental safeguards, and invest in resiliency.