Your guide to the American Infrastructure Plan

The American Jobs plan released on March 31 details the Administration’s transportation infrastructure assets and priorities, including spending on a wide range of assets and incentives that will greatly impact construction and engineering operations across industries. From modernizing roads and bridges to improving waterways and ports, the American Jobs Plan (AJP) is just the beginning of the legislative process to implement infrastructure provisions that would provide investment and funding for critical infrastructure programs.

On March 31, the Administration released its much-anticipated American Jobs Plan, which outlines $2.3 trillion of proposed spending on not only traditional infrastructure programs, but also climate change, housing, drinking water, workforce development, manufacturing, telecommunications and elderly care measures. It also includes a substantial increase in corporate taxes to pay for the proposal.

AJP sets the stage for what is expected to be a robust debate between the Administration and Congress, and within Congress on the details of the legislation to implement the AJP.

It is important to understand what the AJP is and is not. First, AJP is a policy proposal that sets forth the Administration’s policy and spending priorities. It is not, however, a legislative proposal (in other words, there is no proposed legislative language) and does not lay out specific policy details. The details will be contained in the legislative text once it is released.

Second, it is important to understand that the $2.3 trillion proposed in the AJP is to be phased in over the course of eight years and is spread across both traditional transportation infrastructure (roads, bridges, mass transit, airports, waterways and railroads) and many other areas of infrastructure (including housing, broadband, drinking water and energy).

Therefore, while the proposed level of infrastructure spending is significant, the time horizon and the spending across what is a very broadly defined scope of infrastructure should be kept in perspective.

Transportation Infrastructure Assets & Priorities: The spending highlights?
AJP’s infrastructure proposals include spending of approximately $621 billion over the next decade on a wide range of physical assets and transportation-related incentives, with a focus on safety, reliability and resiliency, including the following:

Asset type proposed spending under the AJP
Road and Bridge Modernization — Repairing and modernizing 20,000 miles of highways and roads; fixing the 10 most “economically significant” large bridges as well as repairing 10,000 smaller bridges ($115 billion)

  • Road Safety — Increasing funding to local “vision zero” plans and safety improvements to reduce accidents ($20 billion)
  • Public Transit — Modernizing and expanding public transit systems to meet use demands, including addressing significant transit repair backlogs ($85 billion)
  • Passenger and Freight Rail — Repairing Amtrak; investing in the Northeast Corridor; improving existing corridors and connecting new city pairs; supporting grants related to rail safety and efficiency ($80 billion)
  • Airports — Funding the Airport Improvement Program; spending on FAA asset upgrades and programs supporting terminal renovation and multimodal connections to airports ($25 billion)
  • Ports & Waterways — Improving inland waterways, coastal ports, land ports of entry, and ferries; mitigating impacts of pollution on communities near ports ($17 billion)
  • Large Projects With Regional and National Economic Benefits — Accelerating “transformative investments” and dedicating funds to “ambitious projects” that may be too complex for existing funding programs (25 billion)
  • Addressing Historic Investment Inequities — Reconnecting neighborhoods cut off or divided by prior infrastructure investments; increasing focus on equity in future project development ($20 billion)
  • Electric Vehicles — Supporting grant and incentive programs for producing 500,000 electric vehicle chargers by 2030; creating rebates and incentives for purchasers; replacing diesel transit vehicles and school buses ($174 billion)

What other policy proposals and investments are included?
The AJP also includes nearly $1.4 trillion in spending for clean water infrastructure, digital and broadband infrastructure, power infrastructure, modernization of schools and early learning facilities, affordable housing resources and veterans hospitals.

Additionally, AJP calls for funding increases in research and development infrastructure, climate research initiatives, improvements to American industrial capacity for critical goods, innovation hubs and community revitalization, and worker training programs and for increased access to capital for domestic manufacturers. It also includes $400 billion, 20% of the total, to support increased availability of home care for elderly and disabled people.

How is AJP Paid for?
AJP includes a variety of corporate tax changes that would raise over $15 trillion over 15 years and that the Administration asserts would more than pay for the spending included in the AJP. These are to:

  • Increase the corporate tax from 21% to 28%
  • Increase the tax on foreign sourced income to 21%, calculate tax based on a country-by-country basis and eliminate allowance for foreign assets
  • Impose a 15% minimum tax on large corporations’ book income
  • Eliminate tax incentives for foreign-derived intangible income (FDII)
  • Create new regulations to prevent corporate inversions
  • Eliminate tax preferences for fossil fuels
  • Increase funding for the Internal Revenue Service (IRS) to increase tax audits of corporations and otherwise prevent corporate tax evasion

What opportunities will there be for private investment in infrastructure?
AJP includes few details about policies related to infrastructure investment, including with respect to private investment. Legislation implementing components of AJP could include language that could help facilitate increased private investment in infrastructure, which would increase the overall amount of infrastructure investment through the AJP. These proposals include:

  • Infrastructure investment incentive grants providing federal grants in connection with infrastructure concessions implemented by state and local governments where proceeds of those concessions are reinvested in infrastructure
  • Increasing or eliminating the current $15 billion cap on surface transportation private activity bonds (which is planned to be included)
  • Implementing private activity bond authority for social infrastructure projects
  • Expanding the federal TIFIA and RRIF financing programs and implementing similar low-interest financing programs in other areas of infrastructure (for example, related to resilience, infrastructure equity, airport infrastructure, social infrastructure and broadband development)
  • Making changes to facilitate the use of private activity bonds and TIFIA financing and the maintenance of tax-exempt debt related to existing infrastructure assets concessions where proceeds are reinvested in infrastructure

Where do we go from here?
The release of the AJP is just the beginning of the legislative process to pass one or more bills in Congress to implement the plan. While the AJP was presented as a single plan, its enactment into law will likely occur in pieces. Many of the spending provisions will be collected into a single bill that will be passed using reconciliation procedures, which permit certain spending and taxing legislation to be passed without being subject to the Senate’s filibuster.

However, a separate bill still will likely be needed to reauthorize surface transportation programs, which expire on Sept. 30, and other programmatic reforms, which are not eligible for inclusion in reconciliation legislation. The Senate Parliamentarian decides which provisions can be included in reconciliation.

The Senate Parliamentarian recently ruled that Senate Democrats could use the budget reconciliation process for a second time to move the infrastructure plan forward as they did with the COVID-19 relief package earlier this year. Under budget reconciliation procedures, Senate Democrats could advance infrastructure legislation with only 50 votes, as opposed to 60 votes, which is the threshold for passage for most bills in the Senate.

To pass the infrastructure bill using budget reconciliation, all 50 Senate Democrats will need to be in complete agreement on any legislative text.

What is the time frame?
The plan would be to pass the infrastructure legislature by July 4, but the enactment of AJP unlikely is to occur before Congress’s August recess and more likely to happen in the fall.

Source
The Administration has indicated that the $115 billion in the AJP for roads, bridges and transit is in addition to the expected renewal of the existing surface transportation program funded by the federal gas tax; the last such renewal, in 2015, provided $305 billion in federal funding over the following five years.

AUTHORS
Joseph Seliga is co-lead of Mayer Brown’s Government Transactions and Projects & Infrastructure practices (Chicago); David Narefsky is a partner in Mayer Brown’s Government Transactions and Projects & Infrastructure practices (Chicago); Stephanie D. Wagner is a partner in Mayer Brown’s Government Transactions and Projects & Infrastructure practices (Chicago); Mitchell D. Holzrichter is a partner in Mayer Brown’s Government Transactions and Projects & Infrastructure practices (Chicago); Philip R. Recht is the Managing Partner of Mayer Brown’s LA office and co-leader of the firm’s Public Policy, Regulatory & Political Law practice; Andrew Olmem is a partner in Mayer Brown’s DC office and a member of the Public Policy, Regulatory & Political Law practice; Jonathan H. Becker is a partner in Mayer Brown’s DC office and a member of the Public Policy, Regulatory & Political Law practice’; and Warren S. Payne is a senior advisor in Mayer Brown’s DC office and a member of the Tax, Public Policy, Regulatory & Political Law and International Trade practices.

 

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