Opportunities Abound After House Passes $ 1.2 Trillion Infrastructure Jobs and Investment Law | Pillsbury Winthrop Shaw Pittman LLP
The House also passed a key procedural step that will allow the House to eventually vote on the Build Back Better Act, a second spending bill that provides $ 1.75 trillion for national social policy initiatives. Together, the infrastructure package and the Build Back Better Act represent an important part of the social and economic agenda of the Biden-Harris administration.
The Law on Investment in Infrastructure and Employment
The infrastructure package provides $ 1.2 trillion, including $ 550 billion in entirely new federal spending, for so-called “hard infrastructure” investments, creating funding opportunities across a wide range of sectors and industries. US infrastructure, including energy, broadband, water, transportation, electricity, vehicles, and cybersecurity.
Funding will be provided through grants, pilot projects, R&D programs, tax exemptions, loan and loan guarantee programs, and other funding and incentive mechanisms. Federal agencies responsible for administering the spending and incentive programs will begin issuing instructions and details in the weeks and months to come. Now is the time for private sector interests to engage with U.S. policymakers on recommendations to federal agencies on priority projects that align with the new infrastructure bill. An overview of the main funding possibilities follows.
- Energy: The bill provides approximately $ 65 billion for grants, pilot programs, tax exemptions and other incentives to support clean energy and grid resilience, including in approximate numbers:
– $ 18 billion for renewable energy demonstration projects; R&D programs on clean hydrogen, nuclear, solar, wind and geothermal energy; and hydroelectricity and marine energy programs
– $ 8 billion for carbon capture and reduction programs, including carbon capture and removal R&D programs, demonstration projects, grants and prize competitions
– $ 8 billion to improve the resilience of the network, in particular through loan facilities and subsidies for the construction of facilities and transmission lines
– $ 4 billion to promote energy storage and recycling, including through energy storage R&D demonstration projects, battery manufacturing and recycling programs, and other recycling projects of energy.
- Broadband: The bill provides about $ 65 billion to expand broadband Internet access, including through subsidies, tax incentives and technical assistance programs. In particular, the bill allocates more than $ 40 billion to states to build and expand broadband infrastructure.
- Transport: The bill provides approximately $ 110 billion to fund new programs and continue existing programs for roads, bridges, railways, transit, airports and other transportation-related programs.
- The water: The bill provides about $ 55 billion to modernize water infrastructure, including the replacement of lead pipelines, by creating grants to develop small water, groundwater and aquifer storage projects; large-scale water recycling and reuse programs in some states; and promote resilience and cybersecurity of water supply systems, among other projects.
- Electric vehicles: The bill provides about $ 7.5 billion to promote electric vehicles and electric vehicle infrastructure, including through subsidies for the construction of charging stations and funding for demonstration and R&D projects.
- Cyber ââsecurity: The bill would provide direct funding, grants, incentives and technical assistance to promote cyber resilience within various critical infrastructure industries.
In addition to funding opportunities, the infrastructure bill will impact affected industries in the following ways:
- Changes in regulatory processes. For example, the bill seeks to streamline construction and development processes by requiring federal agencies to coordinate reviews and licensing decisions for large infrastructure projects and set a target for completing environmental reviews. within two years.
- Bonds made in America. Infrastructure funding can trigger Made in America obligations, including new domestic content and iron and steel requirements “from smelting to coating.” As such, potential suppliers would do well to analyze their sourcing related to these areas.
- Definition of “clean hydrogen”. For the first time, US law will define âclean hydrogenâ – the current definition explicitly includes hydrogen produced from renewable energies, fossil fuels with carbon capture, use and sequestration technologies, nuclear and other eligible sources.
Status of the law “Build back better”
After the passage of the infrastructure bill, the House voted for the âruleâ Build Back Better Act, which will govern the terms of the final House vote on the bill. The vote on the rule represents a compromise between the Progressive Democrats in the House, who wanted to pass the infrastructure package and National Social Spending Bill in Tandem, and the Moderate Democrats who have sought to delay votes on the Social Spending Bill pending further economic analysis by the Congressional Budget Office. The rule was passed in a party line vote, with all Democrats voting in favor. Moderate Democrats have publicly agreed to vote for the bill if the Congressional Budget Office confirms it will not increase the federal budget deficit.
The House-drafted Build Back Better Act includes a massive infusion of funds for climate programs and programs for children and families, and health programs that will be offset by tax increases on businesses and high income people. Key provisions include:
- Green energy: The legislation would encourage investment in green energy by extending the production tax credit and the investment tax credit for the cost of properties producing solar and geothermal energy until 2026. The legislation also provides tax credits for zero emission nuclear power plants and clean hydrogen hubs.
- Electric vehicles: The legislation would invest $ 1 billion in zero-emission vehicle infrastructure grants for states. It would also deploy $ 950 million in incentive grants to states that significantly reduce their emissions or adopt strategies to achieve net zero emissions in surface transportation.
- Paid vacation: The law would allocate $ 1.5 billion in spending to provide four weeks of paid family leave.
- Education and childcare: The law would provide $ 18 billion in funding for universal preschool education. It would also provide $ 100 billion in child care subsidies to families earning less than 250% of their state’s average income.
- Lodging: The legislation would allocate $ 3 billion to the Community Development Block Grants Program (CDBG) to support community housing programs. The law would also provide $ 10 billion for affordable housing in communities with persistent poverty and $ 24 billion to support the Housing Choice Voucher program.
- Health benefits, drug prices, tax credits: The legislation would close the “Medicaid gap” by offering people with incomes below the poverty line but who are not Medicaid eligible in their state a tax credit on the premiums for enrolling in a health care plan. health in the market. It would also reduce prescription drug prices for Medicare beneficiaries by capping personal expenses at $ 2,000 per year for Medicare beneficiaries.
- SEL cap: Legislation would increase the $ 10,000 cap on state and local tax deduction to $ 80,000 through 2030, changing the existing cap on the amount of individual property and income or sales tax that individuals can deduct from their federal taxes.
- Tax increases: The legislation would impose a minimum tax rate of 15% on corporations that report income in excess of $ 1 billion in their adjusted financial statements. It would also impose an overall minimum tax of 15% on profits made outside the United States.
The House is expected to pass the Build Back Better Act the week of November 15. However, if the House ultimately passes its version of the Build Back Better Act, the legislation will likely be scrutinized and ultimately amended by the Senate. The bill will be considered by the Senate using that chamber’s budget reconciliation process, which requires a simple majority to pass and prevents the use of filibuster. Considering the very slim majority of Democrats in the Senate and assuming no Republican will vote for the bill, the passage depends on the vote of the 50 Democratic Senators and the tie-breaking Vice President Harris. Since several senators have already announced their public opposition to the provisions of the House bill, the legislation will most likely be significantly changed when it is considered by the Senate, creating opportunities for businesses, industries and other stakeholders. to weigh and shape any eventual social spending program.