As companies are planning for 2022, the Infrastructure Investment and Jobs Act, which is also known as BIF or Bipartisan Infrastructure Framework or the Bipartisan Infrastructure Bill (the “Bill”), has been referenced as a source of additional revenue and potential liquidity by a variety of industries and businesses. It is important to develop an understanding of what is in BIF and evaluate the timing of impacts on different businesses. While the PPP loans and the ERC program provided immediate liquidity for businesses that qualified, the Infrastructure Investment and Jobs Act impacts may be less immediate, but longer term for companies that are able to take advantage of the way the new dollars will be spent.
This article should assist in developing an understanding of the types of businesses that may be positively and negatively impacted by the Bipartisan Infrastructure Bill.
The Bill was summarized by Forbes Advisor on November 15, 2021 into these categories:
$110 billion for building and repairing bridges and roads.
$39 billion to modernize and improve access to public transit, including replacing buses with zero-emission models.
$66 billion to revitalize passenger and freight rail, including updates to the Northeast Corridor.
$25 billion to improve airport runways, gates, and terminals along with air traffic controls towers.
$7.5 billion to build a national network of charging stations for electric vehicles.
$5 billion to replace school buses with low- or no-emission options.
$1 billion for planning street grids, parks, or other infrastructure to connect communities divided by highway systems.
$42 billion to modernize ports and airports.
$50 billion for weatherization, drought protection and other climate resiliency efforts.
$55 billion to replace lead service lines and provide clean drinking water.
$65 billion to increase access to reliable high-speed internet service.
$21 billion to clean up industrial waste sites.
$65 billion to update power grids.
Looking further into these categories provides insight into the companies that may be impacted by the passing of this $1 trillion spending bill.
Roads, Bridges, Transit and Water
The first three items in the list total $215 billion and are targeted toward the funding of new or replacement roads, bridges and major projects, the modernization and improved accessibility to public transit for the disabled and elderly population, and investment in rail maintenance, modernization, and expansion. Large portions of the public transit money will go to major cities such as New York City, based on federal funding formulas. The majority of the rail funds will go to Amtrak, whose mission will become focused on “the intercity passenger rail needs of the United States” rather than focusing on profitability or breakeven performance.
The Biden Administration announcement on November 19, 2021 related to the grant programs under the Infrastructure Bill provides insight into spending priorities. The grants will be known as Rebuilding American Infrastructure with Sustainability and Equity (“RAISE”) and will focus on bicycle and pedestrian safety, which received 18% of the $1 billion in grants, road projects (50%), transit (17.6%) and maritime projects (7.7%). The grants are expected to focus on safety, reduced emissions, and reconnecting neighborhoods split by past highway construction projects. Examples of grant awards include $18.2 million for new crosswalks, bus stops, traffic medians, landscaping, and sidewalks on West Florissant Ave in St Louis County, $15 million for a new transit center in Charlotte, NC and $900,000 to study covering a major Atlanta interstate to reconnect city neighborhoods. Other projects include $25 million to rebuild and modernize 21 miles of highway in New Mexico and $25 million for streets, sidewalks, and bicycle paths in South Millyard, Manchester, NH.
Other targeted projects will be light rail extension, redesigned intersections, and bike lanes. New buses will be funded to improve comfort, accessibility, and reliability.
Assume road projects will first need to work through the lead time for planning and design and will probably not begin for a year or more.
Rail projects will focus on repairing and upgrading aging track, tunnels, and railcars, with $30 billion earmarked for the Northeast Corridor. Amtrak is planning to overhaul its rolling stock and update facilities with new upholstery, carpets, and bathrooms. Amtrak is also planning to add new service in Southern and Western states. And, eventually Amtrak hopes to develop high speed rail routes with trains moving passengers at 180 miles per hour or faster in some areas.
Rail projects will also be targeted to freight lines with a focus on supply chain and delivery bottlenecks. There will be $100 billion in competitive grant money that will change grant funding formulas to give larger ambitious freight projects better access to grant funds. These formulas historically favored smaller, faster to complete road and bridge projects. Geographic regions expected to benefit from this approach will be in the Southern California Multimodal Freight Network Project and the Chicago Region Environmental and Transportation Efficiency Program.
Airports are to receive $25 billion to fund renovations. This includes $15 billion for airport infrastructure grants, $5 billion for airport terminal projects, and $5 billion to upgrade air traffic control towers and related facilities. This funding may be especially helpful to smaller airports with less access to capital markets.
The Infrastructure Bill will address access to fast charging of electric vehicles, with $7.5 billion targeted for a nationwide charging infrastructure focusing on filling gaps in the current charging infrastructure. Zero emission vehicles, including electric school buses, will have $5 billion dedicated for their acquisition.
The Infrastructure bill identifies a desire to close the “digital divide” between Americans who have access to high-speed internet and those that do not. This portion of the Bill addresses access and affordability. The Bill creates a permanent low-income household subsidy of $30 per month, which will benefit individual households and the companies that provide internet services. A $42.5 billion program is set to expand access to high-speed networks and will allow state officials to take the lead in determining how funds are spent rather than previous programs that were typically run at the federal level. States will be able to make grants to nonprofits, cooperatives, and municipalities in addition to the more traditional cable and phone companies. These funds will be delayed until the Federal Communications Commission prepares a map to identify where service is and is not available. Knowledgeable parties expect funds to begin flowing in late 2023.
The Bill provides billions to states to reduce lead in drinking water by eliminating lead pipes which often connect public water mains to private homes.
Storm and disaster preparation projects will receive billions in funding. This funding includes $8 billion for wildfire management, $6 billion for drought management, $8.3 billion for water storage, desalination, and recycling, and $12.5 billion for flood mitigation. Projects could include bayou improvements, mangrove forest support, and rain gardens in urban areas. Other uses could be strengthening flood walls and buying out and relocating homeowners in frequently flooded areas. Communities with more stringent building standards may have priority which could encourage communities to increase building code requirements and increase demand for the materials required for these more stringent standards. Funds will be approved through the Environmental Protection Agency, the Federal Emergency Management Agency, the Department of the Interior, and the Army Corps of Engineers.
Billions will be available to strengthen power lines to better survive fires, heat waves, hurricanes, and record cold. Grant programs will focus on ways to avoid blackouts, strengthening lines, and prevent lines from starting fires.
There will be $36 billion to develop technology for cleaner energy, such as ways to capture carbon dioxide emissions and fund development of hydrogen fuel.
The Energy Department will have $25 billion for demonstration programs with public private partnerships.
There is a lot to digest
This Infrastructure Bill contains significant dollars that will impact a variety of industries and businesses. A key take away to consider in this review is timing. Unlike the Covid stimulus programs, there will be a delay between passage of the Bill and the impact on businesses and industries. When evaluating the impact of the Infrastructure Bill on a specific business, the timeline to consider needs to be extended beyond the Covid program impacts. Also, the changes may be more gradual for the overall economy. For example, the rail impacts or electric vehicle programs may take years to reach businesses with increased orders and revenues.
Companies and lenders will need to be focused on the specific programs identified, whether a grant will need to be approved, timing for approval of funding, and timing for impact on financial performance of the company.