On Nov. 15, 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act (IIJA), a $1.2 trillion infrastructure bill, into law. It puts $550 billion of new federal investments in America’s infrastructure over five years, touching everything from bridges and roads to broadband, water and energy systems.
Not only is the bill enormous, but its breadth also is considerable, containing policy reforms and funding for hundreds of programs. Many have been around for years, like the Clean Water and Drinking Water State Revolving Fund, which addresses lead-pipe remediation, but are now funded at higher levels.
However, many brand-new programs also have been authorized to address gaps in infrastructure funding, like resiliency needed in power and water systems brought about by storms, drought and cybersecurity concerns.
The pace at which federal funds will reach different places nationally depends on the types of projects planned and the types of programs channeling resources to these projects. This creates demand for new workers and greater demand for input materials.
The bill calls for investing $110 billion for roads, bridges and other major infrastructure projects. This includes $40 billion for bridge repair, replacement and rehabilitation. It also contains $16 billion for major projects that are too large or complex for traditional funding programs. According to the White House, 20 percent or 173,000 miles of our nation’s highways and major roads are in poor condition, as are 45,000 bridges.
The following areas have been designated for funding:
- $11 billion for transportation safety, including a program to help state and local governments reduce crashes and fatalities.
- $1 billion to reconnect communities divided by highways and other infrastructure.
- $66 billion in passenger and freight rail, including eliminating Amtrak’s maintenance backlogs, and modernizing the Northeast corridor to bring rail service to areas outside the northeast and mid-Atlantic areas. Included in this is $12 billion for partnership grants for intercity rail service, including high-speed rail service.
- $65 billion will be invested in improving the nation’s broadband infrastructure.
- $17 billion will be spent on port infrastructure and $25 billion in airports to address repair and maintenance issues, and reduce congestion and emissions near ports and airports.
- $7.5 billion will be provided for zero- and low-emission businesses and ferries. Another $7.5 billion will go to building a nationwide network of plug-in electric vehicle chargers.
- $65 billion will be used to rebuild the electric grid, adding thousands of miles of new power lines and expanding renewable energy.
- $55 billion will be used to upgrade water infrastructure, replacing lead services lines and pipes.
- $50 billion will be used to make the power and water systems more resilient, which would protect them from drought, floods and cyberattacks.
- $21 billion will be used to clean up Superfund and brownfield sites.
IIJA is expected to be funded by:
- Repurposing unspent COVID-19 funding.
- Reducing unemployment fraud.
- Federal Trade Commission auction of additional spectrum through 2028.
- Requiring cryptocurrency transactions be reported to regulatory agencies.
- Extending fees on government sponsored enterprises.
- Reinstating Superfund fees.
- Extending customer use fees.
These funds are not designed as a short-term economic stimulus, but as investments over a number of years. Most of the funding is dedicated to reauthorizing existing programs or providing funding for new programs over the next five years with estimates that $973 billion of the funding will be spent between Oct. 1, 2022, and Sept. 30, 2026. Some programs have been authorized to receive funding through 2036.
Federal agencies are at the center of distributing funding contained in the IIJA, primarily to state and local governments. They have the huge task of implementing the law, starting up new programs and finding ways to quickly get money out the door.
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. Funds will be allocated through dozens of competitive grant programs, in which these government agencies will pick recipients from applications by state and local governments.
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. In addition, they will need to make sure 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.
State transportation agencies saw the first of the highway funds at the beginning of December. The money will come through the regular funding formulas the Department of Transportation (DOT) uses to allocate money to states. The new legislation includes a roughly 30 percent increase in highway formula funding. The remaining money will be allocated for items such as bridge replacement or new rail lines through competitive grants. Setting those grant programs up will take several months, which means funding won’t be known until next summer or fall.
It will probably take at least a year for DOT to write the rules around the new grant programs, solicit and evaluate applications and send money to the grant recipients.
The money likely will go to the most populous states. California, Texas and New York most likely will benefit to the greatest extent from the bill, with California receiving $44.56 billion in funds, the largest for any state. Texas is second with an estimated allocation of $35.44 billion and New York with $26.92 billion.
However, according to CNBC, many other less populated states will see an increase in per resident expenditures.
What this means for the equipment rental industry. Undoubtedly, every equipment rental member will have an opportunity to benefit from this new law. As more information becomes available on projects and how to participate in them, the American Rental Association (ARA) will bring that news to members.
Alysia Ryan, J.D., is the American Rental Association’s (ARA) director of state government affairs. To learn more about ARA’s government affairs efforts, visit ARArental.org/government-affairs.