BIPARTISAN INFRASTRUCTURE FRAMEWORK INCLUDES SIGNIFICANT PRIVATE INVESTMENT

On June 24, a group of 21 Republican and Democratic Senators (the “G-21”) came to a bipartisan agreement on a plan that could provide for more than $1 trillion in improvements to the nation’s physical infrastructure.^[1] President Biden and Vice President Harris announced their strong support for the deal the same day.^[2]

This compromise plan, referred to by the Biden administration as the Bipartisan Infrastructure Framework (the “Framework”), omits much of the social and noncore infrastructure aspects of the Biden administration’s $2.3 trillion proposal, the American Jobs Plan (the “AJP”).^[3] However, if implemented, the Framework would result in $579 billion in new infrastructure spending, which combined with baseline spending, would amount to approximately $1.2 trillion in new investment over the next eight years.^[4] The Framework’s plan also is an increase over the initial Republican counteroffer to the AJP, dubbed the “Roadmap,” which was a $568 million proposal that included mostly existing spending.^[5]

Despite the smaller top line amount, the Framework’s proposed investment “uses” are quite broad. The plan includes $312 billion for transportation infrastructure, including funds for transit, roads, bridges, electric vehicle (EV) infrastructure, electric buses, airports, ports and waterways, and another $266 billion for other forms of infrastructure including water, broadband, environmental, power and resilience infrastructure. According to the Biden administration, the Framework would “make the largest investment in infrastructure in history, the biggest investment in rail since the creation of Amtrak, and the largest investment in transit ever.”^[6]

Certain of the Framework’s funding “sources” are particularly notable for private infrastructure investors. More than $100 billion of the cost is expected to be funded through public-private partnerships (“P3s”), private activity bonds (and other municipal bonds) and “asset recycling” (which involves the monetization of existing assets through private investment).^[7] In addition, the Framework proposes the creation and capitalization (in the amount of $20 billion) of a new Infrastructure Financing Authority (the “IFA”) to leverage private investment.^[8] While specific details are yet to be provided, it appears the IFA would supplement existing federal programs such as the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Water Infrastructure Finance and Innovation Act (WIFIA) programs to provide public financing to projects across sectors (thereby creating incentives for private investment in such projects by creating value in the capital structure). Together, these proposals reflect the Biden administration’s and the G-21’s recognition of the need for private investment to achieve the necessary improvements and upgrades to public infrastructure in the United States.

Our infrastructure and energy teams will continue to closely follow the development of these initiatives and other Biden administration proposals in draft legislation, together with the infrastructure bill, drawing on our extensive experience with P3s and private infrastructure investment, including longstanding advice to TIFIA, WIFIA and other federal financing authorities and programs.

Although the Framework reflects an agreement on physical infrastructure, significant hurdles remain in Congress before the plan could become law, in particular because the Biden administration views the infrastructure compromise as one part of a larger legislative package. President Biden has linked the infrastructure bill to a bill that includes initiatives from his American Families Plan (the “AFP”), which includes “human infrastructure” spending such as for childcare, elder care and education^[9], and other clean energy priorities of the administration. While President Biden initially suggested he would not sign an infrastructure bill without a companion bill including the AFP and such other priorities^[10] he subsequently clarified that his intention was not to issue a “veto threat” on the infrastructure bill.^[11] Congressional leaders expect to proceed with the preparation of both bills over the summer with the goal of both reaching Biden’s desk by September 30.^[12] Because a bipartisan agreement on the AFP package is unlikely, the Biden administration has indicated that those items will be voted on by the Senate through the budget reconciliation process, thus avoiding the need for 60 votes in that chamber. House Speaker Nancy Pelosi has also stated that a House vote on an infrastructure bill would not occur until there is a vote on the reconciliation bill.

In the table below, we provide a comparison between the Framework, the AJP and the Republican counterproposal.

 
Special thanks to summer associate Daniel Ishak who contributed to this publication.