Update on Infrastructure Package

The White House and bipartisan Senate infrastructure negotiators on July 28 broke a nearly month-long logjam announcing an infrastructure agreement and successfully passing a Senate procedural “test” vote advancing the $1 trillion package to the Senate floor for debate. By Aug. 1, negotiators unveiled the 2,702-page bill, and on Aug. 2, the Senate began to slowly start to work through a string of amendments to the package. The bill’s vehicle is the House-passed surface transportation bill, the Investing in a New Vision for the Environment and Surface Transportation (INVEST) in America Act (H.R. 3684), with a substitute amendment by lead negotiators Ron Portman (R-OH) and Kyrsten Sinema (D-AZ).

The Senate has been maneuvering all week as timing and passage of the bill remains in the air. Senate Majority Leader Chuck Schumer (D-NY) is balancing Republicans concerns about rushing the amendment process ahead of the August recess. Another factor impacting the schedule is the upcoming Friday funeral for former Wyoming Senator Mike Enzi. At this time, up to 17 GOP lawmakers have signaled tentative support for the infrastructure bill, while several have criticized the bill’s price tag, pay-fors, and concerns that the legislation will hasten inflation. Even if the Senate files for cloture Thursday, senators would have to return next week as Schumer vows the Senate won’t leave for recess until they are done with a vote-arama on the pending $3.5 trillion budget resolution to trigger the reconciliation process.

Meanwhile, the timing and passage of legislation also face another uncertainty as Sen. Lindsey Graham (R-SC), the ranking Republican on the Senate Budget Committee, has tested positive for COVID after a social gathering with a group of bipartisan senators. Senate leaders will have to find a replacement to manage the resolution for their party, but concerns that other Senators attending the social event may also test positive in the coming days. With a 50-50 split and the need for at least 10 Republican senators needed to pass the bill, this could throw a possible wrench into the timeline.

What’s included in the bill?

The 2,702-page legislation package includes several titles that have already advanced through the Senate with bipartisan support. The agreement consists of the Energy and Natural Resources Committee’s energy package, the “Energy Infrastructure Act” (S. 2377), the Environment and Public Works transit bill (S. 1953), the Commerce, Science, and Transportation Committee’s rail and safety bill (S. 2016), and the Senate-passed water infrastructure bill (S. 914).

The legislation invests $55 billion in water infrastructure with a particular emphasis on the infrastructure needs in underserved communities and also invests in resilience and western water infrastructure needs due to climate change effects. $48.4 billion is designated for drinking water and wastewater infrastructure, including $43.4 billion of that evenly distributed through the U.S. Environmental Protection Agency’s (EPA) drinking water and clean water state revolving funds (SRFs).

The bill also provides $15 billion to remove lead pipes throughout the U.S.’s drinking water system, especially in low-income areas and communities of color that are exposed to more lead pipes. This amount falls far short of President Biden’s recommended $45 billion and his vow to eliminate all the lead service lines across the country. Furthermore, half of the funding would take the form of low-interest loans that communities must repay. The other half would come in the form of forgivable loans, which are typically reserved for disadvantaged communities. However, it is unclear in the text whether more affluent communities could compete for that share of the funding.

The White House said that there is another $11 billion in the legislation that can be allocated to the goal and promises that the unprecedented funding in the bill will replace all lead drinking water pipes and service lines in the U.S. “full stop.”  The White House is most likely referring to the $11.7 billion in funding that is designated to the Drinking Water State Revolving Fund (DWSRF) that communities can use to remove the pipes. This, of course, would lead to competition from the many other water infrastructure projects states pay through this fund.

House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR), who ushered the major transportation and water infrastructure bill (H.R. 3684) through committee with a $45 billion request for lead pipe removal, bashed the White House for continuing to spin that the $15 billion would be sufficient for the task.

Industry advocates noted that the funding was a significant step forward, but most criticized the funding levels saying it doesn’t go far enough to address the lead crisis with the true costs to remove all lead pipes in the U.S. being closer to $60 billion. They hope that it would serve as a “down payment” for additional funding that could come from the reconciliation bill.

Recycling additions to the bill

Also added was the full text of the bipartisan, bicameral RECYCLE Act first introduced by Sens. Rob Portman (R-OH) and Debbie Stabenow (D-MI) to improve U.S. recycling programs. The bill—which is widely supported by the paper and plastics industries, would authorize a new $15 million/year for five-year federal grant program through the EPA to help educate households and consumers about their residential and community recycling programs. It directs EPA to develop a toolkit to boost recycling participation and reduce contamination in cycling streams. It would also require the EPA to review and revise its Comprehensive Procurement Guidelines.

The bill provides more than $17 billion in essential funding to the Army Corps of Engineers to be used to address critical projects to protect homes from flooding, restore shorelines, and fight the impacts of climate change.

There is skepticism among many Republicans that the piecemealed revenue streams to pay for the $500 billion in new spending will not produce all the funding needed. Nearly half of the offsets come from repurposing COVID-19 relief funds, and some returned funding from federal unemployment benefits passed during the pandemic. Other sources include money from the sale of future spectrum auctions, strengthening tax enforcement regarding cryptocurrencies, delaying the Medicare Part D rebate rule, and sales from the Strategic Petroleum Reserve. The bill also reinstates and doubles the superfund taxes that expired in 1995.

House Speaker Nancy Pelosi (D-CA) has not ruled out amending the bill if it came over the House, but given the White House’s objections to reopening the negotiations and being a top Biden priority, it is unlikely the House will change what the Senate manages to pass. The Speaker vowed she would not take up the infrastructure or budget reconciliation bills until the Senate passes both of them. Pelosi and other top House Democrats are under significant pressure from some within their caucus to ensure the Senate deal isn’t completely void of House priorities. House Transportation and Infrastructure Chair Peter DeFazio (D-OR) has been highly critical of the surface transportation and water infrastructure provisions. Meanwhile, the Congressional Progressive Caucus insists that the reconciliation package, which will include many of their priorities on climate change, is passed simultaneously.