Infrastructure Update: White House Continues to Urge Congress to Pass BIF

Despite a personal plea from President Biden to pass the Infrastructure Investment and Jobs Act (IIJA) (aka the BIF) this week and reach an agreement on a framework for reconciliation, Democrats remain deadlocked with progressives refusing to yield to pressure from House leadership insistence they need to vote on the bill today (Thursday). Speaker Pelosi (D-CA) and her deputies had hoped to have an agreement in place before President Joe Biden heads to the U.N. climate negotiations conference (COPS 26) in Glasgow, Scotland. Speaker Pelosi said at the beginning of the week that that “they have 90 percent of the bill agreed to and written,” but that hasn’t been enough to get all the Democratic hold-outs in their caucus to agree on the last 10 percent. During a meeting with Democrats right before he left Rome for the G-20, President Biden said, “I don’t think it’s hyperbole to say that the House and Senate majorities and my presidency will be determined by what happens in the next week.”

As of Thursday afternoon, the White House is continuing last-minute attempts to change the course of the negotiations including announcing details of a revised $1.75 trillion framework for Biden’s Build Back Better Plan that he hopes will gain the support of all Democrats The biggest piece would be $555 billion for clean energy and climate investments but not the Clean Electricity Performance Program (CEPP), which Sen. Manchin opposed.

The new Build Back Better Framework also strips away many of the House progressives’ key demands. Progressives have yielded on many of their more ambitious goals but so far have refused to budge on their demands that the infrastructure bill and reconciliation be passed together – which is exactly what they did in August after Speaker Pelosi promised the moderates a vote on the BIF. Given the intransigence of the progressives and the lack of legislative text, it is questionable if Biden can get them to agree to vote on the BIF because they see it as the only leverage point, they have over moderates Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) who want a smaller package. President Biden has spent the past week negotiating with Manchin and Sinema as they trimmed down the Build Back Better bill. Manchin has held out for a $1.5 trillion topline on the reconciliation bill but has shown some possible flexibility to go as high as $1.75 trillion in additional spending.

Meanwhile, Democrats continue to grapple with how to pay for the package. Several ideas and plans have been floated around, but it appears some of the funding will be in savings expected from economic growth. At one point, a 20-cent-per-pound virgin resin tax was among the proposals being tossed around, but wide support for the tax never materialized, and we have not seen the plan surface in the new framework or recent recommendations being discussed. Plans to raise the corporate tax rate have been jettisoned thanks to Sen. Sinema’s objections. A new tax on billionaires, introduced by Senate Finance Chairman Ron Wyden to impose a new levy on the unrealized gains of assets of about 700 billionaires appears to be dead. The new framework proposes a tax on millionaires through a 5 percent charge on incomes over $10 million and another 3 percent surcharge on those making more than $25 million. It also proposes a 1 percent tax on stock buybacks and a 15 percent “book income” minimum tax on corporations reporting more than $1 billion in profits to shareholders.

If the President and Democrats fail to get the broader infrastructure portion passed by Oct. 31, they will have to avoid a lapse in highway and transit programs. Lawmakers have begun preparing another short-term extension as a fallback option that will likely extend the funding until Dec. 3. Stop-gap funding for government agency funding is scheduled to end that same day.

WOTUS
On Oct. 12, the Environmental Protection Agency (EPA) and Army Corps of Engineers sent a draft proposal for a new definition of “waters of the United States” (WOTUS) to the White House Office of Management and Budget (OMB) for review. The rule, which is expected to be proposed by Nov. 30, will be the first step in determining which water bodies and wetlands are subject to Clean Water Act (CWA) jurisdiction.

The EPA and Army announced that they would be holding a series of roundtables in the next couple of months to provide stakeholder input on the new rule and changes to WOTUS jurisdiction. This week, House Transportation and Infrastructure Committee Ranking Member Sam Graves (R-MO) and Water Resources and Environment Subcommittee Ranking Member David Rouzer (R-NC) criticized the Biden administration for limiting input on planned water regulatory actions. The “untested” new selection process requires those who wish to comment on their respective regional roundtable to assemble a slate of no more than 15 diverse stakeholders. Then the agencies will choose which slates are permitted to present. Graves and Rouzer criticized the administration, saying it had assured a full and transparent input process, calling the roundtable’s pre-selected participant approach for input “a sign” that the administration is abandoning this process and “rushing to finalize a predetermined political outcome.”