US Senate Passes $1tn Infrastructure Bill

On 10 August 2021, the US Senate approved a $1tn infrastructure bill (the ‘Bill’) designed to help rebuild America’s aging roads, bridges, public transport and more. The Bill was passed by a bipartisan majority of 69:30 in the Senate (despite late efforts from former president Donald Trump to derail its progress) and promises to deliver more than $500bn of new federal investment in infrastructure, along with $450bn in previously approved funding. Whilst the Bill must still navigate its way through the House of Representatives if it is to reach the desk of President Biden for final approval, if delivered successfully, it will represent one of the largest infrastructure investments in American history.

As we wrote earlier this year, the US has long been plagued by out-dated infrastructure, with the American Society of Civil Engineers’ “Report Card for America’s Infrastructure” repeatedly handing-out low grades for the country’s efforts. However, at more than 2,000 pages, President Biden will hope that the huge array of issues covered by the Bill will be enough to reverse America’s fortunes in the sector. Topics covered in the Bill range from the repair and maintenance of ports and airports to the delivery of thousands of electric buses to help replace America’s famous yellow school bus fleet. With that in mind, the Bill will be of encouragement to almost all those with interests in the construction sector and represents a huge opportunity for both American and international contractors / consultants to capitalise on this ‘once in a lifetime’ investment opportunity to help position themselves as a leading force in the region.

With that being said, a review of the White House’s recent fact sheet on the ‘Bipartisan Infrastructure Investment and Jobs Act’ suggests that there are some industries that stand to benefit more than others from the investments mooted in the Bill. Notable in this regard is the $110bn of new federal investment that the Bill earmarks for use in relation to roads, bridges and major projects. Amongst other things, this funding is designed to focus on helping to repair and rebuild America’s roads and bridges, as well as assisting with funding projects which may be too large / complex for existing support regimes. With the White House fact sheet explaining that some 173,000 miles of highways and major roads (along with 45,000 bridges) are in poor condition, this investment is clearly long overdue, and should only serve to increase the number of active major projects in the US. Combined with substantial investments of $25n and $17bn in airports and port infrastructure respectively, the Bill clearly represents a concerted effort to try and address the issue of the nation’s deteriorating infrastructure.

Another area that looks set to benefit significantly from the Bill is public transit, with new investments and reauthorisation providing guaranteed funding of $89.9bn over the next five years. In part, these funds will go towards efforts to upgrade, repair and modernise the US public transit system, as well improving accessibility. Similarly, the Bill includes a $66bn investment in rail, the largest American rail investment since the creation of Amtrak (America’s national rail operator) in 1971. Aptly, some $22bn of this investment is set to be provided as grants to Amtrak, with areas targeted by the remaining funds including federal-state partnership grants to modernise the ‘Northeast Corridor’ railway line, and significant investments in safety improvements. With major rail projects in the UK such as HS2 and Crossrail already well underway, it looks like it could be busy few years for the rail sector both domestically and further afield.

With the 26^th UN Climate Change Conference of the Parties (‘COP26’) fast approaching, it is also encouraging to see that the Bill places a significant focus on reducing carbon emissions and mitigating the impact of climate change. Headline figures in this regard include a c. $65bn investment in power infrastructure, including the largest single investment in ‘clean energy transmission’ in US history; over $50 billion to help improve community safety and make infrastructure more resilient to the impact of climate change and cyber-attacks; $21 billion for environmental remediation, to help to address issues such as the impact of historic pollutants and to clean-up ‘brownfield’ sites; and $5bn for zero emission and clean buses. In April, we suggested that environmental, social and governance issues on infrastructure projects are receiving more attention than ever before, and these investments appear to be yet another example of this. With the UN Secretary-General describing a recent IPCC Climate Report as a ‘code red for humanity’, this type of climate-conscious investment is crucial, and it is good to see those in government recognise the vital role that the construction industry can play in helping to create resilient and sustainable infrastructure that can support a shift to a greener way of living.

The Bill will now return to the House of Representatives, where it will hope to rely on the support of the slim majority that the Democrats hold to ensure its safe passage. However, it is unlikely to be smooth sailing for President Biden’s plans, however welcome they may be to the construction sector. Perhaps as a sign of things to come, the Bill has already found itself entwined in discussions surrounding Biden’s $3.5tn budget framework, reflecting the ‘sensitivity’ of the political environment in which the Bill must progress. Therefore, expect plenty more twists and turns before the House of Representatives is expected to vote on the Bill next month.