Analysis

What Biden's Win Holds For Transportation, Infrastructure

Law360 (November 8, 2020, 5:20 PM EST) -- President-elect Joe Biden's plans for a "clean energy revolution" include modernized highways, roads and bridges built for climate resilience, and electric vehicles, mass transit and high-speed rail — but experts say the new Democratic administration will face challenges to implementing some of its green infrastructure targets.

Biden prevailed in the presidential race Saturday after his apparent victories in Pennsylvania and Nevada pushed him past 270 electoral votes. While President Donald Trump has vowed to continue fighting the results in court, the former vice president said he was moving forward with his transition plans.

Biden's win tees up transportation and infrastructure investments over the next four years that will be closely tied to a revival of Obama-era initiatives addressing climate change and greenhouse gas emissions. Biden and his advisers also have set a lofty goal of decarbonizing the U.S. power sector by 2035. But putting any of Biden's infrastructure plans into action will be an uphill battle given that Democrats were unable to secure a solid majority in the Senate. 

Experts who spoke with Law360 prior to the election said the ambitious targets in Biden's estimated $2 trillion "Build Back Better" proposal stoke optimism for an economic recovery that could include thousands of new jobs in construction, steel manufacturing and other sectors.

However, big transportation, water, telecommunications and energy infrastructure projects can mean big spending, and Biden's embrace of various elements of the Democratic Party caucus' "Green New Deal" proposal might be a tough sell as Congress tackles top-priority items such as COVID-19 pandemic legislation, experts say.

"It's going to depend on a) competing priorities because boy, does he have a lot of things he wants to spend money on, and b) the budget politics," said Joe White, a Case Western Reserve University professor and director of its Center for Policy Studies. "Macro budget politics is going to make it hard on transportation priorities, especially in a situation in which there's all this other 'Green New Deal' stuff. Transportation is going to be competing with a whole bunch of other things. The first thing I would look at is whether the states get bailed out, then the second thing is, can they manage to do something about the budget caps and [discretionary] spending caps?"

The 'Build Back Better' Plan

After another bitter and bruising election amid a looming global health crisis, experts say infrastructure investment is an area where the parties can and should come together to bridge the divide. And all eyes will be on the president-elect to take the lead on striking a bipartisan deal.

"They realize that we need to invest in our infrastructure and the reason we need to — and this is generally thought across the political spectrum — is it's been neglected for 20 years, it's crumbling, we need to modernize and we need to expand in places," said Squire Patton Boggs senior policy adviser Bill Shuster, former Republican congressman and chairman of the House Transportation & Infrastructure Committee. "It is a bipartisan issue. That's something we're going to be looking for coming out of this election."

Squire Patton Boggs partner Rodney E. Slater, the secretary of transportation from 1997 to 2001 under President Bill Clinton, said COVID-19 "has afforded us an opportunity to look at the different ways [to fund transportation and infrastructure] and here, I find the vice president's vision quite exciting and appropriate."

In addition to traditional areas of transportation investment such as highways, bridges and airports, Biden's "Build Back Better" plan also prioritizes investments in water systems, electricity grids, universal broadband and green spaces.

Biden, a fervent supporter of Amtrak, would also spend more on passenger and freight rail, and push to build a national high-speed rail network.

"He will be very tempted and Congress will share the temptation to go all in on high-speed rail, which is enormously expensive," said Venable LLP partner Jim Burnley, the secretary of transportation from 1987 to 1989 under President Ronald Reagan. "That will be a prominent part of the discussion."

Biden is also keen on helping state and local governments improve existing public transit, and encourages regional planning around pedestrians, cyclists and riders of e-scooters and other micro-mobility vehicles. Biden's proposal also calls for accelerating the development of electric vehicles, expanding electric vehicle charging stations and related infrastructure, and having all new buses built in the U.S. be zero emissions by 2030.

Biden's plan also focuses on ensuring that public infrastructure projects can withstand additional pressure from weather events linked to climate change, such as storms, floods, extreme heat, wildfires and sea level rise.

"This is what makes his approach unique from that of the [Trump] administration in that he's acknowledging the system in the future as we modernize it has to be a system that is resilient," Slater said, referencing extreme weather events such as the recent flooding in the Gulf Coast and wildfires on the West Coast.

"The Biden administration is definitely going to say the environment is a safety issue, which is not the normal course of business right now," said Mike Friedberg, a partner in Holland & Knight LLP's transportation and infrastructure group. "For any benefit from any transportation regulation, I see them tying environment into that."

"They're going to try to do a big bill, but that takes a lot of political capital," Friedberg added. "They're going to have to get bills passed. They're going to have to come to some agreements."

Additionally, Biden has proposed establishing a new $40 billion, 10-year Transformational Projects Fund, to provide "significant discretionary grants for projects too large and complex to be funded through existing infrastructure programs." The grants will be available for transportation, water, and energy projects.

The Biden campaign explained on its website that historically, major infrastructure projects, such as the Erie Canal and the Hoover Dam, reshaped not just a single town or city, but a whole region of the country. But such projects — and their benefits — often extend across state lines, making them difficult for any one state government to plan, fund or execute.

A Long-Term Funding Fix

A pressing issue that's hampered Congress for years is finding a permanent, long-term fix to replenishing the federal Highway Trust Fund that pays for surface transportation projects.

The fast-draining fund receives money from a federal fuel tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel and related excise taxes. The gas tax is the single largest source of federal highway and surface transportation funding, adding about $38 billion to the Highway Trust Fund each year.

Venable's Burnley said the fund "already is not sustainable just on fuel tax revenues [so] something has to change."

The gas tax has not been raised since 1993, and its ability to fund highway infrastructure repairs and upgrades has shrunk over time, leaving a hole of approximately $15 billion each year that needs to be filled by other means. And lawmakers continually have to stave off the fund's insolvency with offsets, bailouts and general fund infusions.

It remains to be seen whether the president-elect will successfully coax Congress into crafting a stable funding fix for surface transportation upgrades after years of stopgap funding gimmicks.

Shuster suggested that an infrastructure investment plan should be put in place swiftly in order for momentum to build.

"Do it in the first six months, get it out there, do what you have to do," he said. "Because the one thing that nobody wants to talk about is the funding."

Lawmakers will have to get over their long-standing opposition to a gas tax increase to address the shortfalls now. Or they'll have to meaningfully implement other types of user fees to fill the infrastructure funding gap — particularly ones that account for the fact that today's vehicles are significantly more fuel-efficient than they were 25 years ago and that there are more electric- or hybrid-vehicles on the roads, experts say.

"You have to raise the gas tax. It's a user fee. One-hundred percent of it goes to its intended purposes," Shuster said. "There are ideas out here. For instance, vehicle miles traveled is a better way because electric vehicles aren't paying their fair share on highways. But members of Congress have to get their head around that … [but] moving to a new system at this point is extremely difficult."

Venable LLP partner Fred Wagner, a former chief counsel for the DOT's Federal Highway Administration under President Barack Obama, agreed that surface transportation funding issues will continue to loom large.

In the past year, House and Senate leaders floated varying infrastructure proposals as they negotiated a reauthorization of surface transportation funding leading up to the Sept. 30 expiration of the Fixing America's Surface Transportation Act. Rather than taking up new legislation, Congress passed a one-year extension of the FAST Act, buying it until September 2021 to come up with a bipartisan bill.

The Biden administration will likely seek to rejigger the funding formula for projects overall and allocate more money to help transit and other regional projects that the previous administration had shunned in favor of traditional highways and roads upgrades or rural transportation projects.

"[There will be] much greater diversification of whatever money is in a new bill after next September. By that I mean the mix of money that's available for transit, passenger rail, port improvements other than the highway pie," Wagner said. "You're likely to see a greater request and emphasis on discretionary and formula funding. ... The pendulum has swung back and forth between discretionary and nondiscretionary spending and returning some power and authority to localities."

--Editing by Alyssa Miller and Pamela Wilkinson.

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