Infrastructure Negotiations Heat Up, But Deal Remains Elusive

Following overwhelming bipartisan approval in late April of a $35 billion measure to clean up the nation’s water systems, and the unanimous Senate Environment and Public Works Committee approval on May 26 of a $311 billion highway bill, President Biden hopes to carry that spirit of cooperation to his ambitious multitrillion-dollar infrastructure package. Unfortunately for him, moments of cooperation in deeply divided Washington can be fleeting. 

Current talks between the White House and Congress on infrastructure legislation are divided into two fronts – debate on a wide-ranging multi-sector package and a second negotiation on a bill to fund the federal highway program.

For the liquid terminal industry, improvements of infrastructure – particularly ports, harbors, inland waterways and even roads and bridges (and pipelines, if included) – could aid movement of product by better facilitating transfers in and out of the terminal.

Sides Exchange Counteroffers on Infrastructure Package

On the broader infrastructure package, President Biden and Senate Republicans are seeking to find a way to reconcile the wide gulf between the President’s American Jobs Plan and a number the Senate Republicans are willing to support. The Biden administration lowered its top-line number on the broader package in a bid to entice Republicans, who continue to say that there remain "vast differences" between the two parties.

The White House continues to tout its latest offer—down to $1.7 trillion from its initial $2.2 trillion proposal. On May 26, Senate Republicans offered a $1 trillion plan up, from their original $596 billion counterproposal. In an encouraging development, Senate Minority Leader Mitch McConnell (R-KY) indicated that Republicans may be willing to go beyond their current proposal. 

Both Senate Republicans and the administration continue to report that they see “common ground” in the talks. Senator Shelly Moore Capito (R-WV), who has been tasked to negotiate on behalf of the GOP, noted that both sides seek funding for eight categories of "physical core" infrastructure. Among those are highways/bridges, ports/inland waterways, transit, drinking water and wastewater treatment, airports and broadband.

However, Republicans remain adamantly opposed to Democratic plans to spend money on anything beyond “roads, bridges, seaports and airports, and broadband" or to raise taxes on corporations and the wealthy to pay for infrastructure spending. Instead, Republicans are considering additional deficit spending and “pay-fors,” including increased “user fees” and repurposing unspent funds from earlier COVID-19-related measures.

There is also concern on the left. Environmental groups say that the EPW-approved Highway bill does not push hard enough to embrace the sweeping, transformative measures Biden has called for to combat climate change.

Transportation Secretary Pete Buttigieg, who is heavily involved in the negotiations, said that the administration continues to talk with Republicans every day and that Biden is committed to “doing everything we can to find common ground." However, the President’s stimulus plan is popular with most voters, and some Democrats are eager to wield their slim majorities in both chambers to push as many of their priorities into law as possible.

Highway Bill Moving Forward

Movement on the highway portion of the infrastructure bill is encouraging, but it has always been the easier lift given broad support for funding highway infrastructure and the long history of bipartisan cooperation in the EPW Committee. Many expected a bipartisan highway bill and the balance of the President’s plan to pass under a budget reconciliation resolution, legislation that could unlock a process that would allow Democrats to circumvent a filibuster and push through a fiscal package without Republican votes. The White House is not ready to call for the maneuver, which would be impossible without retaining the votes of all the 50 Democrats in the Senate. Thus far, Senator Joe Manchin (D-WV) has refused to commit to the plan without Republican support.

As mentioned above, Senate EPW unanimously approved a bill to allocate $311 billion over five years for roads and highways. But the highway bill still requires action by the Senate Banking Committee, which must approve a portion dealing with transit, and the Finance Committee, which will need to find a way to pay for it all. Nonetheless, the unexpected unanimous bipartisan committee approval provides significant momentum to finalize the bill. 

The highway bill includes a new grant program, providing $500 million a year to install electric vehicle charging stations over five years. That figure is more modest than the $15 billion Biden initially proposed for EV charging stations over eight years but represents a step up from the original Republican Senate framework, which omitted funding for such stations.

The Senate plan also includes $1.4 billion for a new formula and competitive grant program aimed at creating more climate-resilient infrastructure, $50 million in each of the bill’s five years to reduce truck emissions at ports; and $100 million a year to create a Transportation Resilience and Adaptation Center of Excellence to study resilient infrastructure. 

The $311 billion compares favorably with the $287 billion highway measure the committee unanimously approved in 2019, when the Senate was controlled by Republicans. That bill never reached the Senate floor for a vote.

The House Transportation and Infrastructure Committee has been awaiting Senate action and plans to mark up its own highway bill in the weeks ahead. Legislators face a tight deadline for passing a bill. They must act by September 30, when the current transportation funding (known as the FAST Act) expires.