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The AJP is the first of two large spending
proposals the administration has
introduced in recent weeks; the second,
called the American Families Plan, would
spend or provide tax credits totaling
approximately $1.8 trillion for child-care
funding, paid family, and medical leave,
universal prekindergarten instruction and
other priorities.2
The AJP covers a broad and ambitious
set of initiatives, and several themes are
emphasized throughout the plan. Most
notably, there is a clean and renewable
energy focus underlying several of the
proposals that is aimed at the mitigation
of and adaptation to climate change,
with a stated goal of reaching 100
percent carbon-pollution free power by
2035. The AJP also features various
programs to assist disadvantaged
communities, including the modernization
and expansion of the nation's power
grid and the expansion of broadband
access for rural communities. Finally,
the plan stresses that its programs will
require goods and materials to be made
in America, though it does not provide
detail on modifications to Buy America
regulations.
CORE INFRASTRUCTURE SPENDING
TRANSPORT AND WATER
The US has long been in dire need of
upgrades to its transportation and water
infrastructure. The AJP would spend
more than $620 billion on transportation
infrastructure investments, including
a large investment in electric vehicles
and buses as well as more traditional
assets such as roads, bridges, transit,
rail, airports and ports. We expect the US
Department of Transportation's (USDOT)
major lending programs, including the
Transportation Infrastructure Finance
and Innovation Act (TIFIA) and Railroad
Rehabilitation & Improvement Financing
(RRIF) programs, to be beneficiaries of
significant additional funding to support
these efforts. Shearman & Sterling is
longstanding outside counsel to USDOT,
currently representing USDOT on
proposed TIFIA financings of concessions
for two mega-express toll lanes projects —
an extension of the Capital Beltway HOT
Lanes in Northern Virginia and the SR
400 Express Lanes in the Atlanta, Georgia
metropolitan area — and we recently
advised USDOT in connection with a
$908 million RRIF loan for the Dallas Area
Rapid Transit Silver Line Regional Rail
Project.
The AJP would spend more than
$110 billion on water infrastructure
improvements, including $56 billion to
upgrade and modernize drinking water,
wastewater, and stormwater systems
and $45 billion to eliminate all lead pipes
and service lines across the country.
These investments would build upon the
recent Drinking Water and Wastewater
Infrastructure Act (the "DWWIA"),
overwhelmingly passed by the Senate on
April 29 and currently under review in the
House of Representatives. The DWWIA
would provide $35 billion for state water
infrastructure programs and reauthorize
the Water Infrastructure Finance and
Innovation Act (WIFIA) program. Shearman
& Sterling serves as outside counsel
to the US Environmental Protection
Agency (USEPA) on this program and
has represented USEPA in connection
with 13 WIFIA loans over the past year
alone, including USEPA's largest single
loan commitment to date for wastewater
system improvements in coastal Virginia.
POWER AND DIGITAL
To bolster America's power infrastructure
and support the development of clean
and renewable energy, the AJP would
spend $100 million on various initiatives,
including creating an investment tax
credit to support private investment on
the buildout of at least 20 gigawatts
of high-voltage capacity power
lines, and extending for 10 years the
popular investment tax credit (ITC) and
production tax credit (PTC) for clean
energy generation and storage. The AJP
would also spend $100 billion for digital
infrastructure to reach 100% coverage of
high-speed broadband across the country.
Shearman & Sterling regularly advises
sponsors and lenders in power and
digital infrastructure sector transactions,
including our recent representation
of (i) note purchasers on a private
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US Infrastructure Update:
Major Spending Proposals from
Biden Administration
INSIGHTS
