The Infrastructure Investment and Jobs Act (“IIJA”) delivers on years of advocacy and dozens of daily news stories covering failing pipes, treatment plants, and dams; sewer overflows; drought; and the contamination of drinking water with lead and emerging chemicals such as PFAS – perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS). Efficient deployment of just over $100 billion in federal funding will provide the private sector opportunities to design, staff, and build thousands of new projects. As most IIJA projects will be bid out and managed at the state and local levels, it is not too soon for investors to be on the watch for opportunities to bid on and invest in these transformative projects.
Involving legal counsel early in the process can reduce unexpected delays and optimize opportunity in a large municipal project. Legal counsel also can identify permitting efficiencies to expedite project commencement, assist with grant applications, and mitigate project risk.
While the details will become clearer in the coming months, we expect that public-private partnerships – or P3s – in which the private and public sector share financing, construction, and operation and maintenance obligations will thrive under aspects of the new law. While the U.S. typically lags other nations in P3s, the size of the IIJA, and the need for long-term certainty in implementation could lead to increased opportunity.
Key elements of the IIJA’s allocations to water infrastructure and PFAS and lead cleanup are as follows:
- Water Infrastructure Breakdown
The IIJA allocates $55 billion for water and wastewater infrastructure, $15 billion for lead service line replacement, and about $12 billion each for the state-run Clean Water and Safe Drinking Water State Revolving Loan Funds. EPA has already expressed intent to engage with water utilities to distribute the funds and to offer information on the tools, resources, and technical assistance that stakeholders will need moving forward. The time is now, however, for the private sector to make itself heard as its' construction, staff, machinery, and design expertise will be critical to successful investment of these resources.
- Western Water Infrastructure
The bill also includes over $8.3 billion for Western water infrastructure, focused on aged water systems, water storage and conveyance projects, rural water investment, and water recycling. Also addressed are desalination projects, dam safety efforts, drought mitigation, endangered species recovery, and ecosystem restoration initiatives. These projects also will offer private sector opportunities.
- PFAS and Emerging Contaminants
The IIJA provides $10 billion in funding from multiple investment streams for states and water utilities to use in the treatment PFAS and other emerging contaminants, as well as $1 billion in grants under the Clean Water SRF to address emerging contaminants. The private sector’s expertise in innovative technologies, and cost-effective treatment options, will be essential in this arena.
- Lead Service Line Replacement Provisions
$15 billion is in the IIJA to identify and replace lead pipes through EPA’s Drinking Water SRF. Approximately half of the funds will be provided as grants or 100 percent principal forgiveness loans, and half will be available as low interest loans without a state match requirement. The funding will support full lead service line removal for both public and private lines. These provisions will provide opportunities for water utilities to obtain funding for full and partial lead service line removals. They also will provide opportunities for the private sector to collaborate with localities to design, staff, manage, and operate these complex projects often in dense urban areas.
Deploying over $100 billion is going to take some time. After studying the prior American Recovery and Investment Act, the Brookings Institution found that “sophisticated capital projects” took longer to commence than “state of good repair projects” like road improvements. Also, of no surprise, was that the dollars allocated to existing federal programs with pre-existing distribution formulas, such as those linked to population or other factors, moved faster than competitive grant programs or programs that require rulemaking or other process to stand up and staff.
As the IIJA’s funds are deployed, and new programs built, the time is now for the private sector to proactively seek opportunities, follow implementation developments, and be a part of the future of America’s water infrastructure and of the many communities we call home.
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