RSMUS.comPresident Joe Biden on Nov. 15 signed a $1.2 trillion infrastructure package—The Infrastructure Investment and Jobs Act—that provides historic funding levels to improve public works, including roads, bridges, highways, internet access and the power grid, as well as to mitigate the effects of climate change. (The law does not include funding for social policy, which is covered under separate legislation known as the Build Back Better Act.)
This is one in our series of industry-focused outlooks analyzing the impact of the infrastructure legislation.
What the $1.2 trillion Infrastructure Investment and Jobs Act means for environmental services
The billions of dollars earmarked for environmental services are meant to strengthen the health, equity and resilience of American communities by remediating legacy pollution and other environmental harms. Environmental services firms will be tasked with those objectives on a wide variety of projects from start to finish. This indicates an increase in demand for services such as environmental studies, remediation and waste removal. To put that increased demand in context, the administration touts the new law as “the largest investment in tackling legacy pollution in American history” and “the single largest investment in water that the federal government has ever made.”
Specific allotments for environmental services
The law apportions tens of billions of dollars to different types of infrastructure and programs that would help to enhance environmental protections, public health and environmental justice for small and disadvantaged communities. Of those numerous allotments, the administration classifies $21 billion as environmental remediation spending:
$11.3 billion – Reclamation of abandoned mine land: Funding for the Abandoned Mine Reclamation Fund, which distributes annual grants for reclaiming abandoned coal mines and production facilities.
$4.7 billion – Methane reduction infrastructure: Money for a new federal program that grants funding to plug, remediate and restore orphaned oil and gas wells.
$3.5 billion – Cleanup of Superfund sites: A so-called Superfund site is an area of land that has been polluted by hazardous materials and requires a long-term cleanup plan. The Environmental Protection Agency reported in July that 73 million people (22% of the U.S. population) live within three miles of one of the country’s 1,866 Superfund sites. That includes 26% of all Black Americans, 29% of all Hispanic Americans and 15% of all Americans living below the poverty line—percentages that are greater than their respective shares of the total population.
$1.5 billion – Brownfields revitalization: Funding for grants and loans to scale up so-called brownfields—properties whose expansion, redevelopment or reuse might be complicated by the presence of hazardous substances or pollutants.
Other apportionments for environmental projects and programs include:
$3 billion – Reclamation of abandoned hardrock mine land: Money for reclaiming and responding to abandoned hardrock mine land contaminated by hazardous substances. Federal agencies have identified 140,000 such areas and believe hundreds of thousands more exist.
$1.96 billion – Environmental programs and management: Funding for EPA programs through which partnerships with various organizations work to protect national water treasures and ensure they continue to serve as vital economic and recreational assets.
$350 million – Waste management and recycling: Grants to states to upgrade local waste management systems and to improve recycling programs through education and outreach.
$100 million – Pollution Prevention Program and a new program to promote environmental justice: Funding to help businesses reduce toxic pollutants, cut water usage, improve efficiency and lower costs.
The additional tens of billions earmarked for roads, bridges, airports, waterways and utilities will generate demand for environmental services firms as well. Waste management companies will see big demand here, but those projects may also require environmental studies and remediation, depending on the location and the quality of the structure that is being built or rehabilitated.
In the short term
Cleaning up a Superfund site is a complex undertaking that historically can take decades to complete. The apportionment of funding for this purpose stands out as an opportunity for environmental services firms because they are typically engaged from the assessment phase at the start of the project all the way through to the waste hauling stage at the conclusion.
Firms eager to bid on Superfund cleanup projects should understand the capabilities that historically have enabled successful site cleanups. Typically, firms are well-versed in at least one of the following treatment practices:
- Biological treatment:Adding or stimulating the growth of microorganisms. These microorganisms metabolize contaminants or create conditions in which contaminants will convert to nonhazardous or less toxic forms.
- Chemical treatment:Chemically converting hazardous contaminants to nonhazardous or less toxic forms. Chemical precipitation (formation of a separable solid substance from a solution) is often included in this form of treatment.
- Physical treatment:Using the contaminant’s physical traits to separate or debilitate the contaminant.
- Thermal treatment:Using heat to separate contaminants from contaminated media (rocks, soil, sediment, etc.). The contaminants or the contaminated media can then be immobilized or destroyed in several ways, including melting and detonating.
- Pump and treat:In this common method of cleaning contaminated groundwater, water is extracted from the ground into a treatment system that removes contaminants.
The big picture
Many proponents of environmental causes applaud the infrastructure package as a positive step while lamenting spending levels they deemed inadequate to address the country’s scope of environmental issues. Still, billions of dollars in new funding for environmental projects and programs should equate to numerous opportunities for environmental services firms. That increase in demand figures to result in growth for firms that are equipped to successfully carry out projects, whether they be environmental assessments, waste management, remediation or others.
As environmental services firms know well, however, it can take years or even decades for a project to result in substantial, visible or quantifiable environmental improvements. In that sense, the sector would benefit from sustained positive momentum sparked by these investments. How long the momentum lasts, though, depends on a few factors, including national and local political dynamics and the early returns on initiatives catalyzed by this new law.
Questions that frame the path forward
- What will project proposal processes entail in each state, including the timing for bids?
- Given that funding for cleaning up Superfund sites is legislated to be offset by reestablishing the Superfund tax (an excise tax on 42 toxic chemicals) in July 2022, how long will it take for funding to be distributed so that cleanup projects can get underway?
- Will an influx of Superfund cleanup sites be added to the National Priorities Listwith the announcement of the new legislation, or is the current list fairly complete for purposes of this program?
- How will the law’s emphasis on environmental justice affect the flow of funding to environmental services firms and to different projects?
- How effective will new or enhanced environmental education and outreach programs be? How can results be accurately measured?
Check out the tax implications of The Infrastructure Investment and Jobs Act, including Superfund excise taxes, here. Learn more about RSM’s business and professional services practice here, and our excise taxes practice here. And for more information on tax policy changes, see RSM’s Tax Policy Resource Center.
