The ongoing changes surrounding the U.S.’s position on infrastructure between the outgoing Biden administration and the incoming Trump administration is creating policy uncertainty for investors and companies in the infrastructure space. This instability may raise concerns among stakeholders that the U.S. is not an ideal place to invest because of the policy inconsistency and increases the likelihood of disputes arising from existing and potential foreign investment projects.

Changes to Bipartisan Infrastructure Law Implementation

Possible changes by the Trump administration to the allocation of funds for transportation, energy, broadband, and other projects under the Infrastructure Investment and Jobs Act (IIJA), also known as the bipartisan infrastructure law, is contributing to uncertainty for investors.[1]

The Trump administration may have a different approach to implementing the IIJA, which passed with bipartisan support but during the Biden administration.[2] The IIJA is set to continue under President-elect Trump, who will oversee the law’s final two years. The Trump administration will have substantial influence over the allocation of the remaining $294 billion in IIJA funds, including $87.2 billion in competitive grants.[3] This transition presents opportunities for the new administration to shape the law’s impact, particularly in areas of focus different from that of the Biden administration.

The Trump administration’s criteria for evaluating grant applications remains uncertain, raising questions about potential shifts in priorities and the influence of political considerations. At the same time, however, a Brookings analysis assessed that already under the Biden administration Republican-leaning states received more funds than their population share warranted, even when excluding specific programs like intercity passenger rail grants.[4] So while the Trump administration may seek to distance itself from Biden-era initiatives, it may face headwinds from members of its own party whose districts are benefiting from the Biden administration’s IIJA investments and who would be reluctant to lose the financial benefits and job opportunities of those investments.[5] Stakeholders will need to navigate these uncertainties and adapt to new administrative processes. The potential for political and administrative shifts in allocating IIJA funds could affect state and local stakeholders.

Promotion of Public-Private Partnerships

The second Trump administration may also encourage private investment in public infrastructure projects to leverage federal funding in ways that the Biden administration did not.[6]

Public-private partnerships (PPPs or P3s) are collaborative agreements between government entities and private sector companies to finance, build, and operate projects that serve the public.[7] Examples of PPPs include transportation projects like highways, bridges, and public transit systems; social infrastructure such as schools, hospitals, and public housing; and utility projects like water treatment plants and energy facilities. PPPs are a way to address infrastructure needs while managing public resources more effectively, though they require careful planning and clear contractual agreements to ensure that both the public and private interests are protected.

In a PPP, both the public and private sectors share the risks and responsibilities associated with the project. This can include financial risks, construction risks, and operational risks. The private sector often brings specialized expertise, innovation, and efficiency to the project, which can lead to cost savings and improved project delivery times. PPPs can provide access to private capital, reducing the need for public funding and allowing for the development of infrastructure projects that might otherwise be unaffordable.

However, PPPs often involve long-term commitments.[8] The long-term contracts typically seen with PPPs ensure that the private sector partner is committed to the project’s success over its entire lifecycle, from construction to operation and maintenance—and throughout the changes of government administrations. The ping-pong of different priorities between administrations can enhance uncertainty for private investors seeking to enter PPPs.

Regulatory Instability

Foreign investors, in particular, rely on policy predictability to make long-term decisions, especially in industries sensitive to infrastructure policy changes, such as renewable energy.

Looking forward, incoming Trump administration changes in the form of reducing regulatory barriers to expedite the approval and completion of infrastructure projects could further disrupt the energy sector. Policy reversals may favor fossil fuel projects over clean energy, potentially leading to stranded assets for investors in renewable infrastructure. While many U.S. states (e.g., California) remain committed to climate goals, a lack of federal coordination may also result in a patchwork of regulations, raising compliance costs for foreign investors.

This uncertainty could harm foreign investments made in reliance on shifting policies. Instability increases the likelihood of investor-state disputes under Bilateral Investment Treaties (BITs) or free trade agreements, like the United States-Mexico-Canada Agreement (USMCA), if changes are viewed as unfair or discriminatory.[9]

Key Takeaways

The transition from the Biden administration to the incoming Trump administration is creating significant uncertainty for investors and contractors regarding policies that affect U.S. infrastructure projects. This uncertainty stems from potential changes in the implementation of the IIJA, with the Trump administration having substantial influence over the allocation of the remaining funds. Investors are concerned about shifts in priorities and political considerations affecting grant evaluations. Additionally, the Trump administration may promote PPPs to leverage federal funding, though the long-term nature of these agreements adds to the risks. Regulatory instability, particularly in the energy sector, could also disrupt investments, and lead to increased compliance costs and potential investor-state disputes. Despite these risks and uncertainties, political challenges may limit the extent to which Trump can unwind or alter Biden’s initiatives.

Stakeholders in the infrastructure industry can manage and reduce risks by conducting thorough due diligence to identify risks, drafting comprehensive and clear contracts, and ensuring appropriate risk allocation. In the facing of shifting government policies, it is advisable to consult legal counsel to navigate the changing landscape. Lawyers can advise on regulatory compliance, dispute resolution mechanisms, and the structuring of PPPs to balance interests, among other aspects of infrastructure projects. Lawyers can also assist in monitoring and enforcing contract performance, keeping investors and contractors informed about political and regulatory changes, providing negotiation support, and discussing exit strategies to protect stakeholders’ interests. These services help stakeholders in the infrastructure space navigate project complexities, ensuring contracts are robust, enforceable, and aligned with strategic objectives.

[1] See The White House, Fact Sheet: The Bipartisan Infrastructure Deal (Nov. 6, 2021), available at https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/06/fact-sheet-the-bipartisan-infrastructure-deal/ (last accessed Jan. 13, 2025); see also The White House, A Guidebook to the Bipartisan Infrastructure Law (Jan. 2024), available at https://www.whitehouse.gov/build/guidebook/ (last accessed Jan. 13, 2025).

[2] Adie Tomer and Ben Swedberg, What the Trump administration might mean for the future of the bipartisan infrastructure law (Nov. 25, 2024), available at https://www.brookings.edu/articles/what-the-trump-administration-might-mean-for-the-future-of-the-bipartisan-infrastructure-law/ (last accessed Jan. 13, 2025); see also Julie Strupp, 5 ways Trump could impact infrastructure construction in 2025 (Jan. 7, 2025), available at https://www.constructiondive.com/news/trump-impact-infrastructure-construction-2025/736597/ (last accessed Jan. 14, 2025).

[3] See id.

[4] See id.

[5] Bob Woods, Why Trump and GOP attacks on IRA can’t score a clean sweep in red states (Jan. 12, 2025), available at https://www.cnbc.com/2025/01/12/trump-gop-attacks-on-ira-wont-score-clean-sweep-in-red-states.html (last accessed Jan. 13, 2025); see also David Quam and Alessandro Pecorari, Election analysis: What President-elect Trump’s victory means for the future of American infrastructure investment (Nov. 6, 2024), available at https://giia.net/insights/election-analysis-what-president-elect-trumps-victory-means-future-american-infrastructure (last accessed Jan. 14, 2025).

[6] See Julie Strupp, 5 ways Trump could impact infrastructure construction in 2025 (Jan. 7, 2025), available at https://www.constructiondive.com/news/trump-impact-infrastructure-construction-2025/736597/ (last accessed Jan. 14, 2025).

[7] See Associated General Contractors of America (AGC), Public-Private Partnership (P3) Basis, available at https://www.agc.org/public-private-partnership-p3-basics (last accessed Jan. 14, 2025).

[8] See, e.g., U.S. Department of Transportation, Federal Highway Administration, Financial Structuring of Public-Private Partnership (P3) Concessions, available at https://www.fhwa.dot.gov/ipd/fact_sheets/p3_toolkit_04_financialstructuring.aspx#:~:text=Under%20a%20Public%2DPrivate%20Partnership,including%20collection%20of%20toll%20revenues (last accessed Jan. 14, 2025).

[9] Office of the United States Trade Representative, Bilateral Investment Treaties, available at https://ustr.gov/trade-agreements/bilateral-investment-treaties#:~:text=BITs%20give%20investors%20from%20each,use%20that%20country’s%20domestic%20courts (last accessed Jan. 14, 2025).