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Electric Vehicle Industry Would Get Boost From Bipartisan Infrastructure Deal

Sept. 3, 2021, 8:00 AM

The transition toward electric vehicles received a boost with the Senate’s passage of a bipartisan infrastructure bill that included myriad provisions that would increase funding and policy support for the domestic electric battery and vehicle industries and for the buildout of a national electric vehicle charging network. While the legislation tries to solve some of the long-standing challenges that have inhibited widespread adoption of electric vehicles, it falls short of what President Biden has argued is needed to meet his goal of net-zero emissions for the transportation sector by 2035.

Below are five of the most important provisions affecting the transition to electric vehicles (EVs).

Charging Infrastructure

The infrastructure bill would provide about $7.5 billion for EV charging infrastructure, considerably less than the $174 billion President Biden’s American Jobs Plan said would be needed for the U.S. “to win the EV market.” The money primarily would be allocated through grants to states and would be used to help build out a national network of charging stations as part of the Alternative Fuel Corridor program first established as part of the FAST Act in 2015.

The infrastructure bill prioritizes the award of grants to build EV charging stations in rural areas, low- and moderate-income neighborhoods, and communities with low ratios of parking spaces to households or high ratios of multi-unit houses to single- family households. One thing the bill does not do is remove the long-standing ban on providing commercial services and refueling at rest stops along most federal highways.

DOT Standards

Under the Senate bill, federal funds may be used to provide only “non-proprietary charging connectors” and “open access to payment methods that are available to all members of the public” to provide the greatest access and interoperability possible, rather than on proprietary technology that is limited to specific vehicles or payment platforms.

The bill’s appropriation section also directs the transportation secretary to develop within 180 days of enactment minimum standards and requirements related to the “installation, operation, or maintenance by qualified technicians of electric vehicle charging infrastructure,” “the interoperability of electric vehicle charging infrastructure,” and “network connectivity of electric vehicle charging infrastructure” among other requirements.

While the bill does not specify how these standards are to be developed, the timeline and scope are ambitious and could impact a broad range of stakeholders.

Per-Mile User Fee

The federal highway fuel taxes have not increased since 1993, and there is growing recognition—and concern—that the transition to EVs is going to hasten the collapse of the Highway Trust Fund. The gap between highway revenues and spending is about $18 billion annually, and Congress makes up the shortfall in fuel-tax revenue through appropriations from the Treasury.

The infrastructure bill would establish an advisory board and pilot program to study the design, implementation, and financial stability of using a per-mile user fee to fund the Highway Trust Fund as an alternative to the current fuel taxes. Participation in the pilot program would be voluntary, include participants from all 50 states, the District of Columbia, and Puerto Rico, and examine the use of third-party on-board diagnostic devices, smart phone applications, telemetric data from automakers, and other alternatives for tracking miles driven.

Utility Rate Reforms

As one of the many provisions concerning electric generation and the grid, the infrastructure bill directs states with rate-making authority and unregulated utilities to consider measures to promote greater electrification of the transportation sector pursuant to the Public Utility Regulatory Policies Act (PURPA).

States and unregulated utilities are to consider the establishment of rate policies that promote affordable and equitable EV charging options for residential, commercial, and public EV charging infrastructure, to improve customer experience around EV charging (including reducing charging times), and to accelerate third-party investment in delivering electricity to EVs. The bill would require states with rate-making authority and nonregulated utilities to begin this consideration under PURPA section 111 within one year, and to complete the process within two years.

Electric Batteries

The infrastructure bill authorizes $3 billion for a grant program to support the development of a domestic and North American battery material processing industry and another $3 billion for a grant program to support the development of domestic and North American battery manufacturing and recycling facilities. It also includes support for the Department of Energy to fund projects to demonstrate the safety and reliability of using second-life (used) EV batteries for energy storage and grid resilience.

In the hours following the Senate’s passage of the bipartisan infrastructure deal, the Senate passed a separate budget resolution on partly line votes that would steer an additional $3.5 trillion toward domestic programs and, among other things, impose a means test on tax credits used to incentivize the purchase of EVs.

The fate of the Senate infrastructure bill—and in many ways the EV industry—is now in the hands of the House of Representatives.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Byron Brown is a senior counsel in Crowell & Moring LLP’s government affairs and environment and natural resources practice groups. He served as deputy chief of staff for policy at the Environmental Protection Agency in 2017-2018, senior counsel for the Senate Committee on Environment and Public Works, the House Committee on Natural Resources, and as an attorney with the EPA Office of General Counsel.

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