The OBBB Act | Infrastructure Overhaul: Transportation, Energy & Water Reforms

On Friday, July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (H.R. 1), Public Law No: 119-21 (The OBBB Act). The legislation spans multiple sectors, with investments in aviation and maritime infrastructure, targeted water resilience efforts and a renewed focus on permitting reform. At the same time, the bill rescinds a number of climate- and equity-focused programs, modifies environmental review processes and alters federal support for clean energy and transportation initiatives. The following summary outlines key provisions related to infrastructure and transportation, energy and environmental policy and water resources.

Infrastructure & Transportation

Provisions that affect transportation infrastructure, environmental permitting and federal grant programs include:

1. New investments in FAA and Coast Guard infrastructure;
2. Rescission of competitive grants and community reinvestment programs;
3. Changes to funding for clean vehicle and low-carbon transportation initiatives; and
4. Modifications to federal environmental review support.

FAA and Coast Guard Infrastructure Funding Preserved
H.R. 1 includes new federal investments such as $12.5 billion for the FAA to modernize air traffic control systems and $24.6 billion in mandatory funding for the U.S. Coast Guard to procure and maintain operational assets and shore-side infrastructure. These appropriations are designed to support aviation safety, national security and maritime readiness.

Competitive Grant and Equity Programs Rescinded
The bill rescinds a significant portion of funding from programs such as the Neighborhood Access and Equity Grant Program, reducing funding by up to 94%. Additionally, approximately $4.7 billion in competitive transportation grants, including some awarded under prior appropriations, are no longer available. These changes impact projects focused on neighborhood connectivity, safety and multimodal access, particularly in areas that were targeted for redevelopment or community restoration.

Clean Transportation Incentives Phased Out
Several initiatives supporting the transition to low-emission transportation are altered. The bill rescinds all unobligated funding from the Low-Carbon Transportation Materials Program ($1.9 billion) and the Clean Heavy-Duty Vehicles Program (~$454 million unspent). It also phases out tax credits for new and used electric vehicles and EV charging infrastructure by mid-2026. These provisions may delay or reduce the scale of electrification efforts in public fleets and the private sector.

Environmental Review Funding Repealed; Fee Introduced
The legislation repeals $100 million in funding for state and local environmental review capacity-building, originally provided by the Inflation Reduction Act. In its place, it introduces a new optional fee equal to 125% of the cost of an environmental assessment or impact statement, which project sponsors may choose to pay to expedite timelines. This shift may help accelerate reviews in some cases but could place additional cost burdens on smaller applicants or local governments.

Energy, Climate & Environment

The bill includes a wide range of provisions that affect energy innovation, environmental regulation and climate-related programs. Four major changes include:

1. Rescission of previously appropriated clean energy and environmental grant funding;
2. Elimination or deferral of certain emissions standards and enforcement mechanisms;
3. Introduction of new cost structures for renewable energy development on public lands; and
4. Changes to environmental justice and public health grant programs.

Rescission of Energy and Climate Program Funding
The bill rescinds significant portions of unobligated funding from the 2022 Inflation Reduction Act, including the Greenhouse Gas Reduction Fund (GGRF) and support for biofuels, diesel emissions reductions, electric grid projects and industrial decarbonization. Many of these programs were still in the early stages of implementation. According to the EPA, only about $3 billion of GGRF funds had been obligated by the time of rescission.

Modifications to Emissions and Fuel Standards
The bill repeals the methane emissions fee and associated mitigation funding for a ten-year period. It further rescinds funding for the enforcement of federal fuel economy standards but does not eliminate the penalties themselves. These provisions represent a shift in federal enforcement priorities and could have implications for long-term emissions trends and compliance behavior in the auto and energy sectors.

Renewable Energy Development Subject to New Fees
The bill imposes a new annual capacity fee of 3.9% of gross electricity revenues or equivalent acreage rent for renewable energy projects on public lands, with 25% of these revenues directed to the host state and 25% to the host county. This replaces prior fee reductions implemented under the Biden administration. The new structure may increase costs for developers, though some projects may be eligible for adjustments such as a 10% multiple-use reduction.

Environmental Justice and Public Health Grants Affected
Several environmental programs supporting pollution monitoring, health impact studies, environmental justice and local climate planning are rescinded. These programs were intended to support disadvantaged communities and local government capacity, particularly in areas affected by environmental health disparities. Stakeholders may need to seek alternative funding mechanisms or partnerships to continue similar work.

Water Resources

Water provisions in H.R. 1 are more targeted in scope, with emphasis on conveyance infrastructure and rural source water protection. Four notable actions include:

1. Funding for Bureau of Reclamation conveyance and storage expansion;
2. Expansion of the Watershed Protection and Flood Prevention Act;
3. Support for Source Water Protection program; and
4. No new funding for municipal drinking water and wastewater infrastructure.

Investment in Bureau of Reclamation Infrastructure
The bill provides $1 billion (available through FY2034) for the construction, restoration and capacity expansion of existing water conveyance and surface water storage facilities operated by the Bureau of Reclamation. This investment supports efforts to enhance drought resilience and long-term water availability, particularly in Western states.

Watershed Protection Funding Increased
The Watershed Protection and Flood Prevention Act is amended to authorize $150 million annually (up from $50 million) beginning in FY2026, with funds remaining available until expended. This program enables the USDA's Natural Resource Conservation Service to offer technical and financial assistance for local watershed planning, flood mitigation and resource conservation.

Support for Source Water Protection Program
The Grassroots Source Water Protection Program is extended through FY2031 with $1 million in new funding beginning in FY2026. The program helps prevent contamination of surface and groundwater sources in rural and agricultural areas. While the funding is modest, the program represents a federal effort to assist small and underserved communities with drinking water safety.

No Additional Funding for Utility Infrastructure
The legislation does not include new investments for municipal water utilities, the Drinking Water State Revolving Fund, or wastewater treatment infrastructure. Utilities facing aging infrastructure or contaminants such as PFAS will likely need to rely on existing funding streams and state-level support.

Conclusion

The "One Big Beautiful Bill" includes a combination of infrastructure investments, policy changes and funding rescissions that reflect a shift in federal priorities. While the legislation preserves or expands funding for certain transportation and water projects, it also significantly reduces federal support for climate-focused, clean energy and equity-oriented programs.

These changes may reshape state and local strategies for delivering infrastructure, energy and environmental projects – particularly those relying on competitive grants or incentives. Entities pursuing clean transportation, renewable energy deployment, or environmental justice work may face new financial and regulatory challenges, while others may benefit from revised permitting timelines or enhanced federal investments in aviation and water storage.

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