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Two federal offices have released long-awaited parameters for implementing Buy America requirements revised by Congress in 2021’s Infrastructure Investment and Jobs Act (IIJA). On August 14, the Made in America Office (MIAO), a component of the White House Office of Management and Budget, released 162 pages of updated guidance for the multiple federal agencies administering domestic preference requirements under the IIJA’s “Build America, Buy America” (BABA) Act. On August 15, the U.S. Department of Transportation (U.S. DOT) finalized its waiver exempting certain de minimis costs and smaller projects from Buy America requirements.
The final guidance will support implementation of the Bipartisan Infrastructure Law’s (BIL) statutory requirements that manufactured products, construction materials, and iron and steel used in federally funded infrastructure projects are Made in America. It also sets forth these standards for construction materials while serving as a guide to agencies in using taxpayer dollars to strengthen the economy by supporting the creation of good jobs in both construction and manufacturing by expanding domestic production through infrastructure investment.
When President Biden signed the BIL, it represented a once-in-a-generation investment in the nation’s infrastructure, creating a historic opportunity to invest in American industry and workers by strengthening Made in America standards. Since the bill’s passage, the Biden-Harris Administration has made significant progress rebuilding roads and bridges, making public transportation accessible, investing in clean infrastructure, upgrading power grids to transmit clean energy, and more – with 37,000 projects funded and counting already. Since the president took office, over 13 million new jobs have been created, including 800,000 new manufacturing jobs nationwide. More than a half a trillion dollars in outside private investment has been made in manufacturing and clean energy, which is already helping grow the economy. Currently, spending on construction of manufacturing plants has nearly doubled in the last two years after growing only two percent during the previous four years.
Why it matters
For more than 40 years, Buy America has required a domestic manufacturing process for iron, steel and certain manufactured products permanently incorporated into federal-aid highway and transit projects. In the IIJA, Congress added “construction materials” to that coverage. Most of the policy dialogue on Buy America since the law’s enactment 21 months ago has focused on the scope and timing of that new provision. The American Road and Transportation Builders Association (ARTBA) has submitted comments, initiated meetings and otherwise remained in regular contact with MIAO, U.S. DOT and other federal officials as they have developed the directives released this week.
MIAO issued interim guidance in April 2022, then released a draft of its revised guidance for comment in February. ARTBA has prepared a “redline” comparison of the two versions for reference. Highlights of the final MIAO guidance include:
The document “is intended to be high-level coordinating guidance for Federal agencies to use in their own direct implementation of BABA.”
As requested by ARTBA and the Transportation Construction Coalition, MIAO clarifies that Buy America does not apply to “tools, equipment, and supplies, such as temporary scaffolding, brought to the construction site and removed at or before” the project’s completion.
The guidance reaffirms the IIJA’s congressional intent that covered “construction materials” include non-ferrous metals, plastic and polymer-based products, glass (including optic glass), lumber, and drywall. At the same time, it adds three new separate categories of covered materials: fiber optic cable (including drop cable), optical fiber and engineered wood.
Similarly, MIAO reiterates that covered “construction materials” do not include “cement and cementitious materials, aggregates such as stone, sand, or gravel, or aggregate binding agents or additives.” However, the guidance will not exempt these materials from coverage if they are part of a manufactured product brought to the job site, such as precast concrete. Wet concrete and hot mix asphalt will remain exempt.
The guidance delineates required, specific domestic manufacturing processes for all eight categories of covered construction materials. The new document notes that any particular item incorporated into a project will fall under just one category for purposes of Buy America compliance: iron, steel, construction materials and manufactured products.
Finally, the guidance recaps the policy for Buy America waivers, which the appropriate federal agency must post for public comment and submit to MIAO for review. Justifications for waivers include “unreasonable costs” (i.e. domestic products will increase a project’s cost by 25 percent or more), ”nonavailability” of domestically-manufactured products needed for the project, and “public interest.”
Meanwhile, U.S. DOT finalized a waiver first proposed – and supported by ARTBA – in November. The final version is somewhat narrower in scope than the original proposal. Key provisions include:
Exemption from all Buy America requirements for non-compliant products that total the lesser of $1 million or five percent of a project’s “total applicable costs.” The latter term represents the total cost of materials and manufactured products subject to Buy America on the project, minus iron and steel, which are already covered by very small de minimis exemptions, including on federal-aid highway projects.
Exemption from Buy America for an entire project when its total federal funding is below $500,000. (Previously, U.S. DOT stated that almost half of its relevant project awards in FY2022 fell under this threshold.)
The department acknowledges the de minimis exemption will save on a project’s administrative costs, in part because it may cover much of a project’s “commercially available off-the-shelf” (COTS) products, which are difficult to document and certify for Buy America compliance. ARTBA has raised these “COTS” concerns with federal officials for over a dozen years.
What’s next?
The MIAO guidance will take effect 60 days after its publication in the Federal Register, which is expected this week. The U.S. DOT waiver will apply to all relevant awards of federal funding as soon as it is published, which is also expected shortly.
ARTBA has remained in contact with officials – including those at MIAO and the Federal Highway Administration (FHWA) – this week and will be arranging opportunities for its members to learn more about the new policies. In advocating on Buy America issues, ARTBA will continue to oppose any interpretation of BABA which allows for coverage of aggregates and related materials, which it believes conflicts with clear congressional intent.
It is also important to note that FHWA is reviewing its longstanding waiver for manufactured products on federal-aid highway projects. ARTBA continues to support this important policy, without which the administrative costs for Buy America compliance will likely increase demonstrably.
For additional information on this final guidance, click here. Final Guidance text available here. Information courtesy of Livia Shmavonian, Made in America Director; and American Road & Transportation Builders Association (ARTBA).