Buy America Requirements for Manufactured Products, 17789-17804 [2024-05182]
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Federal Register / Vol. 89, No. 49 / Tuesday, March 12, 2024 / Proposed Rules
Issued this 27th day of February, 2024, in
Washington, DC.
Peter Paul Montgomery Buttigieg,
Secretary.
[FR Doc. 2024–04729 Filed 3–11–24; 8:45 am]
BILLING CODE P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 73
[Docket No. FDA–2024–C–1085]
Filing of Color Additive Petition From
Phytolon Ltd.
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notification of petition.
The Food and Drug
Administration (FDA or we) is
announcing that we have filed a
petition, submitted by Phytolon Ltd.,
proposing that the color additive
regulations be amended to provide for
the safe use of beetroot red for the
coloring of foods generally in amounts
consistent with current good
manufacturing practice.
DATES: The color additive petition was
filed on November 22, 2023.
ADDRESSES: For access to the docket to
read background documents or
comments received, go to https://
www.regulations.gov and insert the
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FOR FURTHER INFORMATION CONTACT:
Christopher Kampmeyer, Center for
Food Safety and Applied Nutrition,
Food and Drug Administration, 5001
Campus Dr., College Park, MD 20740,
240–402–1255.
SUPPLEMENTARY INFORMATION: Under
section 721(d)(1) of the Federal Food,
Drug, and Cosmetic Act ((21 U.S.C.
379e(d)(1)), we are giving notice that we
have filed a color additive petition (CAP
4C0326), submitted by Phytolon Ltd.,
Ha-Tsmikha St, Yokne’am Illit, Israel.
The petition proposes to amend the
color additive regulations in part 73 (21
CFR part 73), ‘‘Listing of Color
Additives Exempt From Certification,’’
to provide for the safe use of beetroot
red for the coloring of foods generally in
amounts consistent with current good
manufacturing practice.
The petitioner has claimed that this
action is categorically excluded under
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SUMMARY:
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21 CFR 25.32(r), which applies to an
action for substances which occur
naturally in the environment, and for
which the action does not alter
significantly the concentration or
distribution of the substance, its
metabolites, or degradation products in
the environment. In addition, the
petitioner has stated that, to their
knowledge, no extraordinary
circumstances exist. If FDA determines
a categorical exclusion applies, neither
an environmental assessment nor an
environmental impact statement is
required. If FDA determines a
categorical exclusion does not apply, we
will request an environmental
assessment and make it available for
public inspection.
Dated: March 7, 2024.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2024–05216 Filed 3–11–24; 8:45 am]
BILLING CODE 4164–01–P
17789
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SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
23 CFR Part 635
[Docket No. FHWA–2023–0037]
RIN 2125–AG13
Buy America Requirements for
Manufactured Products
Federal Highway
Administration (FHWA), U.S.
Department of Transportation (DOT).
ACTION: Notice of proposed rulemaking;
request for comments.
AGENCY:
Electronic Access and Filing
The FHWA is proposing to
discontinue its general waiver of Buy
America requirements for manufactured
products and in doing so require FHWA
recipients to start applying Buy America
requirements to manufactured products.
The FHWA is also proposing standards
for applying Buy America to
manufactured products should the
waiver be discontinued. The proposed
standards for applying Buy America to
manufactured products are consistent
with the Office of Management and
Budget’s (OMB) guidance implementing
the Build America, Buy America Act
(BABA) provisions of the Infrastructure
Investment and Jobs Act (also known as
the Bipartisan Infrastructure Law (BIL)).
DATES: Comments must be received on
or before May 13, 2024.
ADDRESSES: To ensure that you do not
duplicate your docket submissions,
please submit comments by only one of
the following means:
This document and all comments
received may be viewed online through
the Federal eRulemaking portal at
www.regulations.gov using the docket
number listed above. Electronic retrieval
help and guidelines are also available at
www.regulations.gov. An electronic
copy of this document may also be
downloaded from the Office of the
Federal Register’s website at
www.FederalRegister.gov and the U.S.
Government Publishing Office’s website
at www.GovInfo.gov.
All comments received before the
close of business on the comment
closing date indicated above will be
considered and will be available for
examination in the docket at the above
address. Comments received after the
comment closing date will be filed in
the docket and will be considered to the
extent practicable. In addition to late
comments, FHWA will also continue to
file relevant information in the docket
as it becomes available after the
comment period closing date and
interested persons should continue to
examine the docket for new material. A
final rule may be published at any time
SUMMARY:
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Federal Register / Vol. 89, No. 49 / Tuesday, March 12, 2024 / Proposed Rules
after the close of the comment period
and after FHWA has had the
opportunity to review the comments
submitted.
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I. Executive Summary
A. Purpose of the Regulatory Action
The FHWA is required, by statute, to
ensure that all FHWA-funded projects
only use steel, iron, and manufactured
products that are produced in the
United States. 23 U.S.C. 313. The
FHWA refers to these requirements as
‘‘Buy America’’ requirements. The Buy
America requirement for manufactured
products has existed in some form since
the enactment of the 1978 Surface
Transportation Assistance Act (1978
STAA), Public Law 95–599 (1978), with
those requirements being modified by
the 1983 Surface Transportation
Assistance Act (1983 STAA), Public
Law 97–424 (1983),1 which provides the
current Buy America requirement for
manufactured products. In 1983,
following the passage of the 1983 STAA,
FHWA determined that it would be in
the public interest to waive the Buy
America requirements for manufactured
products, creating the Manufactured
Products General Waiver that continues
to this day. See 48 FR 1946 (Jan. 17,
1983); 48 FR 53099 (Nov. 25, 1983). Due
to the Manufactured Products General
Waiver, manufactured products
permanently incorporated into FHWAfunded projects do not need to be
produced domestically, apart from
predominantly iron or steel
manufactured products and
predominantly iron or steel components
of manufactured products.
On November 15, 2021, the President
signed BIL (Pub. L. 117–58) into law.
The BIL includes the Buy America,
Build America Act (BABA), which
expands the coverage and application of
Buy America requirements in Federal
financial assistance programs for
infrastructure. BIL, div. G sections
70901–70953. Among other
requirements, BABA mandates that all
iron, steel, manufactured products, and
construction materials used in projects
supported by funds made available for
a Federal financial assistance program
for infrastructure be produced in the
United States. BABA section 70914.
BABA provides that this mandate
applies to such materials only to the
extent that a domestic content
procurement preference that meets the
requirements of section 70914 does not
already apply. BABA section 70917(a).
1 For clarity, while this law was enacted as the
Surface Transportation Assistance Act of 1982,
because it was enacted on January 6, 1983, it will
be referred to as the ‘‘1983 STAA.’’
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As FHWA has an existing statutory Buy
America requirement for steel, iron, and
manufactured products at 23 U.S.C. 313,
BABA’s savings provision means that
FHWA’s existing Buy America
requirements under 23 U.S.C. 313 apply
to these products. The BABA’s savings
provision, however, requires that any
domestic content procurement
preference at least meets the
requirements of section 70914. The
requirements of section 70914 apply the
definitions contained in section 70912,
including the definition of ‘‘produced in
the United States.’’ Accordingly, while
FHWA does not directly apply BABA’s
manufactured products requirements,
FHWA interprets BABA as requiring
FHWA’s Buy America requirements to
be generally consistent with the BABA
requirements that are applicable to
section 70914, including the BABA
definition of ‘‘produced in the United
States’’ for manufactured products at
section 70912(6)(B).
BABA also expresses a general policy
preference against general applicability
waivers like the Manufactured Products
General Waiver. Section 70914(d) of
BABA requires Federal Agencies to
review existing general applicability
waivers of Buy America requirements
by publishing in the Federal Register a
notice that: (i) describes the justification
for the general applicability waiver; and
(ii) requests public comments for a
period of not less than 30 days on the
continued need for the general
applicability waiver. As described in
further detail below, FHWA has
undergone that review.
Based on the contents of that review,
and after considering the President’s
policy, as embodied in Executive Order
(E.O.) 14005, ‘‘Ensuring the Future Is
Made in All of America by All of
America’s Workers,’’ to maximize the
use of goods, products, and materials
produced in the United States; the
intent of Congress, as expressed in
BABA’s preference against general
applicability waivers; the purpose and
goals of domestic content procurement
preferences and waivers; and FHWA’s
original rationale for issuing the
Manufactured Products General Waiver
compared to the current domestic
manufacturing situation, FHWA is
proposing the discontinuation of the
Manufactured Products General Waiver.
Simultaneously, FHWA is proposing to
modify its current regulations
implementing Buy America at 23 CFR
635.410 to set forth the standards for
when a manufactured product will be
considered to be ‘‘produced in the
United States’’ and therefore Buy
America-compliant. For uniformity and
consistency with BABA, FHWA is
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proposing that these standards mirror
the standards OMB has established for
BABA’s domestic content procurement
preference for manufactured products in
its final guidance implementing BABA
at 2 CFR part 184 (part 184).2 88 FR
57750.
B. Summary of the Major Provisions of
the Regulatory Action in Question
The FHWA is proposing to set
standards regarding its Buy America
requirement for manufactured products,
defining when a manufactured product
is ‘‘produced in the United States’’ for
the purposes of complying with 23
U.S.C. 313. Under this definition, which
mirrors the definition at section
70912(6)(B) of BABA and in part 184, to
be produced in the United States, a
manufactured product must be
manufactured in the United States and
have the cost of components of the
product that are mined, produced, or
manufactured in the United States be
greater than 55 percent of the total cost
of all components of the manufactured
product. The FHWA is also proposing to
mirror the standard in part 184 for how
to determine the cost of any component.
To provide clarity in presenting these
standards, FHWA is also proposing to
define ‘‘component,’’ ‘‘manufactured
product,’’ and ‘‘manufacturer,’’ with
these definitions again proposed to be
substantially similar to those used in
part 184.
In addition, FHWA is not proposing
to modify its current Buy America
requirements for iron and steel.3 To
distinguish between iron and steel
products, to which FHWA’s existing
Buy America requirements will
continue to apply, and manufactured
products, FHWA is proposing to adopt
the definitions of ‘‘iron or steel
products’’ and ‘‘predominantly of iron
or steel or a combination of both’’ found
in part 184.
In alignment with part 184, FHWA is
also establishing a separate
classification for excluded materials,
2 Throughout this document, references to part
184 refer to both the text in 2 CFR part 184 and the
Preamble published in the Federal Register.
3 The FHWA’s longstanding Buy America
requirements for iron and steel require that all
manufacturing processes of permanently
incorporated steel or iron materials, including
application of a coating, must occur in the United
States. 23 CFR 635.410(b)(1). BABA included
domestic content procurement preferences for iron
and steel at section 70912(2)(A), which require that
all manufacturing processes, from the initial
melting stage through the application of a coating,
occur in the United States. Since FHWA’s
requirements for iron and steel meet BABA’s
requirements for iron and steel, FHWA continues to
apply its existing Buy America requirements
unchanged. The FHWA notes, however, that its
current Buy America requirements for iron and
steel are substantially aligned with BABA’s.
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referred to as section 70917(c) materials
in part 184. These excluded materials
are cement and cementitious materials;
aggregates such as stone, sand, or gravel;
or aggregate binding agents or additives.
The FHWA is proposing to make clear
that, standing alone, these excluded
materials do not constitute a
manufactured product for which a Buy
America requirement applies. Under
FHWA’s proposed regulations, such
excluded materials may constitute a
component of a manufactured product
when combined with other materials,
including other excluded materials;
however, FHWA is proposing to
explicitly state that concrete and asphalt
mixtures delivered to a job site without
final form for incorporation into a
project are not manufactured products.
In addition, for clarity, FHWA is
proposing to make clear that a product
must either be classified as an iron or
steel product, a manufactured product,
an excluded material, or another
category specified by law or in 2 CFR
part 184, such as construction materials.
The FHWA believes that this, in concert
with the new definitions, will make
clear how recipients of FHWA financial
assistance should differentiate between
different materials and ensure that
multiple standards do not apply to a
single material, with exceptions for two
specific manufactured products
described below.
The FHWA proposes to deviate from
the part 184 by applying FHWA’s
existing Buy America requirements for
iron and steel to two specific types of
materials that may be used as
components of manufactured products,
with those manufactured products also
required to conform with FHWA’s
proposed Buy America requirements for
manufactured products.4 First, with
respect to precast concrete products that
are classified as manufactured products,
FHWA is proposing to require that any
iron or steel products that are
components of the precast concrete
product must conform with FHWA’s
existing Buy America requirements for
iron and steel. Second, with respect to
intelligent transportation systems and
other electronic hardware systems that
are installed in the highway right-ofway or other real property and classified
as manufactured products, FHWA is
proposing to require that any iron or
steel enclosures of such systems
conform with FHWA’s existing Buy
America requirements for steel and iron.
4 Unlike these proposed regulations, under part
184, materials should not be considered to fall into
multiple categories, and only need to meet the
domestic content procurement preference for only
the single category in which it is classified. See 2
CFR 184.4(e), (f).
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The FHWA is proposing these two
deviations from part 184 in order to
continue FHWA’s long-standing policy
of requiring the iron or steel in these
specified products to comply with the
Buy America requirements for iron and
steel, while also limiting the number of
products that must comply with two
different Buy America requirements.
Along with these iron and steel
requirements, under FHWA’s proposed
standards, precast concrete and such
electronic hardware systems, when
classified as manufactured products,
would still need to meet FHWA’s
proposed standards for manufactured
products; therefore, the cost of the iron
and steel within the products shall
count toward the 55 percent domestic
content threshold.
C. Benefits and Costs
The preliminary regulatory impact
analysis (RIA) prepared pursuant to
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ and available in
the rulemaking docket, analyzes the
costs and benefits associated with
establishing Buy America requirements
for manufactured products. The RIA
discusses anticipated benefits of the rule
qualitatively, as they could not be
quantified. Expected benefits include
protecting and expanding domestic
manufacturing, increasing supply chain
resiliency, and increasing consistency in
applying domestic content procurement
preferences for manufactured products
between FHWA and other Federal
Agencies that are subject to the
requirements of BABA. Expected costs
of the proposed rule relate to increased
material costs for manufactured
products used in highway construction
projects, project delay, and the
administrative costs to FHWA and
recipients of FHWA financial assistance.
At this time, FHWA is only able to
quantify costs for the increased material
costs and the administrative costs to
FHWA. The FHWA estimates the
increased material costs for
manufactured products permanently
incorporated into FHWA-funded
projects to range from a high of roughly
$737 million per year to a low of $45
million per year. The FHWA further
estimates an additional $167,000 per
year in increased FHWA administrative
costs. The other administrative costs to
recipients of FHWA financial assistance
and the costs associated with project
delivery delay have not been quantified.
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II. Background
A. History of FHWA’s Manufactured
Products Domestic Content Procurement
Preference and Manufactured Products
General Waiver
The FHWA’s Buy America
requirements for the Federal-aid
highway program were first established
in 1978 by Section 401 of the 1978
STAA, which imposed a Buy America
requirement to certain unmanufactured
and manufactured articles, materials,
and supplies. Following enactment of
the 1978 STAA, FHWA issued an
emergency rule to implement the Buy
America requirement of Section 401.
See 43 FR 53717 (Nov. 17, 1978). In that
rule, FHWA determined that it was in
the public interest to temporarily waive
the provisions of Section 401 of the
1978 STAA to all products and
materials other than structural steel. 43
FR at 53717. The FHWA based this
determination on its belief that the
implementation of the statutory text of
Section 401 would have a major impact
on the Federal-aid highway program
and that foreign structural steel was the
only foreign product with a significant
nationwide effect on the cost of Federalaid highway construction projects. Id.
In 1980, following this emergency
rule, FHWA issued an NPRM to
establish regulations implementing
Section 401 of the 1978 STAA. 45 FR
77455 (Nov. 24, 1980). In that NPRM,
FHWA proposed to extend the coverage
of Buy America requirements to all steel
construction materials used in highway
construction projects, while excluding
all other materials and products from
coverage under Section 401. 45 FR at
77455. Again, FHWA stated that
because foreign steel was identified as
the only foreign commodity having a
significant nationwide effect on the cost
of Federal-aid highway construction
projects, it was only necessary to
implement Buy America requirements
for steel products. Id. The FHWA
acknowledged that natural materials,
such as sand, stone, gravel, and earth
materials; and petroleum and
petroleum-based products, such as
fuels, lubricants, and bituminous
products, were two other commodities
used in large amounts for Federal-aid
highway projects, but FHWA proposed
not to apply Buy America requirements
to such materials. Id. The FHWA found
that there was limited foreign
competition in natural materials
because of the difficulty and high cost
of transporting them due to their bulk
and weight; as these materials were
therefore usually domestically sourced,
FHWA found it unnecessary to apply
Buy America requirements to them. Id.
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For petroleum and petroleum-based
products, FHWA determined that such
products were not available from
domestic sources in sufficient and
reasonably available quantities,
justifying their exemption from FHWA’s
proposed Buy America requirements. Id.
For all other manufactured products
covered by Section 401 of the 1978
STAA, FHWA determined that they
were not used in sufficient quantity to
have any appreciable effect on the
overall cost of a project and did not
require the protection of Buy America.
The FHWA therefore proposed in the
1980 NPRM not to apply Buy America
requirements to such products.
Prior to this rulemaking being
finalized, Congress enacted the 1983
STAA, which repealed Section 401 of
the 1978 STAA and instituted new Buy
America requirements that are similar to
those that exist today. Section 165(a)
applied Buy America requirements to
all steel, cement, and manufactured
products used on FHWA-funded
projects.5 Subsection 165(b) provided
that FHWA could waive the provisions
of subsection 165(a) if their application
would be inconsistent with the public
interest; if such materials and products
are not produced in the United States in
sufficient and reasonable quantities and
of a satisfactory quality; or if the
inclusion of domestic material(s) would
increase the cost of the overall project
by more than 25 percent.6
Shortly after the enactment of the
1983 STAA, FHWA issued an interim
5 The Buy America requirement for cement was
eliminated by Congress in 1984. See Public Law 98–
229. In addition, Congress added a Buy America
requirement for iron in 1991. See Public Law 102–
240. The FHWA’s current Buy America
requirements for steel, iron, and manufactured
products were codified at 23 U.S.C. 313 by Section
1903 of the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users
(SAFETEA–LU) in 2005. Public Law 109–59.
6 Section 165(b)(3) of the 1983 STAA also allowed
for a waiver of the provisions in subsection 165(a)
in the case of the procurement of bus and other
rolling stock under the Urban Mass Transportation
Act of 1964 if the cost of components which are
produced in the United States is more than 50
percent of the cost of all components of the vehicle
or equipment; and final assembly of the vehicle or
equipment has taken place in the United States.
This use of components is referenced in subsection
165(c) of the 1983 STAA, which states that for the
purposes of Section 165, in calculating components’
costs, labor costs involved in final assembly cannot
be included. Subsection 165(c) was modified by
Section 337 of the Surface Transportation and
Uniform Relocation Assistance Act of 1987 (Pub. L.
110–17), raising the threshold for the cost of
components. In addition, Section 337(b) of the
Surface Transportation and Uniform Relocation
Assistance Act of 1987 amended Section 165(b)(3)
of the 1983 STAA to refer to the cost of all
subcomponents, as well as components. Section
165(b)(3) was ultimately repealed by Section 4(r) of
Public Law 103–272 in 1994; however, subsection
165(c) of the 1983 STAA remains codified at 23
U.S.C. 313(c).
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final rule implementing Section 165. 48
FR 1946 (Jan. 17, 1983). In this rule,
FHWA again determined that it was in
the public interest to temporarily waive
the provisions of Section 165 of the
1983 STAA as they applied to all
manufactured products other than
cement. 48 FR at 1946. The FHWA
based this decision ‘‘on the fact that
sufficient information is not yet
available in order to adequately assess
the impacts of applying Buy America
provisions to all manufactured products
and to all projects regardless of project
cost.’’ Id. The FHWA also noted that
applying a Buy America requirement for
all manufactured products would
require tracing the origin of components
used in petroleum-based products,
which FHWA stated was extremely
difficult to do. Id.
In late 1983, FHWA issued its final
rule implementing Section 165 of the
1983 STAA, creating its current Buy
America regulations at 23 CFR 635.410.
48 FR 53099 (Nov. 25, 1983). Once
more, FHWA found that a waiver of Buy
America requirements for manufactured
products was in the public interest,
thereby creating the Manufactured
Products General Waiver, which still
remains in effect 40 years later.7 48 FR
at 53102. The FHWA found that most
responses from product manufacturers
‘‘recommended that manufactured
products should be excluded from Buy
America and/or expressed only a
passing interest in the regulation.’’ 48
FR at 53101. For manufacturers that
wanted Buy America requirements
applied to manufactured products,
FHWA stated that these manufacturers
primarily expressed this opinion
because they opposed unfair foreign
trade practices, and that ‘‘protectionism
in terms of a Buy America regulation on
all manufactured products would not
serve this purpose.’’ Id. Rather than
apply Buy America requirements for
manufactured products to remedy this
concern, FHWA stated that unfair
practices could be instead addressed
through import laws. Id. at 53102.
Further, FHWA determined that it was
not the intent of Congress in enacting
the 1983 STAA for FHWA to apply a
Buy America requirement to
manufactured products; FHWA noted
that it had consistently waived
manufactured products from coverage
7 The FHWA’s regulations implementing Buy
America have also remained consistent since 1983,
apart from reacting to statutory changes by
removing a reference to a Buy America requirement
for cement (49 FR 18820 (May 3, 1984)) when
Congress removed that Buy America requirement
and adding a reference to a Buy America
requirement for iron (58 FR 38973 (July 21, 1993))
after Congress added that requirement.
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under Buy America laws and Congress
did not specifically direct a change in
that policy in enacting 1983 STAA,
which FHWA interpreted to mean that
not all manufactured products had to be
covered by the requirements of Section
165. Id. at 53101–02. Finally, FHWA
reiterated that materials and products
other than steel, cement, asphalt, and
natural materials comprised a small
percent of the highway construction
program; that other manufactured
products were minimally used and there
would be little economic effect to
applying Buy America requirements to
them; and that it would be difficult and
administratively burdensome to identify
the various materials comprising
manufactured products and trace their
origin. Id. at 53102.
B. Current FHWA Buy America
Requirements Under 23 U.S.C. 313
Currently, 23 U.S.C. 313(a) requires
that all steel, iron, and manufactured
products used in FHWA-funded projects
be produced in the United States. Per 23
U.S.C. 313(h), these Buy America
requirements apply to all contracts that
are eligible for FHWA assistance
regardless of the funding source if any
contract within the scope of a
determination under the National
Environmental Policy Act (NEPA)
involves an obligation of Federal funds.
For purposes of section 70917 of BABA,
FHWA considers 23 U.S.C. 313 to be a
domestic content procurement
preference in existence at the time of the
enactment of BIL meeting the
requirements of section 70914 with
respect to iron, steel and manufactured
products for all financial assistance that
is administered under title 23, U.S.C.8
However, as noted above in Section II.A,
in 1983, FHWA issued a public interest
waiver of general applicability of
FHWA’s Buy America requirement for
manufactured products, known as the
Manufactured Products General Waiver.
Thus, were FHWA to discontinue this
waiver, FHWA would need to establish
standards for the application of Buy
America to manufactured products that
meet or exceed the requirements of
section 70914. Accordingly, FHWA is
publishing this NPRM to propose such
standards.
8 Financial assistance made available for Federal
Lands Management Agencies under the Federal
Lands Transportation Program is subject to the Buy
American Act provision (41 U.S.C. 8301–8303)
under the Federal Acquisition Regulations.
Throughout this document, FHWA refers to the
projects subject to FHWA’s Buy America
requirements as ‘‘FHWA-funded projects.’’
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C. Administration Priorities
In January 2021, President Biden
issued E.O. 14005, titled ‘‘Ensuring the
Future is Made in All of America by All
of America’s Workers’’ (86 FR 7475, Jan.
28, 2021). The E.O. sets forth a policy
that Federal Agencies should, consistent
with applicable law, maximize the use
of goods, products, and materials
produced in, and services offered in, the
United States. The E.O. helps promote
private sector investment in the
production of goods critical to our
national security and economic
stability. It is a policy of this
Administration, exemplified by this
E.O., to bolster domestic supply chains
and, in doing so, create jobs, strengthen
our manufacturing sector, and create
economic opportunities for more of
America’s small businesses. Indeed,
President Biden emphasized the
importance of using domestic products
in American roads, bridges, and
highways in his 2023 State of the Union
Address.9
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D. Build America, Buy America Act
On November 15, 2021, the President
signed into law BIL, which includes
BABA. The BABA requires that all iron,
steel, manufactured products, and
construction materials made available
for a Federal financial assistance
program for infrastructure be produced
in the United States. BABA section
70914. The BABA, however, provides
that the preferences under section 70914
apply only to the extent that a domestic
content procurement preference as
described in section 70914 does not
already apply to iron, steel,
manufactured products, and
construction materials. BABA section
70917(a)–(b). As FHWA has existing
Buy America domestic content
preferences for steel, iron, and
manufactured products at 23 U.S.C. 313,
BABA’s preferences for those materials
do not explicitly apply to FHWA. The
FHWA does, however, apply BABA’s
domestic preference requirement for
construction materials.10
9 As stated by President Biden: ‘‘And on my
watch, American roads, bridges, and American
highways are going to be made with American
products as well.’’ See https://www.whitehouse.gov/
state-of-the-union-2023/.
10 Along with applying BABA’s domestic
preference requirement for construction materials,
section 70916(c) of BABA requires FHWA to
consult with the Director of the Hollings
Manufacturing Extension Partnership regarding
whether there is a domestic entity that could
provide the iron, steel, manufactured product, or
construction material that is the subject of the
proposed waiver before FHWA grants a waiver
under either its Buy America requirements for iron,
steel, and manufactured products and under
BABA’s domestic preference requirement for
construction materials.
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Under BABA, all manufactured
products must be ‘‘produced in the
United States.’’ BABA section 70914.
With respect to manufactured products,
BABA defines ‘‘produced in the United
States’’ to mean that (1) the
manufactured product was
manufactured in the United States and
(2) the cost of the components of the
manufactured product that are mined,
produced, or manufactured in the
United States is greater than 55 percent
of the total cost of all components of the
manufactured product, unless another
standard for determining the minimum
amount of domestic content of the
manufactured product has been
established under applicable law or
regulation. BABA section 70912(6)(B).
In addition, BABA expresses a general
policy preference against general
applicability waivers, such as the
Manufactured Products General Waiver.
For example, section 70913(c) of BABA
requires Federal Agencies to identify
‘‘deficient programs’’ for financial
assistance, which includes programs
that are ‘‘subject to a waiver of general
applicability not limited to the use of
specific products for use in a specific
project.’’ BABA section 70913(c)(2).
Section 70914(d) of BABA also requires
Federal Agencies to review existing
general applicability waivers of Buy
America requirements by publishing in
the Federal Register a document that: (i)
describes the justification for the general
applicability waiver; and (ii) requests
public comments for a period of not less
than 30 days on the continued need for
the general applicability waiver.
Following the initial notice and review
and consideration of comments
received, BABA requires Federal
agencies to publish in the Federal
Register a determination on whether to
continue or discontinue the general
applicability waiver. BABA section
70914(d)(2)(B). On March 17, 2023, at
88 FR 16517, FHWA published the
required notice to initiate its review of
the Manufactured Products General
Waiver in the Federal Register (‘‘2023
RFC’’). The FHWA discusses the
comments received for the 2023 RFC in
section III.
E. OMB’s Guidance on BABA
The BABA further required OMB to
issue guidance to assist in applying
BABA’s requirements. BABA section
70915. On April 18, 2022, OMB issued
memorandum M–22–11, ‘‘Initial
Implementation Guidance on
Application of Buy America Preference
in Federal Financial Assistance
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Programs for Infrastructure,’’ 11 which
was rescinded and replaced by
memorandum M–24–02,
‘‘Implementation Guidance on
Application of Buy America Preference
in Federal Financial Assistance
Programs for Infrastructure’’ on October
25, 2023 (‘‘Implementation
Guidance’’).12 Section VI of the
Implementation Guidance warns against
overly broad waivers, stating that they
‘‘undermine market signals designed to
boost domestic supply chains,
particularly for key articles, materials,
and supplies in critical supply chains,’’
and that ‘‘[w]aivers that are overly broad
will tend to undermine domestic
preference policies.’’ Section VI also
states that public interest waivers of
domestic content procurement
preferences ‘‘must be used judiciously
and construed to ensure the maximum
utilization of goods, products, and
materials produced in the United
States.’’ The Implementation Guidance
goes on to state that whether a waiver
is in the public interest will depend
upon numerous factors, such as the
nature and amount of resources
available to the recipient; the value of
the items, goods, or materials in
question; the potential domestic job
impacts; and other policy
considerations, including sustainability,
equity, accessibility, performance
standards, and the domestic content (if
any) of and conditions under which the
non-qualifying good was produced. In
terms of general applicability waivers,
section VI of the Implementation
Guidance states that Agencies ‘‘should
align such waivers with complementary
policies, such as work to boost supply
chain resiliency and domestic
employment’’ and that such waivers
‘‘should include appropriate expiration
dates designed to ensure that, once
available, Buy America qualifying
products receive appropriate
consideration.’’
On August 23, 2023, at 88 FR 57750,
OMB revised its guidance in title 2 of
the CFR to add a new part 184 that
provides additional guidance on
implementing BABA. Part 184 includes
definitions for key terms, including iron
or steel products, predominantly of iron
or steel or a combination of both,
manufactured products, component,
and manufacturer. 2 CFR 184.3. In line
with section 70912(6)(B) of BABA, 2
CFR 184.3 states that a manufactured
product is ‘‘produced in the United
11 https://www.whitehouse.gov/wp-content/
uploads/2022/04/M-22-11.pdf.
12 https://www.whitehouse.gov/wp-content/
uploads/2023/10/M-24-02-Buy-AmericaImplementation-Guidance-Update.pdf.
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States’’ if the product was manufactured
in the United States; and the cost of the
components of the manufactured
product that are mined, produced, or
manufactured in the United States is
greater than 55 percent of the total cost
of all components of the manufactured
product, unless another standard that
meets or exceeds this standard has been
established under applicable law or
regulation for determining the minimum
amount of domestic content of the
manufactured product. Part 184 also
provides guidance for determining the
cost of components of manufactured
products. Pursuant to 2 CFR 184.5, in
determining whether the cost of
components for manufactured products
is greater than 55 percent of the total
cost of all components, there are two
standards depending on the origin of the
component. For components purchased
by the manufacturer, the cost of the
component is the acquisition cost,
including transportation costs to the
place of incorporation into the
manufactured product (whether or not
such costs are paid to a domestic firm),
and any applicable duty (whether or not
a duty-free entry certificate is issued). 2
CFR 184.5(a). For components
manufactured by the manufacturer, the
cost of the component is all costs
associated with the manufacture of the
component, including transportation
costs described in 2 CFR 184.5(a), plus
allocable overhead costs, but excluding
profit and any costs associated with the
manufacture of the manufactured
product. 2 CFR 184.5(b).
Part 184 also states that an article,
material, or supply should only be
classified as either an iron or steel
product, manufactured product,
construction material, or section
70917(c) material,13 that the
classification must be made based on
the status of the material at the time it
is brought to the work site for
incorporation into an infrastructure
project, and that the material must meet
the Buy America standards for only the
single category in which it is classified.
2 CFR 184.4(e)–(f).
Again, part 184 does not, by its own
terms, apply to FHWA’s Buy America
requirements for steel, iron, and
manufactured products; it only applies
to FHWA’s domestic content
procurement preference for construction
materials.14 2 CFR 184.2(a). Part 184
does, however, apply to all Federal
financial assistance programs for
infrastructure that are administered by
Federal Agencies that did not have a
domestic content procurement
preference for steel, iron, and
manufactured products meeting or
exceeding BABA’s requirements.
13 Part 184 defines a section 70917(c) material as
cement and cementitious materials; aggregates such
as stone, sand, or gravel; or aggregate binding agents
or additives. See 2 CFR 184.3. These materials are
named section 70917(c) materials in part 184
because they are referred to in section 70917(c) of
BABA.
14 Since 23 U.S.C. 313 did not specifically apply
to ‘‘construction materials,’’ FHWA did not have a
domestic content procurement preference in effect
for these products for purposes of section 70917 of
BABA. Therefore, the provisions of BABA as
interpreted by OMB apply to construction
materials.
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III. March 17, 2023, Request for
Comments
A. Overview of Comments Received
Pursuant to section 70914(d) of
BABA, FHWA published the March 17,
2023, Request for Comments (RFC),
seeking comments on whether to
continue or discontinue the
Manufactured Products General Waiver.
88 FR 16517. The FHWA received 9,496
comments; however, a vast majority of
these comments received were ‘‘form’’
comments that were functionally
identical to each other, with only
occasional minor changes to the
comments themselves under the names
of different commenters. The majority of
these form comments expressed support
for discontinuing the Manufactured
Products General Waiver, although there
were also form comments that
supported continuing the waiver. While
FHWA believes that form comments
might broadly indicate the level of
support or opposition to the waiver, no
form comment provided substantive
analysis regarding the benefits or costs
of continuing or discontinuing the
Manufactured Products General Waiver.
Excluding the form comments, FHWA
received 134 unique, substantive
comments from State departments of
transportation, manufacturers, State
government agencies, labor
organizations, construction contractors,
industry associations, members of
Congress, and individuals. The FHWA
briefly discusses the main topics
brought up by commenters who
supported and opposed the
Manufactured Products General Waiver
below.
B. Comments in Favor of Continuing the
Manufactured Products General Waiver
Commenters who were in favor of
continuing the Manufactured Products
General Waiver generally presented
similar points. Such commenters stated
that removing the waiver (1) would
likely increase project costs due to the
increased cost of domestically produced
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products or due to the reduced size of
the market for Buy America-compliant
products; (2) would likely lead to
project delays or cancellations due to
the difficulty or inability to acquire Buy
America-compliant products, partly due
to a limited supply of such products; (3)
may prevent the use of specific products
because some products or their
components not currently produced
domestically and onshoring will take
time, if it occurs at all, given the size of
the market for Buy America-compliant
products and components; and (4)
would result in significant challenges if
contracting agencies, contractors, and
manufacturers were required to track
the origin of a product’s components,
which commenters claimed would be
worsened if these entities also had to
track the cost of a product’s
components. Many commenters argued
that these issues were particularly
pronounced and any benefits of
rescinding the Manufactured Products
General Waiver would be limited given
their assertions that the cost and amount
of manufactured products used in
highway construction projects are
insignificant relative to the rest of the
materials used in highway construction
projects.
Commenters acknowledged that, were
FHWA to rescind the Manufactured
Products General Waiver and apply Buy
America requirements for manufactured
products, a waiver could be obtained for
manufactured products that are not
available from domestic sources;
however, commenters argued that going
through the waiver process would
inevitably take time and therefore slow
construction down, add administrative
burden, and may result in duplicative
waivers continually being requested for
the same product that is included in
multiple projects.
C. Comments in Favor of Discontinuing
the Waiver
Comments in favor of discontinuing
the waiver and applying Buy America
requirements on manufactured products
generally espoused the belief that doing
so would restore America’s
manufacturing base, create and protect
American jobs, and stimulate domestic
economic growth. Commenters also
noted that recent supply chain
disruptions indicate the benefit of
producing products in the United States
and minimizing dependence on foreign
sources, which these commenters
argued also supports America’s national
security. Commenters who favored
discontinuing the Manufactured
Products General Waiver, in general,
stated their belief that when taxpayer
dollars are spent on federally financed
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infrastructure projects, those dollars
should go to domestically produced
products.
Commenters also argued that
rescinding the Manufactured Products
General Waiver would provide an
incentive for companies to invest in
U.S. manufacturing, which they argued
the current Manufactured Products
General Waiver disincentivizes.
Commenters noted that switching from
foreign-produced products to
domestically produced products would
reward companies that have moved
production onshore, hired American
workers, and conducted their operations
in compliance with strong U.S.
environmental and worker safety
regulations. As one commenter stated,
each time FHWA employs the
Manufactured Products General Waiver,
it fails to account for whether a Buy
America requirement for manufactured
products was feasible, let alone
probable. Another commenter stated
that strong domestic content standards
send demand signals for companies to
invest in domestic production and
workers. In a similar vein, commenters
argued that the continued existence of
the waiver eliminates any incentive for
future domestic investment for
manufactured products used on FHWAfunded projects. Commenters also
pointed out that companies that wish to
make manufactured products for
FHWA-funded projects domestically do
not receive any protection under the
Manufactured Products General Waiver
and must instead compete with foreign
imports. Commenters further noted that
the Manufactured Products General
Waiver encourages the use of cheaper
foreign-produced manufactured
products on FHWA-funded projects and
denies opportunities for U.S.
manufacturing workers.
Despite these issues, some
manufacturers and contracting agencies
also indicated that they intend to
increase domestic manufacturing
capacity in response to the increased
Federal transportation investments
brought about by BIL, which indicates
that there may be expansion capabilities
for manufacturers who wish to produce
Buy America-compliant manufactured
products. Other manufacturers
commented that they believed they were
able to produce a Buy Americacompliant product and therefore desired
the rescission of the current waiver to
take advantage of the market for Buy
America-compliant products. These
manufacturers stated that because of the
Manufactured Products General Waiver,
they must compete with foreign
manufacturers who may seek to
undermine their pricing, have their
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products subsidized by foreign
governments, or dump their products
into the U.S. market.
In addition, commenters stated their
belief that the Manufactured Products
General Waiver was an inappropriate
use of FHWA’s waiver authority when
it was issued in 1983, arguing that the
1983 STAA clearly directed and
intended that FHWA require the use of
U.S.-produced manufactured products
in FHWA-funded projects.
Commenters also stated that the
Manufactured Products General Waiver
is inconsistent with the intent of
Congress, as seen through the enactment
of BIL. These commenters pointed to the
fact that, where it applies, section 70914
of BIL requires the head of each Federal
Agency to ensure that none of the funds
available for a Federal financial
assistance program for infrastructure
may be obligated unless all of the
manufactured products used in the
project are produced in the United
States; section 70913(c) of BIL defines
programs for which a domestic content
procurement preference requirement is
subject to a waiver of general
applicability not limited to the use of
specific products for use in a specific
project, like the Manufactured Products
General Waiver, as ‘‘deficient
programs;’’ and that section 70914(d) of
BIL requires Federal Agencies to review
existing waivers of general applicability
and determine whether to continue or
discontinue them.
IV. Proposed Discontinuation of the
Manufactured Products General Waiver
The FHWA has carefully considered
comments received on the 2023 RFC,
the purpose of its Buy America
requirements, the rationale provided by
FHWA in issuing the Manufactured
Products General Waiver in 1983, the
priorities of the Administration, and the
goal of Congress in enacting the
domestic content procurement
preferences in BABA, in determining
whether the Manufactured Products
General Waiver remains in the public
interest. After considering this
information, FHWA has decided to
propose to discontinue the
manufactured products waiver.
First, both the intent of Congress, as
expressed in secs. 70933 and 70935 of
BABA, and the President’s policy for the
Federal Government, as expressed in
section 1 of E.O. 14005, is that Federal
Agencies should use terms and
conditions in Federal financial
assistance awards to maximize the use
of goods, products, and materials
produced in the United States.
Continuing the long-standing
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Manufactured Products General Waiver
is not consistent with these policy goals.
Second, FHWA believes it is
important to recognize the purpose of
domestic content procurement
preferences when considering whether a
waiver is applicable and in the public
interest. The Congressional findings in
section 70911 of BABA are instructive
regarding the purposes of domestic
content procurement preferences. In
general, the findings provide that
taxpayers expect that publicly funded
infrastructure will be produced in the
United States by American workers,
applying America’s high environmental,
worker, and workplace safety standards;
that taxpayer dollars should not reward
companies that have moved their
operations and jobs to foreign countries;
that publicly funded infrastructure
projects should seek to prevent shifts in
manufacturing to foreign countries, who
may use less energy efficient and more
polluting manufacturing methods, from
the United States; that such projects
should create a demand for domestically
produced goods, helping to sustain and
grow domestic manufacturing and the
jobs domestic manufacturing supports
throughout product supply chains; and
that taxpayer funding should sustain a
robust domestic manufacturing sector,
which is a vital component of the
national security of the United States.
See BABA section 70911. Continuing
the long-standing Manufactured
Products General Waiver continues to
undermine the expressed purposes that
domestic content procurement
preferences, such as FHWA’s Buy
America requirement, are intended to
serve.
Third, OMB’s Implementation
Guidance conveys a policy that waivers,
including waivers of general
applicability like the Manufactured
Products General Waiver, should not be
overly broad in order to ensure that any
such waivers appropriately convey
market signals on where the domestic
supply chain can be bolstered for
American manufacturers to take
advantage of. The Implementation
Guidance further provides that such
waivers should also be time-limited to
ensure that, once available, Buy
America-compliant materials can
receive appropriate consideration for
inclusion in federally funded projects.
The Manufactured Products General
Waiver is inconsistent with these
general principles.
Taking into account these above
references, FHWA believes the
Manufactured Products General Waiver
is overly broad. The FHWA has
considered comments stating that
manufactured products that can be
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manufactured domestically are more
likely to be ignored in favor of cheaper
foreign products for use on FHWAfunded projects. The FHWA agrees with
these commenters that the
Manufactured Products General Waiver
disincentivizes manufacturers from
domestically producing products by
covering all manufactured products
without discretion, rather than
specifically targeting those that would
warrant a waiver under the waiver
criteria in 23 U.S.C. 313(b). Further,
FHWA believes the broadness of the
Manufactured Products General Waiver
can be seen in the fact that it applies to
any newly created manufactured
product without an analysis of whether
coverage of that product is in the public
interest.
The Manufactured Products General
Waiver also fails to provide domestic
manufacturers who wish to produce
products for FHWA-funded projects
with knowledge of the current gaps in
the domestic manufacturing sector. By
covering all manufactured products, the
Manufactured Products General Waiver
does not provide market signals that
distinguish between manufactured
products that are made domestically but
not included in FHWA-funded projects
because the products are more
expensive than foreign products and
manufactured products that are not
produced domestically at all. This lack
of clarity hinders manufacturers who
wish to enter the market from
understanding the competitive
landscape, disincentivizing them from
attempting to provide domestic
manufactured products for FHWAfunded projects.
The FHWA believes it is important to
compare its current understanding of
the purpose and need for waivers with
the fundamental underpinnings of the
Manufactured Products General Waiver
when it was issued in 1983. At that
time, FHWA stated that a waiver was
necessary because of the costs of
applying a Buy America requirement to
manufactured products—primarily the
burden in identifying and tracing the
origin of the components of
manufactured products—while those
products comprised only a small
percent of the highway construction
program. 48 FR at 53102. While FHWA
recognized these costs, FHWA did not
seemingly perceive any benefits of a
Buy America requirement for
manufactured products because it
believed that manufacturers would not
produce Buy America-compliant
products due to the limited demand
created by FHWA-funded projects; such
nonexistent products would thus not
require Buy America protection. In
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other words, when issuing the
Manufactured Products General Waiver,
FHWA presumed at the time that
domestic manufacturers would not
produce Buy America-compliant
products. The purpose of the waiver
was thus to allow for the incorporation
of products from foreign sources to fill
what FHWA perceived would always be
gaps in domestic manufacturing. It
assumed that domestic manufacturing
would not produce Buy Americacompliant products and thus believed
this assumption compelled the need for
a broad waiver of general applicability.
The FHWA no longer agrees with this
premise and is accordingly proposing to
discontinue the Manufactured Products
General Waiver. The FHWA notes that
the Federal-aid highway program has
grown considerably with the enactment
of new funding programs that provide
new eligibilities since the Manufactured
Products General Waiver was
established in 1983. As shown by
commenters, domestic manufacturers
are available to produce Buy Americacompliant products used in Federal-aid
highway funding programs. Keeping the
Manufactured Products Waiver in place
provides no incentive for new domestic
manufacturers to enter the market or for
existing domestic manufacturers to
begin producing Buy Americacompliant products. For nascent
industries that produce manufactured
products used in FHWA-funded
projects, the Manufactured Products
General Waiver also discourages
companies from investing in domestic
manufacturing that may be able to
compete globally once the domestic
manufacturers have built up expertise.
Further, FHWA believes that due to the
development of new kinds of
manufactured products as well as the
expansion of program eligibilities, such
as the establishment of the Surface
Transportation Block Grant Program and
Congestion Mitigation and Air Quality
Improvement Program, manufactured
products as a category are used more
often now than when the Manufactured
Products General Waiver was issued
and accordingly have a larger economic
effect now. When issuing the waiver in
1983, FHWA stated that materials and
products other than steel, cement,
asphalt, and natural materials
comprised a small percentage of the
highway construction program.
Commenters on the 2023 RFC, however,
referenced numerous other products
that they believed would be affected by
rescission of the Manufactured Products
General Waiver, such as ITS hardware,
traffic signals and controllers, and
vehicle detection equipment.
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Unlike the Manufactured Products
General Waiver, FHWA instead
believes, in line with OMB’s
Implementation Guidance, that waivers
should aim to proactively encourage
domestic manufacturing by providing
clear market signals about which
markets domestic manufacturers can
enter with the reasonable expectation
that their products could adequately
compete for use on FHWA-funded
projects. The FHWA acknowledges that
waivers may be necessary in some
circumstances but believes that waivers
should seek to identify areas where
domestic manufacturing can fill gaps
and actively encourage such activity.
Accordingly, FHWA believes that the
Manufactured Products General Waiver
is overly broad, no longer in line with
the purpose of domestic content
procurement preferences and waivers,
and therefore no longer serves the
public interest. The FHWA is thus
proposing to discontinue the
Manufactured Products General Waiver.
In doing so, FHWA seeks to encourage
manufacturers to supply Buy Americacompliant products to FHWA-funded
projects and to encourage other
manufacturers to shift their production
to the United States to take advantage of
this market.
The FHWA believes that rescinding
the Manufactured Products General
Waiver will also provide many benefits
to the United States, such as protecting
and increasing domestic manufacturing
and manufacturing jobs, providing an
opportunity for manufacturing
innovations to occur domestically, and
creating a more resilient domestic
supply chain and protecting national
security. In addition, FHWA expects
increases in domestic manufacturing to
benefit related domestic industries, such
as component manufacturers and
material and product transporters.
At the same time, FHWA understands
that discontinuing the Manufactured
Products General Waiver and applying
Buy America requirements on
manufactured products may result in
cost increases, project delays, and
product unavailability if not done
carefully. The FHWA acknowledges that
there may be some products that are not
currently produced in the United States
and, for various reasons, might not be
able to be produced in the United States
in the near future. For such products,
FHWA intends to consider whether it
should propose any targeted waivers,
with these waivers providing a timeline
to encourage manufacturers to ramp up
domestic production. To that end,
FHWA is concurrently publishing a
Request for Information (RFI), seeking
specific and detailed information on
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what products are not and cannot be
produced in the United States in the
near future. Based on information
received, FHWA intends to propose
time-limited and targeted waivers
covering such products, if it determines
it would be appropriate to do so. The
FHWA believes that issuing targeted
waivers for certain manufactured
products presents a better model than
the current Manufactured Products
General Waiver, which does not
consider the availability of individually
manufactured products and has no set
ending in order to incentivize the
onshoring of manufacturing.
With the FHWA RFI, FHWA seeks to
mitigate the concerns posed by
commenters that rescinding the waiver
will cause cost increases and project
delays by ensuring the continued
availability of necessary manufactured
products. The FHWA would intend for
such waivers to allow for the use of
foreign manufactured products as
domestic production ramps-up. Such
waivers would be time-limited and
could include an explicit schedule for
phasing out a waiver over time, creating
a glide-path toward full Buy America
compliance for products, where
possible. The FHWA’s goal is that once
these waivers expire, the domestic
production of any covered product
would be sufficient to ensure that Buy
America-compliant products would be
available for use in FHWA-funded
projects. Such waivers could also take
into account situations where economic
realities, such as the size of the market,
the cost of onshoring production, and
geographic constraints (such as products
made of materials that are not mined in
the United States) may hinder domestic
manufacturing growth even in the
longer term, though such waivers would
still be subject to periodic review.
By issuing waivers for products where
necessary, FHWA intends to ensure that
manufactured products needed for
highway construction projects are
available while also providing an
advantage to domestic manufacturers
who can provide manufactured
products to FHWA-funded projects
where a waiver is not needed. In
addition, such targeted waivers afford
manufacturers insight into market
demand that can trigger capital
investments in domestic manufacturing
to fill current gaps in the Nation’s
supply chain, thereby decreasing the
need for these waivers over the longterm. The FHWA will consider such
waivers where they are deemed
necessary to ensuring the availability of
products at a reasonable price; however,
where domestic production is currently
feasible, FHWA believes in allowing
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Buy America requirements to operate as
a useful incentive for domestic
manufacturers to contribute Americanmade manufactured products to
highway construction projects.
In addition, DOT has issued a
‘‘Waiver of Buy America Requirements
for De Minimis Costs and Small Grants’’
(‘‘De Minimis and Small Grants
Waiver’’). 88 FR 55817 (Aug. 16, 2023).
The De Minimis and Small Grants
Waiver currently has no operative effect
on manufactured products included in
FHWA-funded projects, as such
products are covered by the
Manufactured Products General Waiver.
Were the Manufactured Products
General Waiver to be rescinded,
however, the De Minimis and Small
Grants Waiver would waive the
application of FHWA’s Buy America
requirements for manufactured products
under a single financial assistance
award for which (1) the total value of
non-compliant products is no more than
the lesser of $1,000,000 or 5 percent of
total applicable costs for the project; or
(2) the total amount of Federal financial
assistance applied to the project,
through awards or subawards, is below
$500,000. 88 FR at 55820. For smaller
projects and projects using limited
amounts of manufactured products,
where there is less of a benefit to
discontinuing the Manufactured
Products General Waiver, FHWA
believes that the De Minimis and Small
Grants waiver should prevent the
rescission of the waiver from increasing
project costs or causing project delays.
For all of the above reasons, FHWA is
proposing to rescind the Manufactured
Products General Waiver. The FHWA
believes that the Manufactured Products
General Waiver is no longer in the
public interest. The FHWA seeks
comment on whether this is the
appropriate course of action. For
proponents of rescission, as detailed
more below, FHWA seeks comment on
when the effective date of the rescission
and the implementation of Buy America
requirements for manufactured products
should be. For opponents of rescission,
FHWA similarly seeks comment on
when in the future, if ever, the waiver
should be rescinded and what factors
should FHWA consider before doing so.
V. FHWA Proposed Buy America
Manufactured Product Standards
As set out in 23 U.S.C. 313, FHWA
must ensure that all manufactured
products used in FHWA-funded projects
are produced in the United States. The
statutory text does not define when a
product is ‘‘produced in the United
States.’’ As FHWA is proposing to
rescind the Manufactured Products
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17797
General Waiver, FHWA believes it is
required by BABA to adopt general
standards that meet or exceed those
under BABA, which FHWA proposes to
do through this rulemaking.
Therefore, while commenters to the
2023 RFC proposed various standards
they suggested FHWA should adopt for
its application of Buy America
requirement for manufactured products,
FHWA is proposing to adopt the
definition of when a manufactured
product is ‘‘produced in the United
States’’ as found in section 70912(6)(B)
of BABA. This would require a
manufactured product to be
manufactured in the United States and
the cost of the components of the
manufactured product that are mined,
produced, or manufactured in the
United States to be greater than 55
percent of the total cost of all
components of the manufactured
product. While FHWA could legally
adopt standards exceeding that found in
BABA, such as by setting a higher
domestic content threshold than 55
percent, FHWA recognizes the burden
that any application of Buy America
requirements may place on contracting
agencies, contractors, and
manufacturers. To minimize that burden
to the greatest extent practicable while
also maintaining the benefits of Buy
America requirements, FHWA is
proposing to align its standard for when
a manufactured product is ‘‘produced in
the United States’’ for the purpose of 23
U.S.C. 313 to the one found in section
70912(6)(B) of BABA.
This standard would also provide
consistency between FHWA’s standard
for manufactured products and the
standard used by other Federal Agencies
that apply BABA. Beyond the
requirements of section 70917 of BABA,
FHWA believes there is a benefit of
consistent application and
interpretation between FHWA’s Buy
America requirements and BABA’s
domestic content procurement
preferences. Consistency minimizes the
burden on contracting agencies,
contractors, and manufacturers, who
can rely on existing systems and
processes that they use to comply with
BABA when working on FHWA-funded
projects. It also allows manufactured
products that provide BABA-compliant
manufactured products for projects
funded by other Federal Agencies to
provide those same products on FHWAfunded projects. Consistent definitions
further allow for better understanding of
applicable requirements, as contracting
agencies, contractors, and
manufacturers do not have to navigate
between multiple, disparate regimes.
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The FHWA notes that were the
Manufactured Products General Waiver
to be rescinded, the requirements of 23
U.S.C. 313(h) would apply to
manufactured products. This would
mean that the proposed Buy America
requirements for manufactured products
would apply to all contracts eligible for
FHWA financial assistance for a project
carried out within the scope of the
applicable finding, determination, or
decision under NEPA, regardless of the
funding source for such contracts, if at
least one contract for the project is
funded with amounts made available to
carry out Title 23, U.S.C. In other words,
any Buy America requirements for
manufactured products could apply to
manufactured products purchased
under contracts using only non-Federal
funds if those contracts are within the
scope of a determination under NEPA
that involves an obligation of Title 23,
U.S.C. funds.
The FHWA notes that it does not
intend for these proposed standards to
supplant current FHWA waivers that
cover specific manufactured products.
The FHWA further notes that its
proposed standards are substantively
similar to those in FHWA’s Electric
Vehicle (EV) Charger Waiver,15 which
covers EV chargers, a type of
manufactured product, and waives Buy
America requirements for chargers
under certain circumstances.16 In
particular, FHWA notes that under
proposed § 635.410(c)(2)(ii), FHWA
intends for a predominantly iron or steel
enclosure of an EV charger that is
installed in the highway right of way or
other real property to be subject to
FHWA’s existing Buy America
requirements for iron or steel. The
FHWA believes this aligns with
FHWA’s EV Charger Waiver, which
states that ‘‘[a]ll predominantly steel
and iron housing components. . .must
meet FHWA’s Buy America
requirements for steel and iron’’ and
that ‘‘[t]he cost of any such housing
shall be included as a cost of an EV
charger’s components when calculating
whether the cost of components
manufactured in the United States
exceed 55 percent of the cost of all
components.’’ See 88 FR 10619, 10634
(Feb. 21, 2023).
While FHWA is proposing to
discontinue the Manufactured Products
General Waiver and impose Buy
America requirements on manufactured
products, FHWA does not desire to
15 Waiver of Buy America Requirements for EV
Chargers, 88 FR 10619, February 21, 2023.
16 More guidance on the EV Charger Waiver can
be found at https://www.fhwa.dot.gov/construction/
contracts/buyam_qaev/.
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place contracting agencies, contractors,
and manufacturers in a position where
they are required to comply with Buy
America requirements for manufactured
products without having the systems in
place to do so. For example, when part
184 was issued by OMB in August 2023,
a 60-day period was provided before the
revised standards for construction
materials become effective. A longer
transition or adjustment period was
provided by DOT following the
initiation of the new BABA
requirements in May 2022. At that time,
DOT issued an adjustment period
waiver to allow time for stakeholders to
transition to new rules and processes
required by BABA related to
construction materials. See ‘‘Temporary
Waiver of Buy America Requirements
for Construction Materials,’’ at 87 FR
31931. The FHWA seeks comment on
whether a similar transition period is
needed for its proposed standards for
manufactured products to allow
contracting agencies, contractors, and
manufacturers time to create
appropriate systems and processes, as
well as train staff on compliance with
the proposed standards. The FHWA
specifically seeks comment on the
minimum time required for these
purposes and, accordingly, the effective
date for the proposed Buy America
requirements for manufactured
products.
The FHWA also recognizes the
complications that may arise if new
requirements are imposed on ongoing
projects, as well as projects that are in
the planning, design, or later
implementation phases. The FHWA
intends any new requirements to only
apply to Federal awards obligated or
authorized after the effective date of a
final rule, but FHWA requests
comments on this point as well. For
instance, FHWA requests comment on
whether there should be a buffer period
for certain projects that are in
development that have not had Federal
awards obligated or authorized but have
relied on the Manufactured Products
General Waiver such that those projects
could continue to rely on the
Manufactured Products General Waiver,
and under what conditions, if any, that
buffer period would apply.17
The FHWA also recognizes that there
are projects for highway construction
17 See DOT’s Waiver of Buy America
Requirements for Construction Materials for Certain
Contracts and Solicitations, issued on January 30,
2023, for a recent example of how the Department
has handled similar situations for construction
materials subject to the BABA requirements.
https://www.transportation.gov/mission/officesecretary/office-policy/transportation-policy/
waiver-buy-america-requirements-for-constructionmaterials.
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that are subject to alternate project
delivery methods, such as design-build,
where contracts are awarded and work
is authorized and obligated in phases.
For example, where a project has not
completed the environmental review
process, Federal funds may be obligated
for preliminary engineering and
environmental document preparation
but not physical construction. In these
situations, FHWA believes that it may
be appropriate to apply these proposed
standards, if adopted, to physical
construction since Federal funds have
not been obligated or authorized for this
work nor have there been any
contractual commitments with respect
to this work. The FHWA also requests
comments on the appropriate buffer
period, if any, for these types of
projects.18
The FHWA also understands that
tracking the origin and cost of
components may be difficult,
particularly for smaller manufacturers,
contractors, and contracting agencies.
To ease this burden, FHWA is not
prescribing any specific method of
compliance. The FHWA’s intent and
expectation is that recipients ensure that
55 percent of components, by cost, of a
manufactured product are mined,
produced, or manufactured in the
United States. The FHWA requests
comments on any specific provisions
that FHWA should consider in easing
the administrative burden in
demonstrating compliance with this
proposed requirement.
VI. Section Analysis
§ 635.410(b), (c), and (d)—Reference to
States
The FHWA does not intend to
substantively change its current Buy
America regulations as they relate to
FHWA’s Buy America requirement for
iron and steel. The FHWA does,
however, intend to make several, minor
changes regarding these requirements to
reflect the current scope of its Buy
America requirements.
In § 635.410(b)(2), the introductory
paragraph to § 635.410(b)(3), and
§ 635.410(d), FHWA is proposing to
replace the mention of ‘‘State’’ with
‘‘recipient.’’ Along with the replacement
of current § 635.410(c), described below,
this would replace all mentions of
‘‘State’’ in the current regulation with
‘‘recipient.’’ The FHWA’s Buy America
requirements apply to all recipients of
title 23, U.S.C. funds, which includes
States but also may include other
recipients like metropolitan planning
organizations, local governments, and
18 Ibid.
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regional transportation authorities. As
the Buy America requirements are the
same between States and non-State
entities, FHWA believes non-State
entities should have the same abilities
provided in regulation as States
currently do.
§ 635.410(b)—Reference to Steel or Iron
Materials
Currently, 23 CFR 635.410(b)
interchangeably refers to ‘‘steel or iron
materials’’ and ‘‘steel and iron
materials.’’ For consistency, FHWA is
proposing to replace mentions of both
terms with a single phrase: ‘‘iron or steel
products,’’ which would be defined at
proposed § 635.410(c)(1)(ii). The FHWA
does not intend this change to affect its
Buy America requirements for iron or
steel materials. As noted in the
discussion below with respect to
proposed § 635.410(c)(1)(ii) and (iv),
and (c)(2), this change would make clear
when a manufactured product
comprised of steel or iron would be
considered an iron or steel product
versus a manufactured product.
Consistent with current FHWA
requirements, predominantly iron or
steel products would be subject to
FHWA’s existing Buy America
requirements for iron and steel at
§ 635.410(b). Manufactured products
that are not predominantly iron or steel
would be subject to FHWA’s proposed
Buy America requirements for
manufactured products at § 635.410(c).
§ 635.410(c)—Waiver Provisions
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The FHWA is proposing to replace
current § 635.410(c) with new language
detailing FHWA’s Buy America
requirements for manufactured
products, as described in detail in
section V and below. The FHWA is thus
proposing to remove the current
regulatory text in 23 CFR 635.410(c),
which discusses the process for
requesting a Buy America waiver and
the procedures FHWA will take to
respond to that request. These
provisions have remained substantively
unchanged from 1983.19 Since then,
19 The FHWA has made minor amendments to 23
CFR 635.410(c)(1)(ii) when Congress has modified
the statutory coverage of its Buy America
requirements. Originally, 23 CFR 635.410(c)(1)
referenced a waiver of Buy America requirements
being possible when steel and cement materials
were not produced in the United States in sufficient
and reasonably available quantity and of a
satisfactory quality. See 48 FR at 53104. When
Congress subsequently removed coverage for
cement, FHWA modified that provision accordingly
to remove reference to cement. See 49 FR at 18821.
And when Congress added coverage for iron,
FHWA modified the provision one last time to
include mention of iron. 58 FR at 38975. None of
these changes, the last of which occurred in 1993,
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however, Congress has enacted several
provisions structuring FHWA’s process
for issuing Buy America waivers.20
These statutorily required processes are
not covered by the current version of 23
CFR 635.410(c), and FHWA does not
find it necessary to modify 23 CFR
635.410(c) to reiterate what is already
stated in statute and FHWA guidance.21
§ 635.410(c)—Introductory Text
As stated above in section V, FHWA
is proposing to require that all
manufactured products used and
permanently incorporated in FHWAfunded construction 22 projects be
produced in the United States. To
promote consistency with FHWA’s
existing Buy America requirements for
iron and steel, FHWA proposes to adopt
language similar to the current
regulatory language in § 635.410(b)(1).
In addition, FHWA is proposing to
make clear that its Buy America
requirement for manufactured products
only applies to products that are
permanently incorporated into FHWAfunded projects. The FHWA believes
this aligns with FHWA’s longstanding
practice for iron and steel items and for
the treatment of manufactured products
covered by BABA. See section IV of the
Implementation Guidance.
§ 635.410(c)(1)(i)—Definition of
Component
The FHWA is proposing to adopt the
definition of ‘‘component’’ used in part
184. This would define what a
component is for the purpose of
FHWA’s proposed Buy America
requirements for manufactured products
and for FHWA’s proposed definition of
an iron or steel product. To provide
contracting agencies, contractors, and
substantially modified the process and procedures
described in 23 CFR 635.410(c), however.
20 The Consolidated Appropriations Act, 2010
(Pub. L. 111–117) required FHWA to make an
informal public notice and comment period at least
15 days prior to issuing any Buy America waiver.
The SAFETEA–LU Technical Corrections Bill (Pub.
L. 110–244) states that if FHWA determines to issue
a waiver, it must publish in the Federal Register a
detailed written justification as to the reasons for
the waiver and provide an additional comment
period not to exceed 60 days, with that additional
comment period not delaying the effectiveness of
the waiver. Section 11513 of BIL affirmed that not
less than 15 days before issuing a waiver, FHWA
must provide notice of the proposed waiver, an
opportunity to comment on the proposed waiver,
and the reasons for the proposed waiver.
21 The FHWA maintains guidance describing the
information needed to submit a waiver request and
the method to do so. See Questions #22–27 at
https://www.fhwa.dot.gov/construction/contracts/
buyam_qageneral.cfm, and Question #19 at https://
www.fhwa.dot.gov/construction/contracts/buyam_
qa_baba.cfm.
22 23 U.S.C. 101(a)(4) defines ‘‘construction’’ to
include, in part, any project eligible for assistance
under title 23, U.S.C.
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manufacturers with consistency, FHWA
believes it is useful to have similar
definitions between FHWA’s Buy
America requirements and BABA’s
domestic content procurement
preference where practicable.
§ 635.410(c)(1)(ii) and (vi)—Iron or Steel
Products
Pursuant to FHWA’s current policy,
predominantly iron or steel
manufactured products must conform
with FHWA’s Buy America
requirements for iron or steel.23 The
FHWA, however, does not currently
define what threshold a product has to
meet in order to be classified as a
predominantly iron or steel product. In
this proposed rulemaking, to provide
clarity and consistency on this issue,
FHWA is proposing to adopt the
definitions of ‘‘iron or steel product’’
and ‘‘predominantly iron or steel or a
combination of both’’ in part 184.
With the proposed application of Buy
America to both iron or steel products
and manufactured products, FHWA
believes that it is necessary to provide
standards to determine whether a
product should be classified as a
manufactured product or an iron or steel
product, as that determination is
significant in understanding which
standards apply to the product. While
under FHWA’s existing Buy America
requirements for iron and steel, all
manufacturing processes of the iron and
steel must occur in the United States,
FHWA’s proposed standards for
manufactured products allow for the
inclusion of non-domestic components.
The FHWA proposes to use the
definitions of ‘‘iron or steel products’’
and ‘‘predominantly of iron or steel or
a combination of both’’ to classify a
product for purposes of Buy America
compliance. In adopting the definitions
of ‘‘iron or steel products’’ and
‘‘predominantly of iron or steel or a
combination of both’’ used in part 184,
FHWA hopes to utilize a single
consistent definition to categorize
products on a national level, both for all
projects included in FHWA-funded
projects and all projects subject to
BABA. See the explanation below for
proposed § 635.410(c)(2) for more
information concerning the
classification of materials.
§ 635.410(c)(1)(iii)—Definition of
Excluded Materials
The FHWA proposes a definition of
the term ‘‘excluded material’’ that crossreferences the definition of the term
‘‘Section 70917(c) material’’ found in
23 See Q&A #12 a https://www.fhwa.dot.gov/
construction/contracts/buyam_qageneral.cfm.
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part 184 at 2 CFR 184.3. Part 184 defines
section 70917(c) materials as cement
and cementitious materials; aggregates
such as stone, sand, or gravel; and
aggregate binding agents or additives.
More information on the use of this
category of materials in this proposed
regulation can be found below in the
discussion of proposed
§§ 635.410(c)(1)(iv) and (c)(2).
§ 635.410(c)(1)(iv)—Manufactured
Products and Section 70917(c) Materials
To ensure consistency with BABA,
FHWA proposes to use substantively the
same definition of ‘‘manufactured
product’’ as used by OMB in part 184,
with slight changes with respect to
references to ‘‘construction materials’’
and ‘‘section 70917(c) materials’’ in that
definition which are described below.
See 2 CFR 184.3.
The FHWA thus proposes to define a
‘‘manufactured product’’ using the same
language found in paragraph (1) of the
definition of the term in part 184. For
consistency, FHWA intends to apply
this provision in the same way as
applied by OMB in part 184. For
example, products brought to the work
site in an unprocessed or minimally
processed state, such as topsoil,
compost, and seed, would not be
considered manufactured products. See
88 FR at 57769. Similarly, nonmanufactured or raw materials mixed
off of the work site with other nonmanufactured or raw materials of
similar types would not necessarily
result in the mixed material brought to
the work site being classified as a
manufactured product if it remains in
an unprocessed or minimally processed
state, such as minimally-processed fill
dirt. See id.
The FHWA notes that its proposal
omits references to construction
materials that are found in part 184. The
FHWA does not believe it necessary to
refer to construction materials in this
proposed rulemaking because 23 U.S.C.
313 does not cover construction
materials. Since section 70915(b) of
BABA directs OMB to issue the
applicable standards with respect to
determining when a construction
material is produced in the United
States for the purposes of BABA, FHWA
and its recipients will follow the
applicable OMB standards and guidance
for construction materials.
The FHWA is also proposing to make
clear that excluded materials, defined in
proposed § 635.410(c)(1)(iii), are not, on
their own, manufactured products. The
FHWA would not consider excluded
materials to be manufactured products
and apply the proposed Buy America
requirements for manufactured products
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if the excluded materials have not been
combined with different excluded
materials, or other materials, to create a
manufactured product. See 88 FR
57772. This is also consistent with
paragraph (2) of the definition of
‘‘manufactured product’’ in part 184.
In terms of these excluded materials,
FHWA received many comments in the
2023 RFC expressing confusion over the
legal effect of section 70917(c) of BABA.
By stating that excluded materials are
not manufactured products, FHWA
seeks to make clear that these
materials—standing alone, as delivered
to the job site—are not manufactured
products. Likewise, FHWA recognizes
and follows the OMB guidance
specifying that these materials, standing
alone, as delivered to the job site are not
construction materials either, as
provided in section 70917(c) of BABA.
See 88 FR 57771.
In alignment with part 184, FHWA
intends this rulemaking to mean that
excluded materials, as defined in
proposed § 635.410(c)(1)(iii), when
combined together with other materials,
including other excluded materials,
could result in the creation of a
manufactured product. See id. at 57772.
If the individual excluded material is
combined with other excluded materials
and non-minor additions of other
materials before it is brought to the work
site, then the new product should be
classified as a manufactured product
and the excluded materials should be
treated as components of the
manufactured products. Therefore, like
all other components of manufactured
products, when excluded materials are
components of a manufactured product,
they would generally be included in the
determination of whether a
manufactured product is Buy Americacompliant under FHWA’s proposed
standards.
For example, in alignment with part
184, the combination of excluded
materials and other materials into
precast concrete would not render the
precast concrete exempt from domestic
content procurement preferences. See
id. at 57771. For precast concrete,
FHWA believes such an item would be
a manufactured product or an iron or
steel item depending on its amount of
iron or steel, by cost. In either case,
precast concrete used in FHWA-funded
projects would be subject to the
applicable Buy America requirement.24
24 If considered an iron or steel item, the precast
concrete would be subject to FHWA’s existing Buy
America requirements for iron and steel. If
considered a manufactured product, as described
below, FHWA is proposing that the precast concrete
be subject to the proposed Buy America
requirements for manufactured products and that
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To the extent that cement and
cementitious material are components
of that precast concrete, their origin and
cost would have to be considered to
determine whether the precast concrete
would be Buy America-compliant.25
Similarly, in some cases, aggregate
binding agents and additives may be
treated as components of manufactured
products.
While FHWA is proposing that
products with excluded materials as
their components would generally be
considered manufactured products, in
alignment with part 184, FHWA also
proposes that such excluded materials
combined as an unsettled mixture
without final form when reaching the
work site should not be considered a
manufactured product, such as in the
case of wet concrete or hot mix asphalt.
See id. The OMB noted in part 184 that
while these products might fit the same
definition of ‘‘manufactured products’’
FHWA is proposing to use, in the sense
that the mixture would have ‘‘different
properties’’ than would the individual
materials, it is more consistent with the
intent of BABA to treat only such
materials that have set or dried into a
particular shape or form prior to
reaching the work site as manufactured
products. Id. The FHWA agrees with
OMB and further intends for these
proposed regulations to have the same
reach as part 184.
In particular, consistent with part 184,
FHWA proposes to make clear that
concrete and asphalt mixtures delivered
to a job site without final form for
incorporation into a project shall not be
considered a manufactured product. As
provided in part 184: ‘‘OMB further
clarifies in this preamble that wet
concrete should not be considered a
manufactured product if not dried or set
prior to reaching the work site. The
setting or drying of a combination of
section 70917(c) materials into a
the iron and steel be subject to FHWA’s existing
Buy America requirements for iron and steel.
25 The FHWA acknowledges that Congress
eliminated a Buy America requirement regarding
cement originally included in the 1983 STAA in
1984. See Public Law 98–229. The FHWA therefore
believes it would be questionable to apply a
domestic content procurement preference to
cement. As noted above, FHWA does not intend to
apply any domestic content procurement preference
to cement standing alone, either as a manufactured
product or as a construction material under BABA.
The FHWA does not believe the removal of cement
from the 1983 STAA, however, means that cement
must be exempted from Buy America requirements
even if included in a manufactured product. The
FHWA believes the language of the 1983 STAA can
be interpreted to refer to cement as a category of
product. Its elimination therefore removes the
ability of FHWA to apply a Buy America
requirement to cement as a category of product. It
says nothing about FHWA’s ability to consider it as
a component of a manufactured product.
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finished product prior to reaching the
work site is generally the circumstance
in which a combination of only section
70917(c) materials would be considered
a manufactured product.’’ See id. at
57772.
§ 635.410(c)(1)(v)—Definition of
‘‘Manufacturer’’
For the purposes of defining the term
‘‘manufacturer’’ as it is used in
§ 635.410(c)(3), FHWA is proposing to
use the definition found in part 184 at
2 CFR 184.3. The FHWA believes this
definition is simple and provides clarity
on how to distinguish between the
manufacturer of the finished
manufactured product and the
manufacturer of the components that go
into that product.
§ 635.410(c)(1)(vii)—Definition of
‘‘Produced in the United States’’
For the reasons stated in section V,
above, FHWA proposes to adopt the
definition for ‘‘produced in the United
States’’ for manufactured products
found in section 70912(6)(B) of BABA,
as implemented by OMB in part 184 at
2 CFR 184.3.
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§ 635.410(c)(2)—Classification
Single Classification of Materials
In § 635.410(c)(2), FHWA is proposing
to make clear, consistent with part 184,
that an article, material, or supply
should only be classified as either an
iron or steel product, manufactured
product, or another category specified
by law or found in 2 CFR part 184. With
two exceptions, discussed in more
detail below, this means that an article,
material, or supply cannot fall into
multiple categories, i.e., be classified as
both an iron or steel product and a
manufactured product. While this
proposed regulation would only apply
requirements to iron or steel materials
and manufactured products, as those are
the only materials covered under 23
U.S.C. 313, FHWA is proposing this
provision to differentiate iron or steel
materials, manufactured products, and
other materials referred to in law or in
part 184, such as excluded materials, as
defined in proposed § 635.410(c)(1)(iii)
and known as section 70917(c) materials
in part 184, and construction materials,
which may be subject to their own
domestic content procurement
preference. In alignment with part 184,
FHWA does not intend to subject a
material to multiple Buy America
requirements. Nor does FHWA intend to
subject a material to a Buy America
requirement and the requirement of
another domestic content procurement
preference, such as requirements for
construction materials found in part
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184. The FHWA similarly does not
intend materials to be subject to a Buy
America requirement and the same
domestic content procurement
preference under BABA. For example,
manufactured products would be
subject only to FHWA’s proposed
standards, not both FHWA’s proposed
standards and the standards under
BABA and part 184. In general, FHWA
agrees with part 184 that applying
multiple requirements to a single
product is unnecessarily burdensome.
For instance, except as provided
below, FHWA does not generally intend
for a manufactured product with limited
iron or steel content to be subject to
both requirements for iron or steel
products and manufactured products.
Conversely, FHWA does not intend for
a predominantly iron or steel
manufactured product, when classified
as an iron or steel product, to be subject
to the proposed standards for
manufactured products. Under FHWA’s
proposed § 635.410(c)(2), any products
meeting the definition of a
manufactured product would need to
comply with the proposed standards for
manufactured products while products
meeting the definition of an iron or steel
product would continue to comply with
FHWA’s existing standards for iron or
steel products found in 23 CFR
635.410(b).
Nor does FHWA intend for materials
properly classified as construction
materials under part 184 to be subject to
FHWA’s Buy America requirements.
The FHWA is not proposing to have this
regulation cover the requirements
applicable to construction materials.
Instead, FHWA intends for properly
classified construction materials to be
solely subject to the requirements in
BABA and part 184. Iron or steel
products and manufactured products
that may contain construction materials,
however, would still be subject to the
applicable FHWA Buy America
requirement. In such cases, FHWA does
not intend for such components of the
iron or steel product or manufactured
product to be subject to BABA’s
construction material requirements.
Finally, FHWA intends this provision
to make clear, as mentioned above in
the discussion of proposed
§ 635.410(c)(1)(iv), that excluded
materials, standing alone, would not be
subject to FHWA’s Buy America
requirements for manufactured
products. Excluded materials, known as
section 70917(c) materials in part 184,
are a category of products specified in
2 CFR part 184. The proposed language
would indicate that a material could
only be classified as either an excluded
material or manufactured product; an
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17801
excluded material could therefore not be
a manufactured product by itself.
However, for two particular kinds of
manufactured products, FHWA is
proposing additional requirements
along with FHWA’s proposed standards
for manufactured products in order to
continue FHWA’s longstanding policy
of requiring predominantly iron or steel
components of manufactured products
to be Buy America-compliant with
respect to those predominantly iron or
steel components. In particular, FHWA
believes this policy should be continued
for (1) the iron or steel components of
precast concrete; and (2) iron or steel
enclosures of intelligent transportation
systems and other electronic hardware
systems installed in the highway rightof-way or other real property.26 The
FHWA believes that these products are
regularly used in highway construction
projects and manufacturers have formed
longstanding supply chains to
incorporate Buy America-compliant
iron or steel components into them.
Where these products are considered
manufactured products, FHWA
proposes that the product must meet the
standard for a manufactured product. In
addition, unlike all other manufactured
products, FHWA is proposing to require
the specified iron or steel components
of these two products to be compliant
with FHWA’s existing Buy America
requirements for iron and steel.
However, to minimize any burden and
give credit for using an American-made
iron or steel product, FHWA proposes to
include the cost of these iron or steel
components in the determination of
whether 55 percent of the product’s
components, by cost, are produced in
the United States.
Besides the two exceptions noted
above for precast concrete and iron or
steel enclosures of intelligent
transportation systems and other
electronic hardware systems installed in
the highway right-of-way or other real
property, FHWA intends § 635.410(c) to
possess the same meaning as 2 CFR
184.4(e). The FHWA also believes its
proposed language makes clear that a
material incorporated into an
infrastructure project must meet the Buy
America requirement only for the single
category in which it is classified, as
generally stated in 2 CFR 184.4(f).
Materials would be classified as either
(1) iron or steel materials and subject to
FHWA’s existing Buy America
26 The FHWA notes that these requirements
would only apply if the precast concrete or
electronic hardware systems were classified as
manufactured products. If they were classified as
iron or steel products, such products would need
to comply with FHWA’s existing Buy America
requirements for iron or steel.
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requirements for iron or steel found in
23 CFR 635.410(b); (2) manufactured
products and subjects to the proposed
Buy America requirements for
manufactured products; or (3)
manufactured products that are also
either precast concrete or iron or steel
enclosures of intelligent transportation
systems and other electronic hardware
systems installed in the highway rightof-way or other real property and
subject to the proposed Buy America
requirements for manufactured products
and FHWA’s existing Buy America
requirements for specified iron or steel
components of these two products.
Categorization at the Work Site
The FHWA proposes § 635.410(c)(2)
to specify that the classification of an
article, material, or supply as being
either an iron or steel product or a
manufactured product must be based on
its status at the time it is brought to the
work site for incorporation into an
infrastructure project. The FHWA
believes it is important to determine
when the classification of materials
occurs, as some manufactured products
might include steel and iron. Depending
on when a product is classified for the
purpose of applying FHWA’s Buy
America requirements, the iron or steel
component of a manufactured product
could be classified as a separate
material, and thus be subject to FHWA’s
Buy America requirements for iron and
steel.
To provide consistency, FHWA is
proposing this standard to align with
the standard used by OMB in part 184
at 2 CFR 184.4(e). The FHWA does not
intend this language to mean that
FHWA will conduct a compliance check
to see if a product is Buy Americacompliant when it is brought to the
work site; FHWA only intends this
language to describe when a product
will be categorized as either an iron or
steel product or a manufactured product
for the purpose of determining which
Buy America requirement applies.
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§ 635.410(c)(3)—Cost of a Component
The FHWA is proposing to adopt the
standards, unchanged, used in part 184
at 2 CFR 184.5 to determine the cost of
a given component. The FHWA believes
that this standard properly includes
activities that directly connect to the
goals of FHWA’s Buy America provision
to increase domestic manufacturing.
The FHWA also notes that 23 U.S.C.
313(c) specifically states that for the
purposes of 23 U.S.C. 313, in calculating
components’ costs, labor costs included
in final assembly must not be included
in the calculation.
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§ 635.410(c)(4)—Severability
The FHWA is proposing to add a new
§ 635.410(c)(4) that contains a
severability clause applicable to the
proposed Buy America requirements for
manufactured products made by this
proposed rule in § 635.410(c). The
FHWA believes that the proposed
amendments to § 635.410(c) are capable
of operating independently of one
another. If one or more aspects of the
proposed Buy America requirements for
manufactured products are determined
to be invalid, the remaining provisions
should remain unaffected and in force.
VII. Rulemaking Analysis and Notices
Executive Order 12866 (Regulatory
Planning and Review), Executive Order
13563 (Improving Regulation and
Regulatory Review), and DOT
Regulatory Policies and Procedures
The OMB has determined that the
proposed rule would be a significant
regulatory action within the meaning of
E.O. 12866, as amended by E.O. 14094.
The preliminary regulatory impact
analysis (PRIA) supports this proposed
regulation and analyzes the costs and
benefits associated with establishing
Buy America requirements for
manufactured products.
The expected benefits of the proposed
rule relate to protecting and expanding
domestic manufacturing, increasing
supply chain resiliency, and increasing
consistency in applying domestic
content procurement preferences for
manufactured products between FHWA
and other Federal Agencies that are
subject to the requirements of BABA.
None of these benefits have been
quantified.
The costs of the proposed rule relate
to increased material costs for
manufactured products used in highway
construction projects, project delay, and
the administrative costs to FHWA and
recipients of FHWA financial assistance.
At this time, FHWA is only able to
quantify costs for the increased
materials costs and the administrative
costs to the FHWA. The FHWA’s
estimates of those increased material
costs for manufactured products
permanently incorporated into FHWAfunded projects range from a high of
roughly $737 million per year to a low
of $45 million. The wide range stems
from the difficulty in estimating (1) the
fraction of inputs to highway
construction that are manufactured
products; (2) the fraction of
manufactured products that are
currently domestically supplied but
which fail to meet the proposed rule’s
requirement that 55 percent of the
product’s components, by cost, are
PO 00000
Frm 00040
Fmt 4702
Sfmt 4702
mined, produced, or manufactured in
the United States; and (3) the likely
price premiums for purchasing
manufactured products that would be
compliant with the proposed rule
compared to manufactured products
currently used in FHWA-funded
projects that would not be. The FHWA
estimates an additional $167,000 per
year in increased FHWA administration
costs to cover the salary and employerprovided benefits of an additional
Federal employee to administer the Buy
America program. The other
administrative costs to recipients of
FHWA financial assistance and the costs
associated with project delivery delay
have not been quantified.
The full regulatory impact analysis is
available in the docket. The FHWA is
seeking comment on assumptions that
were developed as part of the PRIA, as
well as information on other benefits or
costs that would result from
implementation of the rule.
This rule will not adversely affect in
a material way the economy, any sector
of the economy, productivity,
competition, jobs, the environment,
public health or safety, or State, local,
territorial, or Tribal governments or
communities. These changes do not
create a serious inconsistency with any
other Agency’s action or materially alter
the budgetary impact of any
entitlements, grants, user fees, or loan
programs.
Regulatory Flexibility Act
In compliance with the Regulatory
Flexibility Act (Pub. L. 96–354, 5 U.S.C.
601–612), FHWA has evaluated the
effects of this proposed rule on small
entities and has determined that it is not
anticipated to have a significant
economic impact on a substantial
number of small entities. This proposed
rule would impose Buy America
requirements for manufactured products
on recipients of FHWA financial
assistance including States, local
governments, and other grant recipients.
These recipients are primarily States,
who are not included in the definition
of small entity set forth in 5 U.S.C. 601.
The FHWA believes the projected
impact upon small entities that utilize
FHWA funding would be negligible. To
the extent the revisions require
expenditures by State, local
governments, and other grant recipients
on Federal-aid projects, they are
reimbursable. Small entities that may be
impacted indirectly by a rulemaking are
not subject to analysis under the
Regulatory Flexibility Act, see Mid-Tex
Electric Cooperative, Inc. v. Federal
Energy Regulatory Commission, 773
F.2d 327 (D.C. Cir 1985). Therefore,
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FHWA certifies that the proposed action
would not have a significant economic
impact on a substantial number of small
entities.
Unfunded Mandates Reform Act of 1995
This proposed rule would not impose
unfunded mandates as defined by the
Unfunded Mandates Reform Act of 1995
(Pub. L. 104–4, 109 Stat. 48). Section
202(a) of the Unfunded Mandates
Reform Act of 1995 requires Federal
Agencies to prepare a written statement,
which includes estimates of anticipated
impacts, before proposing ‘‘any rule that
includes any Federal mandate that may
result in the expenditure by State, local,
and Tribal governments, in the
aggregate, or by the private sector, of
$100,000,000 or more (adjusted
annually for inflation) in any one year.’’
The current threshold after adjustment
for inflation is $177 million, using the
most current (2022) Implicit Price
Deflator for the Gross Domestic Product.
The definition of ‘‘Federal mandate’’ in
the Unfunded Mandates Reform Act
excludes financial assistance of the type
in which State, local, or Tribal
governments have authority to adjust
their participation in the program in
accordance with changes made in the
program by the Federal Government.
The Federal-aid highway program
permits this type of flexibility. Further,
in compliance with the Unfunded
Mandates Reform Act of 1995, FHWA
will evaluate any regulatory action that
might be proposed in subsequent stages
of the proceeding to assess the effects on
State, local, and Tribal governments,
and the private sector.
khammond on DSKJM1Z7X2PROD with PROPOSALS
Executive Order 13132 (Federalism)
The E.O. 13132 requires Agencies to
ensure meaningful and timely input by
State and local officials in the
development of regulatory policies that
may have a substantial, direct effect on
the States, on the relationship between
the national government and the States,
or on the distribution of power and
responsibilities among the various
levels of government. The FHWA has
analyzed this proposed rule in
accordance with the principles and
criteria contained in E.O. 13132. The
FHWA has determined that this
proposed rule would not have sufficient
federalism implications to warrant the
preparation of a federalism assessment.
The FHWA has also determined that
this proposed rule would not preempt
any State law or State regulation or
affect the States’ ability to discharge
traditional State governmental
functions.
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17803
Paperwork Reduction Act
Regulation Identification Number
Under the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501 et seq.),
Federal Agencies must obtain approval
from OMB for each collection of
information they conduct, sponsor, or
require through regulations. The FHWA
has determined that the proposed rule
does not contain collection of
information requirements for the
purposes of the PRA.
A RIN is assigned to each regulatory
action listed in the Unified Agenda of
Federal Regulations. The Regulatory
Information Service Center publishes
the Unified Agenda in spring and fall of
each year. The RIN contained in the
heading of this document can be used
to cross-reference this action with the
Unified Agenda.
National Environmental Policy Act
The FHWA has analyzed this
proposed rule pursuant to the National
Environmental Policy Act of 1969
(NEPA) (42 U.S.C. 4321 et seq.) and has
determined that it is categorically
excluded under 23 CFR 771.117(c)(20),
which applies to the promulgation of
rules, regulations, and directives.
Categorically excluded actions meet the
criteria for categorical exclusions under
the Council on Environmental Quality
regulations and under 23 CFR
771.117(a) and normally do not require
any further NEPA approvals by FHWA.
This proposed rule would establish Buy
America requirements for manufactured
products. The FHWA does not
anticipate any adverse environmental
impacts from this proposed rule, and no
unusual circumstances are present
under 23 CFR 771.117(b).
Executive Order 12898 (Environmental
Justice)
The E.O. 12898 requires that each
Federal Agency make achieving
environmental justice part of its mission
by identifying and addressing, as
appropriate, disproportionately high
and adverse human health or
environmental effects of its programs,
policies, and activities on minorities
and low-income populations. The
FHWA has determined that this
proposed rule does not raise any
environmental justice issues.
Fmt 4702
Sfmt 4702
List of Subjects in 23 CFR Part 635
Grant programs—transportation,
Highways and roads, Reporting and
recordkeeping requirements.
Shailen P. Bhatt,
Administrator,Federal Highway
Administration.
For the reasons stated in the
preamble, FHWA proposes to amend
part 635, as follows:
PART 635—CONSTRUCTION AND
MAINTENANCE
1. The authority citation for part 635
continues to read as follows:
The FHWA has analyzed this
proposed rule in accordance with the
principles and criteria contained in E.O.
13175, ‘‘Consultation and Coordination
with Indian Tribal Governments.’’ The
FHWA does not believe that the
proposed rule would have substantial
direct effects on one or more Indian
Tribes; would not impose substantial
direct compliance costs on Indian Tribal
governments; and would not preempt
Tribal laws. Therefore, a Tribal
summary impact statement is not
required.
Frm 00041
As required by 5 U.S.C. 553(b)(4), a
summary of this rule can be found in
the Abstract section of the Department’s
Unified Agenda entry for this
rulemaking at [https://www.reginfo.gov/
public/do/eAgendaViewRule?pubId=
202310&RIN=2125-AG13].
■
Executive Order 13175 (Tribal
Consultation)
PO 00000
Rulemaking Summary, 5 U.S.C.
553(b)(4)
Authority: Sections 1525 and 1303 of Pub.
L. 112–141, Sec. 1503 of Pub. L. 109–59, 119
Stat. 1144; 23 U.S.C. 101 (note), 109, 112,
113, 114, 116, 119, 128, and 315; 31 U.S.C.
6505; 42 U.S.C. 3334, 4601 et seq.; Sec.
1041(a), Pub. L. 102–240, 105 Stat. 1914; 23
CFR 1.32; 49 CFR 1.85(a)(1).
Subpart D—General Material
Requirements
2. Amend § 635.410 by:
a. Removing the word ‘‘State’’ and
adding in its place the word ‘‘recipient’’
in paragraphs (b)(2) and (3);
■ b. removing the words ‘‘steel and iron
materials’’ and ‘‘steel or iron materials’’
and adding, in their place, the words
‘‘iron or steel products’’ in paragraphs
(b)(1)(i) and (ii), (b)(2), (b)(3)
introductory text, (b)(3)(i) and (ii), and
(b)(4);
■ c. revising paragraph (c); and
■ d. Removing the word ‘‘State’’ and
adding in its place the word ‘‘recipient’’
in paragraph (d).
The revision reads as follows:
■
■
§ 635.410
Buy America requirements.
*
*
*
*
*
(c) No Federal-aid highway
construction project is to be authorized
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Federal Register / Vol. 89, No. 49 / Tuesday, March 12, 2024 / Proposed Rules
for advertisement or otherwise
authorized to proceed unless the
manufactured products used and
permanently incorporated in such
project are produced in the United
States. To meet this requirement, the
manufactured product must meet the
following:
(1) The following definitions apply to
this section:
(i) Component means an article,
material, or supply, whether
manufactured or unmanufactured,
incorporated directly into a
manufactured product or, where
applicable, an iron or steel product.
(ii) Excluded materials means section
70917(c) materials as defined in 2 CFR
184.3.
(iii) Iron or steel products means
articles, materials, or supplies that
consist wholly or predominantly of iron
or steel or a combination of both.
(iv) Manufactured products means
articles, materials, or supplies that have
been processed into a specific form and
shape, or combined with other articles,
materials, or supplies to create a
product with different properties than
the individual articles, materials, or
supplies. If an item is classified as an
iron or steel product, an excluded
material, or other product category as
specified by law or in 2 CFR part 184,
then it is not a manufactured product.
However, an article, material, or supply
classified as a manufactured product
may include components that are iron
or steel products, excluded materials, or
other product categories as specified by
law or in 2 CFR part 184. Mixtures of
concrete or asphalt delivered to a job
site without final form for incorporation
into a project are not a manufactured
product.
(v) Manufacturer, in the case of
manufactured products, means the
entity that performs the final
manufacturing process that produces a
manufactured product.
(vi) Predominantly of iron or steel or
a combination of both means that the
cost of the iron and steel content
exceeds 50 percent of the total cost of
all its components. The cost of iron and
steel is the cost of the iron or steel mill
products (such as bar, billet, slab, wire,
plate, or sheet), castings, or forgings
utilized in the manufacture of the
product and a good faith estimate of the
cost of iron or steel components.
(vii) Produced in the United States, in
the case of manufactured products,
means:
(A) The product was manufactured in
the United States; and
(B) The cost of the components of the
manufactured product that are mined,
produced, or manufactured in the
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United States is greater than 55 percent
of the total cost of all components of the
manufactured product.
(2) An article, material, or supply
shall only be classified as an iron or
steel product, a manufactured product,
or other products as specified by law or
in 2 CFR part 184. An iron or steel
product must meet the requirements of
paragraph (b) of this section. Except as
otherwise provided in this paragraph
(c), an article, material, or supply shall
not be considered to fall into multiple
categories. In some cases, an article,
material, or supply may not fall under
any of the above-listed categories. The
classification of an article, material, or
supply as falling into one of the
categories listed in this paragraph (c)
must be made based on its status at the
time it is brought to the work site for
incorporation into an infrastructure
project. In general, the work site is the
location of the infrastructure project at
which the iron or steel product or
manufactured product will be
incorporated.
(i) With respect to precast concrete
products that are classified as
manufactured products, components of
precast concrete products that are
manufactured predominantly of iron or
steel or a combination of both shall meet
the requirements of paragraph (b) of this
section. The cost of such components
shall be included in the applicable
calculation for purposes of determining
whether the precast concrete product is
produced in the United States.
(ii) With respect to intelligent
transportation systems and other
electronic hardware systems that are
installed in the highway right of way or
other real property and classified as
manufactured products, the cabinets or
other enclosures of such systems that
are manufactured predominantly of iron
or steel or a combination of both shall
meet the requirements of paragraph (b)
of this section. The cost of cabinets or
other enclosures shall be included in
the applicable calculation for purposes
of determining whether systems referred
to in the preceding sentence are
produced in the United States.
(3) In determining whether the cost of
components for manufactured products
is greater than 55 percent of the total
cost of all components, recipients shall
determine the cost as follows:
(i) For components purchased by the
manufacturer, the acquisition cost,
including transportation costs to the
place of incorporation into the
manufactured product (whether or not
such costs are paid to a domestic firm),
and any applicable duty (whether or not
a duty-free entry certificate is issued); or
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Sfmt 4702
(ii) For components manufactured by
the manufacturer, all costs associated
with the manufacture of the component,
including transportation costs as
described in paragraph (a) of this
section, plus allocable overhead costs,
but excluding profit. Cost of
components does not include any costs
associated with the manufacture of the
manufactured product.
(4) The provisions of this paragraph
(c) are separate and severable from one
another and from the other provisions of
this section. If any provision is stayed
or determined to be invalid, the
remaining provisions shall continue in
effect.
*
*
*
*
*
[FR Doc. 2024–05182 Filed 3–11–24; 8:45 am]
BILLING CODE 4910–22–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 312
[EPA–HQ–OLEM–2024–0097; FRL–11691–
02–OLEM]
Standards and Practices for All
Appropriate Inquiries; Notice of
Proposed Rulemaking
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
EPA is proposing to amend
the Standards and Practices for All
Appropriate Inquiries to reference a
standard practice recently made
available by ASTM International, a
widely recognized standards
development organization. Specifically,
EPA is proposing to amend the All
Appropriate Inquiries Rule to reference
ASTM International’s E2247–23
‘‘Standard Practice for Environmental
Site Assessments: Phase I
Environmental Site Assessment Process
for Forestland or Rural Property’’ and
allow for its use to satisfy the
requirements for conducting all
appropriate inquiries under the
Comprehensive Environmental
Response, Compensation, and Liability
Act. EPA is additionally proposing to
remove after one year, from the All
Appropriate Inquiries Rule, recognition
of the previous version of that standard,
ASTM E2247–16, as compliant with the
All Appropriate Inquiries Rule.
DATES: Written comments must be
received by April 11, 2024.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–HQ–
OLEM–2024–0097 at
www.regulations.gov: Follow the on-line
SUMMARY:
E:\FR\FM\12MRP1.SGM
12MRP1
]]>Agencies
[Federal Register Volume 89, Number 49 (Tuesday, March 12, 2024)]
[Proposed Rules]
[Pages 17789-17804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05182]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
23 CFR Part 635
[Docket No. FHWA-2023-0037]
RIN 2125-AG13
Buy America Requirements for Manufactured Products
AGENCY: Federal Highway Administration (FHWA), U.S. Department of
Transportation (DOT).
ACTION: Notice of proposed rulemaking; request for comments.
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SUMMARY: The FHWA is proposing to discontinue its general waiver of Buy
America requirements for manufactured products and in doing so require
FHWA recipients to start applying Buy America requirements to
manufactured products. The FHWA is also proposing standards for
applying Buy America to manufactured products should the waiver be
discontinued. The proposed standards for applying Buy America to
manufactured products are consistent with the Office of Management and
Budget's (OMB) guidance implementing the Build America, Buy America Act
(BABA) provisions of the Infrastructure Investment and Jobs Act (also
known as the Bipartisan Infrastructure Law (BIL)).
DATES: Comments must be received on or before May 13, 2024.
ADDRESSES: To ensure that you do not duplicate your docket submissions,
please submit comments by only one of the following means:
Federal eRulemaking Portal: Go to www.regulations.gov and
follow the online instructions for submitting comments.
Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590.
Hand Delivery: U.S. Department of Transportation, Docket
Operations, West Building Ground Floor, Room W12-140, 1200 New Jersey
Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays. The telephone number is (202)
366-9329.
All submissions should include the agency name and the docket
number that appears in the heading of this document or the Regulation
Identifier Number (RIN) for the rulemaking. All comments received will
be posted without change to www.regulations.gov, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT: For questions about this document,
please contact Mr. Brian Hogge, Office of Infrastructure, (202) 366-
1562, or via email at [email protected]. For legal questions, please
contact Mr. David Serody, Office of the Chief Counsel, (202) 366-4241,
or via email at [email protected]. Office hours are from 8 a.m. to
4:30 p.m., E.T., Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
Electronic Access and Filing
This document and all comments received may be viewed online
through the Federal eRulemaking portal at www.regulations.gov using the
docket number listed above. Electronic retrieval help and guidelines
are also available at www.regulations.gov. An electronic copy of this
document may also be downloaded from the Office of the Federal
Register's website at www.FederalRegister.gov and the U.S. Government
Publishing Office's website at www.GovInfo.gov.
All comments received before the close of business on the comment
closing date indicated above will be considered and will be available
for examination in the docket at the above address. Comments received
after the comment closing date will be filed in the docket and will be
considered to the extent practicable. In addition to late comments,
FHWA will also continue to file relevant information in the docket as
it becomes available after the comment period closing date and
interested persons should continue to examine the docket for new
material. A final rule may be published at any time
[[Page 17790]]
after the close of the comment period and after FHWA has had the
opportunity to review the comments submitted.
I. Executive Summary
A. Purpose of the Regulatory Action
The FHWA is required, by statute, to ensure that all FHWA-funded
projects only use steel, iron, and manufactured products that are
produced in the United States. 23 U.S.C. 313. The FHWA refers to these
requirements as ``Buy America'' requirements. The Buy America
requirement for manufactured products has existed in some form since
the enactment of the 1978 Surface Transportation Assistance Act (1978
STAA), Public Law 95-599 (1978), with those requirements being modified
by the 1983 Surface Transportation Assistance Act (1983 STAA), Public
Law 97-424 (1983),\1\ which provides the current Buy America
requirement for manufactured products. In 1983, following the passage
of the 1983 STAA, FHWA determined that it would be in the public
interest to waive the Buy America requirements for manufactured
products, creating the Manufactured Products General Waiver that
continues to this day. See 48 FR 1946 (Jan. 17, 1983); 48 FR 53099
(Nov. 25, 1983). Due to the Manufactured Products General Waiver,
manufactured products permanently incorporated into FHWA-funded
projects do not need to be produced domestically, apart from
predominantly iron or steel manufactured products and predominantly
iron or steel components of manufactured products.
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\1\ For clarity, while this law was enacted as the Surface
Transportation Assistance Act of 1982, because it was enacted on
January 6, 1983, it will be referred to as the ``1983 STAA.''
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On November 15, 2021, the President signed BIL (Pub. L. 117-58)
into law. The BIL includes the Buy America, Build America Act (BABA),
which expands the coverage and application of Buy America requirements
in Federal financial assistance programs for infrastructure. BIL, div.
G sections 70901-70953. Among other requirements, BABA mandates that
all iron, steel, manufactured products, and construction materials used
in projects supported by funds made available for a Federal financial
assistance program for infrastructure be produced in the United States.
BABA section 70914. BABA provides that this mandate applies to such
materials only to the extent that a domestic content procurement
preference that meets the requirements of section 70914 does not
already apply. BABA section 70917(a). As FHWA has an existing statutory
Buy America requirement for steel, iron, and manufactured products at
23 U.S.C. 313, BABA's savings provision means that FHWA's existing Buy
America requirements under 23 U.S.C. 313 apply to these products. The
BABA's savings provision, however, requires that any domestic content
procurement preference at least meets the requirements of section
70914. The requirements of section 70914 apply the definitions
contained in section 70912, including the definition of ``produced in
the United States.'' Accordingly, while FHWA does not directly apply
BABA's manufactured products requirements, FHWA interprets BABA as
requiring FHWA's Buy America requirements to be generally consistent
with the BABA requirements that are applicable to section 70914,
including the BABA definition of ``produced in the United States'' for
manufactured products at section 70912(6)(B).
BABA also expresses a general policy preference against general
applicability waivers like the Manufactured Products General Waiver.
Section 70914(d) of BABA requires Federal Agencies to review existing
general applicability waivers of Buy America requirements by publishing
in the Federal Register a notice that: (i) describes the justification
for the general applicability waiver; and (ii) requests public comments
for a period of not less than 30 days on the continued need for the
general applicability waiver. As described in further detail below,
FHWA has undergone that review.
Based on the contents of that review, and after considering the
President's policy, as embodied in Executive Order (E.O.) 14005,
``Ensuring the Future Is Made in All of America by All of America's
Workers,'' to maximize the use of goods, products, and materials
produced in the United States; the intent of Congress, as expressed in
BABA's preference against general applicability waivers; the purpose
and goals of domestic content procurement preferences and waivers; and
FHWA's original rationale for issuing the Manufactured Products General
Waiver compared to the current domestic manufacturing situation, FHWA
is proposing the discontinuation of the Manufactured Products General
Waiver. Simultaneously, FHWA is proposing to modify its current
regulations implementing Buy America at 23 CFR 635.410 to set forth the
standards for when a manufactured product will be considered to be
``produced in the United States'' and therefore Buy America-compliant.
For uniformity and consistency with BABA, FHWA is proposing that these
standards mirror the standards OMB has established for BABA's domestic
content procurement preference for manufactured products in its final
guidance implementing BABA at 2 CFR part 184 (part 184).\2\ 88 FR
57750.
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\2\ Throughout this document, references to part 184 refer to
both the text in 2 CFR part 184 and the Preamble published in the
Federal Register.
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B. Summary of the Major Provisions of the Regulatory Action in Question
The FHWA is proposing to set standards regarding its Buy America
requirement for manufactured products, defining when a manufactured
product is ``produced in the United States'' for the purposes of
complying with 23 U.S.C. 313. Under this definition, which mirrors the
definition at section 70912(6)(B) of BABA and in part 184, to be
produced in the United States, a manufactured product must be
manufactured in the United States and have the cost of components of
the product that are mined, produced, or manufactured in the United
States be greater than 55 percent of the total cost of all components
of the manufactured product. The FHWA is also proposing to mirror the
standard in part 184 for how to determine the cost of any component. To
provide clarity in presenting these standards, FHWA is also proposing
to define ``component,'' ``manufactured product,'' and
``manufacturer,'' with these definitions again proposed to be
substantially similar to those used in part 184.
In addition, FHWA is not proposing to modify its current Buy
America requirements for iron and steel.\3\ To distinguish between iron
and steel products, to which FHWA's existing Buy America requirements
will continue to apply, and manufactured products, FHWA is proposing to
adopt the definitions of ``iron or steel products'' and ``predominantly
of iron or steel or a combination of both'' found in part 184.
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\3\ The FHWA's longstanding Buy America requirements for iron
and steel require that all manufacturing processes of permanently
incorporated steel or iron materials, including application of a
coating, must occur in the United States. 23 CFR 635.410(b)(1). BABA
included domestic content procurement preferences for iron and steel
at section 70912(2)(A), which require that all manufacturing
processes, from the initial melting stage through the application of
a coating, occur in the United States. Since FHWA's requirements for
iron and steel meet BABA's requirements for iron and steel, FHWA
continues to apply its existing Buy America requirements unchanged.
The FHWA notes, however, that its current Buy America requirements
for iron and steel are substantially aligned with BABA's.
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In alignment with part 184, FHWA is also establishing a separate
classification for excluded materials,
[[Page 17791]]
referred to as section 70917(c) materials in part 184. These excluded
materials are cement and cementitious materials; aggregates such as
stone, sand, or gravel; or aggregate binding agents or additives. The
FHWA is proposing to make clear that, standing alone, these excluded
materials do not constitute a manufactured product for which a Buy
America requirement applies. Under FHWA's proposed regulations, such
excluded materials may constitute a component of a manufactured product
when combined with other materials, including other excluded materials;
however, FHWA is proposing to explicitly state that concrete and
asphalt mixtures delivered to a job site without final form for
incorporation into a project are not manufactured products.
In addition, for clarity, FHWA is proposing to make clear that a
product must either be classified as an iron or steel product, a
manufactured product, an excluded material, or another category
specified by law or in 2 CFR part 184, such as construction materials.
The FHWA believes that this, in concert with the new definitions, will
make clear how recipients of FHWA financial assistance should
differentiate between different materials and ensure that multiple
standards do not apply to a single material, with exceptions for two
specific manufactured products described below.
The FHWA proposes to deviate from the part 184 by applying FHWA's
existing Buy America requirements for iron and steel to two specific
types of materials that may be used as components of manufactured
products, with those manufactured products also required to conform
with FHWA's proposed Buy America requirements for manufactured
products.\4\ First, with respect to precast concrete products that are
classified as manufactured products, FHWA is proposing to require that
any iron or steel products that are components of the precast concrete
product must conform with FHWA's existing Buy America requirements for
iron and steel. Second, with respect to intelligent transportation
systems and other electronic hardware systems that are installed in the
highway right-of-way or other real property and classified as
manufactured products, FHWA is proposing to require that any iron or
steel enclosures of such systems conform with FHWA's existing Buy
America requirements for steel and iron. The FHWA is proposing these
two deviations from part 184 in order to continue FHWA's long-standing
policy of requiring the iron or steel in these specified products to
comply with the Buy America requirements for iron and steel, while also
limiting the number of products that must comply with two different Buy
America requirements. Along with these iron and steel requirements,
under FHWA's proposed standards, precast concrete and such electronic
hardware systems, when classified as manufactured products, would still
need to meet FHWA's proposed standards for manufactured products;
therefore, the cost of the iron and steel within the products shall
count toward the 55 percent domestic content threshold.
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\4\ Unlike these proposed regulations, under part 184, materials
should not be considered to fall into multiple categories, and only
need to meet the domestic content procurement preference for only
the single category in which it is classified. See 2 CFR 184.4(e),
(f).
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C. Benefits and Costs
The preliminary regulatory impact analysis (RIA) prepared pursuant
to Executive Order 12866, ``Regulatory Planning and Review,'' and
available in the rulemaking docket, analyzes the costs and benefits
associated with establishing Buy America requirements for manufactured
products. The RIA discusses anticipated benefits of the rule
qualitatively, as they could not be quantified. Expected benefits
include protecting and expanding domestic manufacturing, increasing
supply chain resiliency, and increasing consistency in applying
domestic content procurement preferences for manufactured products
between FHWA and other Federal Agencies that are subject to the
requirements of BABA. Expected costs of the proposed rule relate to
increased material costs for manufactured products used in highway
construction projects, project delay, and the administrative costs to
FHWA and recipients of FHWA financial assistance. At this time, FHWA is
only able to quantify costs for the increased material costs and the
administrative costs to FHWA. The FHWA estimates the increased material
costs for manufactured products permanently incorporated into FHWA-
funded projects to range from a high of roughly $737 million per year
to a low of $45 million per year. The FHWA further estimates an
additional $167,000 per year in increased FHWA administrative costs.
The other administrative costs to recipients of FHWA financial
assistance and the costs associated with project delivery delay have
not been quantified.
II. Background
A. History of FHWA's Manufactured Products Domestic Content Procurement
Preference and Manufactured Products General Waiver
The FHWA's Buy America requirements for the Federal-aid highway
program were first established in 1978 by Section 401 of the 1978 STAA,
which imposed a Buy America requirement to certain unmanufactured and
manufactured articles, materials, and supplies. Following enactment of
the 1978 STAA, FHWA issued an emergency rule to implement the Buy
America requirement of Section 401. See 43 FR 53717 (Nov. 17, 1978). In
that rule, FHWA determined that it was in the public interest to
temporarily waive the provisions of Section 401 of the 1978 STAA to all
products and materials other than structural steel. 43 FR at 53717. The
FHWA based this determination on its belief that the implementation of
the statutory text of Section 401 would have a major impact on the
Federal-aid highway program and that foreign structural steel was the
only foreign product with a significant nationwide effect on the cost
of Federal-aid highway construction projects. Id.
In 1980, following this emergency rule, FHWA issued an NPRM to
establish regulations implementing Section 401 of the 1978 STAA. 45 FR
77455 (Nov. 24, 1980). In that NPRM, FHWA proposed to extend the
coverage of Buy America requirements to all steel construction
materials used in highway construction projects, while excluding all
other materials and products from coverage under Section 401. 45 FR at
77455. Again, FHWA stated that because foreign steel was identified as
the only foreign commodity having a significant nationwide effect on
the cost of Federal-aid highway construction projects, it was only
necessary to implement Buy America requirements for steel products. Id.
The FHWA acknowledged that natural materials, such as sand, stone,
gravel, and earth materials; and petroleum and petroleum-based
products, such as fuels, lubricants, and bituminous products, were two
other commodities used in large amounts for Federal-aid highway
projects, but FHWA proposed not to apply Buy America requirements to
such materials. Id. The FHWA found that there was limited foreign
competition in natural materials because of the difficulty and high
cost of transporting them due to their bulk and weight; as these
materials were therefore usually domestically sourced, FHWA found it
unnecessary to apply Buy America requirements to them. Id.
[[Page 17792]]
For petroleum and petroleum-based products, FHWA determined that such
products were not available from domestic sources in sufficient and
reasonably available quantities, justifying their exemption from FHWA's
proposed Buy America requirements. Id. For all other manufactured
products covered by Section 401 of the 1978 STAA, FHWA determined that
they were not used in sufficient quantity to have any appreciable
effect on the overall cost of a project and did not require the
protection of Buy America. The FHWA therefore proposed in the 1980 NPRM
not to apply Buy America requirements to such products.
Prior to this rulemaking being finalized, Congress enacted the 1983
STAA, which repealed Section 401 of the 1978 STAA and instituted new
Buy America requirements that are similar to those that exist today.
Section 165(a) applied Buy America requirements to all steel, cement,
and manufactured products used on FHWA-funded projects.\5\ Subsection
165(b) provided that FHWA could waive the provisions of subsection
165(a) if their application would be inconsistent with the public
interest; if such materials and products are not produced in the United
States in sufficient and reasonable quantities and of a satisfactory
quality; or if the inclusion of domestic material(s) would increase the
cost of the overall project by more than 25 percent.\6\
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\5\ The Buy America requirement for cement was eliminated by
Congress in 1984. See Public Law 98-229. In addition, Congress added
a Buy America requirement for iron in 1991. See Public Law 102-240.
The FHWA's current Buy America requirements for steel, iron, and
manufactured products were codified at 23 U.S.C. 313 by Section 1903
of the Safe, Accountable, Flexible, Efficient Transportation Equity
Act: A Legacy for Users (SAFETEA-LU) in 2005. Public Law 109-59.
\6\ Section 165(b)(3) of the 1983 STAA also allowed for a waiver
of the provisions in subsection 165(a) in the case of the
procurement of bus and other rolling stock under the Urban Mass
Transportation Act of 1964 if the cost of components which are
produced in the United States is more than 50 percent of the cost of
all components of the vehicle or equipment; and final assembly of
the vehicle or equipment has taken place in the United States. This
use of components is referenced in subsection 165(c) of the 1983
STAA, which states that for the purposes of Section 165, in
calculating components' costs, labor costs involved in final
assembly cannot be included. Subsection 165(c) was modified by
Section 337 of the Surface Transportation and Uniform Relocation
Assistance Act of 1987 (Pub. L. 110-17), raising the threshold for
the cost of components. In addition, Section 337(b) of the Surface
Transportation and Uniform Relocation Assistance Act of 1987 amended
Section 165(b)(3) of the 1983 STAA to refer to the cost of all
subcomponents, as well as components. Section 165(b)(3) was
ultimately repealed by Section 4(r) of Public Law 103-272 in 1994;
however, subsection 165(c) of the 1983 STAA remains codified at 23
U.S.C. 313(c).
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Shortly after the enactment of the 1983 STAA, FHWA issued an
interim final rule implementing Section 165. 48 FR 1946 (Jan. 17,
1983). In this rule, FHWA again determined that it was in the public
interest to temporarily waive the provisions of Section 165 of the 1983
STAA as they applied to all manufactured products other than cement. 48
FR at 1946. The FHWA based this decision ``on the fact that sufficient
information is not yet available in order to adequately assess the
impacts of applying Buy America provisions to all manufactured products
and to all projects regardless of project cost.'' Id. The FHWA also
noted that applying a Buy America requirement for all manufactured
products would require tracing the origin of components used in
petroleum-based products, which FHWA stated was extremely difficult to
do. Id.
In late 1983, FHWA issued its final rule implementing Section 165
of the 1983 STAA, creating its current Buy America regulations at 23
CFR 635.410. 48 FR 53099 (Nov. 25, 1983). Once more, FHWA found that a
waiver of Buy America requirements for manufactured products was in the
public interest, thereby creating the Manufactured Products General
Waiver, which still remains in effect 40 years later.\7\ 48 FR at
53102. The FHWA found that most responses from product manufacturers
``recommended that manufactured products should be excluded from Buy
America and/or expressed only a passing interest in the regulation.''
48 FR at 53101. For manufacturers that wanted Buy America requirements
applied to manufactured products, FHWA stated that these manufacturers
primarily expressed this opinion because they opposed unfair foreign
trade practices, and that ``protectionism in terms of a Buy America
regulation on all manufactured products would not serve this purpose.''
Id. Rather than apply Buy America requirements for manufactured
products to remedy this concern, FHWA stated that unfair practices
could be instead addressed through import laws. Id. at 53102. Further,
FHWA determined that it was not the intent of Congress in enacting the
1983 STAA for FHWA to apply a Buy America requirement to manufactured
products; FHWA noted that it had consistently waived manufactured
products from coverage under Buy America laws and Congress did not
specifically direct a change in that policy in enacting 1983 STAA,
which FHWA interpreted to mean that not all manufactured products had
to be covered by the requirements of Section 165. Id. at 53101-02.
Finally, FHWA reiterated that materials and products other than steel,
cement, asphalt, and natural materials comprised a small percent of the
highway construction program; that other manufactured products were
minimally used and there would be little economic effect to applying
Buy America requirements to them; and that it would be difficult and
administratively burdensome to identify the various materials
comprising manufactured products and trace their origin. Id. at 53102.
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\7\ The FHWA's regulations implementing Buy America have also
remained consistent since 1983, apart from reacting to statutory
changes by removing a reference to a Buy America requirement for
cement (49 FR 18820 (May 3, 1984)) when Congress removed that Buy
America requirement and adding a reference to a Buy America
requirement for iron (58 FR 38973 (July 21, 1993)) after Congress
added that requirement.
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B. Current FHWA Buy America Requirements Under 23 U.S.C. 313
Currently, 23 U.S.C. 313(a) requires that all steel, iron, and
manufactured products used in FHWA-funded projects be produced in the
United States. Per 23 U.S.C. 313(h), these Buy America requirements
apply to all contracts that are eligible for FHWA assistance regardless
of the funding source if any contract within the scope of a
determination under the National Environmental Policy Act (NEPA)
involves an obligation of Federal funds. For purposes of section 70917
of BABA, FHWA considers 23 U.S.C. 313 to be a domestic content
procurement preference in existence at the time of the enactment of BIL
meeting the requirements of section 70914 with respect to iron, steel
and manufactured products for all financial assistance that is
administered under title 23, U.S.C.\8\ However, as noted above in
Section II.A, in 1983, FHWA issued a public interest waiver of general
applicability of FHWA's Buy America requirement for manufactured
products, known as the Manufactured Products General Waiver. Thus, were
FHWA to discontinue this waiver, FHWA would need to establish standards
for the application of Buy America to manufactured products that meet
or exceed the requirements of section 70914. Accordingly, FHWA is
publishing this NPRM to propose such standards.
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\8\ Financial assistance made available for Federal Lands
Management Agencies under the Federal Lands Transportation Program
is subject to the Buy American Act provision (41 U.S.C. 8301-8303)
under the Federal Acquisition Regulations. Throughout this document,
FHWA refers to the projects subject to FHWA's Buy America
requirements as ``FHWA-funded projects.''
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[[Page 17793]]
C. Administration Priorities
In January 2021, President Biden issued E.O. 14005, titled
``Ensuring the Future is Made in All of America by All of America's
Workers'' (86 FR 7475, Jan. 28, 2021). The E.O. sets forth a policy
that Federal Agencies should, consistent with applicable law, maximize
the use of goods, products, and materials produced in, and services
offered in, the United States. The E.O. helps promote private sector
investment in the production of goods critical to our national security
and economic stability. It is a policy of this Administration,
exemplified by this E.O., to bolster domestic supply chains and, in
doing so, create jobs, strengthen our manufacturing sector, and create
economic opportunities for more of America's small businesses. Indeed,
President Biden emphasized the importance of using domestic products in
American roads, bridges, and highways in his 2023 State of the Union
Address.\9\
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\9\ As stated by President Biden: ``And on my watch, American
roads, bridges, and American highways are going to be made with
American products as well.'' See https://www.whitehouse.gov/state-of-the-union-2023/.
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D. Build America, Buy America Act
On November 15, 2021, the President signed into law BIL, which
includes BABA. The BABA requires that all iron, steel, manufactured
products, and construction materials made available for a Federal
financial assistance program for infrastructure be produced in the
United States. BABA section 70914. The BABA, however, provides that the
preferences under section 70914 apply only to the extent that a
domestic content procurement preference as described in section 70914
does not already apply to iron, steel, manufactured products, and
construction materials. BABA section 70917(a)-(b). As FHWA has existing
Buy America domestic content preferences for steel, iron, and
manufactured products at 23 U.S.C. 313, BABA's preferences for those
materials do not explicitly apply to FHWA. The FHWA does, however,
apply BABA's domestic preference requirement for construction
materials.\10\
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\10\ Along with applying BABA's domestic preference requirement
for construction materials, section 70916(c) of BABA requires FHWA
to consult with the Director of the Hollings Manufacturing Extension
Partnership regarding whether there is a domestic entity that could
provide the iron, steel, manufactured product, or construction
material that is the subject of the proposed waiver before FHWA
grants a waiver under either its Buy America requirements for iron,
steel, and manufactured products and under BABA's domestic
preference requirement for construction materials.
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Under BABA, all manufactured products must be ``produced in the
United States.'' BABA section 70914. With respect to manufactured
products, BABA defines ``produced in the United States'' to mean that
(1) the manufactured product was manufactured in the United States and
(2) the cost of the components of the manufactured product that are
mined, produced, or manufactured in the United States is greater than
55 percent of the total cost of all components of the manufactured
product, unless another standard for determining the minimum amount of
domestic content of the manufactured product has been established under
applicable law or regulation. BABA section 70912(6)(B).
In addition, BABA expresses a general policy preference against
general applicability waivers, such as the Manufactured Products
General Waiver. For example, section 70913(c) of BABA requires Federal
Agencies to identify ``deficient programs'' for financial assistance,
which includes programs that are ``subject to a waiver of general
applicability not limited to the use of specific products for use in a
specific project.'' BABA section 70913(c)(2). Section 70914(d) of BABA
also requires Federal Agencies to review existing general applicability
waivers of Buy America requirements by publishing in the Federal
Register a document that: (i) describes the justification for the
general applicability waiver; and (ii) requests public comments for a
period of not less than 30 days on the continued need for the general
applicability waiver. Following the initial notice and review and
consideration of comments received, BABA requires Federal agencies to
publish in the Federal Register a determination on whether to continue
or discontinue the general applicability waiver. BABA section
70914(d)(2)(B). On March 17, 2023, at 88 FR 16517, FHWA published the
required notice to initiate its review of the Manufactured Products
General Waiver in the Federal Register (``2023 RFC''). The FHWA
discusses the comments received for the 2023 RFC in section III.
E. OMB's Guidance on BABA
The BABA further required OMB to issue guidance to assist in
applying BABA's requirements. BABA section 70915. On April 18, 2022,
OMB issued memorandum M-22-11, ``Initial Implementation Guidance on
Application of Buy America Preference in Federal Financial Assistance
Programs for Infrastructure,'' \11\ which was rescinded and replaced by
memorandum M-24-02, ``Implementation Guidance on Application of Buy
America Preference in Federal Financial Assistance Programs for
Infrastructure'' on October 25, 2023 (``Implementation Guidance'').\12\
Section VI of the Implementation Guidance warns against overly broad
waivers, stating that they ``undermine market signals designed to boost
domestic supply chains, particularly for key articles, materials, and
supplies in critical supply chains,'' and that ``[w]aivers that are
overly broad will tend to undermine domestic preference policies.''
Section VI also states that public interest waivers of domestic content
procurement preferences ``must be used judiciously and construed to
ensure the maximum utilization of goods, products, and materials
produced in the United States.'' The Implementation Guidance goes on to
state that whether a waiver is in the public interest will depend upon
numerous factors, such as the nature and amount of resources available
to the recipient; the value of the items, goods, or materials in
question; the potential domestic job impacts; and other policy
considerations, including sustainability, equity, accessibility,
performance standards, and the domestic content (if any) of and
conditions under which the non-qualifying good was produced. In terms
of general applicability waivers, section VI of the Implementation
Guidance states that Agencies ``should align such waivers with
complementary policies, such as work to boost supply chain resiliency
and domestic employment'' and that such waivers ``should include
appropriate expiration dates designed to ensure that, once available,
Buy America qualifying products receive appropriate consideration.''
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\11\ https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf.
\12\ https://www.whitehouse.gov/wp-content/uploads/2023/10/M-24-02-Buy-America-Implementation-Guidance-Update.pdf.
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On August 23, 2023, at 88 FR 57750, OMB revised its guidance in
title 2 of the CFR to add a new part 184 that provides additional
guidance on implementing BABA. Part 184 includes definitions for key
terms, including iron or steel products, predominantly of iron or steel
or a combination of both, manufactured products, component, and
manufacturer. 2 CFR 184.3. In line with section 70912(6)(B) of BABA, 2
CFR 184.3 states that a manufactured product is ``produced in the
United
[[Page 17794]]
States'' if the product was manufactured in the United States; and the
cost of the components of the manufactured product that are mined,
produced, or manufactured in the United States is greater than 55
percent of the total cost of all components of the manufactured
product, unless another standard that meets or exceeds this standard
has been established under applicable law or regulation for determining
the minimum amount of domestic content of the manufactured product.
Part 184 also provides guidance for determining the cost of components
of manufactured products. Pursuant to 2 CFR 184.5, in determining
whether the cost of components for manufactured products is greater
than 55 percent of the total cost of all components, there are two
standards depending on the origin of the component. For components
purchased by the manufacturer, the cost of the component is the
acquisition cost, including transportation costs to the place of
incorporation into the manufactured product (whether or not such costs
are paid to a domestic firm), and any applicable duty (whether or not a
duty-free entry certificate is issued). 2 CFR 184.5(a). For components
manufactured by the manufacturer, the cost of the component is all
costs associated with the manufacture of the component, including
transportation costs described in 2 CFR 184.5(a), plus allocable
overhead costs, but excluding profit and any costs associated with the
manufacture of the manufactured product. 2 CFR 184.5(b).
Part 184 also states that an article, material, or supply should
only be classified as either an iron or steel product, manufactured
product, construction material, or section 70917(c) material,\13\ that
the classification must be made based on the status of the material at
the time it is brought to the work site for incorporation into an
infrastructure project, and that the material must meet the Buy America
standards for only the single category in which it is classified. 2 CFR
184.4(e)-(f).
---------------------------------------------------------------------------
\13\ Part 184 defines a section 70917(c) material as cement and
cementitious materials; aggregates such as stone, sand, or gravel;
or aggregate binding agents or additives. See 2 CFR 184.3. These
materials are named section 70917(c) materials in part 184 because
they are referred to in section 70917(c) of BABA.
---------------------------------------------------------------------------
Again, part 184 does not, by its own terms, apply to FHWA's Buy
America requirements for steel, iron, and manufactured products; it
only applies to FHWA's domestic content procurement preference for
construction materials.\14\ 2 CFR 184.2(a). Part 184 does, however,
apply to all Federal financial assistance programs for infrastructure
that are administered by Federal Agencies that did not have a domestic
content procurement preference for steel, iron, and manufactured
products meeting or exceeding BABA's requirements.
---------------------------------------------------------------------------
\14\ Since 23 U.S.C. 313 did not specifically apply to
``construction materials,'' FHWA did not have a domestic content
procurement preference in effect for these products for purposes of
section 70917 of BABA. Therefore, the provisions of BABA as
interpreted by OMB apply to construction materials.
---------------------------------------------------------------------------
III. March 17, 2023, Request for Comments
A. Overview of Comments Received
Pursuant to section 70914(d) of BABA, FHWA published the March 17,
2023, Request for Comments (RFC), seeking comments on whether to
continue or discontinue the Manufactured Products General Waiver. 88 FR
16517. The FHWA received 9,496 comments; however, a vast majority of
these comments received were ``form'' comments that were functionally
identical to each other, with only occasional minor changes to the
comments themselves under the names of different commenters. The
majority of these form comments expressed support for discontinuing the
Manufactured Products General Waiver, although there were also form
comments that supported continuing the waiver. While FHWA believes that
form comments might broadly indicate the level of support or opposition
to the waiver, no form comment provided substantive analysis regarding
the benefits or costs of continuing or discontinuing the Manufactured
Products General Waiver.
Excluding the form comments, FHWA received 134 unique, substantive
comments from State departments of transportation, manufacturers, State
government agencies, labor organizations, construction contractors,
industry associations, members of Congress, and individuals. The FHWA
briefly discusses the main topics brought up by commenters who
supported and opposed the Manufactured Products General Waiver below.
B. Comments in Favor of Continuing the Manufactured Products General
Waiver
Commenters who were in favor of continuing the Manufactured
Products General Waiver generally presented similar points. Such
commenters stated that removing the waiver (1) would likely increase
project costs due to the increased cost of domestically produced
products or due to the reduced size of the market for Buy America-
compliant products; (2) would likely lead to project delays or
cancellations due to the difficulty or inability to acquire Buy
America-compliant products, partly due to a limited supply of such
products; (3) may prevent the use of specific products because some
products or their components not currently produced domestically and
onshoring will take time, if it occurs at all, given the size of the
market for Buy America-compliant products and components; and (4) would
result in significant challenges if contracting agencies, contractors,
and manufacturers were required to track the origin of a product's
components, which commenters claimed would be worsened if these
entities also had to track the cost of a product's components. Many
commenters argued that these issues were particularly pronounced and
any benefits of rescinding the Manufactured Products General Waiver
would be limited given their assertions that the cost and amount of
manufactured products used in highway construction projects are
insignificant relative to the rest of the materials used in highway
construction projects.
Commenters acknowledged that, were FHWA to rescind the Manufactured
Products General Waiver and apply Buy America requirements for
manufactured products, a waiver could be obtained for manufactured
products that are not available from domestic sources; however,
commenters argued that going through the waiver process would
inevitably take time and therefore slow construction down, add
administrative burden, and may result in duplicative waivers
continually being requested for the same product that is included in
multiple projects.
C. Comments in Favor of Discontinuing the Waiver
Comments in favor of discontinuing the waiver and applying Buy
America requirements on manufactured products generally espoused the
belief that doing so would restore America's manufacturing base, create
and protect American jobs, and stimulate domestic economic growth.
Commenters also noted that recent supply chain disruptions indicate the
benefit of producing products in the United States and minimizing
dependence on foreign sources, which these commenters argued also
supports America's national security. Commenters who favored
discontinuing the Manufactured Products General Waiver, in general,
stated their belief that when taxpayer dollars are spent on federally
financed
[[Page 17795]]
infrastructure projects, those dollars should go to domestically
produced products.
Commenters also argued that rescinding the Manufactured Products
General Waiver would provide an incentive for companies to invest in
U.S. manufacturing, which they argued the current Manufactured Products
General Waiver disincentivizes. Commenters noted that switching from
foreign-produced products to domestically produced products would
reward companies that have moved production onshore, hired American
workers, and conducted their operations in compliance with strong U.S.
environmental and worker safety regulations. As one commenter stated,
each time FHWA employs the Manufactured Products General Waiver, it
fails to account for whether a Buy America requirement for manufactured
products was feasible, let alone probable. Another commenter stated
that strong domestic content standards send demand signals for
companies to invest in domestic production and workers. In a similar
vein, commenters argued that the continued existence of the waiver
eliminates any incentive for future domestic investment for
manufactured products used on FHWA-funded projects. Commenters also
pointed out that companies that wish to make manufactured products for
FHWA-funded projects domestically do not receive any protection under
the Manufactured Products General Waiver and must instead compete with
foreign imports. Commenters further noted that the Manufactured
Products General Waiver encourages the use of cheaper foreign-produced
manufactured products on FHWA-funded projects and denies opportunities
for U.S. manufacturing workers.
Despite these issues, some manufacturers and contracting agencies
also indicated that they intend to increase domestic manufacturing
capacity in response to the increased Federal transportation
investments brought about by BIL, which indicates that there may be
expansion capabilities for manufacturers who wish to produce Buy
America-compliant manufactured products. Other manufacturers commented
that they believed they were able to produce a Buy America-compliant
product and therefore desired the rescission of the current waiver to
take advantage of the market for Buy America-compliant products. These
manufacturers stated that because of the Manufactured Products General
Waiver, they must compete with foreign manufacturers who may seek to
undermine their pricing, have their products subsidized by foreign
governments, or dump their products into the U.S. market.
In addition, commenters stated their belief that the Manufactured
Products General Waiver was an inappropriate use of FHWA's waiver
authority when it was issued in 1983, arguing that the 1983 STAA
clearly directed and intended that FHWA require the use of U.S.-
produced manufactured products in FHWA-funded projects.
Commenters also stated that the Manufactured Products General
Waiver is inconsistent with the intent of Congress, as seen through the
enactment of BIL. These commenters pointed to the fact that, where it
applies, section 70914 of BIL requires the head of each Federal Agency
to ensure that none of the funds available for a Federal financial
assistance program for infrastructure may be obligated unless all of
the manufactured products used in the project are produced in the
United States; section 70913(c) of BIL defines programs for which a
domestic content procurement preference requirement is subject to a
waiver of general applicability not limited to the use of specific
products for use in a specific project, like the Manufactured Products
General Waiver, as ``deficient programs;'' and that section 70914(d) of
BIL requires Federal Agencies to review existing waivers of general
applicability and determine whether to continue or discontinue them.
IV. Proposed Discontinuation of the Manufactured Products General
Waiver
The FHWA has carefully considered comments received on the 2023
RFC, the purpose of its Buy America requirements, the rationale
provided by FHWA in issuing the Manufactured Products General Waiver in
1983, the priorities of the Administration, and the goal of Congress in
enacting the domestic content procurement preferences in BABA, in
determining whether the Manufactured Products General Waiver remains in
the public interest. After considering this information, FHWA has
decided to propose to discontinue the manufactured products waiver.
First, both the intent of Congress, as expressed in secs. 70933 and
70935 of BABA, and the President's policy for the Federal Government,
as expressed in section 1 of E.O. 14005, is that Federal Agencies
should use terms and conditions in Federal financial assistance awards
to maximize the use of goods, products, and materials produced in the
United States. Continuing the long-standing Manufactured Products
General Waiver is not consistent with these policy goals.
Second, FHWA believes it is important to recognize the purpose of
domestic content procurement preferences when considering whether a
waiver is applicable and in the public interest. The Congressional
findings in section 70911 of BABA are instructive regarding the
purposes of domestic content procurement preferences. In general, the
findings provide that taxpayers expect that publicly funded
infrastructure will be produced in the United States by American
workers, applying America's high environmental, worker, and workplace
safety standards; that taxpayer dollars should not reward companies
that have moved their operations and jobs to foreign countries; that
publicly funded infrastructure projects should seek to prevent shifts
in manufacturing to foreign countries, who may use less energy
efficient and more polluting manufacturing methods, from the United
States; that such projects should create a demand for domestically
produced goods, helping to sustain and grow domestic manufacturing and
the jobs domestic manufacturing supports throughout product supply
chains; and that taxpayer funding should sustain a robust domestic
manufacturing sector, which is a vital component of the national
security of the United States. See BABA section 70911. Continuing the
long-standing Manufactured Products General Waiver continues to
undermine the expressed purposes that domestic content procurement
preferences, such as FHWA's Buy America requirement, are intended to
serve.
Third, OMB's Implementation Guidance conveys a policy that waivers,
including waivers of general applicability like the Manufactured
Products General Waiver, should not be overly broad in order to ensure
that any such waivers appropriately convey market signals on where the
domestic supply chain can be bolstered for American manufacturers to
take advantage of. The Implementation Guidance further provides that
such waivers should also be time-limited to ensure that, once
available, Buy America-compliant materials can receive appropriate
consideration for inclusion in federally funded projects. The
Manufactured Products General Waiver is inconsistent with these general
principles.
Taking into account these above references, FHWA believes the
Manufactured Products General Waiver is overly broad. The FHWA has
considered comments stating that manufactured products that can be
[[Page 17796]]
manufactured domestically are more likely to be ignored in favor of
cheaper foreign products for use on FHWA-funded projects. The FHWA
agrees with these commenters that the Manufactured Products General
Waiver disincentivizes manufacturers from domestically producing
products by covering all manufactured products without discretion,
rather than specifically targeting those that would warrant a waiver
under the waiver criteria in 23 U.S.C. 313(b). Further, FHWA believes
the broadness of the Manufactured Products General Waiver can be seen
in the fact that it applies to any newly created manufactured product
without an analysis of whether coverage of that product is in the
public interest.
The Manufactured Products General Waiver also fails to provide
domestic manufacturers who wish to produce products for FHWA-funded
projects with knowledge of the current gaps in the domestic
manufacturing sector. By covering all manufactured products, the
Manufactured Products General Waiver does not provide market signals
that distinguish between manufactured products that are made
domestically but not included in FHWA-funded projects because the
products are more expensive than foreign products and manufactured
products that are not produced domestically at all. This lack of
clarity hinders manufacturers who wish to enter the market from
understanding the competitive landscape, disincentivizing them from
attempting to provide domestic manufactured products for FHWA-funded
projects.
The FHWA believes it is important to compare its current
understanding of the purpose and need for waivers with the fundamental
underpinnings of the Manufactured Products General Waiver when it was
issued in 1983. At that time, FHWA stated that a waiver was necessary
because of the costs of applying a Buy America requirement to
manufactured products--primarily the burden in identifying and tracing
the origin of the components of manufactured products--while those
products comprised only a small percent of the highway construction
program. 48 FR at 53102. While FHWA recognized these costs, FHWA did
not seemingly perceive any benefits of a Buy America requirement for
manufactured products because it believed that manufacturers would not
produce Buy America-compliant products due to the limited demand
created by FHWA-funded projects; such nonexistent products would thus
not require Buy America protection. In other words, when issuing the
Manufactured Products General Waiver, FHWA presumed at the time that
domestic manufacturers would not produce Buy America-compliant
products. The purpose of the waiver was thus to allow for the
incorporation of products from foreign sources to fill what FHWA
perceived would always be gaps in domestic manufacturing. It assumed
that domestic manufacturing would not produce Buy America-compliant
products and thus believed this assumption compelled the need for a
broad waiver of general applicability.
The FHWA no longer agrees with this premise and is accordingly
proposing to discontinue the Manufactured Products General Waiver. The
FHWA notes that the Federal-aid highway program has grown considerably
with the enactment of new funding programs that provide new
eligibilities since the Manufactured Products General Waiver was
established in 1983. As shown by commenters, domestic manufacturers are
available to produce Buy America-compliant products used in Federal-aid
highway funding programs. Keeping the Manufactured Products Waiver in
place provides no incentive for new domestic manufacturers to enter the
market or for existing domestic manufacturers to begin producing Buy
America-compliant products. For nascent industries that produce
manufactured products used in FHWA-funded projects, the Manufactured
Products General Waiver also discourages companies from investing in
domestic manufacturing that may be able to compete globally once the
domestic manufacturers have built up expertise. Further, FHWA believes
that due to the development of new kinds of manufactured products as
well as the expansion of program eligibilities, such as the
establishment of the Surface Transportation Block Grant Program and
Congestion Mitigation and Air Quality Improvement Program, manufactured
products as a category are used more often now than when the
Manufactured Products General Waiver was issued and accordingly have a
larger economic effect now. When issuing the waiver in 1983, FHWA
stated that materials and products other than steel, cement, asphalt,
and natural materials comprised a small percentage of the highway
construction program. Commenters on the 2023 RFC, however, referenced
numerous other products that they believed would be affected by
rescission of the Manufactured Products General Waiver, such as ITS
hardware, traffic signals and controllers, and vehicle detection
equipment.
Unlike the Manufactured Products General Waiver, FHWA instead
believes, in line with OMB's Implementation Guidance, that waivers
should aim to proactively encourage domestic manufacturing by providing
clear market signals about which markets domestic manufacturers can
enter with the reasonable expectation that their products could
adequately compete for use on FHWA-funded projects. The FHWA
acknowledges that waivers may be necessary in some circumstances but
believes that waivers should seek to identify areas where domestic
manufacturing can fill gaps and actively encourage such activity.
Accordingly, FHWA believes that the Manufactured Products General
Waiver is overly broad, no longer in line with the purpose of domestic
content procurement preferences and waivers, and therefore no longer
serves the public interest. The FHWA is thus proposing to discontinue
the Manufactured Products General Waiver. In doing so, FHWA seeks to
encourage manufacturers to supply Buy America-compliant products to
FHWA-funded projects and to encourage other manufacturers to shift
their production to the United States to take advantage of this market.
The FHWA believes that rescinding the Manufactured Products General
Waiver will also provide many benefits to the United States, such as
protecting and increasing domestic manufacturing and manufacturing
jobs, providing an opportunity for manufacturing innovations to occur
domestically, and creating a more resilient domestic supply chain and
protecting national security. In addition, FHWA expects increases in
domestic manufacturing to benefit related domestic industries, such as
component manufacturers and material and product transporters.
At the same time, FHWA understands that discontinuing the
Manufactured Products General Waiver and applying Buy America
requirements on manufactured products may result in cost increases,
project delays, and product unavailability if not done carefully. The
FHWA acknowledges that there may be some products that are not
currently produced in the United States and, for various reasons, might
not be able to be produced in the United States in the near future. For
such products, FHWA intends to consider whether it should propose any
targeted waivers, with these waivers providing a timeline to encourage
manufacturers to ramp up domestic production. To that end, FHWA is
concurrently publishing a Request for Information (RFI), seeking
specific and detailed information on
[[Page 17797]]
what products are not and cannot be produced in the United States in
the near future. Based on information received, FHWA intends to propose
time-limited and targeted waivers covering such products, if it
determines it would be appropriate to do so. The FHWA believes that
issuing targeted waivers for certain manufactured products presents a
better model than the current Manufactured Products General Waiver,
which does not consider the availability of individually manufactured
products and has no set ending in order to incentivize the onshoring of
manufacturing.
With the FHWA RFI, FHWA seeks to mitigate the concerns posed by
commenters that rescinding the waiver will cause cost increases and
project delays by ensuring the continued availability of necessary
manufactured products. The FHWA would intend for such waivers to allow
for the use of foreign manufactured products as domestic production
ramps-up. Such waivers would be time-limited and could include an
explicit schedule for phasing out a waiver over time, creating a glide-
path toward full Buy America compliance for products, where possible.
The FHWA's goal is that once these waivers expire, the domestic
production of any covered product would be sufficient to ensure that
Buy America-compliant products would be available for use in FHWA-
funded projects. Such waivers could also take into account situations
where economic realities, such as the size of the market, the cost of
onshoring production, and geographic constraints (such as products made
of materials that are not mined in the United States) may hinder
domestic manufacturing growth even in the longer term, though such
waivers would still be subject to periodic review.
By issuing waivers for products where necessary, FHWA intends to
ensure that manufactured products needed for highway construction
projects are available while also providing an advantage to domestic
manufacturers who can provide manufactured products to FHWA-funded
projects where a waiver is not needed. In addition, such targeted
waivers afford manufacturers insight into market demand that can
trigger capital investments in domestic manufacturing to fill current
gaps in the Nation's supply chain, thereby decreasing the need for
these waivers over the long-term. The FHWA will consider such waivers
where they are deemed necessary to ensuring the availability of
products at a reasonable price; however, where domestic production is
currently feasible, FHWA believes in allowing Buy America requirements
to operate as a useful incentive for domestic manufacturers to
contribute American-made manufactured products to highway construction
projects.
In addition, DOT has issued a ``Waiver of Buy America Requirements
for De Minimis Costs and Small Grants'' (``De Minimis and Small Grants
Waiver''). 88 FR 55817 (Aug. 16, 2023). The De Minimis and Small Grants
Waiver currently has no operative effect on manufactured products
included in FHWA-funded projects, as such products are covered by the
Manufactured Products General Waiver. Were the Manufactured Products
General Waiver to be rescinded, however, the De Minimis and Small
Grants Waiver would waive the application of FHWA's Buy America
requirements for manufactured products under a single financial
assistance award for which (1) the total value of non-compliant
products is no more than the lesser of $1,000,000 or 5 percent of total
applicable costs for the project; or (2) the total amount of Federal
financial assistance applied to the project, through awards or
subawards, is below $500,000. 88 FR at 55820. For smaller projects and
projects using limited amounts of manufactured products, where there is
less of a benefit to discontinuing the Manufactured Products General
Waiver, FHWA believes that the De Minimis and Small Grants waiver
should prevent the rescission of the waiver from increasing project
costs or causing project delays.
For all of the above reasons, FHWA is proposing to rescind the
Manufactured Products General Waiver. The FHWA believes that the
Manufactured Products General Waiver is no longer in the public
interest. The FHWA seeks comment on whether this is the appropriate
course of action. For proponents of rescission, as detailed more below,
FHWA seeks comment on when the effective date of the rescission and the
implementation of Buy America requirements for manufactured products
should be. For opponents of rescission, FHWA similarly seeks comment on
when in the future, if ever, the waiver should be rescinded and what
factors should FHWA consider before doing so.
V. FHWA Proposed Buy America Manufactured Product Standards
As set out in 23 U.S.C. 313, FHWA must ensure that all manufactured
products used in FHWA-funded projects are produced in the United
States. The statutory text does not define when a product is ``produced
in the United States.'' As FHWA is proposing to rescind the
Manufactured Products General Waiver, FHWA believes it is required by
BABA to adopt general standards that meet or exceed those under BABA,
which FHWA proposes to do through this rulemaking.
Therefore, while commenters to the 2023 RFC proposed various
standards they suggested FHWA should adopt for its application of Buy
America requirement for manufactured products, FHWA is proposing to
adopt the definition of when a manufactured product is ``produced in
the United States'' as found in section 70912(6)(B) of BABA. This would
require a manufactured product to be manufactured in the United States
and the cost of the components of the manufactured product that are
mined, produced, or manufactured in the United States to be greater
than 55 percent of the total cost of all components of the manufactured
product. While FHWA could legally adopt standards exceeding that found
in BABA, such as by setting a higher domestic content threshold than 55
percent, FHWA recognizes the burden that any application of Buy America
requirements may place on contracting agencies, contractors, and
manufacturers. To minimize that burden to the greatest extent
practicable while also maintaining the benefits of Buy America
requirements, FHWA is proposing to align its standard for when a
manufactured product is ``produced in the United States'' for the
purpose of 23 U.S.C. 313 to the one found in section 70912(6)(B) of
BABA.
This standard would also provide consistency between FHWA's
standard for manufactured products and the standard used by other
Federal Agencies that apply BABA. Beyond the requirements of section
70917 of BABA, FHWA believes there is a benefit of consistent
application and interpretation between FHWA's Buy America requirements
and BABA's domestic content procurement preferences. Consistency
minimizes the burden on contracting agencies, contractors, and
manufacturers, who can rely on existing systems and processes that they
use to comply with BABA when working on FHWA-funded projects. It also
allows manufactured products that provide BABA-compliant manufactured
products for projects funded by other Federal Agencies to provide those
same products on FHWA-funded projects. Consistent definitions further
allow for better understanding of applicable requirements, as
contracting agencies, contractors, and manufacturers do not have to
navigate between multiple, disparate regimes.
[[Page 17798]]
The FHWA notes that were the Manufactured Products General Waiver
to be rescinded, the requirements of 23 U.S.C. 313(h) would apply to
manufactured products. This would mean that the proposed Buy America
requirements for manufactured products would apply to all contracts
eligible for FHWA financial assistance for a project carried out within
the scope of the applicable finding, determination, or decision under
NEPA, regardless of the funding source for such contracts, if at least
one contract for the project is funded with amounts made available to
carry out Title 23, U.S.C. In other words, any Buy America requirements
for manufactured products could apply to manufactured products
purchased under contracts using only non-Federal funds if those
contracts are within the scope of a determination under NEPA that
involves an obligation of Title 23, U.S.C. funds.
The FHWA notes that it does not intend for these proposed standards
to supplant current FHWA waivers that cover specific manufactured
products. The FHWA further notes that its proposed standards are
substantively similar to those in FHWA's Electric Vehicle (EV) Charger
Waiver,\15\ which covers EV chargers, a type of manufactured product,
and waives Buy America requirements for chargers under certain
circumstances.\16\ In particular, FHWA notes that under proposed Sec.
635.410(c)(2)(ii), FHWA intends for a predominantly iron or steel
enclosure of an EV charger that is installed in the highway right of
way or other real property to be subject to FHWA's existing Buy America
requirements for iron or steel. The FHWA believes this aligns with
FHWA's EV Charger Waiver, which states that ``[a]ll predominantly steel
and iron housing components. . .must meet FHWA's Buy America
requirements for steel and iron'' and that ``[t]he cost of any such
housing shall be included as a cost of an EV charger's components when
calculating whether the cost of components manufactured in the United
States exceed 55 percent of the cost of all components.'' See 88 FR
10619, 10634 (Feb. 21, 2023).
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\15\ Waiver of Buy America Requirements for EV Chargers, 88 FR
10619, February 21, 2023.
\16\ More guidance on the EV Charger Waiver can be found at
https://www.fhwa.dot.gov/construction/contracts/buyam_qaev/.
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While FHWA is proposing to discontinue the Manufactured Products
General Waiver and impose Buy America requirements on manufactured
products, FHWA does not desire to place contracting agencies,
contractors, and manufacturers in a position where they are required to
comply with Buy America requirements for manufactured products without
having the systems in place to do so. For example, when part 184 was
issued by OMB in August 2023, a 60-day period was provided before the
revised standards for construction materials become effective. A longer
transition or adjustment period was provided by DOT following the
initiation of the new BABA requirements in May 2022. At that time, DOT
issued an adjustment period waiver to allow time for stakeholders to
transition to new rules and processes required by BABA related to
construction materials. See ``Temporary Waiver of Buy America
Requirements for Construction Materials,'' at 87 FR 31931. The FHWA
seeks comment on whether a similar transition period is needed for its
proposed standards for manufactured products to allow contracting
agencies, contractors, and manufacturers time to create appropriate
systems and processes, as well as train staff on compliance with the
proposed standards. The FHWA specifically seeks comment on the minimum
time required for these purposes and, accordingly, the effective date
for the proposed Buy America requirements for manufactured products.
The FHWA also recognizes the complications that may arise if new
requirements are imposed on ongoing projects, as well as projects that
are in the planning, design, or later implementation phases. The FHWA
intends any new requirements to only apply to Federal awards obligated
or authorized after the effective date of a final rule, but FHWA
requests comments on this point as well. For instance, FHWA requests
comment on whether there should be a buffer period for certain projects
that are in development that have not had Federal awards obligated or
authorized but have relied on the Manufactured Products General Waiver
such that those projects could continue to rely on the Manufactured
Products General Waiver, and under what conditions, if any, that buffer
period would apply.\17\
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\17\ See DOT's Waiver of Buy America Requirements for
Construction Materials for Certain Contracts and Solicitations,
issued on January 30, 2023, for a recent example of how the
Department has handled similar situations for construction materials
subject to the BABA requirements. https://www.transportation.gov/mission/office-secretary/office-policy/transportation-policy/waiver-buy-america-requirements-for-construction-materials.
---------------------------------------------------------------------------
The FHWA also recognizes that there are projects for highway
construction that are subject to alternate project delivery methods,
such as design-build, where contracts are awarded and work is
authorized and obligated in phases. For example, where a project has
not completed the environmental review process, Federal funds may be
obligated for preliminary engineering and environmental document
preparation but not physical construction. In these situations, FHWA
believes that it may be appropriate to apply these proposed standards,
if adopted, to physical construction since Federal funds have not been
obligated or authorized for this work nor have there been any
contractual commitments with respect to this work. The FHWA also
requests comments on the appropriate buffer period, if any, for these
types of projects.\18\
---------------------------------------------------------------------------
\18\ Ibid.
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The FHWA also understands that tracking the origin and cost of
components may be difficult, particularly for smaller manufacturers,
contractors, and contracting agencies. To ease this burden, FHWA is not
prescribing any specific method of compliance. The FHWA's intent and
expectation is that recipients ensure that 55 percent of components, by
cost, of a manufactured product are mined, produced, or manufactured in
the United States. The FHWA requests comments on any specific
provisions that FHWA should consider in easing the administrative
burden in demonstrating compliance with this proposed requirement.
VI. Section Analysis
Sec. 635.410(b), (c), and (d)--Reference to States
The FHWA does not intend to substantively change its current Buy
America regulations as they relate to FHWA's Buy America requirement
for iron and steel. The FHWA does, however, intend to make several,
minor changes regarding these requirements to reflect the current scope
of its Buy America requirements.
In Sec. 635.410(b)(2), the introductory paragraph to Sec.
635.410(b)(3), and Sec. 635.410(d), FHWA is proposing to replace the
mention of ``State'' with ``recipient.'' Along with the replacement of
current Sec. 635.410(c), described below, this would replace all
mentions of ``State'' in the current regulation with ``recipient.'' The
FHWA's Buy America requirements apply to all recipients of title 23,
U.S.C. funds, which includes States but also may include other
recipients like metropolitan planning organizations, local governments,
and
[[Page 17799]]
regional transportation authorities. As the Buy America requirements
are the same between States and non-State entities, FHWA believes non-
State entities should have the same abilities provided in regulation as
States currently do.
Sec. 635.410(b)--Reference to Steel or Iron Materials
Currently, 23 CFR 635.410(b) interchangeably refers to ``steel or
iron materials'' and ``steel and iron materials.'' For consistency,
FHWA is proposing to replace mentions of both terms with a single
phrase: ``iron or steel products,'' which would be defined at proposed
Sec. 635.410(c)(1)(ii). The FHWA does not intend this change to affect
its Buy America requirements for iron or steel materials. As noted in
the discussion below with respect to proposed Sec. 635.410(c)(1)(ii)
and (iv), and (c)(2), this change would make clear when a manufactured
product comprised of steel or iron would be considered an iron or steel
product versus a manufactured product. Consistent with current FHWA
requirements, predominantly iron or steel products would be subject to
FHWA's existing Buy America requirements for iron and steel at Sec.
635.410(b). Manufactured products that are not predominantly iron or
steel would be subject to FHWA's proposed Buy America requirements for
manufactured products at Sec. 635.410(c).
Sec. 635.410(c)--Waiver Provisions
The FHWA is proposing to replace current Sec. 635.410(c) with new
language detailing FHWA's Buy America requirements for manufactured
products, as described in detail in section V and below. The FHWA is
thus proposing to remove the current regulatory text in 23 CFR
635.410(c), which discusses the process for requesting a Buy America
waiver and the procedures FHWA will take to respond to that request.
These provisions have remained substantively unchanged from 1983.\19\
Since then, however, Congress has enacted several provisions
structuring FHWA's process for issuing Buy America waivers.\20\ These
statutorily required processes are not covered by the current version
of 23 CFR 635.410(c), and FHWA does not find it necessary to modify 23
CFR 635.410(c) to reiterate what is already stated in statute and FHWA
guidance.\21\
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\19\ The FHWA has made minor amendments to 23 CFR
635.410(c)(1)(ii) when Congress has modified the statutory coverage
of its Buy America requirements. Originally, 23 CFR 635.410(c)(1)
referenced a waiver of Buy America requirements being possible when
steel and cement materials were not produced in the United States in
sufficient and reasonably available quantity and of a satisfactory
quality. See 48 FR at 53104. When Congress subsequently removed
coverage for cement, FHWA modified that provision accordingly to
remove reference to cement. See 49 FR at 18821. And when Congress
added coverage for iron, FHWA modified the provision one last time
to include mention of iron. 58 FR at 38975. None of these changes,
the last of which occurred in 1993, substantially modified the
process and procedures described in 23 CFR 635.410(c), however.
\20\ The Consolidated Appropriations Act, 2010 (Pub. L. 111-117)
required FHWA to make an informal public notice and comment period
at least 15 days prior to issuing any Buy America waiver. The
SAFETEA-LU Technical Corrections Bill (Pub. L. 110-244) states that
if FHWA determines to issue a waiver, it must publish in the Federal
Register a detailed written justification as to the reasons for the
waiver and provide an additional comment period not to exceed 60
days, with that additional comment period not delaying the
effectiveness of the waiver. Section 11513 of BIL affirmed that not
less than 15 days before issuing a waiver, FHWA must provide notice
of the proposed waiver, an opportunity to comment on the proposed
waiver, and the reasons for the proposed waiver.
\21\ The FHWA maintains guidance describing the information
needed to submit a waiver request and the method to do so. See
Questions #22-27 at https://www.fhwa.dot.gov/construction/contracts/buyam_qageneral.cfm, and Question #19 at https://www.fhwa.dot.gov/construction/contracts/buyam_qa_baba.cfm.
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Sec. 635.410(c)--Introductory Text
As stated above in section V, FHWA is proposing to require that all
manufactured products used and permanently incorporated in FHWA-funded
construction \22\ projects be produced in the United States. To promote
consistency with FHWA's existing Buy America requirements for iron and
steel, FHWA proposes to adopt language similar to the current
regulatory language in Sec. 635.410(b)(1).
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\22\ 23 U.S.C. 101(a)(4) defines ``construction'' to include, in
part, any project eligible for assistance under title 23, U.S.C.
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In addition, FHWA is proposing to make clear that its Buy America
requirement for manufactured products only applies to products that are
permanently incorporated into FHWA-funded projects. The FHWA believes
this aligns with FHWA's longstanding practice for iron and steel items
and for the treatment of manufactured products covered by BABA. See
section IV of the Implementation Guidance.
Sec. 635.410(c)(1)(i)--Definition of Component
The FHWA is proposing to adopt the definition of ``component'' used
in part 184. This would define what a component is for the purpose of
FHWA's proposed Buy America requirements for manufactured products and
for FHWA's proposed definition of an iron or steel product. To provide
contracting agencies, contractors, and manufacturers with consistency,
FHWA believes it is useful to have similar definitions between FHWA's
Buy America requirements and BABA's domestic content procurement
preference where practicable.
Sec. 635.410(c)(1)(ii) and (vi)--Iron or Steel Products
Pursuant to FHWA's current policy, predominantly iron or steel
manufactured products must conform with FHWA's Buy America requirements
for iron or steel.\23\ The FHWA, however, does not currently define
what threshold a product has to meet in order to be classified as a
predominantly iron or steel product. In this proposed rulemaking, to
provide clarity and consistency on this issue, FHWA is proposing to
adopt the definitions of ``iron or steel product'' and ``predominantly
iron or steel or a combination of both'' in part 184.
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\23\ See Q&A #12 a https://www.fhwa.dot.gov/construction/contracts/buyam_qageneral.cfm.
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With the proposed application of Buy America to both iron or steel
products and manufactured products, FHWA believes that it is necessary
to provide standards to determine whether a product should be
classified as a manufactured product or an iron or steel product, as
that determination is significant in understanding which standards
apply to the product. While under FHWA's existing Buy America
requirements for iron and steel, all manufacturing processes of the
iron and steel must occur in the United States, FHWA's proposed
standards for manufactured products allow for the inclusion of non-
domestic components.
The FHWA proposes to use the definitions of ``iron or steel
products'' and ``predominantly of iron or steel or a combination of
both'' to classify a product for purposes of Buy America compliance. In
adopting the definitions of ``iron or steel products'' and
``predominantly of iron or steel or a combination of both'' used in
part 184, FHWA hopes to utilize a single consistent definition to
categorize products on a national level, both for all projects included
in FHWA-funded projects and all projects subject to BABA. See the
explanation below for proposed Sec. 635.410(c)(2) for more information
concerning the classification of materials.
Sec. 635.410(c)(1)(iii)--Definition of Excluded Materials
The FHWA proposes a definition of the term ``excluded material''
that cross-references the definition of the term ``Section 70917(c)
material'' found in
[[Page 17800]]
part 184 at 2 CFR 184.3. Part 184 defines section 70917(c) materials as
cement and cementitious materials; aggregates such as stone, sand, or
gravel; and aggregate binding agents or additives. More information on
the use of this category of materials in this proposed regulation can
be found below in the discussion of proposed Sec. Sec.
635.410(c)(1)(iv) and (c)(2).
Sec. 635.410(c)(1)(iv)--Manufactured Products and Section 70917(c)
Materials
To ensure consistency with BABA, FHWA proposes to use substantively
the same definition of ``manufactured product'' as used by OMB in part
184, with slight changes with respect to references to ``construction
materials'' and ``section 70917(c) materials'' in that definition which
are described below. See 2 CFR 184.3.
The FHWA thus proposes to define a ``manufactured product'' using
the same language found in paragraph (1) of the definition of the term
in part 184. For consistency, FHWA intends to apply this provision in
the same way as applied by OMB in part 184. For example, products
brought to the work site in an unprocessed or minimally processed
state, such as topsoil, compost, and seed, would not be considered
manufactured products. See 88 FR at 57769. Similarly, non-manufactured
or raw materials mixed off of the work site with other non-manufactured
or raw materials of similar types would not necessarily result in the
mixed material brought to the work site being classified as a
manufactured product if it remains in an unprocessed or minimally
processed state, such as minimally-processed fill dirt. See id.
The FHWA notes that its proposal omits references to construction
materials that are found in part 184. The FHWA does not believe it
necessary to refer to construction materials in this proposed
rulemaking because 23 U.S.C. 313 does not cover construction materials.
Since section 70915(b) of BABA directs OMB to issue the applicable
standards with respect to determining when a construction material is
produced in the United States for the purposes of BABA, FHWA and its
recipients will follow the applicable OMB standards and guidance for
construction materials.
The FHWA is also proposing to make clear that excluded materials,
defined in proposed Sec. 635.410(c)(1)(iii), are not, on their own,
manufactured products. The FHWA would not consider excluded materials
to be manufactured products and apply the proposed Buy America
requirements for manufactured products if the excluded materials have
not been combined with different excluded materials, or other
materials, to create a manufactured product. See 88 FR 57772. This is
also consistent with paragraph (2) of the definition of ``manufactured
product'' in part 184.
In terms of these excluded materials, FHWA received many comments
in the 2023 RFC expressing confusion over the legal effect of section
70917(c) of BABA. By stating that excluded materials are not
manufactured products, FHWA seeks to make clear that these materials--
standing alone, as delivered to the job site--are not manufactured
products. Likewise, FHWA recognizes and follows the OMB guidance
specifying that these materials, standing alone, as delivered to the
job site are not construction materials either, as provided in section
70917(c) of BABA. See 88 FR 57771.
In alignment with part 184, FHWA intends this rulemaking to mean
that excluded materials, as defined in proposed Sec.
635.410(c)(1)(iii), when combined together with other materials,
including other excluded materials, could result in the creation of a
manufactured product. See id. at 57772. If the individual excluded
material is combined with other excluded materials and non-minor
additions of other materials before it is brought to the work site,
then the new product should be classified as a manufactured product and
the excluded materials should be treated as components of the
manufactured products. Therefore, like all other components of
manufactured products, when excluded materials are components of a
manufactured product, they would generally be included in the
determination of whether a manufactured product is Buy America-
compliant under FHWA's proposed standards.
For example, in alignment with part 184, the combination of
excluded materials and other materials into precast concrete would not
render the precast concrete exempt from domestic content procurement
preferences. See id. at 57771. For precast concrete, FHWA believes such
an item would be a manufactured product or an iron or steel item
depending on its amount of iron or steel, by cost. In either case,
precast concrete used in FHWA-funded projects would be subject to the
applicable Buy America requirement.\24\ To the extent that cement and
cementitious material are components of that precast concrete, their
origin and cost would have to be considered to determine whether the
precast concrete would be Buy America-compliant.\25\ Similarly, in some
cases, aggregate binding agents and additives may be treated as
components of manufactured products.
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\24\ If considered an iron or steel item, the precast concrete
would be subject to FHWA's existing Buy America requirements for
iron and steel. If considered a manufactured product, as described
below, FHWA is proposing that the precast concrete be subject to the
proposed Buy America requirements for manufactured products and that
the iron and steel be subject to FHWA's existing Buy America
requirements for iron and steel.
\25\ The FHWA acknowledges that Congress eliminated a Buy
America requirement regarding cement originally included in the 1983
STAA in 1984. See Public Law 98-229. The FHWA therefore believes it
would be questionable to apply a domestic content procurement
preference to cement. As noted above, FHWA does not intend to apply
any domestic content procurement preference to cement standing
alone, either as a manufactured product or as a construction
material under BABA. The FHWA does not believe the removal of cement
from the 1983 STAA, however, means that cement must be exempted from
Buy America requirements even if included in a manufactured product.
The FHWA believes the language of the 1983 STAA can be interpreted
to refer to cement as a category of product. Its elimination
therefore removes the ability of FHWA to apply a Buy America
requirement to cement as a category of product. It says nothing
about FHWA's ability to consider it as a component of a manufactured
product.
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While FHWA is proposing that products with excluded materials as
their components would generally be considered manufactured products,
in alignment with part 184, FHWA also proposes that such excluded
materials combined as an unsettled mixture without final form when
reaching the work site should not be considered a manufactured product,
such as in the case of wet concrete or hot mix asphalt. See id. The OMB
noted in part 184 that while these products might fit the same
definition of ``manufactured products'' FHWA is proposing to use, in
the sense that the mixture would have ``different properties'' than
would the individual materials, it is more consistent with the intent
of BABA to treat only such materials that have set or dried into a
particular shape or form prior to reaching the work site as
manufactured products. Id. The FHWA agrees with OMB and further intends
for these proposed regulations to have the same reach as part 184.
In particular, consistent with part 184, FHWA proposes to make
clear that concrete and asphalt mixtures delivered to a job site
without final form for incorporation into a project shall not be
considered a manufactured product. As provided in part 184: ``OMB
further clarifies in this preamble that wet concrete should not be
considered a manufactured product if not dried or set prior to reaching
the work site. The setting or drying of a combination of section
70917(c) materials into a
[[Page 17801]]
finished product prior to reaching the work site is generally the
circumstance in which a combination of only section 70917(c) materials
would be considered a manufactured product.'' See id. at 57772.
Sec. 635.410(c)(1)(v)--Definition of ``Manufacturer''
For the purposes of defining the term ``manufacturer'' as it is
used in Sec. 635.410(c)(3), FHWA is proposing to use the definition
found in part 184 at 2 CFR 184.3. The FHWA believes this definition is
simple and provides clarity on how to distinguish between the
manufacturer of the finished manufactured product and the manufacturer
of the components that go into that product.
Sec. 635.410(c)(1)(vii)--Definition of ``Produced in the United
States''
For the reasons stated in section V, above, FHWA proposes to adopt
the definition for ``produced in the United States'' for manufactured
products found in section 70912(6)(B) of BABA, as implemented by OMB in
part 184 at 2 CFR 184.3.
Sec. 635.410(c)(2)--Classification
Single Classification of Materials
In Sec. 635.410(c)(2), FHWA is proposing to make clear, consistent
with part 184, that an article, material, or supply should only be
classified as either an iron or steel product, manufactured product, or
another category specified by law or found in 2 CFR part 184. With two
exceptions, discussed in more detail below, this means that an article,
material, or supply cannot fall into multiple categories, i.e., be
classified as both an iron or steel product and a manufactured product.
While this proposed regulation would only apply requirements to iron or
steel materials and manufactured products, as those are the only
materials covered under 23 U.S.C. 313, FHWA is proposing this provision
to differentiate iron or steel materials, manufactured products, and
other materials referred to in law or in part 184, such as excluded
materials, as defined in proposed Sec. 635.410(c)(1)(iii) and known as
section 70917(c) materials in part 184, and construction materials,
which may be subject to their own domestic content procurement
preference. In alignment with part 184, FHWA does not intend to subject
a material to multiple Buy America requirements. Nor does FHWA intend
to subject a material to a Buy America requirement and the requirement
of another domestic content procurement preference, such as
requirements for construction materials found in part 184. The FHWA
similarly does not intend materials to be subject to a Buy America
requirement and the same domestic content procurement preference under
BABA. For example, manufactured products would be subject only to
FHWA's proposed standards, not both FHWA's proposed standards and the
standards under BABA and part 184. In general, FHWA agrees with part
184 that applying multiple requirements to a single product is
unnecessarily burdensome.
For instance, except as provided below, FHWA does not generally
intend for a manufactured product with limited iron or steel content to
be subject to both requirements for iron or steel products and
manufactured products. Conversely, FHWA does not intend for a
predominantly iron or steel manufactured product, when classified as an
iron or steel product, to be subject to the proposed standards for
manufactured products. Under FHWA's proposed Sec. 635.410(c)(2), any
products meeting the definition of a manufactured product would need to
comply with the proposed standards for manufactured products while
products meeting the definition of an iron or steel product would
continue to comply with FHWA's existing standards for iron or steel
products found in 23 CFR 635.410(b).
Nor does FHWA intend for materials properly classified as
construction materials under part 184 to be subject to FHWA's Buy
America requirements. The FHWA is not proposing to have this regulation
cover the requirements applicable to construction materials. Instead,
FHWA intends for properly classified construction materials to be
solely subject to the requirements in BABA and part 184. Iron or steel
products and manufactured products that may contain construction
materials, however, would still be subject to the applicable FHWA Buy
America requirement. In such cases, FHWA does not intend for such
components of the iron or steel product or manufactured product to be
subject to BABA's construction material requirements.
Finally, FHWA intends this provision to make clear, as mentioned
above in the discussion of proposed Sec. 635.410(c)(1)(iv), that
excluded materials, standing alone, would not be subject to FHWA's Buy
America requirements for manufactured products. Excluded materials,
known as section 70917(c) materials in part 184, are a category of
products specified in 2 CFR part 184. The proposed language would
indicate that a material could only be classified as either an excluded
material or manufactured product; an excluded material could therefore
not be a manufactured product by itself.
However, for two particular kinds of manufactured products, FHWA is
proposing additional requirements along with FHWA's proposed standards
for manufactured products in order to continue FHWA's longstanding
policy of requiring predominantly iron or steel components of
manufactured products to be Buy America-compliant with respect to those
predominantly iron or steel components. In particular, FHWA believes
this policy should be continued for (1) the iron or steel components of
precast concrete; and (2) iron or steel enclosures of intelligent
transportation systems and other electronic hardware systems installed
in the highway right-of-way or other real property.\26\ The FHWA
believes that these products are regularly used in highway construction
projects and manufacturers have formed longstanding supply chains to
incorporate Buy America-compliant iron or steel components into them.
Where these products are considered manufactured products, FHWA
proposes that the product must meet the standard for a manufactured
product. In addition, unlike all other manufactured products, FHWA is
proposing to require the specified iron or steel components of these
two products to be compliant with FHWA's existing Buy America
requirements for iron and steel. However, to minimize any burden and
give credit for using an American-made iron or steel product, FHWA
proposes to include the cost of these iron or steel components in the
determination of whether 55 percent of the product's components, by
cost, are produced in the United States.
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\26\ The FHWA notes that these requirements would only apply if
the precast concrete or electronic hardware systems were classified
as manufactured products. If they were classified as iron or steel
products, such products would need to comply with FHWA's existing
Buy America requirements for iron or steel.
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Besides the two exceptions noted above for precast concrete and
iron or steel enclosures of intelligent transportation systems and
other electronic hardware systems installed in the highway right-of-way
or other real property, FHWA intends Sec. 635.410(c) to possess the
same meaning as 2 CFR 184.4(e). The FHWA also believes its proposed
language makes clear that a material incorporated into an
infrastructure project must meet the Buy America requirement only for
the single category in which it is classified, as generally stated in 2
CFR 184.4(f). Materials would be classified as either (1) iron or steel
materials and subject to FHWA's existing Buy America
[[Page 17802]]
requirements for iron or steel found in 23 CFR 635.410(b); (2)
manufactured products and subjects to the proposed Buy America
requirements for manufactured products; or (3) manufactured products
that are also either precast concrete or iron or steel enclosures of
intelligent transportation systems and other electronic hardware
systems installed in the highway right-of-way or other real property
and subject to the proposed Buy America requirements for manufactured
products and FHWA's existing Buy America requirements for specified
iron or steel components of these two products.
Categorization at the Work Site
The FHWA proposes Sec. 635.410(c)(2) to specify that the
classification of an article, material, or supply as being either an
iron or steel product or a manufactured product must be based on its
status at the time it is brought to the work site for incorporation
into an infrastructure project. The FHWA believes it is important to
determine when the classification of materials occurs, as some
manufactured products might include steel and iron. Depending on when a
product is classified for the purpose of applying FHWA's Buy America
requirements, the iron or steel component of a manufactured product
could be classified as a separate material, and thus be subject to
FHWA's Buy America requirements for iron and steel.
To provide consistency, FHWA is proposing this standard to align
with the standard used by OMB in part 184 at 2 CFR 184.4(e). The FHWA
does not intend this language to mean that FHWA will conduct a
compliance check to see if a product is Buy America-compliant when it
is brought to the work site; FHWA only intends this language to
describe when a product will be categorized as either an iron or steel
product or a manufactured product for the purpose of determining which
Buy America requirement applies.
Sec. 635.410(c)(3)--Cost of a Component
The FHWA is proposing to adopt the standards, unchanged, used in
part 184 at 2 CFR 184.5 to determine the cost of a given component. The
FHWA believes that this standard properly includes activities that
directly connect to the goals of FHWA's Buy America provision to
increase domestic manufacturing. The FHWA also notes that 23 U.S.C.
313(c) specifically states that for the purposes of 23 U.S.C. 313, in
calculating components' costs, labor costs included in final assembly
must not be included in the calculation.
Sec. 635.410(c)(4)--Severability
The FHWA is proposing to add a new Sec. 635.410(c)(4) that
contains a severability clause applicable to the proposed Buy America
requirements for manufactured products made by this proposed rule in
Sec. 635.410(c). The FHWA believes that the proposed amendments to
Sec. 635.410(c) are capable of operating independently of one another.
If one or more aspects of the proposed Buy America requirements for
manufactured products are determined to be invalid, the remaining
provisions should remain unaffected and in force.
VII. Rulemaking Analysis and Notices
Executive Order 12866 (Regulatory Planning and Review), Executive Order
13563 (Improving Regulation and Regulatory Review), and DOT Regulatory
Policies and Procedures
The OMB has determined that the proposed rule would be a
significant regulatory action within the meaning of E.O. 12866, as
amended by E.O. 14094.
The preliminary regulatory impact analysis (PRIA) supports this
proposed regulation and analyzes the costs and benefits associated with
establishing Buy America requirements for manufactured products.
The expected benefits of the proposed rule relate to protecting and
expanding domestic manufacturing, increasing supply chain resiliency,
and increasing consistency in applying domestic content procurement
preferences for manufactured products between FHWA and other Federal
Agencies that are subject to the requirements of BABA. None of these
benefits have been quantified.
The costs of the proposed rule relate to increased material costs
for manufactured products used in highway construction projects,
project delay, and the administrative costs to FHWA and recipients of
FHWA financial assistance. At this time, FHWA is only able to quantify
costs for the increased materials costs and the administrative costs to
the FHWA. The FHWA's estimates of those increased material costs for
manufactured products permanently incorporated into FHWA-funded
projects range from a high of roughly $737 million per year to a low of
$45 million. The wide range stems from the difficulty in estimating (1)
the fraction of inputs to highway construction that are manufactured
products; (2) the fraction of manufactured products that are currently
domestically supplied but which fail to meet the proposed rule's
requirement that 55 percent of the product's components, by cost, are
mined, produced, or manufactured in the United States; and (3) the
likely price premiums for purchasing manufactured products that would
be compliant with the proposed rule compared to manufactured products
currently used in FHWA-funded projects that would not be. The FHWA
estimates an additional $167,000 per year in increased FHWA
administration costs to cover the salary and employer-provided benefits
of an additional Federal employee to administer the Buy America
program. The other administrative costs to recipients of FHWA financial
assistance and the costs associated with project delivery delay have
not been quantified.
The full regulatory impact analysis is available in the docket. The
FHWA is seeking comment on assumptions that were developed as part of
the PRIA, as well as information on other benefits or costs that would
result from implementation of the rule.
This rule will not adversely affect in a material way the economy,
any sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
Tribal governments or communities. These changes do not create a
serious inconsistency with any other Agency's action or materially
alter the budgetary impact of any entitlements, grants, user fees, or
loan programs.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (Pub. L. 96-354,
5 U.S.C. 601-612), FHWA has evaluated the effects of this proposed rule
on small entities and has determined that it is not anticipated to have
a significant economic impact on a substantial number of small
entities. This proposed rule would impose Buy America requirements for
manufactured products on recipients of FHWA financial assistance
including States, local governments, and other grant recipients. These
recipients are primarily States, who are not included in the definition
of small entity set forth in 5 U.S.C. 601. The FHWA believes the
projected impact upon small entities that utilize FHWA funding would be
negligible. To the extent the revisions require expenditures by State,
local governments, and other grant recipients on Federal-aid projects,
they are reimbursable. Small entities that may be impacted indirectly
by a rulemaking are not subject to analysis under the Regulatory
Flexibility Act, see Mid-Tex Electric Cooperative, Inc. v. Federal
Energy Regulatory Commission, 773 F.2d 327 (D.C. Cir 1985). Therefore,
[[Page 17803]]
FHWA certifies that the proposed action would not have a significant
economic impact on a substantial number of small entities.
Unfunded Mandates Reform Act of 1995
This proposed rule would not impose unfunded mandates as defined by
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48).
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
Federal Agencies to prepare a written statement, which includes
estimates of anticipated impacts, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is $177 million, using the most current (2022) Implicit
Price Deflator for the Gross Domestic Product. The definition of
``Federal mandate'' in the Unfunded Mandates Reform Act excludes
financial assistance of the type in which State, local, or Tribal
governments have authority to adjust their participation in the program
in accordance with changes made in the program by the Federal
Government. The Federal-aid highway program permits this type of
flexibility. Further, in compliance with the Unfunded Mandates Reform
Act of 1995, FHWA will evaluate any regulatory action that might be
proposed in subsequent stages of the proceeding to assess the effects
on State, local, and Tribal governments, and the private sector.
Executive Order 13132 (Federalism)
The E.O. 13132 requires Agencies to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that may have a substantial, direct effect on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. The FHWA has analyzed this proposed rule in accordance
with the principles and criteria contained in E.O. 13132. The FHWA has
determined that this proposed rule would not have sufficient federalism
implications to warrant the preparation of a federalism assessment. The
FHWA has also determined that this proposed rule would not preempt any
State law or State regulation or affect the States' ability to
discharge traditional State governmental functions.
Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), Federal Agencies must obtain approval from OMB for each
collection of information they conduct, sponsor, or require through
regulations. The FHWA has determined that the proposed rule does not
contain collection of information requirements for the purposes of the
PRA.
National Environmental Policy Act
The FHWA has analyzed this proposed rule pursuant to the National
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.) and
has determined that it is categorically excluded under 23 CFR
771.117(c)(20), which applies to the promulgation of rules,
regulations, and directives. Categorically excluded actions meet the
criteria for categorical exclusions under the Council on Environmental
Quality regulations and under 23 CFR 771.117(a) and normally do not
require any further NEPA approvals by FHWA. This proposed rule would
establish Buy America requirements for manufactured products. The FHWA
does not anticipate any adverse environmental impacts from this
proposed rule, and no unusual circumstances are present under 23 CFR
771.117(b).
Executive Order 13175 (Tribal Consultation)
The FHWA has analyzed this proposed rule in accordance with the
principles and criteria contained in E.O. 13175, ``Consultation and
Coordination with Indian Tribal Governments.'' The FHWA does not
believe that the proposed rule would have substantial direct effects on
one or more Indian Tribes; would not impose substantial direct
compliance costs on Indian Tribal governments; and would not preempt
Tribal laws. Therefore, a Tribal summary impact statement is not
required.
Executive Order 12898 (Environmental Justice)
The E.O. 12898 requires that each Federal Agency make achieving
environmental justice part of its mission by identifying and
addressing, as appropriate, disproportionately high and adverse human
health or environmental effects of its programs, policies, and
activities on minorities and low-income populations. The FHWA has
determined that this proposed rule does not raise any environmental
justice issues.
Regulation Identification Number
A RIN is assigned to each regulatory action listed in the Unified
Agenda of Federal Regulations. The Regulatory Information Service
Center publishes the Unified Agenda in spring and fall of each year.
The RIN contained in the heading of this document can be used to cross-
reference this action with the Unified Agenda.
Rulemaking Summary, 5 U.S.C. 553(b)(4)
As required by 5 U.S.C. 553(b)(4), a summary of this rule can be
found in the Abstract section of the Department's Unified Agenda entry
for this rulemaking at [https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2125-AG13].
List of Subjects in 23 CFR Part 635
Grant programs--transportation, Highways and roads, Reporting and
recordkeeping requirements.
Shailen P. Bhatt,
Administrator,Federal Highway Administration.
For the reasons stated in the preamble, FHWA proposes to amend part
635, as follows:
PART 635--CONSTRUCTION AND MAINTENANCE
0
1. The authority citation for part 635 continues to read as follows:
Authority: Sections 1525 and 1303 of Pub. L. 112-141, Sec. 1503
of Pub. L. 109-59, 119 Stat. 1144; 23 U.S.C. 101 (note), 109, 112,
113, 114, 116, 119, 128, and 315; 31 U.S.C. 6505; 42 U.S.C. 3334,
4601 et seq.; Sec. 1041(a), Pub. L. 102-240, 105 Stat. 1914; 23 CFR
1.32; 49 CFR 1.85(a)(1).
Subpart D--General Material Requirements
0
2. Amend Sec. 635.410 by:
0
a. Removing the word ``State'' and adding in its place the word
``recipient'' in paragraphs (b)(2) and (3);
0
b. removing the words ``steel and iron materials'' and ``steel or iron
materials'' and adding, in their place, the words ``iron or steel
products'' in paragraphs (b)(1)(i) and (ii), (b)(2), (b)(3)
introductory text, (b)(3)(i) and (ii), and (b)(4);
0
c. revising paragraph (c); and
0
d. Removing the word ``State'' and adding in its place the word
``recipient'' in paragraph (d).
The revision reads as follows:
Sec. 635.410 Buy America requirements.
* * * * *
(c) No Federal-aid highway construction project is to be authorized
[[Page 17804]]
for advertisement or otherwise authorized to proceed unless the
manufactured products used and permanently incorporated in such project
are produced in the United States. To meet this requirement, the
manufactured product must meet the following:
(1) The following definitions apply to this section:
(i) Component means an article, material, or supply, whether
manufactured or unmanufactured, incorporated directly into a
manufactured product or, where applicable, an iron or steel product.
(ii) Excluded materials means section 70917(c) materials as defined
in 2 CFR 184.3.
(iii) Iron or steel products means articles, materials, or supplies
that consist wholly or predominantly of iron or steel or a combination
of both.
(iv) Manufactured products means articles, materials, or supplies
that have been processed into a specific form and shape, or combined
with other articles, materials, or supplies to create a product with
different properties than the individual articles, materials, or
supplies. If an item is classified as an iron or steel product, an
excluded material, or other product category as specified by law or in
2 CFR part 184, then it is not a manufactured product. However, an
article, material, or supply classified as a manufactured product may
include components that are iron or steel products, excluded materials,
or other product categories as specified by law or in 2 CFR part 184.
Mixtures of concrete or asphalt delivered to a job site without final
form for incorporation into a project are not a manufactured product.
(v) Manufacturer, in the case of manufactured products, means the
entity that performs the final manufacturing process that produces a
manufactured product.
(vi) Predominantly of iron or steel or a combination of both means
that the cost of the iron and steel content exceeds 50 percent of the
total cost of all its components. The cost of iron and steel is the
cost of the iron or steel mill products (such as bar, billet, slab,
wire, plate, or sheet), castings, or forgings utilized in the
manufacture of the product and a good faith estimate of the cost of
iron or steel components.
(vii) Produced in the United States, in the case of manufactured
products, means:
(A) The product was manufactured in the United States; and
(B) The cost of the components of the manufactured product that are
mined, produced, or manufactured in the United States is greater than
55 percent of the total cost of all components of the manufactured
product.
(2) An article, material, or supply shall only be classified as an
iron or steel product, a manufactured product, or other products as
specified by law or in 2 CFR part 184. An iron or steel product must
meet the requirements of paragraph (b) of this section. Except as
otherwise provided in this paragraph (c), an article, material, or
supply shall not be considered to fall into multiple categories. In
some cases, an article, material, or supply may not fall under any of
the above-listed categories. The classification of an article,
material, or supply as falling into one of the categories listed in
this paragraph (c) must be made based on its status at the time it is
brought to the work site for incorporation into an infrastructure
project. In general, the work site is the location of the
infrastructure project at which the iron or steel product or
manufactured product will be incorporated.
(i) With respect to precast concrete products that are classified
as manufactured products, components of precast concrete products that
are manufactured predominantly of iron or steel or a combination of
both shall meet the requirements of paragraph (b) of this section. The
cost of such components shall be included in the applicable calculation
for purposes of determining whether the precast concrete product is
produced in the United States.
(ii) With respect to intelligent transportation systems and other
electronic hardware systems that are installed in the highway right of
way or other real property and classified as manufactured products, the
cabinets or other enclosures of such systems that are manufactured
predominantly of iron or steel or a combination of both shall meet the
requirements of paragraph (b) of this section. The cost of cabinets or
other enclosures shall be included in the applicable calculation for
purposes of determining whether systems referred to in the preceding
sentence are produced in the United States.
(3) In determining whether the cost of components for manufactured
products is greater than 55 percent of the total cost of all
components, recipients shall determine the cost as follows:
(i) For components purchased by the manufacturer, the acquisition
cost, including transportation costs to the place of incorporation into
the manufactured product (whether or not such costs are paid to a
domestic firm), and any applicable duty (whether or not a duty-free
entry certificate is issued); or
(ii) For components manufactured by the manufacturer, all costs
associated with the manufacture of the component, including
transportation costs as described in paragraph (a) of this section,
plus allocable overhead costs, but excluding profit. Cost of components
does not include any costs associated with the manufacture of the
manufactured product.
(4) The provisions of this paragraph (c) are separate and severable
from one another and from the other provisions of this section. If any
provision is stayed or determined to be invalid, the remaining
provisions shall continue in effect.
* * * * *
[FR Doc. 2024-05182 Filed 3-11-24; 8:45 am]
BILLING CODE 4910-22-P
