This article was featured in the May 2024 edition of the Utility Contractors Association of New England, Inc.’s Construction Outlook.
In March of 2024, the United States Department of Transportation’s (“DOT”) Federal Highway Administration (“FHWA”) announced a new proposed rule relating to Buy America requirements for manufactured products used in highway projects involving federal funding. The proposed rule would alter a practice that has been in effect for many years.
According to the Transportation Secretary, “[f]or decades, America’s highway projects were allowed to use taxpayer dollars to purchase products manufactured in other countries . . . .” This was a reference to FHWA’s “general waiver of Buy America requirements for manufactured products used in federal-aid highway projects.” In its Press Release, FHWA stated that this general waiver – which has been in effect for more than 40 years – “waived the Buy America requirement for manufactured products.”
The newly proposed rule would “discontinue” this general waiver and apply Buy America standards to manufactured products in a manner consistent with the United States Office of Management and Budget’s (“OMB”) guidance implementing the Build America, Buy America Act (“BABA”) provisions of the recent Bipartisan Infrastructure Law. That is, under the proposed rule, in order to be deemed to have been “produced in the United States,” a manufactured product would need 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” would need to be “greater than 55 percent of the total cost of all components in the manufactured product.”
FWHA is touting this as a modernization of “outdated policy,” stating that, when “Buy America was enacted . . . manufactured products were used in insufficient quantity on highway construction projects to incentivize domestic manufacturing, so there would be little benefit to applying the protections afforded under Buy America” to manufactured products. According to FHWA, the proposed rule responds to the President’s initiative to “maximize” the use of domestic products and “is expected to encourage investment” in “domestic manufacturing for highway construction.”
FHWA noted that the proposed rule does not change Buy America requirements applicable to iron or steel projects and will not change BABA requirements applicable to products classified as construction materials or excluded materials (i.e., “cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives”). FHWA also noted that it does not intend for the proposed standards “to supplant current FHWA waivers that cover specific manufactured products.”
The proposed rule was published in the Federal Register on March 12, 2024. Comments are due by May 13, 2024. Among other things, FHWA seeks comment on whether a “transition” period would be needed “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.” In addition, “FHWA specifically seeks comment on the minimum time required for [transition] and, accordingly, the effective date for the proposed Buy America requirements for manufactured products.” The FHWA also seeks comment as to whether its proposed rule should “only apply to Federal awards obligated or authorized after the effective date of a final rule . . . .” Additional information can be reviewed at FWHA’s Buy America webpage.
