The Department of Transportation (DOT) has concluded the immediate implementation of a ‘Buy America’ requirement for construction materials used in transportation projects would be inconsistent with the public interest. Its six-month waiver of the domestic purchasing mandate in the Infrastructure Investment and Jobs Act (Act) illustrates the administration’s challenge of pursuing two potentially conflicting aims: undertaking critical infrastructure projects and applying a broad domestic purchasing mandate. This post considers the DOT’s waiver in the context of the challenges of implementing the domestic purchasing requirement.
The infrastructure Act, enacted by Congress in November 2021, includes a far-reaching ‘Buy America’ requirement that prohibits the use of federal funds in any infrastructure project undertaken by a non-federal entity “unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.”
The Act applied a domestic purchasing requirement to construction material for the first time. In its initial guidance on implementing this requirement, the Office of Management and Budget (OMB) defined construction materials broadly to include non-ferrous metals, plastic and polymer-based products, glass, lumber, and drywall. Prior to this extension of domestic preferences, none of DOT’s extensive programs covered construction materials. While its operating units “have longstanding experience in applying Buy America preferences for iron and steel and for manufactured products, applying such policies to construction materials is a new exercise.”
As a consequence, on May 25, 2022, DOT issued a 180-day waiver of the mandate with respect to the use of construction materials in the infrastructure projects it funds. It issued the waiver to enable the non-federal recipients of federal funds for transportation projects to apply the new preference. The waiver applies from May 14 to November 10, 2022.
DOT illustrated the potential challenge of applying the ‘Buy America’ requirement to construction materials in highway projects. Citing the National Bridge Inventory, the Department pointed out more than 62,000 bridges include wood or timber. In addition, nearly 2300 bridges have non-ferrous metal elements, and 19,500 bridges include polymer-based products. Since all of these are subject to the new requirement, DOT cannot provide funding for projects unless their construction materials are produced in the US. That means all manufacturing processes for these materials must take place in the US.
Before issuing its waiver, DOT solicited public comments on whether it should issue a temporary waiver. It received 83 separate comments from a wide array of stakeholders, including state transportation agencies, public transit agencies, airport operators, construction firms, manufacturers and suppliers, and labor organizations. The vast majority supported its proposed waiver.
The responses outlined the measures needed for non-federal entities to implement the new requirement for construction materials. In addition to OMB issuing final standards for construction materials, the Utah Department of Transportation’s list of necessary measures included “State DOTs updating standard specifications; establishing certification processes; working with and informing industry to demonstrate their products meet the standards; working with contractors and incorporating new contract provisions prescribing Buy America requirements; and reviewing and updating stewardship and oversight agreements with [the Federal Highway Administration] to address non-compliance with Made in America standards.”
Other commenters, such as the Greater Orlando Aviation Authority, pointed to the need to find potential domestic sources of construction materials and build up an adequate supply base to support federally funded transportation infrastructure projects. Others citing current supply chain challenges in the materials industry and the resulting volatility in those markets commented it was ‘‘extremely difficult to determine at this time whether U.S. production for these newly covered materials can support the demand the [Act’s] increased funding levels will place on these markets, or whether there is sufficient or existing U.S. production at all for some of these goods.’’
Most of those responding to the DOT on the length of a waiver thought it should be at least a year. The Wyoming Department of Transportation emphasized the practical issue of “minimize[ing] disruption to the current construction season.”
If DOT, one of the federal agencies with the most experience applying ‘Buy America’ requirements to infrastructure projects, is challenged by the new requirements, that is likely to be only ‘the tip of the iceberg’ as many departments and non-federal entities have to establish a ‘Buy America’ policy for the first time. A key question is whether the administration can implement expanded ‘Buy America’ requirements, while delivering, in the words of DOT, “a wide range of critical infrastructure projects for States, local communities, counties, Tribal nations and farms, factories and businesses across the U.S.”?
Jean Heilman Grier
May 31, 2022