Notice2022-24743
Notice That the Build America, Buy America Requirement for Construction Materials Applies Effective November 10, 2022, and Notice of Proposed Waiver of That Requirement for a Narrow Category of Contracts and Solicitations
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 15, 2022
Issuing agencies
Transportation Department
Abstract
The Department of Transportation (DOT) seeks to maximize the use of American-made products and materials in all federally funded projects as part of the Biden-Harris Administration's implementation of the Build America, Buy America Act (the Act), which was included in the historic Bipartisan Infrastructure Law (BIL). The implementation of this law will transform DOT's approach to domestic procurement requirements and is designed to drive significant investment in domestic manufacturing, spur job creation and grow the economy. The Department is taking three concurrent actions: (1) DOT is not extending its temporary waiver for construction materials, making that requirement applicable effective November 10, 2022; (2) in a separate notice, DOT is proposing a narrow waiver for de minimis costs, small grants, and minor components; and (3) in this notice, DOT is proposing to take two actions to help transition to the new construction materials standard. First, for DOT awards obligated on or after the effective date of the final waiver, DOT is proposing to waive the construction materials requirements for any contracts entered into before November 10, 2022. Second, DOT is proposing to waive the construction materials requirements for any contracts entered into before March 10, 2023, that result from solicitations published before May 14, 2022.
Full Text
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<title>Federal Register, Volume 87 Issue 219 (Tuesday, November 15, 2022)</title>
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[Federal Register Volume 87, Number 219 (Tuesday, November 15, 2022)]
[Notices]
[Pages 68572-68576]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-24743]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
[Docket No. DOT-OST-2022-0123]
Notice That the Build America, Buy America Requirement for
Construction Materials Applies Effective November 10, 2022, and Notice
of Proposed Waiver of That Requirement for a Narrow Category of
Contracts and Solicitations
ACTION: Notice; request for comments.
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SUMMARY: The Department of Transportation (DOT) seeks to maximize the
use of American-made products and materials in all federally funded
projects as part of the Biden-Harris Administration's implementation of
the Build America, Buy America Act (the Act), which was included in the
historic Bipartisan Infrastructure Law (BIL). The implementation of
this law will transform DOT's approach to domestic procurement
requirements and is designed to drive significant investment in
domestic manufacturing, spur job creation and grow the economy. The
Department is taking three concurrent actions: (1) DOT is not extending
its temporary waiver for construction materials, making that
requirement applicable effective November 10, 2022; (2) in a separate
notice, DOT is proposing a narrow waiver for de minimis costs, small
grants, and minor components; and (3) in this notice, DOT is proposing
to take two actions to help transition to the new construction
materials standard. First, for DOT awards obligated on or after the
effective date of the final waiver, DOT is proposing to waive the
construction materials requirements for any contracts entered into
before November 10, 2022. Second, DOT is proposing to waive the
construction materials requirements for any contracts entered into
before March 10, 2023, that result from solicitations published before
May 14, 2022.
DATES: Comments must be received by November 20, 2022. Late-filed
comments will be considered to the extent practicable.
ADDRESSES: Please submit your comments to the Federal eRulemaking
Portal at <a href="http://www.regulations.gov/">http://www.regulations.gov/</a>, Docket: DOT-OST-2022-0123.
Note: All submissions must contain the agency name and the
docket number. All submissions received, including any personal
information therein, will be posted without change or alteration to
<a href="http://www.regulations.gov">http://www.regulations.gov</a>. For more information, you may review
DOT's complete Privacy Act Statement published in the Federal
Register on April 11, 2000 (65 FR 19477).
FOR FURTHER INFORMATION CONTACT: For questions about this notice,
please contact Darren Timothy, DOT Office of the Assistant Secretary
for Transportation Policy, at <a href="/cdn-cgi/l/email-protection#bbdfdac9c9ded595cfd2d6d4cfd3c2fbdfd4cf95dcd4cd"><span class="__cf_email__" data-cfemail="cfabaebdbdaaa1e1bba6a2a0bba7b68faba0bbe1a8a0b9">[email protected]</span></a> or at 202-366-
4051. For legal questions, please contact Michael A. Smith, DOT Office
of the General Counsel, 202-366-2917, or via email at
<a href="/cdn-cgi/l/email-protection#24494d474c4541480a450a57494d504c64404b500a434b52"><span class="__cf_email__" data-cfemail="4924202a21282c256728673a24203d21092d263d672e263f">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
In January 2021, President Biden issued Executive Order 14005,
titled ``Ensuring the Future is Made in All of America by All of
America's Workers,'' launching a whole-of-government initiative to
strengthen Made in America
[[Page 68573]]
standards. The Executive Order states that the United States Government
``should, consistent with applicable law, use terms and conditions of
Federal financial assistance awards and Federal procurements to
maximize the use of goods, products, and materials produced in, and
services offered in, the United States.'' DOT is committed to ensuring
strong and effective Buy America implementation consistent with
Executive Order 14005 and has a long track record of successfully
applying Made in America standards to support American workers and
businesses through its more than $70 billion in grant programs and $700
million in direct purchases in FY 2020.
On November 15, 2021, President Biden signed the Infrastructure
Investment and Jobs Act (IIJA or the Bipartisan Infrastructure Law),
Public Law 117-58, which includes the Build America, Buy America Act
(BABA). IIJA div. G Sec. Sec. 70901-27. The Bipartisan Infrastructure
Law not only makes an historic investment in American transportation--
from roads and bridges to rail to transit--but also greatly strengthens
Made in America standards. Specifically, BABA expands the coverage and
application of Buy America preferences in Federal financial assistance
programs for infrastructure. BABA requires that no later than May 14,
2022--180 days after the date of enactment--the head of each covered
Federal agency shall ensure that ``none of the funds made available for
a Federal financial assistance program for infrastructure . . . may be
obligated for a project unless all of the iron, steel, manufactured
products, and construction materials used in the project are produced
in the United States.'' IIJA Sec. 70914(a).
BABA 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. IIJA Sec. 70917(a)-
(b). This provision allows Federal agencies to preserve existing Buy
America policies and provisions that meet or exceed the standards
required by BABA.
One of the new Buy America preferences included under BABA is for
construction materials. By May 14, 2022, each covered Federal agency
must ensure that all manufacturing processes for construction materials
used in federally assisted infrastructure projects occur in the United
States. None of the specific statutes that apply particular Buy America
requirements to the Federal financial assistance programs administered
by DOT's Operating Administrations specifically covers construction
materials, other than to the extent that such materials would already
be considered iron, steel, or manufactured products. IIJA Sec. 70914.
In addition to establishing Buy America preferences, BABA also
provides certain statutory authorities for the Made in America Office
(MIAO) in the Office of Management and Budget (OMB). IIJA Sec. Sec.
70915(b), 70923. MIAO was first established by Section 4 of Executive
Order 14005. MIAO's authorities under the Bipartisan Infrastructure Law
include issuing guidance to assist in applying BABA's requirements and
issuing standards that define the term ``all manufacturing processes''
in the case of construction materials. IIJA Sec. 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''
(Implementation Guidance). Under Section VIII of the Implementation
Guidance, ``construction materials'' includes: an article, material, or
supply--other than an item of primarily iron or steel; a manufactured
product; cement and cementitious materials; aggregates such as stone,
sand, or gravel; or aggregate binding agents or additives--that is or
consists primarily of:
<bullet> non-ferrous metals;
<bullet> plastic and polymer-based products (including
polyvinylchloride, composite building materials, and polymers used in
fiber optic cables);
<bullet> glass (including optic glass);
<bullet> lumber; or
<bullet> drywall.
Implementation Guidance at 13-14.
The Implementation Guidance states that ``an article, material, or
supply should only be classified into one of the following categories:
(1) iron or steel; (2) a manufactured product; or (3) a construction
material. For ease of administration, an article, material, or supply
should not be considered to fall into multiple categories.'' Id. at 6.
The Implementation Guidance also explains that ``items that consist of
two or more of the listed materials that have been combined together
through a manufacturing process, and items that include at least one of
the listed materials combined with a material that is not listed
through a manufacturing process, should be treated as manufactured
products, rather than as construction materials.'' Id. at 14. OMB
characterizes its guidance on which materials are construction
materials as ``preliminary and non-binding guidance . . . so that
agencies can begin applying Buy America requirements to those
materials.'' Id. at 13.
Section 70915(b) of BABA requires OMB to issue standards that
define ``all manufacturing processes'' for construction materials.
Section VIII of the Implementation Guidance provides that, ``[p]ending
MIAO's issuance of final standards on construction materials, and
absent any existing applicable standard in law or regulation that meets
or exceeds these preliminary standards, agencies should consider `all
manufacturing processes' for construction materials to mean the final
manufacturing process and the immediately preceding manufacturing stage
for the construction material.'' Implementation Guidance at 14. After
considering information received through stakeholder and industry
outreach, MIAO will issue further guidance that identifies initial
manufacturing processes for each type of construction material that
should be considered as part of ``all manufacturing processes.'' Id.
Agencies are also directed to ``consult with MIAO, as needed, to ensure
that any waiver issued for construction materials is explicitly
targeted and time-limited, in order to send a clear market signal that
additional standards for `all manufacturing processes' in the case of
construction materials will be forthcoming.'' Id.
In April 2022, DOT opened a public docket (DOT-OST-2022-0047) to
receive comments in response to DOT's proposal to waive the
construction materials requirement for 180 days, to allow for a longer
transition period. On May 19, 2022, DOT issued a temporary waiver of
the construction materials requirement for 180 days: from May 14 until
November 10, 2022. 87 FR 31931. In the waiver notice, DOT stated its
expectation that States, industry, and other participants establish
procedures to document compliance.
During the waiver period, DOT is continuing its engagement to help
facilitate the creation of robust enforcement and compliance mechanisms
and to rapidly encourage domestic sourcing of construction materials
for transportation infrastructure improvements. On July 28, 2022, DOT
issued a Request for Information (RFI) seeking input from the public,
including DOT's project sponsors, their contractors and offerors,
manufacturers, labor unions, transportation and trade associations, and
other interested parties on implementing BABA's new construction
[[Page 68574]]
materials requirement. 87 FR 45397. DOT asked the public to submit
comments to the same docket DOT used to propose the 180-day waiver.
Based on its review of comments received on the RFI and other
engagement opportunities with stakeholders, and consistent with the
purpose of the temporary transitional waiver, DOT does not intend to
modify or extend the existing DOT waiver for construction materials. As
a result, DOT awards obligated on or after November 10, 2022, from
financial assistance programs for infrastructure projects will be
subject to the BABA requirement that construction materials used on
those projects be produced in the United States.
The Need for a Waiver
The Implementation Guidance states that a ``waiver in the public
interest may be appropriate where an agency determines that other
important policy goals cannot be achieved consistent with the Buy
America requirements established by the Act.'' Implementation Guidance
at 10. The guidance also recognizes several instances in which Federal
agencies may consider issuing a public interest waiver and encourages
agencies to consider an adjustment period where time-limited waivers
would allow recipients and agencies to transition to new Buy America
preferences, rules, and processes. Id. at 11.
Since enactment of the Bipartisan Infrastructure Law, DOT has
received numerous inquiries and comments from recipients raising
concerns about the applicability of the new construction materials
requirement to projects that already are under construction or are in
advanced stages of planning. For example, a large West Coast transit
system asked whether its projects already under construction could
continue to comply with Buy America requirements as they existed at the
time of contract award, or if they would be affected by the new
domestic preference for construction materials. A large northeastern
transit system similarly asked how the construction materials
requirement would apply to a major construction project that is
underway. The project already has some Federal financial assistance,
and the transit system is concerned about the project remaining
eligible for additional grant awards on or after November 10.
Some commenters on the proposed temporary waiver for construction
materials issued by DOT in April and on the RFI issued in July also
described problems that would arise if DOT were to apply the
construction materials requirement to projects that have been under
development or construction prior to the expiration of the temporary
waiver on November 10.
For example, the Santa Clara Valley Transportation Authority asked
whether the construction materials requirement will apply to
construction contracts that it already has executed under pre-award
authority for a project in the Federal Transit Administration's (FTA)
Expedited Project Delivery Pilot Program, which may receive an FTA
grant that would be awarded on or after November 10.\1\ The New York
Metropolitan Transportation Authority requested that DOT waive the
construction materials requirement for, inter alia, (a) any contracts
awarded during the waiver period, and (b) any contracts executed during
the DOT waiver period using pre-award authority if they are funded by
grants awarded after the waiver period.\2\ Capital Metro requested that
contracts awarded before the construction materials requirement takes
effect be allowed to comply with Buy America standards as they existed
at the time the contract was formed, even if the contract is funded by
grants obligated in subsequent years.\3\
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\1\ Comment from the Santa Clara Valley Transportation Authority
(Aug. 16, 2022), <a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0122">https://www.regulations.gov/comment/DOT-OST-2022-0047-0122</a>.
\2\ Comment from the New York Metropolitan Transportation
Authority (May 13, 2022), <a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0037">https://www.regulations.gov/comment/DOT-OST-2022-0047-0037</a>.
\3\ Comment from the Capital Metropolitan Transportation
Authority (May 13, 2022), <a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0049">https://www.regulations.gov/comment/DOT-OST-2022-0047-0049</a>.
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Several State departments of transportation expressed similar
concerns in their submissions to the docket. For example, the New
Jersey Department of Transportation commented that redesigning projects
that are in an advanced state of design could be expensive and
negatively affect project delivery and requested that such projects be
exempt from the new construction materials requirement.\4\ Similarly,
the South Dakota Department of Transportation commented that it is not
appropriate or feasible to apply the construction materials requirement
to projects where bids were already submitted, and contracts awarded,
based on using materials with no country-of-origin specifications;
doing so would possibly require cancelling current contracts and would
add delay and additional costs for project sponsors.\5\ The California
Department of Transportation reported that it has many multi-year
contracts in place that incorporate Buy America standards as they
existed before BABA and asked whether these contracts will remain
eligible for Federal grants obligated on or after November 10.\6\
Additionally, a joint comment submitted by the transportation
departments of Idaho, Montana, North Dakota, South Dakota, and Wyoming
requested that DOT not apply the new construction materials requirement
to projects where bids were already submitted and awarded without
country-of-origin requirements, because doing so could require project
sponsors and contractors to cancel orders or cancel contracts and incur
additional costs and delays.\7\
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\4\ Comment from the New Jersey Department of Transportation
(Aug. 12, 2022), <a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0111">https://www.regulations.gov/comment/DOT-OST-2022-0047-0111</a>.
\5\ Comment from the South Dakota Department of Transportation
(Aug. 18, 2022), <a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0167">https://www.regulations.gov/comment/DOT-OST-2022-0047-0167</a>.
\6\ Comment from the California Department of Transportation
(Aug. 18, 2022), <a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0170">https://www.regulations.gov/comment/DOT-OST-2022-0047-0170</a>.
\7\ Comment from the Transportation Departments of Idaho,
Montana, North Dakota, South Dakota, and Wyoming (Aug. 17, 2022),
<a href="https://www.regulations.gov/comment/DOT-OST-2022-0047-0132">https://www.regulations.gov/comment/DOT-OST-2022-0047-0132</a>.
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Based on these and other inquiries and comments, DOT has identified
certain categories of projects for which application of the BABA
construction materials requirement after the DOT waiver expires would
present significant concerns:
(1) projects that have received DOT financial assistance awards
before November 10, 2022--and sometimes even prior to enactment of the
Bipartisan Infrastructure Law--that have completed procurements
involving construction materials or currently are in the process of
soliciting construction contracts, and will receive additional DOT
financial assistance that will be obligated on or after November 10,
2022;
(2) projects that will be funded by DOT grants obligated on or
after November 10, 2022, for which recipients have exercised DOT-
approved pre-award authority before November 10 to execute or solicit
construction contracts prior to grant award;
(3) projects that will be funded by DOT credit assistance obligated
on or after November 10, 2022, for which recipients solicited
construction contracts before May 14, 2022;
Requiring compliance with the BABA domestic preference for
construction materials would be unduly burdensome for projects that
already have executed construction contracts, because they already have
received DOT financial
[[Page 68575]]
assistance, are exercising DOT-approved pre-award authority, or will
receive DOT credit assistance for activities already in progress.\8\
Under these circumstances, application of the construction materials
requirement could compel contract terminations and cause projects to be
put on hold while conducting new procurements. Accordingly, application
of the construction materials requirement to these categories of
projects would result in unacceptable delay, increased project costs,
and potential loss of jobs while project construction is paused.
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\8\ For information related to pre-award costs, see 2 CFR
200.458, ``Pre-award costs.'' Some DOT OAs have program-specific
guidance on pre-award authority, including FTA's ``Notice of FTA
Transit Program Changes, Authorized Funding Levels and
Implementation of the Infrastructure Investment and Jobs Act; and
FTA Fiscal Year 2022 Apportionments, Allocations, Program
Information and Interim Guidance'', 87 FR 25362 (April 28, 2022).
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Additionally, for large infrastructure projects, the preparation of
solicitations by project sponsors and the preparation of bids and
proposals by offerors require significant time and investment, and are
based on project design that occurs well in advance of the
solicitations. DOT recipients throughout the country have exercised
pre-award authority to solicit construction contracts prior to the May
14, 2022, effective date of the construction materials requirement, for
which contract award will not occur until on or after November 10.
Applicants to DOT's credit assistance programs often have solicitations
underway concurrent with the Department's application and
creditworthiness reviews. In these instances, amending the
specifications of the contract solicitations to impose new requirements
that were not previously applicable would cause considerable delay.
Proposed Waiver and Request for Comments
DOT recognizes the importance of ensuring the use of domestically
produced construction materials on infrastructure projects receiving
Federal assistance and the need to implement the requirement in a way
that does not delay delivery of projects that were sufficiently
advanced before the requirement applies to DOT funding. Therefore, for
DOT awards obligated on or after the effective date of the waiver, DOT
proposes to issue a general public interest waiver of BABA's domestic
preference for construction materials for:
(1) Any contract entered into before November 10, 2022; and
(2) Any contract entered into before March 10, 2023, if the
contract results from a solicitation published prior to May 14, 2022.
In these limited circumstances, DOT recipients incurred costs,
executed contracts, are conducting procurements with long lead times
prior to the BABA construction materials requirement taking effect,
though they will seek Federal reimbursement through grants obligated on
or after November 10, 2022. This proposed waiver would preserve the
eligibility of costs a project sponsor already incurred or estimated
before the construction materials requirement took effect. The purpose
of covering contracts through March 10, 2023, for contracts resulting
from solicitations published before the May 14, 2022, BABA effective
date, is to provide recipients with reasonable time to complete
procurements. Project sponsors and offerors have invested significant
resources in such procurements, which are based on design and
engineering conducted before the BABA construction materials
requirement went into effect. A project sponsor whose solicitation does
not result in a contract before March 10, 2023, would have to take such
measures as may be necessary to ensure that its contract will comply
with the construction materials requirement.
If issued, this waiver would apply only to projects funded by DOT
financial assistance obligated on or after the effective date of the
waiver. DOT financial assistance obligated before the expiration of the
temporary DOT waiver on November 10, 2022 is not subject to the BABA's
construction materials requirement.
DOT requests comments on the applicable dates proposed in this
waiver. DOT also requests comments on whether this waiver should be
time-limited or phased for certain long-term contracts.
In order to support a more efficient and targeted process for
future waivers, DOT requests comment on whether there are other
scenarios where project delivery would be significantly disrupted or
delayed because of circumstances such as the level of design and
engineering for a project that has occurred in relation to the
effective date of the construction materials preference and provide
specific information as to the construction materials which may not be
available. For example, are there specific circumstances that may
justify a project specific waiver, such as the unavailability of
specific construction materials manufactured in the United States in
sufficient quantity or quality for a particular DOT-funded
transportation project or category of projects? Additionally, are there
transportation projects, such as projects in various stages of FTA's
Capital Investment Grants program, for which a waiver may be justified
due to significant delay in project delivery. If completed design and
engineering must be revised to comply with the construction materials
preference after November 10, 2022, DOT seeks comments on the length
and type of waiver which may be necessary to mitigate a significant
delay.
This proposed waiver would apply to infrastructure projects funded
by financial assistance administered by the Office of Secretary of
Transportation or any of DOT's Operating Administrations with financial
assistance programs, including the Federal Aviation Administration
(FAA); the Federal Highway Administration (FHWA); the Federal Motor
Carrier Safety Administration; the Federal Railroad Administration
(FRA); the Federal Transit Administration (FTA); the Maritime
Administration (MARAD); the National Highway Traffic Administration
(NHTSA); and the Pipeline and Hazardous Materials Safety Administration
(PHMSA).
This proposed waiver would not affect any domestic preference
requirements under other authorities, including DOT's non-BABA domestic
preference statutes: 49 U.S.C. 50101 (FAA); 23 U.S.C. 313 (FHWA and
NHTSA); 49 U.S.C. 22905(a) (FRA); 49 U.S.C. 5323(j) (FTA); and 46
U.S.C. 54101(d)(2) (MARAD).
The Implementation Guidance also provides that, before granting a
waiver in the public interest, to the extent permitted by law, agencies
shall assess whether a significant portion of any cost advantage of a
foreign-sourced product is ``the result of the use of dumped steel,
iron, or manufactured products or the use of injuriously subsidized
steel, iron, or manufactured products.'' Implementation Guidance at p.
12. E.O. 14005 at Section 5 includes a similar requirement for ``steel,
iron, or manufactured goods.'' However, because the public interest
waiver that DOT is proposing in this notice is not based on
consideration of the cost advantage of any foreign-sourced steel, iron,
or manufactured product content, there is not a specific cost advantage
for DOT to consider.
DOT will consider all comments received in the 15-day comment
period, as required by section 70914(c)(2) of the BIL. DOT will
consider comments received after the comment period to the extent
practicable.
[[Page 68576]]
Issued in Washington, DC on: November 8, 2022.
Polly E. Trottenberg,
Deputy Secretary.
[FR Doc. 2022-24743 Filed 11-14-22; 8:45 am]
BILLING CODE 4910-9X-P
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