Rule2024-31350
Buy America Requirements for Manufactured Products
Primary source
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
January 14, 2025
Effective
March 17, 2025
Issuing agencies
Transportation DepartmentFederal Highway Administration
Abstract
This final rule amends FHWA's Buy America regulation to terminate FHWA's general waiver for manufactured products and establish Buy America requirements for manufactured products with respect to Federal-aid highway projects. The standards for applying Buy America to manufactured products are generally 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)).
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 8 (Tuesday, January 14, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 8 (Tuesday, January 14, 2025)]
[Rules and Regulations]
[Pages 2932-2958]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-31350]
=======================================================================
-----------------------------------------------------------------------
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends FHWA's Buy America regulation to
terminate FHWA's general waiver for manufactured products and establish
Buy America requirements for manufactured products with respect to
Federal-aid highway projects. The standards for applying Buy America to
manufactured products are generally 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: This final rule is effective March 17, 2025.
FOR FURTHER INFORMATION CONTACT: For questions about this final rule,
please contact Mr. Brian Hogge, FHWA Office of Infrastructure, 202-366-
1562, or via email at <a href="/cdn-cgi/l/email-protection#e1a39388808fcfa98e868684a1858e95cf868e97"><span class="__cf_email__" data-cfemail="d193a3b8b0bfff99beb6b6b491b5bea5ffb6bea7">[email protected]</span></a>. For legal questions, please
contact Mr. David Serody, FHWA Office of Chief Counsel, 202-366-4241,
or via email at <a href="/cdn-cgi/l/email-protection#541035223d307a0731263b302d14303b207a333b22"><span class="__cf_email__" data-cfemail="e4a085928d80cab781968b809da4808b90ca838b92">[email protected]</span></a>. Office hours for FHWA are from
8:00 a.m. to 4:30 p.m., eastern time (E.T.), Monday through Friday,
except Federal holidays.
SUPPLEMENTARY INFORMATION:
Electronic Access and Filing
This document, the notice of proposed rulemaking (NPRM), all
comments received, and all supporting material may be viewed online at
<a href="http://www.regulations.gov">www.regulations.gov</a> using the docket number listed above. Electronic
retrieval assistance and guidelines are available on the website. It is
available 24 hours each day, 365 days each year. An electronic copy of
this document may also be downloaded from the Office of Federal
Register's website at <a href="http://www.federalregister.gov">www.federalregister.gov</a> and the U.S. Government
Publishing Office's website at <a href="http://www.GovInfo.gov">www.GovInfo.gov</a>.
I. Executive Summary
FHWA is required, by statute, to ensure that all projects funded
under title 23 of the United States Code (U.S.C.) (Federal-aid
projects) use only steel, iron, and manufactured products that are
produced in the United States. 23 U.S.C. 313. FHWA refers to these
requirements as ``Buy America'' requirements. In other words, FHWA's
Buy America requirement for manufactured products mandates that all
such products used on Federal-aid projects must be ``produced in the
United States.'' 23 U.S.C. 313. The Buy America requirement for
manufactured products has existed in some form since the enactment of
the Surface Transportation Assistance Act of 1978 (1978 STAA), Public
Law 95-599 (1978), with those requirements being modified close to
their current form by section 165 of the Surface Transportation
Assistance Act of 1982 (1982 STAA), Public Law 97-424 (1983).
In 1983, following the passage of the 1982 STAA, FHWA determined
that it would be in the public interest to waive the Buy America
requirements for manufactured products, with that waiver known as the
Manufactured Products General Waiver. See 48 FR 1946 (Jan. 17, 1983);
48 FR 53099 (Nov. 25, 1983). Under the Manufactured Products General
Waiver, manufactured products that were permanently incorporated into
Federal-aid projects did not need to be produced domestically, apart
from predominantly iron or steel components of manufactured products.
Through this rule, FHWA is establishing specific dates on which the
Manufactured Products General Waiver will be terminated and is amending
its Buy America regulation at 23 CFR 635.410 to establish standards
regarding Buy America requirements that will apply to manufactured
products on Federal-aid projects. These standards are substantially
similar to those established by OMB that apply to manufactured products
subject to BABA.\1\ This means that to be considered ``produced in the
United States'' and therefore Buy America-compliant, manufactured
products must
[[Page 2933]]
be manufactured in the United States (``final assembly requirement'')
and have greater than 55 percent of the manufactured product's
components, by cost, be mined, produced, or manufactured in the United
States (``55 percent requirement'').
---------------------------------------------------------------------------
\1\ 2 CFR part 184 established in 88 FR 57750 (Aug. 23, 2023)
and M-24-02 (Oct. 25, 2023).
---------------------------------------------------------------------------
Under this final rule, a manufactured product is defined as an
article, material, or supply that has 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, however, an article, material, or
supply meets this definition but could also be classified as an iron or
steel product, excluded material, or other product category as
specified by law or in 2 CFR part 184, that article, material, or
supply is not a manufactured product. Further, mixtures of excluded
materials delivered to a work site without final form for incorporation
into a project are also not manufactured products. For the purpose of
this rule, an article, material, or supply is generally only subject to
one set of requirements. For example, a manufactured product is only
subject to FHWA's Buy America requirements for manufactured products in
Sec. 635.410(c), meaning that the product must meet the final assembly
and 55 percent requirements. An iron or steel product, on the other
hand, must meet FHWA's existing Buy America requirements for iron and
steel in Sec. 635.410(b), generally requiring that all manufacturing
processes, including application of a coating, for these materials must
occur in the United States. See 23 CFR 635.410(b)(1)(ii).
Pursuant to Sec. 635.410(c)(2)(i), however, precast concrete
products that are classified as manufactured products must have their
predominantly iron or steel components meet FHWA's Buy America
requirements for iron and steel.\2\ Similarly, pursuant to Sec.
635.410(c)(2)(ii), the cabinets or other enclosures of intelligent
transportation systems (ITS) and other electronic hardware systems that
are installed in the highway right of way or other real property and
classified as manufactured products must comply with FHWA's Buy America
requirements for iron and steel if the cabinet or enclosure is
predominantly iron or steel. These specified manufactured products must
also comply with FHWA's Buy America requirements for manufactured
products. However, the predominantly iron or steel components for
precast concrete and the predominantly iron or steel cabinet or
enclosure for ITS and other electronic hardware systems will be
considered for the purpose of the 55 percent content requirement.
---------------------------------------------------------------------------
\2\ As described in more detail in the discussion of 23 CFR
635.410(c)(1)(iv) below, while precast concrete may be considered a
manufactured product, wet concrete delivered to a work site is not a
manufactured product, as wet concrete is a mixture of excluded
materials delivered to a work site without final form.
---------------------------------------------------------------------------
The requirements established in this rule are substantially similar
to those proposed in the NPRM. 89 FR 17789 (March 12, 2024). FHWA
notes, however, that the final assembly requirement will become
effective for Federal-aid projects obligated on or after October 1,
2025. The Manufactured Products General Waiver will remain in place
until this date. In addition, unlike the NPRM, the 55 percent
requirement will subsequently become effective for Federal-aid projects
obligated on or after October 1, 2026. This means that, to be Buy
America-compliant, for Federal-aid projects obligated on or after
October 1, 2026, all manufactured products permanently incorporated
into the project must both be manufactured in the United States and
have the cost of the components of the manufactured 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 regulatory impact analysis (RIA) prepared for this final rule
pursuant to Executive Order (E.O.) 12866, as amended by E.O. 14094, is
available in the rulemaking docket. The RIA estimates 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 this rule relate to increased
material costs for manufactured products used in Federal-aid highway
construction projects, project delay, and the administrative costs to
FHWA and recipients of FHWA financial assistance. FHWA is able to
quantify only increased material costs and the administrative costs to
FHWA and recipients of FHWA financial assistance. FHWA estimates the
increased material costs for manufactured products permanently
incorporated into Federal-aid projects to range from $41 million to
$980 million per year. FHWA further estimates an additional $167,000
per year in increased FHWA administrative costs and an additional $22
million per year in increased administrative costs to recipients of
FHWA financial assistance. FHWA estimates the 10-year cost of this rule
to range from $545 million to $8,466 million at a 2 percent discount,
with annualized costs of $61 million to $942 million.
II. Background and Regulatory History
A. History of the Manufactured Products General Waiver
FHWA's Buy America requirements 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;
that rule temporarily waived the provisions of section 401 to all
products and materials other than structural steel. See 43 FR 53717
(Nov. 17, 1978).
In 1980, following the issuance of that 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 being subject to Buy
America. 45 FR 77455. Prior to the 1980 rulemaking being finalized,
Congress enacted the 1982 STAA, which instituted new Buy America
requirements that are similar to those that exist today. Section 165(a)
established Buy America requirements for all steel, cement,\3\ and
manufactured products used on Federal-aid projects, requiring that they
be produced in the United States.\4\ In 2005, Congress codified the
current Buy America requirements for steel, iron, and manufactured
products at 23 U.S.C. 313, and those Buy America requirements remain in
effect today.\5\
---------------------------------------------------------------------------
\3\ The Buy America requirement for cement was eliminated by
Congress in 1984. See Public Law 98-229.
\4\ Congress also added a Buy America requirement for iron in
1991. See Public Law 102-240.
\5\ See section 1903 of Public Law 109-59.
---------------------------------------------------------------------------
In late 1983, FHWA issued its final rule implementing section 165
of the 1982 STAA, creating its current Buy America regulations at 23
CFR 635.410.\6\
[[Page 2934]]
48 FR 53099 (Nov. 25, 1983). In this rule, FHWA found that a waiver of
Buy America requirements for manufactured products was in the public
interest, thereby creating the Manufactured Products General Waiver. 48
FR 53102. FHWA stated that product manufacturers did not generally
express approval of applying Buy America requirements to manufactured
products. Id. at 53101. For those that did, FHWA stated that they were
primarily opposed to unfair foreign trade practices. 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 1982 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 by enacting the 1982 STAA. Id. at 53101-02. FHWA thus
interpreted that to mean that not all manufactured products had to be
covered by the Buy America requirements of section 165. Id. Finally,
FHWA stated 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.
---------------------------------------------------------------------------
\6\ 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
requirement and adding a reference to a Buy America requirement for
iron (58 FR 38973 (July 21, 1993)) after Congress added that
requirement.
---------------------------------------------------------------------------
B. Build America, Buy America Act
On November 15, 2021, the President signed the BIL (Pub. L. 117-58)
into law. The BIL includes BABA, which expands the coverage and
application of domestic content procurement preferences in Federal
financial assistance programs for infrastructure. BIL, div. G sections
70901-70927. 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. The BABA, however, provides that this mandate
applies to iron, steel, manufactured products, and construction
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)-(b). 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 results in FHWA
applying its existing Buy America requirements under 23 U.S.C. 313 to
iron, steel, and manufactured products, not the requirements of BABA.
FHWA does, however, apply BABA's domestic content procurement
preference to construction materials.
Under BABA, all manufactured products must be ``produced in the
United States.'' BABA section 70914. For 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 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).
The BABA also expresses a general policy preference against general
applicability waivers like the Manufactured Products General Waiver.
For example, section 70913(c) of BABA requires Federal Agencies to
identify ``deficient programs,'' which includes programs subject to
general applicability waivers. Section 70914(d) of BABA also requires
Federal Agencies to review existing general applicability waivers by
publishing in the Federal Register a document that: (i) describes the
justification for the general applicability waiver; and (ii) requests
public comments on the need for the waiver. Following consideration of
comments received, BABA then 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, FHWA initiated the review required
by section 70914(d) of BABA for the Manufactured Products General
Waiver, publishing in the Federal Register at 88 FR 16517 a notice and
request for comments on the waiver (``2023 RFC'').
C. OMB's Guidance on BABA
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.\7\ 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 States'' if the product was manufactured in the United States
and the cost of 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).
---------------------------------------------------------------------------
\7\ Throughout this document, references to part 184 refer to
both the text in 2 CFR part 184 and the preamble published at 88 FR
57750 in the Federal Register.
---------------------------------------------------------------------------
Part 184 also states that an article, material, or supply should be
classified as only either an iron or steel product, manufactured
product, construction material, or section 70917(c) material, 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
[[Page 2935]]
the Buy America standards for only the single category in which it is
classified. 2 CFR 184.4(e) and (f). 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. 2 CFR
184.3. These materials are named section 70917(c) materials in 2 CFR
part 184 because they are referred to in section 70917(c) of BABA.
As stated earlier, part 184 does not, by its own terms, apply to
FHWA's Buy America requirements for steel, iron, and manufactured
products; it applies only to FHWA's domestic content procurement
preference for construction materials. 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.
On October 25, 2023, OMB issued memorandum M-24-02,
``Implementation Guidance on Application of Buy America Preference in
Federal Financial Assistance Programs for Infrastructure'' (``OMB
Implementation Guidance'').\8\ 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.''
---------------------------------------------------------------------------
\8\ <a href="https://www.whitehouse.gov/wp-content/uploads/2023/10/M-24-02-Buy-America-Implementation-Guidance-Update.pdf">https://www.whitehouse.gov/wp-content/uploads/2023/10/M-24-02-Buy-America-Implementation-Guidance-Update.pdf</a>.
---------------------------------------------------------------------------
D. Notice of Proposed Rulemaking
Based on the comments received to the 2023 RFC, and after
considering the President's policy, as embodied 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, FHWA proposed to discontinue the Manufactured Products General
Waiver and proposed regulatory standards for applying Buy America to
manufactured products should the waiver be discontinued. 89 FR 17789
(Mar. 12, 2024).\9\
---------------------------------------------------------------------------
\9\ Throughout this document, the NPRM refers to both FHWA's
proposal to discontinue the Manufactured Products General Waiver and
to propose standards for applying Buy America to manufactured
products.
---------------------------------------------------------------------------
In proposing to discontinue the Manufactured Products General
Waiver, FHWA noted that the intent of Congress, as expressed in
sections 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, which would not be consistent with
continuing the Manufactured Products General Waiver. Id. at 17795. FHWA
also noted that continuing the waiver would undermine the purposes that
domestic content procurement preferences, such as FHWA's Buy America
requirement, are intended to serve. Id. Further, FHWA considered the
Implementation Guidance's policy on waivers, that they should not be
overly broad in order to ensure that they appropriately convey market
signals on where the domestic supply chain can be bolstered and that
they should be time-limited to ensure that, once available, Buy
America-compliant materials can receive appropriate consideration for
inclusion in federally funded projects. Id. Again, FHWA noted that the
Manufactured Products General Waiver was inconsistent with these
principles. Id.
FHWA further observed that the Manufactured Products General Waiver
was overly broad, disincentivizing manufacturers from domestically
producing manufactured products by broadly covering all products, even
those that are or could be produced domestically. Id. at 17795-96.
Finally, FHWA noted that the waiver fails to provide domestic
manufacturers with knowledge of the current gaps in the domestic
manufacturing sector by covering all manufactured products, failing to
provide market signals that distinguish between manufactured products
that are domestically produced and those that are not. Id. at 17796.
FHWA observed that this lack of clarity hinders manufacturers who wish
to enter the market from understanding the competitive landscape, again
disincentivizing them from attempting to provide domestic manufactured
products on Federal-aid projects. Id. FHWA stated its belief that, in
line with OMB's Implementation Guidance, 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 Federal-aid projects. Id.
Accordingly, in the NPRM, FHWA stated its belief 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 in the public interest. Id. FHWA thus
proposed to discontinue the Manufactured Products General Waiver. Id.
In the NPRM, FHWA acknowledged that discontinuing the Manufactured
Products General Waiver and applying Buy America requirements to
manufactured products may result in cost increases, project delays, and
product unavailability if not done carefully. Id. To mitigate this
concern, FHWA stated that it would consider proposing targeted waivers.
Id. Accordingly, FHWA published a Request for Information (RFI),
seeking specific and detailed information on what products are not and
cannot be produced in the United States in the near future. Id. at
17796-97. FHWA stated in the NPRM that, based on the information
received from this RFI, it would propose time-limited and targeted
waivers covering domestically unavailable products if it would be
appropriate to do so. Id. at 17797.
FHWA also stated that were the Manufactured Products General Waiver
to be rescinded, manufactured products would fall under the coverage of
DOT's ``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 Costs and Small Grants Waiver would
then 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 million or 5 percent of total applicable costs \10\ for
the project (``departmental de minimis waiver''); or (2) the total
amount of Federal financial assistance applied to the project,
[[Page 2936]]
through awards or subawards, is below $500,000 (``small grants
waiver''). 88 FR 55820.
---------------------------------------------------------------------------
\10\ Per the De Minimis Costs and Small Grants Waiver, ``total
applicable project costs'' are defined as the cost of materials used
in the project that are subject to a domestic preference
requirement, including materials that are within the scope of an
existing waiver.
---------------------------------------------------------------------------
At the same time as FHWA proposed discontinuing the Manufactured
Products General Waiver, the NPRM proposed adopting standards that
would define, per the language in 23 U.S.C. 313, when a manufactured
product is ``produced in the United States.'' Id. In doing so, FHWA
recognized that while it had the discretion to define Buy America
requirements for manufactured products, those standards would have to
meet or exceed those under BABA.\11\ Id. To minimize burden and ensure
consistency with other Federal agencies implementing BABA, FHWA
proposed to adopt standards closely similar to those under BABA. Id.
Thus, FHWA proposed to adopt the definition of when a manufactured
product is ``produced in the United States'' that is found in section
70912(6)(B) of BABA. Id. FHWA proposed to replace current Sec.
635.410(c), which discusses the process for requesting a Buy America
waiver and the procedures FHWA will take to respond to that request,
with a new paragraph that would discuss these Buy America requirements
for manufactured products. Id. at 17799.
---------------------------------------------------------------------------
\11\ Per section 70917(a) and (b) of BABA, BABA's domestic
content procurement preferences apply unless a Federal Agency has a
domestic content procurement preference that meets or exceeds the
requirements of section 70914 of BABA. This means that were FHWA to
enact less stringent Buy America requirements to manufactured
products than in BABA, both those requirements and BABA's
requirements would become effective, essentially raising the
requirements to BABA's level of stringency.
---------------------------------------------------------------------------
Further, FHWA proposed to replace mentions of ``steel or iron
materials'' and ``steel and iron materials'' in Sec. 635.410(b) with
the single phrase of ``iron or steel products,'' which FHWA proposed to
define at Sec. 635.410(c)(1)(ii). FHWA did not otherwise propose to
modify the application of the current Buy America requirements to steel
and iron in Sec. 635.410(b).
FHWA received 136 comments to the NPRM and 41 comments to the RFI
from State departments of transportation (State DOTs), local
governments, manufacturers, associations, and individual citizens. FHWA
first discusses comments on the proposal to rescind the Manufactured
Products General Waiver.
III. Rescission of the Manufactured Products General Waiver
Many commenters to the NPRM and RFI expressed their opinion on
whether FHWA should finalize its proposal to discontinue the
Manufactured Products General Waiver. While many of these comments are
similar to those submitted to the 2023 RFC and discussed in the NPRM,
FHWA summarizes them below.
A. Comments in Favor of Rescinding the Manufactured Products General
Waiver
Generally, commenters in favor of recission argued that doing so
would have positive economic impacts. These commenters argued that
rescinding the waiver would stimulate economic growth, create and
protect American jobs, and restore America's manufacturing base.
Commenters in favor of rescinding the waiver also stated that doing so
would fortify America's domestic supply chains, increasing national
security by minimizing dependence on foreign sources and preventing
supply chain shocks due to foreign pressures. Such commenters argued
that fortifying domestic supply chains may even curb the rising cost of
materials.
Those in favor of rescission further argued that doing so is
important to domestic manufacturers and workers, ensuring that taxpayer
funds go to U.S. businesses. FHWA received comments from manufacturers
stating that they produce manufactured products domestically but have
to compete with cheaper foreign products on Federal-aid projects.
Commenters stated that, contrary to the current situation, rescinding
the waiver would provide domestic manufacturers and workers the first
opportunity to supply products on Federal-aid projects. Commenters,
particularly manufacturers, also argued that rescinding the waiver
would both incentivize domestic manufacturers to onshore production and
incentivize current domestic manufacturers and manufacturers who might
onshore in the near future to increase their domestic manufacturing
capacity. Commenters also indicated that manufacturers may be waiting
for regulatory certainty before increasing domestic capacity.
Other commenters espoused their belief in the benefits of
domestically produced products themselves, stating they are of higher
quality and manufactured with improved labor and environmental
standards versus foreign products. Commenters further argued that
domestic manufacturing is likely to spur innovation and the development
of new technologies.
Commenters in favor of rescission further pressed that the
Manufactured Products General Waiver is inconsistent with the
Administration's priorities, the clear text of 23 U.S.C. 313, and the
congressional intent of BABA. With respect to BABA, such commenters
argued that the findings in section 70911, the requirement in section
70914 to apply requirements to manufactured products, the definition of
``deficient programs'' in sections 70912 and 70913(c), and the
requirement for Federal agencies to review existing waivers of general
applicability in section 70914(d) all indicated congressional
disapproval of existing waivers of general applicability like the
Manufactured Products General Waiver.
Finally, commenters in favor of rescinding the Manufactured
Products General Waiver argued that it is inconsistent with the purpose
of waivers of domestic content procurement preferences. Such commenters
stated that waivers of domestic content procurement preferences should
be transparent, targeted, time-limited, and used only when necessary;
these commenters argued that the Manufactured Products General Waiver
is inapposite to these principles as it covers all manufactured
products for an indeterminate period of time. Commenters continued that
the overbroad nature of the Manufactured Products General Waiver makes
the current supply of domestic products unclear, disincentivizing
manufacturers from attempting to produce manufactured products
domestically.
B. Comments in Favor of Continuing the Manufactured Products General
Waiver
Some commenters in favor of continuing the Manufactured Products
General Waiver expressed opposition to domestic content procurement
preferences entirely, stating that they run counter to free trade
agreements and negatively affect the economies of countries that use
them.
For those specifically suggesting that FHWA maintain the
Manufactured Products General Waiver, many argued that there will be an
insufficient number of Buy America-compliant manufactured products,
either because of a lack of current supply or because the current
supply would be insufficient given the increased demand for compliant
products that would result if the waiver were rescinded. Some
commenters suggested that some products and components may never be
able to be produced domestically, due, for example, to a lack of
domestic raw materials or prohibitive environmental regulations.
In comments to the NPRM and RFI, commenters expressed particular
concern over the domestic availability of certain products, as listed
below.
<bullet> luminaires (including light-emitting diode (LED) luminaires)
<bullet> LED lighting systems
<bullet> road weather information systems
[[Page 2937]]
<bullet> bridge joints and bearing pads
<bullet> video imaging systems
<bullet> video imaging vehicle detection system
<bullet> closed-circuit television cameras
<bullet> permanent crash cushions
<bullet> generators
<bullet> pumps and other products used in pump stations
<bullet> spread spectrum radios
<bullet> electronic screening equipment
<bullet> electronic message signs
<bullet> rolled erosion control products
<bullet> traffic signals and signal systems
<bullet> traffic buttons
<bullet> traffic signal controllers
<bullet> traffic cabinets
<bullet> lane use control signals
<bullet> pedestrian crossing beacons
<bullet> traffic sensors
<bullet> other products in traffic management systems
<bullet> environmental sensors
<bullet> avalanche control systems
<bullet> aeration equipment
<bullet> battery backup systems
<bullet> retroreflective sheeting
<bullet> ultraviolet disinfection equipment
<bullet> crossarms and crossarm braces
<bullet> railroad ties
<bullet> railroad spikes and other supports
<bullet> precast concrete
<bullet> rolling stock
<bullet> various other ITS technologies and electrical equipment
<bullet> various other information communication technologies and
network communication devices
<bullet> various pieces of utility equipment
FHWA notes, however, that some products commenters described as
being unavailable domestically were described by others as being
available. FHWA also notes that it has not made any determinations on
whether these items would be considered manufactured products under the
standards promulgated in this final rule, and that some could be
classified as iron or steel products or construction materials, or as
components of manufactured products, rather than manufactured products
themselves. FHWA discusses how to determine the classification of a
single item below in the analysis of Sec. 635.410(c)(2).
Commenters also argued that rescinding the waiver would increase
the cost of manufactured products and the cost of the projects using
them. Commenters generally stated that this cost increase would be
caused by reducing the supply of manufactured products that could be
used on Federal-aid projects by removing the ability to use foreign
products. Commenters also indicated that costs may increase if imposing
Buy America requirements for manufactured products limited the number
of compliant manufacturers to the point where monopolies for certain
products formed. Commenters also argued that foreign products are, on
average, less costly than domestically produced products, noting that,
otherwise, domestic products would already be used in Federal-aid
projects and Buy America requirements would be unnecessary. Further,
commenters argued that the imposition of Buy America requirements on
manufactured products may incentivize manufacturers to use more
expensive domestic components to ensure that their products meet the 55
percent requirement. Certain commenters also stated that project costs
would increase from higher bid prices due to contractors pricing the
risk of not procuring compliant manufactured products into their bids.
Other commenters raised concern that project costs may increase because
there would be fewer bidders, as some contractors may not place bids if
they are unsure about procuring compliant products.
Commenters also raised concerns about the increased costs that
imposing Buy America requirements on manufactured products may cause to
contractors and manufacturers. Commenters stated that costs to
contractors could increase from a lack of compliant products, producing
delays that could result in increased incidental costs and the costs of
repeated demobilization and mobilization. Similarly, commenters also
raised concern over the imposition of penalties related to contract
administration if contractors were unable to acquire compliant
products. Other commenters stated that the imposition of requirements
would require manufacturers to redevelop, redesign, and resource their
products, all of which trigger increased costs.
Commenters also questioned whether the new requirements would
increase the amount of domestically manufactured products at all. Such
commenters contended that manufactured products make up a minor portion
of the total material cost of Federal-aid projects, which they alleged
indicated that the market for any Buy America-compliant manufactured
products may be too small to incentivize onshoring. In addition, these
commenters argued that products that would be Buy America-compliant may
not be competitive in the global market, further reducing the incentive
for manufacturers who compete internationally to onshore production. In
short, these commenters stated that manufactured products are not used
in Federal-aid projects in large enough quantities to justify the
additional costs that they alleged would be triggered by imposing Buy
America requirements on manufactured products.
In addition, commenters in favor of retaining the Manufactured
Products General Waiver argued that removing the waiver and imposing
Buy America requirements on manufactured products may cause project
delay or cancellation. Such commenters argued that reducing the supply
of products that could be used on Federal-aid projects is likely to
create material shortages. If a Buy America-compliant product is
unavailable, commenters warned that contracting agencies would need to
either acquire a waiver to procure a non-compliant product, which would
require time and cost to try to procure; wait for the product to be
produced domestically; or redesign the project. Commenters also noted
the delay in developing projects that would result from the time needed
for contracting agencies to modify contract specifications and bid
documents, for contractors to prepare bids based on the new
requirements, and for manufacturers to produce sufficient amounts of
compliant products.
Commenters also raised concerns that imposing Buy America
requirements on manufactured products may hinder the ability of
contracting agencies and contractors to change project design or scope
quickly, given the inability to turn to foreign products. Similarly,
manufacturers presented concerns that imposing requirements would
prevent them from being able to quickly switch to foreign suppliers if
required by circumstances.
Overall, many commenters opposing removing the Manufactured
Products General Waiver and imposing Buy America requirements on
manufactured products argued that doing so would result in fewer
projects or projects of lesser quality. These commenters alleged that
by making projects more costly and causing increased project delays and
potential cancellations, imposing Buy America requirements on
manufactured products would result in contracting agencies being able
to complete fewer projects. This would then eliminate the benefits such
projects would otherwise bring, such as safety, quality of life,
sustainability, resiliency, and economic development improvements.
Commenters also argued that imposing requirements may result in
modifications to projects that would reduce their benefits, stating
that contracting agencies and contractors may attempt to avoid using
manufactured products on projects to
[[Page 2938]]
avoid triggering the new requirements. In addition, commenters
complained that imposing Buy America requirements on manufactured
products would exacerbate the current obstacles facing the construction
industry, such as the unavailability of certain products, supply chain
disruptions, inflation and other price increases, and labor shortages.
Another common criticism raised by commenters involved the
administrative burden of ensuring compliance with new requirements.
Commenters protested the time and difficulty they thought would be
needed to trace the origin and cost of components, particularly on
smaller companies and disadvantaged business enterprises. Commenters
also raised concerns that it may be laborious to identify the cost and
origin of components as manufacturers may not know this information,
have an incentive to provide this information, or want to provide
detailed and potentially proprietary information on their products.
These commenters further argued that this process of identifying
components would be unduly burdensome when purchasing products from
third parties. Commenters also raised the concern that, because the
proposed Buy America standards require that more than 55 percent of
components, by cost, must be produced in the United States, the
fluctuation in the cost of components may result in sudden changes to
whether a product is compliant. Other commenters raised concerns over
the administrative burden to test and reevaluate new, compliant
products. In general, commenters argued that these concerns are
particularly heightened because parties are still adjusting to the
burden caused by the addition of BABA's construction material
requirements.
A different set of concerns was raised by commenters who procure
manufactured products for both Federal-aid projects and other projects.
In general, many of these commenters stated that their process was to
procure manufactured products in large quantities to be used for later
projects, some of which may be federally funded but some of which might
not be. Such commenters stated that imposing Buy America requirements
on manufactured products would likely require them to procure products
on a project-specific basis, which would increase costs and cycle
times; purchase only Buy America-compliant products, which may result
in the compatibility concerns described below; or maintain inventories
of both Buy America-compliant and non-compliant products. These
commenters stated that this last option would result in more
variability, necessitating increased training and knowledge to complete
common maintenance, repair, and replacement functions and to manage
infrastructure. Commenters also expressed concern that procuring
compliant and non-compliant products would require more physical space
to house and segregate the products.
Those in favor of retaining the Manufactured Products General
Waiver also expressed concern that domestic components and products
will not be compatible with currently used components, products, and
systems. These commenters warned that a lack of compatibility between
existing non-compliant components, products, and systems and compliant
components and products may necessitate the complete replacement of
products or systems when a component or product has to be replaced.
Commenters also argued that imposing requirements on manufactured
products may prevent entities from using specialized products that are
necessary to meet regulatory requirements or required specifications if
such products are not domestically produced.
Other commenters that were in favor of maintaining the Manufactured
Products General Waiver, contrary to those in favor of rescinding the
waiver, argued that foreign products may be of higher quality than
domestic products, have a track record of quality that domestic
products lack, be more technologically advanced or innovative, or have
reduced environmental impacts. Commenters raised particular concerns
that, in order to meet the proposed Buy America requirements,
manufacturers may opt to incorporate lower-quality domestic components
into their products. Commenters warned that imposing requirements on
manufactured products may also stifle economic development of
manufacturers, leading to job loss.
Finally, commenters argued that the problems with imposing Buy
America requirements to manufactured products would not be solved
through the application of the De Minimis and Small Grants waiver.
These commenters stated that projects procuring manufactured products
may not be covered by the De Minimis and Small Grants waiver because
the project heavily involves the procurement of manufactured products
or the procurement of manufactured products is itself the focus of the
project, or because the project simply is of too large a scale.
Commenters also criticized the burden needed to track the costs of
materials for purpose of the departmental de minimis waiver,
particularly for utilities.
C. FHWA Response
FHWA again notes that many of the comments received to the NPRM
reflect the same concerns commenters made in response to the 2023 RFC.
As stated in the NPRM, FHWA does not believe they reflect justified
reasons to continue the Manufactured Products General Waiver without
change. In general, these comments do not reflect concern over
rescinding the Manufactured Products General Waiver entirely, but the
effect such rescission may have on specific products or categories of
products if rescission of the waiver results in them not being
domestically produced in sufficient quantities. For instance, FHWA does
not believe that commenters claiming that there will not be sufficient
numbers of Buy America-compliant products justifies retaining the
waiver; it, instead, calls for manufacturers, recipients of FHWA
financial assistance, and FHWA to work together to identify the
products that are not in fact domestically manufactured in sufficient
amounts and for FHWA to issue waivers for those products. As described
in more detail in section V, below, FHWA intends to mitigate this
concern by phasing in the requirements of this rule, analyzing which
products and categories of products may require waivers, and issuing
waivers if appropriate.
To take another example, while FHWA understands that some Buy
America-compliant manufactured components and products will not be
compatible with existing components, products, and systems, FHWA does
not find this a sufficient reason to continue the Manufactured Products
General Waiver in its entirety, given that the Manufactured Products
General Waiver sweeps much more broadly than just products that are
replacing existing products and systems. This may be a reason to
consider granting a product-specific waiver, but FHWA does not believe
it justifies maintaining the Manufactured Product General Waiver's
coverage of unrelated products. Similarly, FHWA does not believe that
the fact that some entities may use specialized products or that some
specific products may be preferred by entities justifies retaining the
Manufactured Product General Waiver for unrelated products; they, at
best, are reasons for considering waivers for specific products when
these specific occurrences arise.
Similarly, many commenters argued that because domestic
manufacturers
[[Page 2939]]
will not spring up to provide Buy America-compliant products and
components, removing the Manufactured Products General Waiver will
result in negative consequences, such as higher costs, reduced
flexibility, and potential project delays and cancellations. FHWA does
not believe that this concern justifies maintaining the Manufactured
Products General Waiver; it suggests that were domestic manufacturers
not to emerge, FHWA should consider issuing waivers for products of
limited domestic availability. Again, as described in more detail in
section V, FHWA believes it important to first consider the impacts of
this final rule on manufacturers before issuing any waivers. As
provided in E.O. 14005 and section 70911 of BABA concerning the
benefits of Buy America in general, this rule will provide a powerful
incentive for manufacturers to onshore production that does not
currently exist under the Manufactured Products General Waiver. During
the transition period before the new Buy America requirements for
manufactured products become effective, FHWA will be able to more fully
analyze the extent of this onshoring. In the event that a market for
some manufactured products does not develop, FHWA will be able to
identify those products and consider waivers accordingly.
Overall, FHWA does not believe that these arguments answer FHWA's
concern, discussed in the NPRM, that the Manufactured Products General
Waiver is overly broad and no longer in line with the purpose of
domestic content procurement preferences and waivers. Instead, they
suggest either that commenters believe that no categories of
manufactured products will ever be domestically produced in sufficient
quantities or that commenters believe that the overbroad nature of the
Manufactured Products General Waiver is justified because of the issues
that specific products or categories of products may face when
complying with Buy America requirements.
Based on comments from manufacturers who currently produce domestic
products and who stated that they would increase capacity if the waiver
were rescinded, FHWA believes that at least some manufactured products
will be domestically produced in sufficient quantities. Further, FHWA
does not believe that continuing the overbroad Manufactured Products
General Waiver is necessary because of the difficulties some products
or categories of products may face in complying with Buy America
requirements. FHWA understands the concern that some products may not
be domestically available; FHWA further believes this concern is
heightened for certain ITS and other electronic products, utility
products, and products used in railroad work. As stated in the NPRM,
however, FHWA believes that the more preferable approach is to issue
waivers, as appropriate, for those products and categories of products.
In this way, such targeted waivers can provide manufacturers with
insight into market demand that can trigger investments into domestic
manufacturing in specific products, which cannot happen under the
Manufactured Products General Waiver. FHWA believes that this approach
can ensure that manufactured products needed for Federal-aid projects
are available while also providing an opportunity to domestic
manufacturers who can provide manufactured products to these projects
where a waiver is not needed. FHWA discusses its intended process for
implementing such waivers, where necessary, in section IV.
FHWA does recognize that some concerns over removing the
Manufactured Products General Waiver and imposing Buy America
requirements on manufactured products apply regardless of whether
domestic manufacturers ever produce sufficient amounts of domestic
products. These include concerns that imposing such requirements is
contrary to free trade agreements; that imposing Buy America
requirements will inherently increase the cost of all products that are
not currently compliant and require manufacturers to redevelop,
redesign, and resource their products; that projects may be delayed as
parties modify contract specifications and bid documents and
contractors prepare bids; and the administrative burden of imposing new
requirements.
Some of these concerns inherently reflect the fact that FHWA is
imposing new Buy America requirements on Federal-aid projects. For
instance, FHWA believes it apparent that many manufacturers will have
to shift to making products compliant with requirements that would
otherwise not exist; that contract specifications and bid documents
will have to be changed to include new requirements, and that
contractors will need time to prepare bids after considering the new
requirements; and that the new requirements will pose administrative
burden on those responsible with complying with them. FHWA acknowledges
the burden that such activities could place on affected parties, but
FHWA believes that the overall public interest in the policies behind
Buy America (as described in E.O. 14005 and section 70911 of BABA) is
better served by considering these issues when determining the date on
which to first apply the new Buy America requirements as well as the
need for potential future waivers rather than whether to rescind the
Manufactured Products General Waiver and impose Buy America
requirements at all. Were these concerns sufficient to continue the
Manufactured Products General Waiver, the waiver would seemingly be
required to remain in effect indefinitely, even if there were
sufficient sources of all manufactured products used on Federal-aid
projects. FHWA does not believe this can be a sensible outcome. FHWA
believes that the better approach is to allow for time for affected
parties to set up processes to handle the change in regulatory
requirements, which FHWA intends to do by implementing the final
assembly and 55 percent requirements over time, as described in more
detail below in section V.
FHWA also acknowledges, as explained in more detail in the RIA,
that rescinding the Manufactured Products General Waiver and applying
Buy America requirements to manufactured products may lead to an
increase in cost in some products. While the price of products and
components may increase, FHWA believes that this is the natural result
of achieving the goal of increasing domestic manufacturing, as stated
in E.O. 14005 and BABA.\12\ Were domestic products available at the
same or a lower price than foreign products, FHWA would expect
contracting agencies to purchase domestic products even if no Buy
America requirements existed, creating a domestic supply of
manufactured products. The fact that commenters indicated that this is
not the case demonstrates that contracting agencies procure foreign
products because they are less expensive than domestic alternatives.
The imposition of domestic content procurement preferences should thus
be expected to increase the cost of procuring the projects covered by
those preferences. For manufactured products where manufactures onshore
production of Buy America-compliant products, FHWA expects that the
increase of the cost of the products will occur alongside
[[Page 2940]]
the creation of domestic manufacturing jobs. For manufactured products
where manufacturers elect not to onshore production, FHWA intends to
issue waivers to allow for the continued use of lower-priced foreign
products, reducing or eliminating any burden from cost increases. While
FHWA cannot determine at this point the extent to which manufacturers
will onshore specific products, FHWA believes that this rulemaking will
either have no effect on the cost of products or result in both
increases in product costs and in increases in domestic manufacturing
jobs.
---------------------------------------------------------------------------
\12\ FHWA does not believe it is likely that manufacturers will
use more expensive domestic components than necessary to ensure that
their products have 55 percent of components, by cost, be produced
in the United States. FHWA believes that such manufacturers would
not be competitive in a market with other manufacturers who use less
expensive domestic components.
---------------------------------------------------------------------------
FHWA also acknowledges commenters who expressed opposition to Buy
America requirements on the grounds that such requirements are counter
to free trade agreements. Many free trade agreements, such as the
United States-Mexico-Canada Agreement (USMCA), expressly exempt grants,
loans, cooperative agreements, and other forms of Federal financial
assistance from coverage. Other trade agreements, such as the World
Trade Organization Agreement on Government Procurement, specifically
exclude highway and mass transit projects from coverage. To the extent
that FHWA's Buy America requirements would conflict with a trade
agreement, FHWA believes that specific situation may justify a waiver
of the requirements; FHWA does not believe that it would justify a
waiver of Buy America requirements to all manufactured products.\13\
---------------------------------------------------------------------------
\13\ For instance, the OMB Implementation Guidance states: ``If
a recipient is a State that has assumed procurement obligations
pursuant to the Government Procurement Agreement or any other trade
agreement, a waiver of a Made in America condition to ensure
compliance with such obligations may be in the public interest.''
---------------------------------------------------------------------------
Finally, FHWA again notes that, once Buy America requirements apply
to manufactured products, such products may be exempted by the De
Minimis and Small Grants waiver. FHWA acknowledges that the De Minimis
and Small Grants waiver will not exempt all manufactured products from
Buy America requirements, as that was not the intention of the De
Minimis and Small Grants waiver. As stated in the NPRM, the purpose of
that waiver is to prevent the recission of the Manufactured Products
General Waiver from affecting ``small projects and projects using
limited amounts of manufactured products.'' Id. at 17797.
In conclusion, after a careful review of all the comments received
to the 2023 RFC and NPRM, FHWA believes that the Manufactured Products
General Waiver is no longer in the public interest and is rescinding it
for all recipients of FHWA financial assistance. As discussed in more
detail in section V, FHWA recognizes that some products and categories
of products may not be currently domestically produced in sufficient
amounts. Rather than continue the Manufactured Products General Waiver,
FHWA intends to analyze which products and categories of products may
require waivers, and issue waivers where appropriate.
IV. General Comments
FHWA next discusses general issues raised by commenters regarding
the final rule. Section V then includes a discussion of specific
regulatory provisions of the final rule.
Process for Rescission of Waiver
Comment: In the NPRM, FHWA proposed to rescind the Manufactured
Products General Waiver and, at the same time, issue time-limited and
targeted waivers covering any manufactured products that FHWA
determines are not currently produced in the United States and might
not be able to be produced in the United States in the near future.
Some commenters argued that FHWA should rescind the Manufactured
Products General Waiver only when these time-limited and targeted
waivers are in place. Others stated that FHWA should institute a
delayed effective date for the rescission of the Manufactured Products
General Waiver in general, and then set later effective dates for the
application of Buy America requirements to particular products. Still
other commenters argued for a different model, stating that FHWA should
apply Buy America requirements to specific manufactured products based
on their availability. Under this approach, FHWA would not set an
effective date for the final rule upfront but rather gradually narrow
the scope of the Manufactured Products General Waiver as FHWA removes
specific manufactured products from its coverage as they become
domestically available; FHWA would thus only fully rescind the waiver
when suppliers could demonstrate the ability to provide Buy America-
compliant versions of all manufactured products used on Federal-aid
projects. Other commenters suggested that FHWA should proceed with a
stepped approach, first identifying products that are Buy America-
compliant and applying Buy America requirements to them, then
identifying products that are manufactured in the United States and
applying the final assembly requirement to them, and finally
identifying products that are manufactured in the United States and
meet the 55 percent requirement and apply both the manufactured and 55
percent requirements to them. Other approaches raised by commenters
include that FHWA should rescind the waiver for products only when
there is a clear basis for expecting the emergence of U.S. sources,
that FHWA should prioritize industry use cases and applications that
are high value in national security where necessary investments are
made domestically, and that FHWA should allow contracting agencies to
continue to use existing systems and product sources while requiring
them to study and develop a transition plan towards procuring Buy
America-compliant products.
FHWA Response: After reviewing the comments, FHWA concludes that
the best approach is a transition to the final assembly and 55 percent
requirements for Federal-aid projects. FHWA believes that this approach
is similar to the approach discussed in the NPRM, where FHWA proposed
to issue waivers at the same time as it would rescind the Manufactured
Products General Waiver.
While the NPRM indicated that FHWA would issue waivers at the same
time as it issued a final rule, FHWA believes, after analyzing the
comments received, that it is not necessary to issue waivers at this
time. Based on comments received, FHWA recognizes that there are both
domestic manufacturers of products used in Federal-aid projects and
products for which there are no domestic manufacturers at the moment.
For the latter group, FHWA does not believe it necessary to issue
waivers at this time, as FHWA believes doing so will negatively affect
onshoring that would otherwise be incentivized by the promulgation of
this final rule. FHWA believes that by stating that it will impose the
final assembly requirement on October 1, 2025, and the 55 percent
requirement on October 1, 2026, manufacturers will be incentivized to
begin onshoring production.
FHWA does not believe that it is sensible to continue to apply the
Manufactured Products General Waiver but only remove products from its
coverage when it is shown that those products are domestically produced
in sufficient amounts. Under this approach suggested by many
commenters, Buy America requirements would not apply to manufactured
products until a domestic market for those products has emerged. FHWA,
however, does not believe it reasonable to apply Buy America
requirements, which are designed to incentivize domestic production,
only after domestic
[[Page 2941]]
production has been established. In addition, it is unclear if domestic
markets for manufactured products would ever develop in this scenario;
commenters did not provide sufficient evidence that manufacturers would
onshore production if there were no immediate incentive to do so. FHWA
finds it equally likely in such a scenario that the majority of
manufacturers would elect not to onshore and that the Manufactured
Products General Waiver would apply indefinitely for some products.
That is not FHWA's intention; while there may be some manufactured
products that require time-limited, targeted waivers, FHWA believes
that those waivers should be granted when the incentive of Buy America
requirements has failed to function, not when manufacturers have chosen
to continue producing products abroad because FHWA has actively chosen
to weaken that incentive.
FHWA disagrees with commenters that it should only apply the final
assembly and the 55 percent requirement to products when they are shown
to meet them. For the same reasons stated above, FHWA believes that
doing so removes the incentive for manufacturers to comply with the
requirements. FHWA believes that Buy America requirements should apply
to all manufactured products unless it can be shown that the specific
products or categories of products require a waiver based on the
conditions in 23 U.S.C. 313(b).
Transition Period for Requirements
Comments: In the NPRM, FHWA sought comment on whether a transition
period would be needed for its proposed Buy America requirements for
manufactured products. This transition period would provide time
between the publication of the final rule and the date on which the Buy
America requirements for manufactured products would come into effect,
requiring them to be produced in the United States. If commenters
believed such a period was necessary, FHWA requested comment on what
commenters believed the effective date of the proposed Buy America
requirements should be.
A small number of commenters argued that FHWA should not provide
any sort of transition period, and that the proposed Buy America
requirements should be effective immediately when the final rule became
effective. These commenters argued that the Manufactured Products
General Waiver was in effect for over 40 years, so it was necessary to
act expediently to avoid continuing what these commenters viewed as its
negative effects. These commenters also stated that BABA was enacted in
November 2021, so affected parties had time to prepare for the
imposition of Buy America requirements to manufactured products.
Finally, these commenters argued that affected parties had additional
time to prepare for the imposition of Buy America requirements to
manufactured products as DOT and other Federal agencies employed
various phase-in waivers for BABA's requirements.
Other commenters suggested that FHWA provide a transition period
for the imposition of Buy America requirements for all manufactured
products, with commenters presenting various lengths that they believed
were appropriate. Two commenters suggested a period of 180 days, one
commenter suggested a transition period of 6 months, one commenter
suggested a period of 9 months, four commenters suggested a period of 1
year, one commenter suggested a period of 1 year after FHWA puts in
place any product-specific waivers, six commenters suggested a period
of 18 months, one commenter suggested a period of between 18 and 24
months, one commenter suggested a period of 2 years, one commenter
suggested a period of 2 years for Federal awards obligated after the
effective date of the final rule, one commenter suggested a period of
30 months, seven commenters suggested a period of 3 years, one
commenter suggested a period of 38 months, one commenter suggested a
period of 4 years, and two commenters suggested a period of 5
years.\14\ In addition, one commenter suggested that the Manufactured
Product General Waiver should be continued for at least a few more
years and another suggested that FHWA should delay implementation of
any requirements for 3 to 5 years.\15\
---------------------------------------------------------------------------
\14\ In addition, one commenter stated that FHWA should withdraw
its proposed rule and continue its general applicability waiver for
eighteen months and another commenter stated that FHWA should review
the Manufactured Products General Waiver after 5 years. As neither
commenter indicated that FHWA would rescind the Manufactured
Products General Waiver at the end of these time periods, FHWA does
not view these comments as commenting on a proposed transition
period, but rather comments arguing that FHWA should continue the
Manufactured Products General Waiver. FHWA's response to comments
arguing to continue the Manufactured Products General Waiver can be
found in section IV.
\15\ Other commenters stated what they believed the effective
date should be for specific categories of manufactured products.
While useful in providing information on the necessity of waivers
for those specific products, FHWA does not believe it appropriate to
base the effective date of imposing Buy America requirements on all
manufactured products on the effective date for specific products.
---------------------------------------------------------------------------
Commenters gave various reasons for why they believed a transition
period was necessary. These include that DOT imposed a phase-in period
for BABA's construction material requirements; \16\ that other Federal
agencies imposed a phase-in period for BABA's requirements; the time
required for FHWA to formulate, review, and approve any product-
specific waivers, including the time for FHWA to determine which
products used on Federal-aid projects are BABA-compliant and conduct
market research on those that are not; the time required for FHWA to
provide any guidance on the new requirements; the time required for
manufacturers, contractors, and contracting agencies to determine if
the products they manufacture and use are compliant with the new
requirements; the time for manufacturers, contractors, and contracting
agencies to update and modify their current Buy America processes,
including the time to set up systems for compliance, train personnel
and other stakeholders on the new requirements and processes, rewrite
standard specifications, materials lists, and bid documents, and modify
any guidance documents; the time for manufacturers to onshore domestic
production of manufactured products and components, including the time
for manufacturers to exit long-term leases, contracts, and other
obligations manufacturers might have overseas, establish domestic
manufacturing sites and supply chains, redesign products, test and
certify products; the time for manufacturers to produce a sufficient
amount of compliant products to have on hand; the time for project
designers to incorporate the new Buy America requirements into future
projects; the time for affected parties to understand and process how
the new requirements will impact the design, construction, and costs of
future projects; the time for contracting agencies to test and approve
newly designed manufactured products; the time for contracting agencies
and contractors to identify new vendors and adjust any product occurs;
the time for affected parties to consume their stock of existing
manufactured products and retire existing contractual agreements; and
the time for contracting agencies and contractors to stockpile
materials.
---------------------------------------------------------------------------
\16\ See 87 FR 31931 (May 25, 2022), issuing a general waiver of
the BABA requirements for DOT-funded programs for a period of 180
days.
---------------------------------------------------------------------------
FHWA Response: After reviewing the comments received, FHWA believes
that a transition period is necessary for the reasons identified by
commenters to implement the new Buy America requirements, and FHWA thus
disagrees
[[Page 2942]]
with commenters arguing against the imposition of any such period.
While FHWA understands the urgency some commenters feel to rescind the
Manufactured Products General Waiver, FHWA believes it must do so with
consideration of the issues raised by commenters to ensure that
affected parties are ready to apply Buy America requirements to
manufactured products used on Federal-aid projects. Further, FHWA does
not believe that the fact that BABA was enacted in November 2021 and
that other Federal agencies have imposed phase-in waivers for its
requirements justifies not having a transition period for the
imposition of FHWA's Buy America requirements. While BABA was enacted
in November 2021, FHWA has been consistent in stating that, due to
section 70917(a)-(b), BABA's manufactured product requirements do not
apply to Federal-aid projects.\17\ FHWA thus does not believe it
reasonable to now state that contracting agencies, contractors, and
manufacturers should have been preparing for the implementation of Buy
America requirements on manufactured products on Federal-aid projects
because BABA applied a domestic content procurement preference to
manufactured products on projects funded by other agencies.\18\
Similarly, FHWA does not find it reasonable to believe that contracting
agencies, contractors, and manufacturers should have been preparing for
the implementation of Buy America requirements on manufactured products
on Federal-aid projects during transitional waivers granted by other
agencies for other programs.
---------------------------------------------------------------------------
\17\ See <a href="https://www.fhwa.dot.gov/construction/contracts/buyam_qa_baba_pre10232023.cfm">https://www.fhwa.dot.gov/construction/contracts/buyam_qa_baba_pre10232023.cfm</a>.
\18\ FHWA recognizes that there may be entities that produce or
utilize products in some projects that are covered by FHWA's Buy
America statute and in other projects that are covered by BABA or
Buy America requirements applicable to other DOT agencies. Indeed,
FHWA believes that one of the benefits of imposing Buy America
requirements on manufactured products that are similar to the
requirements in BABA is the uniformity provided to contracting
agencies, contractors, and manufacturers. At the same time, FHWA
believes, based on the comments received to the NPRM, that
contracting agencies, contractors, and manufacturers that are
involved in Federal-aid projects have not completely shifted their
processes and production of products used on Federal-aid projects to
be BABA-compliant. Thus, while uniformity may provide some benefits
to certain entities and products in the future, FHWA believes that
there is a current lack of uniformity. In short, FHWA does not
believe that the transition period given for BABA should be thought
of as serving as a transition period for FHWA's Buy America
requirements for manufactured products.
---------------------------------------------------------------------------
In determining the appropriate time to apply the new Buy America
requirements, FHWA carefully reviewed the different periods suggested
and the reasoning behind them. Based on this review, FHWA believes that
it is appropriate to have a longer transition period for the 55 percent
requirement than the final assembly requirement, given that many of the
reasons provided by commenters for why a transition period is needed do
not apply or apply with less force to the imposition of the final
assembly requirement. For instance, determining whether a product is
manufactured in the United States is much simpler and clearer than
determining whether more than 55 percent of its components, by cost,
are produced in the United States. Similarly, FHWA expects the time for
manufacturers to shift production to be compliant with the final
assembly requirement to be much less than the time needed to be
compliant with the 55 percent requirement, which requires shifting
supply chains and component manufacturing to the United States.
Further, FHWA does not believe that a manufacturer's decision to shift
manufacturing products from overseas to the United States will impact
the product itself to the same degree as changing the source of the
product's components; thus, FHWA does not believe that requiring
products to be manufactured in the United States will result in the
same effects to project development that the 55 percent requirement
may.
At the same time, FHWA recognizes that even imposing this final
assembly requirement will require contracting agencies, contractors,
and manufacturers to devote time to modifying their processes to
account for this new requirement. FHWA acknowledges that these parties
may be required to update standard specifications, material lists, and
bid documents; modify guidance documents; and identify new vendors that
can provide products meeting the final assembly requirements. After
considering the range of transition periods suggested by commenters and
the reasoning behind those dates, FHWA believes it appropriate to apply
the final assembly requirement for Federal-aid projects on October 1,
2025. While this is on the lower end of the range of dates suggested by
commenters, FHWA notes that commenters suggested ranges for the
transition periods of both the final assembly and 55 percent
requirements. As FHWA believes that many of the concerns raised by
commenters reflect more heavily concerns with implementing the 55
percent requirement, FHWA believes that a choice on the lower end of
the suggested range is appropriate. Based on the comments received,
FHWA believes that this will provide time for contracting agencies,
contractors, and manufacturers to be prepared for the imposition of the
final assembly requirement with minimal disruption to the construction
of Federal-aid projects. Simultaneously, FHWA believes that this date
will provide an incentive for manufacturers to begin moving final
assembly of manufactured products to the United States.
At the same time, FHWA recognizes that some manufacturers may not
ultimately move final assembly of their products to the United States
and that domestic companies may not emerge that manufacture certain
products in the United States. For that reason, from the effective date
of this rule to October 1, 2025, FHWA will monitor the status of the
domestic market of manufactured products that can comply with the final
assembly requirement. Based on FHWA's analysis, FHWA may choose to
delay the start date for the final assembly requirement by issuing a
temporary waiver of the final assembly requirement for manufactured
products if more time is needed to onshore domestic production;
however, FHWA maintains that it is important for this rulemaking to
send out a clear market signal to begin that process of onshoring, even
if it takes longer than FHWA currently expects. While commenters
suggested a shorter transition period before imposing the final
assembly requirement may be possible, such a shorter period may not
provide FHWA time to properly monitor changes in the market and adjust
accordingly.
FHWA believes that a longer transition period is necessary before
imposing the 55 percent requirement. Based on the range of comments
received on the preferred duration of a transition period, from 6
months to 5 years, FHWA finds it reasonable to begin the 55 percent
requirement for Federal-aid projects on October 1, 2026. At this point,
starting on October 1, 2026, manufactured products permanently
incorporated into Federal-aid projects will need to comply with both
the final assembly and 55 percent requirements. FHWA believes that a
transition period ending on September 30, 2026, for the 55 percent
requirement, which also serves as a transition period for the full
imposition of FHWA's Buy America requirements for manufactured
products, reflects the general middle ground of dates suggested by
commenters. FHWA believes that a shorter transition period may not give
contracting agencies, contractors, and manufacturers time to
[[Page 2943]]
adjust to the new requirements. Conversely, FHWA believes that a longer
transition period may not send the proper market signals to
manufacturers to incentivize them to begin onshoring as soon as they
are able to. FHWA believes that the transition period should reflect
the minimum amount of time for affected parties to ready themselves for
the new requirements. While some parties may desire a longer timeframe,
FHWA believes that transition period through September 30, 2026, before
imposing the 55 percent requirement provides this minimum amount of
time.
FHWA nonetheless will monitor the status of the domestic market and
the progress contracting agencies, contractors, and manufacturers are
making to ready themselves for the imposition of the 55 percent
requirement. FHWA may modify the start date of the 55 percent
requirement based on information received by issuing a temporary, time-
limited waiver of its Buy America requirements for manufactured
products. In addition, prior to imposing the 55 percent requirement,
FHWA intends to continue to perform market research, analyzing the
effects issuance of this final rule has on the domestic market for
manufactured products and listening to affected parties, including any
parties requesting prospective waivers of the 55 percent requirement.
Based on that research and considering the comments to the RFI and any
future RFIs, FHWA may propose targeted waivers covering products that
do not meet the 55 percent requirement prior to those requirements
taking effect.
As discussed in more detail below, the start date for the final
assembly and 55 percent requirements being promulgated in this final
rule means that all Federal-aid projects obligated on or after those
dates are subject to the applicable requirements.
FHWA emphasizes that while the final assembly requirement does not
begin until October 1, 2025, and the 55 percent requirement does not
begin until October 1, 2026, the other regulatory changes in this final
rule become operative for all Federal-aid projects obligated on or
after March 17, 2025. This means that for all Federal-aid projects
obligated on or after March 17, 2025, all iron or steel products, as
defined in Sec. 635.410(c)(1)(iii), must comply with FHWA's Buy
America requirements for steel and iron in Sec. 635.410(b). This also
means that, for all Federal-aid projects obligated on or after March
17, 2025, per Sec. 635.410(c)(2), articles, materials, and supplies
should be classified as an iron or steel product, a manufactured
product, or another product as specified by law or in 2 CFR part 184;
an article, material, or supply must not be considered to fall into
multiple categories. In other words, starting for all Federal-aid
projects obligated on or after March 17, 2025, all iron or steel
products must comply only with Sec. 635.410(b) and all manufactured
products must comply only with Sec. 635.410(c), with the final
assembly and 55 percent requirements taking effect later.
In addition, for Federal-aid projects obligated on or after October
1, 2025, manufactured products must comply with the final assembly
requirement, and for Federal-aid projects obligated on or after October
1, 2026, manufactured products must generally comply with both the
final assembly and 55 percent requirements.
As stated in the NPRM, FHWA does not intend for these new Buy
America requirements to supplant current FHWA waivers that cover
specific manufactured products. See 89 FR 17798. As noted in the NPRM,
FHWA's Buy America requirements for manufactured products are
substantively similar to those in FHWA's Electric Vehicle (EV) Charger
Waiver, which waives FHWA's Buy America requirements to EV chargers
under certain circumstances.\19\ Specifically, the EV Charger Waiver
waives FHWA's Buy America requirements for EV chargers manufactured on
or after March 23, 2023, and before July 1, 2024, if final assembly of
the charger occurs in the United States and installation of the charger
began by October 1, 2024. The EV Charger Waiver further waives FHWA's
Buy America requirements for EV chargers manufactured on or after July
1, 2024, if final assembly of the charger occurs in the United States
and more than 55 percent of the charger's components, by cost, are
manufactured in the United States. For all EV chargers covered by the
waiver, if the charger's housing is predominantly iron or steel, it is
not covered by the EV Charger Waiver and that housing must meet FHWA's
existing Buy America requirements for steel and iron.
---------------------------------------------------------------------------
\19\ Waiver of Buy America Requirements for EV Chargers, 88 FR
10619, February 21, 2023.
---------------------------------------------------------------------------
Presently, EV chargers covered by the EV Charger Waiver should
either have already begun installation or be compliant with both the
final assembly and 55 percent requirements. FHWA does not intend for
its imposition of Buy America requirements to all manufactured products
through this rulemaking to require EV chargers that have already begun
installation to be pulled out of the ground, nor to set less stringent
Buy America requirements on EV chargers than those that already exist
under the EV Charger Waiver. FHWA therefore intends the EV Charger
Waiver to continue to apply to EV chargers procured in FHWA funded
projects, not the requirements and transition period set in this final
rule. FHWA nonetheless notes that, for projects obligated on or after
October 1, 2026, the requirements that apply to EV chargers and those
that apply to other manufactured products will effectively be the same.
In addition, besides manufactured products covered by existing FHWA
waivers, per Sec. 635.410(c)(2)(i) and (ii), precast concrete products
classified as manufactured products using the definition in Sec.
635.410(c)(1)(iv) and ITS and other electronic hardware systems that
are installed in the highway right of way or other real property and
classified as manufactured products using the definition in Sec.
635.410(c)(1)(iv) are subject to requirements on a different timeline
than other manufactured products. For precast concrete products
classified as manufactured products, components of the precast concrete
products that consist wholly or predominantly of iron or steel or a
combination of both, as defined in Sec. 635.410(c)(1)(vi), must
continue to comply with FHWA's existing Buy America requirements for
iron and steel at Sec. 635.410(b) in every Federal-aid project.
Precast concrete products will then have to additionally comply with
the final assembly requirement and the 55 percent requirement for
Federal-aid projects obligated on or after October 1, 2026. This same
timeframe applies to the application of the requirements in Sec.
635.410(c)(2)(ii). The cabinets or other enclosures of ITS and other
electronic hardware systems that are installed in the highway right of
way or other real property and classified as manufactured products per
Sec. 635.410(c)(1)(iv) that consist predominantly of iron or steel or
a combination of both, as defined in Sec. 635.410(c)(1)(vi), must
continue to comply with FHWA's existing Buy America requirements for
iron and steel at Sec. 635.410(b) in all projects. The systems must
then additionally comply with the final assembly requirement for
Federal-aid projects obligated on or after October 1, 2025, and the 55
percent requirement for Federal-aid projects obligated on or after
October 1, 2026.
FHWA discusses the requirements in Sec. 635.410(c)(2)(i) and (ii)
in more detail below. FHWA notes that the specified steel and iron
components of these products should currently be compliant
[[Page 2944]]
with FHWA's existing Buy America requirements for iron and steel if
they are used on Federal-aid. FHWA is therefore continuing its existing
requirements for these products and components without break, and FHWA
is not adding any additional requirements in this respect.
Effect on Projects in Development
Comments: In the NPRM, FHWA sought 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 in project development. FHWA
notes that this is distinct from the question regarding the transition
period for the new Buy America requirements. The issue of the effect of
rescission on projects in development concerns which projects, at the
start of imposition of the final assembly requirement and later the 55
percent requirement, are subject to those requirements based on their
developmental status at the time.
Commenters presented various views regarding what they believed was
the appropriate point in project development to apply the new Buy
America requirements for manufactured products. Some commenters
suggested that the requirements should not apply to projects in the
design stage at the time the requirements become effective; these
commenters argued that doing so would avoid costly redesigns that delay
construction and allow project designers to begin designing projects
knowing which requirements would apply to those projects.
Other commenters argued that the requirements should not apply to
projects that have already gone out for advertisement or already
solicited applications. Such commenters stated that this approach
enables bidders and applicants to estimate project costs more
accurately and prevents those costs from exceeding application
estimates; in addition, these commenters stated that if price is a
factor in award selection, this approach avoids reopening
advertisements and solicitations and delaying awards. Commenters also
stated that this would enable bidders and applicants to evaluate the
domestic availability of manufactured products before responding to
advertisements or solicitations, allowing the project to avoid delays
that might occur if awarded contractors had to search for compliant
products or potentially redesign the project. Commenters presented
similar reasons for why any new requirements should not apply to
projects that have already opened bidding when the new requirements
become effective. One commenter argued that the requirements should not
apply to projects that have been put out to bid or are put to bid
within one year of final agency action, stating that this would allow
contracting agencies to rely on the Manufactured Products General
Waiver for projects already in the developmental process and avoid the
loss of time and money that would occur if they had to be redesigned or
rebid.
Still other commenters argued that any new Buy America requirements
for manufactured products should not apply to projects already
obligated or authorized at the time the requirements become effective;
such commenters stated that this would allow projects to be completed
on time without significant cost changes and allow contracting agencies
to include appropriate language in their contracts.
Various commenters also suggested that the new Buy America
requirements for manufactured products should not apply to projects
already in the procurement phase to prevent unnecessary delays; that
they should not apply to contracts already executed; that they should
not apply to products already purchased prior to the final rule's
effective date; that they should not apply to material procurement
contracts for at least eighteen months after the final rule is issued;
and that they should not apply to products purchased prior to the start
dates of the requirements, provided that they are installed at least
twelve months after delivery as parties may have acquired non-compliant
products with long lead times.
Finally, some commenters argued that any new requirements should
not apply to projects at any stage in the project development process
at the time the new requirements become effective. Commenters favoring
this broad approach stated that it would avoid the loss of time and
money that would occur if projects had to be redesigned or rebid.
FHWA Response: After carefully reviewing the comments received,
FHWA believes that the most appropriate choice is to have the new Buy
America requirements for manufactured products apply to all Federal-aid
projects obligated after the start dates of the requirements.\20\ This
means that Federal-aid projects must comply with the final assembly
requirement if obligated on or after October 1, 2025, and must comply
with both the final assembly and 55 percent requirements if obligated
on or after October 1, 2026. Federal-aid projects that have already
obligated FHWA financial assistance before October 1, 2025, do not need
to comply with the final assembly or 55 percent requirements. FHWA
believes that the point of obligation represents a clear point after
which Federal requirements, including Buy America, apply to a project.
By applying FHWA's requirements at the point of obligation, FHWA also
believes this aligns with the date on which Federal requirements,
including FHWA's requirements, are generally triggered for a project.
This is in contrast to more nebulous points suggested by commenters,
such as the start of project development or design. While FHWA
recognizes that some Federal-aid projects may be currently being
designed based on the existing Manufactured Products General Waiver,
FHWA believes that delaying the start dates of the Buy America
requirements on manufactured products will allow changes to be made to
those projects, if necessary, during the transition period to minimize
disruption.
---------------------------------------------------------------------------
\20\ FHWA discusses comments on projects using alternate
delivery methods below.
---------------------------------------------------------------------------
Similarly, for Federal-aid projects using advance construction
(AC), FHWA believes that the new Buy America requirements for
manufactured products should become effective for Federal-aid projects
where FHWA approves the AC designation by the applicable start
date.\21\ This means that for Federal-aid projects where FHWA approves
the AC designation on or after October 1, 2025, the project must comply
with the final assembly requirement. For Federal-aid projects where
FHWA approves the AC designation on or after October 1, 2026, the
project must comply with the final assembly and 55 percent
requirements. For Federal-aid projects where FHWA approves the AC
designation on or after October 1, 2025, but before October 1, 2026,
the project must comply with the final assembly requirement but does
not need to comply with the 55 percent requirement.
---------------------------------------------------------------------------
\21\ Pursuant to 23 U.S.C. 115, AC allows a State DOT to begin
work and incur costs that can later be reimbursed with Federal
funding after FHWA approves a request to convert the AC from
eligible for funding to an obligation to fund and reimburse.
---------------------------------------------------------------------------
Per 23 U.S.C. 115(a)(2), a project proceeding under AC must
generally be in accordance with all procedures and requirements
applicable to the project. FHWA accordingly believes that, before
requesting AC approval, a State DOT should be aware that the approval
for the project will require the project to proceed in accordance with
the Federal procedures and requirements generally
[[Page 2945]]
applicable to the project, including Buy America requirements for
manufactured products. In addition, FHWA believes that the date of AC
approval represents a clear point that makes clear to all affected
parties which requirements apply to a given project.
Buffer Period for Projects in Development Using Alternate Delivery
Methods
Comments: In the NPRM, FHWA also requested comment on the
appropriate buffer period, if any, for alternate project delivery
methods. These alternative delivery methods are where contracts are
awarded and work is authorized and obligated in phases, such as with
design-build. Under this delivery method, FHWA may, for instance,
obligate funds for the design phase of a project and then later
obligate funds for the construction phase of a project.
Commenters presented various arguments as to when any new Buy
America requirements for manufactured products should take effect for
projects using alternate delivery methods. Some commenters suggested
that the requirements should not apply to the physical construction
phase if FHWA financial assistance is obligated before the effective
date of the new requirements or, similarly, that the requirements
should only apply to new awards issued prior to the design and
development phase. Other commenters relatedly suggested that the
requirements should not apply to projects that have been initiated
before the final rule's effective date, using the earliest obligation
date for any phase of the project to serve as the date of initiation.
Such commenters argued that this would allow projects to continue to
rely on the Manufactured Products General Waiver when the project's
estimates, designs, and scope have been prepared based on that waiver.
Commenters stated that this would also prevent retroactive adjustments
after contractors or consultants have been selected, which could
otherwise cause delays, and avoid requirements from changing when a
project advances from preconstruction to construction. Other commenters
suggested that requirements should not apply to projects that have
issued a Request for Qualifications (RFQ), stating that this would
prevent wasting efforts taken by funding recipients to develop a cost
estimate in advance of issuing the RFQ and ensure that the project is
delivered as initially envisioned. Other commenters suggested that the
new Buy America requirements for manufactured products should not apply
to projects using alternate delivery methods when those projects have
already entered the procurement phase or should be determined at the
contracting officer's discretion.
FHWA Response: FHWA has carefully analyzed the comments regarding
alternate delivery methods. FHWA believes that the new Buy America
requirements for manufactured products should apply to all Federal-aid
projects where a contract providing for both the preconstruction (such
as preliminary design under a design-build contract) and construction
phases is in place, but the construction phase has not been obligated
by the time of this final rule's start dates. In other words, for
Federal-aid projects using alternate delivery methods, if the
construction phase of the project is obligated on or after October 1,
2025, the project must comply with the final assembly requirement, even
if funds have been obligated for preconstruction phases prior to
October 1, 2025. Similarly, if the construction phase for a Federal-aid
project using alternate delivery methods is obligated on or after
October 1, 2026, the project must comply with the final assembly and 55
percent requirements, even if funds have been obligated for
preconstruction phases prior to this date.
While FHWA understands the opinion expressed by commenters to allow
projects that have been obligated funds for preconstruction work to
continue to rely on the Manufactured Products General Waiver if such
obligation occurs prior to this rule's start dates, FHWA believes that
the focus point should be on the obligation of funds for construction.
In addition, FHWA generally believes that the transition period in this
final rule should allow many Federal-aid projects currently in design
to proceed to construction by the time the new requirements become
effective. For Federal-aid projects that do not, the delayed start
dates for the requirements will provide the necessary time for changes
to occur to prepare for the imposition of the new requirements. FHWA
has concerns that allowing Federal-aid projects to be covered by the
Manufactured Products General Waiver if they are in preconstruction
stages when the final assembly and 55 percent requirements become
effective may be used to delay the full application of the new Buy
America requirements for manufactured products, allowing foreign
products to be purchased even when domestic ones are available. FHWA
does not intend to disrupt the progress of projects but also does not
intend to continue to allow the Manufactured Products General Waiver
continue longer than needed; FHWA believes that allowing Federal-aid
projects that have FHWA financial assistance obligated for construction
before the start dates of this final rule provides an appropriate
middle ground.
Compliance
Comments: In the NPRM, FHWA stated that it was not proposing any
required method of compliance to ease the burden that tracking the
origin and cost of components may pose. FHWA requested comment on any
specific provisions that it should consider in easing the
administrative burden in demonstrating compliance with the Buy America
requirements for manufactured products.
Many commenters nonetheless indicated that they desired FHWA to
specifically clarify what constitutes compliance, such as what level of
detail is required to prove compliance and what penalties FHWA could
bring about in cases of noncompliance. These commenters further
suggested that FHWA should clearly state who is responsible for
tracking and providing information on the compliance of manufactured
products. One commenter, however, agreed with FHWA that not prescribing
any specific method of compliance will ease administrative burden.
Commenters desiring FHWA to clarify a specific method of compliance
suggested various possible methods. One commenter suggested that FHWA
should allow recipients of FHWA financial assistance to rely on a fair
inference that a manufactured product meets Buy America requirements,
such as by relying on a certification, absent material evidence to the
contrary. Other suggested that FHWA should clarify that a certification
from a contractor or manufacturer would demonstrate compliance. Some
commenters also suggested that FHWA itself should provide certification
forms. Other commenters went further, suggesting that FHWA should
itself certify manufactured products as compliant or develop a list of
manufactured products that are compliant with its standards. Finally,
some commenters stated that once a product in a product line is
certified as compliant, that certification should cover other products
from that product line for a certain period of time.
FHWA Response: After analyzing the comments received on this topic,
FHWA believes that commenters did not indicate that they desired FHWA
to prescribe a specific form of compliance but rather sought
clarification on what might constitute compliance. While not
[[Page 2946]]
prescribing any form of compliance, FHWA believes that the manufacturer
will be in the best position to certify that a specific product meets
these requirements. FHWA notes, however, that recipients of FHWA
financial assistance are ultimately responsible for compliance with
FHWA's Buy America requirements. FHWA therefore believes that the
recipient is in the best position to determine the best form of any
certification.
Due to the nature of the Buy America requirements for manufactured
products, each product's compliance must be determined individually.
Given that the compliance of products might change, FHWA does not
believe that it is in a position to certify compliance or have a list
of compliant products; a product from one product line may be compliant
at one point and that same product may then become non-compliant later
in a different product line based on choices made by the manufacturer.
Any certification from FHWA would only provide a brief snapshot of a
specific manufactured product, which would be minimally helpful for
other parties seeking to procure similar products. FHWA instead
believes that it is more appropriate for parties to consult with
product manufacturers, who are in the best position to provide current
information on the compliance of their products.
In determining the proper remedy for resolving an after-the-fact
discovery of the incorporation of noncompliant manufactured products,
FHWA intends to follow the same process as it does for determining the
remedy for a discovery of the incorporation of noncompliant iron or
steel. FHWA will review relevant information to determine the
appropriate resolution, which may include removing the noncompliant
products, making the noncompliant products non-participating, or
determining that all project costs are ineligible.\22\
---------------------------------------------------------------------------
\22\ See Q#48 of FHWA's Buy America Q and A for Federal-aid
Program for more information: <a href="https://www.fhwa.dot.gov/construction/contracts/buyam_qageneral.cfm">https://www.fhwa.dot.gov/construction/contracts/buyam_qageneral.cfm</a>.
---------------------------------------------------------------------------
Scope of Buy America Requirements
Comments: In the NPRM, FHWA noted that 23 U.S.C. 313(h) requires
FHWA's Buy America requirements to apply to all contracts that are
eligible for FHWA assistance, regardless of the funding source for the
specific contracts, if any contract within the scope of a finding,
determination, or decision under the National Environmental Policy Act
(NEPA) is funded with amounts made available to carry out title 23,
U.S.C. In the NPRM, FHWA stated that because of this provision, were
FHWA to rescind the Manufactured Products General Waiver and impose Buy
America requirements for manufactured products, those Buy America
requirements 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 so long as one contract
for the project is funded with amounts made available to carry out
title 23, U.S.C.
Commenters expressed confusion over the scope of FHWA's Buy America
requirements under 23 U.S.C. 313(h) versus BABA's domestic content
procurement preferences. For instance, commenters suggested that
certain manufactured products are not used in infrastructure projects
or are not integral to the construction of an infrastructure project
and therefore should not be covered by any Buy America requirements.
Commenters representing utility companies in particular argued that
FHWA's Buy America requirements for manufactured products should not
apply to utility relocations, stating that the utility relocation is
not an infrastructure project, that the utility company does not
receive any Federal funds for the relocation but is only reimbursed for
its costs, and that the involvement of the utility company in the
project is involuntary.
Other commenters, particularly those involved in the electric
vehicle (EV) charging industry, expressed confusion over how 23 U.S.C.
313(h) functions if the NEPA determination is a categorical exclusion
(CE). These commenters suggested that 23 U.S.C. 313(h) would require
them to seek a NEPA determination on a project's scope, even though the
project is an approved CE, to determine the applicability of Buy
America requirements.
FHWA Response: FHWA wishes to clarify that 23 U.S.C. 313(h)
represents a unique Buy America provision that is exclusive to FHWA.
This provision applies to FHWA's Buy America statute, not other
domestic content procurement preferences, such as those in BABA; thus,
FHWA's Buy America requirements will be different from those applied by
other Federal agencies.
Under 23 U.S.C. 313(h), FHWA's Buy America requirements, including
its Buy America requirement for manufactured products, apply not just
to the Federal-aid project itself but also to contracts under the scope
of the applicable NEPA finding, determination, or decision. This means
that a manufactured product does not need to be integral to the
Federal-aid project itself to be subject to FHWA's Buy America
requirements. For instance, with respect to FHWA's existing Buy America
requirements for iron and steel, FHWA has long made clear that 23
U.S.C. 313(h) requires that all utility work eligible for FHWA
financial assistance must meet its Buy America requirements for iron
and steel, even if FHWA does not fund the utility work.\23\ Given that
23 U.S.C. 313(h) applies to manufactured products to the same extent as
it does to iron and steel, FHWA thus believes that it is clear that
these new requirements will similarly apply to all utility work
eligible for FHWA financial assistance. In other words, a manufactured
product must comply with the Buy America requirements if it is
permanently incorporated into the Federal-aid project or if it is
permanently incorporated as part of work done under a contract within
the scope of the applicable NEPA finding, determination, or decision of
a Federal-aid project and is eligible for FHWA financial assistance.
FHWA discusses the issue of permanent incorporation in more detail
below when discussing the introductory text to Sec. 635.410(c).
---------------------------------------------------------------------------
\23\ <a href="https://www.fhwa.dot.gov/utilities/buyam.cfm">https://www.fhwa.dot.gov/utilities/buyam.cfm</a>.
---------------------------------------------------------------------------
With respect to commenters raising concerns about the applicability
of CEs to 23 U.S.C. 313(h), FHWA notes that a CE is a form of a NEPA
finding, determination, or decision. FHWA would not require or believe
it necessary for a party to seek a further NEPA determination after
obtaining an approved CE solely for the purpose of determining the
extent of Buy America requirements under 23 U.S.C. 313(h). The CE
itself would dictate the scope; all contracts eligible for FHWA
financial assistance under the scope of the CE would need to comply
with FHWA's Buy America requirements if one such contract received
Federal-aid funding.
V. Section-by-Section Discussion
Section 635.410(b)--Recipient
Comments: FHWA proposed to remove the word ``State'' in existing
Sec. 635.410(b)(2) and (3) and (d) and replace it with the word
``recipient.'' FHWA also proposed to use the word ``recipient''
throughout Sec. 635.410(c). One commenter requested that FHWA provide
a definition of the word ``recipient,'' stating that it was unclear
whether this term referred to the contracting agency, contractor,
manufacturer, or a combination of such entities.
[[Page 2947]]
FHWA Response: For the purpose of the final rule, the word
``recipient'' in Sec. 635.410(b), which discusses FHWA's Buy America
requirements for iron and steel, refers to the recipient of FHWA
financial assistance. The change to ``recipient'' in Sec. 635.410(b)
and (d) from ``State'' is simply meant to reflect that rather than
providing funds to States, FHWA also provides discretionary grant funds
directly to other entities, such as local governments and metropolitan
planning organizations. In addition, FHWA notes that its current Buy
America requirements apply to Territorial governments, who receive
funding from FHWA through the Territorial Highway Program under 23
U.S.C. 165(c). The definition of ``State'' for purposes of Sec.
635.410 does not include such Territories, even though such Territories
are subject to the same Buy America requirements as States. See 23 CFR
635.403(f); 23 U.S.C. 101(a)(28). In making this change, FHWA does not
intend to change the existing practice as it currently applies to
States.
Section 635.410(b)--Iron or Steel Products
Comments: FHWA proposed to maintain its existing Buy America
requirements for steel and iron found in Sec. 635.410(b), with the
only change being replacing references to ``steel and iron materials''
and ``steel or iron materials'' with the phrase ``iron or steel
products.'' FHWA further proposed to define ``iron or steel products''
in Sec. 635.410(c)(1)(iii). This change was meant to create a
distinction between the category of iron and steel materials and
manufactured products that may contain iron and steel. FHWA discusses
the effect of this change in further detail when discussing Sec.
635.410(c)(2) below.
With respect to the requirements in Sec. 635.410(b), FHWA received
several comments on Sec. 635.410(b)(4), which allows for a de minimis
amount of foreign iron and steel to be used in Federal-aid projects.
Under this provision, foreign iron and steel can be used in a Buy
America-compliant project if the cost of such materials does not exceed
0.1 percent of the total contract cost or $2,500, whichever is greater.
Commenters expressed confusion over how this de minimis provision would
apply to manufactured products and how it is connected with the
departmental de minimis waiver. Other commenters suggested changes to
the de minimis provision in Sec. 635.410(b)(4), such as by setting a
total contract cost above the current $2,500 figure. Other commenters
argued that FHWA should codify the departmental de minimis waiver in
the regulatory text, similar to how the de minimis provision is
currently codified at Sec. 635.410(b)(4).
In addition, one commenter stated that the proposed language in
Sec. 635.410(b)(1)(ii), that all manufacturing processes for iron or
steel products must occur in the United States, could suggest that all
manufacturing processes for components of the products that are not
made of iron or steel must be domestically produced. This commenter
suggested modifying the language to state that ``if iron or steel
products are to be used, all manufacturing processes of the iron or
steel components, including application of a coating, for these
materials must occur in the United States.''
FHWA Response: FHWA is clarifying that Sec. 635.410(b)(4) only
applies to iron or steel products; it does not apply to materials
properly classified as manufactured products under Sec.
635.410(c)(1)(iv). The de minimis provision applicable to manufactured
products is found in the departmental de minimis waiver. Other comments
discussing changes to existing Sec. 635.410(b)(4) or codifying the
departmental de minimis waiver in Sec. 635.410 are beyond the scope of
this rulemaking.
With respect to changes made to Sec. 635.410(b)(1)(ii), FHWA notes
that the current language states that all manufacturing processes for
steel or iron materials must occur in the United States. FHWA does not
intend for its change in language, from ``steel or iron materials'' to
``iron or steel products'' to change the scope of the requirements in
Sec. 635.410(b)(1)(ii) with respect to the category of iron or steel
products. The intent is for FHWA's current Buy America steel and iron
requirements, codified in Sec. 635.410(b), to continue to apply to all
steel and iron in a product classified as an iron or steel product. The
only functional change FHWA is making in Sec. 635.410(b)(1)(ii) is to
distinguish between iron or steel products and manufactured products
that contain iron and steel. FHWA also notes that the language used in
Sec. 635.410(b)(1)(ii) substantially mirrors the language used in 2
CFR 184.3 to determine when an iron or steel product is manufactured in
the United States.
Existing Sec. 635.410(c)
Comments: In the NPRM, FHWA proposed to replace the current Sec.
635.410(c), which discusses the process for requesting Buy America
waivers and the procedures FHWA will take to respond to that request,
with a new paragraph detailing FHWA's Buy America requirements for
manufactured products.
FHWA received multiple comments expressing concern with removing
existing Sec. 635.410(c). Commenters stated their reservations with
this approach, arguing that it appeared FHWA was removing the ability
for recipients of FHWA financial assistance to request Buy America
waivers. These commenters also indicated that FHWA should codify its
waiver process in its Buy America regulation, similar to how it is done
by OMB in 2 CFR 184.7. Other commenters also expressed dissatisfaction
with FHWA's current Buy America waiver process and suggested what they
viewed as potential solutions.
FHWA Response: FHWA did not intend for removing current Sec.
635.410(c) to remove the ability for recipients of FHWA financial
assistance to request Buy America waivers. The authority for recipients
to request waivers is found in 23 U.S.C. 313(b), and FHWA is not
altering, nor could it alter, that ability through this rule. As stated
in the NPRM, FHWA made the choice to remove existing Sec. 635.410(c)
because the current provision is out of date and does not reflect
FHWA's current statutory requirements regarding waivers, FHWA's current
organizational structure, or FHWA's current procedure for processing
waivers. FHWA believes that recipients of FHWA financial assistance
understand the current Buy America waiver process and therefore does
not believe that codifying this process is necessary.
FHWA also notes that comments on modifying its current waiver
process are out of the scope of this rulemaking.
Section 635.410(c)--Introductory Text
Comments: In Sec. 635.410(c), FHWA proposed to state that
manufactured products used and permanently incorporated in Federal-aid
highway construction projects must be produced in the United States.
Commenters, particularly those representing the utility industry,
questioned what it meant for a manufactured product to be permanently
incorporated into a Federal-aid project. These commenters argued that
utility infrastructure that is being relocated, replaced, or modified
does not become a permanent part of the Federal-aid project because it
is being relocated, replaced, or modified only to accommodate project
construction. Other commenters also suggested that FHWA should clarify
that its Buy America requirements do not apply to existing in-use
equipment.
[[Page 2948]]
FHWA Response: FHWA chose the language used in Sec. 635.410(c) for
FHWA's Buy America requirements for manufactured products to align with
the language currently in Sec. 635.410(b)(1)(i) regarding FHWA's Buy
America requirements for steel and iron. FHWA intends for the standard
for permanent incorporation of manufactured products to be the same as
FHWA currently uses to determine whether steel and iron is permanently
incorporated. In other words, FHWA would apply its Buy America
requirements to iron, steel, and manufactured products permanently
incorporated into Federal-aid projects. The requirements do not apply
to steel, iron, or manufactured products used on a temporary basis on
Federal-aid projects, meaning when contract specifications provide that
the iron, steel, and manufactured products used on the project either
must be removed at the end of the project or may be removed at the
contractor's convenience. FHWA believes that continuation of this
current policy, along with the discussion of 23 U.S.C. 313(h) above,
should provide the necessary guidance on whether the relocation,
replacement, or modification of utilities constitutes permanent
incorporation of the products. In short, any contract or agreement
involving utility work that uses any amount of Federal-aid Highway
Program funding must comply with FHWA's Buy America requirements,
including the new requirement for manufactured products.\24\
---------------------------------------------------------------------------
\24\ See <a href="https://www.fhwa.dot.gov/utilities/buyam.cfm">https://www.fhwa.dot.gov/utilities/buyam.cfm</a> for more
information on the application of Buy America requirements to
utility work on projects.
---------------------------------------------------------------------------
In terms of applicability of the Buy America requirements to
manufactured products to existing in-use equipment, FHWA also notes
that the final assembly requirement will apply to all Federal-aid
projects obligated on or after October 1, 2025, and the 55 percent
requirement will apply to all Federal-aid projects obligated on or
after October 1, 2026. Where FHWA's Buy America requirements for
manufactured products apply, all permanently incorporated manufactured
products must be produced in the United States.
Section 635.410(c)(1)(ii)--Excluded Materials
Comments: In the NPRM, FHWA defined ``excluded materials'' as
``section 70917(c) materials as defined in 2 CFR 184.3.'' Under 2 CFR
184.3, ``section 70917(c) materials'' are defined as ``cement and
cementitious materials; aggregates such as stone, sand, or gravel; or
aggregate binding agents or additives.'' Commenters suggested that FHWA
should, instead of cross-referencing to 2 CFR 184.3, provide a
definition of the terms ``aggregates,'' ``aggregate binding agents,''
and ``additives'' in the regulatory text of Sec. 635.410.
FHWA Response: As noted in the NPRM, section 70917(c) of BABA does
not explicitly comment on whether excluded materials could be
considered manufactured products. By providing a definition of excluded
materials and then stating in the definition of manufactured products
that excluded materials cannot be manufactured products, FHWA seeks to
make clear, in alignment with 2 CFR part 184, that excluded materials
are not, standing alone, manufactured products. As stated in more
detail below when discussing Sec. 635.410(c)(1)(iv), FHWA believes
that excluded materials may nonetheless constitute components of
manufactured products when combined with other materials, including
other excluded materials, to create a manufactured product. In other
words, excluded materials may be standalone materials, and this not
subject to FHWA's Buy America requirements for manufactured products,
or components of manufactured products, and thus the manufactured
product would be subject to the final assembly and 55 percent
requirement. For manufactured products containing excluded materials as
components, the excluded material must be considered in determining
whether the manufactured product has more than 55 percent of its
components, by cost, produced in the United States.
In terms of determining whether an excluded material is itself not
a manufactured product, FHWA views an aggregate as a broad category of
particulate matter, such as stone, sand, or gravel. FHWA views
aggregate binding agents as materials used to bind together small
aggregates, and FHWA views additives as materials added to other
materials to improve their properties. FHWA, however, does not believe
that a definition more specific than this is necessary for the purpose
of this rulemaking; FHWA doubts that aggregates, aggregate binding
agents, or additives will generally be considered standalone
manufactured products. If such outlier cases occur, FHWA believes they
are more appropriately dealt with on a case-by-case basis or through
the issuance of future guidance.
Section 635.410(c)(1)(iii), (vi)--Iron or Steel Products
Comments: In the NPRM, FHWA defined ``iron or steel products'' as
articles, materials, or supplies that consist wholly or predominantly
of iron or steel or a combination of both. FHWA further defined
``predominantly of iron or steel or a combination of both'' as a
material where the cost of the iron and steel content exceeds 50
percent of the total cost of all its components. Both of these
definitions mirror the definitions of the terms in 2 CFR part 184.
Commenters raised concerns regarding the difficulty in evaluating
the steel and iron content of products to determine whether those
products would be considered manufactured products, and subject to the
new Buy America requirements for manufactured products, or iron or
steel products, and subject to the existing Buy America requirements
for iron and steel. These commenters suggested that it may be difficult
for recipients of FHWA financial assistance to determine the cost of
the iron and steel content of a product. One commenter suggested that
FHWA allow recipients to use another metric, such as weight percentage,
to determine how to classify a product, arguing that determining the
weight of iron and steel in a product is easier to determine than the
cost of the iron and steel.
FHWA Response: FHWA believes that adopting a definition that
distinguishes between iron or steel products and manufactured products
that contain iron or steel is important to allow contracting agencies,
contractors, and manufacturers to understand which requirements apply
to a given material. FHWA acknowledges that recipients of FHWA
financial assistance may need to consult with manufacturers to
determine the cost of a product's iron or steel content. FHWA, however,
believes that using the standard proposed, which is the standard under
BABA and 2 CFR part 184, provides a single standard that applies to
iron or steel products across Federal agencies; this is important to
provide certainty to contracting agencies, contractors, and
manufacturers regarding the requirements that apply to a given material
no matter the Federal agency that is funding the procurement of the
material.
Section 635.410(c)(1)(iv)--Distinguishing Manufactured Products From
Other Materials
Comments: In the NPRM, FHWA proposed to define a manufactured
product as an article, material, or supply that has 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
[[Page 2949]]
supplies. FHWA noted, however, that 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, it should not be classified as a
manufactured product.
Commenters expressed confusion about what materials should be
classified as manufactured products, with one commenter requesting FHWA
to clarify whether FHWA's definition meant that a manufactured product
included all permanent materials or products incorporated into a
project outside of the categories specifically listed in the
definition. Other commenters requested for FHWA to specifically state
that certain materials are not manufactured products and therefore not
subject to FHWA's Buy America requirements. One commenter requested
clarity on the meaning of FHWA's statement in the preamble to the NPRM
that ``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'' and that ``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.''
Other commenters requested that FHWA provide clarity on
distinguishing between manufactured products and construction
materials. Certain commenters requested that FHWA specifically classify
specific products as either a manufactured product or a construction
material. Commenters in particular raised concerns over how to classify
construction materials that have articles, materials, supplies, or
binding agents added to them, as the definition of ``construction
material'' in 2 CFR 184.3 states that minor additions of articles,
materials, supplies, or binding agents to a construction material do
not change the categorization of the combined material as a
construction material. Such commenters requested that FHWA define when
a construction material has minor additions and should be classified as
a construction material versus when a construction material has non-
minor additions and should be classified as a manufactured product. One
commenter requested that FHWA provide a list of manufactured products
that include construction materials that have undergone non-minor
additions for this purpose. Other commenters requested that FHWA
clearly state that a product that is a combination of two construction
materials should be classified as a manufactured product, not a
construction material.
FHWA Response: The definition of ``manufactured product'' has two
steps. First, to be a manufactured product, the material must either
(1) be processed into a specific form and shape; or (2) combined with
other articles, materials, or supplies to create a product with
different properties than the individual articles, materials, or
supplies. Like OMB, FHWA finds it necessary to have a positive
definition for what constitutes a ``manufactured product.'' For
example, FHWA would not classify a raw material as a manufactured
product because it is not manufactured under FHWA's meaning of the
term. Raw materials are not (1) processed into a specific form and
shape; or (2) combined with other articles, materials, or supplies to
create a product with different properties than the individual
articles, materials, or supplies.
In terms of determining whether a material is processed into a
specific form and shape, FHWA wishes to make clear that some materials,
like raw materials, are not processed into a specific form and shape.
Alternatively, some products may exist in such a minimally processed
state that they should not be considered ``processed into a specific
form and shape,'' such as topsoil, which should not be considered a
manufactured product.
For the purpose of determining whether a material is combined with
other articles, materials, or supplies to create a product with
different properties than the individual articles, materials, or
supplies, FHWA clarifies that some materials may be combined with other
materials but produce a product that lacks different properties than
the individual materials. For example, a mixture of raw materials in an
unprocessed or minimally processed state, such as minimally processed
fill dirt, should not be classified as a manufactured product because
the fill dirt does not have different properties than its individual
components.
In short, some materials may not be classified as a manufactured
product under this first step. A material properly classified as a
manufactured product under this first step is then analyzed under the
second step of the definition. Under this second step, a material is
excluded from classification as a manufactured product if it could also
be classified as an iron or steel product, an excluded material, or
other product category as specified by law or in 2 CFR part 184. Except
for a specific subset of products discussed in Sec. 635.410(c)(2)(i)
and (ii), below, FHWA intends for materials to be classified as only
one category of material and, based on that classification, only
subject to one set of requirements, as applicable to the
classification.
FHWA recognizes that without this second step, certain materials
could be viewed as both manufactured products under the first step and
as another category, which would make it unclear what requirements
applied to that material. For instance, a material could be considered
a manufactured product under the first step of the definition but also
contain such a high amount of iron and steel to be considered an iron
or steel product, such as might be the case for some vehicles. This
second step makes clear that such a material is properly classified as
an iron or steel product and subject to FHWA's Buy America requirements
for iron and steel under Sec. 635.410(b), not FHWA's Buy America
requirements for manufactured products under Sec. 635.410(c).\25\
Similarly, a material that falls under the definition of an excluded
material could also be considered a manufactured product under the
first step of the definition of ``manufactured product,'' such as
cement. Again, in such a case, such a material would be properly
classified as an excluded material, not a manufactured product. As
excluded materials are not subject to any Buy America requirements
standing alone, such a material would not have any domestic content
procurement preference placed on it. To use another example, certain
materials classified as construction materials under 2 CFR 184.3 could
also be considered a manufactured product under the first step of the
definition of ``manufactured product,'' such as fiber optic cable. Once
more, such a material is properly classified as a construction material
and is subject to BABA's construction material requirements under 2 CFR
part 184, not FHWA's Buy America requirements for manufactured
products.
---------------------------------------------------------------------------
\25\ This rule applies generally to manufactured products. FHWA
discusses the specific exceptions to it below when discussing Sec.
635.410(c)(2)(i) and (ii).
---------------------------------------------------------------------------
FHWA acknowledges that, to determine whether a material should be
classified as a construction material or manufactured product during
this step two, parties need to understand the definition of what
constitutes a construction material in 2 CFR 184.3. Per 2 CFR 184.3, a
construction material is an article, material, or supply that consists
of only one of the following
[[Page 2950]]
eight items: non-ferrous metals; plastic and polymer-based products
(including polyvinylchloride, composite building materials, and
polymers used in fiber optic cables); glass (including optic glass);
fiber optic cable (including drop cable); optical fiber; lumber;
engineered wood; or drywall. In addition, these eight materials may
have minor additions of articles, materials, supplies, or binding
agents added to them and remain properly categorized as a construction
material. In discussing minor additions in 2 CFR part 184, OMB did not
provide a specific definition but instead stated that ``Federal
agencies should exercise reasonable discretion in applying this term
within their respective Federal financial assistance programs for
infrastructure.'' 88 FR 57767. FHWA does not believe that this
rulemaking, which concerns FHWA's requirements for manufactured
products under 23 U.S.C. 313, is the proper place to define what
constitutes non-minor additions for the purpose of determining whether
a material should be considered a construction material; if necessary,
FHWA would instead seek to do so through additional guidance.
FHWA notes that a material properly classified as a manufactured
product under this two-step definition may include components that, on
their own, would be categorized as iron or steel products, excluded
materials, construction materials, or other categories of products.
FHWA emphasizes that it is the classification of the material itself
that determines whether it is a manufactured product versus an iron or
steel product, excluded material, or construction material. For
example, a traffic light may contain iron and steel components and
glass, a construction material, as a component. In determining how to
classify the traffic light, the first step is to determine whether the
traffic light is 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. The second step is to determine whether the traffic light
itself should be classified as an iron or steel product, excluded
material, or other product category as specified by law or in 2 CFR
part 184. The fact that components of the traffic light might be iron
or steel products or construction materials may be relevant to
determining the proper classification of the traffic light; for
example, if the iron or steel components represent more than 50 percent
of the cost of all the traffic light's components, the traffic light
should be classified as an iron or steel product. It is important to
note, however, that merely containing such iron or steel components and
construction materials as components does not mean that the traffic
light is automatically classified as an iron or steel product or a
construction material. This determination must be made by looking at
the specific definition applicable to each category of material.
If a material meets the definition of a manufactured product under
the first step and is not excluded under the second step, it is
properly classified as a manufactured product, unless it is a mixture
of excluded materials delivered to a work site without final form for
incorporation into a project, as discussed below in the analysis of
Sec. 635.410(c)(1)(iv). FHWA reiterates, however, that a material
properly classified as a manufactured product is only subject to FHWA's
Buy America requirements for manufactured products if the material is
permanently incorporated into a Federal-aid project.
FHWA believes that this guidance should allow contracting agencies,
contractors, and manufacturers to properly determine the proper
classification of articles, materials, and supplies.
Section 635.410(c)(1)(iv)--Excluded Materials
Comments: Under FHWA's definition of a manufactured product,
discussed in detail above, an excluded material, by itself, should not
be classified as a manufactured product. FHWA stated in the NPRM,
however, in alignment with 2 CFR part 184, that excluded materials may
constitute a component of a manufactured product when combined with
other materials, including other excluded materials. If a manufactured
product contains components that are excluded materials, those excluded
materials must be considered in determining whether 55 percent of the
product's components, by cost, are produced in the United States. FHWA
once again, notes, however, that mixtures of excluded materials
delivered to a work site without final form for incorporation into a
project are not considered manufactured products; comments on this
topic are discussed in detail below.
Some commenters expressed opposition to having a combination of
excluded materials be classified as a manufactured product. Others
expressed opposition to applying a Buy America requirement to excluded
materials in any form. One commenter requested that FHWA should make it
clear in the final rule that excluded materials do not have a Buy
America requirement placed on them.
FHWA Response: FHWA clarifies that, consistent with 2 CFR part 184,
an individual item listed in section 70917(c) of BABA that is brought
to the work site for permanent incorporation into a Federal-aid project
should be classified as an excluded material and not subject to a Buy
America requirement. For example, cement brought to the work site for
permanent incorporation into a Federal-aid project is not subject to
FHWA's Buy America requirements. If the individual excluded material is
combined with another excluded material, such as cement combined with
aggregates, that combined material should be considered to be a
manufactured product, assuming that it means the definition of a
manufactured product in Sec. 635.410(c)(1)(iv). In this case, each
excluded material (the cement and aggregates) is a component of the
manufactured product and must be considered when determining whether 55
percent of the components, by cost, of the product are produced in the
United States. On the other hand, an excluded material combined with
the same excluded material would remain an excluded material and not be
subject to FHWA's Buy America requirements. In short, a Buy America
preference may apply to excluded materials as a component of a
manufactured product; it cannot apply to an excluded material standing
alone.
FHWA agrees with OMB that the language in section 70917(c) of BABA
indicates that Congress did not intend for excluded materials to be
considered construction materials and did not intend excluded
materials, standing alone, to be classified as manufactured products.
See 88 FR 57771-73. In addition, FHWA agrees with OMB that section
70917(c) does not prevent excluded materials from being components of
manufactured products and considered the same as any other component of
a manufactured product. See id. at 57772. FHWA further believes that it
is useful to align the treatment of excluded materials under FHWA's Buy
America requirements with the requirements of these materials under 2
CFR part 184 where appropriate. FHWA believes that this promotes
uniformity for contracting agencies, contractors, and manufacturers
operating between different Federal Agency programs and will allow for
these entities to build up a greater amount of experience with these
requirements.
[[Page 2951]]
Section 635.410(c)(1)(iv)--Reference to Construction Materials
Comments: In the definition of manufactured product, FHWA stated
that: ``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.'' Many
commenters suggested that FHWA should remove the reference to ``other
product category as specified . . . in 2 CFR part 184'' and instead
just list the specific construction materials referenced in 2 CFR part
184.
FHWA Response: Pursuant to section 70915(b) of BABA, OMB is given
the authority to determine which construction materials are covered by
BABA's requirements and to define the manufacturing processes that must
occur in the United States for those construction materials. As stated
above, except for specific products, described in more detail in the
discussion of Sec. 635.410(c)(2)(i) and (ii), below, FHWA believes
that materials should be classified as only one category of material
and, based on that classification, be subject to only one set of
requirements, as applicable to the classification. The purpose of
referring to ``other product category as specified by law or in 2 CFR
part 184'' is to make clear that products that could be classified as
both another category and a manufactured product should not be
considered manufactured products and are not subject to FHWA's Buy
America requirements for manufactured products. Thus, items classified
as construction materials by OMB are not properly classified as
manufactured products and are not subject to FHWA's Buy America
requirements for manufactured products. Given that OMB has the
authority to define construction materials and thereby impose BABA's
construction material requirements on them, FHWA does not find it
appropriate to separately list construction materials in its own
regulation.
Section 635.410(c)(1)(iv)--Mixtures of Concrete or Asphalt Delivered to
a Job Site Without Final Form
Comments: In the definition of manufactured products in the NPRM,
FHWA stated that ``[m]ixtures of concrete or asphalt delivered to a job
site without final form for incorporation into a project are not a
manufactured product.'' Many commenters stated that FHWA should clarify
that this exception should apply to all mixtures of excluded materials,
not just mixtures of concrete or asphalt. Other commenters suggested
that FHWA should reference a ``work site'' instead of a ``job site,''
given that Sec. 635.410(c)(2) stated that classification of a material
should occur based on its status at the time it is brought to the work
site for incorporation into an infrastructure project. Still other
commenters disagreed, stating that FHWA should clarify that the
exemption should apply to mixtures delivered to or proximate to a work
site. Finally, some commenters opposed treating mixtures of concrete or
asphalt without final form from those that are in a settled form,
contesting that there is no reason to treat the two differently.
FHWA Response: In the preamble to 2 CFR part 184, OMB stated: ``In
the case of section 70917(c) materials, OMB clarifies . . . to the
extent that section 70917(c) materials were only combined as an
unsettled mixture without final form when reaching the work site, such
as in the case of wet concrete or hot mix asphalt, the unsettled
mixture should not be considered a manufactured product.'' 88 FR 57772.
In the NPRM, FHWA stated its agreement with OMB on this topic and that
FHWA intended for its proposed regulations to have the same reach as 2
CFR part 184 in this respect.
FHWA disagrees with commenters suggesting that settled mixtures of
excluded materials should not be considered manufactured products like
FHWA proposed for unsettled mixtures of excluded materials. FHWA agrees
with OMB that unsettled mixtures are not processed into a specific
shape or form like settled mixtures. Id. While settled mixtures may
have different properties than individual excluded materials, FHWA
agrees with OMB that it is more appropriate to only treat excluded
materials that have set or dried into a particular shape or form prior
to reaching the work site as manufactured products. FHWA also notes
that aligning its Buy America requirements with the BABA requirements
in 2 CFR part 184 will promote uniformity and allow contracting
agencies, contractors, and manufacturers that work with different
Federal agencies a greater ability to increase their knowledge of how
these requirements work.
FHWA does agree with commenters that the language in the final rule
should better reflect the intent of OMB. For this reason, FHWA believes
it appropriate to modify its regulatory text to make clear that this
exception applies to all mixtures of excluded materials without final
form. FHWA also agrees that it is appropriate to reference a ``work
site'' instead of a ``job site,'' given that is the language used by
OMB and the language included in Sec. 635.410(c)(2). FHWA intends the
use of ``work site'' in Sec. 635.410(c)(1)(iv) to mirror the use of
``work site'' in Sec. 635.410(c)(2). Thus, the work site is generally
the location of the infrastructure project at which the mixture will be
incorporated; however, there may be circumstances where it is more
appropriate for the work site to be considered to be broader than the
location of the infrastructure project. As the definition of the work
site will depend on the specific project and material being delivered,
FHWA does not believe it necessary to state that the mixtures can be
delivered proximate to a work site.
Section 635.410(c)(1)(vii)--Produced in the United States
Comments: In the NPRM, FHWA defined when a manufactured product was
``produced in the United States'' and thereby when a manufactured
product would be compliant with FHWA's Buy America requirements. FHWA
proposed to adopt the definition of ``produced in the United States''
found in section 70912(6)(B) of BABA, which would require a
manufactured product be manufactured in the United States and the cost
of components of the manufactured 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. FHWA stated
in the NPRM that it believed it was required by BABA to adopt general
standards that meet or exceed those under BABA. Further, FHWA stated in
the NPRM that it was proposing to choose requirements similar to BABA's
manufactured product requirements to minimize the burden placed on
contracting agencies, contractors, and manufacturers. FHWA also stated
that aligning its Buy America requirements for manufactured products
with those applicable to manufactured products under BABA would provide
consistency between the two regimes.
Some commenters noted the benefit of aligning FHWA's Buy America
requirements for manufactured products with BABA's domestic content
procurement preference for manufactured products, with one manufacturer
stating that similar standards would enable it to use the same
compliant products in projects subject to BABA and FHWA's Buy America
statute. Other commenters suggested various other methods for FHWA to
determine when a manufactured product is ``produced in the United
States.'' One commenter stated that the requirements should vary based
on product or product type.
[[Page 2952]]
Others suggested that FHWA should allow products to be sourced from
countries for which the United States has trade agreements. One
commenter argued that FHWA should remove the 55 percent requirement
altogether.
Other commenters sought clarification over how to determine whether
a manufactured product was produced in the United States under FHWA's
proposed standards. Commenters questioned how to determine when a
product was manufactured in the United States for the purpose of the
final assembly requirement. Commenters also sought clarification on how
to determine if a component was mined, produced, or manufactured in the
United States for the purpose of meeting the 55 percent requirement.
FHWA Response: FHWA believes its Buy America requirements for
manufactured products must meet or exceed those under BABA pursuant to
section 70917(a) and (b) of BABA, that choosing requirements meeting
BABA's is the minimally burdensome option, and that doing so allows for
the benefit of consistency between projects subject to FHWA's Buy
America requirements and those subject to BABA.
With respect to what it means for a product to be manufactured in
the United States, and what it means for a component to be mined,
produced, or manufactured in the United States, FHWA intends for the
requirements to reflect the same principles found in BABA and the
Federal Acquisition Regulation (FAR). FHWA intends to issue further
guidance on these topics in the future. FHWA notes, however, that the
manufactured and 55 percent requirements apply to the manufactured
product itself, not the components of a manufactured product. For
example, a component of a manufactured product does not need more than
55 percent of its components--the subcomponents of the manufactured
product -by cost, to be mined, produced, or manufactured in the United
States.
Section 635.410(c)(2)--Buy America Requirements for Iron and Steel
Comments: In the NPRM, FHWA proposed for an article, material, or
supply to 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. FHWA further proposed that an iron or steel product must meet
FHWA's existing Buy America requirements for iron and steel in Sec.
635.410(b). Finally, FHWA proposed that, except as otherwise provided
in Sec. 635.410(c)(2)(i) and (ii), an article, material, or supply
should not be considered to fall into multiple categories.
Several commenters expressed confusion about what it meant for a
material to meet the requirements of Sec. 635.410(b). Others expressed
confusion over whether the rule would require that predominantly iron
and steel components of manufactured products be compliant with Sec.
635.410(b).
Commenters representing the iron and steel industry expressed
opposition to not requiring predominantly iron or steel components of
manufactured products to be subject to FHWA's Buy America requirements
for iron and steel. These commenters stated that this would be contrary
to longstanding FHWA practice. They further stated their belief that
not requiring predominantly iron or steel components of manufactured
products to meet FHWA's Buy America requirements for steel and iron
would be in conflict with BABA's savings provision, arguing that,
pursuant to the savings provision in section 70917(a) and (b) of BABA,
BABA cannot be used to modify an agency's existing requirements that
meet or exceed BABA's. These commenters argued that BABA's savings
provision does not merely allow FHWA to preserve its existing Buy
America policies but explicitly preserves such policies. Commenters
also argued that they believed changing Buy America policies is in
conflict with BABA's intent to expand the application of Buy America
requirements.
Commenters further argued that legislative history demonstrates
that Congress intended the 1982 STAA to cover all steel products,
including steel components of manufactured products. Commenters also
pointed to a statement in the Federal Register notice where FHWA
instituted the Manufactured Products General Waiver which they believed
indicated that FHWA acknowledged Congress' intent in expanding Buy
America coverage to include all steel products. At the time, FHWA
stated: ``Congressional concern that Federal money spent to improve
highways should also aid U.S. industry is apparent in the first
sentence of Section 165, which requires the Secretary of Transportation
to ensure that funds authorized for Federal-aid highway projects would
only buy U.S.-made steel. The FHWA therefore has expended the Buy
America rule to include all steel products.'' See 48 FR 53102. Finally,
commenters opposed to FHWA changing current policy argued that doing so
would harm the domestic steel and iron industry and would allow foreign
steel and iron to be used, which they stated was unfairly traded and
higher-emitting.
Other commenters, however, argued for removing the policy of
applying FHWA's Buy America requirements to predominantly iron and
steel to iron and steel components of manufactured products. These
commenters stated that the current policy is creating a burden on
contracting agencies, contractors, and manufacturers, as well as
marketplace confusion as FHWA's policy does not apply to projects
subject to BABA. One commenter stated that the history of iron and
steel of components is not generally tracked, making compliance with
the current policy difficult.
FHWA Response: FHWA does not intend for its Buy America
requirements on manufactured products to substantially modify its
existing Buy America requirements for iron and steel, codified at Sec.
635.410(b). For manufactured products containing sufficient amounts of
iron and steel, by cost, to be classified as ``iron or steel products''
under the definition in Sec. 635.410(c)(1)(iii), FHWA believes that
those products are properly subject to FHWA's existing Buy America
requirements for iron and steel. Accordingly, FHWA is making clear in
Sec. 635.410(c)(2) that such iron or steel products remain covered by
FHWA's existing Buy America requirements for iron and steel in Sec.
635.410(b). Under these requirements, pursuant to Sec.
635.410(b)(1)(ii), all manufacturing processes of the iron or steel
product, including application of a coating, must generally occur in
the United States.\26\
---------------------------------------------------------------------------
\26\ Under FHWA's Buy America requirements for iron or steel, a
recipient of FHWA financial assistance can demonstrate compliance
through other methods as well. For instance, Sec. 635.410(b)(2)
allows a recipient to satisfy the requirements through having
standard contract provisions mandating the use of domestic materials
and products, including steel and iron materials, to the same or
greater extent as the provisions of Sec. 635.410(b). Per Sec.
635.410(b)(3), recipients may also demonstrate compliance with
FHWA's Buy America requirements for iron and steel through including
alternate bid provisions in conformance with that provision.
Finally, FHWA notes, as stated above, that the de minimis provision
for iron or steel products under Sec. 635.410(b)(4) continues to
apply to iron or steel products.
---------------------------------------------------------------------------
FHWA, however, is making clear what products are subject to its
existing steel and iron requirements and what are subject to its new
manufactured product requirements. Except for the specific products and
components discussed below, FHWA believes that manufactured products
containing predominantly iron or steel components should not be subject
to both FHWA's existing steel and iron requirements and its new
manufactured product
[[Page 2953]]
requirements. In other words, for Federal-aid projects, predominantly
iron or steel components of a product classified as a manufactured
product do not need to comply with FHWA's Buy America requirements for
iron and steel; the manufactured product itself only needs to comply
with FHWA's Buy America requirements for manufactured products. FHWA
believes that, with the imposition of Buy America requirements for
manufactured products, it is generally unnecessary to continue to apply
Buy America requirements to predominantly iron and steel components of
those manufactured products. Manufacturers may continue to use
domestically manufactured iron and steel components for the purpose of
meeting the 55 percent requirements, and FHWA expects manufacturers of
products with more costly iron and steel components to continue to do
so. FHWA is not, however, imposing a requirement that predominantly
iron and steel components, no matter the value, must be domestically
manufactured. FHWA believes, however, that for iron and steel
components of lesser costs, it would be unduly burdensome to require
tracking the origin and cost of these components as well as other
components that are higher priced, which would be necessary to meet the
55 percent requirements.\27\
---------------------------------------------------------------------------
\27\ FHWA notes that recipients of FHWA financial assistance may
need to track the cost of iron or steel components of a material to
determine whether that material is properly classified as an iron or
steel product or a manufactured product. In situations where the
iron and steel content of a material is close to 50 percent of the
total cost of all its components, this may require tracking the cost
of components of lesser costs. If the material is properly
classified as an iron or steel product, FHWA's Buy America
requirements for iron and steel would require the iron and steel
components, including the iron and steel components of lesser cost,
to be domestically manufactured; however, larger, components that
are not iron or steel would not need to be domestically produced.
Alternatively, if the material is properly classified as a
manufactured product, the origin of the iron and steel components of
lesser cost would not need to be tracked. In either case, FHWA
expects the burden of tracking the origin and cost of all components
of lesser cost to be more burdensome than the requirements under
this final rule.
---------------------------------------------------------------------------
Further, requiring all predominantly iron and steel components to
be domestically produced would create discrepancies between FHWA's Buy
America requirements and BABA's requirements, which FHWA seeks to avoid
when not justified. Under BABA, an article, material, or supply should
not be considered to fall into multiple categories and must meet the
specific Buy America preference for only the single category in which
it is classified. See 2 CFR 184.4(e) and (f). Maintaining FHWA's
current policy would result in some materials being BABA-compliant but
not Buy America-compliant. As stated below in the discussion of Sec.
635.410(c)(2)(i) and (ii), FHWA believes that there may be some
products and components for which the continued application of this
policy may be justified, and the departure from BABA's requirements,
based on the circumstances surrounding the manufacture of the products
and components. FHWA does not believe that the same rationale exists
for all predominantly steel and iron components, no matter what size or
what cost, in all manufactured products.
FHWA does not believe that requiring manufactured products
containing predominantly iron and steel components to generally be
subject to only FHWA's Buy America requirements for manufactured
products is contrary to BABA's savings provision in section 70917(a)
and (b) of BABA. Section 70917(a) of BABA states that BABA ``shall
apply to a Federal financial assistance program for infrastructure 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.'' Section 70917(b)
states that nothing in BABA ``affects a domestic content procurement
preference for a Federal financial assistance program for
infrastructure that is in effect and that meets the requirements of
section 70914.'' FHWA interprets these provisions to mean that BABA
only applies to FHWA's programs only to the extent that a domestic
content procurement preference for iron, steel, manufactured products,
and construction materials meeting or exceeding the requirements of
section 70914 does not already exist. Further, FHWA interprets section
70917(b) to mean that, where a domestic content procurement preference
for iron, steel, manufactured products, and construction materials
meeting or exceeding the requirements of section 70914 does exist, BABA
has no effect on such domestic content procurement preferences.
FHWA also disagrees that the legislative history of the 1982 STAA
demonstrates that Congress intended the 1982 STAA to cover all steel
components of manufactured products.
Similarly, FHWA finds commenters' reference to FHWA's statement in
the Federal Register notice that created the Manufactured Products
General Waiver as failing to indicate congressional intent to apply Buy
America requirements for steel to all steel components. In that
statement, FHWA said that congressional intent in section 165 of the
1982 STAA indicated that its Buy America requirements for steel should
extend to all steel products. See 48 FR 53102. At the time, FHWA was
referencing the fact that it had previously applied its Buy America
requirements for steel to only structural steel when implementing
section 401 of the 1978 STAA, and that it was then applying its Buy
America requirements for steel to all steel products.
Finally, FHWA believes that the effects of this rule on the
domestic iron and steel industries will be minimal. Currently,
predominantly iron and steel components of manufactured products used
on Federal-aid projects are required to be produced domestically. FHWA
believes it likely that, where such components represent a large cost
of the manufactured product, manufacturers will continue to use such
domestically produced components. Doing so will allow manufacturers to
more easily satisfy the 55 percent requirement, while requiring minimal
changes to product design. For less expensive iron and steel
components, FHWA believes that manufacturers should have the option to
replace them in their products with foreign components. FHWA agrees
with commenters that tracing the origin of the iron and steel for these
minor components is burdensome and, given their cost, does not provide
sufficient value to the iron and steel industry to justify these
burdens.
Section 635.410(c)(2)--Classification at the Work Site
Comments: In the NPRM, FHWA proposed the classification of an
article, material, or supply into a specific category to be based on
its status at the time it is brought to the work site for incorporation
into an infrastructure project; this classification would then
determine which requirements, if any, the article, material, or supply
would be subject to. In addition, FHWA proposed to state that the work
site is generally the location of the infrastructure project at which
the iron or steel product or manufactured product will be incorporated.
Many commenters expressed confusion over how to distinguish between
a component of a manufactured product and the manufactured product
itself. Commenters were particularly concerned when components for a
product were brought to the work site separately, with commenters
expressing confusion over the fact that a material may be seemingly
classified differently depending on whether its components
[[Page 2954]]
are assembled on or away from the work site. Some commenters wondered
whether bringing components separately to a work site and assembling
them there would result in the components constituting a kit for a
manufactured product versus separate manufactured products. In
contrast, other commenters stated that FHWA should not adopt a
principle that components can be brought to a work site separately but
still be considered a kit and classified as a single manufactured
product; such commenters stated there is no authority in title 23,
U.S.C. for FHWA to adopt such a principle. Commenters similarly argued
that FHWA should not adopt a method for classification that would allow
a system to be classified as a single manufactured product; however,
other commenters pushed for the opposite. Finally, some commenters
argued that FHWA should not base classification on the status of a
product when it is brought to the work site at all but instead on the
status of a product when it is procured.
FHWA Response: FHWA believes that it is essential to set a point at
which an article, material, or supply is classified into a specific
category--whether that be an iron or steel product, a manufactured
product, or any category specified in law such as a construction
material--or not classified into any category. For manufactured
products, this point is especially important to distinguish between the
manufactured product itself and its components. FHWA believes that the
point chosen by OMB, when the product is brought to the work site,
appropriately allows for distinguishing among systems, which would be
comprised of multiple manufactured products with Buy America
requirements applied to each; manufactured products; and components.
FHWA is concerned that alternative points of classification may lead to
diluting the Buy America requirements. For instance, allowing for
classification at the point a material is incorporated into a project
may result in multiple manufactured products, iron or steel materials,
and construction materials being combined together and classified as
one single manufactured product. In particular, this kind of
classification could result in iron and steel products generally being
considered components of manufactured products, thereby functionally
eliminating FHWA's longstanding requirement that all iron and steel
products must be produced in the United States. FHWA further notes that
were it to choose a different point, that could result in certain
materials being classified differently under FHWA's Buy America
requirements versus under 2 CFR part 184; this, in turn, may lead to
multiple, different requirements applying to the same material. To
ensure uniformity, FHWA believes it appropriate to classify materials
at the same point as is done by Federal agencies subject to BABA.
FHWA recognizes, however, that certain manufactured products may be
acquired for incorporation into an infrastructure project from a single
manufacturer or supplier as separate components, which are then
assembled together to form a single product at the work site. FHWA
refers to such products as ``kits.'' FHWA, in alignment with OMB,
believes that these kits should be classified as a single manufactured
product; the individual components of the kit should not, in other
words, be classified as separate manufactured products when they are
brought to the work site. \28\ FHWA believes that this approach avoids
a situation where contractors are incentivized to assemble a kit
offsite and then bring the finished product to the work site, even if
it is inefficient to do so. FHWA further disagrees with commenters
suggesting that this notion of kits is prohibited by title 23, U.S.C.
Again, FHWA is not suggesting that multiple manufactured products can
be brought to the work site, assembled into one system or finished
project, and then only be subject to FHWA's Buy America requirements
for manufactured products. FHWA is merely reflecting the notion, echoed
by commenters, that while the point of classification is important to
prevent the classification system from being abused to dilute the
stringency of Buy America requirements, it should also not result in
the same product being classified differently purely by the location
where it is assembled.
---------------------------------------------------------------------------
\28\ See 88 FR 57776 for OMB's discussion of kits.
---------------------------------------------------------------------------
FHWA notes that the concept of kits has similarities with the idea
of classifying a product based on its status at the time of
procurement. FHWA emphasizes, however, that a kit represents a single
product purchased from a single manufacturer or supplier. FHWA believes
that classifying a product based on its status at the time of
procurement may allow for the classification of entire systems as a
single manufactured product, which would dilute the stringency of the
Buy America requirements and not be in concert with classification
under 2 CFR part 184.
Section 635.410(c)(2)(i), (ii)--Specified Products
Comments: In the NPRM, as stated above, FHWA proposed to generally
require that iron or steel materials only comply with FHWA's existing
Buy America requirements for iron and steel found in Sec. 635.410(b)
and that manufactured products only comply with FHWA's manufactured
product requirements found in Sec. 635.410(c). In Sec.
635.410(c)(2)(i), however, FHWA proposed to require precast concrete
products that are classified as manufactured products to have all
predominantly iron or steel components comply with FHWA's existing Buy
America requirements for iron and steel. Similarly, in Sec.
635.410(c)(2)(ii), FHWA proposed to require the cabins or other
enclosures of ITS and other electronic hardware systems installed in
the highway right of way or other real property and classified as
manufactured products, if predominantly iron or steel, to comply with
FHWA's existing Buy America requirements for iron and steel.
Multiple commenters expressed opposition to the separate
requirements placed on these specific manufactured products in Sec.
635.410(c)(2)(i) and (ii). These commenters argued that such separate
requirements prevented uniformity of FHWA's Buy America requirements to
all manufactured products and uniformity with BABA's requirements for
manufactured products. Commenters also argued that manufacturers do not
know the ultimate owner of items when manufacturing and shipping them.
Thus, commenters argued that these separate requirements created risks
of non-compliance if a contractor purchases a product that is BABA-
compliant but not compliant with Sec. 635.410(c)(2)(i) or (ii), as the
contractor may not know whether the product needs to be BABA-compliant
versus FHWA-compliant when purchasing the product or may receive the
wrong version of the product from the manufacturer. Another commenter
argued that manufacturers would merely shift from using iron and steel
to other materials where possible to avoid these requirements.
Commenters representing the iron and steel industry argued that
there is no distinction between iron and steel in the specific products
referenced in Sec. 635.410(c)(2)(i) and (ii) and the iron and steel in
the components of other manufactured products. These commenters argued
that there is no reason to require the iron and steel in the specific
products referenced in Sec. 635.410(c)(2)(i) and (ii) to be
domestically produced but not the iron
[[Page 2955]]
and steel in other products. Finally, commenters sought clarification
over the definition of ``intelligent transportation systems and other
electronic hardware systems'' found in Sec. 635.410(c)(2)(ii).
FHWA Response: FHWA generally believes that a single material, if
classified as an iron or steel product, should only be subject to its
Buy America requirements for iron and steel in Sec. 635.410(b); if
classified as a manufactured product, FHWA generally believes the
product should only be subject to its Buy America requirements for
manufactured products in Sec. 635.410(c). FHWA also believes, however,
that iron or steel components of precast concrete and iron or steel
enclosures of ITS and other electronic hardware systems installed in
the highway right of way or other real represent unique situations
justifying FHWA to generally apply its Buy America requirements for
manufactured products to the products as a whole and its Buy America
requirements for iron and steel to specific components.
As stated in the NPRM, FHWA believes that the products referenced
in Sec. 635.410(c)(2)(i) and (ii) are regularly used in highway
construction projects and that manufacturers have formed longstanding
supply chains to incorporate Buy America-compliant iron or steel
components into them. FHWA believes that these products are currently
used extensively in Federal-aid projects, where, currently, all their
predominantly iron and steel components are required to comply with
FHWA's Buy America requirements for iron and steel. FHWA further
believes that the iron and steel in the precast concrete and the iron
and steel in the enclosures of ITS and other electronic hardware
systems represent a significant portion of the value of those
manufactured products.\29\ FHWA thus believes that the requirements of
Sec. 635.410(c)(2)(i) and (ii) will have a limited impact on the
manufacture of these specifically-referenced products. While FHWA
acknowledges that the requirements that apply to these products are
distinct from those that apply to other manufactured products under
FHWA's Buy America regulation and BABA, FHWA believes this is justified
by the significant market for these products solely within FHWA's
funding programs. FHWA therefore believes that manufacturers of these
products will be incentivized to produce products compliant with these
unique requirements in sufficient amounts and that contractors should
be able to determine whether any particular product is compliant with
FHWA's regulations.
---------------------------------------------------------------------------
\29\ For example, as indicated in the responses to an RFI
published collectively by DOT and the U.S. Department of Energy, the
housing of an EV charger may comprise over 50 percent of the costs
of the charger. 86 FR 67115 (Nov. 24, 2021).
---------------------------------------------------------------------------
FHWA emphasizes that the specific requirements of Sec.
635.410(c)(2)(i) and (ii) apply only to the specifically referenced
products and components. While FHWA understands that the iron and steel
in these products is similar to the iron and steel in all manufactured
products, FHWA believes that the specific nature of these products, as
stated above, justifies different requirements from other manufactured
products.
With respect to ``intelligent transportation systems and other
electronic hardware systems,'' FHWA clarifies that its requirements in
Sec. 635.410(c)(2)(ii) apply to the cabinets or other enclosures of
the physical electronic hardware system, or other physical ITS, if (1)
the system is classified as a manufactured product under Sec.
635.410(c)(1)(iv); (2) the system is installed in the highway right of
way or other real property; and (3) the cabinets or other enclosures of
such system consists wholly or predominantly of iron or steel or a
combination of both. Where the requirements of Sec. 635.410(c)(2)(ii)
do apply, the cabinet or other enclosure must comply with FHWA's
existing Buy America requirements for iron and steel, meaning that all
iron and steel of the cabinet or other enclosure must be domestically
produced.
Finally, for the components specified in Sec. 635.410(c)(2)(ii),
FHWA is modifying a reference from components that are ``manufactured
predominantly or iron or steel or a combination of both'' to components
that ``consist wholly or predominantly of iron or steel or a
combination of both.'' FHWA does not intend this to be a substantive
change but instead to mirror the language used in the definition of
``iron or steel products.'' Through this change, FHWA seeks to make
clear that the determination of whether components of precast concrete
products or the cabinets or other enclosures of intelligent
transportation systems and other electronic hardware systems that are
installed in the highway right of way or other real property should be
determined as iron or steel products and subject to FHWA's Buy America
requirements for iron and steel should be based on the same definition
that iron or steel products are subject to generally.
Section 635.410(c)(3)--Cost of Components
Comments: In Sec. 635.410(c)(3), FHWA proposed to determine
whether the cost of components for manufactured products is greater
than 55 percent of the total cost of all components through the same
method as used under 2 CFR 184.5 for projects subject to BABA. Per 2
CFR 184.5(a), the cost of a component purchased by the manufacturer 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). For components manufactured by
the manufacturer, 2 CFR 184.5(b) the cost of a component is all costs
associated with the manufacture of the component, including
transportation costs as described in 2 CFR 184.5(a), plus allocable
overhead costs, but excluding profit; the cost of such components also
does not include any costs associated with the manufacture of the
manufactured product. FHWA copied this definition verbatim into
proposed Sec. 635.410(c)(3).
Some commenters disagreed with FHWA's approach to determining the
cost of components entirely, requesting that FHWA should allow
additional costs to factor into the cost of any component, including
the cost of domestic manufacturing, the cost of software and firmware,
the value added at each manufacturing stage, the cost of the
intellectual property, and the cost of the research and development for
the product. One commenter argued that the cost of components should be
determined at the overall system level.
Other commenters sought clarification on FHWA's proposed
definition. Commenters expressed confusion over what were allowable
manufacturing costs for the component versus unallowable manufacturing
costs for the manufactured product. Others sought clarification over
what FHWA meant by allocable overhead costs.
FHWA Response: FHWA disagrees with commenters suggesting that FHWA
depart from the standard used in 2 CFR 184.5 to determine the cost of
components. FHWA believes that uniformity with BABA's requirements is
important and beneficial where appropriate to ensure that manufactured
products are compliant under FHWA's Buy America statute and BABA and to
allow for contracting agencies, contractors, and manufacturers to build
up a greater amount of experience with these requirements.
[[Page 2956]]
FHWA notes that Sec. 635.410(c)(3)(ii) differentiates between
costs associated with the manufacture of a component, which are to be
considered in determining the cost of the component, and costs
associated with the manufacture of the manufactured product, which are
not. Costs associated with the manufacture of the manufactured product
itself, outside of the cost to manufacture a component, should not be
considered in valuing the component. For example, the cost of
assembling the component into the manufactured product is a cost of
manufacturing the manufactured product, not a cost of manufacturing the
component.
Finally, FHWA is correcting an error in the proposed regulatory
text, where Sec. 635.410(c)(3)(ii) made reference to ``paragraph (a)
of this section.'' That reference is from 2 CFR 184.5(b) and refers to
2 CFR 184.5(a). FHWA is thereby correcting the reference to Sec.
635.410(c)(3)(i) to properly align with 2 CFR part 184.
VI. Rulemaking Analyses and Notices
A. 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 this rulemaking is a significant
regulatory action within the meaning of E.O. 12866, as amended by E.O.
14094.
A more detailed discussion of the economic analysis associated with
this rulemaking can be found in the RIA, which is available on the
docket. The RIA estimates the costs and benefits associated with
imposing Buy America requirements to manufactured products. The
expected benefits of this rule relate to protecting and expanding
domestic manufacturing, increasing the resiliency of supply chains, and
increasing consistency in applying domestic content procurement
preferences for manufactured products between FHWA and other Federal
agencies that are subject to BABA's requirements. None of these
benefits have been quantified.
The costs of this rule relate to increased material costs for
manufactured products used in highway construction projects,
administrative costs to FHWA and recipients of FHWA financial
assistance, and potential delays in project delivery. FHWA estimates
that total costs associated with this rule, between FY 2026 and FY
2035, will range from $545 million to $8,466 million at a 2 percent
discount rate. The estimated increase in material costs for
manufactured products ranges from $41 million to $980 million per year.
Much of the wide range of uncertainty surrounding the estimates stems
from the difficulty of 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 fail
to meet the 55 percent requirement; and (3) the likely price premiums
for purchasing manufactured products that would be compliant with this
rule, compared to non-compliant manufactured products currently used in
highway construction. FHWA further estimates an additional $167,000 per
year in increased FHWA administrative costs to cover the salary and
employer-provided benefits of an additional Federal employee to help
administer the Buy America program. We also estimate an additional $22
million per year in administrative costs to recipients of FHWA
financial assistance related to verifying product compliance. Those
costs do not include additional administrative costs related to setting
up systems to track compliance or applying for any project-specific
waivers that may be necessary based on specific circumstances.
The 10-year discounted totals of these costs are provided in the
table below at a 2 percent discount rate. The rest of the costs could
not be quantified with the information available.
------------------------------------------------------------------------
Category 10-Year total at 2%
------------------------------------------------------------------------
Benefits: .............................
Promote Domestic Manufacturing......... Not quantified.
Supply Chain Resiliency................ Not quantified.
Consistency............................ Not quantified.
Total Benefits........................... Not quantified.
Costs: .............................
Materials Costs........................ $361 to $8,282.
FHWA and State Administrative Costs.... $184.
Other Administrative Costs............. Not quantified.
Project Delay.......................... Not quantified.
Negative Secondary Impacts............. Not quantified.
Total Costs.............................. $545 to $8,466.
Annualized Costs......................... $61 to $942.
------------------------------------------------------------------------
Annualized costs are $61 million to $942 million per year at a 2
percent discount rate, $60 million to $932 million per year at a 3
percent discount rate, and $58 million to $890 million per year at a 7
percent discount rate.
FHWA has responded to comments made regarding the preliminary
regulatory impact analysis in the RIA. 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.
B. 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 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 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 receive apportioned funding from FHWA, and who
are not included in the definition of small entity set forth in 5
U.S.C. 601.
FHWA believes the projected impact on small entities that utilize
FHWA funding would be negligible. This final rule will require such
small entities to purchase manufactured products that are manufactured
in the United States and have the cost of components 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
under contracts subject to FHWA's Buy America requirements. FHWA
acknowledges that some Buy America-compliant manufactured products may
be more expensive than manufactured products that are non-compliant.
Thus, this final rule may result in increased project costs. To the
extent this rule requires expenditures by State, local governments, and
other grant recipients on Federal-aid projects, they are reimbursable.
In addition, to the extent that small governmental jurisdictions expend
additional funds to purchase Buy America-compliant manufactured
products, based on FHWA's regulatory impact analysis, FHWA does not
believe that any additional expenditure would be economically
significant.
FHWA recognizes that small businesses, as defined by 5 U.S.C.
601(3), who are also considered small entities, may be affected
indirectly by this final rule when they seek to provide manufactured
products to recipients of FHWA financial assistance who are subject to
the new Buy America requirements. For small businesses not currently
compliant with FHWA's Buy America requirements for manufactured
products who wish to provide Buy America-compliant products, they may
need to change manufacturing processes or component suppliers. Small
entities
[[Page 2957]]
that may be impacted indirectly by a rulemaking, however, 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, FHWA certifies that the action would not have a
significant economic impact on a substantial number of small entities.
C. Unfunded Mandates Reform Act of 1995
This rule does 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 million 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.
D. Executive Order 13132 (Federalism Assessment)
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. FHWA has analyzed this rule in accordance with the
principles and criteria contained in E.O. 13132. FHWA has determined
that this rule would not have sufficient federalism implications to
warrant the preparation of a federalism assessment. FHWA has also
determined that this rule would not preempt any State law or State
regulation or affect the States' ability to discharge traditional State
governmental functions.
E. Paperwork Reduction Act of 1995
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. FHWA has determined that this rule does not contain
collection of information requirements for the purposes of the PRA.
F. National Environmental Policy Act
FHWA has analyzed this rule pursuant to the NEPA and has determined
that it is categorically excluded under 23 CFR 771.117(c)(2), 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 rule will establish Buy America requirements
for manufactured products. FHWA does not anticipate any adverse
environmental impacts from this final rule, and no unusual
circumstances are present under 23 CFR 771.117(b).
G. Executive Order 13175 (Tribal Consultation)
FHWA has analyzed this rule in accordance with the principles and
criteria contained in E.O. 13175, ``Consultation and Coordination with
Indian Tribal Governments.'' FHWA does not believe that the final 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.
H. 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. FHWA has
determined that this rule does not raise any environmental justice
issues.
I. Regulation Identifier 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 the 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.
List of Subjects in 23 CFR Part 635
Grant programs--transportation, Highways and roads, Reporting and
recordkeeping requirements.
Issued under authority delegated in 49 CFR 1.85.
Gloria M. Shepherd,
Executive Director, Federal Highway Administration.
For the reasons stated in the preamble, FHWA amends title 23, Code
of Federal Regulations, part 635, as set forth below:
PART 635--CONSTRUCTION AND MAINTENANCE
0
1. The authority citation for part 635 continues to read as follows:
Authority: Sections 1525 and 1303 of Public Law 112-141, Sec.
1503 of Public Law 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), Public Law 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 words ``steel or iron materials'' and adding, in their
place, the words ``iron or steel products'' in paragraph (b)(1);
0
b. Removing the word ``State'' and adding in its place the word
``recipient'' in paragraphs (b)(2) and (3);
0
c. Removing the words ``steel and iron materials'' and adding, in their
place, the words ``iron or steel products'' in paragraphs (b)(2), (3),
and (4);
0
d. Revising paragraph (c); and
0
e. 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
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 the requirement in this
paragraph (c), the manufactured product must meet the following:
(1) The following definitions apply to this section:
(i) Component means an article, material, or supply, whether
[[Page 2958]]
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 classif
[…truncated; see source link]Indexed from Federal Register on January 14, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.