By Jay Landers
Passed in November 2021, the massive Infrastructure Investment and Jobs Act called for $1.2 trillion in federal spending on infrastructure during the coming decade. However, this infusion of federal funding came with significant strings: The IIJA, which is also known as the bipartisan infrastructure law, included the Build America, Buy America Act. The BABAA requires that practically all federally funded infrastructure projects — not just those funded by the IIJA — use only iron, steel, manufactured products, and construction materials made in the United States.
The BABAA set a deadline of May 14, 2022, for certain federal agencies to begin enforcing the act’s provisions. In April 2022, the Office of Management and Budget within the White House issued a memorandum to federal agencies with guidance on implementing the provisions. However, the memorandum did little to address pressing concerns or answer key questions held by some observers in industries affected by the BABAA requirements.
Recently, the OMB released a proposed rule seeking to clarify certain BABAA requirements. Much like its initial counterpart, the proposal from the OMB has drawn complaints from industry. Essentially, the complaints maintain that the proposed rule lacks the clarity needed to enable compliance by those businesses whose products and materials must comport with the law. Meanwhile, recent remarks by President Joe Biden prompted concerns in some quarters that the White House might seek to expand the scope of the BABAA to encompass materials that Congress specifically exempted from the law.
Defining ‘Made in the USA’
Under the BABAA, many federal agencies were directed to ensure that “none of the funds made available for a Federal financial assistance program for infrastructure … may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States,” according to the law.
For iron or steel products to comply, the BABAA stipulates that “all manufacturing processes, from the initial melting stage through the application of coatings,” must have occurred in the United States, according to the law.
For manufactured products to comply, the cost of their components “that are mined, produced, or manufactured in the United States (must be) greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation,” the law states.
In the case of construction materials, “all manufacturing processes for” a particular material must have occurred in the United States, according to the law. As examples of construction materials, the law cites “non-ferrous metals, plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables), glass (including optic glass), lumber, and drywall.”
However, the BABAA specifically defines the term “construction materials” so as to exclude “cement and cementitious materials, aggregates such as stone, sand, or gravel, or aggregate binding agents or additives,” according to the law.
The BABAA allows federal agencies to waive the Buy America requirements if doing so would be consistent with the public interest or if the products or materials are not reasonably available in the U.S. or would increase the project cost by more than 25%.
For example, on Feb. 21, the U.S. Federal Highway Administration issued a temporary public interest waiver to waive BABAA requirements for steel, iron, manufactured products, and construction materials in electric vehicle chargers. The waiver takes effect on March 23 and will be phased out over time, beginning July 1, 2024, according to the FHWA’s Federal Register notice announcing the waiver.
Concern about construction materials
During his State of the Union address on Feb. 7, Biden included a discussion of infrastructure spending. He announced the imminent release of what he described as “new standards to require all construction materials used in federal infrastructure projects to be made in America,” according to a transcript provided by the White House.
Biden then gave examples, specifically noting “lumber, glass, drywall, (and) fiber-optic cable.” He continued: “And on my watch, American roads, bridges, and American highways are going to be made with American products as well.”
At least one construction industry trade group interpreted the president’s remarks to mean that the Biden administration aims to ignore the congressional exclusion from BABAA requirements granted to the aforementioned materials, aggregates, or aggregate binding agents or additives.
“Regardless of (Biden’s) comments, the Biden Administration still must follow the law as intended,” said Michael Johnson, the president and CEO of the National Stone, Sand & Gravel Association, in a Feb. 8 news release.
“This exclusion has been included in previous guidance from the Office of Management and Budget, as well as the Department of Transportation,” Johnson said. “NSSGA will continue to work with the administration and federal agencies to ensure the regulation is implemented according to the law and does not negatively affect infrastructure projects and modernization.”
But what is the definition of “all manufacturing processes” when it comes to construction materials? The BABAA directed the OMB to issue standards to determine just that. These standards from the OMB “shall not include cement and cementitious materials, aggregates such as stone, sand, or gravel, or aggregate binding agents or additives as inputs of the construction material,” the law states.
In its April 2022 memorandum to federal agencies, the OMB provided what it called “preliminary and non-binding guidance” on the subject, as well, stating that federal agencies “should consider ‘all manufacturing processes’ for construction materials to include at least the final manufacturing process and the immediately preceding manufacturing stage for the construction material.”
On Feb. 9, the OMB published in the Federal Register a proposed rule that, among other things, defines the term “all manufacturing processes” in more detail for various construction materials. (Comments on the proposed rule are due March 13.)
The proposed guidance is a “major step forward (that) will strengthen implementation of domestic content standards, while also improving Federal financial assistance management, consistency, transparency, and oversight to ensure effective stewardship of Bipartisan Infrastructure Law funding,” said Livia Shmavonian, the OMB’s Made in America director, in a Feb. 8 post on the White House website.
“When finalized, the guidance will guide agencies in using taxpayer dollars on infrastructure to strengthen our economy by supporting the creation of good jobs in both construction and manufacturing through the expansion of domestic production,” Shmavonian wrote.
The Feb. 9 proposed rule received a less than enthusiastic response from some industry representatives, including the Water and Wastewater Equipment Manufacturers Association.
In particular, WWEMA members were looking to the proposed rule for answers to certain questions regarding the handling of manufactured products under the law, says Vanessa Leiby, the executive director of the organization. “Our expectation for this guidance was that it was going to provide clarity and an understanding on the parts of manufacturers, consulting engineers, and contractors about how exactly to calculate and certify the 55% component test for compliance with the Buy America requirements,” Leiby says. “It does not do that whatsoever.”
The Associated General Contractors of America also expressed concerns about the proposed guidance. In particular, the AGC, in a Feb. 9 statement on its website, pointed to a series of questions about aggregates that the OMB included in the proposed rule and asked the public to comment on.
For its part, the OMB acknowledges in its proposal the exclusion of certain construction materials from BABAA requirements but goes on to ask: Should the OMB “exclude raw aggregates (such as stone, sand, or gravel) unless they have been processed into a specific form or shape or combined with other raw materials, such as combining them with cement powder and water to produce precast concrete products?”
The OMB then follows with this question: “How should OMB treat cement and cementitious materials before they are processed into a specific form and shape?”
This question by the OMB appears to contradict certain provisions of a Q&A document regarding BABAA requirements that the FHWA released on Feb. 1, according to the AGC. In its Feb. 1 document, the FHWA declares that asphalt is excluded from the definition of construction materials.
“OMB seems to be implying that asphalt would not be exempt from the requirements as FHWA suggested a week ago, and Congress intended in the IIJA,” the AGC said in its statement. Such a requirement would violate the IIJA’s aforementioned exemptions from BABAA requirements, according to the AGC.
This and other proposed changes in the OMB’s guidance document, if adopted, “would force agencies and their partners to reevaluate all of their BABAA policies and documents (including the FHWA Q&A document) that they have released so far,” according to the AGC statement. “The federal government continues to create uncertainty as it relates to new Buy America requirements, and at a time when most of the country will soon be entering construction season.”
Although it supports the concepts that underlie the BABAA, the National Utility Contractors Association seeks to ensure that the law’s requirements do not unnecessarily disrupt or delay infrastructure projects, says Zack Perconti, the vice president of government affairs for the association. “Whenever it makes sense for a given project, we would like to see the use of American products,” Perconti says. “I don't think anyone really disagrees with that when it's practical, but the biggest issue for us really is availability and being able to use the best item for the job.”
“There are some products that just simply are not made in this country, and frankly, there are regulatory hurdles that exist to manufacturing those products in this country,” Perconti says.
Such hurdles have “pushed that production overseas,” Perconti says. “If we're putting Made in America requirements on those (products), then the federal government needs to work with us to identify why those products aren't being made in the United States, what needs to be done in order to make it economical to manufacture those products in the United States, and what the timeline is going to be to be able to bring those online.”
Until such questions have been addressed, NUCA will continue to advocate for flexibility and a waiver process that is “efficient as well as timely,” Perconti says. “We can't afford to have projects waiting in limbo because a waiver has not been granted.”
With individual federal agencies handling the waiver process for infrastructure projects for which they provide funding, the result has been a “confusing and complex patchwork of approaches with no consistency across federal agencies or even within federal agencies,” Leiby says.
“It's very frustrating that we don't have clarity at this point in time, more than a year after the law was signed by the president, about how we're able to move forward to provide the infrastructure that we need in this country to protect public health and the environment,” Leiby says.
This article first appeared in Civil Engineering Online.