The Office of Management and Budget (“OMB”) recently issued initial Buy America implementation guidance required by Sections 70901-52 of the Infrastructure Investment and Jobs Act (P.L. 117-58; “IIJA”).
The Buy America preference applies to federally supported public infrastructure projects, including the structures, facilities and equipment for highway, transit, water and energy projects in the United States. Effective May 14, 2022, the Buy America preferences require that:
- All iron and steel used in the project must be produced in the United States;
- All manufactured products used in the project must be produced in the United States; and
- All construction materials used in the project must be manufactured in the United States.
Importantly, the Buy America preference applies to the entire infrastructure project, even if it is funded by both federal and non-federal funds. There are a couple of significant carve-outs from the Buy America preferences, however. Buy America applies to the infrastructure itself and not the tools, equipment or supplies used in constructing the project and then removed upon completion of the project. Movable furnishings in the completed project, such as portable chairs, desks and computers are also exempt from the Buy America preference.
For highway and transit projects, the key takeaway from the OMB’s initial guidance is the expansion of the Buy America framework to include “construction materials.” Prior to the IIJA, these projects were only subject to the iron and steel, and manufactured products requirements.
Although it is preliminary and non-binding, the OMB guidance defines “construction materials” to include items that primarily consist of non-ferrous metals, plastic and polymer-based products, glass, lumber or drywall. This definition expressly excludes cement and cementitious materials, aggregates (e.g., stone, sand and gravel), and aggregate binding agents and additives.
The OMB guidance allows federal agencies to waive certain Buy America requirements, following a public comment process and subject to approval by the newly created Made in America Office at OMB. The OMB guidance stipulates that waivers should have a short and definite period, be targeted rather than overly broad, and include specific conditions that support the policies behind Buy America. The three categories of Buy America waivers available under the guidance are the:
- Public interest waiver, when applying the domestic content preference would be inconsistent with the public interest;
- Nonavailability waiver, if the covered product or material is not produced in the United States in sufficient quantities or of satisfactory quality; and
- Unreasonable cost waiver, when the inclusion of domestically produced items will increase the overall cost of the project by more than 25 percent.
To assist highway and transit project sponsors in complying with the new Buy America standards for construction materials, on April 28, 2022, the U.S. Department of Transportation (“USDOT”) proposed a transitional waiver for construction materials, which would also become effective on May 14, 2022 and expire after 180 days. USDOT intends to use this 180-day period to obtain feedback from public agencies, industry participants, and other stakeholders as these entities start complying with the new Buy America rules. Feedback and comments on the proposed waiver are due by May 13, 2022.
Going forward, important open issues to monitor include the scope of the construction materials requirement and what constitutes domestic manufacturing in this context, the practical application of each waiver type, applicability of the OMB guidance and USDOT transitional waiver on projects currently in procurement, and the role federal agencies tasked with administering the OMB guidance will have in issuing implementing guidance. OMB will also be seeking input from interested stakeholders as it prepares additional guidance on this topic.
Alyn Shen is an infrastructure attorney with substantial experience in advising clients through the project delivery process, including procurement procedures, drafting contract and procurement documents, and conducting ...
Shant Boyajian advises public agencies on a wide range of innovative methods to procure and deliver the nation’s largest, most complex infrastructure projects. Clients have found tremendous value in his deep experience in ...
Nossaman LLP’s 30-plus infrastructure attorneys offer clients, colleagues, strategic partners, and industry media a wealth of practical experience, insider insight, and thoughtful analysis here on Infra Insight. We blog about what we know best, from industry-leading procurements to local and national policy developments that affect the market and our clients.