In a move that the Biden administration says is aimed at strengthening U.S. manufacturing, the Federal Highway Administration has proposed to jettison its more-than-40-year-old general waiver from the federal domestic-preference requirement for manufactured products used on federal-aid highway projects.

FHWA fleshed out its latest Buy America action in a proposed regulation issued on March 7. Comments on the proposal are due within 60 days after it is published in the Federal Register. 

U.S. Dept. of Transportation officials said the prime reason for the proposed change is to bolster U.S. manufacturing companies and supply chains and stimulate the growth of domestic jobs.

FHWA Administrator Shailen Bhatt said in a statement, “We’re proposing to do away with a policy that did not incentivize restricted American-based manufacturing.” Bhatt added that with the addition of the newly proposed regulation, “American businesses now have a long-term incentive to tap into the broader government market.”

FHWA also said that the new standards are in line with current Buy America Build America Act (BABAA) guidelines for manufactured products. The BABAA is contained in the 2021 Infrastructure Investment and Jobs Act.

AGC's Critique

A major construction contractors group has already criticized the FHWA proposal.

Brian Turmail, the Associated General Contractors of America's vice president-public affairs and strategic initiatives, told ENR via email, "While AGC supports efforts to bolster domestic manufacturing, the implementation process of new Buy America requirements and the proposed removal of the Manufactured Products Waiver is being done too hastily and without proper considerations due to political pressure."

Turmail added, "The reality is that the federal government does not have knowledge of the domestic manufacturing capabilities for many of the materials covered under Build America, Buy America Act rules."

He said, "It is unclear how tying up infrastructure projects in even more red tape will create more jobs, boost domestic manufacturing or make our economy any more efficient."

AASHTO: Keep Waiver, Do Market Studies

The American Association of State Highway and Transportation Officials also sees shortcomings in the FHWA proposal.

AASHTO Executive Director Jim Tymon told ENR in emailed comments, "AASHTO and the state DOTs firmly support the goal of expanding America's manufacturing capacity to promote domestic jobs." Tymon said, "However, we agree with FHWA's previous and long-standing finding that manufactured products in highway projects comprise a small portion of the overall market for those products."

Tymon added "A Buy America requirement for many of these products will not result in on-shoring of the manufacture of those products. 

He said, "Instead of completely eliminating the waiver, we recommend that the waiver be continued as FHWA carries out targeted market studies to observe which products can be on-shored successfully."

Tymon said: "This approach will reduce potential project delays due to the lack of availability of domestic products. This strategy stands a stronger chance of achieving the overall goal of increasing domestic manufacturing:"

The newly proposed requirements would replace the current Manufactured Products General Waiver. FHWA says that waiver was created in the 1978 Surface Transportation Assistance Act and that the standards were last changed in the 1983 surface transportation statute.

The new proposal would not alter Buy America requirements that apply to iron or steel products, FHWA noted. It also would leave intact other BABAA requirements that cover certain types of construction materials.

Moreover, several specific types of construction materials, including cement as well as aggregates such as stone, sand or gravel, also would remain exempt from Buy America.

The IIJA greatly extended the reach of federal Buy America requirements. For one thing, the IIJA sharply hiked funding for highways and other infrastructure projects, most of which are covered by Buy America.

That act also increased the list of types of construction materials that are subject to domestic preferences, and stated that Buy America would apply to projects funded by other federal legislation beyond the IIJA, such as regular appropriations.

For a manufactured product to comply with the proposed requirement, it must be made in the U.S. and the cost of its U.S.-produced or -manufactured components must exceed 55% of the product's total cost.

FHWA also said it is proposing to apply its current Buy America requirements to two types of iron and steel materials that would be permitted to be used as components of manufactured products. Those materials are the iron or steel components of precast concrete; and iron or steel enclosures for intelligent transportation systems and “other electronic hardware systems” installed in highway rights-of-way or other property.