[Federal Register Volume 87, Number 219 (Tuesday, November 15, 2022)]
[Notices]
[Pages 68576-68578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24744]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. DOT-OST-2022-0124]


Notice That the Build America, Buy America Requirement for 
Construction Materials Applies Effective November 10, 2022, and Notice 
of Proposed Waiver of Buy America Requirements for De Minimis Costs, 
Small Grants, and Minor Components

ACTION: Notice; request for comments.

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SUMMARY: The Department of Transportation (DOT) seeks to maximize the 
use of American-made products and materials in all federally funded 
projects as part of the Biden-Harris Administration's implementation of 
the Build America, Buy America Act (the Act), which was included in the 
historic Bipartisan Infrastructure Law (BIL). The implementation of 
this law will transform the Department's approach to domestic 
procurement requirements. The Department is taking three concurrent 
actions: (1) DOT is not extending its temporary waiver for construction 
materials, making that requirement applicable effective November 10, 
2022; (2) in a separate notice, DOT is proposing a waiver for narrow 
categories of contracts and solicitations; and (3) in this notice, DOT 
is proposing a narrow waiver to allow DOT and its assistance recipients 
to focus their domestic sourcing efforts on products that provide the 
greatest manufacturing opportunities for American workers and firms and 
reduce delays in the delivery of important transportation 
infrastructure projects that provide jobs and promote economic growth. 
DOT is seeking comments on whether a waiver of Buy America requirements 
under the Act and related domestic preference statutes administered by 
DOT and its Operating Administrations (OAs) should be granted in the 
public interest for de minimis costs, small grants, and minor 
components.

DATES: Comments must be received by November 20, 2022.

ADDRESSES: Please submit your comments to the U.S. Government 
electronic docket site at http://www.regulations.gov, Docket: DOT-OST-
2022-0124.
    Note: All submissions received, including any personal information 
therein, will be posted without change or alteration to http://www.regulations.gov. For more information, you may review DOT's 
complete Privacy Act Statement published in the Federal Register on 
April 11, 2000 (65 FR 19477).

FOR FURTHER INFORMATION CONTACT: For questions about this notice, 
please contact Darren Timothy, DOT Office of the Assistant Secretary 
for Transportation Policy, at [email protected] or at 202-366-
4051. For legal questions, please contact Michael A. Smith, DOT Office 
of the General Counsel, 202-366-2917, or via email at 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    In January 2021, President Biden issued Executive Order (E.O.) 
14005, titled Ensuring the Future is Made in All of America by All of 
America's Workers. The E.O. states that the United States Government 
``should, consistent with applicable law, use terms and conditions of 
Federal financial assistance awards and Federal procurements to 
maximize the use of goods, products, and materials produced in, and 
services offered in, the United States.'' DOT is committed to ensuring 
strong and effective Buy America implementation consistent with E.O. 
14005.
    On November 15, 2021, President Biden signed the Bipartisan 
Infrastructure Law (BIL) enacted as the Infrastructure Investment and 
Jobs Act, Public Law 117-58. The BIL includes the Act, Public Law 117-
58, div. G Sec. Sec.  70901-27, which greatly strengthens Made in 
America standards by expanding the coverage and application of Buy 
America preferences in Federal financial assistance programs for 
infrastructure. The Act requires that the head of each covered Federal 
agency shall ensure that ``none of the funds made available for a 
Federal financial assistance program for infrastructure . . . may be 
obligated for a project unless all of the iron, steel, manufactured 
products, and construction materials used in the project are produced 
in the United States.'' BIL Sec.  70914(a). However, Federal agencies 
may waive the application of Buy America in certain circumstances, 
including where the agency finds that applying the Buy America 
requirement ``would be inconsistent with the public interest.'' BIL 
Sec.  70914(b)(1).
    The Act required the Office of Management and Budget (OMB) to issue 
guidance to assist in applying the Act's requirements. BIL Sec.  70915. 
On April 18, 2022, OMB issued memorandum M-22-11, ``Initial 
Implementation Guidance on Application of Buy America Preference in 
Federal Financial Assistance Programs for Infrastructure'' 
(``Implementation Guidance''). Section VII(b) of the Implementation 
Guidance, Waiver Principles and Criteria, states that ``Federal 
agencies may wish to consider issuing a limited number of general 
applicability public interest waivers in the interest of efficiency and 
to ease burdens for recipients.'' Implementation Guidance at p. 10. The 
Implementation Guidance goes on to provide examples of certain types of 
public interest waivers an agency may consider issuing that would 
support that goal, including infrastructure project purchases below a 
de minimis threshold; purchases made under small Federal grant awards; 
and miscellaneous minor components within iron and steel products. As 
the Implementation Guidance notes, such waivers could help ``ensure 
that recipients and Federal agencies make efficient use of limited 
resources, especially if the cost of processing the individualized 
waiver(s) would risk exceeding the value of the items waived.'' 
Implementation Guidance at p. 11.
    The Act also provides that the preferences under Section 70914 
apply only to the extent that a domestic content procurement preference 
as described in Section 70914 does not already apply to iron, steel, 
manufactured products, and construction materials. BIL Sec.  70917(a)-
(b). Federal financial assistance programs administered by DOT's 
Operating Administrations (OAs) are subject to a variety of mode-
specific statutes that apply particular Buy America \1\ requirements to 
iron, steel, and manufactured products, including 49 U.S.C. 50101 
(FAA); 23 U.S.C. 313 (FHWA and NHTSA); 49 U.S.C. 22905(a) (FRA); 49 
U.S.C. 5323(j) (FTA); and 46 U.S.C. 54101(d)(2) (MARAD). Recent annual 
appropriations acts have also required DOT to apply the Buy American 
Act (41 U.S.C. Chapter 83) to funds appropriated under those acts,\2\

[[Page 68577]]

where a mode-specific statute is not in place. These statutes also 
allow for waivers of the Buy America requirements to be issued when 
doing so is deemed to be in the public interest.
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    \1\ In this notice, references to ``Buy America'' include 
domestic preference laws called ``Buy American'' that apply to DOT 
financial assistance programs.
    \2\ For example, Section 409 of the Transportation, Housing and 
Urban Development, and Related Agencies Appropriations Act, 2022 
states that ``no funds appropriated pursuant to this Act may be 
expended by an entity unless the entity agrees that in expending the 
assistance the entity will comply with sections 2 through 4 of the 
Act of March 3, 1933 (41 U.S.C. 8301-8305, popularly known as the 
``Buy American Act'').''
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    Certain DOT OAs currently do not apply Buy America preferences to 
de minimis purchases or project costs under their existing statutory 
requirements. For example, the Federal Transit Administration (FTA) 
exempts purchases of $150,000 or less by statute. 49 U.S.C. 
5323(j)(13). The Federal Highway Administration's (FHWA) minimum 
threshold for Buy America to apply is $2,500 (the total amount of iron 
and steel products as delivered to the project) or 0.1% of the total 
contract amount, whichever is greater. 23 CFR 635.410(b)(4). However, 
other DOT OAs, including the Federal Railroad Administration (FRA), the 
Federal Aviation Administration (FAA), and the Maritime Administration 
(MARAD) do not have similar exceptions by statute or regulation.
    In DOT's experience, the development and substantiation of 
individual Buy America waivers requires recipients to determine the 
availability or nonavailability of domestically sourced items. Such 
efforts can help ensure that potential domestic suppliers are not 
overlooked and, where waivers may be appropriate, help send signals to 
industry about market opportunities. However, when the cost of the 
items is relatively low, suppliers may have a lesser incentive to track 
and document the country of origin of those items in a manner 
sufficient to meet the requirements of the Buy America statutes applied 
to Federal assistance, which can lead to increased administrative 
burdens even as the potential impact of applying domestic preferences 
in those cases may be lower. Focusing on higher value items can also 
allow Federal agencies and their assistance recipients to focus their 
domestic sourcing efforts on products that provide the greatest 
manufacturing opportunities for American workers and firms and reduce 
delays in the delivery of important transportation infrastructure 
projects that provide jobs and promote economic growth.
    Transportation infrastructure projects use a variety of iron and 
steel items, manufactured goods, and construction materials. Typical 
iron and steel items subject to Buy America preferences include 
structural and reinforcing steel incorporated into pavements, bridges, 
and buildings (such as maintenance facilities); steel rail; rolling 
stock (such as buses and trains); and other equipment. Manufactured 
products may include airfield lighting and navigational aids; ties and 
ballast; traffic control systems; fare collection and other electronic 
systems; and mooring bollards, fenders, and gate operating systems. 
Construction materials include non-ferrous metals, plastic and polymer-
based products, glass, lumber, and drywall, as well as materials \3\ 
that are explicitly exempted from being considered construction 
materials under the Act.
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    \3\ See BIL section 701917(c). Exempted materials include cement 
and cementitious materials, aggregates such as stone, sand, or 
gravel, and aggregate binding agents or additives.
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Proposed Waiver and Request for Comments

    DOT is proposing to use its authority under Section 70914(b)(1) to 
waive the Act's Buy America preferences for iron and steel, 
manufactured products, and construction materials used in 
infrastructure projects funded under DOT-administered financial 
assistance programs for iron, steel, manufactured products, and 
construction materials under a single financial assistance award for 
which:
     The total value of the non-compliant products is no more 
than the lesser of $1,000,000 or 5% of total allowable costs under the 
Federal financial assistance award;
     The size of the Federal financial assistance award is 
below $500,000; or
     The non-domestically produced miscellaneous minor 
components comprise no more than 5 percent of the total material cost 
of an otherwise domestically produced iron or steel product.
    The basis for this proposal is that applying Buy America 
preferences to iron, steel, manufactured products, and construction 
materials below these thresholds would be inconsistent with the public 
interest. If issued, the waiver would be applicable to awards that are 
obligated on or after the effective date of the waiver. The Department 
requests comment on whether such a waiver would be warranted. DOT also 
specifically seeks comment on the proposed percentage and dollar 
thresholds for applying the waiver, including whether those thresholds 
should be higher or lower than the levels in the proposal.
    Because many DOT-administered financial assistance programs are 
also subject to program-specific domestic preference requirements, the 
waiver proposed in this notice would also apply to those requirements. 
Specifically, the waiver would also be an exercise of DOT's authority 
to issue public interest waivers under 23 U.S.C. 313(b)(1), 49 U.S.C. 
5323(j); 46 U.S.C. 54101(d)(2)(B)(i)(I), 49 U.S.C. 22905(a)(2), 49 
U.S.C. 50101(b)(1), and 41 U.S.C. Chapter 83.
    In developing this proposal, DOT considered different thresholds 
for applying the waiver to small grants. While DOT makes federal 
assistance through discretionary and formula awards at a variety of 
dollar amounts, the vast majority of its assistance funding is provided 
in larger sums to transportation infrastructure projects. Reviewing 
19,000 awards totaling $83 billion in FY 2022 that may be covered by 
DOT's domestic preference requirements, awards for an amount under 
$500,000 represented 48% of the 19,000 total, but just 1.4% of the $83 
billion. Awards under $250,000 accounted for 37% of the 19,000 total 
and 0.5% of the $83 billion. Given the scope and scale of DOT's 
infrastructure assistance programs, the Department believes that it is 
appropriate to apply the waiver to awards below the higher $500,000 
threshold, as this would significantly reduce administrative burdens 
while still ensuring that Buy America requirements would be applied to 
almost all DOT assistance funding. DOT seeks comment on the proposed 
dollar threshold for applying the waiver to small grants.
    DOT believes that waiving the domestic preference requirements for 
lower-cost items purchased for infrastructure projects under the Act 
and the DOT-administered Buy America statutes referenced above will 
support the goals of E.O. 14005 to maximize domestic content in Federal 
financial assistance awards. Doing so will allow the Department and its 
assistance recipients to make efficient use of its limited resources to 
focus their efforts on higher-value products with more significant 
opportunities to develop a domestic supply base and create well-paid 
jobs for American workers.
    Section 70914(d) of the Act requires that any general applicability 
waivers issued under section 70914(b) must ``be reviewed every 5 years 
after the date on which the waiver is issued,'' and prescribes a 
process for that review that includes an opportunity for public notice 
and comment and publication in the Federal Register of a determination 
on whether to continue or discontinue the waiver at that time. 
Accordingly, this proposed general applicability waiver would be 
subject to such a review within five years of its issue

[[Page 68578]]

date. However, DOT would reserve the right to modify or shorten the 
duration of this waiver if it obtains information before the end of the 
five-year period indicating the waiver is no longer in the public 
interest.
    The Implementation Guidance also provides that, before granting a 
waiver in the public interest, to the extent permitted by law, agencies 
shall assess whether a significant portion of any cost advantage of a 
foreign-sourced product is ``the result of the use of dumped steel, 
iron, or manufactured products or the use of injuriously subsidized 
steel, iron, or manufactured products.'' Implementation Guidance at p. 
12. E.O. 14005 at Section 5 includes a similar requirement for ``steel, 
iron, or manufactured goods.'' However, because the public interest 
waiver that DOT is proposing in this notice is not based on 
consideration of the cost advantage of any foreign-sourced steel, iron, 
or manufactured product content, there is not a specific cost advantage 
for DOT to consider.
    DOT will consider all comments received in the initial 15-day 
comment period during our consideration of the proposed waiver, as 
required by section 70914(c)(2) of the BIL. Comments received after 
this period, but before notice of our finding is published in the 
Federal Register, will be considered to the extent practicable. Section 
117 of the SAFETEA-LU Technical Corrections Act of 2008 (Pub. L. 110-
244, 122 Stat. 1572) also requires an additional 5-day, comment period 
after FHWA publishes a waiver finding notice. Comments received during 
that period will be reviewed, but the finding will continue to remain 
valid. Those comments may influence DOT/FHWA's decision to terminate or 
modify a finding.

    Issued in Washington, DC on: November 4, 2022.
Polly E. Trottenberg,
Deputy Secretary.
[FR Doc. 2022-24744 Filed 11-14-22; 8:45 am]
BILLING CODE 4910-9X-P


