[Federal Register Volume 87, Number 219 (Tuesday, November 15, 2022)]
[Notices]
[Pages 68572-68576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24743]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. DOT-OST-2022-0123]


Notice That the Build America, Buy America Requirement for 
Construction Materials Applies Effective November 10, 2022, and Notice 
of Proposed Waiver of That Requirement for a Narrow Category of 
Contracts and Solicitations

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 DOT's approach to domestic procurement 
requirements and is designed to drive significant investment in 
domestic manufacturing, spur job creation and grow the economy. 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 narrow waiver for de minimis costs, small 
grants, and minor components; and (3) in this notice, DOT is proposing 
to take two actions to help transition to the new construction 
materials standard. First, for DOT awards obligated on or after the 
effective date of the final waiver, DOT is proposing to waive the 
construction materials requirements for any contracts entered into 
before November 10, 2022. Second, DOT is proposing to waive the 
construction materials requirements for any contracts entered into 
before March 10, 2023, that result from solicitations published before 
May 14, 2022.

DATES: Comments must be received by November 20, 2022. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: Please submit your comments to the Federal eRulemaking 
Portal at http://www.regulations.gov/, Docket: DOT-OST-2022-0123.

    Note: All submissions must contain the agency name and the 
docket number. 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 14005, 
titled ``Ensuring the Future is Made in All of America by All of 
America's Workers,'' launching a whole-of-government initiative to 
strengthen Made in America

[[Page 68573]]

standards. The Executive Order 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 
Executive Order 14005 and has a long track record of successfully 
applying Made in America standards to support American workers and 
businesses through its more than $70 billion in grant programs and $700 
million in direct purchases in FY 2020.
    On November 15, 2021, President Biden signed the Infrastructure 
Investment and Jobs Act (IIJA or the Bipartisan Infrastructure Law), 
Public Law 117-58, which includes the Build America, Buy America Act 
(BABA). IIJA div. G Sec. Sec.  70901-27. The Bipartisan Infrastructure 
Law not only makes an historic investment in American transportation--
from roads and bridges to rail to transit--but also greatly strengthens 
Made in America standards. Specifically, BABA expands the coverage and 
application of Buy America preferences in Federal financial assistance 
programs for infrastructure. BABA requires that no later than May 14, 
2022--180 days after the date of enactment--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.'' IIJA Sec.  70914(a).
    BABA 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. IIJA Sec.  70917(a)-
(b). This provision allows Federal agencies to preserve existing Buy 
America policies and provisions that meet or exceed the standards 
required by BABA.
    One of the new Buy America preferences included under BABA is for 
construction materials. By May 14, 2022, each covered Federal agency 
must ensure that all manufacturing processes for construction materials 
used in federally assisted infrastructure projects occur in the United 
States. None of the specific statutes that apply particular Buy America 
requirements to the Federal financial assistance programs administered 
by DOT's Operating Administrations specifically covers construction 
materials, other than to the extent that such materials would already 
be considered iron, steel, or manufactured products. IIJA Sec.  70914.
    In addition to establishing Buy America preferences, BABA also 
provides certain statutory authorities for the Made in America Office 
(MIAO) in the Office of Management and Budget (OMB). IIJA Sec. Sec.  
70915(b), 70923. MIAO was first established by Section 4 of Executive 
Order 14005. MIAO's authorities under the Bipartisan Infrastructure Law 
include issuing guidance to assist in applying BABA's requirements and 
issuing standards that define the term ``all manufacturing processes'' 
in the case of construction materials. IIJA 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). Under Section VIII of the Implementation 
Guidance, ``construction materials'' includes: an article, material, or 
supply--other than an item of primarily iron or steel; a manufactured 
product; cement and cementitious materials; aggregates such as stone, 
sand, or gravel; or aggregate binding agents or additives--that is or 
consists primarily of:

 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; or
 drywall.

Implementation Guidance at 13-14.
    The Implementation Guidance states that ``an article, material, or 
supply should only be classified into one of the following categories: 
(1) iron or steel; (2) a manufactured product; or (3) a construction 
material. For ease of administration, an article, material, or supply 
should not be considered to fall into multiple categories.'' Id. at 6. 
The Implementation Guidance also explains that ``items that consist of 
two or more of the listed materials that have been combined together 
through a manufacturing process, and items that include at least one of 
the listed materials combined with a material that is not listed 
through a manufacturing process, should be treated as manufactured 
products, rather than as construction materials.'' Id. at 14. OMB 
characterizes its guidance on which materials are construction 
materials as ``preliminary and non-binding guidance . . . so that 
agencies can begin applying Buy America requirements to those 
materials.'' Id. at 13.
    Section 70915(b) of BABA requires OMB to issue standards that 
define ``all manufacturing processes'' for construction materials. 
Section VIII of the Implementation Guidance provides that, ``[p]ending 
MIAO's issuance of final standards on construction materials, and 
absent any existing applicable standard in law or regulation that meets 
or exceeds these preliminary standards, agencies should consider `all 
manufacturing processes' for construction materials to mean the final 
manufacturing process and the immediately preceding manufacturing stage 
for the construction material.'' Implementation Guidance at 14. After 
considering information received through stakeholder and industry 
outreach, MIAO will issue further guidance that identifies initial 
manufacturing processes for each type of construction material that 
should be considered as part of ``all manufacturing processes.'' Id. 
Agencies are also directed to ``consult with MIAO, as needed, to ensure 
that any waiver issued for construction materials is explicitly 
targeted and time-limited, in order to send a clear market signal that 
additional standards for `all manufacturing processes' in the case of 
construction materials will be forthcoming.'' Id.
    In April 2022, DOT opened a public docket (DOT-OST-2022-0047) to 
receive comments in response to DOT's proposal to waive the 
construction materials requirement for 180 days, to allow for a longer 
transition period. On May 19, 2022, DOT issued a temporary waiver of 
the construction materials requirement for 180 days: from May 14 until 
November 10, 2022. 87 FR 31931. In the waiver notice, DOT stated its 
expectation that States, industry, and other participants establish 
procedures to document compliance.
    During the waiver period, DOT is continuing its engagement to help 
facilitate the creation of robust enforcement and compliance mechanisms 
and to rapidly encourage domestic sourcing of construction materials 
for transportation infrastructure improvements. On July 28, 2022, DOT 
issued a Request for Information (RFI) seeking input from the public, 
including DOT's project sponsors, their contractors and offerors, 
manufacturers, labor unions, transportation and trade associations, and 
other interested parties on implementing BABA's new construction

[[Page 68574]]

materials requirement. 87 FR 45397. DOT asked the public to submit 
comments to the same docket DOT used to propose the 180-day waiver.
    Based on its review of comments received on the RFI and other 
engagement opportunities with stakeholders, and consistent with the 
purpose of the temporary transitional waiver, DOT does not intend to 
modify or extend the existing DOT waiver for construction materials. As 
a result, DOT awards obligated on or after November 10, 2022, from 
financial assistance programs for infrastructure projects will be 
subject to the BABA requirement that construction materials used on 
those projects be produced in the United States.

The Need for a Waiver

    The Implementation Guidance states that a ``waiver in the public 
interest may be appropriate where an agency determines that other 
important policy goals cannot be achieved consistent with the Buy 
America requirements established by the Act.'' Implementation Guidance 
at 10. The guidance also recognizes several instances in which Federal 
agencies may consider issuing a public interest waiver and encourages 
agencies to consider an adjustment period where time-limited waivers 
would allow recipients and agencies to transition to new Buy America 
preferences, rules, and processes. Id. at 11.
    Since enactment of the Bipartisan Infrastructure Law, DOT has 
received numerous inquiries and comments from recipients raising 
concerns about the applicability of the new construction materials 
requirement to projects that already are under construction or are in 
advanced stages of planning. For example, a large West Coast transit 
system asked whether its projects already under construction could 
continue to comply with Buy America requirements as they existed at the 
time of contract award, or if they would be affected by the new 
domestic preference for construction materials. A large northeastern 
transit system similarly asked how the construction materials 
requirement would apply to a major construction project that is 
underway. The project already has some Federal financial assistance, 
and the transit system is concerned about the project remaining 
eligible for additional grant awards on or after November 10.
    Some commenters on the proposed temporary waiver for construction 
materials issued by DOT in April and on the RFI issued in July also 
described problems that would arise if DOT were to apply the 
construction materials requirement to projects that have been under 
development or construction prior to the expiration of the temporary 
waiver on November 10.
    For example, the Santa Clara Valley Transportation Authority asked 
whether the construction materials requirement will apply to 
construction contracts that it already has executed under pre-award 
authority for a project in the Federal Transit Administration's (FTA) 
Expedited Project Delivery Pilot Program, which may receive an FTA 
grant that would be awarded on or after November 10.\1\ The New York 
Metropolitan Transportation Authority requested that DOT waive the 
construction materials requirement for, inter alia, (a) any contracts 
awarded during the waiver period, and (b) any contracts executed during 
the DOT waiver period using pre-award authority if they are funded by 
grants awarded after the waiver period.\2\ Capital Metro requested that 
contracts awarded before the construction materials requirement takes 
effect be allowed to comply with Buy America standards as they existed 
at the time the contract was formed, even if the contract is funded by 
grants obligated in subsequent years.\3\
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    \1\ Comment from the Santa Clara Valley Transportation Authority 
(Aug. 16, 2022), https://www.regulations.gov/comment/DOT-OST-2022-0047-0122.
    \2\ Comment from the New York Metropolitan Transportation 
Authority (May 13, 2022), https://www.regulations.gov/comment/DOT-OST-2022-0047-0037.
    \3\ Comment from the Capital Metropolitan Transportation 
Authority (May 13, 2022), https://www.regulations.gov/comment/DOT-OST-2022-0047-0049.
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    Several State departments of transportation expressed similar 
concerns in their submissions to the docket. For example, the New 
Jersey Department of Transportation commented that redesigning projects 
that are in an advanced state of design could be expensive and 
negatively affect project delivery and requested that such projects be 
exempt from the new construction materials requirement.\4\ Similarly, 
the South Dakota Department of Transportation commented that it is not 
appropriate or feasible to apply the construction materials requirement 
to projects where bids were already submitted, and contracts awarded, 
based on using materials with no country-of-origin specifications; 
doing so would possibly require cancelling current contracts and would 
add delay and additional costs for project sponsors.\5\ The California 
Department of Transportation reported that it has many multi-year 
contracts in place that incorporate Buy America standards as they 
existed before BABA and asked whether these contracts will remain 
eligible for Federal grants obligated on or after November 10.\6\ 
Additionally, a joint comment submitted by the transportation 
departments of Idaho, Montana, North Dakota, South Dakota, and Wyoming 
requested that DOT not apply the new construction materials requirement 
to projects where bids were already submitted and awarded without 
country-of-origin requirements, because doing so could require project 
sponsors and contractors to cancel orders or cancel contracts and incur 
additional costs and delays.\7\
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    \4\ Comment from the New Jersey Department of Transportation 
(Aug. 12, 2022), https://www.regulations.gov/comment/DOT-OST-2022-0047-0111.
    \5\ Comment from the South Dakota Department of Transportation 
(Aug. 18, 2022), https://www.regulations.gov/comment/DOT-OST-2022-0047-0167.
    \6\ Comment from the California Department of Transportation 
(Aug. 18, 2022), https://www.regulations.gov/comment/DOT-OST-2022-0047-0170.
    \7\ Comment from the Transportation Departments of Idaho, 
Montana, North Dakota, South Dakota, and Wyoming (Aug. 17, 2022), 
https://www.regulations.gov/comment/DOT-OST-2022-0047-0132.
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    Based on these and other inquiries and comments, DOT has identified 
certain categories of projects for which application of the BABA 
construction materials requirement after the DOT waiver expires would 
present significant concerns:
    (1) projects that have received DOT financial assistance awards 
before November 10, 2022--and sometimes even prior to enactment of the 
Bipartisan Infrastructure Law--that have completed procurements 
involving construction materials or currently are in the process of 
soliciting construction contracts, and will receive additional DOT 
financial assistance that will be obligated on or after November 10, 
2022;
    (2) projects that will be funded by DOT grants obligated on or 
after November 10, 2022, for which recipients have exercised DOT-
approved pre-award authority before November 10 to execute or solicit 
construction contracts prior to grant award;
    (3) projects that will be funded by DOT credit assistance obligated 
on or after November 10, 2022, for which recipients solicited 
construction contracts before May 14, 2022;
    Requiring compliance with the BABA domestic preference for 
construction materials would be unduly burdensome for projects that 
already have executed construction contracts, because they already have 
received DOT financial

[[Page 68575]]

assistance, are exercising DOT-approved pre-award authority, or will 
receive DOT credit assistance for activities already in progress.\8\ 
Under these circumstances, application of the construction materials 
requirement could compel contract terminations and cause projects to be 
put on hold while conducting new procurements. Accordingly, application 
of the construction materials requirement to these categories of 
projects would result in unacceptable delay, increased project costs, 
and potential loss of jobs while project construction is paused.
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    \8\ For information related to pre-award costs, see 2 CFR 
200.458, ``Pre-award costs.'' Some DOT OAs have program-specific 
guidance on pre-award authority, including FTA's ``Notice of FTA 
Transit Program Changes, Authorized Funding Levels and 
Implementation of the Infrastructure Investment and Jobs Act; and 
FTA Fiscal Year 2022 Apportionments, Allocations, Program 
Information and Interim Guidance'', 87 FR 25362 (April 28, 2022).
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    Additionally, for large infrastructure projects, the preparation of 
solicitations by project sponsors and the preparation of bids and 
proposals by offerors require significant time and investment, and are 
based on project design that occurs well in advance of the 
solicitations. DOT recipients throughout the country have exercised 
pre-award authority to solicit construction contracts prior to the May 
14, 2022, effective date of the construction materials requirement, for 
which contract award will not occur until on or after November 10. 
Applicants to DOT's credit assistance programs often have solicitations 
underway concurrent with the Department's application and 
creditworthiness reviews. In these instances, amending the 
specifications of the contract solicitations to impose new requirements 
that were not previously applicable would cause considerable delay.

Proposed Waiver and Request for Comments

    DOT recognizes the importance of ensuring the use of domestically 
produced construction materials on infrastructure projects receiving 
Federal assistance and the need to implement the requirement in a way 
that does not delay delivery of projects that were sufficiently 
advanced before the requirement applies to DOT funding. Therefore, for 
DOT awards obligated on or after the effective date of the waiver, DOT 
proposes to issue a general public interest waiver of BABA's domestic 
preference for construction materials for:
    (1) Any contract entered into before November 10, 2022; and
    (2) Any contract entered into before March 10, 2023, if the 
contract results from a solicitation published prior to May 14, 2022.
    In these limited circumstances, DOT recipients incurred costs, 
executed contracts, are conducting procurements with long lead times 
prior to the BABA construction materials requirement taking effect, 
though they will seek Federal reimbursement through grants obligated on 
or after November 10, 2022. This proposed waiver would preserve the 
eligibility of costs a project sponsor already incurred or estimated 
before the construction materials requirement took effect. The purpose 
of covering contracts through March 10, 2023, for contracts resulting 
from solicitations published before the May 14, 2022, BABA effective 
date, is to provide recipients with reasonable time to complete 
procurements. Project sponsors and offerors have invested significant 
resources in such procurements, which are based on design and 
engineering conducted before the BABA construction materials 
requirement went into effect. A project sponsor whose solicitation does 
not result in a contract before March 10, 2023, would have to take such 
measures as may be necessary to ensure that its contract will comply 
with the construction materials requirement.
    If issued, this waiver would apply only to projects funded by DOT 
financial assistance obligated on or after the effective date of the 
waiver. DOT financial assistance obligated before the expiration of the 
temporary DOT waiver on November 10, 2022 is not subject to the BABA's 
construction materials requirement.
    DOT requests comments on the applicable dates proposed in this 
waiver. DOT also requests comments on whether this waiver should be 
time-limited or phased for certain long-term contracts.
    In order to support a more efficient and targeted process for 
future waivers, DOT requests comment on whether there are other 
scenarios where project delivery would be significantly disrupted or 
delayed because of circumstances such as the level of design and 
engineering for a project that has occurred in relation to the 
effective date of the construction materials preference and provide 
specific information as to the construction materials which may not be 
available. For example, are there specific circumstances that may 
justify a project specific waiver, such as the unavailability of 
specific construction materials manufactured in the United States in 
sufficient quantity or quality for a particular DOT-funded 
transportation project or category of projects? Additionally, are there 
transportation projects, such as projects in various stages of FTA's 
Capital Investment Grants program, for which a waiver may be justified 
due to significant delay in project delivery. If completed design and 
engineering must be revised to comply with the construction materials 
preference after November 10, 2022, DOT seeks comments on the length 
and type of waiver which may be necessary to mitigate a significant 
delay.
    This proposed waiver would apply to infrastructure projects funded 
by financial assistance administered by the Office of Secretary of 
Transportation or any of DOT's Operating Administrations with financial 
assistance programs, including the Federal Aviation Administration 
(FAA); the Federal Highway Administration (FHWA); the Federal Motor 
Carrier Safety Administration; the Federal Railroad Administration 
(FRA); the Federal Transit Administration (FTA); the Maritime 
Administration (MARAD); the National Highway Traffic Administration 
(NHTSA); and the Pipeline and Hazardous Materials Safety Administration 
(PHMSA).
    This proposed waiver would not affect any domestic preference 
requirements under other authorities, including DOT's non-BABA domestic 
preference statutes: 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).
    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 15-day comment 
period, as required by section 70914(c)(2) of the BIL. DOT will 
consider comments received after the comment period to the extent 
practicable.


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    Issued in Washington, DC on: November 8, 2022.
Polly E. Trottenberg,
Deputy Secretary.
[FR Doc. 2022-24743 Filed 11-14-22; 8:45 am]
BILLING CODE 4910-9X-P