[Federal Register Volume 89, Number 49 (Tuesday, March 12, 2024)]
[Proposed Rules]
[Pages 17789-17804]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-05182]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 635

[Docket No. FHWA-2023-0037]
RIN 2125-AG13


Buy America Requirements for Manufactured Products

AGENCY: Federal Highway Administration (FHWA), U.S. Department of 
Transportation (DOT).

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The FHWA is proposing to discontinue its general waiver of Buy 
America requirements for manufactured products and in doing so require 
FHWA recipients to start applying Buy America requirements to 
manufactured products. The FHWA is also proposing standards for 
applying Buy America to manufactured products should the waiver be 
discontinued. The proposed standards for applying Buy America to 
manufactured products are consistent with the Office of Management and 
Budget's (OMB) guidance implementing the Build America, Buy America Act 
(BABA) provisions of the Infrastructure Investment and Jobs Act (also 
known as the Bipartisan Infrastructure Law (BIL)).

DATES: Comments must be received on or before May 13, 2024.

ADDRESSES: To ensure that you do not duplicate your docket submissions, 
please submit comments by only one of the following means:
     Federal eRulemaking Portal: Go to www.regulations.gov and 
follow the online instructions for submitting comments.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: U.S. Department of Transportation, Docket 
Operations, West Building Ground Floor, Room W12-140, 1200 New Jersey 
Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday 
through Friday, except Federal holidays. The telephone number is (202) 
366-9329.
    All submissions should include the agency name and the docket 
number that appears in the heading of this document or the Regulation 
Identifier Number (RIN) for the rulemaking. All comments received will 
be posted without change to www.regulations.gov, including any personal 
information provided.

FOR FURTHER INFORMATION CONTACT: For questions about this document, 
please contact Mr. Brian Hogge, Office of Infrastructure, (202) 366-
1562, or via email at [email protected]. For legal questions, please 
contact Mr. David Serody, Office of the Chief Counsel, (202) 366-4241, 
or via email at [email protected]. Office hours are from 8 a.m. to 
4:30 p.m., E.T., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION: 

Electronic Access and Filing

    This document and all comments received may be viewed online 
through the Federal eRulemaking portal at www.regulations.gov using the 
docket number listed above. Electronic retrieval help and guidelines 
are also available at www.regulations.gov. An electronic copy of this 
document may also be downloaded from the Office of the Federal 
Register's website at www.FederalRegister.gov and the U.S. Government 
Publishing Office's website at www.GovInfo.gov.
    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable. In addition to late comments, 
FHWA will also continue to file relevant information in the docket as 
it becomes available after the comment period closing date and 
interested persons should continue to examine the docket for new 
material. A final rule may be published at any time

[[Page 17790]]

after the close of the comment period and after FHWA has had the 
opportunity to review the comments submitted.

I. Executive Summary

A. Purpose of the Regulatory Action

    The FHWA is required, by statute, to ensure that all FHWA-funded 
projects only use steel, iron, and manufactured products that are 
produced in the United States. 23 U.S.C. 313. The FHWA refers to these 
requirements as ``Buy America'' requirements. The Buy America 
requirement for manufactured products has existed in some form since 
the enactment of the 1978 Surface Transportation Assistance Act (1978 
STAA), Public Law 95-599 (1978), with those requirements being modified 
by the 1983 Surface Transportation Assistance Act (1983 STAA), Public 
Law 97-424 (1983),\1\ which provides the current Buy America 
requirement for manufactured products. In 1983, following the passage 
of the 1983 STAA, FHWA determined that it would be in the public 
interest to waive the Buy America requirements for manufactured 
products, creating the Manufactured Products General Waiver that 
continues to this day. See 48 FR 1946 (Jan. 17, 1983); 48 FR 53099 
(Nov. 25, 1983). Due to the Manufactured Products General Waiver, 
manufactured products permanently incorporated into FHWA-funded 
projects do not need to be produced domestically, apart from 
predominantly iron or steel manufactured products and predominantly 
iron or steel components of manufactured products.
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    \1\ For clarity, while this law was enacted as the Surface 
Transportation Assistance Act of 1982, because it was enacted on 
January 6, 1983, it will be referred to as the ``1983 STAA.''
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    On November 15, 2021, the President signed BIL (Pub. L. 117-58) 
into law. The BIL includes the Buy America, Build America Act (BABA), 
which expands the coverage and application of Buy America requirements 
in Federal financial assistance programs for infrastructure. BIL, div. 
G sections 70901-70953. Among other requirements, BABA mandates that 
all iron, steel, manufactured products, and construction materials used 
in projects supported by funds made available for a Federal financial 
assistance program for infrastructure be produced in the United States. 
BABA section 70914. BABA provides that this mandate applies to such 
materials only to the extent that a domestic content procurement 
preference that meets the requirements of section 70914 does not 
already apply. BABA section 70917(a). As FHWA has an existing statutory 
Buy America requirement for steel, iron, and manufactured products at 
23 U.S.C. 313, BABA's savings provision means that FHWA's existing Buy 
America requirements under 23 U.S.C. 313 apply to these products. The 
BABA's savings provision, however, requires that any domestic content 
procurement preference at least meets the requirements of section 
70914. The requirements of section 70914 apply the definitions 
contained in section 70912, including the definition of ``produced in 
the United States.'' Accordingly, while FHWA does not directly apply 
BABA's manufactured products requirements, FHWA interprets BABA as 
requiring FHWA's Buy America requirements to be generally consistent 
with the BABA requirements that are applicable to section 70914, 
including the BABA definition of ``produced in the United States'' for 
manufactured products at section 70912(6)(B).
    BABA also expresses a general policy preference against general 
applicability waivers like the Manufactured Products General Waiver. 
Section 70914(d) of BABA requires Federal Agencies to review existing 
general applicability waivers of Buy America requirements by publishing 
in the Federal Register a notice that: (i) describes the justification 
for the general applicability waiver; and (ii) requests public comments 
for a period of not less than 30 days on the continued need for the 
general applicability waiver. As described in further detail below, 
FHWA has undergone that review.
    Based on the contents of that review, and after considering the 
President's policy, as embodied in Executive Order (E.O.) 14005, 
``Ensuring the Future Is Made in All of America by All of America's 
Workers,'' to maximize the use of goods, products, and materials 
produced in the United States; the intent of Congress, as expressed in 
BABA's preference against general applicability waivers; the purpose 
and goals of domestic content procurement preferences and waivers; and 
FHWA's original rationale for issuing the Manufactured Products General 
Waiver compared to the current domestic manufacturing situation, FHWA 
is proposing the discontinuation of the Manufactured Products General 
Waiver. Simultaneously, FHWA is proposing to modify its current 
regulations implementing Buy America at 23 CFR 635.410 to set forth the 
standards for when a manufactured product will be considered to be 
``produced in the United States'' and therefore Buy America-compliant. 
For uniformity and consistency with BABA, FHWA is proposing that these 
standards mirror the standards OMB has established for BABA's domestic 
content procurement preference for manufactured products in its final 
guidance implementing BABA at 2 CFR part 184 (part 184).\2\ 88 FR 
57750.
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    \2\ Throughout this document, references to part 184 refer to 
both the text in 2 CFR part 184 and the Preamble published in the 
Federal Register.
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B. Summary of the Major Provisions of the Regulatory Action in Question

    The FHWA is proposing to set standards regarding its Buy America 
requirement for manufactured products, defining when a manufactured 
product is ``produced in the United States'' for the purposes of 
complying with 23 U.S.C. 313. Under this definition, which mirrors the 
definition at section 70912(6)(B) of BABA and in part 184, to be 
produced in the United States, a manufactured product must be 
manufactured in the United States and have the cost of components of 
the product that are mined, produced, or manufactured in the United 
States be greater than 55 percent of the total cost of all components 
of the manufactured product. The FHWA is also proposing to mirror the 
standard in part 184 for how to determine the cost of any component. To 
provide clarity in presenting these standards, FHWA is also proposing 
to define ``component,'' ``manufactured product,'' and 
``manufacturer,'' with these definitions again proposed to be 
substantially similar to those used in part 184.
    In addition, FHWA is not proposing to modify its current Buy 
America requirements for iron and steel.\3\ To distinguish between iron 
and steel products, to which FHWA's existing Buy America requirements 
will continue to apply, and manufactured products, FHWA is proposing to 
adopt the definitions of ``iron or steel products'' and ``predominantly 
of iron or steel or a combination of both'' found in part 184.
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    \3\ The FHWA's longstanding Buy America requirements for iron 
and steel require that all manufacturing processes of permanently 
incorporated steel or iron materials, including application of a 
coating, must occur in the United States. 23 CFR 635.410(b)(1). BABA 
included domestic content procurement preferences for iron and steel 
at section 70912(2)(A), which require that all manufacturing 
processes, from the initial melting stage through the application of 
a coating, occur in the United States. Since FHWA's requirements for 
iron and steel meet BABA's requirements for iron and steel, FHWA 
continues to apply its existing Buy America requirements unchanged. 
The FHWA notes, however, that its current Buy America requirements 
for iron and steel are substantially aligned with BABA's.
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    In alignment with part 184, FHWA is also establishing a separate 
classification for excluded materials,

[[Page 17791]]

referred to as section 70917(c) materials in part 184. These excluded 
materials are cement and cementitious materials; aggregates such as 
stone, sand, or gravel; or aggregate binding agents or additives. The 
FHWA is proposing to make clear that, standing alone, these excluded 
materials do not constitute a manufactured product for which a Buy 
America requirement applies. Under FHWA's proposed regulations, such 
excluded materials may constitute a component of a manufactured product 
when combined with other materials, including other excluded materials; 
however, FHWA is proposing to explicitly state that concrete and 
asphalt mixtures delivered to a job site without final form for 
incorporation into a project are not manufactured products.
    In addition, for clarity, FHWA is proposing to make clear that a 
product must either be classified as an iron or steel product, a 
manufactured product, an excluded material, or another category 
specified by law or in 2 CFR part 184, such as construction materials. 
The FHWA believes that this, in concert with the new definitions, will 
make clear how recipients of FHWA financial assistance should 
differentiate between different materials and ensure that multiple 
standards do not apply to a single material, with exceptions for two 
specific manufactured products described below.
    The FHWA proposes to deviate from the part 184 by applying FHWA's 
existing Buy America requirements for iron and steel to two specific 
types of materials that may be used as components of manufactured 
products, with those manufactured products also required to conform 
with FHWA's proposed Buy America requirements for manufactured 
products.\4\ First, with respect to precast concrete products that are 
classified as manufactured products, FHWA is proposing to require that 
any iron or steel products that are components of the precast concrete 
product must conform with FHWA's existing Buy America requirements for 
iron and steel. Second, with respect to intelligent transportation 
systems and other electronic hardware systems that are installed in the 
highway right-of-way or other real property and classified as 
manufactured products, FHWA is proposing to require that any iron or 
steel enclosures of such systems conform with FHWA's existing Buy 
America requirements for steel and iron. The FHWA is proposing these 
two deviations from part 184 in order to continue FHWA's long-standing 
policy of requiring the iron or steel in these specified products to 
comply with the Buy America requirements for iron and steel, while also 
limiting the number of products that must comply with two different Buy 
America requirements. Along with these iron and steel requirements, 
under FHWA's proposed standards, precast concrete and such electronic 
hardware systems, when classified as manufactured products, would still 
need to meet FHWA's proposed standards for manufactured products; 
therefore, the cost of the iron and steel within the products shall 
count toward the 55 percent domestic content threshold.
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    \4\ Unlike these proposed regulations, under part 184, materials 
should not be considered to fall into multiple categories, and only 
need to meet the domestic content procurement preference for only 
the single category in which it is classified. See 2 CFR 184.4(e), 
(f).
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C. Benefits and Costs

    The preliminary regulatory impact analysis (RIA) prepared pursuant 
to Executive Order 12866, ``Regulatory Planning and Review,'' and 
available in the rulemaking docket, analyzes the costs and benefits 
associated with establishing Buy America requirements for manufactured 
products. The RIA discusses anticipated benefits of the rule 
qualitatively, as they could not be quantified. Expected benefits 
include protecting and expanding domestic manufacturing, increasing 
supply chain resiliency, and increasing consistency in applying 
domestic content procurement preferences for manufactured products 
between FHWA and other Federal Agencies that are subject to the 
requirements of BABA. Expected costs of the proposed rule relate to 
increased material costs for manufactured products used in highway 
construction projects, project delay, and the administrative costs to 
FHWA and recipients of FHWA financial assistance. At this time, FHWA is 
only able to quantify costs for the increased material costs and the 
administrative costs to FHWA. The FHWA estimates the increased material 
costs for manufactured products permanently incorporated into FHWA-
funded projects to range from a high of roughly $737 million per year 
to a low of $45 million per year. The FHWA further estimates an 
additional $167,000 per year in increased FHWA administrative costs. 
The other administrative costs to recipients of FHWA financial 
assistance and the costs associated with project delivery delay have 
not been quantified.

II. Background

A. History of FHWA's Manufactured Products Domestic Content Procurement 
Preference and Manufactured Products General Waiver

    The FHWA's Buy America requirements for the Federal-aid highway 
program were first established in 1978 by Section 401 of the 1978 STAA, 
which imposed a Buy America requirement to certain unmanufactured and 
manufactured articles, materials, and supplies. Following enactment of 
the 1978 STAA, FHWA issued an emergency rule to implement the Buy 
America requirement of Section 401. See 43 FR 53717 (Nov. 17, 1978). In 
that rule, FHWA determined that it was in the public interest to 
temporarily waive the provisions of Section 401 of the 1978 STAA to all 
products and materials other than structural steel. 43 FR at 53717. The 
FHWA based this determination on its belief that the implementation of 
the statutory text of Section 401 would have a major impact on the 
Federal-aid highway program and that foreign structural steel was the 
only foreign product with a significant nationwide effect on the cost 
of Federal-aid highway construction projects. Id.
    In 1980, following this emergency rule, FHWA issued an NPRM to 
establish regulations implementing Section 401 of the 1978 STAA. 45 FR 
77455 (Nov. 24, 1980). In that NPRM, FHWA proposed to extend the 
coverage of Buy America requirements to all steel construction 
materials used in highway construction projects, while excluding all 
other materials and products from coverage under Section 401. 45 FR at 
77455. Again, FHWA stated that because foreign steel was identified as 
the only foreign commodity having a significant nationwide effect on 
the cost of Federal-aid highway construction projects, it was only 
necessary to implement Buy America requirements for steel products. Id. 
The FHWA acknowledged that natural materials, such as sand, stone, 
gravel, and earth materials; and petroleum and petroleum-based 
products, such as fuels, lubricants, and bituminous products, were two 
other commodities used in large amounts for Federal-aid highway 
projects, but FHWA proposed not to apply Buy America requirements to 
such materials. Id. The FHWA found that there was limited foreign 
competition in natural materials because of the difficulty and high 
cost of transporting them due to their bulk and weight; as these 
materials were therefore usually domestically sourced, FHWA found it 
unnecessary to apply Buy America requirements to them. Id.

[[Page 17792]]

For petroleum and petroleum-based products, FHWA determined that such 
products were not available from domestic sources in sufficient and 
reasonably available quantities, justifying their exemption from FHWA's 
proposed Buy America requirements. Id. For all other manufactured 
products covered by Section 401 of the 1978 STAA, FHWA determined that 
they were not used in sufficient quantity to have any appreciable 
effect on the overall cost of a project and did not require the 
protection of Buy America. The FHWA therefore proposed in the 1980 NPRM 
not to apply Buy America requirements to such products.
    Prior to this rulemaking being finalized, Congress enacted the 1983 
STAA, which repealed Section 401 of the 1978 STAA and instituted new 
Buy America requirements that are similar to those that exist today. 
Section 165(a) applied Buy America requirements to all steel, cement, 
and manufactured products used on FHWA-funded projects.\5\ Subsection 
165(b) provided that FHWA could waive the provisions of subsection 
165(a) if their application would be inconsistent with the public 
interest; if such materials and products are not produced in the United 
States in sufficient and reasonable quantities and of a satisfactory 
quality; or if the inclusion of domestic material(s) would increase the 
cost of the overall project by more than 25 percent.\6\
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    \5\ The Buy America requirement for cement was eliminated by 
Congress in 1984. See Public Law 98-229. In addition, Congress added 
a Buy America requirement for iron in 1991. See Public Law 102-240. 
The FHWA's current Buy America requirements for steel, iron, and 
manufactured products were codified at 23 U.S.C. 313 by Section 1903 
of the Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) in 2005. Public Law 109-59.
    \6\ Section 165(b)(3) of the 1983 STAA also allowed for a waiver 
of the provisions in subsection 165(a) in the case of the 
procurement of bus and other rolling stock under the Urban Mass 
Transportation Act of 1964 if the cost of components which are 
produced in the United States is more than 50 percent of the cost of 
all components of the vehicle or equipment; and final assembly of 
the vehicle or equipment has taken place in the United States. This 
use of components is referenced in subsection 165(c) of the 1983 
STAA, which states that for the purposes of Section 165, in 
calculating components' costs, labor costs involved in final 
assembly cannot be included. Subsection 165(c) was modified by 
Section 337 of the Surface Transportation and Uniform Relocation 
Assistance Act of 1987 (Pub. L. 110-17), raising the threshold for 
the cost of components. In addition, Section 337(b) of the Surface 
Transportation and Uniform Relocation Assistance Act of 1987 amended 
Section 165(b)(3) of the 1983 STAA to refer to the cost of all 
subcomponents, as well as components. Section 165(b)(3) was 
ultimately repealed by Section 4(r) of Public Law 103-272 in 1994; 
however, subsection 165(c) of the 1983 STAA remains codified at 23 
U.S.C. 313(c).
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    Shortly after the enactment of the 1983 STAA, FHWA issued an 
interim final rule implementing Section 165. 48 FR 1946 (Jan. 17, 
1983). In this rule, FHWA again determined that it was in the public 
interest to temporarily waive the provisions of Section 165 of the 1983 
STAA as they applied to all manufactured products other than cement. 48 
FR at 1946. The FHWA based this decision ``on the fact that sufficient 
information is not yet available in order to adequately assess the 
impacts of applying Buy America provisions to all manufactured products 
and to all projects regardless of project cost.'' Id. The FHWA also 
noted that applying a Buy America requirement for all manufactured 
products would require tracing the origin of components used in 
petroleum-based products, which FHWA stated was extremely difficult to 
do. Id.
    In late 1983, FHWA issued its final rule implementing Section 165 
of the 1983 STAA, creating its current Buy America regulations at 23 
CFR 635.410. 48 FR 53099 (Nov. 25, 1983). Once more, FHWA found that a 
waiver of Buy America requirements for manufactured products was in the 
public interest, thereby creating the Manufactured Products General 
Waiver, which still remains in effect 40 years later.\7\ 48 FR at 
53102. The FHWA found that most responses from product manufacturers 
``recommended that manufactured products should be excluded from Buy 
America and/or expressed only a passing interest in the regulation.'' 
48 FR at 53101. For manufacturers that wanted Buy America requirements 
applied to manufactured products, FHWA stated that these manufacturers 
primarily expressed this opinion because they opposed unfair foreign 
trade practices, and that ``protectionism in terms of a Buy America 
regulation on all manufactured products would not serve this purpose.'' 
Id. Rather than apply Buy America requirements for manufactured 
products to remedy this concern, FHWA stated that unfair practices 
could be instead addressed through import laws. Id. at 53102. Further, 
FHWA determined that it was not the intent of Congress in enacting the 
1983 STAA for FHWA to apply a Buy America requirement to manufactured 
products; FHWA noted that it had consistently waived manufactured 
products from coverage under Buy America laws and Congress did not 
specifically direct a change in that policy in enacting 1983 STAA, 
which FHWA interpreted to mean that not all manufactured products had 
to be covered by the requirements of Section 165. Id. at 53101-02. 
Finally, FHWA reiterated that materials and products other than steel, 
cement, asphalt, and natural materials comprised a small percent of the 
highway construction program; that other manufactured products were 
minimally used and there would be little economic effect to applying 
Buy America requirements to them; and that it would be difficult and 
administratively burdensome to identify the various materials 
comprising manufactured products and trace their origin. Id. at 53102.
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    \7\ The FHWA's regulations implementing Buy America have also 
remained consistent since 1983, apart from reacting to statutory 
changes by removing a reference to a Buy America requirement for 
cement (49 FR 18820 (May 3, 1984)) when Congress removed that Buy 
America requirement and adding a reference to a Buy America 
requirement for iron (58 FR 38973 (July 21, 1993)) after Congress 
added that requirement.
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B. Current FHWA Buy America Requirements Under 23 U.S.C. 313

    Currently, 23 U.S.C. 313(a) requires that all steel, iron, and 
manufactured products used in FHWA-funded projects be produced in the 
United States. Per 23 U.S.C. 313(h), these Buy America requirements 
apply to all contracts that are eligible for FHWA assistance regardless 
of the funding source if any contract within the scope of a 
determination under the National Environmental Policy Act (NEPA) 
involves an obligation of Federal funds. For purposes of section 70917 
of BABA, FHWA considers 23 U.S.C. 313 to be a domestic content 
procurement preference in existence at the time of the enactment of BIL 
meeting the requirements of section 70914 with respect to iron, steel 
and manufactured products for all financial assistance that is 
administered under title 23, U.S.C.\8\ However, as noted above in 
Section II.A, in 1983, FHWA issued a public interest waiver of general 
applicability of FHWA's Buy America requirement for manufactured 
products, known as the Manufactured Products General Waiver. Thus, were 
FHWA to discontinue this waiver, FHWA would need to establish standards 
for the application of Buy America to manufactured products that meet 
or exceed the requirements of section 70914. Accordingly, FHWA is 
publishing this NPRM to propose such standards.
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    \8\ Financial assistance made available for Federal Lands 
Management Agencies under the Federal Lands Transportation Program 
is subject to the Buy American Act provision (41 U.S.C. 8301-8303) 
under the Federal Acquisition Regulations. Throughout this document, 
FHWA refers to the projects subject to FHWA's Buy America 
requirements as ``FHWA-funded projects.''

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[[Page 17793]]

C. Administration Priorities

    In January 2021, President Biden issued E.O. 14005, titled 
``Ensuring the Future is Made in All of America by All of America's 
Workers'' (86 FR 7475, Jan. 28, 2021). The E.O. sets forth a policy 
that Federal Agencies should, consistent with applicable law, maximize 
the use of goods, products, and materials produced in, and services 
offered in, the United States. The E.O. helps promote private sector 
investment in the production of goods critical to our national security 
and economic stability. It is a policy of this Administration, 
exemplified by this E.O., to bolster domestic supply chains and, in 
doing so, create jobs, strengthen our manufacturing sector, and create 
economic opportunities for more of America's small businesses. Indeed, 
President Biden emphasized the importance of using domestic products in 
American roads, bridges, and highways in his 2023 State of the Union 
Address.\9\
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    \9\ As stated by President Biden: ``And on my watch, American 
roads, bridges, and American highways are going to be made with 
American products as well.'' See https://www.whitehouse.gov/state-of-the-union-2023/.
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D. Build America, Buy America Act

    On November 15, 2021, the President signed into law BIL, which 
includes BABA. The BABA requires that all iron, steel, manufactured 
products, and construction materials made available for a Federal 
financial assistance program for infrastructure be produced in the 
United States. BABA section 70914. The BABA, however, 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. BABA section 70917(a)-(b). As FHWA has existing 
Buy America domestic content preferences for steel, iron, and 
manufactured products at 23 U.S.C. 313, BABA's preferences for those 
materials do not explicitly apply to FHWA. The FHWA does, however, 
apply BABA's domestic preference requirement for construction 
materials.\10\
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    \10\ Along with applying BABA's domestic preference requirement 
for construction materials, section 70916(c) of BABA requires FHWA 
to consult with the Director of the Hollings Manufacturing Extension 
Partnership regarding whether there is a domestic entity that could 
provide the iron, steel, manufactured product, or construction 
material that is the subject of the proposed waiver before FHWA 
grants a waiver under either its Buy America requirements for iron, 
steel, and manufactured products and under BABA's domestic 
preference requirement for construction materials.
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    Under BABA, all manufactured products must be ``produced in the 
United States.'' BABA section 70914. With respect to manufactured 
products, BABA defines ``produced in the United States'' to mean that 
(1) the manufactured product was manufactured in the United States and 
(2) the cost of the components of the manufactured product that are 
mined, produced, or manufactured in the United States is 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. BABA section 70912(6)(B).
    In addition, BABA expresses a general policy preference against 
general applicability waivers, such as the Manufactured Products 
General Waiver. For example, section 70913(c) of BABA requires Federal 
Agencies to identify ``deficient programs'' for financial assistance, 
which includes programs that are ``subject to a waiver of general 
applicability not limited to the use of specific products for use in a 
specific project.'' BABA section 70913(c)(2). Section 70914(d) of BABA 
also requires Federal Agencies to review existing general applicability 
waivers of Buy America requirements by publishing in the Federal 
Register a document that: (i) describes the justification for the 
general applicability waiver; and (ii) requests public comments for a 
period of not less than 30 days on the continued need for the general 
applicability waiver. Following the initial notice and review and 
consideration of comments received, BABA requires Federal agencies to 
publish in the Federal Register a determination on whether to continue 
or discontinue the general applicability waiver. BABA section 
70914(d)(2)(B). On March 17, 2023, at 88 FR 16517, FHWA published the 
required notice to initiate its review of the Manufactured Products 
General Waiver in the Federal Register (``2023 RFC''). The FHWA 
discusses the comments received for the 2023 RFC in section III.

E. OMB's Guidance on BABA

    The BABA further required OMB to issue guidance to assist in 
applying BABA's requirements. BABA section 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,'' \11\ which was rescinded and replaced by 
memorandum M-24-02, ``Implementation Guidance on Application of Buy 
America Preference in Federal Financial Assistance Programs for 
Infrastructure'' on October 25, 2023 (``Implementation Guidance'').\12\ 
Section VI of the Implementation Guidance warns against overly broad 
waivers, stating that they ``undermine market signals designed to boost 
domestic supply chains, particularly for key articles, materials, and 
supplies in critical supply chains,'' and that ``[w]aivers that are 
overly broad will tend to undermine domestic preference policies.'' 
Section VI also states that public interest waivers of domestic content 
procurement preferences ``must be used judiciously and construed to 
ensure the maximum utilization of goods, products, and materials 
produced in the United States.'' The Implementation Guidance goes on to 
state that whether a waiver is in the public interest will depend upon 
numerous factors, such as the nature and amount of resources available 
to the recipient; the value of the items, goods, or materials in 
question; the potential domestic job impacts; and other policy 
considerations, including sustainability, equity, accessibility, 
performance standards, and the domestic content (if any) of and 
conditions under which the non-qualifying good was produced. In terms 
of general applicability waivers, section VI of the Implementation 
Guidance states that Agencies ``should align such waivers with 
complementary policies, such as work to boost supply chain resiliency 
and domestic employment'' and that such waivers ``should include 
appropriate expiration dates designed to ensure that, once available, 
Buy America qualifying products receive appropriate consideration.''
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    \11\ https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf.
    \12\ https://www.whitehouse.gov/wp-content/uploads/2023/10/M-24-02-Buy-America-Implementation-Guidance-Update.pdf.
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    On August 23, 2023, at 88 FR 57750, OMB revised its guidance in 
title 2 of the CFR to add a new part 184 that provides additional 
guidance on implementing BABA. Part 184 includes definitions for key 
terms, including iron or steel products, predominantly of iron or steel 
or a combination of both, manufactured products, component, and 
manufacturer. 2 CFR 184.3. In line with section 70912(6)(B) of BABA, 2 
CFR 184.3 states that a manufactured product is ``produced in the 
United

[[Page 17794]]

States'' if the product was manufactured in the United States; and the 
cost of the components of the manufactured product that are mined, 
produced, or manufactured in the United States is greater than 55 
percent of the total cost of all components of the manufactured 
product, unless another standard that meets or exceeds this standard 
has been established under applicable law or regulation for determining 
the minimum amount of domestic content of the manufactured product. 
Part 184 also provides guidance for determining the cost of components 
of manufactured products. Pursuant to 2 CFR 184.5, in determining 
whether the cost of components for manufactured products is greater 
than 55 percent of the total cost of all components, there are two 
standards depending on the origin of the component. For components 
purchased by the manufacturer, the cost of the component is the 
acquisition cost, including transportation costs to the place of 
incorporation into the manufactured product (whether or not such costs 
are paid to a domestic firm), and any applicable duty (whether or not a 
duty-free entry certificate is issued). 2 CFR 184.5(a). For components 
manufactured by the manufacturer, the cost of the component is all 
costs associated with the manufacture of the component, including 
transportation costs described in 2 CFR 184.5(a), plus allocable 
overhead costs, but excluding profit and any costs associated with the 
manufacture of the manufactured product. 2 CFR 184.5(b).
    Part 184 also states that an article, material, or supply should 
only be classified as either an iron or steel product, manufactured 
product, construction material, or section 70917(c) material,\13\ that 
the classification must be made based on the status of the material at 
the time it is brought to the work site for incorporation into an 
infrastructure project, and that the material must meet the Buy America 
standards for only the single category in which it is classified. 2 CFR 
184.4(e)-(f).
---------------------------------------------------------------------------

    \13\ Part 184 defines a section 70917(c) material as cement and 
cementitious materials; aggregates such as stone, sand, or gravel; 
or aggregate binding agents or additives. See 2 CFR 184.3. These 
materials are named section 70917(c) materials in part 184 because 
they are referred to in section 70917(c) of BABA.
---------------------------------------------------------------------------

    Again, part 184 does not, by its own terms, apply to FHWA's Buy 
America requirements for steel, iron, and manufactured products; it 
only applies to FHWA's domestic content procurement preference for 
construction materials.\14\ 2 CFR 184.2(a). Part 184 does, however, 
apply to all Federal financial assistance programs for infrastructure 
that are administered by Federal Agencies that did not have a domestic 
content procurement preference for steel, iron, and manufactured 
products meeting or exceeding BABA's requirements.
---------------------------------------------------------------------------

    \14\ Since 23 U.S.C. 313 did not specifically apply to 
``construction materials,'' FHWA did not have a domestic content 
procurement preference in effect for these products for purposes of 
section 70917 of BABA. Therefore, the provisions of BABA as 
interpreted by OMB apply to construction materials.
---------------------------------------------------------------------------

III. March 17, 2023, Request for Comments

A. Overview of Comments Received

    Pursuant to section 70914(d) of BABA, FHWA published the March 17, 
2023, Request for Comments (RFC), seeking comments on whether to 
continue or discontinue the Manufactured Products General Waiver. 88 FR 
16517. The FHWA received 9,496 comments; however, a vast majority of 
these comments received were ``form'' comments that were functionally 
identical to each other, with only occasional minor changes to the 
comments themselves under the names of different commenters. The 
majority of these form comments expressed support for discontinuing the 
Manufactured Products General Waiver, although there were also form 
comments that supported continuing the waiver. While FHWA believes that 
form comments might broadly indicate the level of support or opposition 
to the waiver, no form comment provided substantive analysis regarding 
the benefits or costs of continuing or discontinuing the Manufactured 
Products General Waiver.
    Excluding the form comments, FHWA received 134 unique, substantive 
comments from State departments of transportation, manufacturers, State 
government agencies, labor organizations, construction contractors, 
industry associations, members of Congress, and individuals. The FHWA 
briefly discusses the main topics brought up by commenters who 
supported and opposed the Manufactured Products General Waiver below.

B. Comments in Favor of Continuing the Manufactured Products General 
Waiver

    Commenters who were in favor of continuing the Manufactured 
Products General Waiver generally presented similar points. Such 
commenters stated that removing the waiver (1) would likely increase 
project costs due to the increased cost of domestically produced 
products or due to the reduced size of the market for Buy America-
compliant products; (2) would likely lead to project delays or 
cancellations due to the difficulty or inability to acquire Buy 
America-compliant products, partly due to a limited supply of such 
products; (3) may prevent the use of specific products because some 
products or their components not currently produced domestically and 
onshoring will take time, if it occurs at all, given the size of the 
market for Buy America-compliant products and components; and (4) would 
result in significant challenges if contracting agencies, contractors, 
and manufacturers were required to track the origin of a product's 
components, which commenters claimed would be worsened if these 
entities also had to track the cost of a product's components. Many 
commenters argued that these issues were particularly pronounced and 
any benefits of rescinding the Manufactured Products General Waiver 
would be limited given their assertions that the cost and amount of 
manufactured products used in highway construction projects are 
insignificant relative to the rest of the materials used in highway 
construction projects.
    Commenters acknowledged that, were FHWA to rescind the Manufactured 
Products General Waiver and apply Buy America requirements for 
manufactured products, a waiver could be obtained for manufactured 
products that are not available from domestic sources; however, 
commenters argued that going through the waiver process would 
inevitably take time and therefore slow construction down, add 
administrative burden, and may result in duplicative waivers 
continually being requested for the same product that is included in 
multiple projects.

C. Comments in Favor of Discontinuing the Waiver

    Comments in favor of discontinuing the waiver and applying Buy 
America requirements on manufactured products generally espoused the 
belief that doing so would restore America's manufacturing base, create 
and protect American jobs, and stimulate domestic economic growth. 
Commenters also noted that recent supply chain disruptions indicate the 
benefit of producing products in the United States and minimizing 
dependence on foreign sources, which these commenters argued also 
supports America's national security. Commenters who favored 
discontinuing the Manufactured Products General Waiver, in general, 
stated their belief that when taxpayer dollars are spent on federally 
financed

[[Page 17795]]

infrastructure projects, those dollars should go to domestically 
produced products.
    Commenters also argued that rescinding the Manufactured Products 
General Waiver would provide an incentive for companies to invest in 
U.S. manufacturing, which they argued the current Manufactured Products 
General Waiver disincentivizes. Commenters noted that switching from 
foreign-produced products to domestically produced products would 
reward companies that have moved production onshore, hired American 
workers, and conducted their operations in compliance with strong U.S. 
environmental and worker safety regulations. As one commenter stated, 
each time FHWA employs the Manufactured Products General Waiver, it 
fails to account for whether a Buy America requirement for manufactured 
products was feasible, let alone probable. Another commenter stated 
that strong domestic content standards send demand signals for 
companies to invest in domestic production and workers. In a similar 
vein, commenters argued that the continued existence of the waiver 
eliminates any incentive for future domestic investment for 
manufactured products used on FHWA-funded projects. Commenters also 
pointed out that companies that wish to make manufactured products for 
FHWA-funded projects domestically do not receive any protection under 
the Manufactured Products General Waiver and must instead compete with 
foreign imports. Commenters further noted that the Manufactured 
Products General Waiver encourages the use of cheaper foreign-produced 
manufactured products on FHWA-funded projects and denies opportunities 
for U.S. manufacturing workers.
    Despite these issues, some manufacturers and contracting agencies 
also indicated that they intend to increase domestic manufacturing 
capacity in response to the increased Federal transportation 
investments brought about by BIL, which indicates that there may be 
expansion capabilities for manufacturers who wish to produce Buy 
America-compliant manufactured products. Other manufacturers commented 
that they believed they were able to produce a Buy America-compliant 
product and therefore desired the rescission of the current waiver to 
take advantage of the market for Buy America-compliant products. These 
manufacturers stated that because of the Manufactured Products General 
Waiver, they must compete with foreign manufacturers who may seek to 
undermine their pricing, have their products subsidized by foreign 
governments, or dump their products into the U.S. market.
    In addition, commenters stated their belief that the Manufactured 
Products General Waiver was an inappropriate use of FHWA's waiver 
authority when it was issued in 1983, arguing that the 1983 STAA 
clearly directed and intended that FHWA require the use of U.S.-
produced manufactured products in FHWA-funded projects.
    Commenters also stated that the Manufactured Products General 
Waiver is inconsistent with the intent of Congress, as seen through the 
enactment of BIL. These commenters pointed to the fact that, where it 
applies, section 70914 of BIL requires the head of each Federal Agency 
to ensure that none of the funds available for a Federal financial 
assistance program for infrastructure may be obligated unless all of 
the manufactured products used in the project are produced in the 
United States; section 70913(c) of BIL defines programs for which a 
domestic content procurement preference requirement is subject to a 
waiver of general applicability not limited to the use of specific 
products for use in a specific project, like the Manufactured Products 
General Waiver, as ``deficient programs;'' and that section 70914(d) of 
BIL requires Federal Agencies to review existing waivers of general 
applicability and determine whether to continue or discontinue them.

IV. Proposed Discontinuation of the Manufactured Products General 
Waiver

    The FHWA has carefully considered comments received on the 2023 
RFC, the purpose of its Buy America requirements, the rationale 
provided by FHWA in issuing the Manufactured Products General Waiver in 
1983, the priorities of the Administration, and the goal of Congress in 
enacting the domestic content procurement preferences in BABA, in 
determining whether the Manufactured Products General Waiver remains in 
the public interest. After considering this information, FHWA has 
decided to propose to discontinue the manufactured products waiver.
    First, both the intent of Congress, as expressed in secs. 70933 and 
70935 of BABA, and the President's policy for the Federal Government, 
as expressed in section 1 of E.O. 14005, is that Federal Agencies 
should use terms and conditions in Federal financial assistance awards 
to maximize the use of goods, products, and materials produced in the 
United States. Continuing the long-standing Manufactured Products 
General Waiver is not consistent with these policy goals.
    Second, FHWA believes it is important to recognize the purpose of 
domestic content procurement preferences when considering whether a 
waiver is applicable and in the public interest. The Congressional 
findings in section 70911 of BABA are instructive regarding the 
purposes of domestic content procurement preferences. In general, the 
findings provide that taxpayers expect that publicly funded 
infrastructure will be produced in the United States by American 
workers, applying America's high environmental, worker, and workplace 
safety standards; that taxpayer dollars should not reward companies 
that have moved their operations and jobs to foreign countries; that 
publicly funded infrastructure projects should seek to prevent shifts 
in manufacturing to foreign countries, who may use less energy 
efficient and more polluting manufacturing methods, from the United 
States; that such projects should create a demand for domestically 
produced goods, helping to sustain and grow domestic manufacturing and 
the jobs domestic manufacturing supports throughout product supply 
chains; and that taxpayer funding should sustain a robust domestic 
manufacturing sector, which is a vital component of the national 
security of the United States. See BABA section 70911. Continuing the 
long-standing Manufactured Products General Waiver continues to 
undermine the expressed purposes that domestic content procurement 
preferences, such as FHWA's Buy America requirement, are intended to 
serve.
    Third, OMB's Implementation Guidance conveys a policy that waivers, 
including waivers of general applicability like the Manufactured 
Products General Waiver, should not be overly broad in order to ensure 
that any such waivers appropriately convey market signals on where the 
domestic supply chain can be bolstered for American manufacturers to 
take advantage of. The Implementation Guidance further provides that 
such waivers should also be time-limited to ensure that, once 
available, Buy America-compliant materials can receive appropriate 
consideration for inclusion in federally funded projects. The 
Manufactured Products General Waiver is inconsistent with these general 
principles.
    Taking into account these above references, FHWA believes the 
Manufactured Products General Waiver is overly broad. The FHWA has 
considered comments stating that manufactured products that can be

[[Page 17796]]

manufactured domestically are more likely to be ignored in favor of 
cheaper foreign products for use on FHWA-funded projects. The FHWA 
agrees with these commenters that the Manufactured Products General 
Waiver disincentivizes manufacturers from domestically producing 
products by covering all manufactured products without discretion, 
rather than specifically targeting those that would warrant a waiver 
under the waiver criteria in 23 U.S.C. 313(b). Further, FHWA believes 
the broadness of the Manufactured Products General Waiver can be seen 
in the fact that it applies to any newly created manufactured product 
without an analysis of whether coverage of that product is in the 
public interest.
    The Manufactured Products General Waiver also fails to provide 
domestic manufacturers who wish to produce products for FHWA-funded 
projects with knowledge of the current gaps in the domestic 
manufacturing sector. By covering all manufactured products, the 
Manufactured Products General Waiver does not provide market signals 
that distinguish between manufactured products that are made 
domestically but not included in FHWA-funded projects because the 
products are more expensive than foreign products and manufactured 
products that are not produced domestically at all. This lack of 
clarity hinders manufacturers who wish to enter the market from 
understanding the competitive landscape, disincentivizing them from 
attempting to provide domestic manufactured products for FHWA-funded 
projects.
    The FHWA believes it is important to compare its current 
understanding of the purpose and need for waivers with the fundamental 
underpinnings of the Manufactured Products General Waiver when it was 
issued in 1983. At that time, FHWA stated that a waiver was necessary 
because of the costs of applying a Buy America requirement to 
manufactured products--primarily the burden in identifying and tracing 
the origin of the components of manufactured products--while those 
products comprised only a small percent of the highway construction 
program. 48 FR at 53102. While FHWA recognized these costs, FHWA did 
not seemingly perceive any benefits of a Buy America requirement for 
manufactured products because it believed that manufacturers would not 
produce Buy America-compliant products due to the limited demand 
created by FHWA-funded projects; such nonexistent products would thus 
not require Buy America protection. In other words, when issuing the 
Manufactured Products General Waiver, FHWA presumed at the time that 
domestic manufacturers would not produce Buy America-compliant 
products. The purpose of the waiver was thus to allow for the 
incorporation of products from foreign sources to fill what FHWA 
perceived would always be gaps in domestic manufacturing. It assumed 
that domestic manufacturing would not produce Buy America-compliant 
products and thus believed this assumption compelled the need for a 
broad waiver of general applicability.
    The FHWA no longer agrees with this premise and is accordingly 
proposing to discontinue the Manufactured Products General Waiver. The 
FHWA notes that the Federal-aid highway program has grown considerably 
with the enactment of new funding programs that provide new 
eligibilities since the Manufactured Products General Waiver was 
established in 1983. As shown by commenters, domestic manufacturers are 
available to produce Buy America-compliant products used in Federal-aid 
highway funding programs. Keeping the Manufactured Products Waiver in 
place provides no incentive for new domestic manufacturers to enter the 
market or for existing domestic manufacturers to begin producing Buy 
America-compliant products. For nascent industries that produce 
manufactured products used in FHWA-funded projects, the Manufactured 
Products General Waiver also discourages companies from investing in 
domestic manufacturing that may be able to compete globally once the 
domestic manufacturers have built up expertise. Further, FHWA believes 
that due to the development of new kinds of manufactured products as 
well as the expansion of program eligibilities, such as the 
establishment of the Surface Transportation Block Grant Program and 
Congestion Mitigation and Air Quality Improvement Program, manufactured 
products as a category are used more often now than when the 
Manufactured Products General Waiver was issued and accordingly have a 
larger economic effect now. When issuing the waiver in 1983, FHWA 
stated that materials and products other than steel, cement, asphalt, 
and natural materials comprised a small percentage of the highway 
construction program. Commenters on the 2023 RFC, however, referenced 
numerous other products that they believed would be affected by 
rescission of the Manufactured Products General Waiver, such as ITS 
hardware, traffic signals and controllers, and vehicle detection 
equipment.
    Unlike the Manufactured Products General Waiver, FHWA instead 
believes, in line with OMB's Implementation Guidance, that waivers 
should aim to proactively encourage domestic manufacturing by providing 
clear market signals about which markets domestic manufacturers can 
enter with the reasonable expectation that their products could 
adequately compete for use on FHWA-funded projects. The FHWA 
acknowledges that waivers may be necessary in some circumstances but 
believes that waivers should seek to identify areas where domestic 
manufacturing can fill gaps and actively encourage such activity.
    Accordingly, FHWA believes that the Manufactured Products General 
Waiver is overly broad, no longer in line with the purpose of domestic 
content procurement preferences and waivers, and therefore no longer 
serves the public interest. The FHWA is thus proposing to discontinue 
the Manufactured Products General Waiver. In doing so, FHWA seeks to 
encourage manufacturers to supply Buy America-compliant products to 
FHWA-funded projects and to encourage other manufacturers to shift 
their production to the United States to take advantage of this market.
    The FHWA believes that rescinding the Manufactured Products General 
Waiver will also provide many benefits to the United States, such as 
protecting and increasing domestic manufacturing and manufacturing 
jobs, providing an opportunity for manufacturing innovations to occur 
domestically, and creating a more resilient domestic supply chain and 
protecting national security. In addition, FHWA expects increases in 
domestic manufacturing to benefit related domestic industries, such as 
component manufacturers and material and product transporters.
    At the same time, FHWA understands that discontinuing the 
Manufactured Products General Waiver and applying Buy America 
requirements on manufactured products may result in cost increases, 
project delays, and product unavailability if not done carefully. The 
FHWA acknowledges that there may be some products that are not 
currently produced in the United States and, for various reasons, might 
not be able to be produced in the United States in the near future. For 
such products, FHWA intends to consider whether it should propose any 
targeted waivers, with these waivers providing a timeline to encourage 
manufacturers to ramp up domestic production. To that end, FHWA is 
concurrently publishing a Request for Information (RFI), seeking 
specific and detailed information on

[[Page 17797]]

what products are not and cannot be produced in the United States in 
the near future. Based on information received, FHWA intends to propose 
time-limited and targeted waivers covering such products, if it 
determines it would be appropriate to do so. The FHWA believes that 
issuing targeted waivers for certain manufactured products presents a 
better model than the current Manufactured Products General Waiver, 
which does not consider the availability of individually manufactured 
products and has no set ending in order to incentivize the onshoring of 
manufacturing.
    With the FHWA RFI, FHWA seeks to mitigate the concerns posed by 
commenters that rescinding the waiver will cause cost increases and 
project delays by ensuring the continued availability of necessary 
manufactured products. The FHWA would intend for such waivers to allow 
for the use of foreign manufactured products as domestic production 
ramps-up. Such waivers would be time-limited and could include an 
explicit schedule for phasing out a waiver over time, creating a glide-
path toward full Buy America compliance for products, where possible. 
The FHWA's goal is that once these waivers expire, the domestic 
production of any covered product would be sufficient to ensure that 
Buy America-compliant products would be available for use in FHWA-
funded projects. Such waivers could also take into account situations 
where economic realities, such as the size of the market, the cost of 
onshoring production, and geographic constraints (such as products made 
of materials that are not mined in the United States) may hinder 
domestic manufacturing growth even in the longer term, though such 
waivers would still be subject to periodic review.
    By issuing waivers for products where necessary, FHWA intends to 
ensure that manufactured products needed for highway construction 
projects are available while also providing an advantage to domestic 
manufacturers who can provide manufactured products to FHWA-funded 
projects where a waiver is not needed. In addition, such targeted 
waivers afford manufacturers insight into market demand that can 
trigger capital investments in domestic manufacturing to fill current 
gaps in the Nation's supply chain, thereby decreasing the need for 
these waivers over the long-term. The FHWA will consider such waivers 
where they are deemed necessary to ensuring the availability of 
products at a reasonable price; however, where domestic production is 
currently feasible, FHWA believes in allowing Buy America requirements 
to operate as a useful incentive for domestic manufacturers to 
contribute American-made manufactured products to highway construction 
projects.
    In addition, DOT has issued a ``Waiver of Buy America Requirements 
for De Minimis Costs and Small Grants'' (``De Minimis and Small Grants 
Waiver''). 88 FR 55817 (Aug. 16, 2023). The De Minimis and Small Grants 
Waiver currently has no operative effect on manufactured products 
included in FHWA-funded projects, as such products are covered by the 
Manufactured Products General Waiver. Were the Manufactured Products 
General Waiver to be rescinded, however, the De Minimis and Small 
Grants Waiver would waive the application of FHWA's Buy America 
requirements for manufactured products under a single financial 
assistance award for which (1) the total value of non-compliant 
products is no more than the lesser of $1,000,000 or 5 percent of total 
applicable costs for the project; or (2) the total amount of Federal 
financial assistance applied to the project, through awards or 
subawards, is below $500,000. 88 FR at 55820. For smaller projects and 
projects using limited amounts of manufactured products, where there is 
less of a benefit to discontinuing the Manufactured Products General 
Waiver, FHWA believes that the De Minimis and Small Grants waiver 
should prevent the rescission of the waiver from increasing project 
costs or causing project delays.
    For all of the above reasons, FHWA is proposing to rescind the 
Manufactured Products General Waiver. The FHWA believes that the 
Manufactured Products General Waiver is no longer in the public 
interest. The FHWA seeks comment on whether this is the appropriate 
course of action. For proponents of rescission, as detailed more below, 
FHWA seeks comment on when the effective date of the rescission and the 
implementation of Buy America requirements for manufactured products 
should be. For opponents of rescission, FHWA similarly seeks comment on 
when in the future, if ever, the waiver should be rescinded and what 
factors should FHWA consider before doing so.

V. FHWA Proposed Buy America Manufactured Product Standards

    As set out in 23 U.S.C. 313, FHWA must ensure that all manufactured 
products used in FHWA-funded projects are produced in the United 
States. The statutory text does not define when a product is ``produced 
in the United States.'' As FHWA is proposing to rescind the 
Manufactured Products General Waiver, FHWA believes it is required by 
BABA to adopt general standards that meet or exceed those under BABA, 
which FHWA proposes to do through this rulemaking.
    Therefore, while commenters to the 2023 RFC proposed various 
standards they suggested FHWA should adopt for its application of Buy 
America requirement for manufactured products, FHWA is proposing to 
adopt the definition of when a manufactured product is ``produced in 
the United States'' as found in section 70912(6)(B) of BABA. This would 
require a manufactured product to be manufactured in the United States 
and the cost of the components of the manufactured product that are 
mined, produced, or manufactured in the United States to be greater 
than 55 percent of the total cost of all components of the manufactured 
product. While FHWA could legally adopt standards exceeding that found 
in BABA, such as by setting a higher domestic content threshold than 55 
percent, FHWA recognizes the burden that any application of Buy America 
requirements may place on contracting agencies, contractors, and 
manufacturers. To minimize that burden to the greatest extent 
practicable while also maintaining the benefits of Buy America 
requirements, FHWA is proposing to align its standard for when a 
manufactured product is ``produced in the United States'' for the 
purpose of 23 U.S.C. 313 to the one found in section 70912(6)(B) of 
BABA.
    This standard would also provide consistency between FHWA's 
standard for manufactured products and the standard used by other 
Federal Agencies that apply BABA. Beyond the requirements of section 
70917 of BABA, FHWA believes there is a benefit of consistent 
application and interpretation between FHWA's Buy America requirements 
and BABA's domestic content procurement preferences. Consistency 
minimizes the burden on contracting agencies, contractors, and 
manufacturers, who can rely on existing systems and processes that they 
use to comply with BABA when working on FHWA-funded projects. It also 
allows manufactured products that provide BABA-compliant manufactured 
products for projects funded by other Federal Agencies to provide those 
same products on FHWA-funded projects. Consistent definitions further 
allow for better understanding of applicable requirements, as 
contracting agencies, contractors, and manufacturers do not have to 
navigate between multiple, disparate regimes.

[[Page 17798]]

    The FHWA notes that were the Manufactured Products General Waiver 
to be rescinded, the requirements of 23 U.S.C. 313(h) would apply to 
manufactured products. This would mean that the proposed Buy America 
requirements for manufactured products would apply to all contracts 
eligible for FHWA financial assistance for a project carried out within 
the scope of the applicable finding, determination, or decision under 
NEPA, regardless of the funding source for such contracts, if at least 
one contract for the project is funded with amounts made available to 
carry out Title 23, U.S.C. In other words, any Buy America requirements 
for manufactured products could apply to manufactured products 
purchased under contracts using only non-Federal funds if those 
contracts are within the scope of a determination under NEPA that 
involves an obligation of Title 23, U.S.C. funds.
    The FHWA notes that it does not intend for these proposed standards 
to supplant current FHWA waivers that cover specific manufactured 
products. The FHWA further notes that its proposed standards are 
substantively similar to those in FHWA's Electric Vehicle (EV) Charger 
Waiver,\15\ which covers EV chargers, a type of manufactured product, 
and waives Buy America requirements for chargers under certain 
circumstances.\16\ In particular, FHWA notes that under proposed Sec.  
635.410(c)(2)(ii), FHWA intends for a predominantly iron or steel 
enclosure of an EV charger that is installed in the highway right of 
way or other real property to be subject to FHWA's existing Buy America 
requirements for iron or steel. The FHWA believes this aligns with 
FHWA's EV Charger Waiver, which states that ``[a]ll predominantly steel 
and iron housing components. . .must meet FHWA's Buy America 
requirements for steel and iron'' and that ``[t]he cost of any such 
housing shall be included as a cost of an EV charger's components when 
calculating whether the cost of components manufactured in the United 
States exceed 55 percent of the cost of all components.'' See 88 FR 
10619, 10634 (Feb. 21, 2023).
---------------------------------------------------------------------------

    \15\ Waiver of Buy America Requirements for EV Chargers, 88 FR 
10619, February 21, 2023.
    \16\ More guidance on the EV Charger Waiver can be found at 
https://www.fhwa.dot.gov/construction/contracts/buyam_qaev/.
---------------------------------------------------------------------------

    While FHWA is proposing to discontinue the Manufactured Products 
General Waiver and impose Buy America requirements on manufactured 
products, FHWA does not desire to place contracting agencies, 
contractors, and manufacturers in a position where they are required to 
comply with Buy America requirements for manufactured products without 
having the systems in place to do so. For example, when part 184 was 
issued by OMB in August 2023, a 60-day period was provided before the 
revised standards for construction materials become effective. A longer 
transition or adjustment period was provided by DOT following the 
initiation of the new BABA requirements in May 2022. At that time, DOT 
issued an adjustment period waiver to allow time for stakeholders to 
transition to new rules and processes required by BABA related to 
construction materials. See ``Temporary Waiver of Buy America 
Requirements for Construction Materials,'' at 87 FR 31931. The FHWA 
seeks comment on whether a similar transition period is needed for its 
proposed standards for manufactured products to allow contracting 
agencies, contractors, and manufacturers time to create appropriate 
systems and processes, as well as train staff on compliance with the 
proposed standards. The FHWA specifically seeks comment on the minimum 
time required for these purposes and, accordingly, the effective date 
for the proposed Buy America requirements for manufactured products.
    The FHWA also recognizes the complications that may arise if new 
requirements are imposed on ongoing projects, as well as projects that 
are in the planning, design, or later implementation phases. The FHWA 
intends any new requirements to only apply to Federal awards obligated 
or authorized after the effective date of a final rule, but FHWA 
requests comments on this point as well. For instance, FHWA requests 
comment on whether there should be a buffer period for certain projects 
that are in development that have not had Federal awards obligated or 
authorized but have relied on the Manufactured Products General Waiver 
such that those projects could continue to rely on the Manufactured 
Products General Waiver, and under what conditions, if any, that buffer 
period would apply.\17\
---------------------------------------------------------------------------

    \17\ See DOT's Waiver of Buy America Requirements for 
Construction Materials for Certain Contracts and Solicitations, 
issued on January 30, 2023, for a recent example of how the 
Department has handled similar situations for construction materials 
subject to the BABA requirements. https://www.transportation.gov/mission/office-secretary/office-policy/transportation-policy/waiver-buy-america-requirements-for-construction-materials.
---------------------------------------------------------------------------

    The FHWA also recognizes that there are projects for highway 
construction that are subject to alternate project delivery methods, 
such as design-build, where contracts are awarded and work is 
authorized and obligated in phases. For example, where a project has 
not completed the environmental review process, Federal funds may be 
obligated for preliminary engineering and environmental document 
preparation but not physical construction. In these situations, FHWA 
believes that it may be appropriate to apply these proposed standards, 
if adopted, to physical construction since Federal funds have not been 
obligated or authorized for this work nor have there been any 
contractual commitments with respect to this work. The FHWA also 
requests comments on the appropriate buffer period, if any, for these 
types of projects.\18\
---------------------------------------------------------------------------

    \18\ Ibid.
---------------------------------------------------------------------------

    The FHWA also understands that tracking the origin and cost of 
components may be difficult, particularly for smaller manufacturers, 
contractors, and contracting agencies. To ease this burden, FHWA is not 
prescribing any specific method of compliance. The FHWA's intent and 
expectation is that recipients ensure that 55 percent of components, by 
cost, of a manufactured product are mined, produced, or manufactured in 
the United States. The FHWA requests comments on any specific 
provisions that FHWA should consider in easing the administrative 
burden in demonstrating compliance with this proposed requirement.

VI. Section Analysis

Sec.  635.410(b), (c), and (d)--Reference to States

    The FHWA does not intend to substantively change its current Buy 
America regulations as they relate to FHWA's Buy America requirement 
for iron and steel. The FHWA does, however, intend to make several, 
minor changes regarding these requirements to reflect the current scope 
of its Buy America requirements.
    In Sec.  635.410(b)(2), the introductory paragraph to Sec.  
635.410(b)(3), and Sec.  635.410(d), FHWA is proposing to replace the 
mention of ``State'' with ``recipient.'' Along with the replacement of 
current Sec.  635.410(c), described below, this would replace all 
mentions of ``State'' in the current regulation with ``recipient.'' The 
FHWA's Buy America requirements apply to all recipients of title 23, 
U.S.C. funds, which includes States but also may include other 
recipients like metropolitan planning organizations, local governments, 
and

[[Page 17799]]

regional transportation authorities. As the Buy America requirements 
are the same between States and non-State entities, FHWA believes non-
State entities should have the same abilities provided in regulation as 
States currently do.

Sec.  635.410(b)--Reference to Steel or Iron Materials

    Currently, 23 CFR 635.410(b) interchangeably refers to ``steel or 
iron materials'' and ``steel and iron materials.'' For consistency, 
FHWA is proposing to replace mentions of both terms with a single 
phrase: ``iron or steel products,'' which would be defined at proposed 
Sec.  635.410(c)(1)(ii). The FHWA does not intend this change to affect 
its Buy America requirements for iron or steel materials. As noted in 
the discussion below with respect to proposed Sec.  635.410(c)(1)(ii) 
and (iv), and (c)(2), this change would make clear when a manufactured 
product comprised of steel or iron would be considered an iron or steel 
product versus a manufactured product. Consistent with current FHWA 
requirements, predominantly iron or steel products would be subject to 
FHWA's existing Buy America requirements for iron and steel at Sec.  
635.410(b). Manufactured products that are not predominantly iron or 
steel would be subject to FHWA's proposed Buy America requirements for 
manufactured products at Sec.  635.410(c).

Sec.  635.410(c)--Waiver Provisions

    The FHWA is proposing to replace current Sec.  635.410(c) with new 
language detailing FHWA's Buy America requirements for manufactured 
products, as described in detail in section V and below. The FHWA is 
thus proposing to remove the current regulatory text in 23 CFR 
635.410(c), which discusses the process for requesting a Buy America 
waiver and the procedures FHWA will take to respond to that request. 
These provisions have remained substantively unchanged from 1983.\19\ 
Since then, however, Congress has enacted several provisions 
structuring FHWA's process for issuing Buy America waivers.\20\ These 
statutorily required processes are not covered by the current version 
of 23 CFR 635.410(c), and FHWA does not find it necessary to modify 23 
CFR 635.410(c) to reiterate what is already stated in statute and FHWA 
guidance.\21\
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    \19\ The FHWA has made minor amendments to 23 CFR 
635.410(c)(1)(ii) when Congress has modified the statutory coverage 
of its Buy America requirements. Originally, 23 CFR 635.410(c)(1) 
referenced a waiver of Buy America requirements being possible when 
steel and cement materials were not produced in the United States in 
sufficient and reasonably available quantity and of a satisfactory 
quality. See 48 FR at 53104. When Congress subsequently removed 
coverage for cement, FHWA modified that provision accordingly to 
remove reference to cement. See 49 FR at 18821. And when Congress 
added coverage for iron, FHWA modified the provision one last time 
to include mention of iron. 58 FR at 38975. None of these changes, 
the last of which occurred in 1993, substantially modified the 
process and procedures described in 23 CFR 635.410(c), however.
    \20\ The Consolidated Appropriations Act, 2010 (Pub. L. 111-117) 
required FHWA to make an informal public notice and comment period 
at least 15 days prior to issuing any Buy America waiver. The 
SAFETEA-LU Technical Corrections Bill (Pub. L. 110-244) states that 
if FHWA determines to issue a waiver, it must publish in the Federal 
Register a detailed written justification as to the reasons for the 
waiver and provide an additional comment period not to exceed 60 
days, with that additional comment period not delaying the 
effectiveness of the waiver. Section 11513 of BIL affirmed that not 
less than 15 days before issuing a waiver, FHWA must provide notice 
of the proposed waiver, an opportunity to comment on the proposed 
waiver, and the reasons for the proposed waiver.
    \21\ The FHWA maintains guidance describing the information 
needed to submit a waiver request and the method to do so. See 
Questions #22-27 at https://www.fhwa.dot.gov/construction/contracts/buyam_qageneral.cfm, and Question #19 at https://www.fhwa.dot.gov/construction/contracts/buyam_qa_baba.cfm.
---------------------------------------------------------------------------

Sec.  635.410(c)--Introductory Text

    As stated above in section V, FHWA is proposing to require that all 
manufactured products used and permanently incorporated in FHWA-funded 
construction \22\ projects be produced in the United States. To promote 
consistency with FHWA's existing Buy America requirements for iron and 
steel, FHWA proposes to adopt language similar to the current 
regulatory language in Sec.  635.410(b)(1).
---------------------------------------------------------------------------

    \22\ 23 U.S.C. 101(a)(4) defines ``construction'' to include, in 
part, any project eligible for assistance under title 23, U.S.C.
---------------------------------------------------------------------------

    In addition, FHWA is proposing to make clear that its Buy America 
requirement for manufactured products only applies to products that are 
permanently incorporated into FHWA-funded projects. The FHWA believes 
this aligns with FHWA's longstanding practice for iron and steel items 
and for the treatment of manufactured products covered by BABA. See 
section IV of the Implementation Guidance.

Sec.  635.410(c)(1)(i)--Definition of Component

    The FHWA is proposing to adopt the definition of ``component'' used 
in part 184. This would define what a component is for the purpose of 
FHWA's proposed Buy America requirements for manufactured products and 
for FHWA's proposed definition of an iron or steel product. To provide 
contracting agencies, contractors, and manufacturers with consistency, 
FHWA believes it is useful to have similar definitions between FHWA's 
Buy America requirements and BABA's domestic content procurement 
preference where practicable.

Sec.  635.410(c)(1)(ii) and (vi)--Iron or Steel Products

    Pursuant to FHWA's current policy, predominantly iron or steel 
manufactured products must conform with FHWA's Buy America requirements 
for iron or steel.\23\ The FHWA, however, does not currently define 
what threshold a product has to meet in order to be classified as a 
predominantly iron or steel product. In this proposed rulemaking, to 
provide clarity and consistency on this issue, FHWA is proposing to 
adopt the definitions of ``iron or steel product'' and ``predominantly 
iron or steel or a combination of both'' in part 184.
---------------------------------------------------------------------------

    \23\ See Q&A #12 a https://www.fhwa.dot.gov/construction/contracts/buyam_qageneral.cfm.
---------------------------------------------------------------------------

    With the proposed application of Buy America to both iron or steel 
products and manufactured products, FHWA believes that it is necessary 
to provide standards to determine whether a product should be 
classified as a manufactured product or an iron or steel product, as 
that determination is significant in understanding which standards 
apply to the product. While under FHWA's existing Buy America 
requirements for iron and steel, all manufacturing processes of the 
iron and steel must occur in the United States, FHWA's proposed 
standards for manufactured products allow for the inclusion of non-
domestic components.
    The FHWA proposes to use the definitions of ``iron or steel 
products'' and ``predominantly of iron or steel or a combination of 
both'' to classify a product for purposes of Buy America compliance. In 
adopting the definitions of ``iron or steel products'' and 
``predominantly of iron or steel or a combination of both'' used in 
part 184, FHWA hopes to utilize a single consistent definition to 
categorize products on a national level, both for all projects included 
in FHWA-funded projects and all projects subject to BABA. See the 
explanation below for proposed Sec.  635.410(c)(2) for more information 
concerning the classification of materials.

Sec.  635.410(c)(1)(iii)--Definition of Excluded Materials

    The FHWA proposes a definition of the term ``excluded material'' 
that cross-references the definition of the term ``Section 70917(c) 
material'' found in

[[Page 17800]]

part 184 at 2 CFR 184.3. Part 184 defines section 70917(c) materials as 
cement and cementitious materials; aggregates such as stone, sand, or 
gravel; and aggregate binding agents or additives. More information on 
the use of this category of materials in this proposed regulation can 
be found below in the discussion of proposed Sec. Sec.  
635.410(c)(1)(iv) and (c)(2).

Sec.  635.410(c)(1)(iv)--Manufactured Products and Section 70917(c) 
Materials

    To ensure consistency with BABA, FHWA proposes to use substantively 
the same definition of ``manufactured product'' as used by OMB in part 
184, with slight changes with respect to references to ``construction 
materials'' and ``section 70917(c) materials'' in that definition which 
are described below. See 2 CFR 184.3.
    The FHWA thus proposes to define a ``manufactured product'' using 
the same language found in paragraph (1) of the definition of the term 
in part 184. For consistency, FHWA intends to apply this provision in 
the same way as applied by OMB in part 184. For example, products 
brought to the work site in an unprocessed or minimally processed 
state, such as topsoil, compost, and seed, would not be considered 
manufactured products. See 88 FR at 57769. Similarly, non-manufactured 
or raw materials mixed off of the work site with other non-manufactured 
or raw materials of similar types would not necessarily result in the 
mixed material brought to the work site being classified as a 
manufactured product if it remains in an unprocessed or minimally 
processed state, such as minimally-processed fill dirt. See id.
    The FHWA notes that its proposal omits references to construction 
materials that are found in part 184. The FHWA does not believe it 
necessary to refer to construction materials in this proposed 
rulemaking because 23 U.S.C. 313 does not cover construction materials. 
Since section 70915(b) of BABA directs OMB to issue the applicable 
standards with respect to determining when a construction material is 
produced in the United States for the purposes of BABA, FHWA and its 
recipients will follow the applicable OMB standards and guidance for 
construction materials.
    The FHWA is also proposing to make clear that excluded materials, 
defined in proposed Sec.  635.410(c)(1)(iii), are not, on their own, 
manufactured products. The FHWA would not consider excluded materials 
to be manufactured products and apply the proposed Buy America 
requirements for manufactured products if the excluded materials have 
not been combined with different excluded materials, or other 
materials, to create a manufactured product. See 88 FR 57772. This is 
also consistent with paragraph (2) of the definition of ``manufactured 
product'' in part 184.
    In terms of these excluded materials, FHWA received many comments 
in the 2023 RFC expressing confusion over the legal effect of section 
70917(c) of BABA. By stating that excluded materials are not 
manufactured products, FHWA seeks to make clear that these materials--
standing alone, as delivered to the job site--are not manufactured 
products. Likewise, FHWA recognizes and follows the OMB guidance 
specifying that these materials, standing alone, as delivered to the 
job site are not construction materials either, as provided in section 
70917(c) of BABA. See 88 FR 57771.
    In alignment with part 184, FHWA intends this rulemaking to mean 
that excluded materials, as defined in proposed Sec.  
635.410(c)(1)(iii), when combined together with other materials, 
including other excluded materials, could result in the creation of a 
manufactured product. See id. at 57772. If the individual excluded 
material is combined with other excluded materials and non-minor 
additions of other materials before it is brought to the work site, 
then the new product should be classified as a manufactured product and 
the excluded materials should be treated as components of the 
manufactured products. Therefore, like all other components of 
manufactured products, when excluded materials are components of a 
manufactured product, they would generally be included in the 
determination of whether a manufactured product is Buy America-
compliant under FHWA's proposed standards.
    For example, in alignment with part 184, the combination of 
excluded materials and other materials into precast concrete would not 
render the precast concrete exempt from domestic content procurement 
preferences. See id. at 57771. For precast concrete, FHWA believes such 
an item would be a manufactured product or an iron or steel item 
depending on its amount of iron or steel, by cost. In either case, 
precast concrete used in FHWA-funded projects would be subject to the 
applicable Buy America requirement.\24\ To the extent that cement and 
cementitious material are components of that precast concrete, their 
origin and cost would have to be considered to determine whether the 
precast concrete would be Buy America-compliant.\25\ Similarly, in some 
cases, aggregate binding agents and additives may be treated as 
components of manufactured products.
---------------------------------------------------------------------------

    \24\ If considered an iron or steel item, the precast concrete 
would be subject to FHWA's existing Buy America requirements for 
iron and steel. If considered a manufactured product, as described 
below, FHWA is proposing that the precast concrete be subject to the 
proposed Buy America requirements for manufactured products and that 
the iron and steel be subject to FHWA's existing Buy America 
requirements for iron and steel.
    \25\ The FHWA acknowledges that Congress eliminated a Buy 
America requirement regarding cement originally included in the 1983 
STAA in 1984. See Public Law 98-229. The FHWA therefore believes it 
would be questionable to apply a domestic content procurement 
preference to cement. As noted above, FHWA does not intend to apply 
any domestic content procurement preference to cement standing 
alone, either as a manufactured product or as a construction 
material under BABA. The FHWA does not believe the removal of cement 
from the 1983 STAA, however, means that cement must be exempted from 
Buy America requirements even if included in a manufactured product. 
The FHWA believes the language of the 1983 STAA can be interpreted 
to refer to cement as a category of product. Its elimination 
therefore removes the ability of FHWA to apply a Buy America 
requirement to cement as a category of product. It says nothing 
about FHWA's ability to consider it as a component of a manufactured 
product.
---------------------------------------------------------------------------

    While FHWA is proposing that products with excluded materials as 
their components would generally be considered manufactured products, 
in alignment with part 184, FHWA also proposes that such excluded 
materials combined as an unsettled mixture without final form when 
reaching the work site should not be considered a manufactured product, 
such as in the case of wet concrete or hot mix asphalt. See id. The OMB 
noted in part 184 that while these products might fit the same 
definition of ``manufactured products'' FHWA is proposing to use, in 
the sense that the mixture would have ``different properties'' than 
would the individual materials, it is more consistent with the intent 
of BABA to treat only such materials that have set or dried into a 
particular shape or form prior to reaching the work site as 
manufactured products. Id. The FHWA agrees with OMB and further intends 
for these proposed regulations to have the same reach as part 184.
    In particular, consistent with part 184, FHWA proposes to make 
clear that concrete and asphalt mixtures delivered to a job site 
without final form for incorporation into a project shall not be 
considered a manufactured product. As provided in part 184: ``OMB 
further clarifies in this preamble that wet concrete should not be 
considered a manufactured product if not dried or set prior to reaching 
the work site. The setting or drying of a combination of section 
70917(c) materials into a

[[Page 17801]]

finished product prior to reaching the work site is generally the 
circumstance in which a combination of only section 70917(c) materials 
would be considered a manufactured product.'' See id. at 57772.

Sec.  635.410(c)(1)(v)--Definition of ``Manufacturer''

    For the purposes of defining the term ``manufacturer'' as it is 
used in Sec.  635.410(c)(3), FHWA is proposing to use the definition 
found in part 184 at 2 CFR 184.3. The FHWA believes this definition is 
simple and provides clarity on how to distinguish between the 
manufacturer of the finished manufactured product and the manufacturer 
of the components that go into that product.

Sec.  635.410(c)(1)(vii)--Definition of ``Produced in the United 
States''

    For the reasons stated in section V, above, FHWA proposes to adopt 
the definition for ``produced in the United States'' for manufactured 
products found in section 70912(6)(B) of BABA, as implemented by OMB in 
part 184 at 2 CFR 184.3.

Sec.  635.410(c)(2)--Classification

Single Classification of Materials

    In Sec.  635.410(c)(2), FHWA is proposing to make clear, consistent 
with part 184, that an article, material, or supply should only be 
classified as either an iron or steel product, manufactured product, or 
another category specified by law or found in 2 CFR part 184. With two 
exceptions, discussed in more detail below, this means that an article, 
material, or supply cannot fall into multiple categories, i.e., be 
classified as both an iron or steel product and a manufactured product. 
While this proposed regulation would only apply requirements to iron or 
steel materials and manufactured products, as those are the only 
materials covered under 23 U.S.C. 313, FHWA is proposing this provision 
to differentiate iron or steel materials, manufactured products, and 
other materials referred to in law or in part 184, such as excluded 
materials, as defined in proposed Sec.  635.410(c)(1)(iii) and known as 
section 70917(c) materials in part 184, and construction materials, 
which may be subject to their own domestic content procurement 
preference. In alignment with part 184, FHWA does not intend to subject 
a material to multiple Buy America requirements. Nor does FHWA intend 
to subject a material to a Buy America requirement and the requirement 
of another domestic content procurement preference, such as 
requirements for construction materials found in part 184. The FHWA 
similarly does not intend materials to be subject to a Buy America 
requirement and the same domestic content procurement preference under 
BABA. For example, manufactured products would be subject only to 
FHWA's proposed standards, not both FHWA's proposed standards and the 
standards under BABA and part 184. In general, FHWA agrees with part 
184 that applying multiple requirements to a single product is 
unnecessarily burdensome.
    For instance, except as provided below, FHWA does not generally 
intend for a manufactured product with limited iron or steel content to 
be subject to both requirements for iron or steel products and 
manufactured products. Conversely, FHWA does not intend for a 
predominantly iron or steel manufactured product, when classified as an 
iron or steel product, to be subject to the proposed standards for 
manufactured products. Under FHWA's proposed Sec.  635.410(c)(2), any 
products meeting the definition of a manufactured product would need to 
comply with the proposed standards for manufactured products while 
products meeting the definition of an iron or steel product would 
continue to comply with FHWA's existing standards for iron or steel 
products found in 23 CFR 635.410(b).
    Nor does FHWA intend for materials properly classified as 
construction materials under part 184 to be subject to FHWA's Buy 
America requirements. The FHWA is not proposing to have this regulation 
cover the requirements applicable to construction materials. Instead, 
FHWA intends for properly classified construction materials to be 
solely subject to the requirements in BABA and part 184. Iron or steel 
products and manufactured products that may contain construction 
materials, however, would still be subject to the applicable FHWA Buy 
America requirement. In such cases, FHWA does not intend for such 
components of the iron or steel product or manufactured product to be 
subject to BABA's construction material requirements.
    Finally, FHWA intends this provision to make clear, as mentioned 
above in the discussion of proposed Sec.  635.410(c)(1)(iv), that 
excluded materials, standing alone, would not be subject to FHWA's Buy 
America requirements for manufactured products. Excluded materials, 
known as section 70917(c) materials in part 184, are a category of 
products specified in 2 CFR part 184. The proposed language would 
indicate that a material could only be classified as either an excluded 
material or manufactured product; an excluded material could therefore 
not be a manufactured product by itself.
    However, for two particular kinds of manufactured products, FHWA is 
proposing additional requirements along with FHWA's proposed standards 
for manufactured products in order to continue FHWA's longstanding 
policy of requiring predominantly iron or steel components of 
manufactured products to be Buy America-compliant with respect to those 
predominantly iron or steel components. In particular, FHWA believes 
this policy should be continued for (1) the iron or steel components of 
precast concrete; and (2) iron or steel enclosures of intelligent 
transportation systems and other electronic hardware systems installed 
in the highway right-of-way or other real property.\26\ The FHWA 
believes that these products are regularly used in highway construction 
projects and manufacturers have formed longstanding supply chains to 
incorporate Buy America-compliant iron or steel components into them. 
Where these products are considered manufactured products, FHWA 
proposes that the product must meet the standard for a manufactured 
product. In addition, unlike all other manufactured products, FHWA is 
proposing to require the specified iron or steel components of these 
two products to be compliant with FHWA's existing Buy America 
requirements for iron and steel. However, to minimize any burden and 
give credit for using an American-made iron or steel product, FHWA 
proposes to include the cost of these iron or steel components in the 
determination of whether 55 percent of the product's components, by 
cost, are produced in the United States.
---------------------------------------------------------------------------

    \26\ The FHWA notes that these requirements would only apply if 
the precast concrete or electronic hardware systems were classified 
as manufactured products. If they were classified as iron or steel 
products, such products would need to comply with FHWA's existing 
Buy America requirements for iron or steel.
---------------------------------------------------------------------------

    Besides the two exceptions noted above for precast concrete and 
iron or steel enclosures of intelligent transportation systems and 
other electronic hardware systems installed in the highway right-of-way 
or other real property, FHWA intends Sec.  635.410(c) to possess the 
same meaning as 2 CFR 184.4(e). The FHWA also believes its proposed 
language makes clear that a material incorporated into an 
infrastructure project must meet the Buy America requirement only for 
the single category in which it is classified, as generally stated in 2 
CFR 184.4(f). Materials would be classified as either (1) iron or steel 
materials and subject to FHWA's existing Buy America

[[Page 17802]]

requirements for iron or steel found in 23 CFR 635.410(b); (2) 
manufactured products and subjects to the proposed Buy America 
requirements for manufactured products; or (3) manufactured products 
that are also either precast concrete or iron or steel enclosures of 
intelligent transportation systems and other electronic hardware 
systems installed in the highway right-of-way or other real property 
and subject to the proposed Buy America requirements for manufactured 
products and FHWA's existing Buy America requirements for specified 
iron or steel components of these two products.

Categorization at the Work Site

    The FHWA proposes Sec.  635.410(c)(2) to specify that the 
classification of an article, material, or supply as being either an 
iron or steel product or a manufactured product must be based on its 
status at the time it is brought to the work site for incorporation 
into an infrastructure project. The FHWA believes it is important to 
determine when the classification of materials occurs, as some 
manufactured products might include steel and iron. Depending on when a 
product is classified for the purpose of applying FHWA's Buy America 
requirements, the iron or steel component of a manufactured product 
could be classified as a separate material, and thus be subject to 
FHWA's Buy America requirements for iron and steel.
    To provide consistency, FHWA is proposing this standard to align 
with the standard used by OMB in part 184 at 2 CFR 184.4(e). The FHWA 
does not intend this language to mean that FHWA will conduct a 
compliance check to see if a product is Buy America-compliant when it 
is brought to the work site; FHWA only intends this language to 
describe when a product will be categorized as either an iron or steel 
product or a manufactured product for the purpose of determining which 
Buy America requirement applies.

Sec.  635.410(c)(3)--Cost of a Component

    The FHWA is proposing to adopt the standards, unchanged, used in 
part 184 at 2 CFR 184.5 to determine the cost of a given component. The 
FHWA believes that this standard properly includes activities that 
directly connect to the goals of FHWA's Buy America provision to 
increase domestic manufacturing. The FHWA also notes that 23 U.S.C. 
313(c) specifically states that for the purposes of 23 U.S.C. 313, in 
calculating components' costs, labor costs included in final assembly 
must not be included in the calculation.

Sec.  635.410(c)(4)--Severability

    The FHWA is proposing to add a new Sec.  635.410(c)(4) that 
contains a severability clause applicable to the proposed Buy America 
requirements for manufactured products made by this proposed rule in 
Sec.  635.410(c). The FHWA believes that the proposed amendments to 
Sec.  635.410(c) are capable of operating independently of one another. 
If one or more aspects of the proposed Buy America requirements for 
manufactured products are determined to be invalid, the remaining 
provisions should remain unaffected and in force.

VII. Rulemaking Analysis and Notices

Executive Order 12866 (Regulatory Planning and Review), Executive Order 
13563 (Improving Regulation and Regulatory Review), and DOT Regulatory 
Policies and Procedures

    The OMB has determined that the proposed rule would be a 
significant regulatory action within the meaning of E.O. 12866, as 
amended by E.O. 14094.
    The preliminary regulatory impact analysis (PRIA) supports this 
proposed regulation and analyzes the costs and benefits associated with 
establishing Buy America requirements for manufactured products.
    The expected benefits of the proposed rule relate to protecting and 
expanding domestic manufacturing, increasing supply chain resiliency, 
and increasing consistency in applying domestic content procurement 
preferences for manufactured products between FHWA and other Federal 
Agencies that are subject to the requirements of BABA. None of these 
benefits have been quantified.
    The costs of the proposed rule relate to increased material costs 
for manufactured products used in highway construction projects, 
project delay, and the administrative costs to FHWA and recipients of 
FHWA financial assistance. At this time, FHWA is only able to quantify 
costs for the increased materials costs and the administrative costs to 
the FHWA. The FHWA's estimates of those increased material costs for 
manufactured products permanently incorporated into FHWA-funded 
projects range from a high of roughly $737 million per year to a low of 
$45 million. The wide range stems from the difficulty in estimating (1) 
the fraction of inputs to highway construction that are manufactured 
products; (2) the fraction of manufactured products that are currently 
domestically supplied but which fail to meet the proposed rule's 
requirement that 55 percent of the product's components, by cost, are 
mined, produced, or manufactured in the United States; and (3) the 
likely price premiums for purchasing manufactured products that would 
be compliant with the proposed rule compared to manufactured products 
currently used in FHWA-funded projects that would not be. The FHWA 
estimates an additional $167,000 per year in increased FHWA 
administration costs to cover the salary and employer-provided benefits 
of an additional Federal employee to administer the Buy America 
program. The other administrative costs to recipients of FHWA financial 
assistance and the costs associated with project delivery delay have 
not been quantified.
    The full regulatory impact analysis is available in the docket. The 
FHWA is seeking comment on assumptions that were developed as part of 
the PRIA, as well as information on other benefits or costs that would 
result from implementation of the rule.
    This rule will not adversely affect in a material way the economy, 
any sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities. These changes do not create a 
serious inconsistency with any other Agency's action or materially 
alter the budgetary impact of any entitlements, grants, user fees, or 
loan programs.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612), FHWA has evaluated the effects of this proposed rule 
on small entities and has determined that it is not anticipated to have 
a significant economic impact on a substantial number of small 
entities. This proposed rule would impose Buy America requirements for 
manufactured products on recipients of FHWA financial assistance 
including States, local governments, and other grant recipients. These 
recipients are primarily States, who are not included in the definition 
of small entity set forth in 5 U.S.C. 601. The FHWA believes the 
projected impact upon small entities that utilize FHWA funding would be 
negligible. To the extent the revisions require expenditures by State, 
local governments, and other grant recipients on Federal-aid projects, 
they are reimbursable. Small entities that may be impacted indirectly 
by a rulemaking are not subject to analysis under the Regulatory 
Flexibility Act, see Mid-Tex Electric Cooperative, Inc. v. Federal 
Energy Regulatory Commission, 773 F.2d 327 (D.C. Cir 1985). Therefore,

[[Page 17803]]

FHWA certifies that the proposed action would not have a significant 
economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule would not impose unfunded mandates as defined by 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48). 
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
Federal Agencies to prepare a written statement, which includes 
estimates of anticipated impacts, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and Tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $177 million, using the most current (2022) Implicit 
Price Deflator for the Gross Domestic Product. The definition of 
``Federal mandate'' in the Unfunded Mandates Reform Act excludes 
financial assistance of the type in which State, local, or Tribal 
governments have authority to adjust their participation in the program 
in accordance with changes made in the program by the Federal 
Government. The Federal-aid highway program permits this type of 
flexibility. Further, in compliance with the Unfunded Mandates Reform 
Act of 1995, FHWA will evaluate any regulatory action that might be 
proposed in subsequent stages of the proceeding to assess the effects 
on State, local, and Tribal governments, and the private sector.

Executive Order 13132 (Federalism)

    The E.O. 13132 requires Agencies to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that may have a substantial, direct effect on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. The FHWA has analyzed this proposed rule in accordance 
with the principles and criteria contained in E.O. 13132. The FHWA has 
determined that this proposed rule would not have sufficient federalism 
implications to warrant the preparation of a federalism assessment. The 
FHWA has also determined that this proposed rule would not preempt any 
State law or State regulation or affect the States' ability to 
discharge traditional State governmental functions.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), Federal Agencies must obtain approval from OMB for each 
collection of information they conduct, sponsor, or require through 
regulations. The FHWA has determined that the proposed rule does not 
contain collection of information requirements for the purposes of the 
PRA.

National Environmental Policy Act

    The FHWA has analyzed this proposed rule pursuant to the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.) and 
has determined that it is categorically excluded under 23 CFR 
771.117(c)(20), which applies to the promulgation of rules, 
regulations, and directives. Categorically excluded actions meet the 
criteria for categorical exclusions under the Council on Environmental 
Quality regulations and under 23 CFR 771.117(a) and normally do not 
require any further NEPA approvals by FHWA. This proposed rule would 
establish Buy America requirements for manufactured products. The FHWA 
does not anticipate any adverse environmental impacts from this 
proposed rule, and no unusual circumstances are present under 23 CFR 
771.117(b).

Executive Order 13175 (Tribal Consultation)

    The FHWA has analyzed this proposed rule in accordance with the 
principles and criteria contained in E.O. 13175, ``Consultation and 
Coordination with Indian Tribal Governments.'' The FHWA does not 
believe that the proposed rule would have substantial direct effects on 
one or more Indian Tribes; would not impose substantial direct 
compliance costs on Indian Tribal governments; and would not preempt 
Tribal laws. Therefore, a Tribal summary impact statement is not 
required.

Executive Order 12898 (Environmental Justice)

    The E.O. 12898 requires that each Federal Agency make achieving 
environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations. The FHWA has 
determined that this proposed rule does not raise any environmental 
justice issues.

Regulation Identification Number

    A RIN is assigned to each regulatory action listed in the Unified 
Agenda of Federal Regulations. The Regulatory Information Service 
Center publishes the Unified Agenda in spring and fall of each year. 
The RIN contained in the heading of this document can be used to cross-
reference this action with the Unified Agenda.

Rulemaking Summary, 5 U.S.C. 553(b)(4)

    As required by 5 U.S.C. 553(b)(4), a summary of this rule can be 
found in the Abstract section of the Department's Unified Agenda entry 
for this rulemaking at [https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2125-AG13].

List of Subjects in 23 CFR Part 635

    Grant programs--transportation, Highways and roads, Reporting and 
recordkeeping requirements.

Shailen P. Bhatt,
Administrator,Federal Highway Administration.

    For the reasons stated in the preamble, FHWA proposes to amend part 
635, as follows:

PART 635--CONSTRUCTION AND MAINTENANCE

0
1. The authority citation for part 635 continues to read as follows:

    Authority:  Sections 1525 and 1303 of Pub. L. 112-141, Sec. 1503 
of Pub. L. 109-59, 119 Stat. 1144; 23 U.S.C. 101 (note), 109, 112, 
113, 114, 116, 119, 128, and 315; 31 U.S.C. 6505; 42 U.S.C. 3334, 
4601 et seq.; Sec. 1041(a), Pub. L. 102-240, 105 Stat. 1914; 23 CFR 
1.32; 49 CFR 1.85(a)(1).

Subpart D--General Material Requirements

0
2. Amend Sec.  635.410 by:
0
a. Removing the word ``State'' and adding in its place the word 
``recipient'' in paragraphs (b)(2) and (3);
0
b. removing the words ``steel and iron materials'' and ``steel or iron 
materials'' and adding, in their place, the words ``iron or steel 
products'' in paragraphs (b)(1)(i) and (ii), (b)(2), (b)(3) 
introductory text, (b)(3)(i) and (ii), and (b)(4);
0
c. revising paragraph (c); and
0
d. Removing the word ``State'' and adding in its place the word 
``recipient'' in paragraph (d).
    The revision reads as follows:


Sec.  635.410  Buy America requirements.

* * * * *
    (c) No Federal-aid highway construction project is to be authorized

[[Page 17804]]

for advertisement or otherwise authorized to proceed unless the 
manufactured products used and permanently incorporated in such project 
are produced in the United States. To meet this requirement, the 
manufactured product must meet the following:
    (1) The following definitions apply to this section:
    (i) Component means an article, material, or supply, whether 
manufactured or unmanufactured, incorporated directly into a 
manufactured product or, where applicable, an iron or steel product.
    (ii) Excluded materials means section 70917(c) materials as defined 
in 2 CFR 184.3.
    (iii) Iron or steel products means articles, materials, or supplies 
that consist wholly or predominantly of iron or steel or a combination 
of both.
    (iv) Manufactured products means articles, materials, or supplies 
that have been processed into a specific form and shape, or combined 
with other articles, materials, or supplies to create a product with 
different properties than the individual articles, materials, or 
supplies. If an item is classified as an iron or steel product, an 
excluded material, or other product category as specified by law or in 
2 CFR part 184, then it is not a manufactured product. However, an 
article, material, or supply classified as a manufactured product may 
include components that are iron or steel products, excluded materials, 
or other product categories as specified by law or in 2 CFR part 184. 
Mixtures of concrete or asphalt delivered to a job site without final 
form for incorporation into a project are not a manufactured product.
    (v) Manufacturer, in the case of manufactured products, means the 
entity that performs the final manufacturing process that produces a 
manufactured product.
    (vi) Predominantly of iron or steel or a combination of both means 
that the cost of the iron and steel content exceeds 50 percent of the 
total cost of all its components. The cost of iron and steel is the 
cost of the iron or steel mill products (such as bar, billet, slab, 
wire, plate, or sheet), castings, or forgings utilized in the 
manufacture of the product and a good faith estimate of the cost of 
iron or steel components.
    (vii) Produced in the United States, in the case of manufactured 
products, means:
    (A) The product was manufactured in the United States; and
    (B) The cost of the components of the manufactured product that are 
mined, produced, or manufactured in the United States is greater than 
55 percent of the total cost of all components of the manufactured 
product.
    (2) An article, material, or supply shall only be classified as an 
iron or steel product, a manufactured product, or other products as 
specified by law or in 2 CFR part 184. An iron or steel product must 
meet the requirements of paragraph (b) of this section. Except as 
otherwise provided in this paragraph (c), an article, material, or 
supply shall not be considered to fall into multiple categories. In 
some cases, an article, material, or supply may not fall under any of 
the above-listed categories. The classification of an article, 
material, or supply as falling into one of the categories listed in 
this paragraph (c) must be made based on its status at the time it is 
brought to the work site for incorporation into an infrastructure 
project. In general, the work site is the location of the 
infrastructure project at which the iron or steel product or 
manufactured product will be incorporated.
    (i) With respect to precast concrete products that are classified 
as manufactured products, components of precast concrete products that 
are manufactured predominantly of iron or steel or a combination of 
both shall meet the requirements of paragraph (b) of this section. The 
cost of such components shall be included in the applicable calculation 
for purposes of determining whether the precast concrete product is 
produced in the United States.
    (ii) With respect to intelligent transportation systems and other 
electronic hardware systems that are installed in the highway right of 
way or other real property and classified as manufactured products, the 
cabinets or other enclosures of such systems that are manufactured 
predominantly of iron or steel or a combination of both shall meet the 
requirements of paragraph (b) of this section. The cost of cabinets or 
other enclosures shall be included in the applicable calculation for 
purposes of determining whether systems referred to in the preceding 
sentence are produced in the United States.
    (3) In determining whether the cost of components for manufactured 
products is greater than 55 percent of the total cost of all 
components, recipients shall determine the cost as follows:
    (i) For components purchased by the manufacturer, the acquisition 
cost, including transportation costs to the place of incorporation into 
the manufactured product (whether or not such costs are paid to a 
domestic firm), and any applicable duty (whether or not a duty-free 
entry certificate is issued); or
    (ii) For components manufactured by the manufacturer, all costs 
associated with the manufacture of the component, including 
transportation costs as described in paragraph (a) of this section, 
plus allocable overhead costs, but excluding profit. Cost of components 
does not include any costs associated with the manufacture of the 
manufactured product.
    (4) The provisions of this paragraph (c) are separate and severable 
from one another and from the other provisions of this section. If any 
provision is stayed or determined to be invalid, the remaining 
provisions shall continue in effect.
* * * * *
[FR Doc. 2024-05182 Filed 3-11-24; 8:45 am]
BILLING CODE 4910-22-P