[Federal Register Volume 87, Number 219 (Tuesday, November 15, 2022)]
[Notices]
[Pages 68576-68578]
[FR Doc No: 2022-24744]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

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

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

ACTION: Notice; request for comments.

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

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

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

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

SUPPLEMENTARY INFORMATION:

Background

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

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

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

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

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