Buy America Requirements for Manufactured Products

<RULE> DEPARTMENT OF TRANSPORTATION <SUBAGY>Federal Highway Administration</SUBAGY> <CFR>23 CFR Part 635</CFR> <DEPDOC>[Docket No. FHWA-2023-0037]</DEPDOC> <RIN>RIN 2125-AG13</RIN> <SUBJECT>Buy America Requirements for Manufactured Products</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Highway Administration (FHWA), U.S. Department of Transportation (DOT). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule amends FHWA's Buy America regulation to terminate FHWA's general waiver for manufactured products and establish Buy America requirements for manufactured products with respect to Federal-aid highway projects. The standards for applying Buy America to manufactured products are generally 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)). </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective March 17, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For questions about this final rule, please contact Mr. Brian Hogge, FHWA Office of Infrastructure, 202-366-1562, or via email at <E T="03">Brian.Hogge@dot.gov.</E> For legal questions, please contact Mr. David Serody, FHWA Office of Chief Counsel, 202-366-4241, or via email at <E T="03">David.Serody@dot.gov.</E> Office hours for FHWA are from 8:00 a.m. to 4:30 p.m., eastern time (E.T.), Monday through Friday, except Federal holidays. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Electronic Access and Filing</HD> This document, the notice of proposed rulemaking (NPRM), all comments received, and all supporting material may be viewed online at <E T="03">www.regulations.gov</E> using the docket number listed above. Electronic retrieval assistance and guidelines are available on the website. It is available 24 hours each day, 365 days each year. An electronic copy of this document may also be downloaded from the Office of Federal Register's website at <E T="03">www.federalregister.gov</E> and the U.S. Government Publishing Office's website at <E T="03">www.GovInfo.gov.</E> <HD SOURCE="HD1">I. Executive Summary</HD> FHWA is required, by statute, to ensure that all projects funded under title 23 of the United States Code (U.S.C.) (Federal-aid projects) use only steel, iron, and manufactured products that are produced in the United States. 23 U.S.C. 313. FHWA refers to these requirements as “Buy America” requirements. In other words, FHWA's Buy America requirement for manufactured products mandates that all such products used on Federal-aid projects must be “produced in the United States.” 23 U.S.C. 313. The Buy America requirement for manufactured products has existed in some form since the enactment of the Surface Transportation Assistance Act of 1978 (1978 STAA), Public Law 95-599 (1978), with those requirements being modified close to their current form by section 165 of the Surface Transportation Assistance Act of 1982 (1982 STAA), Public Law 97-424 (1983). In 1983, following the passage of the 1982 STAA, FHWA determined that it would be in the public interest to waive the Buy America requirements for manufactured products, with that waiver known as the Manufactured Products General Waiver. <E T="03">See</E> 48 FR 1946 (Jan. 17, 1983); 48 FR 53099 (Nov. 25, 1983). Under the Manufactured Products General Waiver, manufactured products that were permanently incorporated into Federal-aid projects did not need to be produced domestically, apart from predominantly iron or steel components of manufactured products. Through this rule, FHWA is establishing specific dates on which the Manufactured Products General Waiver will be terminated and is amending its Buy America regulation at 23 CFR 635.410 to establish standards regarding Buy America requirements that will apply to manufactured products on Federal-aid projects. These standards are substantially similar to those established by OMB that apply to manufactured products subject to BABA. <SU>1</SU> <FTREF/> This means that to be considered “produced in the United States” and therefore Buy America-compliant, manufactured products must be manufactured in the United States (“final assembly requirement”) and have greater than 55 percent of the manufactured product's components, by cost, be mined, produced, or manufactured in the United States (“55 percent requirement”). <FTNT> <SU>1</SU>  2 CFR part 184 established in 88 FR 57750 (Aug. 23, 2023) and M-24-02 (Oct. 25, 2023). </FTNT> Under this final rule, a manufactured product is defined as an article, material, or supply that has 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, however, an article, material, or supply meets this definition but could also be classified as an iron or steel product, excluded material, or other product category as specified by law or in 2 CFR part 184, that article, material, or supply is not a manufactured product. Further, mixtures of excluded materials delivered to a work site without final form for incorporation into a project are also not manufactured products. For the purpose of this rule, an article, material, or supply is generally only subject to one set of requirements. For example, a manufactured product is only subject to FHWA's Buy America requirements for manufactured products in § 635.410(c), meaning that the product must meet the final assembly and 55 percent requirements. An iron or steel product, on the other hand, must meet FHWA's existing Buy America requirements for iron and steel in § 635.410(b), generally requiring that all manufacturing processes, including application of a coating, for these materials must occur in the United States. <E T="03">See</E> 23 CFR 635.410(b)(1)(ii). Pursuant to § 635.410(c)(2)(i), however, precast concrete products that are classified as manufactured products must have their predominantly iron or steel components meet FHWA's Buy America requirements for iron and steel. <SU>2</SU> <FTREF/> Similarly, pursuant to § 635.410(c)(2)(ii), the cabinets or other enclosures of intelligent transportation systems (ITS) and other electronic hardware systems that are installed in the highway right of way or other real property and classified as manufactured products must comply with FHWA's Buy America requirements for iron and steel if the cabinet or enclosure is predominantly iron or steel. These specified manufactured products must also comply with FHWA's Buy America requirements for manufactured products. However, the predominantly iron or steel components for precast concrete and the predominantly iron or steel cabinet or enclosure for ITS and other electronic hardware systems will be considered for the purpose of the 55 percent content requirement. <FTNT> <SU>2</SU>  As described in more detail in the discussion of 23 CFR 635.410(c)(1)(iv) below, while precast concrete may be considered a manufactured product, wet concrete delivered to a work site is not a manufactured product, as wet concrete is a mixture of excluded materials delivered to a work site without final form. </FTNT> The requirements established in this rule are substantially similar to those proposed in the NPRM. 89 FR 17789 (March 12, 2024). FHWA notes, however, that the final assembly requirement will become effective for Federal-aid projects obligated on or after October 1, 2025. The Manufactured Products General Waiver will remain in place until this date. In addition, unlike the NPRM, the 55 percent requirement will subsequently become effective for Federal-aid projects obligated on or after October 1, 2026. This means that, to be Buy America-compliant, for Federal-aid projects obligated on or after October 1, 2026, all manufactured products permanently incorporated into the project must both be manufactured in the United States and have the cost of the components of the manufactured 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 regulatory impact analysis (RIA) prepared for this final rule pursuant to Executive Order (E.O.) 12866, as amended by E.O. 14094, is available in the rulemaking docket. The RIA estimates 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 this rule relate to increased material costs for manufactured products used in Federal-aid highway construction projects, project delay, and the administrative costs to FHWA and recipients of FHWA financial assistance. FHWA is able to quantify only increased material costs and the administrative costs to FHWA and recipients of FHWA financial assistance. FHWA estimates the increased material costs for manufactured products permanently incorporated into Federal-aid projects to range from $41 million to $980 million per year. FHWA further estimates an additional $167,000 per year in increased FHWA administrative costs and an additional $22 million per year in increased administrative costs to recipients of FHWA financial assistance. FHWA estimates the 10-year cost of this rule to range from $545 milli ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 201k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━