Legal Alert

USDOT Suspends Buy America Requirements

June 2, 2022

Summary

The U.S. Department of Transportation (USDOT) has temporarily suspended Buy America requirements for certain construction materials needed to build infrastructure projects with federal participation, in part due to challenges in sourcing domestic construction materials and ongoing supply chain issues.

The Upshot

  • The relevant Buy America requirements became effective on May 14, 2022. The USDOT temporarily suspended those requirements when it issued its 180-day waiver on May 19, 2022. The waiver is slated to expire November 10, 2022.
  • The suspension of Buy America requirements affords the USDOT and procuring governmental entities time to develop enforcement and compliance mechanisms for new Buy America standards.
  • The delay also will allow contractors time to investigate potential domestic sources of certain construction materials and to build up an adequate supply base to support federally funded transportation infrastructure projects.

The Bottom Line

The USDOT agreed that public interest waivers should be used sparingly and concluded that avoiding the disruption to civil infrastructure (particularly transportation and transit) projects constitutes a rare and appropriate use of the authority.

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act into law. A crucial provision in the Act imposes broader Buy America requirements for certain construction materials — materials other than an item of primarily iron or steel — including stone, sand or gravel, non-ferrous binding agents, plastic- and polymer-based products, glass, lumber, and drywall.

Generally, Buy America requires that all iron and steel, manufactured products, and construction materials used in federally funded/federal-participation infrastructure projects must be produced in the United States. Buy America requirements are largely observed by contractors and subcontractors, project sponsors, builders, and design and construction professionals. The White House provided preliminary guidance in an OMB Memorandum published on April 18, 2022, highlighting that a public interest waiver may be appropriate where a procuring agency determines that the Buy America requirements are inconsistent with other important policy goals.

On May 19, 2022, the U.S. Department of Transportation (USDOT) issued a 180-day temporary waiver for the identified construction materials to allow state, industry, and other partners to develop procedures, documents, and mechanisms to ensure enforcement and certify compliance with the new standards for construction materials. That is because construction materials have not been previously subject to these rules. USDOT sought comments from affected industry participants as to whether to provide a broad, temporary waiver.

The industry responded, and the USDOT issued the waiver, noting it would allow for implementation of the Buy America requirements “in a way that is not overly burdensome,” particularly in light of ongoing supply chain issues and other regional challenges in sourcing domestic construction materials. The de-facto transitional period affords USDOT the time to develop the Biden administration’s enforcement and compliance mechanisms. It also provides state DOTs the time necessary to update their standards and specifications, allows contractors and industry participants to incorporate the relevant Buy America contract provisions, and better informs the Federal Highway Administration (FHWA) in addressing its noncompliance and oversight processes.

Ballard Spahr’s P3/Infrastructure Practice spans the entire lifecycle of projects, including: counseling on legislative strategy; guiding project planning and structuring; working to develop procurement processes and compliance with government guidelines; and navigating projects through financial structuring. Please feel free to contact us should you need more information.

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