FHWA Rescinds Longstanding Buy America Waiver for Manufactured Products

By eliminating the Manufactured Products General Waiver, which has been in effect since 1983, the FHWA will require that “manufactured products”—which include articles, materials or supplies processed into specific forms and shapes, or combined with other articles, materials or supplies to create a product with different properties than the original—be manufactured in the United States and at least 55 percent of the manufactured product’s components cost be mined, produced or manufactured domestically.

Background
The Infrastructure Investment and Jobs Act (IIJA), enacted in November 2021, authorized roughly $1.2 trillion over 10 years for a range of infrastructure projects. The IIJA further contained a provision known as Build America, Buy America Act (BABA), which specifies that federally financed infrastructure projects may only use iron or steel, manufactured products or construction materials produced in the United States.

Under BABA, manufactured products are 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 individual articles, materials or supplies. Manufactured products are considered “produced in the United States”—and therefore, BABA-compliant—when the final product is manufactured in the United States, and the cost of components mined, produced or manufactured domestically exceeds 55 percent of the total components cost.

FHWA Final Rule
The FHWA final rule is intended to better align the agency’s standards for the use of manufactured products in agency-financed projects with BABA requirements, including the BABA guidance issued by Office of Management and Budget’s (OMB) in October 2023.

The final rule ends the agency’s Manufactured Products General Waiver, initially enacted through the 1983 Surface Transportation Assistance Act, which exempted most manufactured products (except those made predominantly from iron and steel) from domestic production requirements.

By terminating the Manufactured Products General Waiver, manufactured products used in FHWA-financed projects must meet the following requirements:

• Final Assembly Requirements. Manufactured products must be manufactured in the United States.
• 55 Percent Requirement. Greater than 55 percent of the manufactured product’s components, by cost, must be mined, produced, or manufactured in the United States.

FHWA requirements for iron and steel products remain unchanged under the final rule, and generally require that all manufacturing processes, including application of a coating, for these materials occur within the United States.

The final rule keeps the De Minimis Costs and Special Grants Waiver in place, whereby either manufactured products under a single financial assistance award where the total value of non-compliant products is less than $1 million or 5 percent of the total applicable costs, or the total amount of federal assistance through awards or subawards is less than $500,000 are not subject to domestic production requirements.

The final rule also contemplates potential “time-limited, targeted waivers,” if needed, but does not explain when or how these waivers would function.

These new requirements follow those proposed in FHWA’s March 12, 2024, Notice of Proposed Rulemaking (NPRM).

Impact and Timing
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.

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 effect until this date.

The 55 percent requirement will become effective for Federal-aid projects obligated on or after October 1, 2026. As a result, Buy America compliance for Federal-aid projects obligated on or after October 1, 2026, requires that 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.