On Thursday, February 15th, the U.S. House Subcommittee on Highways and Transit met to discuss the implementation of the Buy America provisions of the 2021 bipartisan infrastructure law. The subcommittee called on several witnesses to provide insights on the impacts, challenges, and opportunities for implementing Buy America provisions.
The “Buy America” provisions are another name for domestic content preference laws, which require that certain goods purchased with federal funds be made in the United States. Some “BA” provisions have to infrastructure projects, particularly highways, public transportation, and airports, since as far back as 1978. In an opening statement, subcommittee chair Rep. Crawford (R-AR) made note that the provision is not new, citing the historical evolution of the Buy America provisions. (“Buy America” provisions, without the letter “n,” apply to federal grants to state and local governments, to distinguish them from the Buy American Act of 1933 which deals with things the federal government purchases directly.) The Surface Transportation Assistance Act of 1982 (STAA) regularized BA for highways. Under STAA Section 165, no funds can be obligated “unless steel, cement, and manufactured products in such project are produced in the United States.”
(See this summary of the pre-IIJA Buy America laws and their legislative history, and note that before the IIJA, there was a different BA law applying to grants under each mode of transportation, with slightly different rules.)
As part of the Infrastructure Investment and Jobs Act (IIJA), the Build America, Buy America Act (BABA) was enacted in 2021. The act established domestic procurement requirements for all infrastructure projects receiving federal funding, requiring that all iron, steel, manufactured products, and construction materials be produced in the United States. As subcommittee ranking member Rep. Holmes-Norton (D-DC) noted, while the Buy America provisions historically applied to the Federal Highway Administration (FWHA) and Federal Transit Administration (FTA), the BABA expands domestic content requirements to all federal infrastructure programs, whether the infrastructure is funded through the IIJA or not. Full committee ranking member Rep. Larsen (D-WA) added that the Buy America provision is a strategic approach to increase jobs and improve the nation’s infrastructure while maximizing the economic value of federal funding and ultimately benefiting the taxpayers. The ranking member noted the IIJA, the Inflation Reduction Act (IRA), and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act all encourage private investment while also providing public funding for infrastructure across the country.
A significant element in the Buy America provision is the waiver process, which the chair and both ranking members provided comments on during their opening statements. Chair Crawford voiced concern over the waiver process and both ranking members urged the limited and judicious use of waivers, while noting that temporary waivers can allow a “phase-in” for domestic procurement preferences. The topic of waivers came up repeatedly during the hearing, with reference to the 1983 general applicability waiver. Accordingly, the requirement for U.S. production of steel, iron, and manufactured products can be waived if inconsistent with public interest or if products are not produced in the United States in sufficient quantities or quality. The 1983 general applicability waiver stated that the FHWA does not apply Buy America requirements “to manufactured products except for predominantly steel and iron manufactured products and predominantly steel and iron components of manufactured products.” The BABA applies domestic content requirements for construction materials. There were multiple perspectives on the importance and value of these waivers, with some citing concern that waivers risk increases reliance on imports, while others noted waivers provide flexibility and time to build domestic manufacturing capacity.
Each of the witnesses provided insights into the various stakeholder perspectives on Buy America provisions. Braceras noted that State DOTs have recognized the paramount importance of IIJA project delivery. Bracero emphasized the need for consistency in federal Buy America guidance, adding that training state DOT employees in compliance with regulations is key. Moreover, Braceras urged the need to understand the time it takes to process waivers and recognize the need for clear guidance on documentation required for waiver.
Braceras summarized the Buy America provision in the following way, “American money should be spent on American stuff, to benefit Americans.”
Edmondson described the certification letter process used by construction companies to guarantee that materials from suppliers are compliant (i.e., more than 55 percent domestically produced). At times, suppliers cannot certify that materials are compliant, and the associated uncertainty translates into increased costs. Edmondson noted that this is prevalent with traffic management and safety equipment. Also, smaller businesses may not have the resources to understand all the regulations.
Needham noted that for the steel industry, the Buy America provisions are critical and encourage innovation, create jobs, and reduce reliance on foreign steel (which he noted generates higher emissions than domestic steel). According to Needham, Nucor Corporation is a leader in sustainable steel production, producing steel using a method that produces greenhouse gas emissions (GHG) 66 percent lower than global averages. Needham noted that the Buy America principles provide a foundation for maintaining domestic steel production.
Enders affirmed the importance of Buy America, for the asphalt pavement industry. Enders also pointed out that the two main components in asphalt pavement, aggregate and binders, are not considered manufactured products according to the 1983 waiver, making them exempt from the Buy America requirements, which Enders later in the hearing provided an explanation.
Salrin provided insight from the workers’ perspective, noting that the Buy America policies support domestic manufacturing workers instead of corporations that outsource production to foreign countries that have fewer labor or environmental standards. Salrin suggested that instead of the general applicability waivers, there should be more product-specific waivers.
The witnesses also provided insights during the period of questions, and the discussion touched on several themes: the impact of Buy America on jobs and the domestic manufacturing base, waiver issues, and improvements in implementing Buy America provisions going forward.
In response to Chairman Crawford, Needham noted that Buy America provisions provide companies like Nucor confidence to invest in the future, because the company knows that dollars spent on infrastructure projects support American products. Needham added that such confidence has allowed Nucor to invest $12 billion in expanded capabilities. Braceras added that the Buy American principle not only generates economic value for domestic companies, but also a greater sense of community and belonging.
Salrin touched on the economic benefit of Buy America, in response to Rep. Johnson. (D-GA). Proper implementation of Buy America provisions allows for a transition into the electric vehicle (EV) charger market. The EV charging market is growing, and there is a desire to be ready to engage in that area.
Salrin also noted that the provisions create a demand for U.S. products. The added benefit is more leeway at the bargaining table, where workers can fight for benefits like healthcare, as opposed to fighting only for job security. In response to Rep. Holmes-Norton, Salrin mentioned that the Buy America provisions give workers in the U.S. a “first shot.”
Responding to Rep. Mann (R-KS) on proper implementation, Edmondson and Braceras praised the relationship between agencies and state involvement in federal-level discussions. For them, the relationships help states understand certain issues and provide a place to voice concerns about the marketplace.
The impact of Buy America provision also extends to climate resiliency and sustainable construction. Needham noted that Nucor uses the circular method to produce steel, which uses scrap metal in steel production. Needham pointed to U.S. steel production methods as an explanation for why steel production in the U.S. produced 66 percent fewer GHG emissions compared to the global average. Salrin added, in response to Rep. Titus (D-NV), that a substantial portion of emissions in China come from manufacturing and the Buy America provisions may reduce the need to purchase from Chinese companies.
The issues over Buy America requirement waivers emerged many times during the hearing, including disagreements over the waivers. General applicability waivers apply to multiple projects and awards. General applicability waivers can be product-specific (applying to one product) or non-product specific (applying to all manufactured products). Salrin explained that product-specific waivers allow manufacturers and Congress to see what products are not currently being produced in the United States, thus allowing manufacturers and Congress to observe any gaps in the production process. The waiver can then allow time to build up a domestic capability to produce the product and reach a point where the waiver for that specific product is no longer needed. Salrin repeated this explanation multiple times during the hearing, placing emphasis on the value of building capacity. Salrin suggested that there should be a focus on the product-specific waivers.
Enders touched on how road and bridge projects are impacted by material exemptions, responding to Rep. Menendez (D-NJ), noting that the availability of asphalt binder and aggregate differs from place to place. In Wisconsin, there are enough aggregates available, and space for quarries to collect aggregates, which may not be the case in New Jersey. The exemptions may give suppliers more flexibility to obtain the materials they need. Enders added later that the advantage of asphalt is the ability to reuse asphalt pavement, increases material sustainability by encouraging recycling and keeping asphalt out of landfills. Moreover, using reclaimed asphalt reduces the reliance on material from other places and can save states billions of dollars.
A particular point of the discussion on waivers related to EV charging. Rep. Stauber (R-MN), Rep. LaMalfa (R-CA), Rep. Graves (R-LA), and Rep. Scholten (D-MI) voiced concerns over a waiver exempting EV charger manufacturing from Buy America requirements. Salrin addressed these concerns, stating the function of the waiver would be to build capacity to get manufacturers to a point of production enabling them to participate in this growing market. Salrin reminded the subcommittee that the waiver requires final assembly in the United States, that iron and steel be made in the United States, and that chargers must meet a 55 percent domestic content threshold. Edmondson noted that manufacturing capacity will move to whatever viable market exists. What that means is, if there is an emerging market, like EV charging, the manufacturing sector will move to fill the need of that market, and Edmondson pointed out that is it important allow the manufacturing sector to do so.
Rep. Mann (R-KS), Rep. Owens (R-UT), and Rep. Kean (R-NJ) all inquired about the recommendations to fix to improve the waiver issue. Enders pointed out that the AGC’s relationship with the EPA is critical and a platform to discuss the matter. Having the agency be more involved can be beneficial. Needham agreed with Rep. Owens that improving the waiver is necessary, but reminded the subcommittee that exemptions are few. Regardless, Needham noted that a robust process and granting of waivers on a narrow and specific basis is important. Braceras suggested that obtaining a waiver should not be an easy thing to do. He emphasized a couple of recommendations including clear guidance on proper documentation and reduced wait times for obtaining waivers, citing the time-sensitive nature of project bids.
Throughout the hearing, witnesses discussed how implementation of Buy America provisions can be improved. Representatives spoke to unclear guidance, the prospect of delays, and issues of consistency across agencies. There was a sense of appreciation for Buy America and the importance of focusing on American-made products like steel, iron, and other construction materials. While there were disagreements about the various elements of Buy America, representatives inquired about the steps government agencies and Congress can take to ensure the principles of domestic content preferences.
In response to Rep. Garcia (D-IL), Braceras laid out several recommendations to improve compliance with Buy America provisions:
These considerations aid in addressing the questions: What should we focus on and how do we get there?
Enders noted that one of the biggest priorities going forward will be sustainable funding. Historic funding from the IIJA has created around 1300 projects across Wisconsin, and sustainable funding going forward will be key. Braceras echoed the insight from Enders, responding to Rep. Carbajal (D-CA) that sustainable funding provides states an opportunity to make more infrastructure investments. Braceras also noted in response to Rep. Johnson (R-SD) that he would like to see more consistency between modal agencies and for the FHWA to continue to support FHWA employees in all the states so that they can be a resource for state DOTs.
In addition to funding needs, Edmondson suggested open communication, and the need for collaboration between industry and manufacturing. There were observations that the BABA requirements pose a challenge to the government and industry: there is a desire to grow the manufacturing base but also to deliver infrastructure projects quickly. Braceras agreed, saying the effort is to accomplish several goals with the same tool. Braceras emphasized that while the IIJA is a five-year program, there should be a long-term commitment for Build America Buy America principles.
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