President Joe Biden’s November infrastructure law, worth $1.2 trillion, expanded the requirements for federally funded projects to buy American-made goods. New rules by the Administration will now make it more difficult to obtain waivers from these cost-increasing requirements.
For decades, Buy America laws required that grantees receiving federal funds to build roads, bridges, and rail lines purchase domestically produced steel, iron, and manufactured goods—including rolling stock like buses and trains. Infrastructure Investment and Jobs Act, (IIJA), expanded these Buy America requirements to include copper wiring, plastics and polymers as well as lumber.
They can increase costs, and even render some projects unaffordable. When these requirements prove to be unworkable, or cause excessive costs, grantees can request waivers from Buy America laws.
However, on Monday the White House’s Office of Management and Budget issued guidance to limit the usage of waivers under the IIJA for Buy America.
Most often, those requests are granted or denied by funding agencies. This guidance was issued Monday in accordance with an earlier White House executive directive. It requires agencies to consult OMB’s Made in America Office whenever considering waivers for grants made using IIJA funds. This guidance also allows OMB’s Made in America Office to decide whether waivers will be approved.
These waivers are sent through OMB to restrict the amount and scope of waivers that can be granted. Monday’s guidance states that the consultation was held to determine if there are any ways to make the waiver more efficient in accordance with the law.
Federal contractors have reacted negatively to this requirement. They claim it will add bureaucratic hurdles to the finalization of infrastructure projects.
Stephen Sandherr CEO of the Associated General Contractors of America said yesterday that this is similar to asking the U.S. Department of Education for permission slips to be missed by every child. “Firms won’t have to spend as much time waiting on federal officials to make a decision about whether or not a project meets the latest level of red tape placed by the Administration.”
Sandherr says that such requirements are especially inappropriate in a period when material costs continue to rise.
Back in December, a Congressional Research Service (CRS) report flagged the expansion of Buy America provisions in IIJA as potentially at odds with other provisions of the law that make new funding available to jurisdictions like counties and municipal bus services. CRS reported that smaller agencies and locales might not have the necessary staff or experience to follow complicated Buy America laws. This group will have the hardest time navigating an easier waiver application process.
Biden’s policy of infrastructure makes it harder for people to get waivers from Buy America provisions. While the president is keen to invest in “historical” infrastructure projects, he also believes strongly in regulations to ensure that such investments are as low-cost as possible.
In the example of public transportation, the IIJA raises spending by about $50 billion for five years. That’s an approximate 80 percent increase. Alon Levy, transit cost researcher in the United States, said that some agencies spend up to 70 percent more on rail cars than their European counterparts. According to Levy, the technology of domestically produced cars that they end up using is inferior. Levy says that allowing transit agencies to purchase modular goods from Europe would benefit them almost as much, removing Buy America restrictions for new railroad cars.
You could also make the same argument about the IIJA’s higher spending on road, bridges and other infrastructure, whose costs and delivery time are increased by Buy America.
The Biden administration instead decided to make less money for its buck. This week, the Biden administration doubled down on this approach with its new guidance.