Are the Build America rules slowing infrastructure progress?

A key selling point of President Joe Biden’s infrastructure law was that it would help create jobs for more Americans. But new rules designed to pump up the domestic economy threaten to slow infrastructure projects and drive up their costs.

That’s been the message from state transportation departments, transit agencies and construction groups in recent weeks. They have been trying to raise the alarm with Congress and put pressure on the Biden administration to fix the slow and laborious process of complying with the law.

Transportation industry leaders say they support the goals under the Build America, Buy America Act that were included in the 2021 federal infrastructure law. The rules expand existing mandates that require certain infrastructure built with federal dollars to use U.S.-made materials. But, leaders warn, American companies and regulators often are not prepared for such a big switch.

“States continue to have significant concerns regarding the readiness of industry for this transition,” Carlos Braceras, the executive director of the Utah Department of Transportation, told a U.S. House transportation subcommittee last week.

Part of the worry is that U.S.-made materials might not be available. In that case, the federal approval process for getting foreign parts can take years. But even the prospect of certifying that components are made in the U.S. is so grueling that many suppliers choose not to do it, instead selling their goods to private industry and leaving public agencies with fewer design choices or more expensive bids.

The new Build America, Buy America rules come at the same time that public agencies confront shortages of workers and materials to build projects funded by the 2021 infrastructure law. Inflation has been especially high in the construction sector, too.

Ty Edmondson, the president and CEO of T.A. Loving Company, a North Carolina construction company, told the House Subcommittee on Highway and Transit that his company has had difficulty finding a wide variety of materials needed for road projects. Those include LED lighting, transformers, electric controls and switches, signal cabinets, generators, pumps, motors, water meters, brass products and PFAS treatment systems.

When he asks suppliers to certify that their products were made in the U.S., Edmondson said, many tell him they can’t do that, especially because the federal government frequently revises its rules. In that case, the risk of not complying falls to contractors like his company.

“There is uncertainty. In construction, that means increased costs,” said Edmondson, testifying on behalf of the Associated General Contractors of America. “Contractors have to account for that in their bids to mitigate risk. How can an individual contractor be expected to adhere to rules and regulations when [they’re] a moving target?”

The Infrastructure Investment and Jobs Act broadened the reach of the laws designed to boost American businesses. Previously, they mainly applied to road construction, transit and water projects. The infrastructure law expanded the rules to cover electric utilities and transmission, broadband, and real estate.

But even when it comes to building roads, the law added more materials that must be produced in the U.S.s on projects getting federal money. Before, for example, the Buy America provisions applied to iron and steel. Now, they’ll apply to construction materials such as copper wiring, glass, fiber optic cable and plastics. (Congress chose not to apply the rules to materials like cement, gravel and asphalt, though.)

Braceras, the Utah transportation director, told House members in written testimony that many state agencies have encountered problems because of the new rules.

Utility companies, for example, are often part of road construction projects because underground or overhead infrastructure has to be moved. But Delaware utilities balked at performing work on several projects, because they weren’t willing to sign agreements with the domestic sourcing requirements. In other cases, the utilities agreed to do the work at the same time of road construction, rather than in advance, to give them more time to find appropriate supplies. Georgia experienced similar problems with utilities, too, Braceras said.

Meanwhile, Maine is worried that the federal government won’t let it buy heavy duty plastics from Canada, traffic signal equipment from Mexico or synthetic material to stabilize terrain that it currently gets from Asia. It might have to find a new supply for precast girders if it can’t get them from Canada, even though there are few such manufacturers in the Northeast and trucking those elements is impractical, he added.

Construction leaders also criticized the slow federal response when agencies asked for an exception to the Buy America rules.

For example, Edmondson said, the Illinois Department of Transportation asked for permission to buy foreign-made pumps in May 2021. But it took until late August 2023 for the Federal Highway Administration to publish that request—a key step in getting an exception, because it allows domestic manufacturers to respond if they can provide the equipment.

“How are U.S. DOT and the White House supposed to determine if there are domestic manufacturers or not if the public is not made aware of the waiver request for nearly two and a half years?” Edmondson said in written testimony. “In this instance, a supplier responded to the posted waiver request and confirmed that they could indeed meet the requirements and supply those pumps. While this appears to be a ‘good news’ story, it is frustrating that two years were wasted in the process.”

Similarly, a California agency had to wait 15 months for the FHWA to post a request for maintenance equipment for a suicide-prevention structure on the Golden Gate Bridge, he added.

“To illustrate how slow the process can be,” he added, “there are waiver requests dating back to 2016 that have not yet been given any determination and are still pending on FHWA’s website.”

Edmondson told House members the White House Office of Management and Budget  should set high-level Build America guidance for other federal agencies to follow, then let them grant waivers based on their expertise. As it is, OMB has to give its approval twice, which increases the political pressure to intervene, he said.

“This is akin to [requiring] a local school district to contact the Department of Education twice to approve a child’s absence note,” Edmondson said.

Braceras said state transportation agencies are wary of even applying for waivers because they don’t know how long it will take, they don’t know whether the effort will be worth it and they don’t know how much documentation the federal government will require.

The Associated General Contractors of America and three other trade associations announced last week that they would try to force OMB to provide more guidance about how the rules are being carried out. The trade groups also want OMB to reduce the paperwork other federal agencies require to comply with the rules.

OMB’s rollout of the rules has been “opaque and unbalanced,” the groups argued.

“This type of regulatory uncertainty can result in pared down, delayed and costlier infrastructure projects,” they wrote in a letter to OMB. “It is also a disincentive for construction firms—including small and disadvantaged businesses—to bid on and otherwise participate in infrastructure-related [federally funded] programs, thereby undermining competition.”

The American Public Transportation Association, the American Road & Transportation Builders Association and the National Association of Home Builders joined that request.

“If a waiver is granted,” the groups said in a press release, “it does not mean that a Democratic or Republican administration does not care about domestic manufacturing or American jobs; it means that they also care about American construction jobs and want to rebuild America’s infrastructure.”