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The fight over U.S. DOT infrastructure exemptions for iron and steel
Unions and trade associations claim the exemptions are too great
- By Stephen Barlas
- February 7, 2023
The U.S. Department of Transportation (DOT), the big winner in funding under the Infrastructure Investment and Jobs Act (IIJA), is resisting entreaties from the steelworkers union and some steel companies, such as Nucor, to unwind its decision to allow foreign steel and iron in some limited instances in infrastructure projects. The DOT announced last November that it was relaxing domestic content requirements for construction materials and iron and steel in the case of small grants and projects with minor costs and components.
The law, passed in 2021, provides the DOT hundreds of billions of dollars over five years with just the highway program receiving $350 billion. One of a number of bridge grant programs gets $7.5 billion. Close to 100 DOT programs, many of them requiring components containing iron and steel, are to be funded with infrastructure money.
The infrastructure law included a Build America, Buy America Act that directed all grants awarded under the act to include products made in the U.S. However, language also allowed any federal agency to waive the domestic content requirement when it “would be inconsistent with the public interest.” By allowing waivers of domestic steel in the case of small grants and minor projects, the department argues: “Focusing on higher-value items can also allow federal agencies and their assistance recipients to focus their domestic sourcing efforts on products that provide the greatest manufacturing opportunities for American workers and firms and reduce delays in the delivery of important transportation infrastructure projects that provide jobs and promote economic growth.”
The proposed exemptions are:
- The total value of the noncompliant products is no more than the lesser of $1 million or 5% of total allowable costs under the federal financial assistance award.
- The size of the federal financial assistance award is below $500,000.
- The nondomestically produced miscellaneous minor components comprise no more than 5% of the total material cost of an otherwise domestically produced iron or steel product.
DOT infrastructure projects, whether bridges, airports, buses, or highways, include many products with iron and steel components, including: manhole frames and covers, drainage boxes, inlet frames and grates, traffic signal boxes, street lighting boxes, lampposts and lamppost bases, bollards for traffic and pedestrian control, communications access boxes (such as those used for cable and telephone installations), valves, hydrants and water transmission pipe, and pipe fittings.
The exemption policy provoked numerous protests. Anna Fendley, director of regulatory and state policy, United Steelworkers, said, “Unfortunately, the U.S. Department of Transportation’s proposed waiver on de minimis and small grants needs improvement. The union is concerned that the proposed waiver is a significant shift from long established DOT policy, which could run counter to the congressional intent of the Build America, Buy America language established the IIJA.”
In a written statement, the Municipal Castings Association underlined the “too generous” exemptions argument: “The minimal use exception in current DOT Buy American requirements permits the use of foreign ferrous content valued at the lesser of $2,500 or 0.01% of a project’s costs. The department now proposes a new de minimis waiver permitting foreign ferrous content up to the lesser of 5% of an award’s allowable costs or $1 million. There is stark difference between 0.01% and 5%.”
But some say the exemptions are not generous enough. The New York State Department of Transportation is actually pushing for higher exemption thresholds because “construction costs vary nationwide and are high in New York state.”
Not only has the exemption produced feverish opposition and support, it has stoked considerable confusion about documentation of domestic content and clarity of language.
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The Fabricator is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The Fabricator has served the industry since 1970.
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