By Tom McCurdy
Ever since the Bipartisan Infrastructure Law (BIL) was signed on November 15, 2021, the question of implementation of the Build America, Buy America (BABA) requirement has lingered for manufactured products. There is still no definitive guidance from the Office of Management and Budget (OMB) or the U.S. EPA as of this writing.
To review where we are, here is a truncated rundown of events. There are myriad documents from EPA and OMB, and several submittals from WWEMA and our member manufacturers, all available on the WWEMA Members-Only website.
Of the $1.2 trillion in the BIL funding, approximately $11.7 billion is directed to states through the State Revolving Loan Fund (SRF) programs for Drinking Water and for Clean Water, spread out over 5 years. It was intended to supplement the existing federal appropriations for the SRFs and was to be directed towards small and disadvantaged communities that otherwise couldn’t afford treatment. However, the same BABA requirements that applied to the BIL will also apply to EPA appropriations going forward, starting in FY2022. The cutoff date for BABA compliance was May 14, 2022.
BABA basically did away with all of the previous guidelines dealing with manufactured products. In 2009, ARRA allowed foreign manufacturers to provide their products as long as they could demonstrate “substantial transformation” involving U.S. workers. In 2014, the American Iron and Steel (AIS) provision exempted manufactured products completely, and focused instead on domestic requirements for iron and steel that was more readily available in the U.S. (pipes, structural steel, hydrants, manholes, etc.). All of that is off the table for BABA. The question still remains about implementation.
OMB issued a preliminary guidance document regarding implementation on April 18, 2022. It required all manufactured products to contain at least 55% domestic content. The goal is to increase domestic manufacturing, which is a great concept. The issue is that many of the manufactured products in U.S. water and wastewater treatment plants are U.S. divisions of foreign manufacturers. This sent all of the industry organizations (including WWEMA) and manufacturers into high gear, reaching out to OMB and EPA, asking for general or product-specific waivers. At issue is how the 55% domestic content is to be determined, whether labor is to be included, and how buyout items are to be factored in, etc.
EPA responded with several interim National Waivers, which has kept business going until they could decide on more permanent solutions. The most impactful waiver was the “Adjustment Period” waiver for SRF and WIFIA programs. As long as there was design planning in place prior to the May 14, 2022 deadline, the BABA requirements didn’t apply. Waivers for small projects (under $250,000) and de minimis (5% of the total project cost can be non-domestic) helped as well. However, they are all either expired, expiring, or in the case of the Adjustment Period Waiver, running their course.
What we’re seeing now is specification requirements for BABA compliance. This is interesting because, after over a year and a half, there are still no guidelines. Unless more than 55% of the material costs in the product can be documented as domestic, including NEMA motors, electronic components, plastic parts, and precision parts that were mined, melted, and cast in the U.S., very few manufacturers can provide a definitive guarantee. If a manufacturer cannot assert compliance with the 55% requirement, the response falls in to two possible answers:
- If a company thinks they can comply, and they issue a compliance statement with their bid, only to be proven incorrect based on final guidance, it places them — and the project — at risk.
- If a company can’t comply based on the specified products and declines to bid, and final guidance would have allowed them to offer their products, the project is potentially less competitive, increasing the cost, and the supplier loses out on business.
The program at the WWEMA Washington Forum in April 2023 included a presentation from EPA, specifically regarding manufactured products. They outlined where we are and the additional waivers that they are considering. This includes general, short-term waivers for products not currently manufactured in the U.S. The waiver is to provide time for EPA to research many complex products. The question remains as to what manufacturers can do in the meantime on projects where the previous waivers have expired. It has been suggested that EPA provide an interim statement to protect manufacturers bidding on active projects until EPA reaches a conclusion on manufactured products.
If you supply manufactured products to the water and wastewater industry and haven’t contacted EPA about your concerns, now is the time. Bear in mind that manufacturers cannot request product waivers on individual projects. Our window of influence with EPA is prior to their issuance of guidelines. WWEMA is actively engaged with EPA and has already submitted a request for Public Interest Waivers for several products, including blowers, UV systems, and meters and sensor equipment.
All manufacturers should be actively engaged in understanding the current status of BABA implementation, educating consulting engineering firms and contractors about what is and is not currently known about compliance and implementation, and communicating with EPA and OMB about the challenges of the current situation where projects and manufacturers are treading water in limbo until definitive, clear guidance is issued. If you haven’t considered it before, WWEMA membership is a great way to become fully educated on this issue and to have your voice heard!
Tom McCurdy is Director of Environmental Sales at Aerzen USA. He serves on the Water and Wastewater Equipment Manufacturers Association (WWEMA) Board of Directors and the Executive Committee as Treasurer. He is also the Chair of WWEMA’s Legislative/Regulatory Committee. WWEMA is a non-profit trade association that has been working for water and wastewater technology and service providers since 1908. WWEMA’s members supply the most sophisticated leading-edge technologies and services, offering solutions to every water-related environmental problem and need facing today’s society. For more information about WWEMA, visit www.wwema.org.