Federal Highway Administration Ends General Waiver for Manufactured Products

At a Glance

• On January 14, 2025, the Federal Highway Administration (FHWA) published a Final Rule that terminates the agency’s general Buy America waiver for manufactured products and mandates that all manufactured products used in federally aided highway projects must be produced in the United States and contain a certain percentage of domestic content.
• The Final Rule includes a phased implementation period. The “final assembly requirement” (requiring a manufactured product used on highway projects to be manufactured in the United States) takes effect on October 1, 2025, while the “55% requirement” (requiring manufactured products to be assembled with products made of at least 55% domestic components by cost) takes effect on October 1, 2026.
• Although the rule is intended to enhance domestic manufacturing and align FHWA’s procurement policies with broader national objectives, recipients of FHWA funding may incur additional compliance costs as they seek new domestic sources for manufactured products used in highway construction projects.

The Federal Highway Administration (FHWA) issued a Final Rule terminating its general waiver for manufactured products under its Buy America regulation at 23 CFR § 635.410. The amended rule aligns the agency’s Buy America requirements with the Build America, Buy America Act (BABA) provisions of the Infrastructure Investment and Jobs Act (also known as the Bipartisan Infrastructure Law (BIL), Pub. L. No. 117-58). Pursuant to its revised regulations, the FHWA now requires that manufactured products used in federal highway projects be “produced in the United States.” The Final Rule goes into effect on March 17, 2025, with significant phase-in milestones on October 1, 2025, and October 1, 2026.

The FHWA’s definition of “produced in the United States” is substantially similar to the definition established by the Office of Management and Budget that applies to manufactured products subject to BABA. This includes meeting two key requirements: the “final assembly requirement,” where the product must be manufactured in the U.S., and the “55% requirement,” where more than 55% of the product’s components, by cost, must be sourced domestically. The final assembly requirement will apply to projects obligated on or after October 1, 2025, while the 55% requirement comes into effect for projects obligated on or after October 1, 2026. This phased approach is intended to allow contractors time to adjust to the new standards.

Although the FHWA’s Buy America requirements for manufactured products have been in effect since the enactment of the Surface Transportation Assistance Act of 1978, the FHWA had previously determined that it would be in the public interest to waive the Buy America requirements for manufactured products. Under the previous general waiver, manufactured products that were permanently incorporated into federal-aid projects — other than predominantly iron or steel components — did not need to be produced domestically. Moving forward, however, the FHWA will propose time-limited and targeted waivers covering certain manufactured products that are not available domestically in sufficient quantities or at reasonable prices, as appropriate. In response to commenters expressing concern about the termination of the general waiver for manufactured products, FHWA explained its position that the waiver is “overly broad and no longer in line with the purpose of domestic content procurement preferences and waivers.” FHWA also noted that a targeted waiver model is more aligned with the goals of BABA, which generally disfavors blanket waivers.

In response to comments received on the proposed rule, originally published on March 12, 2024, the FHWA attempted to clarify compliance requirements and account for practical considerations related to implementation. In its efforts to avoid increasing administrative burdens, the FHWA confirmed it would not prescribe a specific method of compliance for contractors, but rather that it expects manufacturers themselves to certify that their products meet the Buy America requirements.

What’s Next?

Federal contractors should investigate their procurement processes to source products that comply with the rule’s Buy America requirements by the time they go into effect later this year, potentially by identifying new suppliers and reviewing existing contracts. Contractors should seek clarifications from the FHWA, as needed, and stay informed about potential targeted waivers issued by the agency in the coming months.

For More Information

We will continue to monitor future developments and are available to answer any questions related to the rulemaking or other domestic sourcing requirements.