Early this month, several electrical trade associations urged the Biden administration to implement pragmatic BABA rules. In the letter sent to the Senior Advisor and Infrastructure Coordinator at the White House, the associations highlighted that “[t]he inability to deploy resources and technologies due to BABA compliance barriers and complexities will result in fewer infrastructure, decarbonization, and electrification projects in the coming years.”[1]
BABA is part of the Infrastructure Investment and Jobs Act (IIJA) signed into law in 2021. The Act requires “none of the funds made available for a Federal financial assistance program for infrastructure may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” IIJA, § 70914(a). Currently, the Office of Management & Budget (OMB) has issued only one policy memorandum,[2] and as the associations’ letter notes, “[t]he lack of alignment with the federal government’s own domestic content policies adds to the lack of clarity and consistency sought by manufacturers, distributors, and contractors.”[3]
Specifically, the question remains as to whether and how the Trade Agreement Act of 1979 (TAA) will be applied to the BABA rules. For instance, IIJA only states that “[t]his section shall be applied in a manner consistent with United States obligations under international agreements.” IIJA, § 70914(e). However, neither the act nor the OMB guidance explains how the BABA would leverage with existing trade agreements.
The TAA is important because it provides statutory waivers from the Buy American Act of 1933 (BAA)’s domestic end product requirements for “eligible products” made from “designated countries” that are subject to various trade agreements beneficial to the U.S. In other words, the TAA recognizes certain foreign-made products from specifically designated countries as if they were domestic products for the purpose of the BAA. Just like the trade associations noted in the recent letter, the TAA’s application to BABA would help “elimin[ate] bottlenecks, exped[ite] commerce, and secur[e] supply chains to spur economic growth and level the playing field for global competition.”[4]
To resolve various ambiguities surrounding the BABA rules, the OMB issued the Proposed Rule in February 2023 and the comment period closed in March 2023. The OMB received around 2,000 comments from various industries. The long-awaited final rule on the “Guidance for Grants and Agreements,” which would support implementation of the BABA and clarify existing requirements, is expected to be published within this year.
[1] Office of Management and Budget (“OMB”), MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES (Apr. 18, 2022), https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf.
[2] Letter from National Electrical Manufacturers Association to the Honorable Mitch Landrieu Senior Advisor and Infrastructure Coordinator at the White House (August 3, 2023), https://www.nema.org/docs/default-source/news-document-library/8.3.23—nema-baba-coalition-letter—final.pdf?sfvrsn=aed0d06e_3.
[3] Id.
[4] Id.
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