Guest Column | October 18, 2022

WWEMA Window: 4 Things You Need To Know About IIJA Funding And The Build America, Buy America Act

By Chris Thomson and Josh Mahan

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The Infrastructure Investment and Jobs Act (IIJA) provides much-anticipated funding for our nation’s infrastructure. The IIJA was enacted and included the Build America, Buy America Act (BABAA), which now requires all recipients of federal infrastructure funding to use products manufactured in the U.S. — not just projects funded directly through the IIJA.

There is certainly a lot to unpack as it pertains to this funding and the related requirements. As a start, here are four key things you need to know:

1. The Funding

The IIJA was enacted on November 15, 2021 and provides federal funding to update and modernize key parts of our nation’s infrastructure, including roads, bridges, airports, the power grid, and water infrastructure. Specific to the water sector, the IIJA is set to fund more than $64B in water and wastewater projects over a five-year span. This includes:

  • $15B to address lead service lines
  • an incremental $11.7B to both the Clean Water and Drinking Water State Revolving Funds (SRFs)
  • $10B to address PFAS substances and other emerging contaminants
  • and funding for rural utilities, western systems, and other critical needs

With the broad range of funding, many Federal agencies are involved in the administration of IIJA funds.  For example, the U.S. Department of the Interior (DOI) and the U.S. EPA are just two of the agencies that will prioritize and administer IIJA money to the water sector.

2. The Language of BABAA

BABAA Background: The Build America, Buy America Act (BABAA or BABA Act) was included in the IIJA. BABAA applies to all purchases made with federal funds awarded to eligible entities on or after May 14, 2022. It involves the purchase of goods, products, and materials used in any form of construction, alteration, maintenance, or repair of infrastructure in the U.S.

What is meant by infrastructure? The term “infrastructure” includes all federally funded infrastructure projects, including drinking water and wastewater systems. Any construction, alteration, maintenance, or repair of infrastructure with federal financial assistance is subject to the BABAA requirements, unless an exemption applies or a waiver is granted by the respective federal agency overseeing the distribution of program funds. It is important to note that BABAA applies to an entire infrastructure project, even if that project is funded by both federal and non-Federal funds under one or more awards.

For infrastructure projects that receive federal assistance, BABAA requires the use of 100% U.S.-made iron and steel. This is the same list of products under the American Iron and Steel requirements put in place in 2014 under the State Revolving Fund. For manufactured products, BABAA requires the product to be manufactured in the United States, and the cost of the components of the manufactured product that are mined, produced, or manufactured in the U.S. is greater than 55% of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation (e.g., American Iron and Steel). For construction materials, which includes non-ferrous metals, PVC, glass, lumber, and drywall, all manufacturing processes have to occur in the U.S.

3.  BABAA Waivers 101

BABAA authorizes federal agencies to issue waivers in certain circumstances. For example, waivers can be issued where:

  • applying the requirements would be inconsistent with the public interest
  • the iron, steel, manufactured products, or construction material is not produced in the U.S. in sufficient and reasonably available quantities or of a satisfactory quality
  • inclusion of the domestic products or construction materials will increase the cost of the overall project by more than 25%

Now, I’m sure your next question is, “How will these waivers be processed?”. Federal agencies are responsible for processing and approving all waivers, including waivers requested by recipients and on behalf of subrecipients. To date, several federal agencies have elected to delay the application of BABAA through granting a six-month “adjustment period” utilizing the law’s public interest waiver authority. Among these agencies are the U.S. Department of Transportation, the U.S. DOI, the U.S. Department of Agriculture, and the U.S. Department of Housing and Urban Development.

It is important to know the specific agency that is administering your IIJA funding. Depending on the agency, BABAA waivers may vary. For example, the DOI issued a six-month general applicability waiver for the BABAA requirements that will expire on January 12, 2023. This waiver is in place to afford time for this agency to continue to narrow the scope of where long-term project or material-specific waivers may be needed without delaying current infrastructure projects. The WaterSMART Water and Energy Efficiency Grants Program administered through DOI’s Bureau of Reclamation is just one example of funding help that will distribute IIJA funds.

The U.S. EPA also issued a significant waiver for the water sector. EPA’s Adjustment Period Waiver for SRF Projects covers projects that initiated design planning prior to the May 14, 2022, the BABAA effective date. For purposes of this waiver, “initiated project design planning” means documentable efforts made by an SRF assistance recipient to evaluate and identify both technologically and financially viable options for capital improvement projects. This action permits using non-domestic manufactured products and construction materials in such projects funded by the Clean Water or Drinking Water SRF Program that would otherwise be prohibited under BABAA requirements. There is a similar waiver for projects that initiated design prior to May 14, 2022 for projects funded under EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) Program. It is important to note that American Iron and Steel (AIS) requirements still apply to these SRF and WIFIA projects even though BABAA requirements do not.

In addition to the Adjustment Period Waiver for SRF Projects, EPA has also issued a separate waiver for a group of other select water programs such as those funded by the Small and Disadvantaged Community Grants Program, Congressionally Directed Spending/Community Project Funding (also known as Community Grants), the U.S.-Mexico Border Water Infrastructure Program, the National Estuaries Program, and several others. Lastly, EPA has issued a Small Project General Applicability Waiver for Projects with Federal Funding Less Than $250,000. This waiver, which was published on September 26, 2022, waives BABAA requirements for projects meeting this dollar threshold. It is valid until for five years when its applicability will be re-evaluated by EPA.

4. Know Your Funding Source

The IIJA provides critical funding for our nation’s aging infrastructure. Water utilities seeking IIJA funds should be aware of BABAA and the specific federal agency and program providing their funding. Utilities should engage with that Agency to understand the status and possibility applicability of BABAA waivers for their project. Doing so is a key step in taking full advantage of IIJA.

To the greatest extent practicable, federal agencies are urging eligible recipients to focus their waiver requests on time-limited, targeted waivers. More specifically, eligible recipients should consider waivers for specific products and projects. There are currently no product waivers for specific manufactured products, so it is critical that each project be individually evaluated to determine the need for a waiver.

It’s important that you continue to keep appraised of the latest information on the IIJA and BABAA. Here are some trusted resources to get you started:

  • Made in America Office (within the Office of Management and Budget). The following website, www.madeinamerica.gov, has useful links and FAQs explaining domestic preference requirements and also lists Federal Financial Assistance and Nonavailability Waiver requests and status. All waiver requests are subject to a 15-day public comment period. Currently this website focuses on federal direct procurement or Buy American requirements but does provide links for federal agencies implementing the new Buy America requirements. 
  • Water and Wastewater Equipment Manufacturers Association (WWEMA). This association provides education and advocacy on behalf of water technology equipment providers. They have created a members-only Buy America Resources page with all federal BABAA information and links to state SRF programs. You can learn more at www.wwema.org or by contacting WWEMA staff.

Chris Thomson is Vertical Marketing Manager – Utility Networks at Xylem, as well as a member of the Water and Wastewater Equipment Manufacturers Association (WWEMA) Board of Directors.

Josh Mahan is Director–Government and Industry Relations at Xylem and also a WWEMA member.

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 and membership benefits, visit www.wwema.org.

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