2025-01113. Public Interest Waiver of the Application of Certain Domestic Preference Requirements and Policies for Transit-Oriented Development Housing Projects

Document Headings

Document headings vary by document type but may contain the following:

1. the agency or agencies that issued and signed a document
2. the number of the CFR title and the number of each part the document amends, proposes to amend, or is directly related to
3. the agency docket number / agency internal file number
4. the RIN which identifies each regulatory action listed in the Unified Agenda of Federal Regulatory and Deregulatory Actions

See the Document Drafting Handbook for more details.

Department of Transportation

Office of the Secretary

1. [Docket No.: DOT-OST-2024-0130]

ACTION:

Notice.

SUMMARY:

In order to expeditiously deliver projects and provide meaningful infrastructure results while ensuring the appropriate application of domestic content standards, the U.S. Department of Transportation (DOT) is issuing waiver for the domestic preference requirements for manufactured products applicable to certain transit-oriented development (TOD) housing projects that receive credit assistance through the Build America Bureau (the Bureau) under the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF) credit programs.

DATES:

The effective date of the waiver is January 17, 2025 and will apply to all TOD housing projects that enter into the Bureau's creditworthiness review on or before December 31, 2025.

FOR FURTHER INFORMATION CONTACT:

For questions about this notice, please contact Dan Schned, U.S. Department of Transportation, Build America Bureau, at 202-366-2300 or [e-mail]. For legal questions, please contact, Jessica Pettrone, DOT Office of the General Counsel, at [phone] or [e-mail].

SUPPLEMENTARY INFORMATION: ( print page 6049)

Background

On November 15, 2021, the Infrastructure Investment and Jobs Act (IIJA) Public Law 117-58 was enacted. IIJA reauthorized Federal surface transportation programs and invested billions in making the United States transportation system safer and more resilient. TOD projects are eligible for both TIFIA (23 U.S.C. 601(a)(12)(E)) and RRIF (49 U.S.C. 22402(b)(1)(F)) financing, subject to all other eligibility criteria, and compliance with all applicable Federal requirements and creditworthiness standards.^[1]

Transportation and land use reforms are central strategies to achieving many goals, including reaching net-zero greenhouse gas emissions by 2050; addressing the housing supply and affordability crises throughout the country; and advancing equity, fair housing, and environmental justice.^[2] Providing long-term, low-interest direct loans through the TIFIA and RRIF credit programs to TOD projects is one of the primary tools available to DOT to help achieve this mission.

Over the last three years, DOT has taken several concrete steps to date to facilitate TOD financing under the TIFIA and RRIF credit programs. DOT has published TOD guidance ^[3] and a policy statement ^[4] and authorized TOD projects' eligibility to borrow up to the maximum allowed under TIFIA to promote the creation of more walkable, mixed-use spaces near transit that support vibrant, sustainable, and equitable communities.^[5] Additionally, the Bureau has worked on outreach to developers and created several tools including the TOD Eligibility Map ^[6] and has conducted webinars to help educate potential borrowers about the opportunities and requirements of the programs.

The IIJA also includes the Build America, Buy America Act (BABA) at div. G, sec. 70901-27. BABA greatly strengthens Made in America standards by expanding the coverage and application of Buy America preferences in Federal financial assistance programs for infrastructure. The Act requires that the head of each covered Federal agency shall ensure that “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 sec. 70914(a).

BABA applies to Federal financial assistance, which term includes “all expenditures by a Federal agency to a non-Federal entity for an infrastructure project.” IIJA sec. 70912(4)(B). “Non-Federal entity,” as defined in 2 CFR 200.1, does not include for-profit entities. Therefore, BABA by its terms does not apply to Federal financial assistance to for-profit entities.^[7] However, in accordance with the Office of Management and Budget (OMB)'s Guidance Memorandum M-24-02, Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure, Federal agencies may consider applying domestic preference requirements to for-profit entities, consistent with their legal authorities.

DOT has a longstanding policy of requiring all borrowers receiving TIFIA or RRIF credit assistance to comply with domestic steel, iron, and manufactured products content requirements, collectively known as “Buy America” requirements,^[8] for the projects receiving TIFIA or RRIF credit assistance, even where not covered by a specific Buy America statute, including chapter 83 of title 41, United States Code (Buy American), because no appropriated funds are used for the cost of the loan. DOT has consistently applied this policy to for-profit borrowers as well. Accordingly, because Buy America is applied to all projects receiving TIFIA or RRIF credit assistance, DOT, in an effort to ensure transparency and maintain consistency in the application of Buy America standards for all recipients (one rule for all projects and borrowers), applies this waiver to the domestic manufactured products requirements as applied to both TOD housing projects with for-profit borrowers that do not use any appropriated funds for the cost of the loan (to which Buy America requirements are applied as a matter of policy), as well as to TOD housing projects with non-Federal entity borrowers (to which Buy America requirements apply as a matter of law, whether or not such loans use appropriated funds), and, in each case, that enter into the Bureau's creditworthiness review on or before December 31, 2025.

TOD projects are a class of eligible capital projects under the TIFIA and RRIF credit programs administered by the Bureau. The Bureau recently provided guidance on Federal requirements for TOD projects receiving TIFIA or RRIF credit assistance.^[9] Pursuant to that guidance, the Bureau reiterated the DOT's longstanding policy of requiring sponsors of all projects receiving TIFIA and RRIF credit assistance to comply with domestic steel, iron, and manufactured products content requirements, collectively known as “Buy America” requirements, for the projects receiving credit assistance, even where not covered by a specific Buy America statute, including Buy American requirements because no appropriated funds are used for the cost of the loan.

Issuance of Waiver and Discussion of Comments Received

DOT proposed a waiver of the Buy America manufactured products requirement for TIFIA and RRIF TOD projects that include any housing elements (TOD Housing Projects) that enter into creditworthiness review on or before December 31, 2025, in the Federal Register (FR Doc. 2024-28820). DOT received two comments on the proposed waiver, one from an advisor on various TOD projects and one from a public policy think tank that represents the interests of real estate entities. Both commenters supported the proposed waiver.

One commenter requested that DOT issue a “blanket waiver” that would effectively establish a new domestic ( print page 6050) preference standard ( e.g., 60-70 percent) that applies to all products and materials involved in TOD projects. They argued that this would simplify the compliance process by preventing the need for sponsors to request many individual product waivers, thereby reducing the burden on DOT resources and expediting the advancement of TOD Housing Projects. As was described in the notice, to support both the delivery of housing and domestic manufacturing, DOT will continue to work closely with borrowers to better understand and document the sources of materials and products used in TOD Housing Projects and the challenges that compliance with DOT's domestic preference standards present and determine appropriate solutions.

One commenter requested that DOT update its guidance for TOD projects to include a “plain language” list of examples of manufactured products covered by this waiver. As was described in the notice, DOT recently provided guidance on Federal requirements applicable to TOD projects receiving TIFIA or RRIF credit assistance. DOT appreciates the suggestion and will consider it in determining the best ways of providing technical assistance to borrowers for TOD Housing Projects.

Finding on the Waiver

Based on the information available, DOT is issuing a public interest waiver of the Buy America requirements for manufactured products that apply to Bureau-financed TOD Housing Projects. This waiver is limited to TOD Housing Projects that enter into creditworthiness review on or before December 31, 2025. For these projects, DOT will continue to apply domestic steel, iron, and construction materials content requirements.

To ensure transparency and maintain consistency in the application of Buy America standards for all recipients (one rule for all projects and borrowers), this waiver will apply to both TOD Housing Projects with for-profit borrowers and those with non-Federal entity borrowers.

To continue to support the goals of Buy America policies, DOT will work closely with TOD Housing Project borrowers to better understand and document the sources of materials and products used in such projects. This research will assist DOT in refining its domestic preference requirements policy for TOD projects entering enter the Bureau's creditworthiness review phase after January 1, 2026, and to further support both the delivery of housing and domestic manufacturing.

Issued in Washington, DC.

Morteza Farajian,

Executive Director, Build America Bureau.

Footnotes

1.  Eligible TOD projects can take many forms, including joint development; public infrastructure; and economic development, including commercial and residential development. One of the key parameters of the programs, among others, is that TOD projects must be within walking distance of a qualifying transit or passenger rail station. See https://www.transportation.gov/​buildamerica/​TOD.

2.   https://www.transportation.gov/​buildamerica/​sites/​buildamerica.dot.gov/​files/​2023-10/​TOD%20Policy%20Statement.pdf.

3.   https://www.transportation.gov/​buildamerica/​TOD.

4.   https://www.transportation.gov/​buildamerica/​sites/​buildamerica.dot.gov/​files/​2023-10/​TOD%20Policy%20Statement.pdf.

5.   https://www.transportation.gov/​buildamerica/​TIFIA49.

6.   https://www.transportation.gov/​buildamerica/​about/​resources-mode/​interactive-map-tifia-and-rrif-tod-eligibility.

7.   See OMB Memorandum M-22-11 Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure (April 18, 2022), p. 2 (“for-profit organizations are not considered non-Federal entities”); OMB Memorandum M-24-02 Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure (October 25, 2023), p. 4 (restating the guidance on for-profit entities from M-22-11); and 88 FR 57750, 57774 (October 23, 2023) (“Thus—although OMB does not require them to do so—Federal agencies are allowed, under the existing structure of part 200, to apply part 200, including the domestic preferences at § 200.322, to for-profit entities”).

8.  As noted above, after the enactment of BABA, Buy America requirements now include domestic construction material requirements per BIL sec. 70914(a).

9.   https://www.transportation.gov/​buildamerica/​about/​resources-mode/​tod-project-federal-requirements-guidance.