Biden Administration Starts Rolling Out Proposed Building Materials Rules

In the State of the Union address, President Joe Biden mentioned his plan to require more US-manufactured materials in federal construction and federally-funded state and local building. Now the Office of Management and Budget has set out a proposed rule and guidance as required by the Infrastructure Investment and Jobs Act. The results could end up stricter than the administration’s earlier suggestions.

In the past, products could qualify as domestically made if at least 55% of the value of their components were from the US. That would allow companies to source from geographic regions with cheaper materials to reduce expenses.

In 2021, Biden signed an executive order changing that. The administration started to increase the percentage of value from 55% to an intermediate 60%, in operation now, and then to 75%.

But in the State of the Union, Biden also said, “Tonight, I’m announcing new standards to require all construction materials used in federal infrastructure projects to be made in America. Made in America. I mean it. Lumber, glass, drywall, fiber-optic cable.”

The National Association of Home Builders looked at the OMB document and put together a table of some notable changes. Although iron and steel seem to have the same treatment as before, many things do not.

Non-ferrous metals like nickel, copper, tin, and brass must be made in the US starting with initial melting or smelting. Plastics and polymer-based materials must run from the initial mixing of the polymer ingredients. Glass manufacturing must occur from initial batching and melting. Drywall, everything from blending of gypsum plaster to cutting and drying of panels. Lumber? From initial debarking through treatment and planning must be performed in the US.

Notice that these directives would likely not leave much room for arguments that even say 60% or 75% of US-created context would seem not enough to meet the new requirements for the specified products. Could a mix between US and Canadian dimensional lumber for a project suffice? No, because the Canadian part would have been processed out of the US, although perhaps domestically manufactured lumber from Canadian logs would be acceptable.

OMB has allowed 30 days to receive comments.

“NAHB will submit comments as we believe that, under OMB’s proposal as written, virtually all housing development could be excluded,” the organization wrote. “We have strongly urged HUD to exempt single-family and multifamily affordable housing projects from the Build America, Buy America Back Act mandates. However, NAHB remains concerned that the “built in America” standards may stall road and utility projects funded by CDBG or HOME that are needed to allow housing development to take place.”

But HUD hasn’t yet exempted any aspect. Aside from infrastructure, there are many types of federal building projects — or, presumably, repairs, modifications, and rehabs — that will fall under the requirements. There are also some logical deductions that could effectively expand the list. Windows, for example, would require native-made glass, and it seems unlikely that companies would ship materials overseas for assembly and return. The NAHB table mentioned plastics, with PVC as an example. But what of plastic parts that get incorporated into many building components? Will they also be made in the US, exported to another country, and put into a product to be shipped back?

And then, availability could become a problem, according to an email from Kojo, a firm that makes that makes materials management software for contractors. “Construction materials are still up 40% since Feb 2020,” the company said, and so “restricting the supply base to American-made is likely going to be tough for contractors who can barely get materials at reasonable cost globally, let alone just in the US.” And then there will be additional administration and documentation needs all the way up and down supply chains to provide manufacturing provenance.