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Waiver of Buy America Requirements for Electric Vehicle Chargers Publication: Federal Register Agency: Federal Highway Administration Byline: Shailen P. Bhatt Date: 21 February 2023 Subjects: American Government  , Electric Vehicles
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[Federal Register Volume 88, Number 34 (Tuesday, February 21, 2023)]
[Notices]
[Pages 10619-10635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03498]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[Docket No. 2022-0023]
Waiver of Buy America Requirements for Electric Vehicle Chargers
AGENCY: Federal Highway Administration (FHWA), U.S. Department of
Transportation (DOT).
ACTION: Notice.
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SUMMARY: The Federal Highway Administration (FHWA) is establishing a
temporary public interest waiver to waive Buy America requirements for
steel, iron, manufactured products, and construction materials in
electric vehicle (EV) chargers. This short-term, temporary waiver
enables EV charger acquisition and installation to immediately proceed
while also ensuring the application of Buy America to EV chargers by
the phasing out of the waiver over time. On the effective date of this
waiver, it will apply to all EV chargers manufactured by July 1, 2024,
whose final assembly occurs in the United States, and whose
installation has begun by October 1, 2024. Beginning with EV chargers
manufactured on July 1, 2024, FHWA will phase out coverage under this
waiver for those previously covered EV chargers where the cost of
components manufactured in the United States does not exceed 55 percent
of the cost of all components. This second phase will therefore apply
to all EV chargers that are manufactured on or after July 1, 2024,
whose final assembly occurs in the United States, and for which the
cost of components manufactured in the United States is at least 55
percent of the cost of all components. For all phases, EV charger
housing components that are predominantly steel and iron are excluded
from the waiver and must meet current FHWA Buy America requirements. As
of the effective date of this waiver, FHWA is also removing EV chargers
from its existing general applicability waiver for manufactured
products.
DATES: The temporary waiver is effective starting on March 23, 2023.
Comments may be submitted to FHWA's website via the link to this
waiver on https://www.fhwa.dot.gov/construction/contracts/waivers.cfm
by February 27, 2023.
FOR FURTHER INFORMATION CONTACT: For questions about this notice,
please contact Mr. Brian Hogge, FHWA Office of Infrastructure, 202-366-
1562, or via email at Brian.Hogge@dot.gov. For legal questions, please
contact Mr. David Serody, FHWA Office of Chief Counsel, 202-366-4241,
or via email at David.Serody@dot.gov. Office hours for FHWA are from 8
a.m. to 4:30 p.m., E.T., Monday through Friday, except Federal
holidays.
SUPPLEMENTARY INFORMATION:
I. Background
A. Priorities of the Administration
The Biden-Harris Administration has laid out a bold vision for
making transformative transportation investments to support job growth
and reshape the U.S. transportation system, strengthen the U.S. economy
and competitiveness, and support a sustainable energy and climate
future. In January 2021, President Biden issued Executive Order (E.O.)
14008, titled ``Tackling the Climate Crisis at Home and Abroad'' (86 FR
7619, Feb. 1, 2021). This E.O. states that the U.S. faces ``a climate
crisis that threatens our people and communities, public health and
economy, and starkly, our ability to live on planet Earth.'' The
President directed the Federal Government ``to organize and deploy the
full capacity of its agencies to combat the climate crisis to implement
a governmentwide approach that reduces climate pollution in every
sector of the economy,'' including through the ``deployment of clean
energy technologies and infrastructure.'' The President has set the
ambitious goal of building a national network of 500,000 EV chargers by
2030.\1\
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\1\ White House Fact Sheet: Biden Administration Advances
Electric Vehicle Charging Infrastructure (Apr. 22, 2021), available
at https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet-biden-administration-advances-electric-vehicle-charging-infrastructure/.
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On November 15, 2021, the President signed into law the Bipartisan
Infrastructure Law (BIL), enacted as the
[[Page 10620]]
Infrastructure Investment and Jobs Act (IIJA) (Pub. L. 117-58). The BIL
makes the most transformative investment in EV charging in U.S.
history, including $5 billion over 5 years that will be made available
under the new National Electric Vehicle Infrastructure (NEVI) Formula
Program.\2\ As outlined in statute, the purpose of the NEVI Formula
Program is to ``provide funding to States to strategically deploy EV
charging infrastructure and to establish an interconnected network to
facilitate data collection, access, and reliability.'' See BIL,
Division J, Title VIII, Highway Infrastructure Program heading,
Paragraph (2). This purpose would be satisfied by creating a
convenient, affordable, reliable, and equitable network of EV chargers
throughout the country. The BIL also includes many additional funding
and financing programs with eligibilities for EV charging
infrastructure, including formula, discretionary, other allocated, and
innovative finance programs.\3\ These historic investments across the
Federal Government in EV charging under BIL will put the U.S. on a path
to meeting the President's goal for EV charging infrastructure and
ensuring a convenient, reliable, affordable, and equitable charging
experience for all users.
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\2\ See https://highways.dot.gov/newsroom/president-biden-usdot-and-usdoe-announce-5-billion-over-five-years-national-ev-charging.
\3\ Federal Funding is Available For Electric Vehicle Charging
Infrastructure On the National Highway System, FHWA (April 22,
2022), available at https://www.fhwa.dot.gov/environmentalternative_fuel_corridors/resources/ev_funding_report_2022.pdf.
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At the same time as the Administration seeks to ensure successful
and timely delivery of EV infrastructure projects, the Administration
also seeks to maximize the use of American made products and materials.
In January 2021, President Biden issued E.O. 14005, titled ``Ensuring
the Future is Made in All of America by All of America's Workers'' (86
FR 7475, Jan. 28, 2021). This E.O. states that the U.S. Government
``should, consistent with applicable law, use terms and conditions of
Federal financial assistance awards and Federal procurements to
maximize the use of goods, products, and materials produced in, and
services offered in, the United States.'' The FHWA is committed to
ensuring strong and effective Buy America implementation consistent
with E.O. 14005.
B. FHWA Buy America Requirements
The FHWA's existing Buy America requirements for steel, iron, and
manufactured products are set forth at 23 U.S.C. 313 and 23 CFR
635.410. The FHWA also has a standing waiver under 23 U.S.C. 313(b),
the Manufactured Products General Waiver, which has been in effect
since 1983 and covers manufactured products that are not predominantly
steel and iron and are funded under title 23, U.S.C.\4\ See 48 FR 53099
(Nov. 25, 1983). Thus, FHWA's current Buy America requirements apply to
FHWA-funded projects and require that all steel and iron that are
permanently incorporated into a project must be produced in the United
States unless a waiver is granted, including predominantly steel and
iron components of a manufactured product. As applied to products other
than iron and steel, the term ``produced'' in 23 U.S.C. 313 includes
physical final assembly and manufacturing processes. This requirement
applies to the obligation of funds authorized to carry out title 23,
U.S.C. In addition, for all predominantly steel or iron materials,
products, or components to be used in projects that involve the
obligation of title 23, U.S.C. funds, all manufacturing processes,
including application of coating, must occur in the U.S. Coating
includes all processes which protect or enhance the value of the
material to which the coating is applied. In addition, under 23 U.S.C.
313(h), the Buy America requirements apply to all contracts that are
eligible for FHWA assistance regardless of the funding source if any
contract within the scope of a determination under the National
Environmental Policy Act (NEPA) involves an obligation of Federal
funds.
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\4\ As explained in Section III.A below, while the Manufactured
Products General Waiver continues to remain in effect, FHWA is
removing EV chargers, as defined below, from its coverage.
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The BIL also includes new Build America, Buy America (``BABA'')
provisions to strengthen domestic manufacturing, which expand the
coverage and application of Buy America preferences in Federal
financial assistance programs for infrastructure. BIL, div. G sections
70901-27. The BABA applies those requirements to obligations made after
May 14, 2022. BIL section 70914(a). However, BABA's domestic content
procurement preferences only apply to the extent that a domestic
content procurement preference, as described in section 70914, does not
already apply to iron, steel, manufactured products, and construction
materials. BIL section 70917(a)-(b). Where they do apply, BABA requires
that funds for a Federal financial assistance program for
infrastructure may not 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. BIL section 70914(a).
Under BABA, iron or steel products are considered to be produced in the
United States if all manufacturing processes, from the initial melting
stage through the application of coatings, occurred in the United
States. BIL section 70912(6)(A). Manufactured products are considered
to be produced in the United States if (i) the manufactured product was
manufactured in the United States; and (ii) the cost of the components
of the manufactured product that are mined, produced, or manufactured
in the United States is greater than 55 percent 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. BIL
section 70912(6)(B). Finally, under BABA, a construction material is
considered to be produced in the United States if all manufacturing
processes for the construction material occurred in the United States.
BIL section 70912(6)(C).
By statute at 23 U.S.C. 313, FHWA has domestic content preferences
for steel, iron, and manufactured products, so the requirements under
23 U.S.C. 313 apply to steel, iron, and manufactured products instead
of the requirements under BABA. As FHWA's existing Buy America
requirement does not specifically cover construction materials, other
than to the extent that such materials would already be considered
iron, steel, or manufactured products, the Buy America preferences
under section 70914 of BABA apply for construction materials. For the
purpose of this notice, ``Buy America requirements'' refers to FHWA's
existing requirements for steel, iron, and manufactured products under
23 U.S.C. 313 and requirements for construction materials under section
70914 of BABA.
The BABA further required the Office of Management and Budget (OMB)
to issue guidance to assist in applying BABA's requirements. BIL
section 70915. On April 18, 2022, OMB issued memorandum M-22-11,
``Initial Implementation Guidance on Application of Buy America
Preference in Federal Financial Assistance Programs for
Infrastructure'' (``Implementation Guidance''). Section VII(b) of the
Implementation Guidance states that ``Federal agencies may wish to
consider issuing a limited number of general applicability public
interest waivers in the interest of efficiency and
[[Page 10621]]
to ease burdens for recipients.'' Implementation Guidance at p. 10.
Under 23 U.S.C. 313(b) and section 70914(b) of BABA, FHWA may
consider a Buy America waiver when either (i) the application of the
requirements under 23 U.S.C. 313(b) and section 70914 of BABA would be
inconsistent with the public interest; or (ii) when products are not
produced in the United States in sufficient and reasonably available
quantities of a satisfactory quality.\5\ This waiver is being issued on
the basis of its consistency with the public interest.
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\5\ Section 70914(b)(3) of BABA also provides a cost-based
condition for a waiver, which FHWA's regulation addresses at 23 CFR
635.410(b)(3) through alternate bid procedures.
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C. Summary of FHWA's Proposed Waiver of Buy America Requirements for EV
Chargers
In order to ensure delivery and meaningful results on EV charging
projects using Federal-aid highway funds throughout the U.S., FHWA
issued a Notice of Proposed Waiver of Buy America Requirements for
Electric Vehicle Chargers on August 31, 2022, at 87 FR 53539. The FHWA
proposed a waiver of Buy America requirements with respect to steel,
iron, manufactured products, and construction materials for EV chargers
on FHWA-assisted infrastructure projects, on the basis that applying
the domestic content preferences for these materials would be
inconsistent with the public interest. 87 FR 53539. In doing so, FHWA
also proposed removing EV chargers from the Manufactured Products
General Waiver to allow for the uniform implementation of all Buy
America requirements applicable to an EV charger. Through this proposed
waiver, FHWA sought to treat EV chargers as manufactured products
subject to their own, separate waiver. FHWA structured the proposed
waiver to partially phase out over a specified timeframe to a domestic
content threshold that is generally consistent with how manufactured
products are covered under section 70914 of BABA. In proposing this
waiver, FHWA considered information gathered from a November 24, 2021,
Request for Information (RFI), published collectively by DOT and the
U.S. Department of Energy. 86 FR 67115 (Nov. 24, 2021). In line with
FHWA policy, Section 123 of Division A of Public Law 111-117, and
Section 117 of Public Law 110-244, FHWA also included a link to the
proposed waiver on its website.\6\
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\6\ See https://www.fhwa.dot.gov/construction/contracts/waivers.cfm.
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For the proposed waiver, FHWA proposed that the term ``EV charger''
include EV chargers and associated payment systems, distribution
systems, telecommunications and networking equipment, energy storage
systems, and other supporting equipment and systems that are (i) in the
immediate vicinity of a charger or group of chargers and (ii) essential
to the function or operation of a charger or group of chargers. The
FHWA proposed the term ``charger'' exclude parking areas adjacent to
the EV chargers and lanes for vehicle ingress and egress.
In the proposed waiver, FHWA proposed to initially apply a complete
waiver to EV chargers and all components of EV chargers that are
installed in a project during calendar year 2022. The FHWA proposed to
consider an EV charger as being ``installed in a project'' when the EV
charger is permanently incorporated into or affixed to a Federal-aid
funded infrastructure project. Following the initial proposed phase in
calendar year 2022, FHWA proposed to partially phase-out the waiver in
two steps during calendar year 2023. Beginning on January 1, 2023, FHWA
proposed to remove from the waiver EV chargers whose final assembly
does not occur in the United States. Beginning on July 1, 2023, FHWA
proposed to additionally remove from the waiver EV chargers for which
the cost of components manufactured in the U.S. does not exceed 25
percent of the cost of all components. Beginning on January 1, 2024,
and thereafter, FHWA proposed to remove from the waiver EV chargers for
which the cost of components manufactured in the U.S. does not exceed
55 percent of the cost of all components. The final waiver, which would
be applicable only if final assembly occurred in the U.S. and the cost
of components manufactured in the U.S. exceeded 55 percent of the cost
of all components, was proposed as remaining in place until terminated
by FHWA.
In the proposed waiver, FHWA proposed that the cost of components
that are purchased when they are incorporated into an EV charger be
determined by including the acquisition costs (including transportation
costs to the place of incorporation into the end product) and any
applicable duty (regardless of whether a duty-free certificate of entry
is issued). The FHWA proposed that the cost of manufactured components
include all costs associated with the manufacture of the component
(including transportation costs and quality testing), and allocable
overhead costs, but FHWA proposed to exclude profits and any labor
costs associated with the manufacture of the end product. The FHWA
proposed that costs include costs incurred specifically for the
contract; benefit both the contract and other work and can be
distributed to each in reasonable proportion to the benefits received;
or are necessary to the overall operation of the business, even if a
direct relationship to any particular cost objective cannot be shown.
In the proposed waiver, FHWA requested comments on all aspects of
the proposed waiver, including the definition of ``EV charger;'' the
phases of the proposed schedule set forth in the proposed waiver;
alternative dates and supporting information for alternative dates if
applicable; whether there should be four phases as proposed; how many
chargers would be fully compliant with BABA requirements at each phase
of the proposed waiver and by the end of the 5-year NEVI Program and
how many would not be compliant at each phase; the reliability of
chargers; the cost completeness of chargers; production rates and
capacity of chargers; the timing of delivery upon the order or purchase
of chargers; whether industry expects its production rates and capacity
for chargers to be consistent with the proposed schedule; how the
proposed schedule or alternative dates impact installation schedules in
the field; whether to establish different phase-out schedules for
Direct Current Fast Charging (DCFC) chargers and Alternating-Current
Level 1 (ACL1) and Level 2 (ACL2) chargers; the proposed meaning of
cost of component; whether to use the installation date of the EV
charger or some other date to determine which phase a given charger
would be covered by; whether and how to apply FHWA's existing Buy
America requirement for iron and steel to any specific predominantly
steel and iron EV charger components; and the reliable availability of
such steel and iron components which are capable of complying with
FHWA's existing Buy America policy.
II. Summary of Major Changes Reflected in the Final Waiver
In light of the comments received on the proposed waiver
demonstrating the inability of EV charger manufacturers to produce a
steady and reliable supply of EV chargers, FHWA is making several
changes to the timeline in the final waiver for multiple reasons
described in further detail below, including to allow manufacturers
additional time to domestically source components for their EV
chargers:
[[Page 10622]]
1. FHWA is eliminating the proposed first phase in the proposed
waiver, which would have applied a complete waiver of Buy America
requirements to EV chargers and all components of EV chargers.\7\
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\7\ Throughout this notice, this phase will be referred to as
the ``complete waiver'' phase.
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2. The start date of the second phase of the proposed waiver (the
first phase of the final waiver), which removes from the waiver EV
chargers whose final assembly process does not occur in the U.S., will
now occur on the effective date of this waiver instead of January 1,
2023, and the end date of this phase has been extended to June 30,
2024.\8\ In addition, during this phase, any housing components that
are predominantly steel and iron must comply with existing FHWA Buy
America steel and iron requirements, meaning that if predominantly iron
and steel housing is used for the EV charger, the housing must be
entirely manufactured in the United States according to FHWA standards.
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\8\ Throughout this notice, this phase will be referred to as
the ``final assembly phase.''
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3. The third phase of the proposed waiver, which would have removed
from the waiver EV chargers for which the cost of components
manufactured in the U.S. does not exceed 25 percent of the cost of all
components, has been eliminated in the final waiver.\9\
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\9\ Throughout this notice, this phase will be referred to as
the ``25 percent phase.''
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4. The start date of the fourth phase of the proposed waiver (the
second phase of the final waiver), which removes from the waiver EV
chargers for which the cost of components manufactured in the U.S. does
not exceed 55 percent of the cost of all components, has been extended
from beginning on January 1, 2024, as in the proposed waiver, to
beginning on July 1, 2024.\10\ In addition, any housing components that
are predominantly steel and iron must continue to comply with FHWA Buy
America steel and iron requirements, meaning that the housing must be
entirely manufactured in the United States according to FHWA standards.
The cost of predominantly steel and iron EV charger housing will also
count towards determining whether 55 percent of the cost of all
components are manufactured in the U.S.
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\10\ Throughout this notice, this phase will be referred to as
the ``55 percent phase.''
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5. As required under section 70914(d) of BABA, FHWA is clarifying
that it will revisit this waiver and determine whether there is
continued need for it within 5 years from the effective date of this
notice. The FHWA will also publish RFIs every 6 months until the start
of the 55 percent phase to acquire information about the state of the
EV charging industry.
6. The proposed waiver also used the installation date of the EV
charger to determine which phase of the waiver would apply to any given
EV charger. The final waiver instead uses the date on which an EV
charger is manufactured, which is defined in further detail below in
Section III.C. However, any EV chargers manufactured before June 30,
2024, (the end of the final assembly phase) will need to begin
installation by October 1, 2024, to be covered by this waiver.
7. The FHWA also has simplified and narrowed the definition of ``EV
charger'' in a manner that will maximize the use of domestic goods,
products, and materials. The proposed waiver defined ``EV charger'' to
include EV chargers and associated payment systems, distribution
systems, telecommunications and networking equipment, energy storage
systems, and other supporting equipment and systems: (i) in the
immediate vicinity of a charger or group of chargers; and (ii)
essential to the function or operation of a charger or group of
chargers. The definition of ``EV charger'' as used in this final waiver
only refers to the self-contained EV charging unit; it does not include
associated equipment.
The reasons for these changes are discussed in more detail in the
next section.
III. Response to Comments Received
The FHWA received 92 comments and 1 supplemental comment from 89
different commenters, including automobile manufacturers, EV charger
manufacturers, EV charger installers, members of the steel and aluminum
industries, labor organizations, private associations, public
associations, local public agencies, State departments of
transportation (State DOT), and several individuals. While several
commenters raised objections to the waiver as proposed, most commenters
were in favor of some version of a waiver of applicable Buy America
requirements. The FHWA discusses the main objections to the proposed
waiver and major categories of comments below.
In accordance with section 70916(c) of BIL, FHWA consulted with the
National Institute of Standards and Technology's Hollings Manufacturing
Extension Partnership before issuing this waiver.
A. Applicability of FHWA's Manufactured Products General Waiver to EV
Chargers
The proposed waiver suggested removing EV chargers from FHWA's
Manufactured Products General Waiver. By doing so, the manufactured
product content in EV chargers would be subject to the requirements of
23 U.S.C. 313, with this waiver serving to provide a phased approach to
exempt certain chargers from these requirements over time. The FHWA
stated that continuing to apply the Manufactured Products General
Waiver to EV chargers would be inconsistent with the objectives of BABA
and is not supported by currently available information on domestic
manufacturing capabilities. Removing EV chargers from the Manufactured
Products General Waiver and issuing this final waiver allows all
aspects of EV chargers to be covered by a single waiver and thus Buy
America-compliant. The FHWA believes that individuals who take
advantage of this waiver can avoid confusion and know the domestic
content procurement preferences applicable to EV chargers.
The FHWA did not receive substantive comments objecting to this
approach and is therefore removing EV chargers, as defined in this
waiver, from FHWA's existing Manufactured Products General Waiver.
B. Opposition to the Proposed Waiver
Eight commenters, (the Steel Manufactures Association (SMA), United
Steelworkers, Nucor Corporation, Aluminum Extruders Fair Trade
Committee (AEFTC), American Iron and Steel Institute (AISI), Alliance
for American Manufacturing (AAM), BorgWarner, Inc., and the American
Federation of Labor and Congress of Industrial Organizations) expressed
that they did not support the proposed waiver, presenting various
objections that are summarized below:
Indefinite Duration of Proposed Waiver: SMA and the Nucor
Corporation criticized the proposed waiver as being of an indefinite
duration, arguing that this was contrary to OMB's Implementation
Guidance, which stated that waivers should be time-limited. United
Steelworkers also noted that FHWA's Manufactured Products General
Waiver remains in place after almost 40 years and was concerned that
FHWA would similarly fail to narrow the proposed waiver after its
initialization.
The FHWA Response: FHWA agrees that the waiver is not, and should
not be, indefinite and, as clarified in more detail below, will review
the waiver
[[Page 10623]]
(including by providing an opportunity for public notice and comment)
within 5 years of its issuance, and will discontinue the waiver if it
is found to no longer be in the public interest at that time, in
accordance with section 70914(d) of BABA. The FHWA will also monitor
the domestic supply of EV chargers throughout the course of this waiver
and may choose to discontinue this waiver or make changes to the
timeline described below if FHWA finds that there is a sufficient
domestic supply of EV chargers available. Specifically, as further
explained below, this waiver will only feature two phases: a final
assembly phase and, after a phase-out period, a 55 percent phase.
During the final assembly phase, FHWA will conduct biannual RFIs to
assess industry progress on producing a charger that would be covered
by the 55 percent phase and whether the EV charger industry is on track
to meet the timeline set out in this waiver. Based on information
received during these RFIs, FHWA may determine during the final
assembly phase that domestic manufacturing capacity is able to produce
a sufficient amount of chargers to meet the demand of recipients that
would exist under the 55 percent phase. If this occurs, FHWA may
discontinue the final assembly phase and proceed immediately to the 55
percent phase by phasing out from this waiver's coverage EV chargers
for which the cost of components manufactured in the U.S. does not
exceed 55 percent of the cost of all components.
Congressional Intent of Domestic Content Preferences: AISI and the
Nucor Corporation argued that the proposed waiver was contrary to
Congress' intent in establishing Buy America requirements, as these
commenters believed that Congress intended Buy America requirements to
cover all items made primarily of iron and steel. The SMA, AAM, and
Nucor Corporation added that it is the Administration's policy to
maximize the use of domestic steel, iron, manufactured products, or
construction materials in federally funded infrastructure, not to use
foreign items. Similarly, objecting commenters argued that the waiver
is contrary to Congress' intent in passing BABA, noting the
Congressional findings in section 70911 of BABA and stating that
section 70914(a) required that FHWA ensure that Buy America
requirements apply to iron, steel, manufactured products, and
construction materials.
The FHWA Response: FHWA acknowledges that compliance with Buy
America is both an Administration priority and required under Federal
law. Also, EV chargers purchased using funds from the NEVI Formula
Program established by Congress as part of BIL are to be administered
under title 23, U.S.C.,\11\ including the Buy America requirements
under 23 U.S.C. 313. At the same time, however, FHWA does not believe
that Congress envisioned applying FHWA's Buy America requirement (now
codified at 23 U.S.C. 313) to EV chargers when it first enacted these
requirements, starting in 1978 with the Surface Transportation
Assistance Act of 1978 (Pub. L. 95-599). Rather, for the foreseeable
future where this waiver is necessary to encourage domestic industry to
ramp up production of EV chargers, it furthers Congressional intent for
EV chargers purchased through the NEVI Program to more closely align
with the requirements of BABA, which, like the NEVI Formula Program,
was also established in BIL.
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\11\ See BIL, Division J, Title VIII, Highway Infrastructure
Program heading, Paragraph 2, twenty-fourth proviso.
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Pursuant to its authority under Buy America, FHWA believes it is in
the public interest, as well as more in harmony with the Congressional
intent behind BABA and the BIL, to waive certain Buy America
requirements for a temporary period when FHWA is not convinced that
manufacturers would be able to meet demand for Buy America-compliant EV
chargers on FHWA-funded projects, which would threaten the ability for
those infrastructure projects to be completed in a timely manner. The
FHWA believes it most appropriate to carry out Congress' intent to
timely complete EV charger infrastructure projects and ensure that the
steel, iron, manufactured products, and construction materials used in
infrastructure projects are produced in the United States through a
specially tailored waiver that balances the need to have a supply of EV
chargers with the need to ramp up domestic production through a phased
approach, which, during the 55 percent phase, will cover EV chargers in
close alignment with the BABA standards for manufactured products. The
FHWA also proposed and intends to implement a final waiver with a
phased approach, which provides an incentive for manufacturers to shift
toward domestic manufacturing processes to comply with the narrowing
scope of the waiver.
Further, as discussed in more detail below, FHWA plans to exclude
the housing, cabinet, or enclosure of an EV charger (hereinafter
referred to as the ``housing'') of EV chargers, if that component is
predominantly steel or iron, from coverage under both phases of this
waiver. Doing so gives effect to FHWA's long-standing practice of
excluding predominantly steel and iron components of manufactured
products from the Manufactured Products General Waiver. This also seeks
to remove uncertainty among recipients \12\ and the EV charger industry
over which components would need to comply with FHWA's existing
requirements for iron and steel. The FHWA believes that this final
waiver therefore is consistent with the public interest and is
justified pursuant to section 70914(b)(1) of BABA.
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\12\ When used in this notice, a recipient refers to direct
recipients of FHWA financial assistance, subrecipients, and pass-
through entities.
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Presence of Buy America-Compliant EV Chargers: The eight commenters
that objected to the proposed waiver also disputed points made in the
notice justifying the proposed waiver and claimed that this meant that
there was no public interest justification for the proposed waiver. The
Nucor Corporation, AEFTC, and BorgWarner, Inc., for example, stated
that there are existing EV chargers that are compliant with FHWA's Buy
America requirements and that a waiver would disadvantage these
manufacturers that have already made significant investments to be Buy
America-compliant. These commenters pointed to companies that responded
in the 2021 RFI by stating that their EV chargers met FHWA's Buy
America requirements for steel and iron as well as other companies that
have stated that they can meet FHWA's overall Buy America requirements.
The FHWA Response: While FHWA acknowledges the progress that some
companies have made in manufacturing Buy America-compliant EV chargers,
FHWA is still uncertain whether these companies can respond to the
immediate demand for EV chargers that will result from programs under
BIL, such as the NEVI Formula program and supply equipment that is
certified as fully Buy America-compliant. The FHWA is also unsure if
statements that existing EV chargers are Buy America-compliant are
relying on the Manufactured Products General Waiver being available to
cover non-domestic components that are not predominantly steel or iron.
While some manufactures may be able to domestically assemble chargers
at the present, FHWA is concerned that many manufacturers could not
produce Buy America-compliant chargers without the Manufactured
Products General Waiver being in effect. The FHWA believes, as noted
above, that removing EV chargers
[[Page 10624]]
from the Manufactured Products General Waiver aligns with the goals of
Buy America requirements and seeks to ensure that EV chargers are
produced with domestic manufactured components. Finally, FHWA seeks to
reiterate that this waiver does not prohibit the purchase of Buy
America-compliant EV chargers by a recipient if such chargers are
available; the comments received, however, indicate a limited supply of
EV chargers that is currently insufficient to ensure that EV charger
infrastructure projects are delivered on time, which is the basis for
this waiver.
Existing Buy America Processes: Similarly, commenters mentioned
that FHWA has long-standing and well-developed regulatory and
administrative rules related to the implementation and enforcement of
Buy America requirements for steel and that suppliers on FHWA projects
have needed to comply with these steel requirements for decades.
According to these commenters, this history of compliance meant that
there should be no uncertainty and no additional time needed to comply
with Buy America steel requirements as applied to EV chargers, contrary
to what they argued was depicted in the proposed waiver.
The FHWA Response: FHWA agrees that there are steel suppliers who
are highly knowledgeable about FHWA's Buy America requirements as they
apply to steel. At the same time, EV chargers that are currently on the
market may not have been designed to be compliant with FHWA's Buy
America requirements, especially considering that they may have been
designed with the belief that they would be covered by FHWA's
Manufactured Products General Waiver. Further, they may contain steel
components obtained from suppliers all over the world. The FHWA
believes that the presence of steel in an EV charger does not mean that
recipients could comply with Buy America requirements merely by
complying with existing Buy America steel requirements. Further, it is
not clear to FHWA that EV chargers that are currently available on the
market use Buy America compliant steel, or that other aspects of the EV
charger would not render them noncompliant with Buy America
requirements without this waiver going into effect. Again, FHWA
stresses that the purpose of this waiver is to encourage manufacturers
of EV chargers to transition to a point where they utilize components
manufactured in America, including those made out of steel. As noted
below, while the housing of an EV charger is a specific component that
when made predominantly of iron and steel does not need to be covered
by this waiver, this is not true for all components of EV chargers.
Traceability of Steel Inputs: The Nucor Corporation, SMA, and AISI
also argued that certifying that steel is Buy America-compliant is not
new or difficult, contrary to how they claimed it was presented as a
justification for the proposed waiver. These commenters stated that
there is nothing unique about the steel used in EV chargers that would
make Buy America certification more difficult, as mill test
certificates for steel inputs are routinely provided to distributors
and fabricators that these commenters allege provide complete
traceability throughout the distribution chain.
The FHWA Response: FHWA understands that steel producers have
developed certain methods they use to certify that their steel is Buy
America-compliant, but FHWA does not believe that this affects the need
for this waiver. As set out in the proposed waiver, there is a need to
establish compliance and certification processes focused specifically
on EV chargers. The FHWA does not believe that just because there are
existing processes for certifying that steel is Buy America-compliant
intrinsically means that there are existing processes for certifying
that the EV charger and all of its components are Buy America-
compliant.
At the same time, as described in more detail below, FHWA does
believe that these commenters make a valid point for predominantly
steel and iron components of EV chargers that are widely available from
domestic suppliers. This is one of the reasons why FHWA is excluding
the housing of a charger if it is predominantly iron or steel from
coverage under this waiver. The commenters' point, however, does not
hold for other components that are not predominantly iron or steel and
for which the ability for any small amount of steel to be accurately
traced in them does not necessarily ensure that the EV charger is Buy
America-compliant.
Environmental Impacts of Foreign Steel: The Nucor Corporation, SMA,
and AISI further claimed that foreign steel is often produced and
transported with significantly higher greenhouse gas emissions that
would occur with domestic production and transportation, which they
argued meant that allowing for the use of foreign steel would be
counter to the environmental goals undergirding the purchase and
installation of EV chargers.
The FHWA Response: Through this waiver, FHWA seeks to incentivize
domestic manufacturers to ramp up production and make needed
investments to build and expand domestic production in order to support
a sustainable energy and climate future. The FHWA does not intend for
recipients of FHWA financial assistance to continue to rely on
components manufactured overseas that might have steel in them to the
extent practical once those components are manufactured and available
in the United States; this is the intent behind the phase-out of
chargers for the 55 percent phase and potential future phases. Further,
while FHWA's existing Buy America requirements would apply to any steel
or iron component of an EV charger, they would not cover the charger
itself. The FHWA believes that this waiver, which, after a phase out
period, waives Buy America requirements only for EV chargers where
final assembly occurs in the U.S. and the cost of components
manufactured in the U.S. exceeds 55 percent of the cost of all
components, which would align with BABA's requirements for manufactured
products, encourages recipients, their contractors, and subcontractors
to utilize more domestic steel than under FHWA's existing Buy America
requirements.
C. Applicability Date of Waiver and Waiver Phase-Out Periods
Thirty-three commenters recommended a different date of
applicability than the installation date used in the proposed
waiver.\13\ Commenters noted that there may be a significant difference
in time between when a product is manufactured and when it is installed
due to unforeseen circumstances, such as permitting delays, supply
chain constraints, utility interconnection delays, delivery delays,
prolonged adverse weather, potential workforce shortages, and routine
certification and quality checks that commercial operators perform on
industrial products before putting them into service. Such
circumstances could result in EV chargers being manufactured during one
phase of the proposed waiver (and consistent with the requirements in
place during that phase) and installed in another,
[[Page 10625]]
resulting in those chargers no longer being covered by this waiver and
risking them not being Buy America-compliant. These commenters stated
that relying on the installation date would prevent recipients, their
contractors, subcontractors, and EV charger manufacturers from knowing
which phase of the proposed waiver any given EV charger might be
covered by, creating uncertainty and financial risk; commenters warned
that this could discourage parties from moving forward with purchase
decisions until the start of the 55 percent phase. The EV charger
manufacturers also noted that they would not be able to certify with
certainty that their EV chargers were covered by this waiver and
therefore Buy America-compliant, as they would have no control over the
date their chargers were installed. Finally, commenters pointed out
that using the date of installation would potentially risk
manufacturers either producing a glut of EV chargers that could not be
used on FHWA-assisted projects or that manufacturers would delay
producing chargers until those chargers would be compliant with the 55
percent phase to ensure their ability to be used in FHWA-funded
projects.
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\13\ Unlike the effective date, which is the date where this
waiver's first phase would begin, the date of applicability refers
to the date on which an event occurs that determines which phase of
this waiver would cover a specific EV charger. For example, under
this final waiver, an EV charger with a date of applicability of
July 20, 2023, would need to have final assembly occur in the United
States to be covered by this waiver. An EV charger with a date of
applicability of July 20, 2024, on the other hand, would need to
have final assembly occur in the United States and have at least 55
percent of the cost of all components manufactured in the United
States to be covered by this waiver.
---------------------------------------------------------------------------
In terms of alternatives, the most common suggestion made by
commenters, including Wallbox, USA, Inc. (Wallbox), PowerCharge, bp
pulse fleet, the Electric Vehicle Charging Association (EVCA), Tesla,
Inc. (Tesla), the American Association of State Highway Traffic
Officials (AASHTO), and the Associated General Contractors of America
(AGC), recommended that FHWA use the manufacture date of the EV charger
as the date of applicability. AASHTO noted that this would allow EV
charger manufacturers to sell and install equipment that had been
manufactured prior to this waiver's effective date. The AGC commented
that using the manufacture date would reduce the opportunity for
external factors to cause delays, as the manufacture date occurs at the
beginning of the EV charger production process. Wallbox stated that
using the date of final assembly as the date of applicability could
allow EV suppliers to streamline reporting and enforcement of Buy
America requirements.
Eight commenters (including Revel Transit (Revel), EVgo, Electrify
America, LLC (Electrify America), and FreeWire Technologies (FreeWire))
recommended that the date on which FHWA obligated funds be used as the
date of applicability, arguing that it was more predictable than the
date of installation. The Kansas Department of Transportation (KDOT)
commented that using the date of obligation would allow recipients to
move forward on EV charging infrastructure projects with an exact
understanding of how this waiver would apply to their projects; EVgo
similarly stated that this would ensure applicants for FHWA financial
assistance would be aware of what phase of this waiver would be
applicable to their project. The Maryland Department of Transportation
(MDOT) stated that using the date of obligation would allow vendors to
provide existing EV chargers for projects to enable those projects to
be implemented as soon as possible.
Other commenters recommended using the date on which an EV charger
is purchased as the date of applicability for this waiver and its
phases. Volta Inc. (Volta) stated that the date a charger is purchased
is the date at which vendors solidify pricing and orders with their
suppliers. Shell USA, Inc. (Shell) commented that using the purchase
date as the date of applicability would enable both the project
applicant and their EV charger vendor or supplier to ascertain their
ability to be covered under this waiver and its phases with a high
degree of predictability.
Other suggestions for the date of applicability included the date
on which a solicitation is released, the date where the funding
agreement between the FHWA and awarded entity is executed, the date on
which the submission of bids for the project is due, the date that the
EV charger is shipped from the manufacturer, the date of delivery of
the EV charger, and to match the phase of the waiver with funding
dedicated for specific fiscal years.
The FHWA Response: After reviewing the comments, FHWA agrees that
relying on the date of installation to determine the date of
applicability is impractical. Due to the current unavailability of Buy
America-compliant EV chargers, as well as other factors noted by
commenters such as the time to acquire proper permits and approvals
that might delay installation after procurement of an EV charger,
recipients of FHWA financial assistance who purchase EV chargers might
not know when those chargers will be installed on their EV
infrastructure projects at the time of purchase. Using the installation
date as the date of applicability could mean that those recipients,
their contractors, and subcontractors would face uncertainty over
whether, by the time an EV charger is installed, that EV charger would
still be covered by the phase of the waiver existing when the charger
was purchased, which FHWA believes will determine how that charger is
manufactured. The FHWA acknowledges that uncertainty surrounding when a
procured EV charger will be installed could result in parties waiting
to purchase EV chargers until the 55 percent phase of this waiver,
which goes against the purpose of this waiver in promoting the timely
delivery of EV infrastructure projects.
In considering alternative effective dates, FHWA acknowledges that
the goal should be to provide certainty to EV charger manufacturers and
to those purchasing EV chargers with Federal-aid funds that the EV
charger they will manufacture, purchase, and install will comply with
this waiver. For that reason, FHWA agrees with the plurality of
commenters suggesting an alternative and believes that the most
appropriate date of applicability would be the date on which an EV
charger is manufactured. The FHWA considers the ``date of manufacture''
to be the date on which the EV charger, as defined further below, has
its final assembly occur and is in an operational state. The
manufacturer will be in the best position to know if their chargers
comply with this waiver, as they would be the ones to ensure that the
chargers are domestically assembled or sourced. A purchaser can
therefore be confident that, for example, if they enter into a purchase
order for a charger that is domestically assembled to comply with the
final assembly phase of this waiver, they will receive a charger
compliant with this waiver so long as the manufacturer can manufacture
a domestically assembled charger by June 30, 2024. If a manufacturer
cannot, a purchaser can turn to another manufacturer to receive a
charger that complies with this waiver.
To ensure the timely delivery of EV charger infrastructure
projects, for EV chargers manufactured during this waiver's final
assembly phase, FHWA expects recipients will begin installation of
those EV chargers by October 1, 2024.
D. Timeline of Waiver
Removing Phases from the Waiver: The most common category of
comment FHWA received on the proposed waiver was with respect to the
phase-out timeline proposed. Of 89 unique commenters, 48 recommended an
extension for the waiver. Of the other 41 commenters, 17 agreed with
the need for a waiver without mentioning extending the proposed
waiver's timelines, 5 had an unclear position, 3 did not mention
extending the waiver's timeframes but instead requested that the waiver
have a flexible duration, 2 argued that the final waiver should not
[[Page 10626]]
have any phases, and the remaining 14 argued against a waiver
entirely.\14\
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\14\ Eight of these 14 commenters were the commenters mentioned
in Section III.A. The remaining six presented objections against the
waiver without providing substantive arguments as to their
reasoning.
---------------------------------------------------------------------------
The two commenters who argued that the final waiver should not have
any phases, FreeWire and Broadband Telecom Power, Inc. (BTC Power),
stated that the proposed phases were unnecessary, added compliance
tracking challenges for the industry, and lacked commensurate benefit
for EV charging projects. FreeWire also stated that they assumed some
EV charger manufacturers would be able to more readily source
components domestically than perform final assembly domestically.
Instead of phases, BTC Power recommended that the waiver start on its
effective date with the 55 percent phase.
The FHWA Response: FHWA does not agree that a single-phase approach
would serve the public interest more than a waiver where coverage of
certain chargers is gradually phased out through phases. As noted
below, commenters raised many more concerns with domestically sourcing
components than they did with ensuring that final assembly of EV
chargers occurs in the United States, and FHWA believes that EV charger
manufacturers will be able to assemble chargers domestically before
they are able to ensure that 55 percent of components, by cost, are
manufactured in the United States. The FHWA received no indication that
there were manufacturers who would have more difficulty having final
assembly of their chargers occur in the United States, beyond
FreeWire's assumption, and FHWA does not believe the hypothetical
existence of such companies justifies adding complexity to the waiver.
The FHWA also believes that the phased approach provides an
incentive to manufacturers to ramp up production while, crucially,
ensuring that there is a steady supply of EV chargers available that
covered by this waiver and therefore Buy America-compliant. Having the
waiver start at the 55 percent phase, like BTC Power suggested, risks
having a limited supply of covered chargers at this waiver's effective
date, which may unnecessarily delay EV charger infrastructure projects.
Further, this waiver does not require that EV charger manufacturers
create chargers that comply with any given phase; manufactures may
choose to ignore this waiver and produce otherwise Buy America-
compliant chargers. What this waiver does is provide certainty to how
manufactures can achieve Buy America compliance and sets steps for them
to reach a point where an EV charger would be covered if the EV charger
met certain conditions similar to the requirements imposed on a
manufactured product under BABA.
Extension of Waiver's Time Periods: Of the 48 commenters arguing
for an extension of the waiver, there were various suggestions on how
long that extension should be. Some commenters, such as AASHTO, argued
for extending the dates of the final assembly, 25 percent, and 55
percent phases by 2 years from what was in the proposed waiver. Others,
such as the Electric Drive Transportation Association and PowerCharge,
recommended extended those same dates by 1 year from what was in the
proposed waiver. Still others recommended extending those dates by 6
months from what was in the proposed waiver. Finally, many commenters
argued for modifying the dates of the phase-out periods from the
proposed waiver in non-uniform durations. Tesla, for example,
recommended keeping the start of the final assembly phase on January 1,
2023, but recommended delaying the start of the 25 percent and 55
percent phases by 6 months. The Ford Motor Company (Ford), Wallbox, and
Blink Charging Co. (Blink Charging) similarly recommended keeping the
start of the final assembly phase at January 1, 2023, but recommended
delaying the start of the 25 percent phase by 6 months and the start of
the 55 percent phase by 1 year. Finally, several commenters also asked
for FHWA to evaluate the progress of the EV charger industry and listen
to feedback from recipients and the EV charger industry to determine
whether phases should be subsequently extended.
These 48 commenters routinely mentioned that the proposed waiver's
timeline was not achievable and that an extension was necessary to
ensure that EV chargers which would be covered by this waiver would be
available. Some commenters stated that EV charger manufacturers would
not be able to domestically assemble EV chargers on the proposed
waiver's timeframe. EVgo, for instance, stated that domestically
assembled chargers would not be available at sufficient scale by
January 1, 2023, and Electrify America commented that they thought
domestic assembly of 150 kilowatt (kW) EV chargers would be underway
industry-wide only by the latter half of 2023, with reliability testing
concluding and those chargers being available for purchase in 2024.
EVgo further commented that it conducts up to a yearlong
``qualification process'' for new suppliers which requires a nearly
produced or produced test unit.
Multiple members of the EV charging industry argued in favor of
extending the proposed waiver's timeframe, generally due to concerns
with sourcing EV charger components domestically to allow a charger to
be covered under the 55 percent phase.\15\ The only EV charger
manufacturer who stated that they could meet the proposed waiver's
timeframes was ABB E-Mobility.
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\15\ As noted above, several members of the EV charging industry
did not comment on the proposed waiver's timeframe, including
Tritium, Siemens, Enel X Way, TeraWatt, and FLO EV Charging.
ChargePoint commented that a blanket waiver for ACL2 chargers should
be extended until January 1, 2024, without making clear when
subsequent phases for these chargers would start; this point is
discussed in Section III.C further below. The bp pulse fleet did not
comment either way, stating that it would rely on others to speak to
the appropriate schedule.
---------------------------------------------------------------------------
FreeWire requested an extension so that recipients and the EV
charger industry could have time to complete a thorough assessment of
the cost of components and to establish proper certifications. FreeWire
also stated that FHWA was underestimating the complexity and long-lead
time it would take to source components and that ongoing supply chain
disruptions limited the availability of domestic components. For these
reasons, FreeWire requested that all Buy America requirements become
effective on July 1, 2024, one-and-a-half years after the final
assembly phase and 6 months after the 55 percent phase would have
started in the proposed waiver.
SK Signet commented that while domestic assembly might be
achievable in the near future, some components are not available from
domestic sources, while other components were available domestically
but at vastly greater prices than foreign components. SK Signet
recommended delaying the start of the final assembly phase until July
1, 2023, and the 55 percent phase until January 1, 2026.
Blink Charging stated that establishing sufficient domestic
production, securing new suppliers, and validating the safety of their
products takes time, which is amplified by the ongoing equipment and
materials shortages and shipment delays stemming from global supply
chain constraints. Blink Charging further commented that these
constraints are particularly acute for DCFC components and recommended
a 1-year delay in phase-out dates.
Wallbox stated that it would be ready for final assembly in the
U.S. shortly but
[[Page 10627]]
that there were significant challenges facing the industry in terms of
the procurement and sourcing of components, which would be exacerbated
by the demand for components caused by the NEVI Formula Program.
Wallbox suggested having the final assembly phase start on January 1,
2023, as proposed in the waiver, with subsequent phase-out periods each
starting 1 year later. Wallbox did not clearly indicate that they could
domestically assemble EV chargers by January 1, 2023; however, they
hinted that they could and did not recommend an extension to the
proposed waiver's January 1, 2023, date.
Volta, on the other hand, commented that they believed it possible
to domestically assemble EV chargers by January 1, 2023, but thought
that starting the 55 percent phase on January 1, 2024, was unreasonable
based on its suppliers' low confidence of being able to produce an EV
charger that could be covered by the 55 percent phase.
Among other companies, WiTricity stated that many EV charger
components are not manufactured in the United States, which they stated
would only happen if chargers were manufactured in sufficient volume to
generate adequate demand. Tesla added that an extension to the timeline
of the proposed waiver would allow manufactures time to fully assess
their supply chains, calculate domestic content values, enter into new
supply agreements, and reorient their supply chains.
Many State officials also argued in favor of extending the proposed
waiver's timeframe for the same reasons mentioned by EV charger
manufacturers.\16\ The AASHTO similarly claimed delays and increased
costs could result if EV charging equipment providers were required to
shift component sourcing to domestic suppliers, who may struggle with
availability due to limited quantities of EV chargers and EV charger
components and high demand. The AASHTO also commented that the
practical ability for the industry to source American-made EV charger
components would take longer than the proposed timeframe permitted.
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\16\ The AASHTO, the National Association of State Energy
Officials, and a total of 18 State DOTs submitted comments, with all
but one State DOT, the New Jersey Department of Transportation
(NJDOT), indicating that the proposed timeline is not achievable.
The NJDOT instead argued in favor of a temporary waiver without
specifically commenting on its proposed timeframe.
---------------------------------------------------------------------------
State DOTs also requested the proposed timeline be extended due to
the experience they have had in attempting to procure EV chargers.
State DOTs pointed to the fact that orders placed for EV chargers
remain unfilled after considerable time due to supply chain issues. The
KDOT stated that they had heard from their stakeholders that wait times
for some electrical components in EV chargers stretched to 60-80 weeks,
even without considering the increased demand created by the
investments under BIL. The KDOT also commented that although there are
some manufacturers with currently available equipment that is Buy
America-compliant, they did not believe there was adequate capacity yet
to fill the rapidly expanding need for EV chargers.
In essence, these commenters stated that the current delay in
producing EV chargers meant that chargers may be ready for purchase
after some phases of the proposed waiver have already ended, with
particular emphasis on this being the case for the first phase, which
was proposed as ending on December 31, 2022. FreeWire stated that they
doubted whether any States would complete the installation of NEVI
projects before the first quarter of 2024, at the earliest. FreeWire
also stated that they expected it to take State administrators several
months to design and issue solicitations, with some States expected to
take longer as they have indicated that they would take 1 to 2 years
conducting further planning before beginning the procurement process.
For the States that do issue solicitations for NEVI projects in the
next several months, FreeWire commented that they expected the
solicitation period to last several more months, with more time being
taken for States to make awards. Similarly, EVgo commented that many
States plan to solicit proposals for charging stations beginning in
late 2022 and extending into early 2023. The Georgia Department of
Transportation (GDOT) mentioned that it may not be ready to install EV
chargers until well after 2022, with installation not expected to occur
until 2024 at the earliest, meaning that the 2022 waiver period would
be useless. The MDOT similarly commented that, to its knowledge, no
State DOT or associated vendor would be able to benefit from the first
phase of the waiver as the earliest dates for project awards they
projected would be in the spring of 2023. East Bay Community Energy
stated that the short timeframe of the first phase would likely have no
impact on market acceleration, and Tesla commented that the first phase
would provide little relief since States have not issued requests for
proposals regarding EV charger deployment. Other issues raised by
commenters to justify an extension of the proposed waiver's timeframe
were the difficulty for EV charger manufacturers and their suppliers to
understand the waiver; price volatility; the need to alter
manufacturing processes; potentially increased demand for EV chargers
from both the public and private sector, which may result in
potentially increased cost; the additional time it would take to
conduct safety and reliability testing on the newly domestically
produced chargers; the necessary delay to ensure that there are
suitable numbers of replacement parts; potential workforce issues; and
the lack of a final rule from FHWA on the technical requirements for EV
chargers under the NEVI Formula Program. Due to many of these factors,
EVgo stated that the limited number of chargers available and the
significant expected increase in demand meant that chargers may not be
available until late 2024 or early 2025.
In terms of the benefits of extending the proposed waiver's
timeline, Siemens Corporation (Siemens) commented that a delay would be
necessary to account for the limited supply of EV chargers that are
currently available, and that the timeline of any waiver needed to
consider the time it would take to procure, deliver, and install EV
chargers in order for that waiver to have a meaningful effect.
Similarly, General Motors (GM) stated that an extension would provide
the time necessary to onshore supply chains, ramp up production, and
conduct necessary testing of new chargers.
The FHWA Response: In terms of the complete waiver phase of the
proposed waiver, FHWA does not agree with commenters that it is
necessary to extend this phase beyond the date set out in the proposed
waiver; FHWA instead believes that commenters indicated why this phase
is not in the public interest. Commenters argued that the complete
waiver phase as proposed, which would have occurred only in calendar
year 2022, would start and end without a steady supply of EV chargers
available for procurement. The FHWA disagrees with this assessment. For
the purpose of this waiver, the question is whether there will be
enough chargers available to satisfy the demand posed by recipients.
The purpose of the complete waiver phase in the proposed waiver was
to provide time for EV charger manufacturers to domestically assemble a
sufficient supply of chargers for when the first phase-out period
occurred. Once EV charger manufacturers have
[[Page 10628]]
such a supply available, FHWA believes it appropriate to phase out from
this waiver's coverage all EV chargers that do not have final assembly
occur in the United States. The EV charger manufacturers, who FHWA
believes have the most insight as to when they can domestically
assemble an EV charger, differed on what date they recommended for the
final assembly phase to start. ChargePoint, Inc. (ChargePoint), Blink
Charging, and PowerCharge requested that this phase start in 2024;
however, others, such as Volta and Wallbox, approved of the proposed
date of January 1, 2023, for the start of the final assembly phase.
Based on comments received, FHWA expects recipients to start to procure
chargers in early 2023. The FHWA expects EV charger manufacturers who
stated a preference for the final assembly phase to start on January 1,
2023, to be able to provide the limited number of chargers requested by
recipients in early 2023. Throughout 2023, as more recipients seek to
procure EV chargers, FHWA expects this demand to be met by increases in
the number of domestically assembled chargers produced by EV charger
manufactures.
As the proposed first phase-out date of January 1, 2023, has
already occurred and, as described above, FHWA does not believe it
necessary to delay this date, FHWA finds that a complete waiver phase
would not be in the public interest.
Twenty-five Percent Phase: Other commenters criticized the 25
percent phase of the proposed waiver as being overly complex and
burdensome. Several commenters pointed out that this phase would not
assist in reaching the final 55 percent phase of the waiver. Enel X Way
USA, LLC (Enel X Way) and Tritium commented that by eliminating the 25
percent phase, manufacturers would be provided more time to solidify
the necessary partnerships, suppliers, and supply chain resources to
ensure that EV chargers are covered by the 55 percent phase.
The FHWA Response: FHWA agrees that the 25 percent phase is
unnecessary and would not serve the public interest. The FHWA initially
proposed this phase to serve as a gradual step between having the
waiver cover chargers whose final assembly process occurred in the
United States and phasing out from coverage under this waiver EV
chargers for which the cost of components manufactured in the United
States does not exceed 55 percent of the cost of all components,
leading to the 55 percent phase. The FHWA believed that doing so would
incentivize manufacturers during the 25 percent phase to make progress
to reaching the point where they could produce chargers that would be
covered by the 55 percent phase of the waiver. The FHWA intended that
manufacturers would shift their processes to account for the 25 percent
threshold and then shift again to account for the 55 percent threshold.
Based on the comments received, FHWA no longer believes that
manufacturers will make the initial shift to produce chargers that
could be covered by the 25 percent phase. Instead, FHWA believes that
manufacturers will simply shift their processes to produce EV chargers
that are covered by the 55 percent phase, rendering the 25 percent
phase pointless for many of them.
Further, for those manufactures that do attempt to take advantage
of the existence of the 25 percent phase by altering their processes to
produce EV chargers where the cost of components manufactured in the
United States exceeds 25 percent of the cost of all components, FHWA is
concerned that doing so may hinder these manufactures from producing EV
chargers that could be covered by the 55 percent phase, which
undermines this waiver's goal of incentivizing the production of EV
chargers assembled and sourced in America. While FHWA wishes to
incentivize companies to produce EV chargers that are Buy America-
compliant as quickly as they are able to, starting with EV chargers
that would be covered by the 55 percent phase, FHWA no longer believes
that the 25 percent phase is a useful means in reaching this goal.
Start of 55 Percent Phase: With the removal of the complete waiver
phase and the 25 percent phase, this waiver will start with the final
assembly phase on its effective date and its first phase-out will occur
at the start of the 55 percent phase. At this time, EV chargers covered
by the final assembly phase for which the cost of components
manufactured in the U.S. does not exceed 55 percent of the cost of all
components will be removed from this waiver's coverage. Removing the 25
percent phase, however, necessitates consideration of when to now end
the final assembly phase and begin the first phase-out period that
commences the 55 percent phase.
Commenters gave a wide range of dates for when the 55 percent phase
should start, from January 1, 2024, to January 1, 2026. Again, FHWA
finds the dates that EV charger manufactures suggested to be important
considerations, as they will be the ones domestically sourcing chargers
for the 55 percent phase. Many EV charger manufacturers, such as
Tritium, Enel X Way, Siemens, and TeraWatt Infrastructure (TeraWatt),
did not suggest an alternative to the 55 percent phase while making
recommendations on other aspects of the proposed waiver, indicating
tacit approval of FHWA's proposed date of January 1, 2024. Others, such
as Wallbox, PowerCharge, Volta, and Blink Charging, suggested modifying
this date to January 1, 2025. SK Signet was among the few commenters
who argued for a proposed date of January 1, 2026.
The FHWA Response: Given the range of extension timelines suggested
by commenters, FHWA believes it is appropriate to extend the date of
the final assembly phase such that it ends on June 30, 2024. The first
phase-out period under this final waiver, starting the 55 percent
phase, where FHWA will remove from the waiver EV chargers for which the
cost of components manufactured in the U.S. does not exceed 55 percent
of the cost of all components, will therefore begin on July 1, 2024.
This date is between the two dates proposed by the majority of EV
charger manufacturers. Similar to the discussion on the final assembly
phase, this should not affect manufacturers who recommended a start
date for the 55 percent phase of January 1, 2024. For those that
recommended later dates, this may serve to expedite the domestic
sourcing process so these manufactures can compete with ones that are
able to domestically source by January 1, 2024. In addition, FHWA notes
that many manufacturers recommended a date for the start of the 55
percent phase at the same time as they recommended a new date for the
start of the 25 percent phase. With the 25 percent phase removed, FHWA
expects manufactures to be able to modify their processes to produce
chargers covered by the 55 percent phase faster, as these manufactures
will not have to perform an additional modification of their processes
to produce chargers that could be covered by the 25 percent phase. The
FHWA believes that extending the start of this first phase-out for a
year properly considers the concerns of many commenters regarding the
time it takes to domestically source components, without extending the
waiver for so long that it no longer provides a proper incentive for
manufactures to comply with the Administration's goals of encouraging
the domestic manufacturing and assembling of EV chargers. The FHWA
expects all recipients to procure EV chargers during this phase, with
many recipients that
[[Page 10629]]
had already procured chargers in previous phases using this phase to
procure additional chargers using NEVI Formula Program funds from
additional years.
The FHWA will also regularly monitor the status of the domestic EV
charger industry. If the industry is advancing with production of Buy
America-compliant EV chargers faster than expected, FHWA may
discontinue this waiver or alter this waiver's timelines accordingly.
To accomplish this goal, FHWA will conduct biannual RFIs to receive
information on the status of the EV charger industry during the final
assembly phase, which may lead FHWA to commencing the first phase-out
and starting the 55 percent phase earlier than July 1, 2024. If FHWA
plans to modify this waiver, FHWA will provide adequate notice of its
intention to do so. As required by section 70914(d) of BIL, 5 years
from the effective date of this waiver, FHWA will also revisit this
waiver to determine whether there is still a need to continue it or
whether the domestic EV charger industry has advanced to a point where
this waiver can be discontinued.
Removal of Defined Dates: Some commenters went further than merely
extending the waiver and suggested that the inclusion of any sort of
date would be inappropriate and that FHWA should base its waiver off of
market research or other metrics. The Oklahoma Department of
Transportation (OKDOT) requested FHWA publish an RFI and conduct
extensive research on the availability of the materials manufactured in
the U.S. before phasing out the waiver. The GDOT commented that setting
the duration of any phase in advance would be arbitrary and that the
only baseline that should be used is EV charger production data. The
National Association of Truck Stop Operators (NATSO) and the Society of
Independent Gasoline Marketers of America (SIGMA) jointly commented
that FHWA should waive Buy America requirements until it is clear that
a competitive market of products that meet Buy America requirements are
available at scale. The City of Dallas stated that any timeframe should
be delayed until a predefined set of manufacturing and installation
metrics are achieved. The AGC also agreed with using market research to
identify manufacturing capacity for the purpose of setting phase out
dates. The AGC argued that setting specific dates may encourage EV
charger manufacturers to rush production to produce chargers before
these dates, causing them to fail to test these chargers for safety and
reliability. The AGC also commented that setting specific dates for the
start of phases risk manufacturers failing to produce chargers that can
be covered under a given phase.
The FHWA Response: FHWA disagrees with commenters suggesting that
this waiver should not feature specific dates and believes that
specific timeframes and phase-out dates are useful in providing
recipients of FHWA financial assistance certainty as to the
requirements that will apply at any given time for purchases of EV
chargers. Waiver periods that are tied only to the results of
contemporary market research may change suddenly, disrupting planning
made by recipients, their contractors, and subcontractors. In addition,
specific dates provide industry vendors with a clear timetable to
encourage them to shift to manufacturing and assembling EV chargers
domestically as quickly as possible. Again, FHWA is issuing this waiver
both after considering the current and projected state of the market
and to encourage an increase in domestic content within the market over
time. While FHWA acknowledges that some EV charger manufacturers may
not be able to produce compliant chargers within the timeframe set out
in this waiver, FHWA believes that delaying the phases of this waiver
to account for such manufacturers goes against the purpose of Buy
America requirements and the Administration's goals of realizing
American production of EV chargers. In addition, FHWA intends to
collect new information as it becomes available via biannual RFIs and,
as detailed above, may enter into the 55 percent phase before the
scheduled July 1, 2024, date depending on the information received.
Bifurcating Timeframes for ACL2 and DCFC Chargers: Several
commenters brought up the differences between ACL1 and ACL2 chargers
and DCFC chargers and argued that these differences justified different
waiver timeframes for the two kinds of chargers. EVgo commented that
ACL2 chargers contain fewer components and cost dramatically less than
DCFC chargers. EVgo further commented that it expected the domestic
DCFC charger market to take longer to develop to a point where those
chargers could be produced domestically at scale than they expected for
the domestic ACL2 charger market. EVgo claimed that DCFCs require more
highly specialized manufacturing processes, that the ACL2 charger
market is more robust currently than the DCFC charger market, and that
the company expected demand to be lower for ACL2 chargers in the NEVI
Formula Program. Electrify America commented that because ACL2 chargers
have become relatively commoditized, unlike DCFC chargers which are a
relatively new technology, there should be different phase-out
schedules for the two kinds of chargers. Electrify America suggested
that ACL2 chargers follow the proposed waiver phase-out schedule
whereas DCFC chargers be permitted an extended schedule. ChargePoint,
on the other hand, stated that supply chains were less advanced for
ACL2 chargers than DCFC chargers due to a lack of prior demand for Buy
America-compliant ACL2 chargers and recommended extending the waiver
for ACL2 chargers until January 1, 2024, to account for that.
The FHWA Response: FHWA does not believe that there is a need to
bifurcate this waiver's phase-out schedule for ACL2 chargers and DCFC
chargers. To start with, the comments received on this issue differed
in the basic notion of whether bifurcation was necessary to account for
delays in the ACL2 charger market or delays in the DCFC charger market.
Further, FHWA does not intend this waiver to be overly burdensome on
recipients and believes that bifurcating phase-out periods would
unnecessarily confuse recipients as to which waiver period a given
charger may fall into, without providing any clear benefit.
E. 350 kW DCFC Chargers
Some commenters raised special concerns over 350kW DCFC chargers.
These comments generally proceeded along the same path. First, these
commenters stated that DCFC chargers are the best chargers to be
purchased using NEVI Formula Program funds. Pilot Travel Centers LLC
(Pilot), for instance, commented that Congress, FHWA, and States EV
Deployment Plans clearly favored deployment of 350 kW DCFC chargers. In
a joint comment, Pilot, GM, and EVgo further stated that recent
investments in EV charging infrastructure illustrate a clear preference
for 350 kW DCFC chargers and that this also matches a growing trend in
the automotive industry. Commenters stated that if 350 kW DCFC chargers
were not available at scale, States would instead purchase lower power
chargers, such as 150 kW DCFC chargers that meet the proposed standards
promulgated by FHWA for the NEVI Formula Program.\17\ These
[[Page 10630]]
commenters believed that using 150 kW DCFC chargers instead of 350 kW
DCFC chargers would result in an EV charging network inadequately
prepared for the next generation of EVs.
---------------------------------------------------------------------------
\17\ The FHWA proposed regulations setting minimum standards and
requirements for projects funded under the NEVI Formula Program on
June 22, 2022. See 87 FR 37262. The FHWA proposed that the maximum
power per DCFC charging port be at or above 150 kW, with each
charging station capable of providing at least 150 kW per charging
point.
---------------------------------------------------------------------------
Next, commenters stated that it was not possible for 350 kW DCFC
chargers to comply with the proposed waiver's timeframe. The Alliance
for Automotive Innovation mentioned that the proposed waiver did not
give specific attention to 350 kW DCFC chargers, and the commenter
believed that the same issues facing all EV chargers were especially
pronounced for 350 kW DCFC chargers. A joint comment from NATSO and
SIGMA mentioned that they were unaware of any data suggesting that Buy
America-compliant 350 kW DCFC chargers were available at scale or will
be available in time to meet the timelines in the proposed waiver and
that FHWA should waive Buy America requirements for these chargers
until it is clear that a competitive market of compliant products is
available at scale.
To deal with this perceived concern, some commenters requested FHWA
additionally extend its waiver schedule specifically for 350 kW DCFC
chargers. The joint comment from the Pilot, GM, and EVgo requested a
focused 1-year delay solely for 350 kW DCFC chargers given what they
claimed were additional complexities and supply chain challenges facing
these chargers.
The FHWA Response: FHWA does not agree that it is necessary to give
special accommodations for 350 kW DCFC chargers in this waiver. The
FHWA finds that the argument pushed by commentators in favor of such
preference is flawed at its first premise. The FHWA proposed allowing
150 kW DCFC chargers to be used on NEVI Formula Program funded
projects. Commenters in favor of special treatment for 350 kW DCFCs do
so under the idea that these chargers should be purchased using NEVI
Formula Program funds and that this waiver should encourage that. The
FHWA believes that the rulemaking for the NEVI Formula Program, not
this waiver, is the appropriate place to make that argument. This
waiver is to encourage the domestic production of chargers that can be
used on FHWA assisted projects and delaying this waiver's timeframe for
350 kW DCFC chargers does not comport with this goal.
F. Definition of ``EV Charger''
Coverage of Waiver: In the proposed waiver, FHWA defined an ``EV
charger'' as ``EV chargers and associated payment systems, distribution
systems, telecommunications and networking equipment, energy storage
systems, and other supporting equipment and systems: (i) in the
immediate vicinity of a charger or group of chargers; and (ii)
essential to the function or operation of a charger or group of
chargers.'' The FHWA also stated that the term would not include
parking areas adjacent to the EV chargers and lanes for vehicle ingress
and egress.
Many commenters expressed concern over this proposed definition,
with some suggesting that it be expanded while others stating that it
was overly broad. In the former group, Ford asked for FHWA to consider
including EV charging posts and cable management systems as part of the
definition of ``EV charger.'' The KDOT suggested that the waiver also
apply to other manufactured products that are external to the EV
charger but in its immediate vicinity, as well as switchboards,
switchgears, and panelboards. The MDOT recommended that manufactured
components for battery storage and other alternative power sources,
such as solar panels, be included in the definition of ``EV charger,''
although MDOT admitted doing so may cause confusion. ElectricFish
similarly requested that the definition apply to battery storage
systems.
In the opposite group, many commenters complained that the broad
definition in the proposed waiver for ``EV chargers'' could cause
confusion and delay. The AASHTO stated that this definition would muddy
the parameters surrounding the waiver and complicate the determination
of compliance when determining the cost of components for the 55
percent phase. General Motors stated that the broad proposed definition
may cause project delays since equipment outside of the actual EV
charger might have its own supply chain considerations, particular with
respect to utility-related equipment. Volta similarly commented that
systems and technologies not core to the EV charger itself, such as
wireless and telecommunications systems, are frequently not
manufactured in the United States and that moving supply chains to the
United States for these components would be extremely difficult and
costly. Revel agreed, stating that the proposed definition could
increase noncompliance with Buy America requirements because many of
these systems and technologies are not produced domestically. In
addition, TeraWatt noted that the EV charging market is not large
enough to dictate a domestic shift to the telecommunications supply
chain, potentially resulting in no Buy America-compliant
telecommunications systems being available and, if the proposed
definition is used, fewer Buy America-compliant EV chargers. The Zero
Emission Transportation Association (ZETA) and Shell both noted that
additional equipment encompassed by FHWA's proposed definition may
implicate other domestic content procurement preferences, resulting in
confusion by recipients, their contractors, and subcontractors and
potential delays. BTC Power commented that including equipment beyond
the EV charger would make it difficult for EV charger manufacturers to
certify Buy America compliance, given that they might not necessarily
have insight into the domestic content of pieces they don't manufacture
themselves.
Finally, multiple commenters stated that the proposed definition of
``EV charger'' would disincentivize the integration of helpful features
such as on-site renewable energy generation and energy storage systems
in EV charging stations, since inclusion of such features would require
them to be Buy America-compliant. Commenters presented concerns that
such domestically produced technologies were not available and
therefore may not be included in charging stations featuring EV
chargers purchased with FHWA financial assistance. The ZETA noted that
FHWA should encourage including on-site renewable energy generation in
charging stations, which would be hindered if those technologies were
required to be Buy America-compliant given that manufacturers were
unlikely to change their processes to domestically manufacture those
technologies to support the minimal quantity involved in EV charging
stations.
Commenters who suggested a narrower definition that FHWA originally
proposed presented numerous options. The AASHTO recommended the
definition only include the self-contained EV charging unit itself.
Autel Energy (Autel) suggested that the definition should only apply to
those components that are under the direct control of the EV charger
manufacturer. Proterra recommended that FHWA limit Buy America
requirements to items that are directly related to electric vehicle
supply equipment. Revel suggested that the definition apply only to
technologies or systems permanently
[[Page 10631]]
affixed to the charger that are essential to the charger's function and
operation. Finally, Shell commented that Buy America requirements
should only apply to the portion of the project which the recipient
deems eligible for EV infrastructure-related Federal-aid funding.
The FHWA Response: FHWA agrees with the number of commenters
suggesting that the definition of ``EV charger'' should be narrower
than what was presented in the proposed waiver. After reviewing the
comments received, FHWA does not believe it is necessary to include the
associated equipment specified in the proposed waiver as part of this
final waiver. Such equipment will fall under FHWA's current Buy America
requirements, which may include coverage under the existing
Manufactured Products General Waiver. In this final waiver, FHWA will
consider an ``EV charger'' as only the EV charger unit itself and the
equipment contained inside it. As there are various configurations
possible for EV chargers, FHWA is reliant on manufacturers to determine
which components are within the EV charger and will therefore be
covered by this waiver.
The FHWA believes that it is important to accelerate the domestic
EV charger manufacturing industry and that it is feasible for
manufacturers to onshore production in the near future to take
advantage of the increased funding for EV infrastructure projects. This
waiver serves to incentivize that process. The FHWA does not believe,
however, that such incentives exist for equipment associated with the
EV charger that may have uses beyond EV charging infrastructure
projects, such as telecommunications equipment; for these pieces of
equipment, FHWA does not think that the same incentive exists to
encourage their domestic production. Including them under the
definition of ``EV charger'' would mean that final assembly of these
pieces of equipment would need to occur domestically and many of them
would need to be sourced domestically in order to be covered by this
waiver, and FHWA does not believe the EV charger market is large enough
to incentivize manufacturers of these additional pieces of equipment to
domestically produce those pieces of equipment. Under the proposed
definition of ``EV charger,'' this would mean that certain pieces of
equipment associated with an EV charger could not be covered by this
waiver, potentially leaving many EV charger stations noncompliant with
Buy America requirements and hindering efforts to complete EV
infrastructure projects. The FHWA believes that this possibility
justifies narrowing the definition of ``EV charger'' than what was
previously proposed.
In summary, FHWA is choosing to limit this waiver to the EV charger
itself. The FHWA believes doing so keeps the waiver as simple as
possible, compared to other suggested definitions. By limiting the
definition to the EV charger itself, EV charger manufacturers will be
able to determine if a charger is covered by this waiver, while also
providing clarity to recipients, their contractors, and subcontractors
when procuring chargers regarding how this waiver will cover those
chargers. The FHWA also notes that much equipment associated with EV
chargers is covered by FHWA's Manufactured Products General Waiver and,
for this reason, defining ``EV charger'' more narrowly should not
prevent projects from being delivered on time.
Utility Equipment: Several commenters sought clarity on how this
waiver would affect equipment used in utility relocations and upgrades.
Autel questioned whether products used in utility upgrades would be
covered by this waiver. The OKDOT commented that the proposed waiver
did not address whether Buy America requirements extend to utility
relocations and requested that utilities be excluded from Buy America
requirements.
The FHWA Response: Based on the definition used for ``EV charger''
in this final waiver, equipment used in utility relocations and
upgrades would generally not be covered by this waiver; instead, FHWA's
Buy America requirements would apply to such work. Further, FHWA does
not believe it is necessary to treat utility-related work for EV
charger infrastructure projects differently from utility-related work
for other Federal-aid highway projects.
G. Treatment of Components
Defining Components of EV Chargers: Multiple commenters requested
that FHWA clearly delineate what components are covered by this waiver.
Siemens recommended that FHWA further define items that FHWA considers
to be components of EV chargers for the purpose of computing the
domestic content of those components. Tesla and the North Central Texas
Council of Governments (NCTCOG) commented that FHWA should release a
list of all components the proposed waiver would apply to. ABB E-
Mobility, on the other hand, argued that FHWA should not create a list
of what it considers to be a component of an EV charger because EV
charger technology is developing rapidly, and components vary by
manufacturer.
The FHWA Response: In general, any article, material, or supply
that is directly incorporated into the end product (i.e., EV charger)
is a component. Given the various ways that EV chargers are structured,
and may be structured in the future, FHWA agrees with ABB E-Mobility
that it is not useful to define with particularity every component used
in an EV charger.
Determining Cost of Components: Multiple commenters sought
clarification regarding how to determine the cost of components to
determine whether an EV charger is covered by the waiver. Enel X Way
USA and Tritium recommended that the subassembly of foreign parts into
components qualify as part of the manufacturing process which should be
treated as part of the cost of a component. Tritium also suggested that
manufactures should be able to determine the cost of the component
using their manufacturing costs. The NCTCOG asked whether the exclusion
of labor costs associated with the manufacture of the end product also
prohibited inclusion of labor costs associated with manufacture of
components. Wallbox recommended adding the cost of labor towards final
assembly as a cost of the component, and Tesla encouraged FHWA to
include labor costs for components that are manufactured domestically
and included in the final EV charger. Wallbox also recommended that
FHWA clarify that all components used in final assembly, including
components purchased by the manufacturer from upstream suppliers, count
for domestic content calculations in the 55 percent phase. The National
Electrical Manufacturers Association questioned whether Manufacturer
Value Add or Substantial Transformation is part of the cost of a
component.
The FHWA Response: FHWA does not believe that changes need to be
made to how the cost of components are calculated from how was
described in the proposed waiver. The FHWA proposed to determine the
cost of components for this waiver using the same methodology used to
calculate the cost of components for the Buy American statute under
chapter 83 of title 41, U.S.C., which generally applies to supplies,
construction, and services acquired for public use. The FHWA believes
that utilizing existing definitions rather than creating new ones for
this waiver provides more consistency across Federal agencies and more
certainty to recipients, their contractors, subcontractors, and EV
charger manufacturers. Per the
[[Page 10632]]
regulations implementing the Buy American statute, the Federal
Acquisition Regulations (FAR), ``cost of component'' is defined in FAR
25.003 as: ``(1) For components purchased by the contractor, the
acquisition cost, including transportation costs to the place of
incorporation into the end product or construction material (whether or
not such costs are paid to a domestic firm), and any applicable duty
(whether or not a duty-free entry certificate is issued); or (2) for
components manufactured by the contractor, all costs associated with
the manufacture of the component, including transportation costs as
described in paragraph (1) . . . plus allocable overhead costs, but
excluding profit. Cost of components does not include any costs
associated with the manufacture of the end product.'' \18\ As the Buy
American statute is similar in its goals to Buy America, FHWA believes
that relying on the definition for ``cost of components'' in FAR 25.003
is preferrable to other methods, such as considering whether
substantial transformation has occurred. For components purchased and
then incorporated into an EV charger, the cost of that component would
be the acquisition cost, including transportation costs to the place of
incorporation (whether or not such costs are paid to a domestic firm)
and any applicable duty (whether or not a duty-free entry certificate
is issued). For components manufactured and then incorporated into an
EV charger, the cost of that component would be all costs associated
with the manufacture of the component, including transportation costs
to the place of incorporation, plus allocable overhead costs, but
excluding profit. To the extent that costs do not fit into this
definition, FHWA will not consider them in determining whether an EV
charger is covered by this waiver's 55 percent phase. For instance,
this would not cover Manufacturer Value Add as that is not a cost
associated with the manufacture of the component.
---------------------------------------------------------------------------
\18\ See 48 CFR 25.003.
---------------------------------------------------------------------------
This definition would include the cost of subassembly of foreign
parts into the component for components manufactured by the EV charger
manufacturer as it is a cost associated with the manufacture of the
component. For components purchased by the EV charger manufacturer, the
cost of subassembly of foreign parts would be reflected in the
acquisition cost of that component. Based on this definition, the cost
of all components used in final assembly, whether manufactured or
purchased by the EV charger manufacturer, will be considered when
determining whether a charger is covered during the 55 percent phase of
this waiver.
In terms of labor costs, for purchased components, FHWA expects the
labor cost to be built into the acquisition cost of the component and
it should not be accounted for separately. For manufactured components,
labor costs associated with the manufacture of the end product will not
be considered to be the cost of a component; however, the labor costs
associated with the manufacture of the component itself will be. Such
costs are costs associated with the manufacture of the component.
Applicability of Buy America Iron and Steel Requirements to
Predominantly Iron and Steel Components of EV Chargers: Commenters
disagreed over whether FHWA should apply existing Buy America
requirements regarding iron and steel to primarily steel and iron
components of EV chargers. On one side, commenters argued that FHWA
should not apply such requirements to any specific predominantly iron
or steel EV charger component. These commenters argued that doing so
would complicate compliance and pose an undue burden on EV charger
manufacturers in terms of time and cost. TeraWatt also noted that
because EV chargers need to have their final assembly occur in the
United States and meet the cost of component threshold set out in this
waiver to be covered by it, there was no need to turn to FHWA's
existing iron and steel requirements to ensure the expansion of
domestic manufacturing capacity. The ZETA, Enel X Way, and NCTCOG
argued that imposing FHWA's existing iron and steel requirements under
Buy America would create additional roadblocks to the completion of EV
charging infrastructure projects. ABB E-Mobility argued that the
domestic availability of steel for which all manufacturing processes
occurs in the United States is limited and could be cost prohibitive
when integrated into EV chargers and recommended FHWA not require that
predominantly steel components use steel for which the entire
manufacturing process occurs in the United States. The AGC further
argued that singling out any specific component to be excluded from the
waiver would provide unnecessary complications and potentially cause
delays. Several commenters added that FHWA's current steel and iron
requirements under 23 U.S.C. 313 should not apply to EV chargers at any
point, claiming that while EV chargers may contain iron and steel
components, they are not predominantly steel and iron. ChargePoint went
further, recommending that FHWA exclude any steel and iron requirements
indefinitely.
Other commenters disagreed and stated that FHWA's existing
requirements for iron and steel under Buy America should apply to at
least some EV charger components. Nucor and AISI, two opponents of the
proposed waiver, agreed that the waiver should not apply to all
components of an EV charger. These two commenters stated that the
domestic steel industry has the capacity to supply steel for use in EV
chargers and that products used in EV chargers, such as the EV
charger's housing, are readily available from domestic steel producers.
Tritium also stated that it was comfortable with excluding
predominantly iron and steel components from coverage under this waiver
if manufacturers were able to count these excluded components to meet
the cost of component thresholds.
The FHWA Response: FHWA agrees with certain commenters that it is
in the public interest to apply this waiver to all components of an EV
charger. In general, except with respect to the housing of an EV
charger, commenters to the proposed waiver did not provide sufficient
information as to which components were predominantly iron or steel.
Without readily available information on which components are more
often than not predominantly iron or steel to apply a categorical rule,
FHWA does not find it appropriate to place the onus on manufacturers
and recipients to sift through components one by one to determine which
are predominantly iron or steel. By specifying which predominantly
steel and iron components of an EV charger are expected to comply with
current FHWA Buy America requirements, manufacturers and recipients
will have certainty over which components are covered, which will allow
for projects involving those chargers to be completed more
expeditiously.
The FHWA believes, however, that it is practical to apply FHWA's
existing Buy America requirements for predominantly iron or steel
components to specifically identified components of an EV charger that
are predominantly iron or steel. Based on comments received, the only
component identified as potentially being predominantly iron or steel
is an EV charger's housing. As indicated in the responses to the 2021
RFI, the housing may comprise over 50 percent of the costs of the
charger. While other components may contain some amounts of iron and
steel, the housing was the only component mentioned by commenters to
the 2021
[[Page 10633]]
RFI as being predominantly iron and steel. In addition, ABB E-Mobility
commented on the proposed waiver of the significant amounts of steel
included in the housing.
After reviewing the comments received, FHWA believes that housing
predominantly made of iron or steel should not be covered by this
waiver and therefore must comply with existing FHWA Buy America
requirements. The purpose of FHWA's Buy America requirements is to
ensure that, where possible, iron and steel products are produced in
the United States. The FHWA believes that waivers should be used
sparingly; if a product would otherwise be covered by FHWA's iron and
steel Buy America requirements, FHWA believes those requirements should
apply to that product absent sufficient justification to the contrary.
An EV charger's housing has been repeatedly described to FHWA as being
the single component with a significant percentage of its costs being
comprised of the cost of its steel and iron. This also aligns with
FHWA's existing treatment of predominantly iron and steel components of
manufactured products. Current FHWA policy does not distinguish between
predominantly iron and steel components of any manufactured product and
predominantly iron and steel components of predominantly iron and steel
manufactured products, and FHWA does not find it necessary to create
such a distinction here. The FHWA agrees with Tritium, however, that if
an EV charger does feature a housing that is predominantly iron or
steel, FHWA will consider the cost of that cabinet when calculating the
cost of components to determine whether the EV charger falls under this
waiver during the 55 percent phase.
The FHWA does not believe that removing housings that are
predominantly iron or steel from this waiver's coverage will cause an
undue burden on EV charger manufacturers, contrary to what was argued
by some commenters. Based on comments from the steel industry, there is
an adequate amount of domestic steel available, and commenters did not
present arguments that there was anything unique about an EV charger's
housing that would prevent it from being sourced and assembled
domestically, consistent with how other predominantly steel and iron
components of manufactured products are treated regularly in Federal-
aid highway projects.
H. Coverage of Subcomponents
Application of Waiver to Subcomponents: Commenters suggested that
the domestic content provisions of this waiver should only apply at the
component level, not at the subcomponent level. In essence, these
commenters requested that when determining if EV chargers were covered
by the 55 percent phase, FHWA should determine the cost of components
manufactured in the United States without including the cost of
subcomponents. According to these commenters, FHWA should allow for the
sourcing of subcomponents from international sources throughout the
lifetime of this waiver due to the delay it would take manufacturers to
either locate and substitute domestically sourced subcomponents or
alter the designs of their chargers, the costs of doing so, the
challenge to track and certify subcomponents, and their opinion that
applying this waiver at the subcomponent level would not meaningfully
further FHWA's domestic manufacturing goals. The ZETA added that they
believe the standard of the 55 percent phase, where the waiver would
cover EV chargers only if the cost of components manufactured in the
United States exceeds 55 percent of the cost of all components, could
only be achievable if subcomponents could be sourced internationally.
ABB E-Mobility urged FHWA to state that subcomponents could be used
without regard to their country of origin, arguing that there is a need
to be able to source subcomponents internationally and that EV charging
demand is unlikely to shift production of these subcomponents to the
United States, considering the size of the EV charger industry. BTC
Power recommended that FHWA should copy the regulatory definition the
Federal Transit Administration uses for determining whether a
manufactured product is considered produced in the United States, with
49 CFR 661.5(d)(2) stating that ``[a] component is considered of U.S.
origin if it is manufactured in the United States, regardless of the
origin of its subcomponents.''
The FHWA Response: To be covered by the initial phase of this
waiver, the final assembly process of EV chargers must occur in the
United States; this includes the incorporation of subcomponents into
the final EV charger. It does not include the assembly of the
subcomponent itself or the assembly of subcomponents into components.
To be covered by the 55 percent phase, the cost of components
manufactured in the United States must exceed 55 percent of the cost of
all components. In alignment with the definition of ``cost of
components'' in FAR 25.003, FHWA did not and does not intend for
subcomponents to be considered when calculating the cost of components
to determine coverage under the 55 percent phase. While the cost of
subcomponents may factor into the cost of components, the cost of
subcomponents should not be separately calculated and used to determine
whether a charger is covered by this waiver.
Exclusion of ``Non-Substantial'' Components: PowerCharge requested
that non-substantial components of EV chargers, such as screws and
clips, be exempt from the calculation of an EV charger's steel and iron
content.
The FHWA Response: FHWA does not believe this change is necessary.
At all times that this waiver is active, it will cover EV chargers
where final assembly occurs in the U.S. and, after the first phase-out
period, where the cost of components manufactured in the U.S. exceeds
55 percent of the cost of all components. Screws and clips, which
PowerCharge mentioned as ``non-substantial components,'' will many
times be considered subcomponents, which, as mentioned above, are not
included in calculations for the purpose of determining coverage under
the 55 percent phase. Further, to the extent that a non-substantial
component exists, is not manufactured domestically, and is included in
an EV charger, that charger may still be covered under this waiver.
Such components are likely to cost a de minimis amount, and, even at
the 55 percent phase, this waiver still covers EV chargers for which
the cost of components exceeds 55 percent of the cost of all
components. The FHWA does not believe that including the costs of such
components in calculating the costs of all components for the purpose
of the 55 percent phase presents a significant burden to manufacturers
and does not find it necessary to explicitly exclude minor components.
I. Buy America Processes
Standardized Certification Process: Commenters routinely requested
that there be a standardized process to demonstrate compliance with Buy
America requirements, with most of them suggesting that FHWA develop
such a process. The AASHTO recommended developing a process for vendors
to provide information about the percentage of materials that are
sourced domestically, as well as a consistent method for State DOTs to
confirm the accuracy of such information. Blink Charging suggested FHWA
establish a compliance and certification process specifically focused
on EV chargers. The EVCA expressed
[[Page 10634]]
concern about the potential lack of consistency if certification is not
standardized at the Federal level. Wallbox suggested that a public or
third-party entity be responsible for Buy America certification.
The FHWA Response: To the extent that many commenters suggested a
Buy America certification process that extended beyond EV chargers,
that falls outside the scope of this waiver. In terms of designing a
certification process for EV chargers covered by this waiver, FHWA does
not believe it necessary to alter its existing certification processes
specifically for EV chargers. Doing so would create a separate
certification process for EV chargers, which would cause unnecessary
confusion and delay as recipients who are accustomed to FHWA's current
certification process learn how this new process would work.
List of Buy America-Certified Products: Other commenters suggested
that FHWA should maintain a list of Buy America compliant products,
including Buy America compliant EV chargers.
The FHWA Response: Similarly, to the extent that these commenters
suggested that FHWA maintain a list of Buy America-compliant products
outside of EV chargers, that falls outside the scope of this waiver. In
terms of compiling a list of which EV chargers are covered by this
waiver, this waiver is not the appropriate place to require that EV
charger manufactures provide information to the Agency, nor, as
mentioned above, does FHWA believe it should undertake its own
certification process for EV chargers.
IV. Final Public Interest Waiver
Based on all the information available to FHWA, FHWA concludes that
applying the Buy America requirements of 23 U.S.C. 313 for steel, iron,
and manufactured products and section 70914 of BABA for construction
materials to EV chargers on FHWA-assisted infrastructure projects would
be inconsistent with the public interest. A waiver of these
requirements under 23 U.S.C. 313(b)(1), 23 CFR 635.410(c), and section
70914(b) of BABA, structured to phase out over time, is thus
appropriate. In addition, FHWA is removing EV chargers from being
covered by the existing Manufactured Products General Waiver, starting
on the date of this notice. In consideration of the foregoing, FHWA is
issuing this waiver as stated below:
The FHWA will apply a waiver of Buy America requirements under 23
U.S.C. 313 and section 70914 of BABA to EV chargers and all components
of EV chargers if final assembly occurs in the United States for all
chargers that are manufactured from the effective date of this waiver
until June 30, 2024. This phase applies only to EV chargers that are
manufactured during this period and for which recipients begin
installation by October 1, 2024. In addition, all predominantly steel
and iron housing components are excluded from the waiver and must meet
FHWA's Buy America requirements for steel and iron.
Starting on July 1, 2024, this waiver will not apply to EV chargers
for which the cost of components manufactured in the United States does
not exceed 55 percent of the cost of all components. This means that
any EV chargers which are manufactured on and after July 1, 2024, would
be covered by this waiver only if: (i) final assembly occurs in the
United States; and (ii) the cost of components manufactured in the
United States exceeds 55 percent of the cost of all components. All
predominantly steel and iron housing components continue to be excluded
from the waiver and must meet FHWA's Buy America requirements for steel
and iron. The cost of any such housing shall be included as a cost of
an EV charger's components when calculating whether the cost of
components manufactured in the United States exceed 55 percent of the
cost of all components. The FHWA considers the ``date of manufacture''
to be the date on which the EV charger, as defined further below, has
its final assembly occur and is in an operational state.
This waiver will remain in place until terminated by FHWA. In
accordance with section 70914(d)(1) of BABA, FHWA will commence a
review of this waiver no later than 5 years from the effective date of
this waiver, at which time FHWA may discontinue this waiver if it is
found to no longer be in the public interest. The FHWA, however,
reserves the right to modify or shorten the duration of this waiver or
any of its phases if it obtains information indicating that this waiver
or any or its phases are no longer in the public interest. The FHWA
will conduct RFIs every 6 months from this waiver's effective date to
July 1, 2024, to receive information on the state of the EV charger
industry. This information may lead FHWA to amend this waiver to, for
example, state that EV chargers are covered by this waiver only if
final assembly occurs in the United States and the cost of components
manufactured in the United States exceeds 55 percent of the cost of all
components for waivers that are manufactured before July 1, 2024, with
the results of the RFIs determining what this new date will be.
For the purpose of this waiver, FHWA considers the cost of a
component to be based on whether it is purchased or manufactured when
it is incorporated into the EV charger. The FHWA will use the standards
in FAR 25.003 to determine the allowable costs included in purchased or
manufactured components and will use the standards in FAR 31.201-4 to
determine overhead costs that are generally allocable. In other words,
FHWA will include acquisition costs (including transportation costs to
the place of incorporation into the end product) and any applicable
duty (regardless of whether a duty-free certificate of entry is issued)
for purchased components. For manufactured components, FHWA will
include all costs associated with the manufacture of the component
(including transportation costs and quality testing) and allocable
overhead costs; FHWA will not include profits and any labor costs
associated with the manufacture of the end product. The FHWA will
consider allocable overhead costs to be (a) costs incurred specifically
for the contract; (b) benefit both the contract and other work and can
be distributed to each in reasonable proportion to the benefits
received; or (c) are necessary to the overall operation of the
business, even if a direct relationship to any particular cost
objective cannot be shown.
For purpose of this waiver, FHWA defines ``EV charger'' to mean the
EV charger unit itself and the equipment contained inside it. This
definition does not include associated equipment external to the EV
charger, parking areas adjacent to the EV charger, and lanes for
vehicle ingress and egress. In addition, this waiver does not cover an
EV charger's housing (also known as its cabinet or enclosure) if it is
comprised predominantly of steel or iron; however, the cost of housing
comprised predominantly of steel and iron must be used in the cost of
components calculation. For the purposes of this waiver, an EV
charger's housing is defined as the component of the EV charger that
contains the electronics that convert electricity to direct current.
For any areas, products, or materials excluded from this waiver,
FHWA's existing Buy America requirements and policies will continue to
apply, including the new requirement applicable to construction
materials established under BABA. This means, for example, that the
requirements of 23 U.S.C. 313 and section 70914 of BABA will apply to
the housing of an EV charger if it is predominantly steel or iron. The
FHWA will consider the cost of an EV charger's housing when
[[Page 10635]]
considering whether the cost of components manufactured in the United
States exceeds 55 percent of the cost of all components in the EV
charger, even if that housing is predominantly steel or iron and is not
covered by this waiver. In other words, starting on July 1, 2024, the
waiver will apply only to EV chargers for which the cost of all
components, including the cost of the housing if it is predominantly
steel or iron, manufactured in the United States exceeds 55 percent of
the cost of all components, including a housing that is predominantly
steel or iron.
For purpose of this waiver, FHWA considers an EV charger to fall
under the phase of the waiver that exists on the date when that EV
charger was manufactured.
The OMB Implementation Guidance provides that, before granting a
waiver in the public interest, to the extent permitted by law, Agencies
shall assess whether a significant portion of any cost advantage of a
foreign-sourced product is ``the result of the use of dumped steel,
iron, or manufactured products or the use of injuriously subsidized
steel, iron, or manufactured products.'' OMB Implementation Guidance at
p. 12. E.O. 14005 at Section 5 includes a similar requirement for
``steel, iron, or manufactured goods.'' However, because the public
interest waiver that FHWA is finalizing in this notice is not based on
consideration of the cost advantage of any foreign-sourced steel, iron,
or manufactured product content in EV chargers, there is not a specific
cost advantage for FHWA to now consider.
In accordance with the provisions of Section 117 of the SAFETEA-LU
Technical Corrections Act of 2008 (Pub. L. 110-244), FHWA is providing
this notice as its finding that a waiver of Buy America requirements is
appropriate. FHWA invites public comment on this finding for an
additional 5 days following the date of publication of this notice.
Comments may be submitted to FHWA's website via the link provided to
the waiver page noted above by February 27, 2023. Comments received
during that period will be reviewed, but the finding will continue to
remain valid. Those comments may influence FHWA's decision to terminate
or modify a finding.
Issued in Washington, DC, under authority delegated in 49 CFR
1.85.
Shailen P. Bhatt,
Administrator, Federal Highway Administration.
[FR Doc. 2023-03498 Filed 2-17-23; 8:45 am]
BILLING CODE 4910-22-P