The Office of Management and Budget (OMB) may ease the impact of the "Buy American" iron and steel provisions in the $787-billion economic stimulus package by crafting regulations that would soften some aspects of the measure and possibly grant some outright exemptions as well.

One proposal under study would exempt so-called "green" projects from the "Buy American" rules, sources said, while another proposal, aimed at treating U.S. cities as if they were signatories to international trade agreements, is less likely to be adopted.

OMB has received comments from a wide variety of groups affected by the measure and is now in the process of writing new regulations, which will be issued later this summer.

It is working closely with the 15 federal agencies that have been designated to administer the process of disbursing the stimulus money. Some of the agencies, especially the Environmental Protection Agency, have already indicated...