- Expanded Department of Transportation Buy America Requirements Will Apply to Utility Providers
- October 24, 2013
- Law Firm: Dentons Canada LLP - Toronto Office
Effective January 1, 2014, changes in the US Federal Highway Administration (FHWA) Buy America rules implemented by 'The Moving Ahead for Progress in the 21st Century Act' (MAP-21) will require utility providers to certify that the materials used in utility relocations comply with Buy America, even if the project is not federally funded.1 As a result of the new rules:
- Utility relocation projects that are not federally funded will be required to comply with the FHWA Buy America requirements if even one contract related to the project is eligible for federal-aid highway program funding.2
- Utility providers may be required to modify their supply chains in order to comply with Buy America requirements that require construction materials to be produced or manufactured in the United States.
Additionally, the Federal Transit Administration (FTA) has indicated that it will enforce its own Buy America requirements as applied to utilities, which it has not historically enforced.3
The Buy America rules generally require (1) the Department of Transportation (DOT) to use U.S.-made iron, steel, and manufactured goods in construction activities, and (2) contractors to certify that the materials used comply with these requirements.4
The FHWA and FTA Buy America requirements are distinct from each other in the following ways: The FHWA Buy America rules require that all iron and steel products used in 'Federal-aid highway construction projects' be U.S.-made.5 The FHWA Buy America coverage extends to goods made from ninety percent or more of iron or steel, such as guardrails, fencing, and manhole covers.6 Coverage excludes some component products like screws, bolts, and door hinges.7
The FTA Buy America rules are more stringent: they require that projects funded through FTA grants use U.S.-made manufactured goods, in addition to iron and steel goods.8 The FTA Buy America requirements cover manufactured 'end products' such as garages, information systems, and elevators.9
In late September 2013, a number of utility providers expressed concern over the expanded Buy America rules and asked the DOT to clarify how the FHWA and FTA Buy America provisions will apply to utility companies, and to utility relocations specifically.10 While the DOT has not yet replied to that request, the FHWA -- and the FTA, to a lesser degree -- have provided some information regarding the application of Buy America to utility providers, as summarized below.
Changes to the FHWA Buy America Rules
- All contracts (including contracts with utilities) stemming from highway construction projects approved after October 1, 2012 that are eligible for any federal-aid highway program funding must comply with the FHWA Buy America requirements.11 As a result:
- If a highway project eligible for Federal-aid highway program funding is divided into a number of contracts, the fact that only one of those contracts is eligible for the funds will trigger the applicability of the FHWA Buy America rules to all of the contracts12 and
- When the Buy America rules apply, contractors will need to certify that all of their materials conform to Buy America.13
- To permit covered entities time to come into compliance, the FHWA has clarified that it will only enforce its rules on contracts executed on or after January 1, 2014.14
The FHWA has already received at least one waiver request for utility relocation, though it was withdrawn after the FHWA announced the January 1, 2014 implementation date.15
Changes to the FTA Buy America Rules
- In September 2012 the FTA announced that its Buy America provisions "have always applied" to utility projects,16 and that "enforcement of these longstanding requirements ... is simply the fulfillment of the intent of the law[.]"17
Although it is uncertain when the FTA will begin to enforce its Buy America rules as applied to utilities, the FTA appears to be moving forward with its enforcement plans. On September 24, 2013, the FTA announced an Interagency Agreement with the Department of Commerce, National Institute of Standards and Technology to foster a "domestic supply base" for U.S. transit needs through "maximiz[ing] nationwide compliance with Buy America[.]"18
Projects with Joint FHWA/FTA Funding
- When a project is funded by both the FHWA and the FTA, the Buy America rules of the lead agency for the project apply.
- It is not clear whose rules apply when the endeavor is not headed by a single agency: the FHWA says its Buy America rules would apply to its funds, and that "other agencies' requirements apply as well."19
Other Changes to the FTA Buy America Rules
- The legislation that changed the FHWA Buy America rules also makes it more difficult for the FTA to grant waivers to its Buy America requirements by requiring the Secretary of Transportation to both provide a notice-and-comment period prior to granting waivers, and to prepare an annual report on the waivers granted during the previous year.20
1 U.S. Department of Transportation, Federal Highway Administration, Memorandum, "Application of Buy America to non FHWA-funded utility locations," Jul. 1, 2013 (FHWA July 1 Memo); U.S. Department of Transportation, Federal Highway Administration, "FHWA's Buy America Q and A for Federal-aid Program," Updated Jul. 1, 2013 (FHWA Buy America FAQ).
3 U.S. Department of Transportation, Federal Transit Administration, "Letter to New Starts Working Group," Sept. 7, 2012; Presentation by Cecelia Comito, Regional Counsel, "FTA: Current Legal Issues," E-9, Apr. 3-4, 2013.
4 FHWA Buy America FAQ; 49 C.F.R. § 661.6.
5 23 C.F.R. § 635.410.
6 U.S. Department of Transportation, Federal Highway Administration, Memorandum, "Clarification of Manufactured Products under Buy America," Dec. 21, 2012.
7 U.S. Department of Transportation, Federal Highway Administration, Memorandum, "Clarification of Manufactured Products under Buy America," Dec. 21, 2012.
8 49 C.F.R. § 661.
9 49 C.F.R. § 661.3.
10 The letter to DOT Secretary Anthony Foxx, dated Sept. 17, 2013, is publicly available on the American Public Transportation Association (APTA) website.
11 U.S. Department of Transportation, Federal Highway Administration, "Buy America Issues to Consider for Utility Work on Projects," updated Aug. 15, 2013.
14 FHWA July 1 Memo.
15 Request and Related Comments; waiver request dated Jun. 27, 2013; withdrawal notice dated Jul. 23, 2013.
16 U.S. Department of Transportation, Federal Transit Administration, "Letter to New Starts Working Group," Sept. 7, 2012; see also Presentation by Cecelia Comito, Regional Counsel, "FTA: Current Legal Issues," E-9, Apr. 3-4, 2013.
17 U.S. Department of Transportation, Federal Transit Administration, "Letter to New Starts Working Group," Sept. 7, 2012.
18 Interagency Agreement Between U.S. Department of Transportation, Federal Transit Administration, and U.S. Department of Commerce, National Institute of Standards and Technology, Jul. 16, 2013; Press Release: Federal Transit Administration Announces Interagency Agreement to Strengthen the "Buy America" Program and Domestic Manufacturing, Sept. 24, 2013.
19 U.S. Department of Transportation, Federal Highway Administration, "FHWA's Buy America Q and A for Federal-aid Program," Updated Jul. 1, 2013.
20 77 Fed. Reg. 63670, 63676, 6367878, Oct. 16, 2012, Notice of FTA Transit Program Changes, Authorized Funding Levels and Implementation of the Moving Ahead for Progress in the 21st Century Act (MAP-21) and FTA Fiscal Year 2013 Apportionments, Allocations, Program Information and Interim Guidance.