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Buy America Requirements for Federal Highway Projects (2020)

Chapter: VI. RELATIONSHIP TO OTHER LAWS

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Suggested Citation:"VI. RELATIONSHIP TO OTHER LAWS." National Academies of Sciences, Engineering, and Medicine. 2020. Buy America Requirements for Federal Highway Projects. Washington, DC: The National Academies Press. doi: 10.17226/25799.
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Suggested Citation:"VI. RELATIONSHIP TO OTHER LAWS." National Academies of Sciences, Engineering, and Medicine. 2020. Buy America Requirements for Federal Highway Projects. Washington, DC: The National Academies Press. doi: 10.17226/25799.
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Suggested Citation:"VI. RELATIONSHIP TO OTHER LAWS." National Academies of Sciences, Engineering, and Medicine. 2020. Buy America Requirements for Federal Highway Projects. Washington, DC: The National Academies Press. doi: 10.17226/25799.
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Suggested Citation:"VI. RELATIONSHIP TO OTHER LAWS." National Academies of Sciences, Engineering, and Medicine. 2020. Buy America Requirements for Federal Highway Projects. Washington, DC: The National Academies Press. doi: 10.17226/25799.
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Suggested Citation:"VI. RELATIONSHIP TO OTHER LAWS." National Academies of Sciences, Engineering, and Medicine. 2020. Buy America Requirements for Federal Highway Projects. Washington, DC: The National Academies Press. doi: 10.17226/25799.
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Suggested Citation:"VI. RELATIONSHIP TO OTHER LAWS." National Academies of Sciences, Engineering, and Medicine. 2020. Buy America Requirements for Federal Highway Projects. Washington, DC: The National Academies Press. doi: 10.17226/25799.
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NCHRP LRD 80 39 all apply [Buy America] provisions differently on those projects where they are the federal lead agency. Caltrans recognizes that util- ity companies are struggling to develop internal processes to identify mate rials that are subject to [Buy America] when the rules are applied differently from one project to another.”478 The American Road and Transportation Builders Association has expressed concern that, as a result of MAP-21, FHWA will now have to “determine Buy America compliance on many utility and railroad contracts it would not [or- dinarily] review through its customary oversight responsibilities.”479 As a result, “owners may delay construction of a project if there is un- certainty about the Buy America compliance of the utility or railroad contract.”480 However, FHWA has not implemented any formal rules or regulations addressing the application of the FHWA Buy America provision to utility contracts funded by non-FHWA sources. VI. RELATIONSHIP TO OTHER LAWS A. State Buy America Statutes There are often domestic preferences or Buy America provi- sions in state and local law that apply to highway projects. These state and local Buy America laws often predate the FHWA Buy America provision, and are often modeled after the 1933 Buy American Act, so that they may impose restrictions against a much wider range of foreign materials than just steel and iron.481 State transportation agencies should presume that they are re- quired to comply with both the FHWA Buy America provision and any state Buy America provision on a state transportation agency project funded in part by FHWA.482 In the 1960s, prior to enactment of the FHWA Buy America provision, courts frequently determined that state and local Buy America provisions in public works projects were invalid. Local ordinances and Buy America policies of highway departments were often deemed to violate state public procurement law favor ing contract award to the lowest responsible bidder.483 State Buy America laws were occasionally deemed to be an uncon- 478 Caltrans, Comments, Docket No. FHWA-2013-0041 (Sept. 9, 2013), available at http://www.regulations.gov/document?D=FHWA- 2013-0041-0062. 479 American Road & Transportation Builders Association, Com- ments, Docket No. FHWA-2013-0041 (Sept.  6, 2013), available at http://www.regulations.gov/document?D=FHWA-2013-0041-0048. 480 Id. at 3. 481 See, e.g., N. Am. Salt Co. v. Ohio Dep’t of Transp., 701 N.E.2d 454, 457, 122 Ohio App. 3d 213, 218 (1997) (concluding that Ohio stat- ute prevents ODOT from contracting with bidders proposing to supply Canadian road salt). 482 James Lockhart, Validity, Construction, and Application of State “Buy American” Acts, 107 A.L.R. 5th 673 (2003) (“Where federal funds are involved in a project, it may be necessary to determine not only that a bid meets state requirements, but also that it meets federal Buy Ameri- can requirements.”). 483 See, e.g., Am. Inst. for Imported Steel, Inc. v. Erie Cty., 58 Misc. 2d 1059, 1063, 297 N.Y.S.2d 602, 607 (N.Y. 1968), rev’d, 32 A.D.2d 231, 302 N.Y.S.2d 61 (N.Y. 1969); Texas Highway Comm’n v. Texas Ass’n of Steel Importers, Inc., 372 S.W.2d 525 (Tex. 1963). project.472 With MAP-21, by applying the FHWA Buy America provi- sion cumulatively to all contracts on a single NEPA “project,” Con- gress similarly attempted to prevent the “segmenting” of highway projects to circumvent the FHWA Buy America provision. Despite Congress adopting the NEPA definition of “project” for pur- poses of evaluating the FHWA Buy America provision, in a notice of proposed rulemaking issued thereafter jointly by FHWA, FTA, and FRA, the agencies stated that “in the highway context, .  .  . issuance of Buy America waivers . . . are not considered to be environmental review responsibilities that can be assigned.”473 Thus, in a highway project with multiple USDOT funding sources (e.g., with portions funded by FHWA and other agencies such as FTA), each agency re- tains authority over requests for waivers from its own Buy America provision. Even though the FHWA Buy America provision applies to the entire project (including segments or contracts funded by other agencies), the other agencies do not assign to FHWA the authority to issue waivers from Buy America provisions administered by those agencies. Project segments or contracts funded by agencies other than FHWA conceivably have to either conform to multiple Buy America provisions or receive Buy America waivers from multiple agencies including both the funding agency and also FHWA. Perhaps more significantly, as a result of MAP-21, the FHWA Buy America provision can extend to contracts that would otherwise not be subject to any Buy America provision. In December 2012, for example, FHWA determined that “utility work” on FHWA-funded projects (such as state transportation agency funded relocation of utilities out of the path of new highway development) is subject to the FHWA Buy America provision, even if the utility work is not re- imbursed with FHWA funds.474 This prompted concern from state transportation agencies and transportation industry associations that highway projects would be delayed while utility companies, who had not historically been subject to Buy America requirements, became compliant.475 Therefore, on July 11, 2013, FHWA granted a temporary reprieve to utility companies, delaying application of the FHWA Buy America provision to state transportation agency funded utility relo- cations only through December 31, 2013.476 State transportation agencies, transportation industry associations, and utilities continue to express concern about the application of the FHWA Buy America provision to utility relocation work.477 De- spite the anti-segmentation language of MAP-21, which applies the FHWA Buy America provision to all contracts on a project, Caltrans has recommended that Buy America provisions should apply “on[l]y to those contracts that utilize federal funding. FHWA, FTA and FRA 472 See, e.g., Western N.C. Alliance v. N.C. Dep’t of Transp., 312 F. Supp. 2d 765, 772–73 (E.D.N.C. 2003). 473 Surface Transportation Project Delivery Program Application Requirements, 78 Fed. Reg. 53,712, 53,715 (Aug. 30, 2013). 474 Letter from Victor M. Mendez, FHWA Administrator, to John Horsley, AASHTO Executive Director (Dec. 20, 2012), available at https://www.fhwa.dot.gov/construction/contracts/121220.cfm. 475 Letter from AASHTO et al. to Ray Lahood, USDOT Secretary, et al., Re: Application of Buy America Requirements to Utility Relocations (June 28, 2013), available at http://web.archive.org/web/ 20160805174734/http://www.apta .com/gap/letters/2013/ Pages/130628_LaHood_Foxx.aspx. 476 Memo from Gloria M. Shepherd, FHWA Associate Administra- tor for Infrastructure, to FHWA Division Administrators et al., Re: Application of Buy America to non FHWA-funded Utility Relocations (July 11, 2013), available at https://www.fhwa.dot.gov/construction/ contracts/130711.cfm. 477 See, e.g., Steven J. Troch, Baltimore Gas & Electric Co., Buy America—Utility Perspective, Presentation at the 94th Annual Meeting of the Transportation Research Board (Jan. 13, 2015).

40 NCHRP LRD 80 state transportation agencies to use domestic cement, or do- mestic manufactured products, even though the FHWA Buy America provision does not presently apply to either cement or manufactured products that are not predominantly steel or iron. In Mabey Bridge & Shore, Inc. v. Shoch,492 the U.S. Court of Appeals for the Third Circuit held that the FHWA Buy America provision did not preempt a Pennsylvania statute that imposed more stringent domestic content restrictions on tem- porary steel used in Pennsylvania Department of Transporta- tion (PennDOT) projects. The FHWA Buy America provision applies to “permanently incorporated steel or iron materials,” but does not prohibit the use of temporary steel bridges.493 However, the Pennsylvania Steel Products Procurement Act, enacted in 1978,494 requires the use of only domestic steel in public works including bridges, “whether of a permanent or temporary nature.”495 In 2010, PennDOT notified a supplier of temporary bridges that the Pennsylvania statute prohibited the use of foreign steel in temporary bridges, despite the fact that the supplier had apparently been furnishing temporary bridges made with steel from the United Kingdom on PennDOT proj- ects for more than twenty years.496 The supplier filed suit, seek- ing an injunction against PennDOT’s ban on temporary bridges incorporating foreign steel as to ongoing projects, contending that the Pennsylvania statute was preempted by the FHWA Buy America provision.497 The court acknowledged some ambiguity in the FHWA Buy America regulations, which do not allow state transportation agencies to “prohibit, restrict, or otherwise discriminate against the use of articles or materials of foreign origin to any greater extent than”498 permitted by FHWA. However, the court also observed that the FHWA Buy America regulations expressly allow state transportation agencies to “require the use of domes- tic materials and products, including steel and iron materials, to the same or greater extent as the” FHWA Buy America provi- sion, thus contemplating “that states may have more stringent requirements regarding the use of domestic steel materials than the federal law.”499 Further, in enacting the FHWA Buy America provision, Congress expressly constrained FHWA from restrict- ing state transportation agencies “from imposing more strin- gent requirements than [the FHWA Buy America provision] on the use of articles, materials, and supplies mined, produced, or can goods in public works projects that receive federal funding, it also expresses support for state ‘Buy American’ statutes. .  .  . In its imple- menting regulation, the Department of Transportation conditions its participation in state projects on the requirement that state ‘Buy Ameri- can’ requirements be at least as stringent as federal requirements.”). 492 666 F.3d 862 (3d Cir. 2012). 493 Id. at 869 (citing 23 C.F.R. § 635.410(b)(1)). 494 73 Pa. Stat. Ann. §§ 1881-87 (2018). 495 Mabey, 666 F.3d at 875 (citing 73 Penn. Stat. § 1886). 496 Id. at 867. 497 Id. 498 Id. at 870 (citing 23 C.F.R. § 635.409(b)). 499 Id. (citing 23 C.F.R. § 635.410(b)(2)) (emphasis omitted). stitutional encroachment on the federal government’s exclusive power over foreign affairs.484 In 1978, the original FHWA Buy America provision was en- acted by Congress, raising further questions as to whether state Buy America provisions were federally preempted, at least as to highway contracting. In the Wampler v. Goldschmidt case,485 supra, there was an applicable Minnesota Buy America stat- ute in addition to the FHWA Buy America provision. The U.S. District Court for the District of Minnesota approved the ap- plication of the Price Differential exception for the FHWA Buy America provision in that case, allowing the use of foreign steel due to a cost savings greater than 10 percent. The Minnesota Buy America statute had a similar exception, allowing the use of foreign steel where the cost of domestic steel “unreasonably exceeds” the cost of foreign steel, but there was no quantitative formula.486 The highway commissioner concluded that the cost of domestic steel was unreasonably excessive, invoking the ex- ception to the Minnesota Buy America statute, which the court deemed was within the commissioner’s discretion.487 Because the application of both statutes resulted in allowing the procure- ment of foreign steel, the court declined to consider whether the Minnesota Buy America statute was preempted by the FHWA Buy America provision, but suggested that it would have had to make that determination if the commissioner had concluded that the cost of domestic steel was not unreasonable, as that “would conflict with the federal requirement.”488 The court also declined to consider whether the Minnesota Buy America stat- ute was an unconstitutional encroachment on the federal gov- ernment’s exclusive power over foreign affairs, because that is- sue had not been raised by the parties.489 In its 1983 revision of the FHWA Buy America provision, Congress effectively endorsed the application of state Buy America statutes to highway contracting, by expressly direct- ing FHWA not to apply the FHWA Buy America provision in a way that “restricts any State from imposing more stringent requirements than [the FHWA Buy America provision] on the use of articles, materials, and supplies mined, produced, or manufactured in foreign countries in projects carried out with such assistance or restricts any recipient of such assistance from complying with such State imposed requirements.”490 This al- lows states to impose their own Buy America statutes, that may be stricter than the FHWA Buy America provision, to FHWA- funded projects.491 State legislatures could conceivably require 484 Bethlehem Steel Corp. v. Bd. of Comm’rs of Dep’t of Water & Power of City of Los Angeles, 276 Cal. App. 2d 221, 229, 80 Cal. Rptr. 800, 806 (1969). 485 486 F. Supp. 1130 (D. Minn. 1980). 486 Id. at 1139 (citing Minn. Stat. § 16.073, Subd.3). 487 Id. 488 Id. at 1139 n.13. 489 Id. at 1139 n.12. 490 23 U.S.C. § 313(d) (2018). 491 Jean Galbraith, Book Review: Cooperative and Uncooperative Foreign Affairs Federalism: The Myth of National Exclusivity, 130 Harv. L. Rev. 2131, 2144 (2017) (“In addition to requiring the use of Ameri-

NCHRP LRD 80 41 Puerto Rico statute was an unconstitutional restriction on for- eign commerce in violation of the commerce clause. Apparently unaware that the FHWA Buy America provision enacted by Congress expressly endorsed state Buy America provisions with “more restrictive requirements,” the District Court stated that Congress has not granted “approval for laws prohibiting the use of foreign materials in state-funded construction projects.”513 However, in 2005, the First Circuit vacated the decision, con- cluding that the District Court “insufficiently considered”514 the issue, as “the record is devoid of any factual evidence of custom, usage, or administrative practice.”515 On remand, the District Court ruled again in 2009 that the Puerto Rico statute was invalid,516 based in part on the testimo- ny of the Assistant Executive Director for Infrastructure for the Puerto Rico Highway and Transportation Authority (PRHTA). This witness testified that, although he was unfamiliar with the BAA, the FHWA Buy America provision prohibited foreign steel in federally funded PRHTA projects.517 The witness testi- fied that PRHTA did not apply the Puerto Rico statute to feder- ally funded projects, thereby allowing the use of “ cement manu- factured anywhere,”518 because FHWA had notified PRHTA that the Puerto Rico statute was inapplicable to federally funded projects.519 The witness testified that PRHTA applied the Puerto Rico statute only to projects funded by the commonwealth with- out FHWA funds, prohibiting the use of foreign cement in those projects.520 In most states, projects without federal funds would not be subject to either the BAA or the FHWA Buy America provision; however, the BAA expressly applies to direct pro- curements by the commonwealth of Puerto Rico,521 so the Dis- trict Court held that the Puerto Rico statute was preempted by the BAA,522 and enjoined its continued enforcement on public works projects funded by the commonwealth. Once again, the First Circuit reversed, ruling in 2012 that there is not a conflict between the Puerto Rico Statute and the BAA:523 “There is noth- ing unusual about a state supplementing a federal statute with stronger regulations.”524 The First Circuit also held that the Puer- to Rico statute does not violate the commerce clause, because the Puerto Rico statute only applies to government projects, 513 Id. 514 Antilles Cement Corp., 408 F.3d at 51. 515 Id. at 50 (1st Cir. 2005). 516 Antilles Cement Corp. v. Calderon, No. 02-CV-01643, 2009 U.S. Dist. LEXIS 132125 (D.P.R. Jan. 9, 2009), aff’d in part, rev’d in part sub nom. Antilles Cement Corp. v. Fortuno, 670 F.3d 310 (1st Cir. 2012). 517 Id. at *32–33. 518 Id. at *33. 519 Id. 520 Id. at *34-35. 521 Antilles Cement Corp. v. Fortuno, 670 F.3d 310, 320 (1st Cir. 2012) (citing 41 U.S.C. § 8301). 522 Antilles Cement Corp., No. 02-CV-01643, 2009 U.S. Dist. LEXIS 132125 at *74. 523 Antilles Cement Corp., 670 F.3d at 326. 524 Id. at 325. manufactured in foreign countries in projects carried out with [FHWA] assistance.”500 The court thus concluded, considering the entire “federal legislative and regulatory scheme,” that the FHWA Buy America provision “authorizes the states to impose more stringent re- quirements on the domestic manufacture of steel products.”501 Not only was the Pennsylvania ban on foreign steel in tempo- rary bridges not preempted, but instead Congress “plainly au- thorized restrictions of the kind contained in the” Pennsylvania statute.502 Furthermore, because the Pennsylvania statute was in effect at the time the supplier “entered into its contracts to pro- vide temporary bridges for PennDOT projects,”503 PennDOT’s ban on foreign steel in temporary bridges did not impermissi- bly impair the supplier’s contract rights, despite the fact that the supplier (based on its long course of dealing with PennDOT) “could justifiably believe that its bridges made with foreign steel were acceptable.”504 The court thus affirmed summary judgment in favor of PennDOT.505 Likewise, in Antilles Cement Corporation v. Fortuño,506 the U.S. Court of Appeals for the First Circuit held that states and territories may impose stronger Buy America requirements than federal law, such as requiring the use of domestic cement in highway projects. In 1985, the Puerto Rico legislature enact- ed a statute that prohibited the use of foreign cement in public construction projects.507 The plaintiff, an importer of foreign cement, filed suit in 2002 against the commonwealth (includ- ing its Secretary of Transportation and Public Works) seeking a declaration that the Puerto Rico statute violated the commerce clause of the U.S. Constitution, and that it was preempted by both the FHWA Buy America provision and the BAA.508 The defendants argued that the Puerto Rico statute had “been sanc- tioned by Congress because Congress has effectively granted approval to state ‘Buy American’ statutes.”509 As support for this position, the defendants specifically cited the FHWA Buy America regulations,510 as well as interpretive materials distrib- uted by FHWA stating that states are permitted “to have ‘Buy America’ provisions that are more restrictive than the federal requirements.”511 However, the U.S. District Court for the Dis- trict of Puerto Rico dismissed this as “an isolated statement by the Federal Highway Administration,”512 and held that the 500 Id. at 869 (citing 23 U.S.C. § 313(d)). 501 Id. at 871. 502 Id. at 873. 503 Id. at 874. 504 Id. at 875. 505 Id. at 877. 506 670 F.3d 310 (1st Cir. 2012). 507 Id. at 316 (citing P.R. Laws Ann. Tit. 3, §§ 927–927h). 508 Antilles Cement Corp. v. Acevedo Vila, 408 F.3d 41, 44 (1st Cir. 2005). 509 Antilles Cement Corp. v. Calderon, 288 F. Supp. 2d 187, 200 (D.P.R. 2003). 510 Id. at 201 (citing 23 C.F.R. § 635.410(b)(2)). 511 Id. 512 Id.

42 NCHRP LRD 80 just steel and iron, but in many ways, it is less stringent than the FHWA Buy America provision. For example, under the BAA, the phrase “substantially all” in the BAA is construed to treat a product as domestic as long as the cost of its domestic content exceeds 50 percent of the cost of the product, and final assembly of the product occurs in the United States.534 In contrast, under the FHWA Buy America provision, a predominantly steel or iron product is not considered domestic unless all of its steel or iron content is domestic, and all manufacturing processes take place in the United States. The Price Differential waiver under the BAA allows foreign goods to be procured if the lowest bid including only domestic goods is only 6 percent to 12 percent higher than the lowest bid containing foreign goods,535 as op- posed to the 25 percent Price Differential under the FHWA Buy America provision. Therefore, state transportation agencies and their contractors should not confuse the FHWA Buy America requirements with the BAA requirements, as in most highway construction cases, the FHWA Buy America provision will apply and the BAA will not.536 There are products that can be procured under the BAA but cannot be procured under the FHWA Buy America provi- sion, and vice versa, and suppliers will often not understand the differences. C. Other Federal Buy America Provisions Other USDOT agencies have their own Buy America provi- sions, which often look very similar to the FHWA Buy America provision. However, there are significant differences from one agency to the next regarding issues such as allowable domes- tic content of manufactured products, etc. State transportation agencies and their contractors should take care to not confuse the various USDOT Buy America requirements. 1. FTA Buy America Provision The FHWA Buy America provision originated as a common requirement applicable to both FHWA and UMTA, now known as FTA. However, in 1994, a separate FTA Buy America provi- sion was enacted.537 Like the FHWA Buy America provision, the FTA Buy America provision states that “steel, iron, and manu- factured goods used” on an FTA-funded project must be “pro- duced in the United States.”538 Unlike the FHWA Buy America provision, there is no general Manufactured Products waiver from the FTA Buy America provision (although there is a gen- eral waiver for computer equipment including software).539 The 534 48 C.F.R. § 25.101(a) (2018). 535 48 C.F.R. § 25.105 (2018). 536 But see Antilles Cement Corp. v. Fortuno, 670 F.3d 310 (1st Cir. 2012) (holding that BAA applied to the Puerto Rico Department of Transportation and Public Works project, barring the use of foreign cement which would have been allowed under FHWA Buy America provision). 537 Pub. L. No. 103-272, § 4(r)(2), 108 Stat. 745, 1371 (July 5, 1994). 538 49 U.S.C. § 5323(j) (2018). 539 Timothy R. Wyatt, Updated Guide to Buy America Requirements, TCRP LRD No. 49, Transportation Research Board of in which the commonwealth is acting as a market participant rather than a regulator.525 Following this logic, it would appear that a state legislature could prohibit the use of foreign cement or manufactured prod- ucts on FHWA-funded highway projects performed for the state transportation agency, despite the fact that FHWA has waived application of the FHWA Buy America provision to cement and manufactured products. Although the testimony in Antilles Cement was that FHWA did not permit the Puerto Rico stat- ute to be applied to federally funded highway projects, this may have been because the Puerto Rico statute also created a prefer- ence for cement from Puerto Rico over cement from other U.S. territories and states,526 which is a violation of FHWA regula- tions.527 A state statute that simply prohibited the use of for- eign cement or manufactured products on state transportation agency projects would appear to be just an instance of “more stringent requirements” for domestic content, which is expressly endorsed by the FHWA Buy America provision.528 B. Buy American Act The BAA enacted in 1933 applies to direct procurements by the federal government. It nominally requires federal agencies to purchase only domestic materials and domestic manufac- tured products (those manufactured in the United States “sub- stantially all” from domestic materials).529 Like the FHWA Buy America provision, the BAA has a Nonavailability exception, allowing the procurement of goods that “are not mined, pro- duced, or manufactured in the United States in sufficient and reasonably available commercial quantities and are not of a sat- isfactory quality.”530 The BAA also provides for waivers due to Public Interest or Price Differential,531 and there is a Minimal Use exception.532 The BAA does not apply to procurements by federal grant recipients, which led to the enactment of the FHWA Buy Amer- ica provision. The original 1978 FHWA Buy America provision closely mirrored the language of the BAA, in that it required that only domestic materials and manufactured products (i.e., products “manufactured in the United States substantially all from” domestic materials) be used on FHWA-funded con- tracts.533 However, the FHWA Buy America provision has been significantly revised since 1978 so that today it effectively ap- plies only to steel and iron. In some ways the BAA language is more stringent than the FHWA Buy America provision as it applies to all products, not 525 Id. at 329. 526 Antilles Cement Corp., No. 02-CV-01643, 2009 U.S. Dist. LEXIS 132125 at *74. 527 23 C.F.R. § 635.409(a) (2018). 528 23 U.S.C. § 313(d) (2018). 529 41 U.S.C. § 8302(a)(1) (2018). 530 Id. § 8302(a)(2)(B) (2018). 531 Id. § 8302(a)(1) (2018). 532 Id. § 8302(a)(2)(C) (2018). 533 Surface Transportation Assistance Act of 1978, Pub. L. No. 95-599, § 401, 92 Stat. 2689, 2756 (Nov. 6, 1978).

NCHRP LRD 80 43 which nation wide Nonavailability waivers have been granted,550 alleviat ing the need for FAA grant recipients to request project- specific waivers for products on that list. 3. FRA Buy America Provision A Buy America provision applicable to Federal Railroad Ad- ministration (FRA) grant funds was enacted in 2008.551 The FRA Buy America provision requires “all steel, iron, and manufac- tured goods used” in an FRA-funded project to be “produced in the United States.”552 There is no Manufactured Products waiver from the FRA Buy America provision, and FRA nominally re- quires all manufactured products (including rolling stock) to be assembled in the United States of 100 percent domestic compo- nents. However, FRA considers a component to be domestic as long as it is manufactured in the United States, regardless of the origin of its subcomponents.553 Therefore, a manufactured prod- uct can contain significant foreign content at the sub component level. Steel construction materials, such as rail, must be domes- tic. The Public Interest, Nonavailability, and Price Differential waivers in the FRA Buy America provision are all similar to the FHWA Buy America provision. The FRA Buy America provi- sion does not apply to contracts where the cost of materials is $100,000 or less. FRA also administers a separate Buy America provision applicable to procurements made by the National Railroad Passenger Corporation (Amtrak) using federal funds.554 Like the original FHWA Buy America provision, the Amtrak Buy Amer- ica provision was enacted in 1978, and mirrors the language of the BAA,555 in that it requires that only domestic materials and manufactured products (i.e., products “manufactured in the United States substantially from” domestic materials) be pro- cured by Amtrak.556 There is no Manufactured Products waiver, although the term “substantially” suggests that manufactured products are considered domestic as long as they consist of 50 percent domestic components and final assembly takes place in the United States. The Public Interest, Nonavailability, and Price Differential waivers in the Amtrak Buy America provision are all similar to the BAA and the 1978 FHWA Buy America provi- sion, in that the Price Differential is less stringent than the 25 percent Price Differential currently applicable to FHWA, FTA, and FRA. The Amtrak Buy America provision does not apply to contracts less than $1 million. 550 FAA, Nationwide Buy American Waivers Issued, https://www. faa.gov/airports/aip/buy_american/media/nationwide-buy-american- waivers-issued.pdf. 551 Rail Safety Improvement Act of 2008, Pub. L. No. 110-432, Div. B, § 301(a), 122 Stat. 4848, 4935 (2008). 552 49 U.S.C. § 22905(a)(1) (2019). 553 Timothy R. Wyatt, Buy America Requirements for Feder- ally Funded Rail Projects, NCRRP LRD No.  1, Transportation Research Board of the National Academies of Sciences, Engineering and Medicine of Washington, D.C. (Feb. 2015), p.10. 554 Id. at 26. 555 Amtrak Improvement Act of 1978, Pub. L. No. 95-421, § 10, 92 Stat. 923, 928 (1978). 556 49 U.S.C. § 24305(f). FTA Buy America regulations describe a relatively complex pro- cedure for determining whether manufactured goods and roll- ing stock may be considered domestic.540 As of fiscal year 2020, rolling stock such as a vehicle will be considered domestic if 70 percent of its content (measured as the cost of all components and subcomponents) is domestic, and final assembly takes place in the United States.541 In other respects, the FTA Buy America provision is similar to the FHWA Buy America provision: All construction materials made primarily of steel or iron must be domestic, with all manufacturing processes taking place in the United States.542 The Public Interest, Nonavailability, and Price Differential waivers in the FTA Buy America provision are all similar to the FHWA Buy America provision.543 The FTA Buy America certification requirements and waiver notice-and com- ment requirements are somewhat stricter than the requirements of the FHWA Buy America provision. The FTA Buy America provision does not apply to contracts with a price of $150,000 or less.544 2. FAA Buy America Provision A Buy America provision applicable to Federal Aviation Administration (FAA) grant funds was enacted in 1987.545 The FAA Buy America provision requires all “steel and manufac- tured goods used” on an FAA-funded project to be “produced in the United States.”546 Although there is no Manufactured Prod- ucts waiver from the FAA Buy America provision, a manufac- tured product is considered domestic if 60 percent of its content (measured as the cost of all components and subcomponents) is domestic, and final assembly takes place in the United States.547 FAA has effectively granted waivers for cement and asphalt, but all steel must be domestic.548 The Public Interest, Nonavail- ability, and Price Differential waivers in the FAA Buy America provision are all similar to the FHWA Buy America provi- sion.549 However, FAA maintains a lengthy list of products for the National Academies of Sciences, Engineering, and Medicine of Washington, D.C. (May 2017), pp. 30-31. 540 Id. at 16–23. 541 Fixing America’s Surface Transportation Act, Pub. L. No. 114-94, § 3011(2)(A), 129 Stat. 1312, 1474 (Dec. 4, 2015) (codified at 49 U.S.C. § 5323(j)(2)(C)(i)(III)). 542 49 C.F.R. § 661.5(b) (2018). 543 Compare 49 U.S.C. § 5323(j)(2) (2018) with 23 U.S.C. § 313(b) (2018). 544 Fixing America’s Surface Transportation Act, Pub. L. No. 114-94, § 3011(2)(E), 129 Stat. 1312, 1475 (Dec. 4, 2015) (codified at 49 U.S.C. § 5323(j)(13)). 545 Airport and Airway Safety and Capacity Expansion Act of 1987, Pub. L. No. 100-223 (1987). 546 49 U.S.C. § 50101(a) (2018). 547 Timothy R. Wyatt, Buy America Requirements for Feder- ally Funded Airports, ACRP LRD No. 18, Transportation Research Board of the National Academies of Sciences, Engineering, and Medi- cine of Washington, D.C. No. (Feb. 2013), pp 31-32. 548 Id. at 50–51. 549 Compare 49 U.S.C. § 50101(b) (2018) with 23 U.S.C. § 313(b) (2018).

44 NCHRP LRD 80 federal grant funding, and thus does not impact application of the FHWA Buy America provision.562 Furthermore, the WTO Agreement on Government Procurement and trade agreements such as the North American Free Trade Agreement (NAFTA) expressly exempt “grants” from coverage.563 Therefore, because the FHWA Buy America provision applies to FHWA grant fund expenditures by state transportation agencies, the FHWA Buy America provision is not pre-empted by trade agreements such as NAFTA. This means, for example, that Canadian steel or iron is not considered domestic for purposes of the FHWA Buy America provision and cannot be used on an FHWA-funded project.564 In 2003, in ADF Group, Inc. v. United States,565 a tribunal of the International Centre for Settlement of Investment Disputes (ICSID) reaffirmed that NAFTA did not apply to VDOT’s con- tract for construction of the Springfield Interchange, so that steel girders procured for that project were required to be man- ufactured in the United States under the FHWA Buy America provision. In 1998, VDOT obtained FHWA funding for the project and entered into a prime construction contract.566 In 1999, the prime contractor entered into a subcontract with ADF to supply “all structural steel components for nine (9) bridges” on the project.567 In April 1999, the prime contractor informed VDOT that ADF intended to fulfill its subcontract by using steel manufactured at a steel mill in the United States, but fabricated into girders at an ADF facility in Canada.568 VDOT advised the prime contractor that girders fabricated in Canada would not comply with the FHWA Buy America provision.569 In June 1999, the prime contractor requested a waiver from VDOT, but less than a month later, VDOT advised the prime contractor that there was “no basis” for a waiver.570 ADF proceeded to perform its subcontract in compliance with the FHWA Buy America provision, having the steel fabricated at an ADF facility in Florida as well as by second tier subcontractors with facilities in 562 Stuart B. Nibley, Amy M. Conant & Erica L. Bakies, Real Steps Towards ‘Buy American’ Compliance—Part I: Unpacking FAR Pt. 25 and the Application Of ‘Buy American’ Laws, The Government Contrac- tor, vol. 60, no. 7, ¶ 52 (Feb. 21, 2018). 563 See World Trade Org., Agreement on Government Procure- ment, App. 1, United States, General Notes, WT/Let/672 (Mar. 22, 2005); North American Free Trade Agreement, Part IV: Government Procurement, ch. 10, § A, art. 1001(5). 564 Memorandum from Jesse A. Story, Chief of FHWA Construc- tion and Maintenance Division, to FHWA Regional Administrators, Re: Information—Buy America and NAFTA (Apr. 22, 1994), available at https://www.fhwa.dot.gov/construction/contracts/940422.cfm; Letter from Rodney Slater, FHWA Administrator, to T. Peter Ruane, American Road and Transportation Builders Association President (Mar. 17, 1994), available at https://www.fhwa.dot.gov/construction/ contracts/ 940317.cfm. 565 ICSID Case No. ARB(AF)/00/1, 4 Asper Rev. Int’l Bus. & Trade L. 293 (2003). 566 Id. at ¶¶ 45-46, 4 Asper Rev. Int’l Bus. & Trade L. at 309. 567 Id. at ¶ 47, 4 Asper Rev. Int’l Bus. & Trade L. at 310. 568 Id. at ¶¶ 48-49, 4 Asper Rev. Int’l Bus. & Trade L. at 311. 569 Id. at ¶ 50, 4 Asper Rev. Int’l Bus. & Trade L. at 311. 570 Id. at ¶ 54, 4 Asper Rev. Int’l Bus. & Trade L. at 313–14. In addition to the significant differences in statutory lan- guage (e.g., different domestic content requirements, price dif- ferentials, and contract price thresholds) from one Buy America provision to the next, each agency has its own standards for granting waivers. Products that may be purchased by a USDOT grant recipient under one Buy America provision might not be allowable under another Buy America provision. State trans- portation agencies and their contractors should also be aware that, for jointly funded projects (e.g., highway-rail grade cross- ings557), it is possible that two sets of Buy America requirements could apply to a contract. This is especially true in light of the 2012 expansion of the FHWA Buy America provision to all con- tracts in a project, regardless of whether the contract is funded by FHWA. For example, FHWA-funded highway or bridge projects may cross Amtrak right-of-way, impacting Amtrak steel structures such as catenary wire.558 In that situation, even if the work in the Amtrak right-of-way is performed by Amtrak’s own forces, using only Amtrak funds, it is likely that the FHWA Buy Amer- ica provision applies to the work in the Amtrak right-of-way, as long as FHWA is funding at least one contract in the over- all project.559 The Amtrak Buy America provision may apply as well, meaning that manufactured products, which would other- wise be exempt under FHWA’s Manufactured Products waiver, must be domestic to comply with the Amtrak Buy America provision. On the other hand, predominantly steel or iron prod- ucts would be subject to the more stringent domestic content, price differential, and contract price requirements of the FHWA Buy America provision. The result is that state transportation agencies must occasionally seek project-specific waivers from FHWA for steel or iron railroad materials procured under an Amtrak contract.560 D. Free Trade Agreements There is often confusion about the interplay between Buy America requirements and trade agreements. In 1979, in the Trade Agreements Act (TAA), Congress provided the author- ity to waive the BAA and thus permit federal procurement of foreign goods from certain trading partners, including signa- tories to specific agreements specifically including the World Trade Organization (WTO) Agreement on Government Pro- curement.561 This had the general effect of treating goods from those trading partners as domestic goods for purposes of the BAA. However, the TAA explicitly disclaims any applicability to 557 See Association of American Railroads, Comments, Docket No. FHWA-2016-0028 (Dec. 2, 2016), available at https://www.regula- tions.gov/document?D=FHWA-2016-0028-0056. 558 See Amtrak, Comments, Docket No. FHWA-2016-0028 (Dec. 2, 2016), available at https://www.regulations.gov/document?D=FHWA- 2016-0028-0066. 559 23 U.S.C. § 313(g) (2018). 560 See, e.g., Buy America Waiver Notification, 74 Fed. Reg. 32,219 (July 7, 2009); Buy America Waiver Notification, 73 Fed. Reg. 42,894 (July 23, 2008). 561 Trade Agreements Act, Pub. L. No. 96-39, §§ 301, 303, 93 Stat. 144, 295, 297 (1979).

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The Federal Highway Administration's “Buy America Act” requires federally funded highway projects to use only steel, iron, and manufactured products produced in the United States.

The TRB National Cooperative Highway Research Program's NCHRP LRD 80: Buy America Requirements for Federal Highway Projects summarizes the intent and application of the provision. It also summarizes the procedure that FHWA has implemented for granting waivers and the impact that court interpretation of such waivers has had on the industry.

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