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State and local transportation agencies are concerned the feds are moving too fast in imposing tighter requirements, complicating a wave of new construction.
The Biden administration is pushing state transportation departments and their contractors to use more U.S.-made materials as they build new infrastructure, but many industry groups worry the federal government is rolling out the changes too quickly.
“AASHTO is still concerned that the quick implementation of Buy America requirements for such a broad range of materials will cause delays in project delivery while states, contractors, manufacturers, and suppliers continue working to determine how best to track and verify these materials,” wrote Roger Millar, Washington state’s secretary of transportation and the president of the American Association of State Highway and Transportation Officials, in a letter to federal officials.
“Delays and costs will likely increase, at least in the short term, as contractors are forced to shift material purchases to domestic suppliers, who in turn may struggle with availability due to limited quantities and high demand,” he added.
The current debate over “Buy America” rules for infrastructure projects stems from provisions in last year’s federal infrastructure law that expand the types of projects the rules apply to and the kinds of materials that the rules cover.
The Infrastructure Investment and Jobs Act broadened the reach of the laws designed to boost American businesses. Previously, they mainly applied to road construction, transit and water projects. The infrastructure law expanded the rules to cover electric utilities and transmission, broadband and real estate.
But even when it comes to building roads, the law added more materials that must be produced in the United States on projects getting federal money. Before, for example, the Buy America provisions applied to iron and steel. Now, they’ll apply to construction materials such as copper wiring, glass, fiber optic cable and plastics. (Congress chose not to apply the rules to materials like cement, gravel and asphalt, though.)
The Biden administration put the new rules on hold for six months this spring, to give transportation agencies and industries time to get ready for the more stringent requirements.
AASHTO and other groups, including the American Public Transportation Association, which represents transit agencies, tried to get federal transportation officials to extend the waiver for even longer. They argued that the federal government had not provided enough detail for state and local agencies to use to determine whether certain products qualified as U.S.-made.
Plus, they said, American companies needed more time to start producing the products that transportation agencies needed to buy.
“USDOT needs to ensure that the emphasis on creating jobs in the manufacturing industry – a longer-term goal that will take several years to achieve – does not unintentionally and negatively impact American jobs in the construction industry in the short-term, which is a distinct possibility if project delivery is disrupted by a rushed or sudden transition to new requirements,” AASHTO’s previous president, Shawn Wilson, the secretary of the Louisiana Department of Transportation and Development, wrote in August.
APTA warned earlier that moving too quickly could also increase costs for key projects.
“Given the current supply chain constraints, moving to all U.S.-sourced construction materials will inevitably lead to project sponsors paying a premium to meet the Act’s requirements. The question then becomes whether the market/industry can absorb a doubling, tripling or even a quadrupling of costs for construction materials,” APTA President and CEO Paul Skoutelas wrote in June.
Still, the federal Transportation Department let the rules take effect on Nov. 10. It offered two smaller waivers, though, to address some of the worries raised by industry leaders.
The first would address contracts that were already in the works before the department let the Buy America rules take effect. The waiver applies to contracts entered into before Nov. 10 or that are entered into before March 10 of next year, if the solicitation for those projects was published before May 14, 2022.
The second waiver applies to minor components used in smaller projects.
State agencies generally backed the new waivers. North Carolina’s transportation department, for example, said it “strongly supports” the waiver for contracts already moving through the process. “The waiver timelines as given will be especially important to our larger, multi-year contracts which without the waiver would have faced large delays and additional incurred costs,” wrote Todd Whittington, the state materials engineer for the North Carolina Department of Transportation.
Five Western states told federal officials they supported the two waivers “as opposed to no waiver” but thought the exemptions should be broader to provide a “practical transition.”
Officials from the transportation departments of Idaho, Montana, North Dakota, South Dakota and Wyoming said they were especially worried that their states would be left behind if materials were not widely available.
“As relatively rural states that may be considered ‘small market’ by vendors of some materials and products, we are particularly concerned that the burden of an absence of waivers could fall heavily on us, as scarce Buy America qualified products tend to be sent to more populous areas,” they explained.
“The blow to program delivery, local jobs, and transportation benefits that would entail could well be magnified by the short construction season in our northern, high elevation states – where even short delays and project disruptions can push project completion into the ‘next construction season,’” they added.
Inflation, plus the cost of staffing up and staffing down construction crews over successive years, would also add to the price of construction projects, they warned.
A group representing airports (which are often owned by municipal governments) supported the waivers but said they did not go far enough. The Airports Council International – North America said ending the broad-based waiver “is short-sighted and unnecessarily risks reducing the number of airport construction projects and associated U.S. construction jobs.”
Daniel C. Vock is a senior reporter for Route Fifty based in Washington, D.C.