Letter to New Starts Working Group

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September 07, 2012


Mr. Jeffrey F. Boothe
Chair
New Starts Working Group

Dear Mr. Boothe:

I write in response to your letter of July 18, 2012, in which you challenge the Federal Transit Administration's (FTA) ability to apply the Buy America regulations, which help FTA create U.S. jobs with the taxpayer money it administers. In particular, you question whether FTA can apply its "Buy America" rules to utility work that is within the scope and budget of an FTA-funded project, and claim this constitutes a change in policy that is subject to the notice and comment requirements of 49 U.S.C. § 5334(1). As I explain below, Buy America rules have always applied to the entire scope of an FTA-funded project, including utility work. Because there has been no change in law or policy, the notice and comment requirements do not apply.

Before I address the specific issues raised in your letter, allow me to provide some background on FTA's Buy America rules. U.S. taxpayer money should be used to support the creation of U.S. jobs. The American public has entrusted FTA with billions of dollars in grant funds and rightly expects that FT A will act as an effective steward. As part of its stewardship obligations, FT A is responsible for ensuring that Federal funds are used responsibly and consistent with legal requirements. Thus, under current law and absent extreme circumstances, American tax dollars may only be used to purchase steel, iron, and manufactured products that are produced within the United States.

FTA makes no apology for vigorously enforcing the Buy America rules. In 2010, after FTA learned that Houston METRO was going to use FTA funds to build light rail vehicles in Spain, FTA conducted a four-month investigation and threatened to stop funding for several major capital projects unless the project sponsor terminated its contract with the foreign railcar manufacturer and agreed to re-procure railcars that would be made in the United States.  In 2011, I sent an FTA "Dear Colleague" policy letter (enclosed) emphasizing the importance of using FTA resources to maximize opportunities to create jobs, to put Americans to work, and to support our domestic manufacturing industry.

More recently, I directed FTA's Project Management Oversight Contractors to review select rolling stock audits for Buy America compliance.  These reviews will include on-site inspections to verify that FTA-funded vehicles are being built to conform with FTA's Buy America rules. In light of these efforts to emphasize Buy America and to ensure the creation and retention of U.S. jobs, I am happy to report that the number of Buy America waivers granted annually has dropped from 42 in Fiscal Year 2009 to only 3 in Fiscal Year 2012.

Regarding the issues raised in your letter -- whether FT A can apply its Buy America rules to utility contracts that are within the scope and budget of an FTA-funded project, and whether the application of Buy America to utility contracts constitutes a change in policy that is subject to the notice and comment requirements of 49 U.S.C. § 5334(1) -- I offer the following response.

The statute is clear -- FT A may obligate money for a project "only if the steel, iron, and manufactured goods used in the project are produced in the United States." 49 U.S.C. § 53230).  Buy America rules apply to the entire project. Application to the entire project means that all contracts necessary to complete a project must include Buy America provisions.

Your assertion is wrong that FT A must seek public comment before it may require utility contracts on FTA-funded projects to apply the Buy America requirements. FTA's Buy America rules and policies have not changed. As with the statute, FT A regulations are clear -- "no funds may be obligated by FTA for a grantee project unless all iron, steel, and manufactured products used in the project are produced in the United States." 49 C.F.R. § 661.5(a). And these Buy America regulations became law following a notice and comment process at the time the regulations were issued. FTA has not imposed new obligations or effected a significant change in existing policy by enforcing the existing statute and regulations.

Buy America is among the most important legal requirements FT A oversees, and I am committed to implementing it to ensure that all steel, iron, and manufactured products used on FTA-funded projects are produced in the United States. The enforcement of these longstanding requirements does not constitute a change in law or policy; it is simply the fulfillment of the intent of the law to ensure that the use of Federal funds supports the creation of U.S. jobs.

If you or any project sponsors have questions about Buy America, please feel free to contact Jayme L. Blakesley, Attorney-Advisor, at (202) 366-0304 or jayme.blakesley@dot.gov.

Sincerely yours,


Peter Rogoff

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