Publications | April 6, 2016

Rail Law Alert – FTA Proposes Implementation of Buy America Change

FTA Proposes Nuanced Implementation of FAST Act’s Buy America Changes

The Federal Transit Administration (FTA) is seeking comments on its proposed implementation of significant changes to the FTA’s Buy America requirements for rolling stock procurements. As amended by the Fixing America’s Surface Transportation (FAST) Act, Pub. L. No. 114-94 (Dec. 4, 2015), a Buy America waiver may be granted only if the cost of rolling stock components and subcomponents produced in the United States exceeds sixty percent of the cost of all components in FY16 and FY17, sixty-five percent in FY18 and FY19, and seventy percent in FY20 and each year thereafter. 49 U.S.C. 5323(j)(2).

Under the FTA’s proposed policy, rolling stock must meet the increased domestic content requirements in effect at the time of delivery if a contract was entered into after October 1, 2015 (the effective date of the FAST Act). For example, the domestic content of a vehicle procured on January 1, 2016, must exceed sixty-five percent if it is delivered in FY18 or FY19, or seventy percent if delivered in FY20 or later. While earlier contracts would generally not be subject to the increased domestic content requirements—

  • The FTA would consider the assignment of an option (i.e. piggy-backing) to be a “new contract,” and therefore subject to the increased domestic content requirements; and
  • The date of a purchase order placed against a State purchasing schedule would control for the purpose of required domestic content, even if the State had established the vendor schedules prior to October 1, 2015.

In an effort to mitigate hardship for certain classes of recipients, the FTA concurrently issued a notice of proposed general public interest waiver that waives the increased domestic content requirement for—

  • Contracts entered into between October 1, 2015 and December 4, 2015, regardless of when the vehicles are delivered; and
  • Contracts entered into after December 4, 2015, as a result of solicitations for bids or requests for proposals that were advertised before December 4, 2015, regardless of when the vehicles are delivered.

While the FAST Act leaves the FTA no discretion in increasing domestic content over the next several years, the agency’s interpretation of the amended provisions may be more stringent than Congress intended. Recipients of FTA funds, particularly those considering piggy-backing on existing agreements, should review the FTA’s notices and consider submitting comments. Comments on the notice of proposed policy are due by May 6, 2016, while comments on the notice of proposed general public interest waiver are due by April 13, 2016.