EPA Loosens Buy American Rules
On June 1, the Environmental Protection Agency (EPA) announced a new national waiver to the "Buy American" requirements for clean water and drinking water projects that receive funding from the American Recovery and Reinvestment Act (ARRA). Under the new waiver, projects that solicited bids prior to the February 17, 2009 enactment of ARRA are not subject to ARRA's Buy American requirements. The EPA feels that this waiver is consistent with the public interest.
ARRA allocated to the EPA $6.4 billion for clean water and drinking water projects. Projects receiving ARRA funding are generally required to use American iron, steel, and manufactured goods under § 1605 of the Act. The EPA expects projects to comply with the Buy American requirement; however, both ARRA and the EPA recognize circumstances where a project may bypass the Buy American requirement. The two general ways to bypass the Buy American requirements are to obtain a waiver from the EPA or to use foreign iron, steel, and manufactured goods as directed under an international trade agreement.
The EPA waiver process reflects the Congressional intent to provide capital funding as quickly as possible so that water infrastructure projects are under contract or under construction by February 17, 2010. The EPA may thus provide a waiver under the following circumstances:
- the necessary iron, steel, and relevant manufactured goods are not produced in the U.S. in sufficient and reasonably available quantities and of a satisfactory quality;
- the Buy American requirements would be inconsistent with the public interest; or
- buying only American iron, steel, and manufactured goods will increase the cost of the overall project by more than 25%.
The EPA expects a majority of waivers to come under the "sufficient and reasonably available" exception. EPA has currently issued two waivers under the public interest exception for: (1) projects that solicited bids prior to February 17, 2009; and (2) projects using ARRA funds to refinance debt incurred on or after October 1, 2008 and before February 17. All waivers issued by the EPA will be published in the Federal Register.
State agencies and local entities listed in the appendix to Appendix 9 of the Office of Management and Budget (OMB) Updated Implementing Guidance that have international agreements covering the procurement of iron, steel, or manufactured goods are exempt from the Buy American requirements. These agencies and local entities should procure iron, steel, and manufactured goods as directed by the covering international agreement. The international agreement exception applies only to projects estimated to be over $7.4 million.
The Buy American requirements of ARRA also will affect broadband projects, other infrastructure projects, and are becoming popular with Congress, appearing in at least two other infrastructure funding bills that have passed the House and are pending before the Senate. Other agencies have yet to release guidelines regarding waivers to Buy American requirements, although, the OMB guidelines provide agency heads with a fair amount of room to interpret the provisions.
For more information regarding Buy American requirements, please contact Chris Cushing, (202) 545-2974, or Tom Sullivan, (202) 545-2909.
 See 77 Fed. Reg. 26397-26398 (June 2, 2009), available at http://www.epa.gov/fedrgstr/EPA-WATER/2009/June/Day-02/w12793.htm
 See Memorandum form the EPA on Implementation of Buy American Provisions (Apr. 28, 2009), http://www.epa.gov/water/eparecovery/docs/04-29-2009_BA_waiver_process_final.pdf
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