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Request

Action: Withdrawn

Web posting date: 07/03/2013

Federal Register Notice of Finding Publication Date: to be determined

Effective Date of Federal Register: to be determined

Close of public comment period: 15 days following the effective date

Summary: FHWA invites comments in response to a request by the California Department of Transportation's (Caltrans) request for a waiver of Buy America requirements for various components related to the relocation of Pacific Gas and Electric's (PG&E) natural gas service facilities on the Cordelia I-80/I-680/SR 12 project in Solano County, California. The proposed waiver would cover approximately 167 material items (valves and related items, steel pipe products, regulators, and miscellaneous other products. See the exhibit to June 27, 2013, PG&E letter. Caltrans asserts that this waiver would be in the public interest and consistent with 23 USC 313.

All utilities involved in relocation work as a result of a Federally funded highway project are required to comply with Buy America by virtue of Section 1518 of MAP-21, which became effective on October 1, 2012. Caltrans asserts that a limited waiver is in the public interest because the timely relocation of the PG&E's natural gas service facilities is critical to ensure that the San Francisco metro area has an adequate gas supply for the winter. At the current time, PG&E cannot certify that all iron and steel in the valves and related materials complies with Buy America. The non-Buy America compliant materials to be used represent:

  • 0.04 of the utility relocation project cost, and
  • 0.0013 of the interchange project cost.

Finally, Caltrans represents that a public interest waiver is justified because of safety concerns expressed by the PG&E that it must ensure the safe operation of the gas pipeline system by using only materials certified to meet existing standards and requirements.

FHWA will consider a Buy America waiver only when the conditions of 23 CFR 635.410( c) have been met, i.e., (1) when the application of the provision would be inconsistent with the public interest; or (2) when steel and iron products are not produced in the United States in sufficient and reasonably available quantities, which are of a satisfactory quality.

In considering waiver requests, there are two separate and distinct comments periods. There is an initial 15-day comment period that opens upon the posting of this notice to the Internet prior to the final decision and a subsequent 15-day comment period after the publication of the final decision in the Federal Register. In our evaluation of the Caltrans' waiver request, FHWA will consider all comments received during the initial 15-day comment period. Comments received after this period, but before notice of our finding is published in the Federal Register, will be considered to the extent practical. Follow-up coordination on the comments received may result in a delay in the publication of our waiver finding in the Federal Register. Comments received during the 15-day comment period after notice of our finding is published in the Federal Register will be reviewed, but the finding will continue to remain valid. Comments received during the comment period after the effective date of the finding will be reviewed, and may influence the FHWA's decision to terminate or modify its finding.

[Incoming Caltrans Letter - contact Edwin Okonkwo for a copy]

[Note: On July 23, 2013 Caltrans withdrew this waiver request. See the July 23, 2013 comment by Caltrans below.]

Comments

Roger Forsythe 07/03/2013
This request is too broad and since this is a Safety related request it would be best to keep the Manufacturing of these materials on-shore and truly U.S. certified to meet high quality standards that pipelines need to meet and not just satisfactory standard! This coulpled with the need for pipeline safety and the new programs that will be needed to to help build the US infrastructure, Rails, Bridges, Pipelines, will cause the U.S. manufactures to expand and even upgrade their manufacturing processes. Off Shore puchasing of these materials could delay the rebuilding of the U. S. infrastructure.

Jayne Bauer 07/03/2013
Solano Transportation Authority (STA) is writing to urge the Federal Highway Administration to approve the California Department of Transportation’s (Caltrans) June 27, 2013 request for a waiver of the Buy America requirements as they apply to Pacific Gas & Electric’s (PG&E) relocation of a gas transmission valve field station and ancillary facilities to accommodate the Interstate 80/I-680/State Route 12 improvements in Solano County, California (the “Project”). STA is the transportation agency for Solano County that has partnered with Caltrans to deliver the Project. Solano County is located between San Francisco and Sacramento along I-80 and is both a goods movement and commuter corridor.

Background:

The Project involves construction of new interchanges that will reduce congestion, reduce local traffic, improve freeway access, accommodate current and future truck traffic, improve access to truck lanes and truck scales, improve safety conditions and provide better access to HOV lanes. The total project cost for phase one is about $695 million. The project has environmental clearance and is ready to proceed to construction.

In January 2013, STA asked PG&E to sign Caltrans’ standard utility agreement to relocate the gas plant. At the time, neither Caltrans nor STA believed that the Buy America requirements applied to utility relocations that are not funded with federal dollars. Since that time, FHWA advised the state transportation agencies that it interpreted a new Buy America provision in the Moving Ahead for Progress in the 21st Century (MAP-21) Act as requiring that utilities comply with Buy America if a utility relocation is related to a larger transportation project that will receive federal funds. By the time STA was made aware of this interpretation and asked PG&E to sign a modified utility agreement certifying compliance with Buy America, PG&E advised STA and Caltrans that it could not comply with Buy America in sufficient time to be able to relocate the gas plant before the start of the winter heating season. If PG&E cannot begin work on the relocation immediately, it will not be able to relocate the gas plant until next spring, which would significantly delay the Project and cause the project to lose $35.4 million in state Proposition 1B Trade Corridor funds, which expire if not obligated in 2013.

In its letter to Caltrans Director Malcolm Dougherty dated June 27, PG&E identified certain critical steel or iron parts for the gas plant relocation that are not currently available in the United States. It also has noted that it has ordered and received most if not all of the parts that are required for the relocation and would not be able to secure new parts in sufficient time to complete the utility relocation before the winter heating season. PG&E raised other concerns regarding the need to establish a certification process for U.S.-sourced parts. We understand that PG&E is working to establish a procedure to comply with Buy America in the future, but that it cannot comply with Buy America in connection with the utility relocation necessary for the I-80/I-680/SR 12 project without delaying the project by at least a year and causing STA to forfeit critical dollars for the project. Delaying the project also would delay the jobs that will be created in Solano County which was hard hit by the recession.

Grounds for Waiver:

STA believes it is in the public interest to grant a waiver to Caltrans for PG&E’s utility relocation. Not only do the circumstances make it impossible for PG&E to comply with Buy America within the necessary time frame to ensure that the larger project can move forward, but the entire utility relocation is $21 million of which only $2.18 million is allocated for materials.

STA understands the importance of Buy America to increasing and sustaining U.S. jobs and a U.S. manufacturing base. However, STA supports Caltrans’ waiver request because of the need to phase in the Buy America requirements so that utilities can find local sources for their parts and allow the I-80/I-680/SR 12 Project to proceed to construction.

Thank you for your consideration.

J. Vorhies 07/03/2013
What is the purpose of Buy America? Why can't PG&E certify that all items comply with Buy America? Knowing this is a federally funded project why isn't PG&E prepared to comply with Buy America? No waiver should be granted PG&E should strive to comply with keeping our tax Dollars in house. It is the best thing when disbursement of Tax Dollars is concerned.

Robert Tischbein 07/03/2013
I don't believe that Caltrans can't find American made standard valves and fittings anywhere in the United States. I think the Caltrans Purchasing Agent is sleeping at the switch.

Hermann R. Dudik 07/04/2013
To Whom it may concern. The current economical situation mandates that all and every component used on any job in the USA should be made in America. It is imperative that every company no matter how big or small complies with this very important request to bust the demand for items "Made in America" and help to reduce the national deficit and unemployment.

Gary Strome 07/05/2013
If the folks cannot get the components domestically, then it should be redesigned with US origin products .

Dave Berthold 07/05/2013
No one should be allowed to even consider a waiver. These government agencies, and public supported companies need to do their job. As a small veteran owned America manufacturer, no one has approached us or any other small manufacturer I know that could do this work.

Raymond Schnell 07/05/2013
I must agree with several of the previous comments in that there is no justifiable reason as to why these components cannot be purchased from American manufacturers. PG&E is not doing their due diligence in researching American companies that are currently producing these valve and fitting parts. in light of the current economic conditions, the FHWA should not even remotely consider such a waiver. Why have a "Buy America" program in place, if it is not being supported by our own American Federal agencies?

Gary Click 07/05/2013
In reading the Request for Waiver, it appears that the required components have already been sourced and possibly received from a non-compliant supplier. There is also an implication that there is no domestic supplier that meets safety requirements. This seems like a variant of the "subcomponent of a component" approach that is sometimes used to circumnavigate the "Buy America", "Buy American" requirements with these reasons being given as justification to avoid the project rquirements.

John D 07/05/2013
What is the purpose of making it in America if the FHWA keeps asking for waivers on everything it possibly can?? I have received numerous waiver messages on various projects and products. And it's only a 15day formality. Exactly what is needed to prevent your waiver? Why don't you mention this on TV and radio so more people will know about this scam?

James Agalzoff 07/05/2013
Buy American we have the products and some of our MFG sent the manufacture equipment to China to save on cheap labor. The products turn-out to be very poor material and many of the casting had sand holes. Especially sew pipe fitting and shut-off main valves. The sew ditches had to reopen and replace with American components. Take Care!!!

Marlen Hansen 07/05/2013
The "Buy America" clause was in the contract when it was bid. Therefore, unless there are extreme new circumstances, the Buy America clause should be followed. Didn't the project designers, Engineers, check on availability of the needed materials when it was designed?

C. Raymond 07/05/2013
No.

Tom Dalzell, Business Manager IBEW Local 1245 07/06/2013
On behalf of Local Union 1245 of the International Brotherhood of Electrical Workers (IBEW Local 1245), we congratulate you on your recent appointment as the 17th United States Secretary of Transportation. IBEW Local 1245 is based in the City of Vacaville in Solano County (California), and includes approximately 19,000 members and retirees from the States of California, Nevada, Idaho, Oregon, and Washington. We perform work in a variety of areas including utility, telephone, cable television, and line clearance tree trimming, while maintaining labor agreements with over 50 employers and over 100 contractors. . We are writing to respectfully request your support to help advance a June 27,, 2013 Caltrans’ waiver request for utility relocation work on a highway project in Solano County, California. The project, the I-80/I-680/SR-12 Interchange project, is critical in terms of local jobs and community investment. However, we are concerned this vital project may lose its eligibility for federal-aid highway money because of new, recently adopted provisions in the federal Moving Ahead for Progress in the 21st Century Act (now Public Law 112-141). Because some iron and steel equipment for the Cordelia utility relocation work is not available in the United States or long lead times are needed to obtain compliant material, the entire highway project may be put on hold, or the whole project may lose its eligibility for federal highway money. California jobs in the community will be lost on this and other similar projects, including jobs performed by IBEW Local 1245 members in California. IBEW Local 1245 is a strong supporter of Buy America, and we believe that every utility relocation project must come into compliance as quickly as possible. Nevertheless, we support Caltrans’ waiver request for relatively minor amounts of iron and steel material that cannot be domestically sourced on the Cordelia project. Furthermore, we recommend that you approve a short term, transitional period for States to comply with new Buy America requirements. Waivers in the short term and a reasonable phase-in period would make it possible for important transportation and infrastructure projects to move forward, while encouraging economic growth and job creation in the communities we serve. Thank you for your support of the I-80/I-680/SR-12 Interchange project and a responsible phased-in implementation period for new Buy America requirements. We appreciate your attention to this request.

Bren I. George 07/06/2013
Let us pause and think about the purpose of Buy America (BA). While there is provision to give waivers in extreme circumstances where it can be "REALY" justified to be in the public interest, we don't want to set precedence that will kill the BA program. Is BA such a new program that PG&E is not aware of its existence? Why can't PG&E certify that all the items to be incorporated in this project meet the BA requirement? What is difficult in meeting the requirement? Let us look at all the merits.

Solano County, CA reprentatives 07/08/2013
Letter available upon request
Michael Stumo 07/08/2013
The Coalition for a Prosperous America objects to this waiver request. Caltrans request is overbroad in covering 167 different items. It has not shown an inability to find or procure any of these items in the U.S. It has not shown that the items are unavailable. Caltrans has not shown any attempts to locate, price or buy any of these items. At best, Caltrans has shown that it is merely inconvenient for its purchasing department to look for U.S. suppliers of the components.

Caltrans has shown a past institutional bias against Buy America rules or trends. Caltrans transferred large amounts of taxpayer money to Chinese suppliers when building the San Francisco-Oakland Bay Bridge.

The remedy in this case should not be a waiver, but for Caltrans to change its procurement department practices.

Wright Parkes 07/08/2013
Most of the commentators fail to address the facts, the issues, or the law. The facts are (1) this represents a new interpretation of Buy America by FHWA (aand by the Federal Transit Administration)which drastically changes past and current practice, an interpretation change which did not go through any kind of public notice or review process; (2) the items at issue represent far less than 1% of the cost of the relocation; and (3) the impact on a major highway project would be severe in terms of time and delay costs. The law - the Buy America statutes and regulations - recognize that situations exist where a strict reading will be detrimental to the public interest, and that there are cases where no U.S. made product is reasonably available. As a practical matter, prohibiting any non-U.S. made materials on federally-funded projects will shut large portions of the transportation industry down. I doubt that the responders who want to take that approach follow the same practice in their daily lives - if they tried they would find it is impossible.

The Caltrans waiver request is reasonable and prudent under the circumstances and should be granted.

Dianne Feinstein 07/09/2013
Letter available upon request
John Garamendi 07/09/2013
Letter available upon request
Steve Hardy 07/09/2013
Letter available upon request
Harry Price 07/09/2013
Letter available upon request
Brett Guge 07/09/2013
As a Southern California supplier of steel sheet and pipe products, California Steel Industries, Inc. (CSI) SUPPORTS PG&E's waiver request. Buy America, while well intended, often discriminates against Western U.S. steel manufacturing companies and their customers. The reason is the Agency’s interpretation that the steel must be "melted and poured" in the U.S. Over time, this interpretation has become more and more discriminatory against steel companies in the West. Unlike our Eastern U.S. competitors, Western producers of steel sheet and plate products do not, and will not, have the capability to melt their own steel due to a myriad of factors, mainly environmental regulations and energy costs. At our plant east of Los Angeles, we employ more than 1,000 people in our rolling mills. Our feedstock is in the form of 20-ton steel slabs, which are semi-finished products that can only be made into something useful by a steel mill. We buy all of the U.S.-made slabs that we can, but slabs are typically not available for sale to us by our Eastern U.S. competitors. So we are forced to import slabs, primarily from Japan, Brazil and Mexico, through the Port of Los Angeles. We then rail the slabs to our Fontana operations, heat the slabs to more than 2,300 degrees, roll them into sheet, and further manufacturer various steel sheet products which are then sold in coil sheet form to customers across the Western U.S. In the West, our sheet and plate competitors are all like California Steel -- they must purchase steel feedstock, predominately from foreign sources, in order to survive as a business. California Steel's sheet products are sold as far east as the Mississippi River. They are further manufactured by our customers (or our customers' customers) in the U.S. into final products such as pumps, valves, tubes, pipe, culverts, utility poles, etc. These made-in-the-USA final products cannot be supplied to a highway or transit project that has even a dollar of federal funding in it, due to the outdated Buy America interpretation-- just because the original steel slab that we purchased was melted in another country, and EVEN THOUGH the value-added finishing work was done in the U.S. In addition to sheet products, our company produces one "end use" product in California, steel pipe, which we sell to utilities such as PG&E for natural gas or liquid transmission, and for myriad other uses. However, with the new Buy America restrictions, California utilities working on a federally-assisted highway project can no longer use California-made pipe (fabricated from imported steel slabs) without a waiver. We support Buy America. However, the Agency’s interpretation does not take into account the fact that American steel companies have evolved into different forms over the years. Now, Buy America picks winners and losers among American companies. The losers are companies like California Steel, who have a business model, by necessity, that did not exist when Buy America came into being in 1982. U.S. steel companies who melt in the U.S. may import their iron ore or scrap feedstock from anywhere in the world, and still qualify for Buy America. And because the U.S. steel industry's melting capacity for sheet and plate products is all located on or east of the Mississippi River, Buy America discriminates against Western steel companies, who have no melting capability, and their downstream customers in the West. Reasonable Buy America waivers are necessary to address this in the short run and avoid lost revenues to U.S. companies, create new U.S. jobs, and provide job security for U.S. workers like California Steel's. In the long run, we need to modernize Buy America to reflect the realities of today’s industry and the need to move projects along more quickly with far less bureaucracy, in order to lower costs and create American jobs.

G. Raymond Lorello 07/10/2013
My area of responsibility for the Ohio Department of Transportation has to do with all utility relocation activities associated with the construction of our highway projects. When FHWA informed our Department that the "Buy America" regulation was to be applied to a utility relocation that was eligible for reimbursement, I raised a challenge that we could not legally do that. My reasoning was because the only way a utility company becomes eligible for reimbursement in ODOT projects (and all other states for that matter) is because they have a "property right" and our highway project is damaging the facilities they have in their easement which gives them their "property right".. Under our country's Constitution, we are responsible for paying for "property rights" in a "just" manner, so what gives us the right to tell the utility how they can spend the funds we are using to pay them for the damage we are doing to their system. Not only does this cause a problem for our highway project, depending on the utility components involved in their relocation, this causes significant problems for the utility's system and their efforts to provide efficient, responsive and cost effective advantages to the customers they serve..Under law, this "Buy america" regulation is associated with contracts...when we do a utility reimbursement, there is no contract between our Department of Transportation and the utility company...what we use is an "agreement" between the utility and the Department that confirms the utility's "property right", identifies those components of the relocation that are eligible for reimbursement, establish a timing for the relocation process that meets our construction schedule and approves all elligible design and labor costs associated with the utility facility relocation....the bottome line is this....the utility has a "property right"..we approve their "property right" but tell them we will only pay them if they adhere to the "Buy America" regulation...the utility lets us know that there are issues this regulation will cause that have significant negative impacts on their system and let us know they will not do their relocation until we approve reimbursing them for the damage our highway project will do to their system...so now our project is stopped because the utility facility has not been relocated...I have had disussons with virtually every utility company I am engaged with and they all have indicated they do their best to obtain as much domestic manufactured materials and componets as they can...but there are instances when that cannot be done and they do not feel we have the right to tell them how they can spend the funds we are using to pay them for their "property right"....during my career, in both the private and public sectors, I have done everything I can do to promote American jobs...but I have always done it in a "legal" way because that is what I am responsible to do...It is not clear if this Waiver request in the California situation is a reimbursment CalTrans needs to do because the utility in question has a "property right"...but, if it is, I can understand why this project is in the position it currently is in...I support this request for a waiver because it will keep the CalTrans project moving forward for the benefit of the traveling public we serve...and, I am hoping FHWA will finally determine that this "Buy America" regulation cannot be imposed on a utility when it is being reimbursed for its "property right"...

AASHTO 07/10/2013
Letter available upon request
Scott Barnes 07/11/2013
The Pipe products listed in the request are common items produced domesitically.

Thomas Fish 07/11/2013
We believe that many of the fittings and nipples are available as domestic product and can be procured in California.

Tim Kubli 07/11/2013
The purpose of "Buy America" is not to stop or delay a project with a late rule adoption of the law, as they relate to private utilities. Please grant the Waiver to PG&E so this project can get started before the funding runs out and the safety of I-80 commuters is at stake. This is a good project that will employ a large number of people and will support "Buy American".

Tim

Solano EDC 07/12/2013
The Solano Economic Development Corporation (EDC) is writing to urge the Federal Highway Administration to approve the California Department of Transportation’s (Caltrans) June 27, 2013 request for a waiver of the Buy America requirements as they apply to Pacific Gas & Electric’s (PG&E) relocation of a gas transmission valve field station and ancillary facilities to accommodate the Interstate 80/I-680/State Route 12 improvements in Solano County, California (the “Project”).

The mission of the Solano Economic Development Corporation is to attract, grow, and retain business and industry in Solano County that will enhance the economic vitality and quality of life in our communities. Founded in 1983, the Solano EDC represents a collaboration of private and public stakeholders that provide a leadership role for economic development efforts in Solano County and its seven cities: Benicia, Dixon, Fairfield, Rio Vista, Suisun City, Vacaville and Vallejo.

We SUPPORT the Caltrans waiver request:

• The Interstate 80/I-680/State Route 12 improvements Project involves construction of new interchanges that will reduce congestion, reduce local traffic, improve freeway access, accommodate current and future truck traffic, improve access to truck lanes and truck scales, improve safety conditions and provide better access to HOV lanes.

• The overall project is $700 million. The initial construction package of $110 million is delayed and could be unfunded should this Buy America waiver not be granted.

• Delaying the project also would delay the 1,200 jobs that will be created in Solano County which was hard hit by the recession.

• If PG&E cannot begin work on the relocation immediately, it would significantly delay the Project and likely cause the project to lose $35.4 million in state and federal funds which will expire.

• PG&E has now identified certain critical steel or iron parts for the gas plant relocation that are not currently available in the United States, which is the subject of this specific waiver request.

• PG&E is working to establish a procedure to comply with Buy America in the future, but that it cannot comply with Buy America in connection with the utility relocation necessary for the I-80/I-680/SR 12 project without delaying the project by at least a year and causing the forfeiture of critical state and federal funding for the project.

• The entire utility relocation is $21 million of which only $2.18 million is allocated for materials.

• The circumstances make it impossible for PG&E to comply with Buy America within the necessary time frame to ensure that the larger project can move forward.

• Therefore, it is in the public interest to grant a waiver to Caltrans for PG&E’s utility relocation. • Solano County understands the importance of Buy America to increasing and sustaining U.S. jobs and a U.S. manufacturing base. However, the waiver is critical because of the need to phase in the Buy America requirements so that utilities can find local sources for their parts and allow the I-80/I-680/SR 12 Project to proceed to construction.

The EDC believes it is in the public interest to grant a waiver to Caltrans for PG&E’s utility relocation. Not only do the circumstances make it impossible for PG&E to comply with Buy America within the necessary time frame to ensure that the larger project can move forward, but the entire utility relocation is $21 million of which only $2.18 million is allocated for materials.

The EDC understands the importance of Buy America to increasing and sustaining U.S. jobs and a U.S. manufacturing base. However, the EDC supports Caltrans’ waiver request because of the need to phase in the Buy America requirements so that utilities can find local sources for their parts and allow the I-80/I-680/SR 12 Project to proceed to construction.

Jon Riley, Napa-Solano Central Labor Council 07/15/2013
Solano Transportation Authority (STA) is writing to urge the Federal Highway Administration to approve the California Department of Transportation’s (Caltrans) June 27, 2013 request for a waiver of the Buy America requirements as they apply to Pacific Gas & Electric’s (PG&E) relocation of a gas transmission valve field station and ancillary facilities to accommodate the Interstate 80/I-680/State Route 12 improvements in Solano County, California (the “Project”). STA is the transportation agency for Solano County that has partnered with Caltrans to deliver the Project. Solano County is located between San Francisco and Sacramento along I-80 and is both a goods movement and commuter corridor.

Background

The Project involves construction of new interchanges that will reduce congestion, reduce local traffic, improve freeway access, accommodate current and future truck traffic, improve access to truck lanes and truck scales, improve safety conditions and provide better access to HOV lanes. The total project cost for phase one is about $695 million. The project has environmental clearance and is ready to proceed to construction.

In January 2013, STA asked PG&E to sign Caltrans’ standard utility agreement to relocate the gas plant. At the time, neither Caltrans nor STA believed that the Buy America requirements applied to utility relocations that are not funded with federal dollars. Since that time, FHWA advised the state transportation agencies that it interpreted a new Buy America provision in the Moving Ahead for Progress in the 21st Century (MAP-21) Act as requiring that utilities comply with Buy America if a utility relocation is related to a larger transportation project that will receive federal funds. By the time STA was made aware of this

interpretation and asked PG&E to sign a modified utility agreement certifying compliance with Buy America, PG&E advised STA and Caltrans that it could not comply with Buy America in sufficient time to be able to relocate the gas plant before the start of the winter heating season. If PG&E cannot begin work on the relocation immediately, it will not be able to relocate the gas plant until next spring, which would significantly delay the Project and cause the project to lose $35.4 million in state Proposition 1B Trade Corridor funds, which expire if not obligated in 2013.

In its letter to Caltrans Director Malcolm Dougherty dated June 27, PG&E identified certain critical steel or iron parts for the gas plant relocation that are not currently available in the United States. It also has noted that it has ordered and received most if not all of the parts that are required for the relocation and would not be able to secure new parts in sufficient time to complete the utility relocation before the winter heating season. PG&E raised other concerns regarding the need to establish a certification process for U.S.-sourced parts. We understand that PG&E is working to establish a procedure to comply with Buy America in the future, but that it cannot comply with Buy America in connection with the utility relocation necessary for the I-80/I-680/SR 12 project without delaying the project by at least a year and causing STA to forfeit critical dollars for the project. Delaying the project also would delay the jobs that will be created in Solano County which was hard hit by the recession.

Grounds for Waiver

STA believes it is in the public interest to grant a waiver to Caltrans for PG&E’s utility relocation. Not only do the circumstances make it impossible for PG&E to comply with Buy America within the necessary time frame to ensure that the larger project can move forward, but the entire utility relocation is $21 million of which only $2.18 million is allocated for materials.

STA understands the importance of Buy America to increasing and sustaining U.S. jobs and a U.S. manufacturing base. However, STA supports Caltrans’ waiver request because of the need to phase in the Buy America requirements so that utilities can find local sources for their parts and allow the I-80/I-680/SR 12 Project to proceed to construction.

Michael P. Melaniphy, APTA 07/15/2013
On behalf of the more than 1,500 member organizations of the American Public Transportation Association (APTA), I write to provide comments on the Federal Highway Administration’s (FHWA) notice concerning the California Department of Transportation’s (Caltrans) request for a waiver of Buy America requirements related to utility relocation, published online on July 3, 2013.

About APTA

APTA is a non-profit international trade association of more than 1,500 public and private member organizations, including public transit systems; high-speed intercity passenger rail agencies; planning, design, construction and finance firms; product and service providers; academic institutions; and state associations and departments of transportation. More than ninety percent of Americans who use public transportation are served by APTA member transit systems.

APTA speaks for its members. Its Board of Directors reiterated that fact on March 9, 2013, when it adopted the following statement: “While APTA encourages its members to provide specific examples or impacts in support of the association's positions, APTA crafts its comments to represent those of all APTA members. The association goes to great lengths to ensure its regulatory comments represent the consensus views of our members. Every APTA member has the opportunity to review drafts, participate in discussions, and assist in crafting those consensus comments. In short, we speak with a single voice and, when the rare instance occurs that we cannot reach consensus, we do not speak at all. APTA's comments are those of our more than 1,500 members. This consensus-based method of crafting regulatory comments is a factor underlying APTA's selection of one of Washington's most trusted brands in a broad survey conducted by the National Journal and we encourage all federal agencies to recognize the representative nature of the association's regulatory comments.”

APTA SUPPORTS THE CALTRANS REQUEST

On June 28, 2013, APTA and nine of our partner organizations urged both outgoing Secretary LaHood and incoming Secretary Foxx to preclude delays in highway and public transportation projects across the country occasioned by the decision to apply Buy America requirements to utility relocation agreements. As explained in our joint letter, a copy of which is attached hereto, utility relocation has historically been treated as a real estate transaction rather than as a procurement contract. As such, Buy America was never held to apply to these transactions.

Faced with this substantial policy shift, and without clear guidance on how Buy America compliance will even be defined, both project sponsors and utilities are unable to certify, in good faith, that utility relocation work complies with the requirements.

Moreover, as part of this joint organization letter, we have requested consistent, Department-wide, policy, interpretation, and guidance, so utilities are not forced into inconsistent compliance models when looking at highway or transit projects.

Given the uncertainty of Buy America compliance requirements, the immense cost of project delays, and the need for broad based industry engagement before a workable solution is reached, we believe FHWA must approve this waiver. To deny the waiver would be to sacrifice thousands of known jobs for a handful of potential jobs and further delay and disillusion both highway and transit users.

We appreciate FHWA’s consideration of our comments and the comments of our partner organization. For additional information, please contact James LaRusch, APTA’s chief counsel and vice president-corporate affairs, at (202) 496-4808 or jlarusch@apta.com.

Darrell Johnson 07/15/2013
Letter available upon request
Michael P. Melaniphy, APTA 07/15/2013
Comments submission attachment.

June 28, 2013

The Honorable Ray LaHood, Secretary The Honorable Anthony Foxx, Secretary-Designate U.S. Department of Transportation 1200 New Jersey Ave, SE Washington, DC 20590 Re: Application of Buy America Requirements to Utility Relocations

Dear Secretary LaHood and Secretary-Designate Foxx:

We are writing to request your assistance in addressing an issue that has the potential to create substantial delays and increased costs for transportation projects across the country with attendant adverse effects on jobs and the economy – the application of Buy America requirements to materials used in utility relocation agreements. Your leadership is needed to resolve the uncertainty that has resulted from the decision by the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) to begin applying Buy America requirements to utility relocation agreements.

Since utilities and the companies that make the materials used in utility relocation have not been subject to Buy America historically, we believe that a transition period is needed. During this transition period, the process of compliance for utility relocation can be clarified, waivers can be issued where appropriate, and education and training of affected industries can occur. Most importantly, transportation projects can move forward. We believe utility relocations should not be subject to Buy America requirements during this transition period.

At the outset, we would like to emphasize our support for the application of Buy America requirements to transportation projects. Buy America requirements help to promote American jobs by requiring the use of American-made iron, steel, and manufactured products in transportation facilities and vehicles built with federal funds. These requirements have been implemented effectively for many years through a strong cooperative relationship among transportation agencies and their construction contractors and suppliers. While the goal of Buy America is to promote American jobs, a recent change in the U.S. Department of Transportation’s (USDOT) implementation of the statute presents a substantial risk of having precisely the opposite effect.

Our concern involves the recent efforts by FHWA and FTA to begin applying Buy America requirements to materials used as part of utility relocation agreements. Utility relocation agreements arise when utility companies are required to move their existing infrastructure to accommodate construction of federally supported transportation projects.

Historically, FHWA and FTA applied Buy America requirements only to construction contracts – that is, to contracts in which a recipient of federal funds engages in a procurement process and selects a construction contractor to build a transportation facility. Buy America requirements were not applied to utility relocation agreements because those agreements were treated as the equivalent of compensation payments to affected property owners. Unlike State and local agencies, and any construction contractors who voluntarily bid to participate in such projects, utilities are essentially required by the State and local agencies to relocate their facilities to accommodate the work of such contractors. This longstanding interpretation is evidenced by the fact that FHWA and FTA do not mention utility relocations, even briefly, in their extensive Buy America regulations and guidance.

Within the past year, FHWA and FTA have made a policy change: they have begun to inform State and local transportation agencies that Buy America requirements do apply to utility relocation agreements. FHWA has acknowledged that this interpretation represents a shift in policy and has cited Section 1518 of the Moving Ahead for Progress in the 21st Century Act (MAP-21) as the basis for the policy shift. FTA indicated that they do not believe there has been a change in policy, but rather has described its position as simply a heightened emphasis on enforcement of a long-standing requirement. Either way, the practical effect is the same: for the first time, State and local transportation agencies are being required to ensure that all utility relocation agreements comply with Buy America requirements. Under this policy, utilities have to comply with Buy America rules even in cases where the relocation is funded with non-federal dollars. Moreover, they are being asked immediately to comply with new requirements without the benefit of clear guidance and a rulemaking to explain how utilities will demonstrate Buy America compliance.

Currently, State and local transportation agencies are attempting to accommodate the uncertainty created by this policy change by working cooperatively with FHWA, FTA, and utilities to develop solutions that avoid major delays of transportation projects. For example, our understanding is that FHWA has provided some flexibility by permitting projects that were approved prior to the effective date of MAP-21 (October 1, 2012) to proceed. But these types of short-term solutions will help only some projects. Many other projects will be delayed because, at this time, utilities are not certain as to what Buy America compliance entails. Many materials used in utility relocation have long lead times and some are not domestically available. As a result, utilities are not able to certify that the materials used in relocation efforts necessary to facilitate transportation projects satisfy Buy America requirements at this time. The California Department of Transportation recently presented USDOT with information about the compliance challenges for utilities in that State and the multimillion-dollar projects that are likely to be delayed as a result. These examples are not unique to California and illustrate how uncertainty about how to apply Buy America requirements to utility relocation agreements is affecting major projects, increasing costs and jeopardizing jobs.

If it is decided that Buy America requirements should be applied to utility relocation agreements, it will be necessary to provide a reasonable framework that allows utilities to comply without disrupting ongoing projects. We believe this framework needs to include several key elements and should:

• Clarify the requirements. • Allow a transition period. • Apply timely, streamlined waivers where appropriate. • Establish consistent requirements for utility relocations across transportation modes. • Provide training and education. We briefly address each of these issues below. Until this framework is in place, we believe utility relocations should not be subject to Buy America requirements. Given that utility relocations are very small projects in comparison to the larger transportation projects at issue, the vast majority of the iron, steel and manufactured products that will be used in transportation projects in the interim will be Buy America-compliant.

Clarify the Buy America requirements for utility relocations. As noted above, utility relocations are not mentioned anywhere in FHWA and FTA’s existing Buy America regulations.1 FHWA and FTA’s guidance documents on Buy America also do not mention utility relocations, except for a handful of “Buy America Questions and Answers” posted to FHWA’s website in December 2012.2 As a result, transportation agencies and utilities do not have answers to important questions such as how FHWA’s exemption (set forth in a December 2012 memorandum) for manufactured products that are less than 90% steel or iron content applies to the various types of materials used in utility relocations; who is responsible for certifying compliance with Buy America requirements for utility relocations; what form that certification should take; and what happens if a utility relocation is later found to be non-compliant with Buy America requirements. This lack of information is exacerbated by the fact that the FHWA and FTA guidance differs – for example, FTA has not provided similar guidance on manufactured products and has yet to provide definitions for components and subcomponents of utility systems. We recommend that these issues be addressed initially through guidance and ultimately in regulations adopted through notice-and-comment rulemaking, during which the particular interests and concerns of utilities could be considered.

Allow a transition period for utilities to come into compliance. As a practical matter, a transition period is needed. First, the equipment used in utility relocation efforts is often project-specific and not fungible. Because lead times for utility equipment orders can be substantial, many projects that are ready for construction would grind to a halt while new, Buy America-compliant equipment and materials are ordered (if, indeed, they are ultimately found to be available). Second, utilities are in the process of reassessing and reconfiguring diverse supply chains, and adjusting their internal controls to account for domestic content. Many utilities will need to identify new suppliers and manufacturers (to the extent they are available), especially for specialized products that are either not currently manufactured in the United States or are produced here but not in full compliance with Buy America. For utilities, the products must not just meet domestic content standards, but must be interoperable with their existing infrastructure and meet standards for safety, effectiveness, and reliability. A transition period that allows for a sufficient time for new regulations and guidance to be developed, for training to occur, for new equipment to be ordered, and for utilities’ supply chains and internal systems to be modified is needed.

Apply waivers where appropriate. Transportation agencies and their contractors have had decades of experience with Buy America requirements as applied to transportation construction contracts. This experience has enabled contractors to minimize the need for waivers by identifying and cultivating American suppliers for materials commonly used in transportation projects. By contrast, utilities have not been subject to Buy America requirements, so in the short run at least, utilities would likely have a significantly greater need for waivers. For example, electric and natural gas utilities use many specialized products, which are critical to the safety and stability of the transmission and distribution systems. Over time, it may be possible to develop domestic suppliers for these products. But in the near term, because of obtaining materials not currently made in the United States and the long lead times associated with obtaining specialized utility products, waivers are likely to be needed more frequently for utility relocations than for general construction activities typically included in transportation projects. Accordingly, we recommend that DOT establish clear procedures for obtaining waivers where necessary due to insufficient quantity, quality or timely availability. Moreover, since many utilities do business in multiple States and the same non-compliant materials are likely to resurface in multiple projects, we believe that establishing a streamlined procedure for waivers (including ensuring that utilities themselves may make such requests) and waivers that could be obtained for a particular material throughout the country (versus on a project by project basis) would be warranted.

Ensure that Buy America requirements for utility relocations are consistent. Under federal law, each USDOT modal administration is subject to a different Buy America statute, and each modal administration has implemented Buy America requirements through its own regulations and guidance. As a result, while the basic elements of Buy America requirements are similar across all modes, there are some important differences. For example, as noted above, FHWA has issued guidance clearly exempting some manufactured products; FTA has no such waiver. If utilities are required to comply with Buy America requirements, it would be extremely inefficient to force them to follow different rules, develop different accounting protocols and seek out different suppliers depending on whether the utility relocation is associated with a highway project or a transit project. The same rules should apply to utilities, regardless of the type of project the relocation of utility equipment makes possible. Because of the substantially larger number of highway projects that are potentially impacted, we recommend that USDOT adopt the Buy America processes developed and administered by FHWA.

Provide appropriate training and education. The expansion of Buy America requirements to include utility relocations must be accompanied by a large-scale training and education effort. Hundreds of utilities across the country – as well as the accompanying network of suppliers and manufacturers – are faced with a steep learning curve as they become familiar with a complex set of legal requirements that previously have not applied to their activities. Non-compliance with those requirements could have serious consequences, both for the utilities and for State and local transportation agencies. Common sense suggests that implementation of these new requirements must include not only the development of new regulations and guidance, but also training programs to ensure the new requirements are well-understood and consistently applied and enforced throughout the utility industry.

In closing, we would like to emphasize our willingness to work cooperatively with you and with each of the modal administrations to achieve a constructive resolution that promotes the goals of the Buy America programs while also allowing transportation projects and the utility relocations associated with them to move forward without delays.

Sincerely,

American Association of State Highway and Transportation Officials American Gas Association American Public Power Association American Public Transportation Association Community Streetcar Coalition Edison Electric Institute Interstate Natural Gas Association of America National Rural Electric Cooperative Association NTCA-The Rural Broadband Association New Starts Working Group United States Telecom Association

1 FHWA’s Buy America regulations are in 23 CFR 635.410, and FTA’s Buy America regulations are in 49 CFR Part 661. The word “utility” does not appear in either set of regulations. FHWA also has regulations on utility relocations in 23 CFR Part 645; those utility regulations do not contain a single reference to Buy America. USDOT’s regulation at 49 CFR Part 24, “Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally-Assisted Programs,” specifically discusses utility relocation in paragraph 306 without mention of Buy America or other third party contract provisions. 2 FHWA’s Contract Administration Core Curriculum Manual (2006) includes detailed instructions for federal-aid highway construction contracts. Section II.B.1 of the manual discusses Buy America, but that section does not mention utility relocations. FTA’s Third-Party Contracting Guidance, Circular 4220.1F (March 2013) includes detailed instructions regarding FTA-funded construction contracts. Several sections of the Circular address Buy America requirements, but none of those sections mention utility relocations.

cc: Administrator Victor M. Mendez, Federal Highway Administration cc: Administrator Peter M. Rogoff, Federal Transit Administration

Matthew DeLong, Michigan Department of Transportation 07/17/2013
I am responsible for utlitity issues for the Michigan Department of Transportation. I fully support granting of the waiver requested by CALTRANS.

While I am in full support of the Buy America goals and objectives, the current implementation has two major flaws: 1) The ability or inability of utilities (in the near term) to certify that the materials they are using meet Buy America requirements and the resulting impacts on critical transportation projects; and 2) The basic constitutional problem posed by the application of Buy America requirements to the utility portion of a transportation project where the impacted utility has property rights.

In regard to issue number 1, it has become very clear that retooling of the supply chain and development of the necessary processes for utilities to acquire and certify Buy America compliant materials is simply taking time to complete. FHWA has recently issued new guidance on this issue granting needed flexibility. This is a good first step.

Under issue number 2, Buy America has placed states in an untenable position in that the 5th amendment to the U.S. consititution provides that property cannot be take with Just Compensation. Under the Buy America provisions, states are forced to require that a property owner follow specific rules and requirements as to what they can do with their Just Compensation. Utilities, under their consitutional rights can simply say, "No. Give me my payment of just compensation and let me have the quiet enjoyment of my remaining property (if any)." States are now in a situation where the project cannot be built with federal participation because a property owner, exercising their rights under the constitution, has refused to comply. It places states in a position of respponsibilility without authority. FHWA has stated that the provision of MAP-21 requires that Buy America apply to all situations where federal funds are involved. This disregards the legitimate and overarching question that is being asked. FHWA must address this question, regardless of what MAP-21 provides: Can the constitutional rights of a property owner to receive Just Compensation be abridged by a requirement to spend those proceeds only on Buy America compliant materials?

Fairfield-Suisun Chamber of Commerce 07/17/2013
The Fairfield-Suisun Chamber of Commerce is writing to urge the Federal Highway Administration to approve the California Department of Transportation’s (Caltrans) June 27, 2013 request for a waiver of the Buy America requirements as they apply to Pacific Gas & Electric’s (PG&E) relocation of a gas transmission valve field station and ancillary facilities to accommodate the Interstate 80/I-680/State Route 12 improvements in Solano County, California (the “Project”). We SUPPORT the Caltrans waiver request: • The Interstate 80/I-680/State Route 12 improvements Project involves construction of new interchanges that will reduce congestion, reduce local traffic, improve freeway access, accommodate current and future truck traffic, improve access to truck lanes and truck scales, improve safety conditions and provide better access to HOV lanes. • The overall project is $700 million. The initial construction package of $110 million is delayed and could be unfunded should this Buy America waiver not be granted. • Delaying the project also would delay the 1,200 jobs that will be created in Solano County which was hard hit by the recession. • If PG&E cannot begin work on the relocation immediately, it would significantly delay the Project and likely cause the project to lose $35.4 million in state and federal funds which will expire. • PG&E has now identified certain critical steel or iron parts for the gas plant relocation that are not currently available in the United States, which is the subject of this specific waiver request. • PG&E is working to establish a procedure to comply with Buy America in the future, but that it cannot comply with Buy America in connection with the utility relocation necessary for the I-80/I-680/SR 12 project without delaying the project by at least a year and causing the forfeiture of critical state and federal funding for the project. • The entire utility relocation is $21 million of which only $2.18 million is allocated for materials. • The circumstances make it impossible for PG&E to comply with Buy America within the necessary time frame to ensure that the larger project can move forward. • Therefore, it is in the public interest to grant a waiver to Caltrans for PG&E’s utility relocation. • Solano County understands the importance of Buy America to increasing and sustaining U.S. jobs and a U.S. manufacturing base. However, the waiver is critical because of the need to phase in the Buy America requirements so that utilities can find local sources for their parts and allow the I-80/I-680/SR 12 Project to proceed to construction. The Fairfield-Suisun Chamber of Commerce believes it is in the public interest to grant a waiver to Caltrans for PG&E’s utility relocation. Not only do the circumstances make it impossible for PG&E to comply with Buy America within the necessary time frame to ensure that the larger project can move forward, but the entire utility relocation is $21 million of which only $2.18 million is allocated for materials. The Fairfield-Suisun Chamber of Commerce understands the importance of Buy America to increasing and sustaining U.S. jobs and a U.S. manufacturing base. However the waiver is critical because of the need to phase in the Buy America requirements so that utilities can find local sources for their parts and allow the I-80/I-680/SR 12 Project to proceed to construction.

Eric Cimo 07/19/2013
The Delaware Department of Transportation supports the Caltrans/PG&E waiver request. Though Buy America has been around for many years, recent interpretation of the policy has caused many companies to quickly change their practices. This is not realistic and has led to country wide frustrations. Additionally, according to the summary provided at the beginning of this forum, the non-Buy America materials come in at 0.0013% of the project costs which is under 0.1% requirement in 23 CFR 635.410(b)(4). Should this waiver not be approved the project will be delayed and Caltrans and PG&E will incur higher costs. Unfortunately, these issues will directly impact the public leading to frustration due items such as traffic delays, poor infrastructure, and higher utility rates. In general, it seems that companies, such as PG&E, are committed to meeting the Buy America requirements but are not able to comply with recent deadlines given complexities of some projects.

In relation to this waiver, we also ask that FHWA clarify the constitutional issues referred to in other comment posts in regards to Buy America requirements and property rights.

Leslie Wright 07/19/2013
Puget Sound Energy, a subsidiary of Puget Energy, is Washington state’s oldest local energy company. We serve more than 760,000 natural gas customers, and more than 1.1 million electric customers in 10 counties in Washington. We meet the energy needs of our customers, in part, through cost-effective energy efficiency, procurement of sustainable energy resources, and far-sighted investment in energy-delivery infrastructure. We are regulated by the Washington Utilities and Transportation Commission (WUTC) with a charge to provide safe and reliable service to customers at reasonable rates. Puget Sound Energy fully supports the California Department of Transportation’s request for a waiver of Buy America requirements for various components related to the relocation of PG&E’s natural gas facilities in Solano County, CA based on the fact that for some components used in the operation of a natural gas system, particularly steel gas valves, the materials are not produced in the United States in sufficient and reasonably available quantities. We are in the planning stages of a natural gas system relocation project that may result in issues similar to those that are presently faced by PG&E. We respectfully submit our support and thank you for your consideration.

Philip Bennett 07/19/2013
U. S. Department of Transportation Federal Highway Administration Construction Contract Administration Docket

Re: Comments on Caltrans’ Request for Limited Waiver from “Buy America” Requirements to Utility Relocations

The American Gas Association (AGA), founded in 1918, represents more than 200 local energy companies that deliver clean natural gas throughout the United States. There are more than 71 million residential, commercial and industrial natural gas customers in the U.S., of which 92 percent — more than 65 million customers — receive their gas from AGA members. AGA is an advocate for natural gas utility companies and their customers and provides a broad range of programs and services for member natural gas pipelines, marketers, gatherers, international natural gas companies and industry associates. Today, natural gas meets almost one-fourth of the United States' energy needs

AGA appreciates the opportunity to submit comments on the waiver requested by the California Department of Transportation (Caltrans) from the Federal Highway Administration (FHWA) regarding provisions in the “Buy America,” Moving Ahead for Progress in the 21st Century Act, 23 United States Code Section 3(g). AGA strongly supports the limited waiver from provisions of “Buy America” for a subset of Pacific Gas & Electric (PG&E) utility materials necessary for the relocation project referred to as the “Cordelia I-80/I-680/State Route (SR) 12 Project” which is designed to reduce congestion, accommodate increases in traffic and address safety concerns.

The vast majority of materials used on this important highway project will meet “Buy America” requirements. The public safety and job benefits derived from advancing this project are in the public interest. In the letter from PG&E to Mr. Malcolm Dougherty, Director Caltrans, dated June 27, 2013, PG&E explained that many of the materials for the relocation project were obtained in good faith but cannot not be certified by PG&E, or the suppliers, that the iron or steel in those materials is of United States origin. The waiver is needed by July 15, 2013 so that the relocation of natural gas facilities can be completed before the onset of the winter heating season without compromising safety and reliability of gas service.

AGA also believes it is important that the FHWA and Federal Transit Administration (FTA) decide if “Buy America” requirements should be applied to utility relocation agreements and, if necessary, provide a reasonable framework for utilities to comply without disrupting ongoing projects. AGA believes this framework would need to include several key elements:

• Clarify the requirements. • Allow a transition period. • Apply timely, streamlined waivers where appropriate. • Establish consistent requirements for utility relocations across transportation modes. • Provide training and education.

Each of these issues were addressed in the letter to Mr. Anthony Foxx, Secretary of Transportation, dated June 28, 2013, from AGA and other trade associations. Until this framework is in place, AGA believes utility relocations should not be subject to “Buy America” requirements. Given that utility relocations are very small projects in comparison to the larger transportation projects at issue, the vast majority of the iron, steel and manufactured products that will be used in transportation projects in the interim will be “Buy America” compliant.

In closing, AGA emphasizes its support for the application of “Buy America” requirements to transportation projects. “Buy America” requirements help to promote American jobs by requiring the use of American-made iron, steel, and manufactured products in transportation facilities and vehicles built with federal funds. AGA is willing to work cooperatively with each of the modal administrations to achieve a constructive resolution that promotes the goals of the “Buy America” programs while also allowing transportation projects and the utility relocations associated with them to move forward without delays.  

If you need additional information, please feel free to contact me.

Respectfully submitted,

Philip Bennett Managing Senior Counsel Operations and Safety

cc: Administrator Victor M. Mendez, Federal Highway Administration Administrator Peter M. Rogoff, Federal Transit Administration

Steve Walker 07/19/2013
The Alabama Department of Transportation supports granting the CALTRANS PG&E waiver request because of the implication to all states. The new Federal Highway Administration, FHWA, application of the Buy America requirements to utility agreements is a departure from past practice. The MAP 21 addition to the longstanding Buy America requirement made no inference to the inclusion of utility agreements. The language in the new MAP 21 addition is consistent with past language and specifies contracts only. This is an important distinction.

State Departments of Transportation voluntarily enter into funding agreements with the Federal Highway Administration that include the stipulation of numerous federal requirements associated with the use of federal funds. In turn, State DOT’s regularly enter into contracts for public works projects that include Buy America requirements. These contracts are voluntary and mutually beneficial to the DOT’s and to the contractors. The DOT specifies the required materials and when the project is completed the improvement is publicly owned and operated.

Utility relocation agreements, however, are very different in nature. The relocation is compulsory, and the intent of the relocation is to clear the project conflict and to make the utility whole. The utility does not benefit from the relocation. The utility company is required to pay for any improvements it makes to the facility as a part of the relocation that are above and beyond that which is required to make it whole. When the relocation is completed the facility is owned and operated by the utility company.

FHWA makes a clear distinction in the applicability of federal contract provisions and federal laws between federally reimbursable contracts that are State-let and those that are Utility-let or Utility continuing contracts. For example, the Davis-Bacon Wage Rate requirements and EEO requirements are not applicable for Utility-let contracts. Also other federal laws such as the Clean Air Act are not applicable. This is outlined in the FHWA Program Guide for Utility Relocation and Accommodation on Federal-Aid Highway Projects. The link is http://www.fhwa.dot.gov/reports/utilguid/util1b.cfm . Based on consistency with these determinations, the Buy America requirements should not apply to Utility-let contracts and continuing contracts.

We respectfully believe the federal government has overreached its authority by implementing a requirement that goes beyond making the utility whole in the required relocation. The federal government has not acquired the right to dictate the materials that must be used.

Mat Flores, Colorado Department of Transportation 07/19/2013
I am responsible for resolving utility issues for the Colorado Department of Transportation. I fully support granting of the waiver of Buy America requirements related to the utility relocation on the Cordelia I-80/I-680/SR 12 project requested by CALTRANS.

The State of Colorado supports the Buy America goals and objectives. Like many of Colorado’s highway construction projects, time is not a luxury for the California Cordelia project. If the project does not move forward immediately, federal dollars and jobs that this country sorely needs will be lost.

I also believe that the Buy America requirements have not been sufficiently transitioned into effect giving utility companies enough time to redesign for domestic parts manufacturing and stockpiling.

Christopher Weld 07/19/2013
July 19, 2013

The Honorable Victor M. Mendez Administrator Federal Highway Administration 1200 New Jersey Ave., SE Washington, DC 20590

Dear Administrator Mendez:

On behalf of Nucor Corporation (“Nucor”), a major steel producer and recycler in the United States, we hereby submit the following comments on the California Department of Transportation’s (“Caltrans”) June 27, 2013 request to waive the Buy America requirements as they apply to the Pacific Gas and Electric (“PG&E”) relocation of utility natural gas service facilities. For the reasons detailed below, we respectfully request that the Federal Highway Administration (“FHWA”) deny this waiver request for those products that are manufactured in the United States.

First, Nucor urges the FHWA to carefully scrutinize this waiver request, in part due to the significant scope and breadth of the request. The waiver request covers 167 parts and products and accounts for nearly 40 percent of the cost of materials needed for the relocation work. Moreover, the U.S. steel industry is still recovering from the Great Recession, currently operating at less than 80 percent of capacity utilization, and would be producing substantially more steel if demand conditions were more favorable.

Second, the vast majority of the products covered by the Caltrans waiver request are manufactured in the United States. As PG&E acknowledges, 153 of the 167 parts and products subject to the waiver request are available from sources that manufacture these products in the United States. (See page 4 of the PG&E “Enclosure”). Nucor produces several of the steel products subject to the waiver request; specifically, Nucor produces a wide variety of rebar and steel plate products in the United States and is able to supply these Buy America-compliant products with minimal lead-times (including items 144, 149, and potentially items 150-153 listed in the exhibit of the waiver request). Many of the other products subject to the waiver request are basic, commodity steel products that are available from U.S. producers with minimal lead-times, because, as noted above, the U.S. steel industry has substantial unused capacity available.

As a result, granting this waiver request would undermine the very purpose of the Buy America requirements, which is to ensure that Federal-aid dollars are used to purchase iron and steel products that are manufactured in the United States. Indeed, granting a blanket waiver for those products that are available from domestic sources is contrary to the statute and subsequent agency rulemaking, which require that all the steel and iron used in Federal-aid highway projects are produced in the United States when such products are available in sufficient and reasonably available quantities. (See Section 165 of the 1982 Surface Transportation Assistance Act and the implementing regulations found at 23 U.S.C. § 635.410).

Third, the justifications for the waiver request offered by Caltrans and PG&E are not recognizable under the law and are explicitly rejected by prior FHWA guidance. PG&E acknowledges that 153 of the 167 parts and products subject to the waiver request are produced in the United States, but suggests that a waiver is warranted because such products are available only with “potential increased price and lead-time.” (See page 4 of the PG&E “Enclosure”). With respect to “price,” the statute and regulations provide for a Buy America waiver only if the cost of including domestic material will increase the cost of the overall contract by more than 25 percent. Caltrans and PG&E provide no evidence that utilizing domestic steel and iron products on the project at issue would increase the cost of the contract by more than 25 percent. As a result, a waiver based on price or cost is not justified under the law.

Nor is a waiver based on “increased … lead-times” recognized in either the statute or regulations. In fact, FHWA guidance explicitly rejects lead-times as a basis for a waiver. FHWA’s Contract Administration Core Curriculum Participant’s Manual and Reference Guide 2006 states that “[w]hen domestic steel products are available, meeting the contractor’s schedule should not be the basis for requesting a Buy America waiver.” Moreover, Caltrans and PG&E provide no evidence of the alleged “long lead-times” of the domestic products or that the purchase of such material would result in project delays. In fact, as noted above, many of the products subject to the waiver request are available from domestic sources with minimal lead-times. Nor have Caltrans and PG&E provided any evidence that they actually attempted to purchase domestic product when they allegedly become aware of the Buy America requirements in March 2013. Instead, these entities delayed three months before submitting their June 27, 2013 waiver request. Finally, according to FHWA guidance, waivers based on public interest should be rare, such as during an emergency situation or to evaluate a steel product on an experimental basis (See FHWA’s Buy America Q and A for Federal-aid Program at Q&A No. 8). Caltrans and PG&E have not demonstrated that a public interest waiver is warranted in this case, as the justification offered by these entities does not meet this high standard.

Fourth, Caltrans and PG&E had ample notice of the applicability of Buy America requirements to utility relocation projects. Buy America requirements have long applied to utility relocation projects (indeed, well prior to MAP-21), so Caltrans and PG&E should have been aware that Buy America requirements could have applied to this project. While MAP-21 broadened the applicability of the Buy America requirements to non-Federally funded utility relocation projects, MAP-21 was signed into law more than one year ago, providing ample time for Caltrans and PG&E to purchase compliant material. In fact, according to PG&E, the material for this relocation project was not purchased until after January 17, 2013 – 6 months after enactment of MAP-21 and 1 month after FHWA’s December 2012 memorandum clarifying the applicability of Buy America to utility relocation projects. (See page 3 of the PG&E “Enclosure”).

For these reasons, we respectfully request that FHWA deny Caltrans’ waiver request for those products that are manufactured in the United States. We appreciate that Caltrans and PG&E are working to ensure that their supply chains are Buy America compliant, and urge them to do so in a prompt and transparent manner. To the extent that FHWA grants this waiver request, Caltrans and PG&E should be held accountable for future compliance with the Buy America requirements, including through FHWA-imposed benchmarks and timetables.

Thank you for your consideration of this request.

Sincerely,

Christopher B. Weld Counsel to Nucor Corporation

Peter Ouborg 07/19/2013
PG&E hereby responds to certain comments posted above that recommend a denial of the Caltrans request for waiver: 1. Some commenters state that PG&E should be able to certify compliance since it was well aware of the requirements. As PG&E stated in its letter to Caltrans: “Unfortunately, PG&E did not receive notice of the need to comply with the FHWA’s Buy America requirements until March 26, 2013. By that time, in reliance on an earlier contract with STA that did not specify Buy America compliance, PG&E had ordered the necessary pipeline materials and parts for the relocation work from its existing reputable and qualified suppliers without any Buy America requirement. As a result neither PG&E nor its suppliers can certify Buy America compliance for these materials. As detailed below, the lead times necessary for meeting the FHWA’s Buy America requirements at this time will prevent PG&E from completing the relocation of its critical energy infrastructure in 2013 which in turn, will prevent the citizens of California from reaping the benefits of the Cordelia transportation project.” 2. Several commenters allege that certain items (valves, pipes, nipples, and other fittings) are available domestically. The materials for which a waiver is necessary include products that are potentially available domestically, and certain items that are not, such as large valves. With respect to lead times for PG&E to obtain these items from Buy America sources, PG&E estimates that three months (for the more routine items available from domestic sources) to more than two years (for certain gas valves that are not available domestically) will be required. In particular, due to the large size of transmission pipes connected to the gas valve field station, a number of the gas pipeline system materials and products required for the relocation (including steel pipe products, gas valves larger than 24 inches, gas regulators, and associated equipment) are highly specialized requiring long procurement lead times. These items are also subject to stringent regulatory, safety, and reliability requirements. Absent a waiver, these lead times will delay the Cordelia project well into the future since construction has to start immediately to allow the gas valve field relocation to be safely and reliably completed in 2013. 3. Some commenters state that neither Caltrans nor PG&E have shown any attempts to locate, price or buy any of these items. To the contrary, as stated in the PG&E letter to Caltrans, PG&E and Caltrans have undertaken intensive efforts to identify domestic sources of these materials: ”Starting in April, after learning from Caltrans of the Buy America requirements for Cordelia and other projects, PG&E began to develop a list of items associated with pending gas and electric relocation projects. This review involved looking at almost 70 projects and at last count the product list comprises over 1,200 material codes. On a project-specific basis (such as for Cordelia) PG&E engineers are meeting with Caltrans engineers and regional FHWA personnel to go through each material line item and determine (1) is the item subject to Buy America and (2) if so, what options are available for compliance. These reviews are very time consuming. The Cordelia review took a full day in Sacramento on June 20 and additional clarification is still needed for a number of the Cordelia materials as to the applicability of Buy America. Additional project-specific material list reviews are anticipated, as PG&E and Caltrans engineers collaborate and share knowledge of the specialized utility equipment and its function. For items identified as non-Buy America compliant, PG&E conducts additional review with its suppliers or researches alternate suppliers. This step is time consuming since it involves multiple email exchanges, clarifying calls, and other communications with distributors and suppliers for each item.”

Kevin Damron 07/19/2013
In the interest of expeditious and efficient completion of the work needed, the Kentucky Transportation Cabinet recommends acceptance of the waiver proposed by Caltrans. It is our general belief that the execution of much needed road improvements put Americans to work and provide avenues for further American economic development. We support California’s effort to perform these road improvements. It is damaging to the community to delay or potentially cease needed roadwork activities as a result of certification of components within a privately held facility that is impacted by the road work proposed. It is our belief that privately held property should be secured at the discretion of the owner within the bounds of the law. The foundation of utility relocation work performed on behalf of a road improvement is founded on the company’s right of property, and the fact that they are being impacted by road construction does not negate their property right. We have an obligation under federal guidance to make the company whole which is defined within the bounds of State law. We execute agreements with the company to make them whole. There is no benefit to the company for entering into that agreement beyond restoring their facility to its original condition. A contract requires that parties receive an ‘ascertainable benefit’, and in the case of utility relocations, there is no such benefit for the company. In short, we cannot treat utility companies as if they are road contractors, because they have not willingly come to the table, there is no benefit beyond being restored.

Thomas Kuhn 07/22/2013
Letter available upon request
Mike Thompson 07/22/2013
Letter available upon request
Caltrans 07/23/2013
Letter available upon request

Contact

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Office of Program Administration
202-366-1558
E-mail Edwin

 
 
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Updated: 06/23/2014
 

FHWA
United States Department of Transportation - Federal Highway Administration