AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYNo
On December 4, 2015 President Obama signed into law the 'Fixing America's Surface Transportation Act,' also known as the 'FAST Act' (Public Law No. 114-94).Division E of the bill, entitled the 'Export-Import Bank Reform and Reauthorization Act of 2015,' reauthorizes the Export-Import Bank through Fiscal Year 2019. It also makes numerous changes in the operation of the institution (e.g., the establishment of an Office of Ethics, a Risk Management Committee, and a Chief Risk Officer within the bank). One provision in the division states that, 'Not later than 180 days after the date of the enactment of the Export-Import Bank Reform and Reauthorization Act of 2015, the President shall submit to Congress a proposal, and a strategy for achieving the proposal, that the United States Government will pursue with other major exporting countries, including OECD members and non-OECD members, to eliminate over a period of not more than 10 years subsidized export-financing programs, tied aid, export credits, and all other forms of government-supported export subsidies.' The bill also includes some provisions intended to promote local procurement of goods. Section 3009, for example, makes changes in existing law that are aimed at easing calculations over the cost-effectiveness of domestically produced rolling stock that is purchased through funds appropriated for railroads. The bill also includes a Buy American provision with respect to capital leases. Section 3011 amends section 5323 of title 49 of the United States Code to strengthen the requirements that railroad equipment be procured in the United States. Among other things, this section requires that in fiscal years 2016 and 2017 the procurement of rolling stock (including train control, communication, traction power equipment, and rolling stock prototypes) under this chapter be conditioned upon more than 60 percent of the cost of all components of the rolling stock components and subcomponents produced in the United States, and that this be more than 65 percent in fiscal years 2018 and 2019 and more than 70 percent for fiscal year 2020 and each fiscal year thereafter. The same section also amends the existing rules regarding waivers of the Buy-American rules to provide that any denials of waivers be accompanied by 'a written certification that- (i) the steel, iron, or manufactured goods ... is produced in the United States in a sufficient and reasonably available amount; '(ii) the item produced in the United States is of a satisfactory quality; and (iii) includes a list of known manufacturers in the United States from which the item can be obtained.'
In a pair of Federal Register notices (Volume 81, Number 66) that were both published on April 6, 2016, the Federal Transit Administration (FTA) of the U.S. Department of Transportation addressed the difficulties that it faces in the implementation of new rules requiring an increased level of U.S. content in procurements of rolling stock (i.e., railroad carriages and the like). In the first and most unusual of these notices the FTA took the extraordinary step of articulating the agency's justification for waiving its Buy America requirements for rolling stock under certain limited circumstances, stating that 'application of the increased domestic content requirements is inconsistent with public policy.' The Buy America laws implemented by the FTA were amended by the Fixing America's Surface Transportation (FAST) Act signed into law on December 4, 2015, with an effective date of October 1, 2015, including a phased increase in domestic content for rolling stock. FTA proposes a public interest waiver for the following categories of contracts: (1) For contracts entered into between the FAST Act's effective date and date of enactment (i.e., between October 1, 2015 and December 4, 2015), the increased domestic content requirements for FY2018 and beyond will not apply, regardless of when the vehicles are delivered; and (2) for 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, the increased domestic content requirements for FY2018 and beyond will not apply, regardless of when the vehicles are delivered. FTA is providing notice of this public interest waiver and seeks public comment by April 13, 2016. After consideration of the comments, FTA will issue a second Federal Register notice responding to comments and issuing final public interest waivers. In the second notice the FTA issued a proposed policy statement concerning the department's Buy American policy and requested comments on that statement. Comments must be received by May 6, 2016. The FAST Act amended the rolling stock waiver in 49 U.S.C. 5323(j)(2)(C) to provide for a phased increase in the domestic content of rolling stock. It provided as follows: (1) In general. The Secretary may obligate an amount that may be appropriated to carry out this chapter for a project only if the steel, iron, and manufactured goods used in the project are produced in the United States. (2) Waiver. The Secretary may waive paragraph (1) of this subsection if the Secretary finds that: (C) when procuring rolling stock (including train control, communication, traction power equipment, and rolling stock prototypes) under this chapter (i) the cost of components and subcomponents produced in the United States (I) for fiscal years 2016 and 2017, is more than 60 percent of the cost of all components of the rolling stock; (II) for fiscal years 2018 and 2019, is more than 65 percent of the cost of all components of the rolling stock; and (III) for fiscal years 2020 and each fiscal year thereafter, is more than 70 percent of the cost of all components of the rolling stock; and (ii) final assembly of the rolling stock has occurred in the United States'.' According to FTA, suppliers have asked FTA to provide specific guidance on the applicability of the FAST Act's new Buy America provisions to contracts entered into before or after October 1, 2015, the effective date of the FAST Act. FTA states that it interprets the statute to require that if a recipient or group of recipients enter into a contract for rolling stock after the effective date of the FAST Act, i.e., October 1, 2015, then the new FAST Act provisions for the date of delivery of the rolling stock apply. Thus, for vehicles delivered in FY2018 and FY2019, the domestic content must be more than 65 percent, and for vehicles delivered in FY2020 and beyond, the domestic content must be more than 70 percent. These delivery provisions apply to contracts signed after the effective date of the FAST Act, i.e., October 1, 2015, unless a waiver is granted. The FTA interprets the law to mean that the FAST Act amendments do not apply to contracts entered into before the effective date of the FAST Act, i.e., October 1, 2015, even if the contract provides for the delivery of vehicles after FY2017. For contracts entered into before October 1, 2015, FTA proposes to continue to permit options to be exercised during the contract period even if the vehicles will be delivered outside the five- or seven-year contract term. Recipients who are not direct parties to a contract executed before October 1, 2015, however, may not exercise options ('piggybacking'') on such contracts and apply the lower domestic content requirement. The assignment of options to a third party results in the third party and the vendor entering into a new contract after the effective date of the FAST Act, and therefore, the increased domestic content requirements for FY2018 and beyond will apply to vehicles delivered in those years.
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