OCBC Policy Win! Feds Give Six-Month Grace Period to Avoid Project Shutdowns

Last week, the Department of Transportation and Federal Highway Administration (FHWA) announced it would grant a six-month transition period to utility companies involved in numerous transportation projects across the state to comply with the “Buy America” mandate in Moving Ahead for Progress in the 21st Century (MAP-21) legislation. This grace period is critical in keeping nearly 50 infrastructure projects in California already in construction, or soon to be, from delays that would cost more than $3.2 billion and 180,000 jobs.

“Buy America” is a new federal interpretation that requires infrastructure projects to be built with American-manufactured supplies. In an op-ed originally published June 11 in the Orange County Register, OCBC President and CEO Lucy Dunn wrote, “The irony of ‘Buy America’ is that its implementation will not create jobs, but massive layoffs-exactly the opposite of its sound bite intent and exactly the opposite of what President Barack Obama called for in his May 17 address to rebuild the nation’s infrastructure and spur job creation.”

OCBC has been at the forefront of advocacy on this issue, meeting with former Secretary of Transportation Ray LaHood and Administrator Mendez during the annual advocacy trip to Washington D.C., and partnering regionally with local transportation agencies, to develop a sound strategy to keep California’s transportation projects on track.

MAP-21 was passed last year to build and improve critical infrastructure projects across the nation. But a recent interpretation of the legislation requires any project that receives federal funds to be 100 percent compliant with the Buy America provision; this is to include utility relocations, even if no federal dollars are being used to implement the relocations. However, utility companies have not had to comply with this requirement previously, and they do not have a process in place to certify that every product they purchase for relocation complies with Buy America. Utilities’ supply chain is global, their suppliers numerous, their inventories enormous-while they are willing to make the necessary changes, the process can take months or years to develop protocol to review all chains of supply and contracts that are already in place. And because the California Division of the FHWA now requires utility agreements to be executed prior to the approval of a right of way certification, required to obtain funding approval, construction projects are on hold across the state as they wait for utilities’ ability to comply with Buy America.

Of the projects in danger of delays, Caltrans reported that 10 projects already in construction, accounting for $2.5 billion and more than 20,000 jobs, were suspended or in jeopardy in the very near future due to the Buy America interpretation on utility companies. This included two crucial infrastructure projects in the Southern California region: The Gerald Desmond Bridge and State Route 91 Corridor Improvement Project. The transition period is a good first step to improving the compliance process. However, in order to keep all projects moving now and in the future to prevent job loss and millions in construction delay costs, more time and clarification of federal requirements is needed. For more information contact Bryan Starr, Senior Vice President, Government Affairs.

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