The Reality of 'Buy America'

When a steel girder spans a new bridge, it’s relatively easy to determine whether this monolithic component was made in America. The same can’t be said of a compressor, with its varied components. Given that reality, utilities are in their fifth year of efforts to comply with revisions to federal Buy America mandates, but possible relief is in sight. In 2012, Congress’ passage of the Moving Ahead for Progress in the 21st Century Act (MAP-21) imposed Buy America requirements on subprojects within federally funded highway projects or proposals. Those subprojects often involve utilities that are called on to relocate their facilities and reimbursed for their rights of way, making them subject to the mandate that any products greater than 90 percent steel or iron used in the utility relocation project be melted or made in the United States. The change presented multiple challenges for utilities, whether gas or electric, including:

Procurement: For utilities, “there are certain things we buy that are made internationally and simply not available in the United States,” said Steven J. Troch,
P.E., manager – Gas Engineering & Asset Performance, Gas Distribution Division, Baltimore Gas & Electric Co. “This is a challenging mandate for utilities because
some products we require cannot currently meet the domestic definition.” The argument that demand would encourage American manufacturing isn’t the case,
he said. The limited demand of these products is such
that businesses won’t make overpriced products that conflict with their interests, and utilities must justify
their spending before state commissions. “At some
point, you can’t pay what it takes,” Troch said. “It is not
in the best interest of our customers or the general
public to pay exorbitant costs for what is typically considered a standard sourced product.”

Paper trail: Every metallic nut and bolt could potentially fall under Buy America requirements, said Junaid Faruq, manager, Operations & Engineering Services, American Gas Association. Tracing the origin of the metal used to make small nuts, bolts and other fittings and proving their American provenance is “relatively impossible by a manufacturer in the modern age,” he said.

Multiple jurisdictions: Three U.S. Department of Transportation agencies—the Federal Highway Administration, the Federal Railroad Administration and the Federal Transit Administration—oversee relevant projects. Those agencies, in turn, award interpretation and enforcement powers to state departments of transportation. “Across the country, there is almost no consistency area by area of how the federal region and the state authority are applying this,” said Troch.

In California, one utility’s inability to verify the origin of about 180 parts delayed a major highway project, Faruq said. The potential for utilities to be seen as the reason for holding up projects poses “a greater risk to us as an industry than anything else.”AGA supports American manufacturing and production, but is seeking “specific waivers to apply to our industry,” Faruq said. Those waivers would address the facets
of the law that need changes, including multicomponent equipment and small products “so minor that the
cost of compliance would far supersede the benefit to
the economy.” He added, “We don’t want to negate the intent of act. We still want companies to buy American-made goods, but it’s important to help ensure that the law truly drives economic growth in the country as it is intended to do.” —M.D.M.American Gas - May 2017itron AdSensusUser GuideMastheadBP adWUSpeedpayPresident's MessageWith a Side of GoodwillIn High DemandA Stronger, Diverse Energy ProviderA New Way for WasteDigestCONSTRUCTing a FutureSmart StorageWise SavingsOpen Your EyesBy The NumbersPeoplePlacesIndianaAlaskaKentuckyMichiganNew YorkNevadaDelawareWyomingWorker Safety: Yours, Mine and OursStrengthening or Weakening Prospects for Growth?The Reality of 'Buy America'NGI AdAYMcDonaldHennessy Gas Utility Fund2017 Operations Conference + Biennial ExhibitionWorld Gas Conference2017 CS Week - Exhibitor Index2017 CS Week SponsorsJobsBurner TipsAd IndexNext IssueMaking A DifferenceBurnsMcDonnellULC Ad