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Buy America / Build America, Buy America (BABA) Resources

WWEMA fully supports U.S. businesses and works diligently to ensure member companies can successfully market their products in the U.S. and abroad. Today’s economy relies on an interconnected global supply network to maintain cost-competitiveness and source specialized products that are either not manufactured in the U.S. or unavailable in sufficient quality or quantity. 

However, a succession of U.S. domestic sourcing policies and legislation has negatively impacted the ability of U.S. companies to compete effectively at home and abroad. Navigating this regulator landscape requires managing a complex patchwork of laws, including:

Each of these laws introduces distinct, often conflicting requirements and compliance conditions and can make compliance often difficult, and sometimes impossible, for many U.S. manufacturers. Ultimately, these overlapping mandates reduce market competition, drive up project costs, and create an uneven playing field among domestic companies. 

While BABA represents the broadest expansion of these rules to date, WWEMA continues to focus heavily on the operational impacts of both the AIS provisions and BABA mandates, as they directly affect water and wastewater utilities, engineers, and manufacturers alike. 

Legislation

“American Iron and Steel” (AIS) provisions first appeared in two 2014 laws dealing with water and wastewater funding.

  • 2015 Consolidated Appropriations Act – In this act, the AIS language applies to projects receiving Clean Water State Revolving Funds (CWSRF) and Drinking Water State Revolving Funds (DWSRF).

The relevant language is as follows:

Sec. 424. (a)

  • None of the funds made available by a State water pollution control revolving fund as authorized by section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12) shall be used for a project for the construction, alteration, maintenance, or repair of a public water system or treatment works unless all of the iron and steel products used in the project are produced in the United States.
  • In this section, the term “iron and steel products” means the following products made primarily of iron or steel: lined or unlined pipes and fittings, manhole covers and other municipal castings, hydrants, tanks, flanges, pipe clamps and restraints, valves, structural steel, reinforced precast concrete, and construction materials.

(b) Subsection (a) shall not apply in any case or category of cases in which the Administrator of the Environmental Protection Agency (in this section referred to as the “Administrator”) finds that –

  • applying subsection (a) would be inconsistent with the public interest;
  • iron and steel products are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality
  • inclusion of iron and steel products produced in the United States will increase the cost of the overall project by more than 25 percent.
  • Water Resources Reform and Development Act (WRRDA) In WRRDA, the AIS provision applies to projects receiving loans through a new funding mechanism created by the Act called the Water Infrastructure Finance and Innovation Authority. WRRDA uses language identical to the Appropriations Act. It also makes permanent the requirement to use AIS for CWSRF projects by amending the Clean Water Act.

EPA Guidance

On March 20, 2014, the U.S. Environmental Protection Agency (EPA), which was charged with interpreting and enforcing the “American Iron and Steel” language used in the 2014 Consolidated Appropriations Act, issued its guidance on the legislation.

  • The EPA has interpreted primarily iron and steel to mean that products listed in Sec. 436(a)(2) of the legislation must be made of greater than 50 percent iron or steel, measured by cost, with the cost being based on the material costs.
  • Produced in the United States means all manufacturing processes, including melting, refining, forming, rolling, drawing, finishing, fabricating, and application of coatings, must take place in the United States. Even if the iron and steel is produced in the U.S., it cannot leave the country for assembly or modification and remain compliant. Metallurgical processes involving refinement of steel additives do not have to take place in the U.S., and non-iron or steel components of an iron and steel product do not have to come from the U.S.
  • The legislation defines iron and steel product as one of the following made primarily of iron or steel that is permanently incorporated into the public water system or treatments works:
  • Lined or unlined pipes or fittings
  • Manhole covers
  • Municipal Castings
  • Hydrants
  • Tanks
  • Flanges
  • Pipe clamps and restraints
  • Valves
  • Structural steel
  • Reinforced precast concrete
  • Construction materials
  • EPA further defines municipal castings as “cast iron or steel infrastructure products that are melted and cast. They typically provide access, protection, or housing for components incorporated into utility owned drinking water, storm water, wastewater, and surface infrastructure. They are typically made of grey or ductile iron, or steel.” The EPA provides the following examples of municipal castings:
    • Access hatches
    • Ballast screen
    • Benches (iron or steel)
    • Bollards
    • Cast bases
    • Cast iron hinged hatches, square and rectangular
    • Cast iron riser rings
    • Catch basin inlet
    • Cleanout/monument boxes
    • Construction covers and frames
    • Curb and corner guards
    • Curb openings
    • Detectable warning plates
    • Downspout shoes (boot, inlet)
    • Drainage grates, frames and curb inlets
    • Inlets
    • Junction boxes
    • Lampposts
    • Manhole covers, rings and frames, risers
    • Meter boxes
    • Service boxes
    • Steel hinged hatches, square and rectangular
    • Steel riser rings
    • Trash receptacles
    • Tree grates
    • Tree guards
    • Trench grates
    • Valve boxes, covers and risers
  • On May 30, 2014, EPA issued additional clarification regarding the AIS provision as it relates to valves and hydrants, as follows: “The EPA considers only the significant iron and steel components of a covered valve or hydrant – the body, bonnet, shoe, stem, and wedge/disc/gate/ball – to be within the definition of ‘iron and steel products that must be made domestically, or otherwise must comply with the AIS requirement.'” Excluded are miscellaneous incidental components such as clips, pins, washers, nuts, and bolts. Electric powered, motor-operated valves are included in the requirement, though the actuator (a motor that controls the valve) is considered a separate product and is not included.
  • EPA further defines structural steel as “rolled flanged shapes, having at least one dimension of their cross-section three inches or greater, which are used in the construction of bridges, buildings, ships, railroad rolling stock, and for numerous other constructional purposes. Such shapes are designated as wide-flange shapes, standard I-beams, channels, angles, tees and zees. Other shapes include H-piles, sheet piling, tie plates, cross ties, and those for other special purposes.”
  • EPA further defines construction materials as “those articles, materials, or supplies made primarily of iron and steel, that are permanently incorporated into the project, not including mechanical and/or electrical components, equipment and systems. Some of these products may overlap with what is also considered ‘structural steel.'” The EPA indicates that this includes, but is not limited to:
    • Wire rod
    • Bar
    • Angles
    • Concrete reinforcing bar
    • Wire
    • Wire cloth
    • Wire rope and cables
    • Tubing
    • Framing
    • Joists, trusses
    • Fasteners (i.e., nuts and bolts)
    • Welding rods
    • Decking
    • Grating
    • Railings
    • Stairs
    • Access ramps
    • Fire escapes
    • Ladders
    • Wall panels
    • Dome structures
    • Roofing
    • Ductwork
    • Surface drains
    • Cable hanging systems
    • Manhole steps
    • Fencing and fence tubing
    • Guardrails
    • Doors
    • Stationary screens
  • EPA adds that “construction materials” do NOT include “mechanical and electrical components, equipment and systems…. Mechanical equipment is typically that which has motorized parts and/or is powered by a motor. Electrical equipment is typically any machine powered by electricity and includes components that are part of the electrical distribution system.” The Agency offer the following examples of items that are NOT considered construction materials (including their appurtenances necessary for their intended use and operation):
    • Pumps
    • Motors
    • Gear reducers
    • Drives (including variable frequency drives (VFDs))
    • Electric/pneumatic/manual accessories used to operate valves (such as electric valve actuators)
    • Mixers
    • Gates
    • Motorized screens (such as traveling screens)
    • Blowers/aeration equipment
    • Compressors
    • Meters
    • Sensors
    • Controls and switches
    • Supervisory control and data acquisition (SCADA)
    • Membrane bioreactor systems
    • Membrane filtration systems
    • Filters
    • Clarifiers and clarifier mechanisms
    • Rakes
    • Grinders
    • Disinfection systems
    • Presses (including belt presses)
    • Conveyors
    • Cranes
    • HVAC (excluding ductwork)
    • Water heaters
    • Heat exchangers
    • Generators
    • Cabinetry and housings (such as electrical boxes/enclosures)
    • Lighting fixtures
    • Electrical conduit
    • Emergency life systems
    • Metal office furniture
    • Shelving
    • Laboratory equipment
    • Analytical instrumentation
    • Dewatering equipment

A complete copy of the guidance can be found here

WWEMA Response

WWEMA has been opposed to “Buy American” language since it was first included in the American Recovery and Reinvestment Act (ARRA) of 2009. The reasons for this opposition are many. Download WWEMA Fact Sheet

  • In today’s global economy, many U.S. companies — small, mid-sized, and large — rely on global supply chains for products and parts. Trade restrictions mean a loss of business for these companies, which in turn means lost jobs and economic opportunities for the communities where they are based.
  • Trade restrictions lead to monopolies for a limited number of companies. There is nothing more un-American than laws designed to stifle competition and opportunity.
  • As we saw during ARRA, water and wastewater project costs increase due to “Buy American” restrictions on funding. The entire purpose of these funding mechanisms is to make it easier for localities to be able to afford water projects, yet limiting manufacturers’ ability to source products in the most cost-effective manner possible drives up costs and too often negates any potential advantages.
  • Costs may increase, but that doesn’t mean local budgets will. As a result, sorely needed infrastructure projects — repairs and improvements that are vital to public health and local economies — end up being scaled back, phased over longer periods of time, or canceled altogether.
  • “Buy American” can lead (and has led) to retaliation from our international trading partners as they enact their own local content policies. The inability to export to these countries could mean the loss of far more jobs than “Buy American” will ever create.
  • U.S. international trade policy calls for fair, unrestricted trade. Imposing “Buy American” requirements on water and wastewater project funding flies in the face of this policy and places an unfair burden on municipalities struggling to afford much-needed infrastructure repairs and improvements

WWEMA represents the “Voice of the Manufacturer” on this issue, engaging key legislators, the EPA, the Canadian Embassy, and many other stakeholders on a monthly, weekly, and even daily basis.

Together we must educate Capitol Hill and the general public about the fallacies behind the seemingly patriotic “Buy American” slogan. The more members we have, the more effective we can be.

For information on how to support this effort, check out our “Join WWEMA” page.

International Response

One of the biggest problems with “Buy American” restrictions on trade is that it elicits retaliatory responses from our international trading partners as they enact their own local content provisions. Lost opportunities to export to these countries could mean the loss of far more jobs than “Buy American” will ever create.

  • On December 22, 2014, the Canadian Manufacturer & Exporters issued a call for Canadian governments at all levels to “ensure that Canadian procurement markets remain open, but only for suppliers from countries that allow Canadian manufacturers access to their markets.” This was a backlash against “Buy American” restrictions that led to the December 19, 2014, the closing of a Quebec steel and iron foundry.
  • On June 25, 2014, Canadian Minister of International Trade Ed Fast filed an intervention at a meeting of the World Trade Organization Committee on Government Procurement to register the nation’s concern with U.S. local content provisions in the Water Resources Reform and Development Act as well as other legislation.
  • On June 26-27, 2014, Canadian Manufacturers & Exporters Chief Executive Officer and President Jayson Myers sent letters to mayors of four of the nation’s cities urging them to retaliate against “Buy American” provisions by adopting “a reciprocity policy that would level the playing field,” specifically in relation to “the procurement of goods and equipment used to modernize … infrastructure, in particular water and waste water infrastructure.”
  • In July 2012, the Peel Regional Council of Ontario, Canada, voted to impose local content requirements on a massive watermain project, citing the inability for Canadian companies to trade freely with the United States due to “Buy American” as a primary consideration in reaching their decision.
  • In March 2012, the European Commission published a proposed regulation that would have permitted member states’ authorities to exclude foreign goods and services for public procurement contracts. Many viewed the (ultimately unsuccessful) proposal as a direct retaliation against “Buy American” provisions.

In June 2009, the Federation of Canadian Municipalities, in a 189-175 vote, passed a resolution to “support municipalities who choose to adopt procurement policies which favour free and fair trade by ensuring that local infrastructure projects … procure goods and materials … only from companies whose countries of origin do not impose trade restrictions against goods and materials manufactured in Canada.”

Enforcement

Under the 2014 Consolidated Appropriations Act, recipients of Clean Water and Drinking Water State Revolving Loan Funds must specify “American Iron and Steel” language in all contracts, from the assistance agreements down to purchase agreements, and must maintain certification that project materials meet the AIS requirements. Manufacturers are responsible for providing those certifications to the recipients. [Sample certification documentation can be found on pages 19-20 of the U.S. Environmental Protection Agency’s guidance.] Failure to maintain the proper certifications can result in fund denial/withdrawal, and falsifying documents can lead to stiff legal fines. We have seen this enforcement in past “Buy American” legislation.

  • Jett Industries Inc. – On May 28, 2014, the U.S. Department of Justice announced that Jett Industries agreed to pay the United States $500,000 to settle allegations that the company had violated the False Claims Act by falsely certifying compliance with the “Buy American” provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) in constructing a water pump station.
  • Itasca, Illinois – In March 2012, the U.S. Environmental Protection Agency’s Office of Inspector General conducted an unannounced visit to the Village of Itasca, Illinois, based on a hotline complaint that plans for a new wastewater treatment plant in the Village did not comply with ARRA “Buy American” provisions and therefore did not qualify for $10 million in funds authorized by the state. Inspectors found Itasca in non-compliance, leading to a withdrawal of the funds.