Updated Guide to Buy America Requirements—2015 Supplement (2017)

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3UPDATED GUIDE TO BUY AMERICA REQUIREMENTS By Timothy R. Wyatt, Conner Gwyn Schenck PLLC, Greensboro, North Carolina I. INTRODUCTION A. Purpose of Digest When transportation programs receive assistance from federal funding, there are typically domestic preference conditions, or “Buy America” require- ments, associated with the use of federal funds. The Buy America provision associated with Federal Transit Administration (FTA) grant funds is one of the most longstanding federal transportation Buy America provisions and is probably the subject of more documentation than all of the rest. FTA’s regu- lations implementing the Buy America provision are lengthy and detailed, in contrast to other federal transportation grant Buy America provisions. The Transportation Research Board (TRB) first published its Guide to Federal Buy America Require- ments in 2001 as Transit Cooperative Research Program (TCRP) Legal Research Digest 17.1 A 2009 supplement to the guide was published as TCRP Legal Research Digest 31.2 The 2009 supplement addressed significant legislative changes to the FTA Buy America provision enacted by Congress in 2005, as well as FTA’s 2007 final rule implementing those changes. In 2015, the FTA Buy America provi- sion was addressed again in National Cooperative Rail Research Program (NCRRP) Legal Research Digest 1,3 along with other federal transportation grant Buy America provisions that are applicable to federally funded rail projects. The purpose of this Legal Research Digest is to update the earlier TRB legal research to provide a comprehensive and current summary of the FTA Buy America provision for transit attorneys and procurement officials. This accounts for changes to the FTA Buy America provision since the 2009 supplement, including a significant revision by Congress in December 2015, recent FTA guidance and decisions, and recent court decisions involving the FTA Buy America provision. FTA maintains a Buy America website that contains current guidance, policy letters, rulemaking notices, waiver requests, and waiver decisions at https://www.transit.dot.gov/regulations-and- guidance/buy-america/buy-america-regulations. Infor- mation published by FTA since the 2009 supplement is emphasized in this Legal Research Digest. B. Overview of FTA Buy America The current language of the FTA Buy America provision, as enacted by Congress, is set forth at 49 U.S.C. § 5323(j). Additional regulations promulgated by FTA to implement or interpret the FTA Buy America provision are set forth at 49 C.F.R. Part 661. The statute provides that, as a general rule, the U.S. Department of Transportation may “obligate” funds appropriated under U.S.C. Chapter 53 (“Public Transportation”) only if all “steel, iron, and manu- factured goods used in the project are produced in the United States.”4 This provision applies when federal grant funds are used for transit capital proj- ects,5 public transportation planning,6 and research and development related to public transportation,7 among other things. The regulations promulgated by FTA clarify that the provision applies to all proj- ects that receive FTA grant funds.8 Generally, the FTA Buy America provision does not apply to tran- sit projects that do not involve FTA funds, but other domestic preferences may apply depending on the source of funds. The requirement that all “steel, iron, and manu- factured goods used in the project [be] produced in the United States” applies to FTA-funded infra- structure and construction projects as well as to 1 Jaye Pershing Johnson, guide to Federal Buy america requirements (Transit Cooperative Research Program Legal Research Digest No. 17, Transportation Research Board, 2001) [hereinafter TCRP LRD 17]. 2 Jaye Pershing Johnson, guide to Federal Buy america requirements—2009 suPPlement (Transit Cooperative Research Program, Legal Research Digest No. 31, Transpor- tation Research Board, 2010) [hereinafter TCRP LRD 31]. 3 timothy r. Wyatt, Buy america requirements For Federally Funded rail ProJects 52–72 (National Cooper- ative Rail Research Program Legal Research Digest No. 1, Transportation Research Board, 2015) [hereinafter NCRRP LRD 1]. 4 49 U.S.C. § 5323(j)(1) (2016); see also 49 C.F.R. § 661.5(a) (2015). 5 49 U.S.C. §§ 5307–5311 (2016). 6 49 U.S.C. §§ 5303–5306 (2016). 7 49 U.S.C. § 5312 (2016). 8 49 C.F.R. § 661.5(a) (2015).

4procurements of manufactured products, including rolling stock. The application of the FTA Buy America provision to each of these procurement categories is addressed in detail in Section III. The general requirement that only domestic materials be used on FTA-funded projects is allevi- ated significantly by a number of waivers that are available to FTA grant recipients. First, Congress has provided a Domestic Content waiver applicable only to procurements of “rolling stock” such as vehi- cles, which permits rolling stock to be treated as domestic even when it includes some foreign content. The rolling stock Domestic Content waiver is addressed in detail in Section III.B. Other waivers available to FTA grant recipients include Non-Availability (where comparable domes- tic products are not available in sufficient quantities of satisfactory quality), Price Differential (when domestic products would increase the cost of the project by 25 percent), and Public Interest. These types of waivers that may be requested for a specific project, and the procedures for doing so, are discussed in Section IV.B. Further, FTA has issued some waivers of general applicability, including a Small Purchase waiver, which permit FTA grant recipients to purchase some foreign products without requesting a waiver. These general waivers are discussed in Section IV.A. The FTA Buy America provision is unique among the various federal transportation grant Buy Amer- ica provisions, in that it has been the subject of a lengthy, well-documented history of legislative revi- sions, formal rulemaking, and waiver decision making. Section II infra addresses the history of the FTA Buy America provision to help the reader understand how it has iteratively evolved over the years into the version that exists today. First, however, as in the previous TCRP Legal Research Digests, the following section briefly contrasts the FTA Buy America provision with other domestic preferences, including other federal transportation grant Buy America provisions, to help the reader better appreciate the unique features of the FTA Buy America provision. C. What FTA Buy America Is Not Government agencies and their contractors can encounter a wide variety of domestic preferences and Buy America requirements. Most Buy America requirements, including the FTA Buy America provi- sion, are variations of requirements that originated with the Buy American Act (BAA) in 1933. Although these other Buy America requirements can appear almost identical to the FTA Buy America provision, there are actually subtle yet significant differences in the various Buy America requirements. In order to fully understand and appreciate the uniqueness of the FTA Buy America provision, it is helpful to have a basic understanding of these other domestic prefer- ences and Buy America requirements. The remainder of this section briefly addresses these other require- ments, and the remainder of the digest addresses the unique features of the FTA Buy America provision. 1. 1933 Buy American Act The BAA,9 enacted by Congress in 1933, applies to direct purchases “for public use” by federal agen- cies, including direct purchases by FTA. The BAA nominally prohibits federal agencies from purchas- ing any foreign construction materials of any kind, including steel, cement, wood, and even “mined” materials such as aggregate or sand.10 The BAA also requires federal agencies to purchase only domestic manufactured products (those “that have been manufactured in the United States substantially all from” domestic components, i.e., from goods that were themselves “mined, produced, or manufactured in the United States”).11 In practice, however, the BAA has several excep- tions that allow for significant purchases of foreign goods by federal agencies. These include: • Domestic Content. Via a 1954 Executive Order, manufactured products are deemed to be composed “substantially all” from domestic components as long as domestic components constitute at least 50 percent of the end product (by cost) and the final as- sembly location for the end product is in the United States.12 Thus, manufactured products can contain a significant amount of foreign content and still be considered domestic for purposes of the BAA. • Price Differential. The BAA permits federal agencies to purchase foreign goods if the price of comparable domestic goods is “unreasonable.”13 The 1954 Executive Order interpreted the cost of do- mestic goods to be “unreasonable” if it was higher than an adjusted bid to provide comparable foreign goods, when the adjusted foreign bid price is calcu- lated by increasing the cost of the foreign goods in the bid by a minimum six percent “differential.”14 This six percent Price Differential exception is still 9 41 U.S.C. §§ 8301–8305 (2016). For a detailed discus- sion of the legislative history of the BAA, see Lawrence Hughes, Buy North America: A Revision to FTA Buy America Requirements, 23 transP. L.J. 207, 208 13 (1995). 10 41 U.S.C. §§ 8302(a)(1), 8303(a) (2016). 11 41 U.S.C. §§ 8302(a)(1), 8303(a)(2) (2016). 12 Exec. Order No. 10,582, 19 Fed. Reg. 8,723 (Dec. 17, 1954). 13 41 U.S.C. § 8302(a)(1) (2016). 14 Exec. Order No. 10,582, 19 Fed. Reg. 8,723 (Dec. 17, 1954).

5applicable in the BAA regulations that govern di- rect federal procurements.15 • Non-Availability. The BAA permits the pur- chase of foreign goods when comparable domestic goods “are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and are not of a satisfactory quality.”16 Although these terms are not clearly defined or quantified in the legislation, the Federal Acquisition Regulation (FAR) provides a list of classes of goods where it has been deter- mined “that domestic sources can only meet 50 percent or less of total U.S. government and non- government demand.”17 Although federal agencies are required to perform some market research and specifically seek out domestic sources before pur- chasing goods on this list, federal agencies may purchase foreign goods on the list without a writ- ten waiver determination as long as their market research does not identify sources of comparable domestic goods.18 Furthermore, if there are no do- mestic offers in response to an open solicitation, federal agencies are entitled to presume that do- mestic goods are not reasonably available, even if they are not on the FAR list.19 • Public Interest. The BAA includes an excep- tion that permits federal agencies to purchase foreign goods if the acquisition of higher-priced do- mestic goods would “be inconsistent with the public interest.”20 The FAR clarifies that the Public Inter- est exception to the BAA applies when the federal government “has an agreement with a foreign gov- ernment that provides a blanket exception to the Buy American Act.”21 Specifically, under the Trade Agreements Act, the BAA has been waived for transactions covered by the World Trade Organi- zation (WTO) Agreement on Government Procure- ment or other free trade agreements.22 • Small Purchase. The BAA, like many federal procurement statutes, is inapplicable to purchases for which the entire contract value is less than the federal “micro-purchase threshold,” which is cur- rently $3,000.23 More than 85 years after its passage, the BAA remains federal law and still applies to most direct procurements by federal agencies, including FTA. However, most transit procurements in the United States are made not by FTA, but rather by state and local transit agencies, albeit often using FTA grant funds. The FTA Buy America provision that is the subject of this digest, not the BAA, applies to these procurements. On its face, the FTA Buy America provision can appear very similar to the BAA, espe- cially because there are waivers available under the FTA Buy America provision that can appear similar to the five general BAA exceptions previously listed.24 In practice, however, the FTA Buy America provision is very different from the BAA, and the criteria for obtaining waivers from the FTA Buy America provision are generally more stringent than the criteria for exceptions to the BAA. FTA grant recipients should be aware that many prod- ucts that can be purchased by federal agencies under the BAA cannot be purchased under the FTA Buy America provision. 2. Other Federal Transportation Buy America Requirements Although the BAA does not apply to federally funded procurements by state and local transporta- tion agencies, there typically are Buy America provi- sions associated with those procurements. The specific Buy America requirements associated with a given procurement depend upon which federal agency’s funds are being used. Buy America requirements for FTA funds (and other federal transportation agencies) originated in 1978 as a result of congressional concern that the BAA was not being applied to transportation grant funds. In 1978, the U.S. General Accounting Office (GAO, now the U.S. Government Accountability Office) reported to Congress “that contracts awarded by State and local authorities under Federal grant programs are not covered by the Buy American Act, unless the statute authorizing the Federal assis- tance to State and local authorities explicitly provides for application of the Buy American Act.”25 GAO concluded that federal grant programs admin- istered by the Federal Highway Administration 15 48 C.F.R. § 25.105(b)(1) (2015). 16 41 U.S.C. §§ 8301(a)(2)(B), 8303(b)(1)(B) (2016). 17 48 C.F.R. §§ 25.103(b)(1)(i), 25.104(a) (2015). 18 48 C.F.R. § 25.103(b)(1)(ii) (2015). 19 48 C.F.R. § 25.103(b)(3) (2015). 20 41 U.S.C. §§ 8302(a)(1), 8303(b)(3) (2016). 21 48 C.F.R. §§ 25.103(a), 25.202(a)(1) (2015). 22 48 C.F.R. § 25.402(a)(1) (2015); see also Trade Agree- ments Act of 1979, Pub. L. No. 96-39, §§ 301, 303, 93 Stat. 144 (1979). 23 41 U.S.C. §§ 1902(a), 8302(a)(2)(C), 8303(b)(1)(C) (2016). 24 Comparable waivers from the FTA Buy America pro- vision, including the Price Differential, Non-Availability, and Public Interest waiver, are discussed in Section IV.B.1. FTA has also issued a general Small Purchase waiver, which is discussed in Section IV.A.1. Finally, Congress has provided a general Domestic Content waiver applicable only to rolling stock, which is discussed in Section III.B. 25 Federal assistance to state and local governments and other organizations For selected Programs, Enclosure II, at 6, comP gen. reP’t no. ID 78 40, Docket Nos. B-162222, B-156489 (1978).

6(FHWA), Federal Railroad Administration (FRA), and Amtrak “do not address the issue” of domestic preferences, and the grant program administered by the Urban Mass Transportation Administration (UMTA, now known as FTA) actually “prohibits domestic preference.”26 Shortly thereafter, Congress enacted Buy America provisions applicable to UMTA and FHWA,27 as well as Amtrak,28 as amendments to transportation appropriations bills, with the intent to extend the BAA requirements to the transportation grant programs.29 The FTA and FHWA Buy America requirements originated as a single statute appli- cable to both agencies, but the statute was adminis- tered differently by the two agencies, and since 1994 there have been separate Buy America statutes applicable to the two agencies.30 In 1990, Congress enacted a Buy America proion applicable to Federal Aviation Administration (FAA) grant funds.31 Finally, in 2008, Congress enacted a Buy America provision applicable to FRA grant funds.32 The various Buy America provisions applicable to federal transportation grants and the BAA are all deceptively similar in appearance, often having some variation on the same five categories of avail- able waivers or exceptions. However, there are significant differences in the way the Buy America provisions are administered from one federal trans- portation agency to another. Specifically, the federal agencies employ markedly different criteria for granting waivers. It is important for a federal grant recipient, such as a state or local transit agency, to understand which Buy America provisions apply to its federally funded projects and to be aware that products that can be procured under one provision might not be available under another. State and local transit agencies must be cogni- zant of situations in which multiple federal trans- portation grant Buy America provisions apply to a given project. Multiple federal funding sources can lead to confusion because the FTA Buy America provision (and most other federal transportation grant Buy America provisions) apply to the “project,” not necessarily the portion of the project that is funded by the federal transportation grant program.33 Where development projects are funded jointly, using FTA grant funds and funds from some other source, FTA requires “that the steel, iron, and manufactured goods used in the joint development project are produced in the United States, as described in” the FTA Buy America provision.34 Therefore, the FTA Buy America provision could conceivably apply to individual contracts or “segments” of a project not funded by FTA.35 Whether the FTA Buy America provision or other federal transportation grant Buy America provisions apply to a given contract may depend on the mean- ing of the word “project.” In 2012, the U.S. Senate 26 Foreign-source Procurement Funded through Federal Programs By states and organizations 1, comP. gen. reP’t no. ID-79-1, Docket Nos. B-162222, B-156489, App. 1, at 13–14 (1978). At that time, FTA was known as the Urban Mass Transportation Administration (UMTA). To avoid confusion, both FTA and UMTA are referenced inter- changeably herein as “FTA.” 27 Surface Transportation Assistance Act of 1978, Pub. L. No. 95-599, § 401, 92 Stat. 2689 (Nov. 6, 1978) [hereinafter STAA 1978]. 28 Amtrak Improvement Act of 1978, Pub. L. No. 95-421, § 10, 92 Stat. 923 (Oct. 5, 1978) (codified at 49 U.S.C. § 24305(f)). For more information about the Amtrak Buy America provision, see NCRRP LRD 1, supra note 3, at 26 37. 29 Hughes, supra note 9, at 215 (“Rep. Robert W. Edgar (D-Pa.) explained that the [BAA] (enacted in 1933) applied only to direct federal procurements, and not to grants-in- aid. Rep. Edgar’s amendment would encompass grants- in-aid projects within the Buy America requirement.”). 30 Pub. L. No. 103-272, § 1(e), 108 Stat. 745 (Jul. 5, 1994) (formally codifying the FTA Buy America provision at 49 U.S.C. § 5323(j)); see also Safe, Accountable, Flexible, Effi- cient Transportation Equity Act: A Legacy for Users, Pub. L. No. 109-59, § 1903, 119 Stat. 1144 (Aug. 10, 2005) (recod- ifying the FHWA Buy America provision at 23 U.S.C. § 313). 31 Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, § 9129, 104 Stat. 1388 (Nov. 5, 1990) (codified at 49 U.S.C. § 50101). For more information about the FAA Buy America provision, see Timothy R. Wyatt, Buy america requirements For Federally Funded airPorts (Airport Cooperative Research Program Legal Research Digest No. 18 (Feb. 2013)). 32 Rail Safety Improvement Act of 2008, Pub. L. No. 110- 432, Div. B, § 301(a) (Oct. 16, 2008) (codified at 49 U.S.C. § 24405(a)). For more information about the FRA Buy America Provision, see NCRRP LRD 1, supra note 3, at 9 26. 33 The FTA Buy America provision requires all “steel, iron, and manufactured goods used in the project” to be “produced in the United States.” 49 U.S.C. § 5323(j)(1) (2016) (emphasis added); see also 49 C.F.R. § 661.5(a) (2015). Historically, FTA’s practice was to only apply the FTA Buy America provision to individual contracts funded by FTA grants, not to other contracts that were conceiv- ably part of the same “project.” That practice, however, was expressly abandoned by FTA in 2007. Buy America Requirements—End Product Analysis and Waiver Proce- dures, 72 Fed. Reg. 53,688, 53,691 (Sept. 20, 2007). 34 Notice of Final Agency Guidance on the Eligibility of Joint Development Improvements Under Federal Transit Law, 72 Fed. Reg. 5,788, 5,792 (Feb. 7, 2007). 35 See infra note 131 and accompanying text. FHWA takes the position that, when a project is jointly funded by FHWA and FTA, the joint funds should be transferred to the “lead agency.” Then the FTA Buy America provision applies to FHWA funds that “are transferred to FTA for a transit project,” and the FHWA Buy America provision applies to FTA funds that “are transferred to FHWA for a highway project.” FHWA, Buy America Q and A for Federal-Aid Program, https://www.fhwa.dot.gov/ construction/contracts/buyam_qa.cfm.

7passed a measure that would adopt a very broad definition of a “project” for purposes of the FTA Buy America provision.36 Although this measure ulti- mately was not enacted into law for purposes of the FTA Buy America provision, a similar measure was enacted for purposes of the FHWA Buy America provision, as discussed in Section II.F. The clear trend in federal law is to extend federal transporta- tion Buy America provisions from one funding source to related contracts funded by another source, if the contracts are related parts of a single “project.” State and local transit agencies should identify all poten- tially applicable Buy America provisions and perform an independent evaluation of the compliance of the entire project with each Buy America provision. There are significant variations in the Buy America requirements from one federal grant program to the next, so a grant recipient cannot assume that a proj- ect that complies with one Buy America provision also complies with all other Buy America provisions that may apply to the project. 3. American Recovery and Reinvestment Act The American Recovery and Reinvestment Act (ARRA) stimulus bill passed in 2009, which provided substantial funding for FTA programs, included its own Buy America provision.37 ARRA also provided for expanded enforcement and monitoring of the Buy America provisions associated with ARRA- funded projects,38 resulting in increased scrutiny of Buy America compliance by federal transportation grant recipients. In 2009, FTA concluded that the ARRA Buy America provision did not supersede the obligation for FTA grant recipients to comply with the FTA Buy America provision, even when performing proj- ects funded by ARRA.39 ARRA stands as an example to FTA grant recipients that there may be domestic preferences or Buy America requirements associ- ated with a given appropriation by Congress, but unless Congress provides otherwise, those addi- tional requirements do not override or supersede the FTA Buy America provision (when the state or local transit agency receives the funding via a grant from FTA). Unless Congress or FTA states other- wise, FTA grant recipients should presume that they are required to satisfy the FTA Buy America provision as well as any specific domestic preference requirements associated with that appropriation. 4. State and Local Requirements Some states have their own domestic preferences or Buy America provisions that can apply to procure- ments by state and local transit agencies, even when the agency is using FTA funds rather than state or local funds. When such procurements are funded in part with FTA grant funds, or when the procure- ments are otherwise made in support of an FTA- funded project, the FTA Buy America provision also applies. State and local transit agencies in such states should presume that they are required to comply with both the FTA Buy America provision and any state Buy America provision when using FTA grant funds. Congress has specifically provided that FTA may not impose any condition on a grant recipient “that restricts a State from imposing more stringent requirements than” the FTA Buy America provision regarding the purchase of foreign goods, “or that restricts a recipient of [FTA] assistance from comply- ing with those State-imposed requirements.”40 Accordingly, FTA’s regulations provide that “any State may impose more stringent Buy America or buy national requirements than contained in” the FTA Buy America provision.41 Such state and local Buy America requirements must be “explicitly set out under State law.”42 For example, in L.B. Foster Co. v. Southeastern Pennsylvania Transportation Authority,43 the Commonwealth Court of Pennsylvania held that a Southeastern Pennsylvania Transportation Author- ity (SEPTA) contract funded in part with FTA grant funds was required to satisfy both the FTA Buy America provision and a Pennsylvania state law that required the use of domestic steel products.44 The second-lowest bidder sought an injunction after SEPTA announced that it intended to award the contract to the noncompliant low bidder, who proposed to supply foreign castings, despite the fact that domestic castings were available and offered by 36 S. 1813, 112th Cong., § 20017 (2012), proposing to make the FTA Buy America provision applicable to all contracts eligible for assistance under this chapter for a project carried out within the scope of the applicable finding, determination, or decision under [the National Environmental Policy Act] regardless of the funding source of such contracts, if at least 1 contract for the project is funded with amounts made available to carry out this chapter. 37 American Recovery and Reinvestment Act of 2009, Pub. L. No. 111 5, § 1605(c), 123 Stat. 115, 303 (Feb. 17, 2009). 38 Id. § 1524, 123 Stat. at 291. 39 American Recovery and Reinvestment Act of 2009 Public Transportation Apportionments, Allocations and Grant Program Information, 74 Fed. Reg. 9,656, 9,664 (Mar. 5, 2009). 40 49 U.S.C. § 5323(j)(9) (2016). 41 49 C.F.R. § 661.21(a) (2015). 42 49 C.F.R. § 661.21(b)(2) (2015). 43 705 A.2d 164 (Pa. Commw. Ct. 1997). 44 73 Pa. stat. ann. §§ 1881–1887 (2016).

8the other bidders.45 The trial court denied an injunc- tion, and the unsuccessful bidder appealed.46 On appeal, SEPTA argued that the castings were “trans- portation equipment,”47 in an apparent attempt to have the castings evaluated according to the rolling stock 60 percent domestic content criterion of the FTA Buy America provision, rather than the 75 percent domestic content criterion of the Pennsylva- nia statute.48 Further, the low bidder might have qualified for a Price Differential waiver under the FTA Buy America provision, as its bid price (offering foreign castings) was 25 percent less than the protes- tor’s bid price (offering domestic castings).49 The Commonwealth Court of Pennsylvania concluded that the trial court erred in its application of the Pennsylvania statute, and remanded to deter- mine whether the unsuccessful bidder was entitled to an injunction.50 Regardless of whether the cast- ings would be subject to the rolling stock standard under the FTA Buy America provision, the court rejected the notion that the castings were exempt from the 75 percent domestic content requirement of the Pennsylvania statute.51 Furthermore, although the Pennsylvania statute allowed for a Non- Availability waiver similar to that in the FTA Buy America provision, the Pennsylvania statute did not allow for a Price Differential waiver. Therefore, even if a Price Differential waiver was available for the castings under the FTA Buy America provision, no such waiver was available under the Pennsylvania statute, and the procurement was required to comply with both. Likewise, in 2012, in Mabey Bridge & Shore, Inc. v. Schoch,52 the U.S. Court of Appeals for the Third Circuit contrasted the Pennsylvania domestic steel statute with the FTA and FHWA Buy America 45 Foster, 705 A.2d at 166. 46 Id. at 169. 47 Id. 48 Id. at 167. Under FTA’s regulations, rolling stock sub- ject to the reduced domestic content criterion includes such items as “train control equipment” and “traction power equipment.” 49 C.F.R. § 661.11(t),(v) (2015). The 100 percent domestic steel requirement of the FTA Buy America provi- sion does not apply to such rolling stock. 49 C.F.R. § 661.5(a) (2015). See also 73 Pa. stat. ann. § 1886 (2016) (excluding “transportation equipment” from the definition of “steel products” for purposes of the Pennsylvania statute). 49 Foster, 705 A.2d at 169 n.3, 170. 50 Id. at 170. 51 Id. (“If transportation equipment, as defined, is involved but is excluded under the provisions of the Federal Act, the remaining parts of the contract are not thereby excluded from compliance with the State Act.”). 52 666 F.3d 862 (3d Cir. 2012). 53 Id. at 868. 54 Id. at 869. 55 cal. gov’t. code § 14031.1 (2016). 56 Letter from Peter Rogoff, FTA Administrator, to Bob Franklin, San Francisco Bay Area Rapid Transit District (Nov. 16, 2011), available at https://www.transit.dot.gov/ regulations-and-guidance/buy-america/san-francisco- bay-area-rapid-transit-district-november-16-2011. 57 49 C.F.R. § 661.21(b)(1) (2015). 58 49 C.F.R. § 661.21(b)(3) (2015). provisions, which provide “a more extensive set of exceptions [waivers]” than the Pennsylvania stat- ute.53 The court concluded that the FTA and FHWA Buy America provisions demonstrate “Congress’s intent to allow states to enact more restrictive requirements related to the use of domestic steel and, thus, that the [Pennsylvania] Steel Act is not preempted.”54 Thus, FTA grant recipients must comply with state Buy America requirements that exceed the FTA Buy America requirements. Since 2012, California has had a state law that allows state and local transit agencies “to provide a bidding preference to a bidder if the bidder exceeds” the FTA Buy America provision.55 In a letter dated November 16, 2011 (shortly before the California statute became effective), FTA specifically endorsed California’s application of Buy America require- ments that exceed the FTA Buy America provision, stating “FTA’s rules set a floor, not a ceiling.”56 FTA funds may not be used, however, to fund a project when state law provides that the project may not be subject to domestic preferences as strict as the FTA Buy America provision.57 Furthermore, FTA funds may not be used to fund a project subject to “Buy Local” requirements (as opposed to Buy America requirements), which favor in-state or local suppliers over other domestic suppliers.58 Whether a state Buy America provision is more or less stringent than the FTA Buy America provi- sion might not be a straightforward determination. Although FTA may have a stronger domestic content requirement for steel and iron construction materi- als, a comparable state Buy America provision might have stronger restrictions against foreign steel and iron parts (i.e., components and subcomponents) of manufactured products. Effectively, FTA grant recipients must perform independent evaluations of a project’s compliance with both the FTA Buy Amer- ica provision and any potentially applicable state Buy America provision. The same principle gener- ally applies to projects that receive grant funds from multiple federal agencies—the grant recipient should evaluate the project’s compliance with all potentially applicable Buy America provisions based on the funding source.