CHICAGO Iron and steel foundries, steelmaker Nucor Corp., the United Steelworkers union and the Municipal Castings Association have objected to a Federal Highway Administration (FHWA) ruling on "Buy America" requirements, saying it could cost them millions of dollars in lost sales.
The group has asked the U.S. Appeals Court for the District of Columbia to review the final rule, "Classification of Manufactured Products Under Buy America," issued Dec. 21.
According to an FHWA memorandum clarifying its position on the application of "Buy America" requirements to manufactured products, "questions have arisen regarding the scope of the application" since the American Recovery and Reinvestment Act was passed in 2009.
"It has been suggested that nuts, bolts, washers and other miscellaneous steel or iron parts used in common off-the-shelf products ... must be Buy America-compliant," the FHWA said, but "such a reading of Buy America is inconsistent with (a) previous waiver decision and is not cost-effective to administer."
The federal agency reiterated that steel and iron productsincluding bolts, dowel bars and rebarused in a wide variety of public works structures are subject to Buy America coverage but that "miscellaneous steel or iron components, subcomponents and hardware necessary to encase, assemble and construct the above components are not." Examples include clamps, fittings, washers, nuts, screws, tie wire and spacers.
"The guidance interprets the Buy America provision in a narrow, unwise and arbitrary way," Paul Rosenthal, partner at Kelley Drye & Warren LLP, Washington, which represents the plaintiffs, told AMM Feb. 25. "The interpretation incorporated in its guidance to states is not supported by statutes or any other precedent and has the potential to create giant loopholes in the way the law is interpreted."
Depending on how long the rule remains in effect, "it could mean tens of millions of dollars" in lost domestic sales for U.S. iron and steel producers, Rosenthal said.
He also complained that the agency had not provided a public comment period. "If they had proper notice out for industry and public to comment, they would have known the rule was not sensible," he said.
The guidance is broader than specifying what states can do with regard to requesting Buy American waivers. The rule exempts fittings and fasteners "by name" from the requirement, Rosenthal said. "Certainly these are made in the United States and some of them are very large, weighing hundreds of pounds."
The FWHA rulemakers perhaps "misunderstand the nature of the fittings and fasteners, and think its a small connector not incidental to the letting of projects," he said.
The appeals court is not expected to hold its first hearing on the petition for at least a month, pending a response from the government.