Buying a new bus can prove expensive for public transportation agencies. CARTA recently spent more than $400,000 apiece for four new buses to replace part of its aging fleet, for example.
That’s pretty much the going rate.
But part of that cost likely stems from a misguided federal rule that places complex requirements on buying and replacing buses and other transit vehicles designed to ensure that they are manufactured almost entirely within the United States.
The provision is referred to as Buy America and has been a part of transportation-related legislation and regulations for decades. It was included in the Fixing America’s Surface Transportation Act (FAST), which Congress passed late last year.
FAST even ups the ante on Buy America by increasing the percentage of American-made content required for so-called “rolling stock” from the current level of 60 percent to 70 percent by 2020.
That means that at least 70 percent of each bus, train and transit rail car must be made in the United States. Vehicles manufactured in part abroad must also be finished domestically.
Since CARTA paid for the new buses largely through federal funds, it has to comply with federal regulations governing what kinds of buses can be purchased.
Buy America’s goal is commendable: ensuring that projects paid for with Americans’ tax dollars support American jobs.
The problem is that it’s difficult to prove that every nut and bolt — or at least 60 and soon 70 percent of them — was actually made in the United States. And in an increasingly global economy, in which American companies have facilities abroad and foreign companies have facilities in the U.S., it is more and more difficult to define what counts as an American product.
And what if it would be cheaper to buy the same goods made somewhere else? It’s tough to argue that buying American still benefits taxpayers if the cost of domestic products is dramatically more expensive than a comparable product made by a foreign competitor.
The Buy America rule deals with that potential problem to an extent. Waivers are available if American materials or manufactured goods would increase the total cost of a project by more than 25 percent. Other exemptions are available for more nebulous reasons such as a lack of sufficient domestic production.
But confirming that a waiver is needed can be complicated — and costly — requiring extensive market research and professional analysis.
So even if American materials and goods don’t directly drive up the cost of a transportation project, Buy America regulations virtually guarantee that project administrators and analysts will be necessary just to navigate the rules. That drives up costs and makes projects more time consuming.
And those impacts are precisely what all levels of government should be seeking to avoid. Transportation infrastructure and mass transit construction and repairs are badly needed nationwide.
In South Carolina, state Department of Transportation estimates suggest hundreds of millions in additional funding will be required over the next few decades just to keep state roads functioning at a safe level, even without any new construction or transit expansion — including buying badly needed new buses for CARTA.
Undoing even the most burdensome federal regulation won’t make up for that S.C. shortfall — a state gas tax hike is needed — but it could help cut costs and speed up projects. Efficiency and cost-effectiveness are crucial to meeting South Carolina’s and the nation’s transportation needs.
American jobs ultimately depend on American infrastructure. Any rule that hampers infrastructure development and maintenance deserves a critical rethinking.