EPA Waives ARRA's "Buy American" Requirement for Certain Water Projects

May 8, 2009
Client Alert Newsletter May 2009

On April 7, 2009, the U.S. Environmental Protection Agency ("EPA") issued a nationwide waiver of the "Buy American" requirements of the American Recovery and Reinvestment Act of 2009 ("ARRA") for certain water projects refinanced through the Clean or Drinking Water State Revolving Funds ("SRFs"). The scope of the waiver is limited to projects that incurred debt between October 1, 2008 and February 17, 2009 and that are refinanced through the SRFs using ARRA funds. The "Buy American" provision requires that all public works projects receiving funding under the ARRA must use iron, steel, and manufactured goods produced in the United States, unless a federal agency determines that the requirement would be inconsistent with the "public interest."

Prior to the adoption of the ARRA on February 17, 2009, several states moved forward with job-creating SRF projects, while other states deferred projects in hopes that the ARRA would provide more favorable financing terms. To reward those states that moved forward with job-creating SRF projects, the ARRA explicitly authorized the refinancing of debts incurred on or after October 1, 2008, but before February 17, 2009. As noted by EPA, several of these early project proponents may have contracted for non-U.S. manufactured goods. To require these projects to meet the Buy American requirement would entail "time-consuming delay and thus displace the 'shovel-ready' status of these projects." EPA noted that in all cases, project proponents proceeded in good faith and without fair notice as to the existence and scope of the Buy American requirement. Thus, EPA invoked the "public interest" exception and waived the Buy American requirements for those SRF projects that incurred debt between October 1, 2008 and February 17, 2009. Due to these narrow and unique circumstances, it is unlikely that EPA's waiver will serve as a precedent for other agencies.