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How “Buy America” Restrictions Can Cost America Jobs

Proponents of Buy America restrictions -- regulations that require American-made sourcing for transportation projects supported by the federal government -- may be well-meaning, but when applied to rail expansion, these rules can be pretty pernicious. There isn't a large domestic passenger rail market in the United States, so there isn't much of a domestic traincar manufacturing industry. When you throw Buy America into the mix, that can end up being a real problem for passenger rail projects.

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Network blog Systemic Failure points to Ray LaHood's rejection of a $5.5 billion loan application by a private group seeking to build high-speed rail between Los Angeles and Las Vegas. LaHood cited Buy America rules to justify the rejection, but ironically, that means Nevada won't be getting a whole bunch of jobs, the blogger writes:

Note that the loan was not going to be spent on the train-sets. They would have been purchased separately. But the mere fact that any non-US goods were to be used was enough to kill the project.

And how exactly is this rigid adherence to Buy-America supposed to create jobs?

Now some would argue that this was a bad project anyway. The line would have terminated too far from Los Angeles to attract enough ridership. I agree with that point, but the rejection letter makes no mention of this. So what happens when the next HSR application comes along — and it is a really solid application. Will the DOT again make unreasonable requirements on rolling stock?  There is no domestic HSR manufacturing, and it is unrealistic to expect HSR manufacturers to magically spring out of nothingness to market trains for a project.

What we have here is a classic chicken-and-egg problem. Domestic HSR manufacturing cannot exist without HSR lines being built. And HSR lines cannot be built if the DOT mandates domestic rolling stock.

Elsewhere on the Network today: This Big City lists its choices for the five best high-speed rail lines in the world. Half-Mile Circles explores the accomplishments of tactical urbanism. And Better Institutions looks at the challenge of reserving space for buses on roads that carry more transit riders than drivers.

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