XpressWest Struggled to Meet Federal Buy America Rules
The letter that Ray LaHood wrote to XpressWest to inform them their loan application review had been suspended has now surfaced. (Hat tip to Mike Rosenberg.) As you can see in the letter, which is embedded below, XpressWest was struggling to meet the federal government’s Buy America rules mandating domestic manufacturing for projects that use certain federal dollars or loan programs – including the loan program XpressWest sought to use. This appears to have been the key sticking point and eventually led LaHood to suspend review of the loan application.
Although some parts of the letter have been redacted by the US Department of Transportation owing to confidentiality rules, the gist of the letter is clear. You can also sense frustration on the part of LaHood regarding the many years that this process has been taking and the inability to reach a resolution.
However, I do not see in this letter a final “no” from the USDOT regarding the loan application. Instead they have “decided to suspend further consideration” of the request. They can also decide to resume further consideration of the loan request should the situation change. If LaHood wanted to kill the loan application and the project with it, he would have done so and he would have said so. My guess is this letter is designed to get XpressWest to make some significant changes to their approach and show them that the USDOT will not wait around forever.
We don’t know enough from this letter exactly what the nature of the challenge was regarding the Buy America rules. It looks like they wanted to utilize a foreign equipment manufacturer and thus override the Buy America rules. USDOT wanted them to work with another grant recipient (likely the California HSR project), but for whatever reason, XpressWest continued to pursue a Buy America exemption. In this administration they are highly unlikely to get such an exemption for the reasons LaHood described in the letter.
I don’t think this is the end of the XpressWest story. And it shouldn’t be the end of the Vegas HSR story. The United States desperately needs a nationwide network of electric high speed trains connecting metropolises to each other as part of our work to reduce oil consumption and fight global warming, and that includes a link from Southern California to Southern Nevada. Let’s hope that a way forward is found to allow the XpressWest project, or one much like it, to get funded and built.