Texas Lawmakers Inch Toward Requiring American Steel for Government Construction

Steel and iron producers in Texas are hoping that before the legislative session ends this month, lawmakers will approve a bill prohibiting the use of cheaper foreign steel in taxpayer-funded construction unless a certain cost threshold is met.

Under Senate Bill 1289 by Sen. Brandon Creighton, R-Conroe, domestic steel would be required for use in government construction such as office buildings, highways, and water infrastructure unless doing so would cause the entire cost of the project to rise more than 20 percent.

Critics, including some local governments, have said taxpayers should not be on the hook for increased costs but the steel industry says those fears are unfounded.

Sen. Charles Perry, R-Lubbock, was able to attach an amendment during the Senate debate that would have exempted water infrastructure projects from the Buy America provision in the bill. But the Texas House rejected Perry’s language.

“Texas and U.S. based iron and steel manufacturers cannot compete with foreign competitors who don’t follow international trade laws,” said Rep. Chris Paddie, R-Marshall, who championed the bill in the House. He added that iron and steel manufacturing jobs are on the line unless lawmakers take steps to protect them.

After the Senate adopted Sen. Perry’s amendment, steel industry leaders were quick to provide information refuting his argument that local governments would be less likely to apply for loans from the state’s revolving fund for water projects, the State Water Implementation Fund for Texas, if it includes a Buy America provision.

Local entities have often applied for loans administered by the state that include provisions requiring the use of domestic supplies, the steel industry noted.

Just this year, in fact, $154 million has been loaned to local governments through funds requiring American steel. Those loan applicants included the City of Houston, Tarrant County, Montgomery County, Corpus Christi, Hood County, and others.

Some of those broke out like this:

  • $64 million for Houston
  • $12 million for Jarrell, in Williamson County
  • $15 million for Hood County
  • $2.8 million for Montgomery County
  • $51 million for Corpus Christi
  • $15 million for Tarrant County

When the debate played out in the Texas House, Rep. Lyle Larson, R-San Antonio, tried to reattach the amendment exempting water infrastructure.

“Why would you change something when you have incredible success?” Larson asked on the House floor. “If we start putting these encumbrances on to the folks that want to borrow the money, they’ll simply choose not to use the fund, and it hurts all of us.”

Rep. Paddie argued to the contrary and the majority of the House agreed. “I would point out that there are other funds within the Water Development Fund that are under Buy America provisions today,” Paddie said, noting that the city of Houston has applied for and received millions of those funds. “Clearly, they were not deterred by those provisions,” Rep. Paddie said.

The Senate can now either agree with the House changes or ask for a conference committee to work out the differences between the two chambers before sending the bill to Gov. Greg Abbott’s desk for his signature or veto.

 

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