Buy America Requirements; End Product Analysis and Waiver Procedures, 53688-53698 [E7-18355]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 72, Number 182 (Thursday, September 20, 2007)]
[Rules and Regulations]
[Pages 53688-53698]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-18355]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 661

[Docket No. FTA-2005-23082]
RIN 2132-AA90


Buy America Requirements; End Product Analysis and Waiver 
Procedures

AGENCY: Federal Transit Administration (FTA), DOT.

[[Page 53689]]


ACTION: Final rule.

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SUMMARY: The Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users (SAFETEA-LU) requires the Federal 
Transit Administration (FTA or the Agency) to make certain changes to 
the Buy America requirements. This Final Rule creates a new publication 
process for public interest waivers to provide an opportunity for 
public comment; clarifies Buy America requirements with respect to 
microprocessor waivers; issues new provisions to permit post-award 
waivers; clarifies the definition of ``end products'' with regards to 
components, subcomponents, and major systems, and provides a 
representative list of end products; clarifies the requirements for 
final assembly of rolling stock and provides representative examples of 
rolling stock components; expands FTA's list of communications, train 
control, and traction power equipment; and updates debarment and 
suspension provisions to bring them into conformity with statutory 
amendments made by SAFETEA-LU.

EFFECTIVE DATE: The effective date of this publication is October 22, 
2007.

FOR FURTHER INFORMATION CONTACT: Richard Wong, Office of the Chief 
Counsel, Federal Transit Administration, 1200 New Jersey Avenue, SE., 
Washington, DC 20590, (202) 366-4011 or Richard.Wong@dot.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    On November 28, 2005, the Federal Transit Administration (FTA) 
published a Notice of Proposed Rulemaking (NPRM) in the Federal 
Register (70 FR 71246) that discussed several proposals mandated by 
SAFETEA-LU (Pub L. 109-59, August 10, 2005), and proposed to provide 
further clarification of existing FTA decisions on Buy America. Due to 
the complexity of many Buy America issues addressed in the NPRM and the 
divergence of opinion in important areas, FTA issued a final rule that 
addressed fewer subjects than addressed in the NPRM. (71 FR 14112, Mar. 
21, 2006.) These more routine topics covered in the final rule 
included: (1) Administrative review; (2) the definition of ``negotiated 
procurement;'' (3) the definition of ``contractor;'' (4) repeal of the 
general waiver for Chrysler vans; (5) certification under negotiated 
procurements; (6) pre-award and post-award review of rolling stock 
purchases; and (7) miscellaneous corrections and clarifications to the 
Buy America regulations.
    The Second Notice of Proposed Rulemaking (SNPRM) (71 FR 69412, Nov. 
30, 2006) addressed six issues identified in the original NPRM but not 
covered in the initial final rule: (1) A publication process for public 
interest waivers to provide an opportunity for public comment; (2) a 
clarification of Buy America requirements with respect to 
microprocessor waivers; (3) new provisions to permit post-award 
waivers; (4) clarifications in the definition of ``end products'' with 
regards to (a) components and subcomponents, (b) major systems, and (c) 
a representative list of end products; (5) a clarification of the 
requirements for final assembly of rolling stock and a list of 
representative examples of rolling stock items; (6) expanding FTA's 
list of eligible communications, train control, and traction power 
equipment; and added a technical correction; and, an update of the 
debarment and suspension provisions to bring them into conformity with 
statutory amendments made by SAFETEA-LU.

1. Published Justification for Public Interest Waivers

    In the first NPRM, FTA proposed amending 49 CFR 661.7(b) to 
implement the SAFETEA-LU requirement that FTA publish justifications 
for public interest waivers in the Federal Register and provide for 
notice and comment. The NPRM proposed to continue the current practice 
of posting all public interest waiver requests on FTA's Buy America Web 
site for public review and comment, with the additional step of 
publishing FTA's proposed approvals in the Federal Register for 
additional comment.
    After a thorough review of the comments received in response to the 
NPRM, which were discussed at length in the SNPRM, FTA believed that 
SAFETEA-LU intended a four-step process: (1) Publish the incoming 
public interest waiver request on FTA's Web site for public review and 
comment; (2) publish FTA's proposed approvals and FTA's justification 
in the Federal Register for formal notice and comment; (3) issue a 
formal written decision to the applicant; and (4) post copies of the 
formal decision on FTA's Web site.
A. Comments Received
    FTA received six comments in response to the SNPRM. All supported 
an expedited approach. Most supported the 30-day timeframe proposed in 
the SNPRM, although one commented that providing fair public notice was 
more essential than a rapid turnaround.
    Two commenters urged FTA to publish both the incoming request and 
the proposed determination in the Federal Register. Several commenters 
complained that monitoring both FTA's Web site and the Federal Register 
Web site on a daily basis for potential waiver petitions was unduly 
burdensome.
    One commenter to both the NPRM and SNPRM suggested that FTA not 
limit publication of decisions to approvals of waiver petitions. The 
commenter noted that lessons learned from disapprovals lead to a better 
understanding and application of the Buy America requirements.
B. FTA Response
    FTA believes that a dual Federal Register publication process for 
both incoming requests and proposed determinations would be slow and 
cumbersome, jeopardizing FTA's ability to maintain a 30-day processing 
time. FTA believes that publication of incoming requests on FTA's Buy 
America Web site with simultaneous notice to trade associations such as 
the American Public Transportation Association (APTA) and the Community 
Transportation Association of America (CTAA) provides interested 
parties with adequate notice and opportunity to comment, and that 
formal publication of FTA's proposed determination and justification in 
the Federal Register meets SAFETEA-LU's notice and comment 
requirements. As explained in the NPRM and SNPRM, FTA believes the 
plain language of SAFETEA-LU and its legislative history expressly 
requires FTA to issue a written justification and to publish it in the 
Federal Register, and only in instances where the justification 
supports a waiver request. See 49 U.S.C. 5323(j)(3); see also H.R. 
Conf. Rep. No. 109-203, at 952 (2005). However, FTA agrees with the 
commenter who asked FTA to also publish denial letters, and FTA will 
publish both approval and denial letters on its Web site, as FTA 
believes that researchers and potential applicants will find both 
documents useful.
    With regards to the concern that monitoring both FTA's Web site and 
the Federal Register for public interest waivers will be unduly 
burdensome, FTA has made improvements to its Web site whereby 
interested parties can subscribe to be notified whenever a new item is 
published on a specific FTA webpage, including FTA's table of its 
Federal Register publications. FTA believes that this proactive 
notification system will reduce, if not eliminate, the need to 
constantly monitor both FTA's Web site and the Federal Register for

[[Page 53690]]

waiver petitions and determination letters.
    Accordingly, FTA believes the following process meets the 
requirements specified in SAFETEA-LU: (1) Post notification of the 
public interest waiver request on FTA's Web site and solicit comments 
on the request; (2) based on the comments received, prepare a 
justification that explains the rationale for approving or denying a 
waiver request; (3) publish the justification in the Federal Register 
for notice and comment within a reasonable time; and (4) publish the 
final decision on FTA's Web site regarding the waiver request, based on 
comments received in response to the published justification.
    It should be noted that upon review of the formal comments received 
in response to the publication of the proposed determination and 
justification in the Federal Register, FTA may ultimately determine 
that a waiver is not in the public interest, and deny the request, 
despite FTA's initial determination. FTA believes that this methodology 
would create a total processing time of about 30 calendar days.

2. Microcomputer/Microprocessor Waivers

    In the SNPRM, FTA requested comment on its proposal to implement 
the SAFETEA-LU requirement to ``clarify'' that any waiver of the Buy 
America requirements for a microprocessor, computer, or microcomputer, 
applies ``only to a device used solely for the purpose of processing or 
storing data'' and does not extend to the product or device containing 
a microprocessor, computer, or microcomputer.
A. Comments Received
    FTA received nine comments on this issue, many of which echoed 
identical comments submitted in response to the initial NPRM, proposing 
the exclusion of input/output devices and software. Other commenters 
voiced objections to the current methodology of considering the cost of 
the microcomputer/microprocessor as domestic content for purposes of 
meeting the 60% domestic content requirement, suggesting that the cost 
of the exempted item should be excluded from the sum of the end 
product's domestic and non-domestic content. On the other hand, several 
commenters stressed that existing regulatory practices must be 
continued to avoid significant disruption in the industry, emphasizing 
that FTA was directed to ``clarify'' its existing Buy America 
interpretations with regard to microcomputers and microprocessors, 
without changing the current regulatory regime.
B. FTA Response
    In FTA's attempt to clarify that the waiver applied to devices 
``used solely for the purpose of processing or storing data,'' 
commenters misinterpreted this effort to mean that ``input/output'' 
facilities and software should now be excluded from the waiver's 
coverage. Such is not the case. Although the current version of the 
general waiver at 49 CFR 661.7, Appendix A, does not include the term 
``input/output'' facility, FTA has interpreted the waiver to include 
software (``microcomputer equipment, including software, of foreign 
origin can be procured by grantees.'') (Emphasis added.) In addition, 
the inclusion of input/output devices under the waiver provision was 
used in a previous definition of a microcomputer. See 50 FR 18760, May 
2, 1985 (``A basic microcomputer includes a microprocessor, storage, 
and input/output facility, which may or may not be on one chip.'') 
(Emphasis added.)
    FTA agrees with commenters that Congress did not intend for FTA to 
change its current regulatory treatment of microcomputer equipment. See 
H.R. Conf. Rep. No. 109-203, at 952 (2005) (``In directing the 
Secretary to issue new regulations regarding microprocessors, 
computers, or microcomputers, there is no intent to change the existing 
regulatory treatment of software or of microcomputer equipment.'') 
Because SAFETEA-LU directed FTA to ``clarify,'' not alter current 
regulatory policy, FTA will continue to allow both software and input/
output devices to be covered under the microcomputer/microprocessor 
waiver, provided that the waiver is limited to the device used solely 
for the processing or storing data. Consistent with prior FTA 
rulemakings and letters of determination, the waiver does not extend to 
an entire product or device merely because it contains a microprocessor 
or microcomputer, such as a laptop computer, video display monitor, 
farecard reader, or similar piece of hardware or equipment.

3. Post-Award Waivers

    FTA sought comment in the first NPRM on its proposal to create a 
post-award non-availability waiver. Under FTA's current regulation, a 
bidder or offeror that certifies compliance with Buy America is ``bound 
by its original certification'' and ``is not eligible for a waiver of 
those requirements.'' 49 CFR 661.13(c). The NPRM's proposed language 
would allow grantees to request a non-availability waiver after 
contract award where a bidder or offeror had originally certified 
compliance with the Buy America requirements, but can no longer comply 
with its certification and contractual obligations due to commercial 
impossibility or impracticability.
    In the SNPRM, FTA revised the provisions in the first NPRM based on 
responses from commenters who recommended that in the interest of 
consistency, FTA use the existing process for non-availability waivers 
set forth in 49 CFR 661.7(c). In addition, commenters suggested that 
FTA include a ``good faith'' element in its deliberations. FTA agreed 
and the SNPRM proposed that a grantee, when making a request for a 
post-award waiver, should provide specific evidence of a contractor's 
good faith when justifying the post-award waiver. This evidence would 
include information about the origin of the product or materials, 
invoices, or other relevant solicitation documents as requested and 
that the item to be procured cannot now be obtained domestically due to 
commercial impossibility or practicability. Additionally, when 
determining whether conditions exist to grant a post-award waiver, the 
SNPRM stated that FTA would consider all appropriate factors on a case-
by-case basis.
A. Comments Received
    FTA received four comments on the revised language. Two commenters, 
one a large public transit agency and one a system manufacturer 
concurred with the SNPRM's revised approach. The third commenter, a 
large transit agency, expressed concerns about validating the 
credibility of its supplier or contractor and the sufficiency of the 
evidence that needed to be submitted to FTA as part of the waiver 
request. The transit agency was concerned that it could be placed in a 
conflict of interest position or subjected to litigation if had to 
advocate on behalf of a given vendor. The fourth commenter, a large 
trade association representing transit agencies and their vendors and 
suppliers, opined that the consideration of other bidders or offerors 
should have no consideration in FTA's evaluation of post-award non-
availability requests, believing that a frustrated second-lowest bidder 
could hold a transit agency ``economic hostage'' to a frustrated 
competitor who had obtained limited remaining domestic supplies through 
exclusive distribution agreement or other arrangement. According to the 
trade association, the situation would result in significant cost 
increases as the transit agency would be forced to

[[Page 53691]]

terminate its contract with the initial contractor with no effective 
competition to ensure reasonable pricing.
B. FTA Response
    FTA believes that the language set forth in the SNPRM forms a 
reasonable approach. With regard to proving supplier or contractor 
credibility, a transit agency may reasonably rely upon a contractor's 
representation, as making a knowingly false claim in a Federally-funded 
procurement could subject a perjurious contractor to Federal criminal 
statutes and possible debarment from future contracting opportunities. 
With regard to the sufficiency of the evidence, the SNPRM stated that 
FTA will consider all factors on a case-by-cases basis. If FTA believes 
that the document submitted by a grantee or its contractor is 
insufficient, inadequate, or suspect, FTA may request additional 
information to determine whether there is sufficient evidence to 
justify granting a waiver.
    With regard to the concerns of the third commenter that submitting 
a waiver request would raise conflict-of-interest issues, FTA believes 
that submitting a post-award waiver request would not constitute 
advocacy on behalf of a given vendor, but rather, constitutes advocacy 
on behalf of the transit agency itself, which would be forced into 
reopening a bid or otherwise encounter performance delays without a 
post-award waiver.
    FTA does not agree with the comments from the fourth commenter that 
the status of other bidders should be excluded from consideration. The 
Buy America status of other responsive bidders, including losing 
bidders, is materially relevant, particularly where the winning bidder 
is seeking to substitute non-domestic materials for domestic ones. The 
intent of Buy America is to safeguard American jobs by requiring that 
steel, iron, and manufactured goods used in an FTA-funded project are 
produced in the United States--not to protect a particular contractor 
or supplier against the vagaries of the marketplace. In deciding 
whether to grant a post-award waiver, therefore, FTA will consider the 
status of other bidders or offerors who are Buy America compliant and 
can furnish domestic material or products on an FTA-funded project. 
Concluding otherwise would violate the legislative intent of Buy 
America.
    With regard to the commenter's concern that a losing bidder 
offering American-made products could hold the purchaser economic 
hostage and charge extortionary rates, FTA acknowledges that it has the 
authority to grant a cost-differential waiver if the price of acquiring 
a domestic product would increase the cost of the overall contract to 
the transit agency by more than 25 percent. Because the SNPRM stated 
that FTA would consider ``all appropriate factors on a case-by-case 
basis'' in deciding whether to grant a post-award waiver, FTA believes 
it would be appropriate to take the reasonableness of any cost 
differential into account when deciding whether to grant a waiver 
request. Whether the 25 percent cost differential would apply to the 
cost of the non-available domestic product or to the cost of the 
overall contract is a factor FTA would consider on a case-by-case 
basis, depending upon the significance of the product to the overall 
contract.

4. ``End Products''

    SAFETEA-LU directed FTA to define the term ``end product,'' and in 
defining the term, FTA is to ``address the procurement of systems under 
the definition to ensure that major system procurements are not used to 
circumvent the Buy America requirements.'' In addition, SAFETEA-LU 
directed FTA to develop a list of representative end products that are 
subject to Buy America requirements.
4a. Defining ``End Product'' Under a Shift and Non-Shift Approach
    FTA's initial NPRM sought comments on two alternative definitions 
of the term ``end product.'' The first proposed definition came from 
FTA's current, long-standing practice whereby the end product is the 
deliverable item specified by the grantee in the third party contract. 
Under this ``shifting'' methodology, the same item could be an end-
product, a component, or a subcomponent, depending upon the deliverable 
specified in the third party contract, with applicable Buy America 
requirements attaching based on an item's characterization. Applying 
this shifting approach, FTA's first proposed definition stated: ``End 
product means any item subject to 49 U.S.C. 5323(j) that is to be 
acquired by a grantee, as specified in the overall project contract.''
    FTA's second proposal was to base the definition of ``end product'' 
on that found in the Federal Acquisition Regulation (FAR) at 48 CFR 
part 25 implementing the Buy American Act, 41 U.S.C. 10a-10d. Under 
this definition, end products do not shift and components and 
subcomponents retain their designation. FTA's second proposed 
definition for this ``non-shift approach'' stated: ``End product means 
any article, material, supply, or system, whether manufactured or 
unmanufactured, that is acquired for public use under a federally 
funded third party contract.'' To that point, FTA created a list of 
representative end products that was included in the SNPRM.
    Based on its analysis and review of the comments received in 
response to the first NPRM, FTA concurred with the majority of 
commenters who recommended that FTA adopt the second ``non-shift'' 
proposal in the SNPRM, finding that such an approach would (1) foster 
reasonable predictability and stability in the transit business 
community, (2) enable offerors and bidders to price proposals more 
accurately, and (3) allow transit agencies to obtain better prices.
    Several commenters opposed the NPRM's ``non-shift'' approach, 
stating that keeping track of aftermarket rolling stock parts would not 
only prove to be an impossible burden for grantees, it would also 
discourage parts suppliers from developing an aftermarket support 
structure within the United States, potentially increasing the lead 
time for the purchase of replacement parts. These concerns were based 
on the assumption that FTA would treat replacement parts under the 
rolling stock standard (i.e., where sixty percent of the subcomponents 
of a component, by cost, must be domestic, but forty percent may be 
foreign-sourced). To address the concerns of these commenters, the 
SNPRM proposed to treat rolling stock replacement parts under the 
simpler ``manufactured products'' standard in 49 CFR 661.5, which 
requires that a component be manufactured domestically, without the 
need to document the origin of each of its subcomponents. As FTA's Buy 
America regulation currently states, a component of a manufactured 
product ``is considered of U.S. origin if it is manufactured in the 
United States, regardless of the origin of its subcomponents.'' 49 CFR 
661.5(d)(2).
    The SNPRM's proposal to apply the ``manufactured product'' standard 
to replacement parts is very different from the current regulation that 
applies the rolling stock standard to such parts. Under the current 
regulation, a component of rolling stock, in order to be Buy America-
compliant, must consist of at least 60% domestic subcomponents. A 
rolling stock component, if purchased later as a replacement part, 
shifts upwards to become an ``end product'' and its subcomponents shift 
to become ``components'' and must consist of 100% domestic, even if the 
original subcomponent was part of the vehicle's

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allowable 40% non-domestic content. The SNPRM proposed that replacement 
components would retain their characterization as ``components'' 
throughout the life of the vehicle and their replacements would not 
shift upwards to become ``end products.'' In addition, replacement 
components would be subject to the ``manufactured products'' standard 
with regard to the origin of its subcomponents.
    By applying the ``manufactured products'' standard to replacement 
components, suppliers would still be required to manufacture 
replacement components in the United States, thereby preserving a 
domestic manufacturing base while at the same time recognizing the 
global marketplace with regard to the procurement of subcomponents. In 
addition, applying the ``manufactured products'' test to the 
acquisition of replacement components relieves manufacturers and buyers 
of the burden of documenting country-of-origin records for an endless 
number of possible subcomponents, so long as the component itself is 
manufactured in the United States. FTA believed the SNPRM's approach 
provided limited relief from current practices and was not likely to 
disrupt the supply industry.
    A more significant change in the SNPRM pertained to the replacement 
of subcomponents. Under the current regulation, if a purchaser replaces 
rolling stock subcomponents, those replacement parts also shift upwards 
to become ``end products'' (i.e., the item must be American-made). The 
SNPRM proposed that replacement parts would be subject to the same Buy 
America requirements that applied to the original part--subcomponents 
would not shift upwards to become ``end products'' but would instead 
remain ``subcomponents'' throughout the life of the vehicle. Albeit 
such a rule might lead to an increase in the level of foreign-sourced 
replacement parts, FTA believed that the benefits of consistency, 
stability, and favorable price structures in the transit industry and 
would outweigh any disadvantages to domestic suppliers.
A. Comments Received
    The four parties who submitted comments on this issue represented a 
broad cross-section of docket commenters--one of the nation's largest 
public transit agencies, a manufacturer of an integrated fare 
collection system, a manufacturer of rolling stock, and a large 
industry trade association. All four endorsed FTA's proposal.
    The SNPRM, the trade association noted, ``will provide the market 
predictability the transit industry needs to maintain stability and 
reasonable pricing,'' adding that permanently fixing the status of a 
part as components or sub-components for all future purposes would 
allow agencies to procure proven replacement parts without non-
productive recordkeeping The transit agency expressed similar concerns 
that maintaining records of rolling stock end products, components, and 
end products throughout the service life of the vehicle would have been 
an ``unbearable burden.'' The fare collection system manufacturer 
concurred without additional comment, while the rolling stock 
manufacturer stressed that components ``should always be manufactured 
in the U.S. regardless of whether the component was purchased as part 
of an end product or separately as a service part for an end product.''
B. FTA Response
    Based on the comments received, FTA is adopting the SNPRM's non-
shift approach. Under the current regulation, a procurement for a 
replacement part, whether the part was previously classified as a 
component or a sub-component, is treated as a procurement for an ``end 
product.'' Under the new approach, procurements for replacement parts, 
whether components or subcomponents of the original end product, would 
retain their characterization and the requirements applicable to 
manufactured products would apply. This new approach would apply 
consistently to the procurement of replacement parts for rolling stock 
as well as to manufactured products.
    This approach to replacement parts is supported by the trade 
association's comments that the SNPRM's approach would ``provide the 
market predictability the transit industry needs to maintain stability 
and reasonable pricing,'' and that ``fixing their status as components 
or sub-components for all future purposes will allow agencies to 
procure replacement parts without non-productive record keeping.'' For 
rolling stock components, FTA recognizes that the illustrative list of 
``typical'' rolling stock components in Appendices B and C to 49 CFR 
661.11 will assist procurement officers in identifying components. For 
manufactured products, the contract or the bid proposal would govern 
the hierarchy of components and subcomponents.
    In addition, the classification of ``components'' and 
``subcomponents'' would not only apply to the procurement of items 
purchased as part of the vehicle's original equipment, but would apply 
consistently to the same item if purchased as an aftermarket accessory. 
To illustrate, under the present regulation, a bicycle rack is treated 
as a ``component'' if specified in a contract for the purchase of a new 
bus, but is treated as an ``end product'' if subsequently purchased as 
an aftermarket accessory or as part of a vehicle rehabilitation or 
retrofit. FTA believes that the same Buy America rules should apply 
regardless of when the bicycle rack is purchased, i.e., a bicycle rack 
will be treated as a component and must comply with the manufactured 
products standard. This approach will lead to consistency in the 
manufacturing of components and will greatly simplify the procurement 
process for transit agencies and their suppliers.
    In the NPRM, FTA considered an approach that would have permitted 
the replacement of non-domestic components and subcomponents with 
identical products of non-domestic manufacture. But due to comments 
from transit agencies that maintaining country-of-origins records for 
every component and subcomponent throughout a vehicle's useful service 
life was too great of a recordkeeping burden, FTA is not adopting this 
approach.
    FTA believes that the benefits of the non-shift approach to the 
procurement of replacement parts outweigh any potential impact on 
replacement parts manufacturers. FTA finds it noteworthy that despite 
publication of the SNPRM and a request for data in the February public 
meeting, FTA received no comments to the docket from domestic suppliers 
of replacement subcomponents that quantified any adverse economic 
effects, particularly since the SNPRM would have subjected them to 
potential foreign competition.
    FTA believes that adopting the non-shift approach will benefit 
transit agencies in their direct procurement of replacement parts, and 
lead to additional cost-savings to transit agencies and component 
manufacturers in the procurement of subcomponents. The non-shift 
approach will also provide consistency and stability with regard to the 
identity of components and subcomponents, eliminating the distinctions 
between the procurement of rolling stock and manufactured product 
replacement parts, and different procurement standards for replacement 
parts and aftermarket products. Transit agencies will be able to 
procure replacement parts from the original part manufacturers, 
purchasing agents will find it easier to determine the applicable Buy 
America rules when attempting to procure replacement parts, and opening 
the market to foreign and domestic sources will guarantee favorable 
price

[[Page 53693]]

structures in the transit industry and cost savings to the American 
taxpayer.
4b. ``System'' as an ``End Product''
    SAFETEA-LU requires that ``the procurement of systems'' be 
addressed ``to ensure that major system procurements are not used to 
circumvent the Buy America requirements.'' The NPRM sought comment on 
whether FTA should continue its longstanding practice of including 
``systems'' as definable end products. Furthermore, FTA sought comment 
on a proposed definition of ``system'' which was based on the 
``functional test'' for interconnected systems from the Harmonized 
Tariff Schedule of the United States (HTSUS), 19 U.S.C. 1202, heading 
8474, used in customs law. The NPRM proposed to define ``system'' as 
``a machine, product, or device, or a combination of such equipment, 
consisting of individual components, whether separate or interconnected 
by piping, transmission devices, electrical cables or circuitry, or by 
other devices, which are intended to contribute together to a clearly 
defined function.''
    Although many commenters expressed concerns that manufacturers 
could potentially abuse the definition of ``system'' to incorporate a 
large degree of non-domestic subcomponents into a single ``end 
product'' procurement, a majority of commenters encouraged FTA to 
continue its longstanding practice of including a ``system'' as a 
definable end product. Furthermore, FTA noted that SAFETEA-LU only 
required FTA to develop a rule to ``ensure that major system 
procurements are not used to circumvent the Buy America requirements,'' 
and did not expressly seek to prohibit the designation of systems as 
end products. Rather, SAFETEA-LU instructed FTA to develop a rule that 
would cure potential abuses, without eliminating system procurements or 
drastically changing FTA's long-standing Buy America practices.
    FTA received many comments offering alternatives to the NPRM's 
proposed definition of ``system.'' Some commenters suggested FTA should 
consider whether performance warranties apply to an integrated system; 
whether products perform on an integrated basis with other products in 
a system, or are operated independently of associated products in the 
system; or whether transit agencies routinely procure a product 
separately (other than as replacement or spare parts). Based on these 
comments, FTA rewrote the SNPRM's definition of ``system'' to 
incorporate these criteria.
A. Comments Received
    Five commenters responded to FTA's proposal. Four were generally 
appreciative of FTA's approach, while one, a transit vehicle 
manufacturer, found the concept ``confusing and unnecessary,'' and 
urged a more concise definition and a full listing of end products. A 
large transit agency supported FTA's definition, proposing that FTA add 
a ``minimum set of components and interconnections'' factor to the 
criteria. A large industry trade association, while appreciative of 
FTA's efforts, commented that the SNPRM ``fails to provide necessary 
guidance to the industry'' and stated that the list of characteristics 
should be expanded, lest the absence of one characteristic be seen as 
determinative. The commenter added that the definition should address 
what types of systems would not be eligible for consideration as end 
products. A manufacturer of a fare collection system responded to the 
trade association's comments, stating that the trade association's 
members were unable to achieve consensus on this issue and that because 
the trade association was unable to propose clear product-specific 
categories as an alternative definition to FTA's approach, FTA should 
instead use principles in performing its analysis.
B. FTA Response
    Based on the comments received and on SAFETEA-LU's statutory 
language and legislative history, FTA is retaining the SNPRM's 
definition of a ``system'' and will add the term ``system'' to the 
definition of ``end product.'' FTA believes the definition proposed in 
the SNPRM and the new illustrative criteria will protect against the 
bundling of unrelated independent products into a ``super system'' that 
would undermine the principles of Buy America. Most importantly, as FTA 
explained in the SNPRM, FTA is willing to carefully review major system 
procurements to determine whether an integrated system actually exists, 
and, if so, which items constitute the system. This review process will 
further serve to avoid the circumvention of Buy America requirements.
    FTA believes a fare collection system, in toto, meets the 
definition of an ``end product.'' FTA reached this conclusion in a 1994 
and 2002 decision involving the Massachusetts Bay Transportation 
Authority (MBTA), and a 1995 decision involving the Tri-County 
Metropolitan District of Oregon. In these three decisions FTA cited 49 
CFR Sec.  661.11(s) in defining ``end product'' as any item procured by 
a grantee as specified in the overall project contract. Furthermore, 
FTA believes that the fare collection system at issue in its 2002 
determination would have met the SNPRM's definition of ``system:'' the 
warranty clause referred to a single end product, i.e., an automated 
fare collection system; the automated fare collection system was the 
subject of a single procurement whereby the manufactured ``end 
product'' was functionally different than that which would have 
resulted from a mere assembly of elements or materials; and most 
importantly, the individual parts performed on an integrated basis with 
other parts of the system.
    Under FTA's Buy America current methodology, if a purported end 
product is too large, i.e., composed of what FTA traditionally 
considers as separate ``end products'' such as structures, vehicles, 
fare collection equipment, etc., FTA will break it down into separate 
end products. FTA's willingness to do this in previous requests to 
evaluate the characterization of a turnkey rail project as a ``system'' 
should allay the fears of commenters that an end product system could 
be so large, and incorporate so many different levels of equipment such 
as stations, track, vehicles, fare collection equipment, etc., that Buy 
America requirements could be circumvented.
    FTA remains aware that a single large-scale procurement could 
conceivably contain multiple end products, each of which must 
independently meet the requirements of Buy America. But at the same 
time FTA also recognizes that various elements may be integrated into a 
single system. FTA is aware of the developing trend towards systems 
procurements and the potential circumvention of Buy America 
requirements, and will therefore exercise heightened scrutiny in this 
area, using the new criteria. FTA notes, however, that the criteria are 
illustrative rather than determinative, and that lacking one of the 
criteria would not necessarily result in the automatic disqualification 
of a ``system.''
4c. Representative List of End Products
    SAFETEA-LU directed FTA to develop a ``representative list'' of end 
products. FTA sought comment on a proposed list of representative end 
products in the first NPRM, and as FTA explained then, the proposed 
list was not meant to be all-inclusive, instead describing general 
``representative'' categories of end products consistent with the 
legislation.

[[Page 53694]]

A. Comments Received
    FTA received five comments on this issue. Of these, two commenters 
concurred with FTA's approach. One commenter stated that FTA's proposed 
representative list was ``too abbreviated and inconsistent,'' 
recommending that FTA issue a more extensive or comprehensive list and 
subjecting that list for public comment before publishing it as a Final 
Rule. Another commenter representing a coalition of manufacturers 
provided a list of end products that it believed should be added to the 
representative list, stating that products identified on the list 
should retain their status as end products, even if incorporated into a 
new system. One commenter, an elevator manufacturer, sought 
clarification that the adjective ``mobile'' in the representative list 
of manufactured products applied to lifts, hoists, and elevators that 
were movable and not part of a facility's permanent infrastructure.
B. FTA Response
    FTA agrees with the commenters who recommended FTA implement a 
``representative'' list of end products for two reasons: First, 
SAFETEA-LU directed the Secretary to ``develop a list of representative 
items that are subject to the Buy America requirements'' (emphasis 
added). By use of the term ``representative'' rather than 
``comprehensive,'' FTA believes that Congress did not intend that the 
list be exhaustive. Second, FTA agrees that it would be unrealistic and 
unnecessary to develop a comprehensive list and keep it constantly 
updated as some commenters suggested.
    FTA believes it is impractical to attempt to produce an exhaustive 
comprehensive list of every conceivable end product, component, and 
subcomponent in the transit industry. The comprehensive lists offered 
by commenters to the NPRM and SNPRM, which were often very lengthy, 
highly detailed, and seldom uniform, illustrate the difficulty of 
creating such a list. One commenter stated that the suggested lists of 
end products were not based upon the development of reasonable 
governing principles, but rather, ``by parochial interests that are 
focused literally on a product by product basis.'' That commenter 
recommended that FTA design its regulations around principles that can 
be fairly and impartially applied on a consistent basis in a 
technologically complex and constantly evolving environment.
    FTA believes that a more practical approach is to issue a 
representative list that is not meant to be all-inclusive and to rely 
upon basic governing principles to address future deliberations. An 
example of this practical approach are the representative lists of 
typical bus and rail car components found in Appendices B and C to 49 
CFR 661.11. Manufactured products not enumerated on those component 
lists can be analyzed within the context of other items on those lists, 
using governing principles. FTA's representative list of ``end 
products'' is similarly reflective of the broad scope of transit 
procurements and new end products can be similarly assessed.
    With regard to the applicability of the term ``mobile,'' FTA 
intended for it to apply to all portable or moveable lifts, hoists, and 
elevators. FTA did not intend that permanently affixed lifts, hoists, 
and elevators would be considered as ``end products.'' Rather, they 
will continue to be considered components of the larger facility, which 
itself could constitute the ``end product.''

5. Definition of ``Final Assembly''

    In the first NPRM, FTA sought comment on its proposal to amend the 
definition of ``final assembly'' in 49 CFR part 661 for rolling stock 
procurements by incorporating the minimum requirements for final 
assembly as outlined in FTA's March 18, 1997, Dear Colleague letter, C-
97-03, which Congress implemented through section 3035 of the 
Transportation Equity Act for the 21st Century (TEA-21) (Pub. L. 105-
178).
    Several commenters recommended several changes to the NPRM's 
proposed definition, suggesting that it be made consistent with the 
descriptions of incorporation and final assembly for rail cars and 
buses in 49 CFR 661.11(b) and (c). FTA concurred with these commenters, 
agreeing that the definition of final assembly should refer back to 49 
CFR 661.11(b) and (c) for the bus and rail car components that must be 
incorporated into the end product at the final assembly location.
    FTA also agreed with a commenter who recommended that language from 
the March 18, 1997, Dear Colleague letter regarding FTA determinations 
of compliance be added to the ``final assembly'' provisions.
A. Comments Received
    Although two transit agencies concurred with FTA's approach without 
providing substantive comments, the proposal was opposed by five 
rolling stock manufacturers, a large industry trade association, a 
consortium of suppliers, and a consultant, all of whom submitted 
lengthy comments to the SNPRM describing their opposition. These 
commenters pointed out that the Dear Colleague letter has been 
successfully implemented for the past ten years, and that any changes 
could create confusion for manufacturers and grantees. One commenter 
noted that the Dear Colleague letter reflected extensive input from 
industry participants. Vehicle manufacturers stated that they had made 
long-term operational and investment decisions based on existing law 
and guidance, and changing policy would be ``extremely onerous and 
harmful to manufacturers that currently comply with existing laws.'' 
Another commenter warned that adoption of the SNPRM's language would 
have ``unintended consequences'' on an ``already fragile bus 
industry.''
    Finally, commenters pointed out that the Dear Colleague letter's 
definition of ``final assembly'' had been acknowledged and memorialized 
by Congress in section 3035 of TEA-21, and Congress did not indicate 
any direction for FTA to alter the current definition of final 
assembly.
B. FTA Response
    FTA finds the commenters persuasive. Not only does the Dear 
Colleague letter reflect widespread industry understanding of the final 
assembly process, it is a long-standing precedent that reflects 
industry input and consensus and has been recognized by Congress as an 
acceptable standard. Therefore, FTA is withdrawing the proposed 
language in the SNPRM and will instead continue to implement the terms 
of the March 18, 1997, Dear Colleague letter, with a few minor 
additions to reflect industry practices that have taken effect after 
the 1997 Dear Colleague letter was issued, such as the construction of 
bus shells and the installation of locomotive engines in passenger 
railcars.

6. Communication, Train Control, and Traction Power Equipment

    FTA sought comment on three substantive proposals to the Buy 
America requirements for rolling stock components in the NPRM. In the 
first of these proposals, FTA sought comment on whether it should 
continue to find that the items of communication equipment listed in 49 
CFR 661.11 include wayside equipment, i.e., communication equipment 
that is not in or on a vehicle, but on the adjacent tracks or right-of-
way. FTA also sought comment on whether the items of train control, 
communication, and traction power equipment listed in 49 CFR 661.11(t), 
(u), and (v) should be deleted

[[Page 53695]]

and whether any new items should be added to these lists to reflect new 
technology. Finally, FTA sought comment on whether the term 
``communication equipment'' should be limited to equipment whose 
primary function is communication ``with or between people'' or whether 
it should be expanded to include a ``machine-to-machine'' interface.
    Based on comments received in response to the NPRM, FTA determined 
that the rolling stock requirements for communications equipment would 
continue to apply to wayside equipment. One commenter recommended 
deleting several items from the proposed lists of train control, 
communication, and traction power equipment, but several more 
commenters suggested the addition of items to the lists, which was 
reflected in the SNPRM. With regard to the expansion of the term 
``communication equipment'' to include machine-to-machine interactions, 
FTA noted in the SNPRM that modern communication networks frequently 
support both capabilities (i.e., human to human interaction and 
machine-to-machine interface) and it would be difficult in those 
situations to determine which components of the communication equipment 
was supporting one purpose or the other. Moreover, FTA's review of 
prior Buy America decisions involving communication equipment supported 
these conclusions and FTA declined to make such a distinction in the 
SNPRM. However, the SNPRM stated that FTA will continue to carefully 
scrutinize, on a case-by-case basis, whether technology may properly be 
characterized as ``communication equipment'' within the meaning of the 
rolling stock provisions of 49 U.S.C. 5323(j) and 49 CFR 661.11.
A. Comments Received
    Two of the three commenters to the SNPRM concurred with FTA's 
approach. One commenter, a large transit agency, believed that further 
modification was necessary to reflect current technology and 
practices--namely, that propulsion systems and cab display should be 
added to the list of traction power equipment.
B. FTA Response
    FTA notes that several commenters recommended that aluminum 
composite conducting rail, otherwise known as Bimetallic Power 
Transmission (BPTS) Equipment, which is a combination of an aluminum 
conductor and a stainless steel abrasion-resistant cap, be added to the 
list of traction power equipment in 49 CFR 661.11(v). However, FTA's 
current regulation at 49 CFR 661.11(w) states that ``[t]he power or 
third rail is not considered traction power equipment and is thus 
subject to the requirements of 49 U.S.C. 5323(j) and the requirements 
of 49 CFR 661.5.''
    FTA believes that these recommendations go beyond the scope of the 
present rulemaking. Currently, all power or third rails, regardless of 
whether made primarily from aluminum, steel, or some other material, is 
excluded from the definition of ``traction power equipment'' and 
instead is subject to 49 CFR 661.5. If the rail is made of steel or 
iron, the product must comply with 49 CFR 661.5(c). If BPTS third rail 
is not made primarily of steel, it would be treated as a manufactured 
product under 49 CFR 661.5(d). In order to provide a competitive and 
level playing field, FTA is interpreting the commenters' 
recommendations as a request to classify power or third rails as 
traction power equipment, whether made of steel, aluminum, or some 
other material. This would require a Congressional action to exclude 
steel and iron contact rail from the domestic manufacturing 
requirements of 661.5(c), which is beyond FTA's authority in this 
rulemaking.

7. Statutory Update

    The SNPRM proposed to amend the debarment and suspension provisions 
in 49 CFR 661.18 to incorporate a reference to SAFETEA-LU, replacing 
the existing reference to the Intermodal Surface Transportation 
Efficient Act of 1991 (ISTEA).
A. Comments Received
    Commenters were unanimous in their support of the amendment.
B. FTA Response
    FTA is adopting the amendment without change. FTA is also amending 
the statutory references to section 165 of the Surface Transportation 
Assistance Act of 1982 in 49 CFR 661.6 and 661.12 and replacing them 
with references to the current Buy America requirements at 49 U.S.C. 
5323(j). In addition, FTA is amending the title of 49 Part 661 to 
remove the reference to the Surface Transportation Assistance Act of 
1982 so that the title will simply read, ``Buy America Requirements.''

II. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

    This final rule is authorized under SAFETEA-LU (Pub. L. 109-59), 
which amended Section 5323(j) and (m) of Title 49, United States Code 
and required FTA to revise its regulations with respect to Buy America 
requirements.

B. Executive Order 12866 and DOT Regulatory Policies and Procedures

    This final rule is a nonsignificant regulatory action under section 
3(f) of Executive Order 12866 and, therefore, was not reviewed by the 
Office of Management and Budget. This final rule is also nonsignificant 
under the Regulatory Policies and Procedures of the Department of 
Transportation (44 FR 11034, Feb. 26, 1979). This final rule imposes no 
new compliance costs on the regulated industry; it merely clarifies 
terms existing in the Buy America regulations and adds terms consistent 
with SAFETEA-LU.

C. Executive Order 13132

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13132 (``Federalism''). This 
final rule does not include any regulation that has substantial direct 
effects on the States, the relationship between the national government 
and the States, or the distribution of power and responsibilities among 
the various levels of government. Therefore, the consultation and 
funding requirements of Executive Order 13132 do not apply.

D. Executive Order 13175

    This final rule has been analyzed in accordance with the principles 
and criteria contained in Executive Order 13175 (``Consultation and 
Coordination with Indian Tribal Governments''). Because this final rule 
does not have tribal implications and does not impose direct compliance 
costs, the funding and consultation requirements of Executive Order 
13175 do not apply.

E. Regulatory Flexibility Act and Executive Order 13272

    The Regulatory Flexibility Act (5 U.S.C. 601-611) requires each 
agency to analyze regulations and proposals to assess their impact on 
small businesses and other small entities to determine whether the rule 
or proposal will have a significant economic impact on a substantial 
number of small entities. This final rule imposes no significant new 
costs on small entities, and in fact, is expected to reduce costs by 
eliminating specific recordkeeping burdens. Therefore, FTA certifies 
that this proposal does not require further analysis under the 
Regulatory Flexibility Act.

[[Page 53696]]

F. Unfunded Mandates Reform Act of 1995

    This final rule does not propose unfunded mandates under the 
Unfunded Mandates Reform Act of 1995. If the proposals are adopted into 
a final rule, it will not result in costs of $100 million or more 
(adjusted annually for inflation), in the aggregate, to any of the 
following: State, local, or Native American tribal governments, or the 
private sector.

G. Paperwork Reduction Act

    This final rule proposes no new information collection 
requirements.

H. Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN number contained in the heading 
of this document may be used to cross-reference this action with the 
Unified Agenda.

I. Environmental Assessment

    The National Environmental Policy Act of 1969 (NEPA), as amended 
(42 U.S.C. 4321-4347), requires Federal agencies to consider the 
consequences of major Federal actions and prepare a detailed statement 
on actions significantly affecting the quality of the human 
environment. There are no significant environmental impacts associated 
with this final rule.

J. Privacy Act

    Anyone is able to search the electronic form for all comments 
received into any of our dockets by the name of the individual 
submitting the comments (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit 
https://dms.dot.gov.

List of Subjects in 49 CFR Part 661

    Grant programs--transportation, Public transportation, Reporting 
and recordkeeping requirements.

0
Accordingly, for the reasons described in the preamble, part 661 of the 
Code of Federal Regulations is amended as follows:

PART 661--BUY AMERICA REQUIREMENTS

0
1. The authority citation for part 661 is amended to read as follows:

    Authority: 49 U.S.C. 5323(j) (formerly sec. 165 of the Surface 
Transportation Assistance Act of 1982 (Pub. L. 97-424); as amended 
by sec. 337, Pub. L. 100-17; sec. 1048, Pub. L. 102-240; sec. 
3020(b), Pub. L. 105-178; and sec. 3023(i) and (k), Pub. L. 109-59); 
49 CFR 1.51.


0
2. The heading for part 661 is revised to read as set forth above.


Sec.  661.1  [Amended].

0
3. Amend Sec.  661.1 by removing ``Federal Mass Transit Act of 1964, as 
amended'' and adding in its place ``49 U.S.C. 5323(j)''.

0
4. Revise Sec.  661.3 to read as follows:


Sec.  661.3  Definitions.

    As used in this part:
    Act means the Federal Public Transportation Law (49 U.S.C. Chapter 
53).
    Administrator means the Administrator of FTA, or designee.
    Component means any article, material, or supply, whether 
manufactured or unmanufactured, that is directly incorporated into the 
end product at the final assembly location.
    Contractor means a party to a third party contract other than the 
grantee.
    End product means any vehicle, structure, product, article, 
material, supply, or system, which directly incorporates constituent 
components at the final assembly location, that is acquired for public 
use under a federally-funded third-party contract, and which is ready 
to provide its intended end function or use without any further 
manufacturing or assembly change(s). A list of representative end 
products is included at Appendix A to this section.
    FTA means the Federal Transit Administration.
    Grantee means any entity that is a recipient of FTA funds.
    Manufactured product means an item produced as a result of the 
manufacturing process.
    Manufacturing process means the application of processes to alter 
the form or function of materials or of elements of the product in a 
manner adding value and transforming those materials or elements so 
that they represent a new end product functionally different from that 
which would result from mere assembly of the elements or materials.
    Negotiated procurement means a contract awarded using other than 
sealed bidding procedures.
    Rolling stock means transit vehicles such as buses, vans, cars, 
railcars, locomotives, trolley cars and buses, and ferry boats, as well 
as vehicles used for support services.
    System means a machine, product, or device, or a combination of 
such equipment, consisting of individual components, whether separate 
or interconnected by piping, transmission devices, electrical cables or 
circuitry, or by other devices, which are intended to contribute 
together to a clearly defined function. Factors to consider in 
determining whether a system constitutes an end product include: 
Whether performance warranties apply to an integrated system 
(regardless of whether components are separately warranteed); whether 
products perform on an integrated basis with other products in a 
system, or are operated independently of associated products in the 
system; or whether transit agencies routinely procure a product 
separately (other than as replacement or spare parts).
    United States means the several States, the Commonwealth of Puerto 
Rico, the District of Columbia, Guam, American Samoa, the U.S. Virgin 
Islands, and the Commonwealth of the Northern Mariana Islands.

Appendix A to Sec.  661.3--End Products

    The following is a list of representative end products that are 
subject to the requirements of Buy America. This list is 
representative, not exhaustive.
    (1) Rolling stock end products: All individual items identified 
as rolling stock in Sec.  661.3 (e.g., buses, vans, cars, railcars, 
locomotives, trolley cars and buses, ferry boats, as well as 
vehicles used for support services); train control, communication, 
and traction power equipment that meets the definition of end 
product at Sec.  661.3 (e.g., a communication or traction power 
system).
    (2) Steel and iron end products: Items made primarily of steel 
or iron such as structures, bridges, and track work, including 
running rail, contact rail, and turnouts.
    (3) Manufactured end products: Infrastructure projects not made 
primarily of steel or iron, including structures (terminals, depots, 
garages, and bus shelters), ties and ballast; contact rail not made 
primarily of steel or iron; fare collection systems; computers; 
information systems; security systems; data processing systems; and 
mobile lifts, hoists, and elevators.


Sec.  661.6  [Amended]

0
5. Amend Sec.  661.6 as follows:
0
a. Remove ``Certificate of Compliance With Section 165(a)'' and add in 
its place ``Certificate of Compliance with Buy America Requirements'' 
and remove ``section 165(a) of the Surface Transportation Assistance 
Act of 1982, as amended'' and add in its place ``49 U.S.C. 
5323(j)(1)''.
0
b. Remove ``Certificate for Non-Compliance with Section 165(a)'' and 
add in its place ``Certificate of Non-Compliance with Buy America

[[Page 53697]]

Requirements'', remove ``section 165(a) of the Surface Transportation 
Assistance Act of 1982, as amended'' and add in its place ``49 U.S.C. 
5323(j)'', and remove ``section 165(b)(2) or (b)(4) of the Surface 
Transportation Assistance Act of 1982'' and add in its place ``49 
U.S.C. 5323(j)(2)''.

0
6. Amend Sec.  661.7 as follows:
0
a. In paragraph (a), remove ``Section 165(b) of the Act'' and add in 
its place ``Section 5323(j)(2) of Title 49 United States Code'' and 
remove ``section 165(a)'' and add in its place ``49 U.S.C. 
5323(j)(1)''.
0
b. Revise paragraph (b);
0
c. Amend paragraph (c) by removing ``section 165(b)(2) of the Act'' and 
adding in its place ``49 U.S.C. 5323(j)(2)'' and removing ``section 
165(a)'' and adding in its place ``49 U.S.C. 5323(j)'';
0
d. Add a new paragraph (c)(3);
0
e. Amend paragraph (e) by removing ``section 165(b) of the Act'' and 
adding in its place ``49 U.S.C. 5323(j)(2)'';
0
f. Amend paragraph (f) by removing ``section 165(b)(3) of the Act'' and 
adding in its place ``49 U.S.C. 5323(j)(2)(C)''; and
0
g. Amend Appendix A to Sec.  661.7 by removing paragraphs (b) and (c) 
and adding new paragraph (b).
    The revisions and addition read as follows:


Sec.  661.7  Waivers.

* * * * *
    (b) Under the provision of 49 U.S.C. 5323(j)(2)(A), the 
Administrator may waive the general requirements of 49 U.S.C. 
5323(j)(1) if the Administrator finds that their application would be 
inconsistent with the public interest. In determining whether the 
conditions exist to grant this public interest waiver, the 
Administrator will consider all appropriate factors on a case-by-case 
basis, unless a general exception is specifically set out in this part. 
When granting a public interest waiver, the Administrator shall issue a 
detailed written statement justifying why the waiver is in the public 
interest. The Administrator shall publish this justification in the 
Federal Register, providing the public with a reasonable time for 
notice and comment of not more than seven calendar days.
    (c) * * *
    (3) After contract award, the Administrator may grant a non-
availability waiver under this paragraph, in any case in which a bidder 
or offeror originally certified compliance with the Buy America 
requirements in good faith, but can no longer comply with its 
certification. The Administrator will grant a non-availability waiver 
only if the grantee provides sufficient evidence that the original 
certification was made in good faith and that the item to be procured 
cannot now be obtained domestically due to commercial impossibility or 
impracticability. In determining whether the conditions exist to grant 
a post-award non-availability waiver, the Administrator will consider 
all appropriate factors on a case-by-case basis.
* * * * *

Appendix A to Sec.  661.7--General Waivers

* * * * *
    (b) Under the provisions of Sec.  661.7 (b) and (c) of this 
part, a general public interest waiver from the Buy America 
requirements applies to microprocessors, computers, microcomputers, 
or software, or other such devices, which are used solely for the 
purpose of processing or storing data. This general waiver does not 
extend to a product or device which merely contains a microprocessor 
or microcomputer and is not used solely for the purpose of 
processing or storing data.
* * * * *

0
7. Amend Sec.  661.9(a) by removing ``section 165(b)(3) of the Act'' 
and ``section 165(b)(3)'' and adding in their place ``49 U.S.C. 
5323(j)(2)(C)''.

0
8. Amend Sec.  661.11 as follows:
0
a. Remove and reserve paragraph (s).
0
b. Add paragraphs (t)(14) through (t)(22), (u)(18) through (u)(30), and 
(v)(28) through (30);
0
c. Amend Appendix B by adding ``Car body shells'' before ``Engines'';
0
d. Amend Appendix C by adding ``engines'' after ``Car shells'' and 
remove ``doors, door actuators, and controls,'' and add in its place 
``doors, door actuators and controls, wheelchair lifts and ramps to 
make the vehicle accessible to persons with disabilities,''; and
0
e. Add a new Appendix D.
    The additions read as follows:


Sec.  661.11  Rolling stock procurements.

* * * * *
    (t) * * *
    (14) Cab Signaling;
    (15) ATO Equipment;
    (16) ATP Equipment;
    (17) Wayside Transponders;
    (18) Trip Stop Equipment;
    (19) Wayside Magnets;
    (20) Speed Measuring Devices;
    (21) Car Axle Counters;
    (22) Communication Based Train Control (CBTC).
    (u) * * *
    (18) Antennas;
    (19) Wireless Telemetry Equipment;
    (20) Passenger Information Displays;
    (21) Communications Control Units;
    (22) Communication Control Heads;
    (23) Wireless Intercar Transceivers;
    (24) Multiplexers;
    (25) SCADA Systems;
    (26) LED Arrays;
    (27) Screen Displays such as LEDs and LCDs for communication 
systems;
    (28) Fiber-optic transmission equipment;
    (29) Fiber-optic transmission equipment;
    (30) Frame or cell based multiplexing equipment; 13) Communication 
system network elements.
    (v) * * *
    (28) Propulsion Control Systems;
    (29) Surge Arrestors;
    (30) Protective Relaying.
* * * * *

Appendix D to Sec.  661.11--Minimum Requirements for Final Assembly

    (a) Rail Cars: In the case of the manufacture of a new, 
remanufactured, or overhauled rail car, final assembly would 
typically include, as a minimum, installation and interconnection of 
the typical Rail Car Components listed in Sec.  661.11, Appendix C, 
including but not limited to the following items: car bodies or 
shells, chassis, carbody wiring, car-borne power plants or power 
pick-up equipment, energy management and storage devices, 
articulation equipment, propulsion control equipment, propulsion 
cooling equipment, friction brake equipment, energy sources for 
auxiliary equipment and controls, heating and air conditioning 
equipment, interior and exterior lighting equipment, coupler 
equipment and coupler control system, communications equipment, 
pneumatic systems, electrical systems, door and door control 
systems, passenger seats, passenger interiors, cab interiors, 
destination signs, wheelchair lifts (or other equipment required to 
make the vehicle accessible to persons with disabilities), motors, 
wheels, axles, gear boxes or integrated motor/gear units, 
suspensions, and truck frames. Final Assembly activities shall also 
include the inspection and verification of all installation and 
interconnection work; and the in-plant testing of the rail car to 
verify all fu