Notice of Proposed Policy Statement on the Implementation of the Phased Increase in Domestic Content Under the Buy America Waiver for Rolling Stock, 20049-20051 [2016-07837]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 81, Number 66 (Wednesday, April 6, 2016)]
[Notices]
[Pages 20049-20051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07837]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2016-0019]


Notice of Proposed Policy Statement on the Implementation of the 
Phased Increase in Domestic Content Under the Buy America Waiver for 
Rolling Stock

AGENCY: Federal Transit Administration, DOT.

ACTION: Notice of proposed policy statement and request for comments.

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SUMMARY: This notice proposes a statement of policy regarding the 
implementation of the phased increase in domestic content for rolling 
stock under the Federal Transit Administration's (FTA) Buy America 
statute, as amended by the Fixing America's Surface Transportation 
(FAST) Act. The FAST Act was signed into law on December 4, 2015, with 
an effective date of October 1, 2015. FTA seeks comments from all 
interested parties. After consideration of the comments, FTA will issue 
a second Federal Register notice responding to comments and noting any 
changes made to the policy statement as a result of the comments 
received.

DATES: Comments must be received by May 6, 2016. Late-filed comments 
will be considered to the extent practicable.

ADDRESSES: Please submit your comments by one of the following means, 
identifying your submissions by docket number FTA-2016-0019:
    1. Web site: https://www.regulations.gov. Follow the instructions 
for submitting comments on the U.S. Government electronic docket site.
    2. Fax: (202) 493-2251.
    3. Mail: U.S. Department of Transportation, 1200 New Jersey Avenue 
SE., Docket Operations, M-30, West Building, Ground Floor, Room W12-
140, Washington, DC 20590-0001.
    4. Hand Delivery: U.S. Department of Transportation, 1200 New 
Jersey Avenue SE., Docket Operations, M-30, West Building, Ground 
Floor, Room W12-140, Washington, DC 20590-0001 between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.
    Instructions: All submissions must make reference to the ``Federal 
Transit Administration'' and include docket number FTA-2016-0019. Due 
to the security procedures in effect since October 2011, mail received 
through the U.S. Postal Service may be subject to delays. Parties 
making submissions responsive to this notice should consider using an 
express mail firm to ensure the prompt filing of any submissions not 
filed electronically or by hand. Note that all submissions received, 
including any personal information therein, will be posted without 
change or alteration to https://www.regulations.gov. For more 
information, you may review DOT's complete Privacy Act Statement in the 
Federal Register published April 11, 2000 (65 FR 19477), or you may 
visit https://www.regulations.gov.

[[Page 20050]]


FOR FURTHER INFORMATION CONTACT: Cecelia Comito, Assistant Chief 
Counsel, Office of the Chief Counsel, phone: (202) 366-2217 or email, 
Cecelia.Comito@dot.gov.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    The purpose of this notice is to propose a statement of policy that 
will clarify how to apply FTA's Buy America requirements to 
procurements for rolling stock with delivery dates or options in FY2018 
through FY2020 and beyond. The FAST Act amended the rolling stock 
waiver in 49 U.S.C. 5323(j)(2)(C) to provide for a phased increase in 
the domestic content of rolling stock for FY2018-FY2019 and FY2020 and 
beyond:

    (j) Buy America.
    (1) In general. The Secretary may obligate an amount that may be 
appropriated to carry out this chapter for a project only if the 
steel, iron, and manufactured goods used in the project are produced 
in the United States.
    (2) Waiver. The Secretary may waive paragraph (1) of this 
subsection if the Secretary finds that:
* * * * *
    (C) when procuring rolling stock (including train control, 
communication, traction power equipment, and rolling stock 
prototypes) under this chapter
    (i) the cost of components and subcomponents produced in the 
United States
    (I) for fiscal years 2016 and 2017, is more than 60 percent of 
the cost of all components of the rolling stock;
    (II) for fiscal years 2018 and 2019, is more than 65 percent of 
the cost of all components of the rolling stock; and
    (III) for fiscal years 2020 and each fiscal year thereafter, is 
more than 70 percent of the cost of all components of the rolling 
stock; and
    (ii) final assembly of the rolling stock has occurred in the 
United States . . .

    Recipients may enter into rolling stock contracts under 49 U.S.C. 
5325(e) for up to five years for buses and seven years for railcars. In 
FTA Circular 4220.1F, ``Third Party Contracting Guidance,'' FTA 
interpreted these five- and seven-year periods as covering the 
recipient's ``material requirements'' for rolling stock and replacement 
needs from the first day when the contract becomes effective to its 
``material requirements'' at the end of the fifth or seventh year, as 
applicable. FTA has not required that ``the recipient must obtain 
delivery, acceptance, or even fabrication in five or seven years. 
Instead it means only that FTA limits a contract to purchasing no more 
than the recipient's material requirements for rolling stock or 
replacement parts for five or seven years based on the effective date 
of the contract.'' See FTA Circular 4220.1F, Chapter IV, page 23. 
Therefore, options for vehicles can be exercised within the five- or 
seven-year contract term, even if the vehicles will be delivered after 
the contract term.
    Recipients have asked FTA to provide specific guidance on the 
applicability of the FAST Act's new Buy America provisions to contracts 
entered into before or after October 1, 2015, the effective date of the 
FAST Act.

II. Proposed Policy

    FTA's Buy America requirements focus on two points in time: (1) 
``When procuring rolling stock,'' which FTA interprets as the date of 
contracting; and (2) ``the cost of components and subcomponents 
produced in the United States for fiscal years . . .'', which FTA 
interprets as the date of delivery of the vehicle.
    Individual and Joint Procurements. FTA interprets the statute to 
require that if a recipient or group of recipients enter into a 
contract for rolling stock after the effective date of the FAST Act, 
i.e., October 1, 2015, then the new FAST Act provisions for the date of 
delivery of the rolling stock apply. Thus, for vehicles delivered in 
FY2018 and FY2019, the domestic content must be more than 65 percent, 
and for vehicles delivered in FY2020 and beyond, the domestic content 
must be more than 70 percent. These delivery provisions apply to 
contracts signed after the effective date of the FAST Act, i.e., 
October 1, 2015, unless a waiver is granted.
    The FAST Act amendments do not apply to contracts entered into 
before the effective date of the FAST Act, i.e., October 1, 2015, even 
if the contract provides for the delivery of vehicles after FY2017. For 
contracts entered into before October 1, 2015, FTA proposes to continue 
to permit options to be exercised during the contract period even if 
the vehicles will be delivered outside the five- or seven-year contract 
term. Recipients who are not direct parties to a contract executed 
before October 1, 2015, however, may not exercise options (a/k/a 
``piggybacking'') on such contracts and apply the lower domestic 
content requirement. The assignment of options to a third party results 
in the third party and the vendor entering into a new contract after 
the effective date of the FAST Act, and therefore, the increased 
domestic content requirements for FY2018 and beyond will apply to 
vehicles delivered in those years.
    State Purchasing Schedules. Some recipients purchase rolling stock 
from a State purchasing schedule. A State purchasing schedule is an 
arrangement that a State has established with multiple vendors in which 
those vendors agree to provide essentially an option to the State, and 
its subordinate governmental entities and others it might include in 
its programs, to acquire specific property or services in the future at 
established prices. Because the purchasing schedule does not commit the 
State to procuring a minimum number of vehicles, a ``contract'' does 
not exist until a State, recipient or sub-recipient enters into a 
purchase order with a vendor listed on the schedule.
    Therefore, for purchase orders placed against State purchasing 
schedules before October 1, 2015, for the delivery of rolling stock in 
FY2018 and beyond, the increased domestic content requirements will not 
apply. For purchase orders placed against State schedules on or after 
October 1, 2015, for rolling stock that will be delivered in FY 2016 
and 2017, the domestic content requirement must exceed 60%. For 
purchase orders placed against State schedules for rolling stock that 
will be delivered in FY 2018 and 2019, the domestic content must exceed 
65%, and for purchase orders placed against State schedules for rolling 
stock that will be delivered in FY 2020 and beyond, the domestic 
content must exceed 70%.
    FTA believes that this interpretation is consistent with the plain 
language of the statute, Congress' directive to increase the domestic 
content for vehicles produced in FY2018 or later, and principles of 
statutory construction.
    Calculation of Domestic Content. The FTA will adjust the 
calculation for determining whether a component is of domestic origin 
under 49 CFR 661.11 to accommodate the increase in domestic content for 
FY2018 and beyond. Currently under 49 CFR 661.11(g), ``for a component 
to be of domestic origin, more that 60 percent of the subcomponents of 
that component, by cost, must be of domestic origin, and the 
manufacture of the component must take place in the United States. If, 
under the terms of this part, a component is determined to be of 
domestic origin, its entire cost may be used in calculating the cost of 
domestic content of an end product.''
    Thus, for FY2018 and 2019, for a component to be of domestic 
content, more than 65 percent of the subcomponents of that component, 
by cost, must be of domestic origin, and for FY2020 and beyond, more 
than 70 percent of the subcomponents of the component must be of 
domestic content. The requirement that manufacture of the component 
take place in the United States still applies. Additionally, if a

[[Page 20051]]

component is determined to be of domestic origin, its entire cost may 
be used in calculating the cost of content of an end product.
    General Public Interest Waivers. FTA recognizes, however, that the 
FAST Act amendments to the rolling stock Buy America waiver may produce 
significant hardship for two categories of recipients and 
manufacturers: (1) Recipients who entered into contracts or placed 
purchase orders against State schedules between October 1, 2015 and 
December 4, 2015; and (2) recipients who have entered into contracts 
after December 4, 2015, as a result of solicitations for bids or 
requests for proposals that were advertised before December 4, 2015.
    Under 49 U.S.C. 5323(j)(2)(A), the Administrator may waive the Buy 
America requirements if the Administrator finds that applying the Buy 
America requirements would be inconsistent with the public interest. 
``In determining whether the conditions exist to grant a public 
interest waiver, the Administrator will consider all appropriate 
factors on a case-by-case basis . . . 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.'' 49 CFR 661.7(b).
    In a separate notice published in today's Federal Register, FTA is 
seeking comment on a general public interest waiver. This public 
interest waiver is for the following categories of contracts: (1) For 
contracts entered into between the FAST Act's effective date and date 
of enactment (i.e., between October 1, 2015 and December 4, 2015), the 
increased domestic content requirements for FY2018 and beyond will not 
apply, regardless of when the vehicles are delivered; and (2) for 
contracts entered into after December 4, 2015 as a result of 
solicitations for bids or requests for proposals that were advertised 
before December 4, 2015, the increased domestic content requirements 
for FY2018 and beyond will not apply, regardless of when the vehicles 
are delivered.
    Recipients or vendors may apply to FTA for individual public 
interest waivers for contracts entered into after December 4, 2015, and 
others that do not fall within the scope of a general public interest 
waiver. A request for a public interest waiver should set forth the 
detailed justification for the proposed waiver, including information 
about the history of the procurement and the burden on the recipient 
and/or the industry in complying with the FAST Act. Public interest 
waivers should be narrowly tailored and FTA will not generally look 
favorably on waivers that provide for contracts that include the 
exercise of options for vehicles that will be delivered beyond FY2020. 
FTA will act expeditiously on public interest waiver requests that 
provide the information requested.
    FTA seeks comment from all interested parties on the above policy 
statement. After consideration of the comments, FTA will publish a 
second notice in the Federal Register with a response to comments and 
noting any changes made to the policy statement as a result of the 
comments received.

Therese McMillan,
Acting Administrator.
[FR Doc. 2016-07837 Filed 4-5-16; 8:45 am]
 BILLING CODE 4910-57-P