81 FR 20051 - Notice of Proposed Public Interest Waiver of Buy America Domestic Content Requirements for Rolling Stock Procurements In Limited Circumstances

DEPARTMENT OF TRANSPORTATION
Federal Transit Administration

Federal Register Volume 81, Issue 66 (April 6, 2016)

The purpose of this notice is to articulate the Federal Transit Administration's (FTA) justification for waiving its Buy America requirements for rolling stock under certain limited circumstances because application of the increased domestic content requirements is inconsistent with public policy. The Fixing America's Surface Transportation (FAST) Act amended FTA's Buy America statute to include a phased increase in domestic content for rolling stock. The FAST Act was signed into law on December 4, 2015, but included an effective date of October 1, 2015. FTA proposes a public interest waiver 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. FTA is providing notice of this public interest waiver and seeks public comment. After consideration of the comments, FTA will issue a second Federal Register notice responding to comments and issuing final public interest waivers.

[Federal Register Volume 81, Number 66 (Wednesday, April 6, 2016)]
[Notices]
[Pages 20051-20053]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-07836]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2016-0020]


Notice of Proposed Public Interest Waiver of Buy America Domestic 
Content Requirements for Rolling Stock Procurements In Limited 
Circumstances

AGENCY: Federal Transit Administration, DOT.

ACTION: Notice of proposed general public interest waiver and request 
for comments.

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SUMMARY: The purpose of this notice is to articulate the Federal 
Transit Administration's (FTA) justification for waiving its Buy 
America requirements for rolling stock under certain limited 
circumstances because application of the increased domestic content 
requirements is inconsistent with public policy. The Fixing America's 
Surface Transportation (FAST) Act amended FTA's Buy America statute to 
include a phased increase in domestic content for rolling stock. The 
FAST Act was signed into law on December 4, 2015, but included an 
effective date of October 1, 2015. FTA proposes a public interest 
waiver 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. FTA is providing notice of this public interest waiver 
and seeks public comment. After consideration of the comments, FTA will 
issue a second Federal Register notice responding to comments and 
issuing final public interest waivers.

DATES: Comments must be received by April 13, 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-2016-0020:
    1. Web site: http://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-2016-0020. 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 http://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 http://www.regulations.gov.

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

SUPPLEMENTARY INFORMATION: 

[[Page 20052]]

I. Introduction

    The FAST Act, FTA's current authorizing legislation, amended the 
rolling stock waiver in 49 U.S.C. 5323(j)(2)(C) to provide for a phased 
increase in the domestic content for rolling stock for FY2018-FY2019 
and FY2020 and beyond. As amended by the FAST Act, the domestic content 
for rolling stock increases over time from the current rate of ``more 
than 60 percent'' to ``more than 70 percent'' in 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 . . .
    In a separate notice published in today's Federal Register, FTA is 
seeking comment on its proposed statement of policy regarding the 
implementation of the phased increase in domestic content for rolling 
stock under the FAST Act. FTA interprets the language in the FAST Act 
to require that if the date a recipient enters into a contract for 
rolling stock occurs after the effective date of the FAST Act, i.e., 
October 1, 2015, then the new FAST Act provisions for rolling stock 
apply. Thus, contracts entered into after October 1, 2015 must provide 
that vehicles delivered in FY2018 and FY2019 have a domestic content of 
more than 65 percent, and that vehicles delivered in FY2020 and beyond 
must have a domestic content of 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.

II. Proposed Public Interest Waiver

    With certain exceptions, FTA's ``Buy America'' requirements prevent 
FTA from obligating an amount that may be appropriated to carry out its 
program for a project unless ``the steel, iron, and manufactured goods 
used in the project are produced in the United States.'' 49 U.S.C. 
5323(j)(1). One such exception is where applying the Buy America 
requirements ``would be inconsistent with the public interest.'' 49 
U.S.C. 5323(j)(2)(A). After considering all appropriate factors on a 
case-by-case basis, 49 CFR 661.7(b), if FTA determines that the 
conditions exist to grant a public interest waiver, FTA will issue a 
detailed written statement justifying why the waiver is in the public 
interest, and will 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).
    Recipients who entered into rolling stock contracts prior to 
December 4, 2015, were required under existing Buy America law to 
procure vehicles with a domestic content of more than 60 percent, 
regardless of when the vehicle was delivered. Because rolling stock 
frequently cannot be delivered in a short time frame, recipients may 
enter into multi-year contracts for rolling stock, allowing for 
contracts up to five years for buses and up to seven years for 
railcars. 49 U.S.C. 5325(e). Thus, under existing law at the time of 
contracting, recipients were not prohibited from entering into 
contracts for vehicles that would be delivered in FY2018 and beyond.
    Although the FAST Act was signed into law on December 4, 2015, 
Congress included an effective date of October 1, 2015. Application of 
the FAST Act's retroactive effective date to rolling stock contracts 
entered into between October 1, 2015 and December 4, 2015, would result 
in rendering those contracts ineligible for FTA funds for vehicles 
delivered in FY2018 and beyond. Without a waiver, recipients most 
likely would be required to cancel those contracts, and start the 
procurement process again.
    ``The inquiry into whether a statute operates retroactively demands 
a ``commonsense, functional judgment about `whether the new provision 
attaches new legal consequences to events completed before its 
enactment.' '' INS v. St. Cyr., 533 U.S. 289, 312 (2001) (quoting 
Martin v. Hadix, 527 U.S. 343, 357-358 (1999)). Additionally, ``the 
mere promulgation of an effective date for a statute does not provide 
sufficient assurance that Congress specifically considered the 
potential unfairness that retroactive application would produce.'' St. 
Cyr., 533 U.S. at 317. Thus, the decision to apply a statute 
retroactive should be guided by considerations of fair notice, 
reasonable reliance, and settled expectations.
    Retroactive application of the FAST Act's increase in domestic 
content to contracts entered into between October 1, 2015 and December 
4, 2015 would be inconsistent with the public interest. As noted in the 
FTA's Best Practices Procurement Manual, the procurement process for 
buses and railcars can be several years from drafting detailed 
specifications to contract award. Rail vehicle procurements are planned 
seven to ten years in advance of needed completion because several 
interdependent contracts may have to be awarded in order to accomplish 
the project. Bus procurements generally require at least three years of 
advance planning.
    Depending on the complexity of the procurement, the time intervals 
typically required to accomplish rolling stock contract awards might 
include:
     One year advance planning before Request for Proposals 
(RFP) for the engineering services;
     Four months from RFP to award of the engineering services;
     Two years to prepare technical specifications;
     Three months from completion of specifications to system 
RFP;
     Six months from system RFP to award; and
     Three years for system construction.
    The planning and design processes can change this schedule 
significantly.
    All of this planning and work by the recipient is at tremendous 
cost to the recipient, and therefore, to the public, both in terms of 
money and the delayed acquisition of new transit vehicles. 
Additionally, preparation of a proposal or bid in response to a 
solicitation for vehicles is both time-consuming and costly for the 
manufacturers.
    Application of the FAST Act's increased domestic content 
requirements to rolling stock procurements for which recipients have 
advertised solicitations for bids or requests for proposals prior to 
December 4, 2015 will be particularly burdensome for both the recipient 
and the manufacturer. FTA proposes a public interest waiver under these 
circumstances. These procurements are underway and a change in the 
domestic content will require recipients to amend their solicitations 
and specifications in order to include the FAST Act's

[[Page 20053]]

increased domestic content requirements, which would result in 
substantial delay and increased costs, particularly for those 
recipients who are about to enter into contracts.
    Accordingly, FTA proposes a public interest waiver 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.
    This public interest waiver is limited to the parties to the 
contract only. Recipients who are not direct parties to the contract, 
however, may not exercise options (a/k/a ``piggybacking'') on such 
contracts and take advantage of 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.
    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 this 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 public 
interest waiver. 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 public interest waiver as a result of 
the comments received.

Therese McMillan,
Acting Administrator.
[FR Doc. 2016-07836 Filed 4-5-16; 8:45 am]
BILLING CODE 4910-57-P