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Notice of Buy America Waiver

American Government Special Collections Reference Desk

American Government

Notice of Buy America Waiver

Paul A. Hemmersbaugh
National Highway Traffic Safety Administration
June 30, 2015


[Federal Register Volume 80, Number 125 (Tuesday, June 30, 2015)]
[Notices]
[Pages 37359-37362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16099]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2015-0065]


Notice of Buy America Waiver

AGENCY: National Highway Traffic Safety Administration (NHTSA), 
Department of Transportation (DOT).

ACTION: Notice of Buy America waiver; request for comment.

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SUMMARY: This notice provides NHTSA's finding that a public interest 
waiver of the Buy America requirements is appropriate for any 
manufactured product whose purchase price is $5,000 or less, excluding 
a motor vehicle, when such product is purchased using Federal grant 
funds administered under Chapter 4 of Title 23 of the United States 
Code; and requests public comment.

DATES: The effective date of this waiver is July 30, 2015. Written 
comments regarding this notice may be submitted to NHTSA and must be 
received on or before July 30, 2015.

ADDRESSES: Written comments may be submitted using any one of the 
following methods:
     Mail: Docket Management Facility, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590.
     Fax: Written comments may be faxed to (202) 493-2251.
     Internet: To submit comments electronically, go to the 
Federal regulations Web site at http://www.regulations.gov. Follow the 
online instructions for submitting comments.
     Hand Delivery: West Building, Ground Floor, Room W12-140, 
1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. Eastern Time, 
Monday through Friday, except Federal holidays.
    Instructions: All comments submitted concerning this notice must 
include the agency name and docket number. Please note that all 
comments received will be posted without change to http://www.regulations.gov, including any personal information provided. You 
may also call the Docket at 202-366-9324.

FOR FURTHER INFORMATION CONTACT: Andrew DiMarsico, Office of Chief 
Counsel, NHTSA (phone: 202-366-1834). You may send mail to Mr. 
DiMarsico at the National Highway Traffic Safety Administration, 1200 
New Jersey Avenue SE., Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

[[Page 37360]]

Background

    The statutory requirement (``Buy America'') states that the 
Secretary ``shall not obligate any funds authorized to be appropriated 
to carry out the Surface Transportation Assistance Act of 1982 (96 
Stat. 2097) or [title 23 of the United States Code] and administered by 
the Department of Transportation, unless steel, iron, and manufactured 
products used in such project are produced in the United States.'' 23 
U.S.C. 313(a). The Secretary of Transportation has delegated the 
authority to administer Buy America for NHTSA programs to the 
Administrator of NHTSA. 49 CFR 1.95; 49 CFR 501. Buy America provides 
that NHTSA may waive those requirements if ``(1) their application 
would be inconsistent with the public interest; (2) such materials and 
products are not produced in the United States in sufficient and 
reasonably available quantities and of a satisfactory quality; or (3) 
the inclusion of domestic material will increase the cost of the 
overall project contract by more than 25 percent.'' 23 U.S.C. 313(b).
    Buy America establishes a preference for domestically produced 
goods for use in Federally sponsored projects. The first Buy America 
legislation conditioning the expenditure of Federal funds by NHTSA 
grant recipients was enacted in 1978 as part of the Surface 
Transportation Assistance Act of 1978. Pub. L. 95-599, 92 Stat. 2689. 
The focus of that Buy America provision was on large procurements, such 
as bridge replacement projects, and not on smaller, routine 
purchases.\1\ The House of Representatives considered excluding up to 
$5 million in project costs from the requirements of Buy America, but 
ultimately did not pursue a threshold.\2\ The Senate bill sought to 
limit Buy America requirements to projects whose costs exceeded $1 
million to avoid imposing excessive requirements on small, routine 
projects. See H.R. Conf. Rep. 95-1797 (1978), 1978 U.S.C.C.A.N. 6693, 
6754. Ultimately, the Senate's proposed threshold was reduced in 
conference to $500,000, and the provision became law, establishing a 
preference for ``articles, materials, supplies mined, produced or 
manufactured'' in the United States and costing more than $500,000.
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    \1\ H.R. Rep. No. 95-1485, 1978 U.S.C.C.A.N. 6575, 6644 (August 
11, 1978).
    \2\ Id.
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    In 1983, Congress repealed that Buy America provision and 
substituted section 165 of the Surface Transportation Assistance Act of 
1982. Pub. L. 97-424, 96 Stat. 2067.\3\ The 1982 enactment specified 
that the Buy America prohibition applied to ``steel, cement and 
manufactured products'' and eliminated the $500,000 threshold.\4\ 
Although the threshold was eliminated, Congress acknowledged 
circumstances where the prohibition would be difficult to apply and 
introduced exceptions under a waiver process that remains in place 
today. Pub. L. 97-424, 96 Stat. 2067. One of these exceptions is the 
public interest waiver. Id.
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    \3\ Section 165 was originally included as a note to section 23 
U.S.C. 101 and codified in 2005 to current its section, 23 U.S.C. 
131. See Pub. L. 109-509, 119 Stat. 1464.
    \4\ Congress amended section 165 of the STAA of 1982 by removing 
``cement'' in 1984, Pub. L. 98-229. 98 Stat. 55, and by adding 
``Iron'' in 1991, Pub. L. 102-240, 105 Stat. 1914.
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    Agencies are permitted to waive the Buy America requirement when 
they determine that ``it is inconsistent with the public interest.'' 23 
U.S.C. 313(b)(1). In consideration of this authority and consistent 
with the purposes of NHTSA's grant programs to reduce accidents and 
resulting fatalities and injuries, the agency has determined that it is 
appropriate to issue a public interest waiver for small, routine 
purchases by States under the highway safety grant programs. In making 
this decision and arriving at a reasonable threshold for waiver, NHTSA 
remains mindful of the overarching purposes of Buy America, while 
evaluating all relevant facts, including administrative burden, delay 
and impact on the congressionally authorized State grant programs.

NHTSA Highway Safety Grant Programs

    NHTSA's mission is to reduce deaths, injuries and economic losses 
resulting from motor vehicle crashes. This is accomplished by setting 
and enforcing safety performance standards for motor vehicles and motor 
vehicle equipment, and through grants to States to enable them to 
conduct effective State and local highway safety programs. NHTSA's 
State highway safety programs are codified in Chapter 4 of Title 23, 
United States Code. Chief among these programs is section 402, which 
provides formula grants to States to administer a comprehensive highway 
safety program designed to reduce traffic accidents and resulting 
deaths, injuries and property damage. 23 U.S.C. 402. Section 402 
authorizes State programs related to speeding, occupant protection, 
impaired driving, accident prevention, school bus safety, unsafe 
driving behavior (aggressive, fatigued and distracted driving), traffic 
safety law enforcement, driver education, pedestrian and bicycle 
safety, and traffic administration (record systems, accident 
investigation and emergency services). In addition to the core section 
402 grants, NHTSA also administers other grants to the States, which 
Congress from time to time authorizes to address specific highway 
safety needs. Most recently, under the ``Moving Ahead for Progress in 
the 21st Century Act'' (Pub. L. 112-141), Congress authorized the 
``National Priority Safety Programs,'' providing additional grants to 
States in the areas of occupant protection, State traffic safety 
information system improvements, distracted driving, motorcyclist 
safety, and State graduated driver licensing laws. See 23 U.S.C. 405.
    In general, States may expend Federal section 402 or 405 funds for 
any item or service that is necessary and reasonable for proper and 
efficient performance and administration of their highway safety 
programs and activities, subject to the statutory requirements and 
implementing regulations. See 23 CFR 1200 et seq. Because of the broad 
reach of these Federally sponsored highway safety programs, States may 
expend grant funds on thousands of different items and activities. In 
the area of equipment, allowable purchases range from low cost items 
such as office supplies (DVDs, printers and ink cartridges), computers, 
cameras, child restraints, motorcycle helmets, and radar speed 
detection devices to higher cost items such as police cruisers. In 
recent years, NHTSA has seen an increase in waiver requests for 
purchases of these smaller commercial items, based on non-availability 
in the United States or availability only at a high price differential. 
Many of these items cost $5,000 or less. See, e.g., 80 FR 9851 (Feb. 
24, 2015) (printers); 79 FR 74811 (Dec. 16, 2014) (child restraints); 
79 FR 74812 (Dec. 16, 2014) (training motorcycles); and 79 FR 55529 
(Sept. 16, 2014) (DVDs and motorcycle safety vests).

Non-Availability and High Cost Differential Waivers Under Buy America

    State grantees incur significant burdens when required to submit 
waivers for small, routine purchases of items that are increasingly not 
manufactured in the United States. As part of a waiver request, a State 
must demonstrate through a market analysis that the item for which it 
seeks a waiver is not available in the United States or will cost 25 
percent more than a comparable non-domestic item. For each waiver 
request, the agency must, in the exercise of due diligence, perform

[[Page 37361]]

an additional independent review and market analysis to confirm that 
the item meets either the non-availability exemption or the high cost 
differential exemption of Buy America. See 23 U.S.C. 313(b)(2), (b)(3). 
This process substantially delays State grantees in obtaining the items 
needed to administer and implement important highway safety programs. 
It also consumes limited agency resources to administer the highway 
safety grants. Moreover, the staff time needed by a State to prepare 
individual waivers for many small purchases comes at the expense of 
time devoted to implementing these life-saving programs. This is 
especially concerning in an era of tight State budgets, where State 
highway safety offices administering these grants face increasingly 
serious staffing constraints.
    It is important to consider these constraints and burdens in the 
historical context of Buy America. During the many years Buy America 
has been in place, a significant statutory focus has been on purchases 
of materials used in construction and large-scale fabrication. Its 
application to the grants of transportation agencies such as the 
Federal Highway Administration (for road and bridge building materials) 
and the Federal Transit Administration (for acquisition of rolling 
stock and manufactured end products) is plain, because those materials 
are of central importance to those grants. However, by statute, NHTSA 
grant funds may not be used for construction. 23 U.S.C. 402(g)(1)(A). 
As a result, while steel and iron purchases are not implicated in 
NHTSA's grant programs, Buy America's reach to include the small amount 
of manufactured products used in NHTSA's programs does not have any 
effect on the manufacturer of those items. Under NHTSA's State grant 
programs, purchases of small manufactured products that are largely 
ancillary rather than central to the purposes of the highway safety 
grants (e.g., laptops, printers, ink cartridges, DVDs, and other office 
products) are captured by the restriction. Whereas the core expenses 
under NHTSA's State grant programs are for reimbursing performance 
(estimated at more than 90 percent), such as police enforcement of 
State traffic safety laws, safety education, and the like, Buy America 
has the effect of restricting or delaying the States' ability to 
acquire ancillary support items necessary to successfully deploy these 
important highway safety programs. The result is that critical safety 
program delivery to the States, and from the States to their 
localities, suffers.

Public Interest Waiver

    Based upon the foregoing discussion, NHTSA believes that a public 
interest waiver is appropriate to address these delays and burdens and 
thereby promote the success of State highway safety programs. NHTSA 
concludes that it is in the public interest to waive the Buy America 
requirements for a manufactured product whose purchase price is $5,000 
or less, with one exception--the purchase of a motor vehicle, as 
defined in 49 U.S.C. 30102.\5\ We do not believe that the purchase of 
motor vehicles can be reasonably viewed as ancillary in the context of 
these highway safety programs, and therefore decline to extend this 
public interest waiver to such purchases. The agency has selected this 
per-item threshold based on our determination that it is the level 
necessary to alleviate the burdens associated with purchases of low-
priced commercially available items that are required for the 
successful implementation of the highway safety projects required under 
NHTSA grants. In selecting this conservative threshold, we sought to 
balance the goals of Buy America with the life-saving goals of the 
State highway safety grant programs.
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    \5\ Under that statutory provision, motor vehicle means ``a 
vehicle driven or drawn by mechanical power and manufactured 
primarily for use on public streets, roads, and highways, but does 
not include a vehicle operated only on a rail line.'' We recognize 
that the cost of most motor vehicles would fall above the threshold 
in today's notice. However, this exception from the waiver is 
included because the cost of some motor vehicles (for example, 
certain motorcycles), may fall below the threshold.
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    A threshold of $5,000 for this waiver is in step with government-
wide requirements and procedures applicable to grantee purchases of 
equipment, where the Federal interest starts at the $5,000 level. Under 
the Uniform Administrative Requirements, Cost principles, and Audit 
Requirements for Federal Awards, equipment is defined as an item having 
a per unit cost of $5,000 or more. 2 CFR 200.33. At levels of $5,000 
and above, grantees are required to obtain prior approval and account 
for equipment purchases. See 2 CFR 200.313; 2 CFR 200.439. In contrast, 
at levels below $5,000, Federal procedures governing purchase, 
administration, and disposition of items needed for performance of the 
grant do not apply. This treatment has also been codified in the NHTSA 
regulation implementing these programs, the Uniform Procedures for 
State Highway Safety Grant Programs. See 23 CFR 1200.31.
    Moreover, NHTSA's chosen threshold is very conservative when 
compared to small purchase waivers or exclusions under Buy America 
within the jurisdiction of other operating modes of the U.S. Department 
of Transportation. For example, the Federal Transit Administration 
issued a general public interest waiver for small purchases, as defined 
in DOT's grants management common rule at 49 CFR 18.36(d).\6\ 60 FR 
37930 et. seq. (July 24, 1995); 49 CFR 661.7, Appendix A(c). Also, 
Congress codified the public interest need for a small purchase waiver 
in the Buy America requirement applicable to the Federal Railroad 
Administration, setting the threshold at $100,000. 49 U.S.C. 
24405(a)(11).
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    \6\ The DOT Grants Management common rule, 49 CFR part 18, was 
repealed and replaced by 2 CFR part 2. See 78 FR 78590 (December 26, 
2013).
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    In light of the above discussion, and pursuant to 23 U.S.C. 
313(b)(1), NHTSA finds that it is appropriate to waive Buy America 
requirements for a manufactured product, excluding a motor vehicle, 
whose cost per unit is $5,000 or less. Therefore, in accordance with 
the provisions of Section 117 of the SAFFETEA-LU Technical Corrections 
Act of 2008 (Pub. L. 110-244, 122 Stat. 1572), NHTSA is providing this 
notice of its finding that a waiver of the Buy America requirements is 
appropriate. Written comments on this finding may be submitted through 
any of the methods discussed above. This waiver is consistent with the 
general government initiatives that promote streamlined government 
contracting by Federal agencies and use of Federal funds by grantees to 
reduce administrative burdens and increase efficiency to accomplish 
agency missions. See E.O. 12931, 59 FR 52387 (October 13, 1994). It 
does not eliminate NHTSA's oversight of the State grantees' use of 
Federal grant funds. NHTSA's Regional Administrators will continue to 
ensure that Federal grantee purchases are necessary and reasonable for 
the purposes of the specific highway safety grant program. After the 
effective date, grantees must still request a waiver of Buy America 
requirements for purchases that exceed the threshold published in 
today's notice. The agency will monitor State purchases under the 
highway safety grant programs and under this waiver to ensure that the 
important policy goals and the spirit of Buy America are maintained.

    Authority: 23 U.S.C. 313; Pub. L. 110-161.


[[Page 37362]]


    Issued in Washington, DC, on June 25, 2015 under authority 
delegated in 49 CFR part 1.95
Paul A. Hemmersbaugh,
Acting Chief Counsel.
[FR Doc. 2015-16099 Filed 6-29-15; 8:45 am]
 BILLING CODE 4910-59-P

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