Buy America Nationwide Waiver Notification for Commercially Available Off-the-Shelf (COTS) Products With Steel or Iron Components and for Steel Tie Wire Permanently Incorporated in Precast Concrete Products |
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Gregory G. Nadeau
Federal Highway Administration
18 October 2016
[Federal Register Volume 81, Number 201 (Tuesday, October 18, 2016)]
[Notices]
[Pages 71784-71788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25116]
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA-2016-0028]
Buy America Nationwide Waiver Notification for Commercially
Available Off-the-Shelf (COTS) Products With Steel or Iron Components
and for Steel Tie Wire Permanently Incorporated in Precast Concrete
Products
AGENCY: Federal Highway Administration (FHWA), DOT.
ACTION: Notice.
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SUMMARY: The FHWA is proposing two nationwide waivers from the Buy
America requirements for COTS products with steel or iron components
and steel tie wire permanently incorporated into precast concrete
products.
Specialty steel or iron items, or any steel or iron item that is
built to contract specification for a Federal-aid project, would remain
subject to FHWA's Buy America requirements. The FHWA is requesting
comments on these two proposed nationwide waivers, including the impact
this proposal would have on State and local agencies administering
Federal-aid projects; contractors; materials suppliers; railroads and
utilities performing work related to a Federal-aid highway construction
contract; and manufacturers.
DATES: Comments must be received on or before December 2, 2016.
ADDRESSES: Mail or hand deliver comments to Docket Management Facility:
U.S. Department of Transportation, 1200 New Jersey Avenue SE., Room
W12-140, Washington, DC 20590. You may also submit comments
electronically at www.regulations.gov. All comments should include the
docket number that appears in the heading of this document. All
comments received will
[[Page 71785]]
be available for examination and copying at the above address from 9
a.m. to 5 p.m., e.t., Monday through Friday, except Federal holidays.
Those desiring notification of receipt of comments must include a self-
addressed, stamped postcard or you may print the acknowledgment page
that appears after submitting comments electronically. Anyone is able
to search the electronic form of all comments in any one of our dockets
by the name of the individual submitting the comment (or signing the
comment, if submitted on behalf of an association, business, or labor
union). The DOT posts these comments, without edits, including any
personal information the commenter provides, to www.regulations.gov, as
described in the system of records notice (DOT/ALL-14 FDMS), which can
be reviewed at www.dot.gov/privacy.
FOR FURTHER INFORMATION CONTACT: Mr. Gerald Yakowenko, FHWA Office of
Program Administration, (202) 366-1562, Gerald.Yakowenko@dot.gov, or
Mr. William Winne, FHWA Office of the Chief Counsel, (202) 366-1397,
William.Winne@dot.gov, Federal Highway Administration, Department of
Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590.
Office hours are from 8:00 a.m. to 4:30 p.m., e.t., Monday through
Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
Electronic Access
An electronic copy of this notice may be downloaded from the
specific docket page at www.regulations.gov.
Background
The FHWA's Buy America regulation at 23 CFR 635.410 requires a
domestic manufacturing process for steel or iron materials that are
permanently incorporated into a Federal-aid construction project. The
FHWA interprets domestic manufacturing process to include steel
manufacturing processes such as melting, rolling, cutting, welding,
fabrication, and the process of applying a coating. The regulation is
based on the statutory mandate in 23 U.S.C. 313(a).
The statute requires the application of the FHWA Buy America
requirements to any project receiving Federal assistance under Title
23; however, the statute provides exceptions if the Secretary finds:
(1) The application of the requirement would be inconsistent with the
public interest; (2) where 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. See 23 U.S.C. 313(b).
A request for a waiver may be made for specific projects, for
certain materials or products in specific geographic areas, or waivers
regarding nationwide public interest or availability issues. See 23
U.S.C. 313(c). Not less than 15 days before waiving any Buy America
requirement for Federal-aid highways projects, FHWA is required to
notify the public on its intent to issue such a waiver.\1\ The FHWA's
implementing regulations also allow the Agency to publish its decisions
on nationwide waivers in the Federal Register for public comment. 23
CFR 635.410(c)(6). Based on the Secretary's authority to grant waivers
from Buy America, FHWA has issued three nationwide waivers: for
manufactured products other than steel and iron manufactured products
(1983), for certain ferry boat equipment (1994), and for pig iron and
processed, pelletized, and reduced iron ores (1995).
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\1\ Section 122, Division L, of the Consolidated Appropriations
Act of 2016 (Pub. L. 114-113) provides: ``Not less than 15 days
prior to waiving, under his or her statutory authority, any Buy
America requirement for Federal-aid highways projects, the Secretary
of Transportation shall make an informal public notice and comment
opportunity on the intent to issue such waiver and the reasons
therefor.'' This provision has been included in each Appropriations
Act since 2008. In addition, Section 117(a) of the SAFETEA-LU
Technical Corrections Act of 2008 (Pub. L. 110-244) requires that
(1) If the Secretary of Transportation makes a finding under
section 313(b) of Title 23, United States Code, with respect to a
project, the Secretary shall:
(A) publish in the Federal Register, before the date on which
such finding takes effect, a detailed written justification as to
the reasons that such finding is needed; and
(B) provide notice of such finding and an opportunity for public
comment on such finding for a period of not to exceed 60 days.
(2) Nothing in paragraph (1) shall be construed to require the
effective date of a finding referred to a in paragraph (1) to be
delayed until after the close of the public comment period referred
to in paragraph (1)(B).
The FHWA interprets both of these provisions to apply to
project-specific waiver requests, not to nationwide waivers, but the
Agency is choosing to follow a similar process for nationwide
waivers. For nationwide waivers, the Agency will publish a Federal
Register Notice on the intent to issue the waiver with an
opportunity for public review and comment, followed by a Federal
Register Notice on the final decision of the waiver after
consideration of comments. The Agency believes that the waiver
should not take effect before this process is complete. This process
is consistent with 23 CFR 635.410(c)(6) and the nationwide waivers
issued in the past.
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The FHWA Buy America regulations also contain a regulatory
exception for minimal use of foreign iron and steel. See 23 CFR
635.410(b)(4). This exception allows for a small use of foreign iron
and steel materials if ``the cost of such materials used does not
exceed one-tenth of one percent (0.1 percent) of the total contract
cost or $2,500, whichever is greater.'' The FHWA expects that the
contracting agency will maintain a running list of foreign steel or
iron material as a project proceeds to be able to confirm compliance
with this provision. The intent of this provision was to ``eliminate an
administrative burden placed on the States for truly minor items.'' 48
FR 1946, 1947 (Jan. 17, 1983); 48 FR 53099, 53103 (Nov. 25, 1983).
Manufactured Products Waiver of 1983
In its final rule issued on November 25, 1983, FHWA also discussed
a nationwide waiver for manufactured products other than steel and
cement manufactured products. 48 FR 53099, 53102 (Nov. 25, 1983). In
the final rule, FHWA stated that materials and products other than
steel, cement, asphalt, and natural materials comprised a small percent
of the highway construction program, and it was very difficult to
identify the various materials and trace their origin. Id. The FHWA
found that it was ``in the public interest to waive the application of
Buy America to manufactured products other than steel and cement \2\
manufactured products.''
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\2\ Congress modified the 1983 Buy America statute to repeal the
statute's coverage of cement (Pub. L. 98-229, Section 10 (1984) and
to add coverage for iron (Intermodal Surface Transportation
Efficiency Act (ISTEA), Pub. L. 102-240, Section 1048(a) (1991)).
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As a result of the heightened awareness on projects funded under
the American Recovery and Reinvestment Act of 2009 (Recovery Act) (Pub.
L. 111-5), project inspectors and auditors spent significant resources
examining compliance with FHWA's Buy America requirements for all steel
or iron products in highway projects and noted compliance issues with
Buy America certifications. In working to address these findings, FHWA
realized that there was confusion regarding the application of Buy
America requirements to COTS products with steel or iron components,
such as sinks, toilets, faucets, traffic controller cabinets, and
circuit breaker panels. Some FHWA Divisions were requiring Buy America
compliance for steel and iron components and subcomponents of
manufactured products. Other Divisions were treating these steel or
iron components of manufactured products as excluded from Buy America
requirements through the manufactured products waiver. On December 21,
2012, FHWA issued a memorandum intended
[[Page 71786]]
to clarify the scope and meaning of the manufactured products waiver
and indicated that the waiver was intended to encompass miscellaneous
steel or iron components and subcomponents that are commonly available
as off-the-shelf products.\3\
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\3\ Memorandum from John Baxter to the Divisions--Clarification
of Manufactured Products under Buy America (Dec. 21, 2012), http://www.fhwa.dot.gov/construction/contracts/121221.cfm.
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December 2015 District Court Decision
On October 12, 2014, the United Steelworkers Union and a group of
eight manufacturing corporations filed a lawsuit challenging FHWA's
December 21, 2012, Buy America memorandum, claiming that it was a
substantive rule that required notice and comment pursuant to the
Administrative Procedure Act, 5 U.S.C. 553.\4\
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\4\ United Steelworkers Union, et al. v. FHWA, No. 13-1301
(D.D.C. Dec. 22, 2015).
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On December 22, 2015, the U.S. District Court for the District of
Columbia rendered its decision in the United Steelworkers Union case.
The Court found against FHWA and vacated the December 21, 2012,
memorandum. The Court also found that the COTS exception was a separate
waiver from the manufactured products waiver in the November 25, 1983,
rule. Id. at 26. The court concluded, as a result, that FHWA had to
provide notice and an opportunity for comment in accordance with
SAFETEA-LU Technical Correction Act of 2008 and the Consolidated and
Further Continuing Appropriations Act, 2012 before the Agency could
implement that exception.\5\
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\5\ See footnote 1.
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The decision returned matters to pre-2012 memorandum conditions,
when there was ambiguity and uncertainty on whether the FHWA Buy
America requirements applied to COTS products with steel or iron
components. As before December 21, 2012, FHWA Divisions and State DOTs
are currently left to interpret the applicability of Buy America in
this gray area, creating potential inconsistency in the application of
Buy America. In response, FHWA evaluated options to achieve greater
nationwide uniformity in the application of its Buy America
requirements in a manner consistent with the Court's ruling. The FHWA
has also received a number of requests to take action in this
regard.\6\
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\6\ These requests have been placed in the docket for this
notice at www.regulations.gov using the docket number identified in
the heading of this notice.
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Covered Materials
In keeping with the statutory text and the purpose of the Buy
America requirements, the following covered materials, among others,
have been and continue to be subject to Buy America requirements:
(1) Structural steel (any structural steel shapes used as load-
bearing members);
(2) reinforcing steel used in cast-in-place, precast, pre-stressed
or post-tensioned concrete products (including reinforcing steel
couplers, connectors, wire mesh, steel fibers, pre-stressing or post-
tensioning strand, wire rope or cable);
(3) steel or iron materials used in pavements, bridges, tunnels, or
other structures: High strength bolts/nuts (any threaded fastening
element with a nominal diameter greater than \3/4\ inch inclusive and
any matching components to it such as nuts and washers), anchor bolts,
anchor rods, dowel bars, bridge bearings, and cable wire/strand;
(4) motor/machinery brakes and other equipment for moveable
structures;
(5) guardrail, guardrail posts, offset blocks, guardrail related
hardware, transitions, end sections, end treatments, terminals, cable
barriers;
(6) steel fencing or steel fabric material, fence posts, fence
rails;
(7) steel or iron pipe, casing, conduit, ducting, fire hydrants,
manhole covers, rims, risers, drop inlet grates;
(8) mast arms, poles, cross arms, standards, trusses, or supporting
structural members for signs, luminaires, or traffic control systems;
(9) incidental steel or iron items that are not explicitly defined
in the contract documents but are permanently incorporated. This
includes items that are impractical to remove due to design,
construction, staging, or other functional requirements. If a steel or
iron item is necessary for construction and it is impossible or
impractical to remove, then Buy America requirements apply. This
category includes, but is not limited to: Corrugated steel stay-in-
place forms, sheet piling, steel casing for micropile construction, tie
wire, filler metal/green rod for welding operations, etc.; \7\
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\7\ An interpretation of the applicability of Buy America
requirements to items that are used or permanently incorporated is
addressed in an agency policy memo dated June 13, 2011 (see: http://www.fhwa.dot.gov/construction/contracts/110613.cfm).
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(10) steel or iron materials that are specified and manufactured
for a specific Federal-aid project (for example, a lifting cable that
is designed and manufactured for a specific project, or ductile iron
pipe fittings built to contractor specifications); and
(11) rails for railroad or transit infrastructure funded under
Title 23.
Pursuant to 23 U.S.C. 313(b), however, FHWA finds that the
application of the Buy America requirements in certain limited
circumstances is inconsistent with the public interest. Accordingly,
FHWA is proposing two new nationwide waivers.
Proposed Nationwide Waivers
The FHWA continues to carry out and require compliance with the Buy
America requirements, but it is also cognizant of the practical and
administrative issues associated with its implementation. Contracting
agencies must document and trace the origin of all steel components for
products not waived under the 1983 regulations that are permanently
incorporated in a Federal-aid project. If they are not able to document
the domestic manufacturing processes for steel components (melted and
manufactured in the United States), they must assume the steel is non-
domestic and track each component to ensure compliance with the minimal
use provisions of 23 CFR 635.410(b)(4) or request a waiver for each
product under 23 CFR 635.410(c)(1).
From a practical viewpoint, manufacturers of electrical and
mechanical products rely on multiple suppliers, both domestic and
foreign, to source steel components for their products. Some steel
components may be comprised of subcomponents that originate from
different global suppliers with separate manufacturing processes. For
many electrical and mechanical products, the Federal-aid highway
program represents only a small fraction of the market for that
product. For a contracting agency to comply with the Buy America
requirements, it would need manufacturers to source and track
components separately from its suppliers and provide certifications for
all steel components. Only upon issuance of such certifications by
manufacturers would contracting agencies be able to properly certify
compliance with Buy America requirements. Thus, manufacturers would
need to implement new sourcing, inventory, and tracking processes for
contracting agencies to fully comply with the Buy America requirements.
Several State DOTs recently informed FHWA that manufacturer's
certifications documenting compliance with the Buy America requirements
are not available, and as a result, the State DOT must assume that all
of the steel components are non-domestic and request a waiver.
[[Page 71787]]
Oregon DOT's January 15, 2016, waiver request for the steel components
of more than 50 manufactured products illustrates the challenges and
administrative burdens faced by contracting agencies.
The FHWA recognizes that verifying compliance with the Buy America
requirements may be burdensome for some materials. For others, it is
virtually impossible to trace the processes from the melting of the
steel through the manufacturing and coating of the steel or iron
materials. The FHWA believes that requiring contracting agencies to
document the origin of every amount of steel or iron subcomponent of
commercially available off-the-shelf products places an unreasonable
burden on recipients and increases their administrative costs without
significantly furthering the objectives and policies of Buy America.
Therefore, FHWA seeks comments about the administrative costs of
documenting the origin of steel or iron used in subcomponents of COTS
products.
Proposed Nationwide Waiver for Commercially Available Off-the-Shelf
Products With Steel or Iron Components
The first proposed nationwide waiver is for COTS incorporating
steel or iron components. The term COTS means any manufactured product
incorporating steel or iron components (excluding the covered materials
discussed above, vehicles, or tie wire permanently incorporated in
precast concrete) that:
(1) Is available and sold to the public in the retail and wholesale
market;
(2) is offered to a contracting agency, under a contract or
subcontract at any tier, without modification, and in the same form in
which it is sold in the retail or wholesale market; and
(3) is broadly used in the construction industry.
The COTS products are limited to manufactured products with steel
or iron components, such as sinks, faucets, toilets, door hinges,
electrical products, and ITS hardware that are not made specifically
for highway projects but are incidental to such projects. By contrast,
products produced of steel or iron that are permanent features of a
highway project that are specifically manufactured or modified for
construction of such projects are excluded from COTS items and must
comply with FHWA's Buy America requirements.
The FHWA believes that tracking the country of origin of steel or
iron components of COTS places an unreasonable administrative burden on
Federal-aid recipients, distributors, and contractors, including small
businesses. These entities would likely have to establish costly
material inventory tracking systems to ensure that all steel or iron
components meet the Buy America requirements. The FHWA believes that
manufacturers, distributors, contractors, and Federal-aid recipients
would incur significant and unreasonable costs to document and track
information regarding manufacturing operations. The FHWA also believes
that steel or iron components of COTS constitute a relatively small
percentage of the overall steel and iron materials used on Federal-aid
projects, and the administrative costs associated with ensuring
compliance would be disproportional to the value of the material. The
FHWA believes that it may be in the public's interest that related
administrative costs are better allocated to other oversight actions
that reduce costs or accelerate project delivery. Accordingly, and
pursuant to the exception provided under 23 U.S.C. 313(b) when
application of the Buy America requirements is inconsistent with the
public interest, FHWA proposes to issue this nationwide waiver for COTS
with steel or iron components.
Proposed Temporary Nationwide Waiver for Steel Tie Wire Permanently
Incorporated in Precast Concrete Products
The second proposed nationwide waiver is for steel tie wire that is
permanently incorporated into precast concrete products. Steel tie wire
may be shown or referenced in standard plans, specifications, special
provisions, or are standard industry practice. Even when tie wire is
permanently incorporated in a precast concrete product, it is
considered incidental to the design and construction of the product.
Steel tie wire facilitates or allows the final product to be
constructed but does not provide a structural function in the final
product.
Manufacturers in the precast concrete industry rely extensively on
rebar tying guns to tie reinforcing steel. The benefits of using rebar
tying guns include the reduction of repetitive stress workplace
injuries, such as carpal tunnel syndrome, and an increase in
production. These rebar tying guns use tie wire supplied on spools.
Although tie wire is domestically produced, patent requirements for the
tying guns that are widely used by the precast concrete industry limit
the use of tie wire to non-domestic sources. The patented design of
these guns requires the use of specific tie wire spools, which are not
compatible with the tie wire that is currently produced in the United
States. Although there may be companies interested and able to supply
Buy America-compliant tie wire, the supply of this product may be
limited to specific applications due to its lack of compatibility with
the rebar tying guns. The FHWA does not want to discourage innovation
or create artificial barriers to continued process improvements in the
construction industry. However, the Agency recognizes that more time
may be needed to accommodate the demand for Buy America-compliant tie
wire (supplied on spools for the proprietary tie wire guns commonly
used in the industry) because it may not be domestically produced in
sufficient and reasonably available quantities at this time.
The FHWA recognizes the impacts to the precast concrete industry
related to the Court's decision to vacate FHWA's December 21, 2012,
memorandum, and believes that it is appropriate to issue a 1-year
temporary waiver of the Buy America requirements to allow suppliers in
the precast industry to provide Buy America compliant tie wire.
Accordingly, and pursuant to the exception provided under 23 U.S.C.
313(b) when materials and products are not produced in the United
States in sufficient and reasonably available quantities, FHWA proposes
to temporarily waive Buy America requirements for tie wire permanently
incorporated into precast concrete products for a 1-year period from
the date of issuance of the waiver. At the end of the 1-year period,
FHWA will assess whether to continue the waiver or apply Buy America
requirements to tie wire permanently incorporated into precast concrete
products. The FHWA also seeks comments about the domestic availability
of tie wire and lifting devices.
Other Steel and Iron Products Permanently Incorporated in Precast
Concrete Products
The FHWA is considering whether to issue a nationwide waiver for
specialized lifting devices incorporated in precast concrete products.
Over the years, suppliers in the precast industry have developed many
types of specialized steel lifting devices that are designed and used
to lift and move different precast concrete products used in highway
and infrastructure projects. Many in the precast concrete industry may
have come to rely on non-domestic lifting devices. The Court's decision
to vacate FHWA's December 21, 2012, memorandum may result in an
increase in demand for Buy America compliant
[[Page 71788]]
lifting devices. It is uncertain whether the current supply of Buy
America compliant lifting devices would be sufficient to meet such an
increase in demand. The Agency recognizes that more time may be needed
to accommodate an increase in demand for Buy America compliant lifting
devices. The FHWA seeks comments and additional information about the
supply and availability of Buy America compliant lifting devices that
are permanently incorporated into precast concrete products.
Invitation for Public Comment
The FHWA requests public comment and input on this proposal for two
nationwide waivers for manufactured items. Specifically, FHWA invites
public comment on the following issues:
Proposed Nationwide Waiver for Commercially Available Off-the-Shelf
Products With Steel or Iron Components
1. Does the COTS definition provide a reasonable description of
commercially available off-the-shelf steel or iron items?
2. Are there COTS products that should be on the covered steel or
iron materials list? If so, why?
3. Should there be a per-item cost cap for COTS items? If so, what
should the cap be?
4. What is the burden, time, and cost associated with enforcing or
complying with Buy America requirements for COTS items?
5. Are certifications and/or other documents available to allow
owner agencies to trace and verify domestic melting and manufacturing
processes for steel or iron products?
6. Does your agency or company track costs associated with the
administrative or compliance efforts associated with the Buy America
requirements?
Proposed Temporary Nationwide Waiver for Steel Tie Wire Permanently
Incorporated in Precast Concrete Products
7. Is the temporary waiver for tie wire permanently incorporated
into precast concrete necessary and appropriate, and if yes, is 1 year
the appropriate length?
Additional Question Regarding Other Steel and Iron Products Permanently
Incorporated in Precast Concrete Products
8. Is domestically produced supply sufficient to meet demand for
Buy America compliant lifting devices permanently incorporated into
precast concrete?
9. Does your agency or company have concerns regarding the
administrative burden, time, and cost associated with enforcing or
complying with Buy America requirements on steel or iron products
permanently incorporated into precast concrete products?
10. Does your agency or company have concerns regarding the
availability of materials and products that comply with Buy America
requirements on steel or iron products permanently incorporated into
precast concrete products?
11. Does your State DOT have data that document the relative use of
steel or iron products incorporated into precast products in comparison
with all steel/iron materials used in your highway program?
(Authority: 23 U.S.C. 313; 23 CFR 635.410)
Dated: October 11, 2016.
Gregory G. Nadeau,
Administrator, Federal Highway Administration.
[FR Doc. 2016-25116 Filed 10-17-16; 8:45 am]
BILLING CODE 4910-22-P