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Notice of Buy America Waiver of Domestic Content Requirement for Minivans and Vans

American Government Special Collections Reference Desk

American Government

Notice of Buy America Waiver of Domestic Content Requirement for Minivans and Vans

Ellen Partridge
Federal Transit Administration
20 October 2016


[Federal Register Volume 81, Number 203 (Thursday, October 20, 2016)]
[Notices]
[Pages 72667-72670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25370]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2016-0025]


Notice of Buy America Waiver of Domestic Content Requirement for 
Minivans and Vans

AGENCY: Federal Transit Administration, DOT.

ACTION: Notice of Buy America public interest waiver.

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SUMMARY: In response to a formal petition from the Pace Suburban Bus 
Division of the Regional Transportation Authority (Pace) requesting a 
Buy America non-availability waiver to purchase 188 Dodge Caravan 
minivans for its vanpool program and informal requests from other FTA 
recipients for similar waivers, and because FTA has been unable to 
identify any minivan manufacturers who meet both the final assembly and 
domestic content requirements for non-ADA-accessible minivans, the 
Federal Transit Administrative (FTA) hereby waives its Buy America 
domestic content requirement for non-ADA-accessible minivans and vans. 
FTA's requirement for final assembly in the United States is not 
waived. This waiver applies to all contracts for the procurement of 
non-ADA-accessible minivans and vans entered into on or before 
September 30, 2019, or until a fully-compliant domestic source becomes 
available, whichever is earlier.

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: FTA received a formal request from Pace for 
a Buy America non-availability waiver to purchase 188 Dodge Caravan 
minivans for its vanpool program. Minivans are considered rolling stock 
and are subject to the Buy America waiver set forth in 49 U.S.C. 
5323(j)(2)(C), which requires that (i) rolling stock, including 
minivans, contain more than 60 percent domestic content, and (ii) final 
assembly of the vehicles occurs in the United States. Although 
initially Pace sought a waiver of only the final assembly requirement, 
Pace augmented its request to include a waiver of the domestic content 
and final assembly requirements. By way of background, Pace operates a 
vanpool program in the Chicago suburban area with more than 785 
vehicles in service. A vanpool vehicle is defined, in pertinent part, 
as a vehicle with a seating capacity of at least six adults (not 
including the driver). See 49 U.S.C. 5323(i)(2)(C)(ii).
    In October 2014, Pace issued an invitation for bid (IFB) for a 
five-year contract for the purchase of seven-person, non-ADA-accessible 
minivans. The successful bidder, Napoleon Fleet, Inc., proposed Dodge 
Caravan minivans, but certified that the vehicles were not compliant 
with the Buy America requirement because the vehicles are not assembled 
in the United States, but are assembled in Canada. On April 15, 2015, 
Pace petitioned FTA for a non-availability waiver to procure 188 Dodge 
Caravan minivans, believing that the vehicles would be able to meet the 
domestic content requirement.
    In August 2015 and November 2015, however, Pace conducted pre-award 
Buy America audits of the Dodge Caravan minivans and discovered that 
the Dodge Caravan did not meet the current domestic content requirement 
of more than 60% US-made components. Pace informed FTA that the audit 
showed a 57.4% domestic content for

[[Page 72668]]

2015 model year minivans and a 52% domestic content for model year 2016 
minivans. Pace therefore expanded its request to a non-availability 
waiver on the grounds that no seven-person non-ADA-accessible minivan 
that complies with both domestic content and final assembly 
requirements was available.
    In addition to Pace, FTA has received inquiries from other transit 
agencies and vanpool operators regarding the lack of available non-ADA-
accessible minivans that meet both domestic content and final assembly 
requirements.
    With certain exceptions, FTA's Buy America statute prevents 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). When procuring rolling stock, such as minivans, the cost of 
components and subcomponents produced in the United States for fiscal 
years 2016 and 2017 must be more than 60 percent of the cost of all 
components and subcomponents and final assembly of the rolling stock 
must occur in the United States.\1\ 49 U.S.C. 5323(j)(2)(C).
---------------------------------------------------------------------------

    \1\ Under recent amendments to 49 U.S.C. 5323(j)(2)(C), the 
domestic content for minivans will increase in FY2018 and FY2019 to 
more than 65 percent and in FY2020 or beyond, the domestic content 
will increase to more than 70 percent.
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    FTA funds the procurement of between 2,500 and 3,000 minivans 
annually, including both ADA-accessible vans and non-ADA-accessible 
vans. The challenges associated with buying minivans that comply with 
FTA's Buy America statute and regulations have been well documented 
over the past six years. In 2010, El Dorado National, Kansas and 
Chrysler Group LLC petitioned FTA for a waiver of the Buy America final 
assembly requirement. In response to the request, FTA published a 
notice in the Federal Register, seeking comment from all interested 
parties. Numerous parties responded to the notice expressing support 
for the waiver. One manufacturer, Honda, indicated that its minivans 
were in compliance with the Buy America regulations but would not 
provide the additional information needed to support its claims. 
Ultimately, on June 21, 2010, FTA issued a public interest waiver of 
the Buy America final assembly requirement for all minivans and minivan 
chassis, but retained the domestic content requirement. See 75 Federal 
Register 35123.
    On November 27, 2012, following the introduction of the Vehicle 
Production Group's wheelchair-accessible MV-1 vehicle into the 
marketplace, FTA rescinded the waiver of final assembly for minivans, 
finding that the manufacturer of the MV-1 was a manufacturer of 
paratransit vehicles that could meet both the domestic content and the 
final assembly requirements for rolling stock under Buy America. See 75 
Federal Register 71676. Although FTA acknowledged that the MV-1 minivan 
is a wheelchair-lift equipped minivan and does not provide the seating 
capacity needed for vanpool programs, FTA did not continue the final 
assembly waiver for non-ADA-accessible vehicles, noting that it 
``prefers to consider waiver requests for limited circumstances and on 
procurement-by-procurement basis . . . .'' Id.
    On November 27, 2013, FTA issued a one-time, limited Buy America 
waiver of the final assembly requirement to the North Front Range 
Metropolitan Planning Organization (NFRMPO), for the purchase of 25 
seven-passenger minivans, based upon non-availability. See 78 Federal 
Register 71025. FTA rejected comments suggesting that it reinstate the 
2012 blanket waiver for seven-person minivans, and instead issued a 
waiver for final assembly for NFRMPO's purchase of up to 25 minivans.
    The market for non-ADA-accessible minivans has changed since 2013. 
In 2013, the Chrysler minivan met the domestic content requirements but 
was not assembled in the United States. FTA issued a partial waiver for 
final assembly because more than 60 percent of the minivan's components 
were produced in the United States. According to Pace's pre-award audit 
of the Dodge Caravan, Dodge does not meet either Buy America 
requirement. However, there are at least four manufacturers--GMC, Ford, 
Honda and Toyota--that make non-ADA-accessible minivans or vans that 
are assembled in the U.S.\2\
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    \2\ This information is from the 2016 report submitted by car 
manufacturers to the National Highway Transportation Safety 
Administration (NHTSA) under the American Automobile Labeling Act. A 
copy of the report is posted on NHTSA's Web site at http://www.nhtsa.gov.
---------------------------------------------------------------------------

    In order to verify Pace's assertion that minivans are not available 
from a domestic source, on May 17, 2016, FTA published a notice in the 
Federal Register seeking public comment. In the notice, FTA stated that 
because there are at least four manufacturers who assemble their 
vehicles in the United States, FTA proposed issuing a general waiver of 
only the domestic content requirement for non-ADA-accessible minivans 
and vans. Final assembly for minivans still must occur in the U.S. FTA 
asked for comments from all interested parties regarding the proposed 
waiver and sought additional comments on whether manufacturers would 
consider submitting to a pre-award and post-delivery audit process 
conducted by FTA on each new model year, as opposed to requiring audits 
for each individual procurement.

Response to Comments

    FTA received comments from 18 entities in Docket FTA-2016-0025 
including a variety of transit agencies, national associations, vanpool 
operators, industry groups, state department of transportation, a 
manufacturer of electric passenger vehicles and buses, a research and 
development center, and the general public. Seventeen of the commenters 
expressed support for the waiver, recognizing the fact that non-ADA-
accessible minivans do not meet the domestic content requirement. Two 
commenters asked that FTA reconsider providing a waiver for final 
assembly and domestic content. One anonymous commenter opposed the 
waiver, believing that the waiver would give vanpool operators a 
benefit not available to traditional public transit agencies.
    Commenters supportive of the waiver noted the consequences of the 
rescission of the 2012 waiver, including the following: Minivans are 
being operated past their useful life since transit agencies are unable 
to use Federal funds to procure new minivans that are not Buy America 
compliant, agencies are procuring larger SUVs with less desirable 
access/egress characteristics compared to minivans, and vanpool 
programs are folding or failing to form because public transit agencies 
have been unable to purchase compliant minivans. Commenters supportive 
of the waiver also noted that vanpools provide an important 
transportation alternative both in large cities and rural regions and 
that the elderly and disabled who do not need an ADA-accessible van 
also benefit from vanpools.
    The comments and questions can be categorized into the following 
primary categories:

A. What are the four minivans that meet the final assembly requirement?

    Nine commenters asked that FTA identify the four minivans 
referenced in the May 2016 Federal Register Notice. These commenters 
noted that based on the 2016 American Automobile Labeling Act 
information provided on the National Highway Traffic Safety 
Administration's Web site, they identified six manufacturers of Multi-
Purpose Vehicles (MPV). However, from

[[Page 72669]]

the information provided on the Web site, they identified only two 
``true'' minivans--the Toyota Sienna and the Honda Odyssey--and both of 
these are not currently certified by their respective manufacturers as 
meeting the final assembly requirement. The commenters asked if FTA 
would identify the four minivans that it has determined meet the final 
assembly requirement.
    FTA's Response: Based on the 2016 American Automobile Labeling Act 
information provided on the National Highway Traffic Safety 
Administration's Web site, the four minivans FTA has identified that 
comply with the Buy America final assembly requirement are the GMC 
Acadia, the Ford Expedition, the Toyota Sienna and the Honda 
Odyssey.\3\
---------------------------------------------------------------------------

    \3\ The definition of ``minivan'' used in this Notice is based 
solely on the vehicles' published seating capacity and should not be 
taken as FTA's endorsement of a vehicle's suitability for use in all 
FTA-funded van procurements or vanpool programs.
---------------------------------------------------------------------------

B. What other federal requirements must a manufacturer comply with?

    Six commenters asked that FTA clarify what non-Buy America federal 
requirements a van manufacturer would have to comply with, such as 
those contained in FTA's Master Agreement, and if there are additional 
certifications that a manufacturer would have to make before the 
vehicles can be procured by transit agencies using FTA funds. One 
commenter asked why FTA does not specifically exempt vans and minivans 
from FTA's other compliance requirements since FTA already exempts 
``unmodified mass-produced vans'' in the 4-year, 100,000-mile service 
life category from its Bus Testing regulations. This commenter proposed 
that FTA clarify that unmodified mass-produced vans and minivans having 
a projected annual production rate of 20,000 or more units are exempt 
from the Bus Testing regulation in the 4-year, 100,000-mile service 
life category, and are also exempt from other FTA compliance 
requirements, such as: Civil rights, disadvantaged business enterprise, 
clean air, clean water and employee protections.
    FTA's Response: Today's FTA action is limited to the Buy America 
compliance of vans and minivans procured with FTA financial assistance. 
Compliance with the USDOT's civil rights, disadvantaged business 
enterprise, and environmental and employee protections is governed by 
other Federal and Departmental regulations that are beyond the scope of 
this Notice and are not within FTA's authority to waive. If commenters 
believe additional regulatory amendments are warranted, they may 
petition the USDOT, consistent with the procedures outlined in 49 CFR 
part 5, subpart B.

C. Objection to the Proposed Waiver

    One commenter objected to the proposed waiver, stating that the 
vanpool industry is a small subsection of alternate commuting and that 
it appears that FTA and the U.S. Department of Transportation are 
working to assist less than .25% of those who commute daily to work. 
The commenter further stated that small vanpool companies are pushing a 
mandate to give options to government employees who should be choosing 
more efficient modes of travel such as larger vehicles. The commenter 
contended that minivans allow companies to push ``maxing out'' the 
subsidy to improve top line results and if true, these companies should 
be held to the same standards as municipalities receiving federal funds 
and adhere to Buy America.
    Another commenter noted that there are manufacturers of zero-
emission vehicles (ZEV) who manufacture vehicles in the United States 
that contain compliant levels of domestic content and that these ZEVs 
can be used for public transportation service (vanpool, car share, 
fleet replacement), and in order to provide zero emission vanpools, the 
commenter asks that FTA deny Pace's request for a waiver.
    FTA Response: FTA does not agree with this commenter that the 
proposed waiver would provide an undue advantage for individuals who 
commute by vanpool, noting that all public transit agencies are subject 
to FTA's Buy America requirements regardless of vehicle size, and those 
agencies are eligible to petition FTA for a Buy America waiver if faced 
with similar circumstances, regardless of the type of transportation 
they provide (i.e., heavy rail, light rail, commuter bus, transit bus, 
paratransit, or vanpool).
    FTA believes that the ZEV vehicles currently available on the 
market are sedans that are not suitable for all forms of public 
transportation services. While ZEV sedans can be used to provide ADA 
paratransit and similar demand-responsive services to ambulatory 
patrons, they do not yet exist in a configuration capable of 
accommodating a rider who cannot transfer out of a wheelchair, and they 
do not provide a passenger capacity that meets the statutory minimum 
for a vanpool vehicle.
    However, as FTA stated at the beginning of this Notice, the waiver 
is only valid until a vehicle that complies with both the domestic 
content and final assembly requirement is manufactured in sufficient 
quantities to meet the requirements of FTA recipients, or September 30, 
2019, whichever occurs first. When a vehicle that meets both domestic 
content and final assembly becomes available, the manufacturer of such 
vehicles may petition FTA for a review of today's waiver.

D. Will FTA apply this waiver in the future to 9-15 seat passenger 
vans?

    Five commenters asked if FTA would be willing to consider a similar 
waiver for 9-15 passenger seat vans, with one commenter noting that 9-
15 seat passenger vans are essential to their program and compose a 
substantial part of their fleet.
    FTA Response: A separate waiver for 9-15 passenger seat vans is not 
needed since the proposed waiver encompasses any mass produced, 
unmodified non-ADA-accessible vans, including 9-15 passenger seat vans.

E. Request for FTA To Reconsider Pace's Domestic Manufacturer Waiver 
Request

    Pace asked that FTA reconsider its waiver request. Following Pace's 
request to waive the final assembly requirement, Pace expanded its 
request to include domestic content based on the pre-award audit Pace 
conducted. According to Pace's research, there are only two minivan 
manufacturers that are compliant with FTA's final assembly 
requirement--Honda's Odyssey and Toyota's Sienna--and Pace asserts that 
Honda and Toyota have not participated in FTA-funded procurements due 
to the audit requirements in 49 CFR part 663 that require the 
manufacturer to open its records for audit and inspection in order to 
confirm U.S. content of more than 60%. The unwillingness of these two 
potential vendors to document their domestic content would make it 
unlikely that the transit authority could ever successfully award an 
FTA-assisted contract to a minivan manufacturer who met the Buy America 
regulation's final assembly requirements. Pace also asserts that other 
minivan manufacturers, who cannot meet FTA's final assembly 
requirement, including: GM and Chevrolet, Ford, Dodge/Chrysler, Nissan, 
Kia, and Mercedes Benz, may be unable to document compliance with the 
domestic content requirement. Consequently, Pace amended its petition 
to request FTA reconsider its request to expand the Buy America waiver 
to cover both domestic content

[[Page 72670]]

and final assembly for non-ADA-accessible minivans.
    FTA Response: With regard to a manufacturer's willingness to 
document its compliance with the audit requirements, because today's 
Notice waives the domestic content requirement, recipients will not be 
obligated to document or audit a covered vehicle's domestic components. 
However, a recipient still must confirm a vehicle's compliance with the 
other requirements of 49 CFR part 663, including conformity to the 
original bid specifications, and compliance with all applicable Federal 
Motor Vehicle Safety Standards (FMVSS).

F. Comments on FTA's Question Whether Manufacturers Would Consider 
Submitting to a Pre-Award and Post-Delivery Audit Process That Was 
Conducted by FTA on Each New Model Year, as Opposed To Requiring Audits 
for Each Individual Procurement

    Commenters were supportive of the concept of annual audits of 
vehicle models, rather than requiring audits for each individual 
procurement. Six commenters provided input on FTA's pre-award and post-
delivery audit process question. None of the commenters were minivan 
manufacturers and commenters noted that while they could not speak on 
behalf of automakers, they supported any policy that would promote more 
entrants, more competition, and more options in the procurement of 
minivans for vanpool purposes.
    FTA Response: FTA believes this proposal has merit and will take 
this recommendation into consideration in a future action that FTA may 
take to address pre-award and post-delivery audits for minivan 
procurements. Until that time, however, recipients procuring vans with 
FTA financial assistance must still conduct pre-award and post-delivery 
audits, consistent with the statutory requirement at 49 U.S.C. 5323(m) 
and FTA's implementing regulation at 49 CFR part 663. Given the 
circumstances warranting this waiver, the audits will not need to 
document the domestic content of the vehicle for compliance, but will 
still need to confirm the place of final assembly. The audit will need 
to document that the vehicle conforms to the requirements outlined in 
the bid specifications, and complies with the FMVSS.

Conclusion

    Although no minivans are presently available in the domestic market 
that meet both the final assembly and domestic content requirements, 
FTA has identified four non-ADA-accessible vehicles that may be 
suitable for vanpool use that meet FTA's Buy America final assembly 
requirement. Therefore, FTA is providing a Buy America waiver of the 
domestic content requirement for non-ADA-accessible minivans and vans; 
final assembly in the U.S. is still required. This waiver is limited to 
contracts entered into on or before September 30, 2019 or until a 
fully-compliant domestic source becomes available whichever is earlier.
    Additionally, FTA is granting Pace a one-time non-availability 
waiver of both domestic content and final assembly requirements for the 
purchase of up to 188 Dodge Caravan minivans for its vanpool program, 
as set forth in Pace's original request for a waiver. Pace originally 
sought a waiver for the procurement of minivans for its vanpool program 
in April 2014, after the solicitation resulted in no bidders that 
certified compliance with Buy America. FTA requested that Pace re-
advertise its procurement for minivans (IFB 412654), which Pace did in 
October 2014. The October 2014 solicitation also resulted in no bidders 
who could certify to both Buy America requirements. Pace has an 
immediate need for replacement vehicles for its vanpool program, and 
acquisition of these vehicles has been delayed due to the Buy America 
waiver review process. Therefore, FTA also is granting Pace a limited 
waiver of Buy America for the purchase up to 188 Dodge Caravan minivans 
for its vanpool program pursuant to IFB 412654.

Ellen Partridge,
Chief Counsel.
[FR Doc. 2016-25370 Filed 10-19-16; 8:45 am]
 BILLING CODE P

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