Notice of Buy America Waiver of Domestic Content Requirement for Minivans and Vans |
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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).
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\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.
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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\
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\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.
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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]
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