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Buy America Waiver Notification


American Government

Buy America Waiver Notification

Nicole R. Nason
Federal Highway Administration
6 April 2020


[Federal Register Volume 85, Number 66 (Monday, April 6, 2020)]
[Notices]
[Pages 19212-19214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07145]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration


Buy America Waiver Notification

AGENCY: Federal Highway Administration (FHWA), U.S. Department of 
Transportation.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice provides information regarding FHWA's finding that 
it is appropriate to grant a Buy America waiver to the Inter-Island 
Ferry Authority (IFA) of Alaska for procurement of foreign iron and 
steel components for refurbishment of two ferry vessels, specifically 
including (i) two sets of reduction gear replacement parts, one for the 
M/V Stikine ferry and the other for the M/V Prince of Wales ferry; and 
(ii) one set of pitch control units for the M/V Prince of Wales ferry.

DATES: The effective date of the waiver is April 7, 2020.

FOR FURTHER INFORMATION CONTACT: For questions about this notice, 
please contact Mr. Gerald Yakowenko, FHWA Office of Program 
Administration, (202) 366-1562, or via email at 
Gerald.Yakowenko@dot.gov. For legal questions, please contact Mr. 
Patrick Smith, FHWA Office of the Chief Counsel, (202) 366-1345, or via 
email at Patrick.C.Smith@dot.gov. Office hours for FHWA 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 document may be downloaded from the 
Federal Register's home page at: http://www.archives.gov and the 
Government Publishing Office's database at:  http://www.access.gpo.gov/nara.

Background

    The FHWA's Buy America regulation, 23 CFR 635.410, requires a 
domestic manufacturing process for any steel or iron products 
(including protective coatings) that are permanently incorporated in a 
Federal-aid construction project. The regulation also provides for a 
waiver of the Buy America requirements when the application would be 
inconsistent with the public interest or when satisfactory quality 
domestic steel and iron products are not produced in the United States 
in sufficient and reasonably available quantities. This notice provides 
information regarding FHWA's finding that it is appropriate to grant 
IFA a Buy America waiver for procurement of non-domestic iron and steel 
components for refurbishment of two ferry vessels, specifically 
including (i) two sets of reduction gear replacement parts, one for the 
M/V Stikine ferry and the other for the M/V Prince of Wales ferry; and 
(ii) one set of pitch control units for the M/V Prince of Wales ferry. 
The reduction gear replacement units and pitch control units are not 
available to be produced using 100 percent domestic steel or iron.
    Background on the IFA System: The IFA system provides the only 
ferry service to Prince of Wales (POW) Island, which is the fourth-
largest island in the United States with a landmass of 2,577 square 
miles. It has a population of approximately 6,000. The POW Island is 
located west of the City of Ketchikan, but is not accessible by road or 
bridge. Because of the lack of road access, residents and visitors rely 
heavily on the IFA ferries to reach POW Island or return to the 
mainland. The IFA ferries make daily runs between Ketchikan and Hollis, 
a census-designated place on POW Island. The ferries include passenger 
and vehicle decks. They carry more than 50,000 passengers and 12,000 
vehicles annually.
    The IFA provides critical ferry service to businesses and 
individuals on POW Island. For example, island residents rely on ferry 
service for access to health care, employment, and markets in Ketchikan 
including for groceries, goods, and services. In addition, many 
businesses on POW Island and in Ketchikan rely on this daily 
transportation connection to transport goods and customers. Finally, 
passengers brought to the island from the mainland support the island's 
tourism industry.
    Considering the lack of access to POW Island by road or bridge, the 
IFA system is the only reliable and affordable mode of transportation 
for many users. The IFA system is critical to users in a way that not 
all Federal-aid-supported ferry systems are: It is the only available 
route for owner-occupied vehicles to access the island. Although POW 
Island may also be accessed by more expensive air travel or much slower 
cargo barges, the IFA system provides a reliable, middle alternative 
that is essential to many of its users (including low-income users who 
cannot afford alternative modes). It also provides transportation 
security on

[[Page 19213]]

days when weather prevents travel by air.
    The IFA is a public, non-profit corporation organized under 
Alaska's Municipal Port Authority Act. The IFA is governed by a Board 
of Directors who are appointed by the member communities. Although the 
IFA is separate from the State of Alaska, its operations are dependent 
on subsidies from the State government. The IFA reports that it runs 
approximately 75 to 80 percent of its operational costs out of incoming 
revenue from fares; subsidies from the State cover the remainder. The 
IFA maintains that current fiscal problems in Alaska have put those 
subsidies at risk and make it highly unlikely that IFA or Alaska will 
be able to cover significant cost overruns on the ferry refurbishment 
project.
    Need for refurbishment of IFA ferries: The IFA owns two ferries, 
the M/V Stikine and the M/V Prince of Wales. The M/V Prince of Wales 
was built in 2002 and the M/V Stikine was built in 2005. The IFA needs 
to refurbish both ferries to keep them in service and allow them to 
continue operating safely. The IFA reports that the anticipated service 
life for these vessels, with proper maintenance and refurbishment, may 
be up to 50 years. Thus, IFA anticipates that the ferries may have a 
remaining service life of 25 years to 35 years if they are maintained 
and refurbished as required. During preliminary engineering, the IFA 
confirmed that most parts needed for the refurbishment will comply with 
FHWA's Buy America requirements. The IFA identified only two parts 
needed for the refurbishment project that could not satisfy FHWA's Buy 
America requirements: (i) Reduction gear replacement parts for both 
ferries; and (ii) pitch control units for the M/V Prince of Wales.
    Based on estimates received from IFA, the two parts requiring 
waivers constitute approximately 30 percent of the total estimated 
project cost of approximately $3 million. The IFA has confirmed that 
both the reduction gear replacement parts and the pitch control units 
can be installed domestically in the shipyard in Ketchikan, Alaska.
    The existing reduction gears on both vessels have exceeded their 
recommended service life and must be replaced. The IFA maintains that 
there are no satisfactory replacement reduction gears made domestically 
meeting FHWA's Buy America requirement that will ensure: (i) 
Synchronization with its existing propulsion (or powertrain) system; 
and (ii) continued safe operation of the ferries. The existing 
reduction gears on both ferries were manufactured by Reintjes GmbH in 
Germany. Considering the age and hours of use of the existing reduction 
gears, the IFA maintains that there is urgent need for the replacement 
parts to ensure the continued safe transportation of its users. The IFA 
also maintains the replacement is urgent due to the importance of the 
IFA system to the communities it serves in terms of access and 
connectivity. The service life of the replacement reduction gears would 
be 13 to 15 years.
    The IFA also maintains that the existing pitch control units in the 
M/V Prince of Wales are obsolete and must be replaced. It maintains 
that there are no satisfactory pitch control units made domestically 
meeting FHWA's Buy America requirement that will ensure: (i) 
Synchronization with its existing propulsion system; and (ii) continued 
safe operation of the ferry. The IFA also maintains that timely 
replacement of this part is necessary to ensure the continued safe 
transportation of its users and due to the importance of the IFA system 
to the communities it serves in terms of access and connectivity. The 
service life of the replacement pitch control units would be 15 to 20 
years.
    Waiver Request and Supporting Information: The IFA originally 
submitted a Buy America waiver request to FHWA for the reduction gear 
replacement parts and pitch control units in September 2018. Prior to 
submitting its waiver request, IFA sought but failed to identify 
domestic manufacturers for these products. Consistent with Executive 
Order 13788, after receiving the request, FHWA requested that IFA seek 
to maximize the use of goods, products, and materials produced in the 
U.S. on the project. In response to this request and several iterations 
of follow-up questions from FHWA, IFA spent the ensuing 12 months 
seeking to identify domestic manufacturers for the parts that it had 
not identified in its original search or, if full compliance was not 
possible, foreign manufacturers that could maximize use of domestic 
content by using greater quantities of U.S. steel. These search 
activities continued between September 2018 and September 2019. 
Although IFA did not identify compliant products, IFA provided 
information to FHWA supporting its waiver request, including:
     Information describing the domestic content 
characteristics of the manufactured products needed, including the 
sources and assembly locations of those products;
     information supporting the technical necessity of these 
specific products for the continued safe operation of the ferries and 
demonstrating that alternative designs were infeasible;
     information documenting efforts to maximize domestic 
content even if full compliance was not possible, including efforts to 
have foreign manufacturers incorporate domestic steel; and
     information describing the effects of denying the request, 
including the infeasibility of completing the acquisitions without 
Federal funding.
    For the reduction gears on both vessels, IFA determined that only 
the original equipment manufacturer, Reintjes GmbH, could produce 
replacement parts to synchronize with its existing system and ensure 
continued safe operation. Due to existing supply contracts and warranty 
requirements for its parts, Reintjes GmbH was unable to offer an option 
to produce the reduction gears using United States steel.
    For the pitch control units on the M/V Prince of Wales, IFA 
reported the following: It identified a manufacturer in Denmark that 
could potentially produce the parts using United States steel. However, 
considering the revised cost of raw materials and the transportation 
costs for sending the materials from the United States to Denmark, 
among other factors, this option increased the cost estimate for the 
pitch control units by approximately $750,000 compared to pitch control 
units produced with foreign steel (including both parts and 
installation). This doubled the total cost estimate for the parts. The 
IFA also identified a manufacturer in Sweden that could produce an 
alternate propulsion system for the M/V Prince of Wales using mostly 
Unites States content, but this option would increase the project cost 
by at least $1.5 million compared to pitch control units produced with 
foreign steel (including both parts and installation). This more than 
tripled the total cost estimate for refurbishing the pitch control 
units. Moreover, the manufacturer could not guarantee that the 
alternate propulsion system would properly synchronize with all other 
existing parts on the M/V Prince of Wales. The IFA determined that 
these alternatives would be cost prohibitive: If required to purchase 
one of these options, IFA would not be able to refurbish the vessel. 
This would effectively end the remaining service life of the M/V Prince 
of Wales, which could otherwise continue in operation for decades if 
properly refurbished and maintained. The IFA also maintains that the 
current fiscal situation in Alaska makes the State government unwilling 
to increase the existing subsidy to absorb significant cost overruns 
relative

[[Page 19214]]

to IFA's estimate for pitch control units produced with foreign steel.
    Public Comments on Waiver Request: In accordance with the 
Consolidated Appropriations Act of 2016 (Pub. L. 114-113) and the 
Continuing Appropriations Act of 2017 (Pub. L. 114-223), FHWA published 
a notice of intent to issue a waiver on its website, https://www.fhwa.dot.gov/construction/contracts/waivers.cfm?id=155, on February 
19, 2020. The FHWA received six comments in response to the 
publication. Four comments supported the waiver, one comment was 
generally opposed to the waiver, and one comment was nonresponsive. The 
comment FHWA considered non-responsive appeared to request FHWA to 
publish notice of its waiver finding in the Federal Register, which 
FHWA does through this notice. The comment opposing the waiver did not 
offer any information on the availability of compliant products, nor 
did it suggest specific, additional actions that IFA could take to 
maximize its use of goods, products, and materials produced in the 
United States. Thus, IFA has not received any new information 
indicating that the subject parts can be produced by domestic 
manufacturers.

Finding and Request for Comments

    Based on all the information available to the Agency, FHWA 
concludes that there are no domestic manufacturers of the reduction 
gear replacement parts and pitch control units needed for refurbishment 
of the M/V Stikine and M/V Prince of Wales by IFA. This finding is only 
for the procurement of non-domestic iron and steel components for 
refurbishment of two ferry vessels, specifically including (i) two sets 
of reduction gear replacement parts, one for the M/V Stikine ferry and 
the other for the M/V Prince of Wales ferry; and (ii) one set of pitch 
control units for the M/V Prince of Wales ferry.
    The IFA and its contractors and subcontractors involved in the 
procurement of the reduction gear replacement parts and pitch control 
units are reminded of the need to comply with the Cargo Preference Act 
in 46 CFR part 38, if applicable.
    In accordance with the provisions of Section 117 of the SAFETEA-LU 
Technical Corrections Act of 2008 (Pub. L. 110-244, 122 Stat. 1572), 
FHWA is providing this notice as its finding that a waiver of Buy 
America requirements is appropriate. The FHWA invites public comment on 
this finding for an additional 5 days following the effective date of 
the finding. Comments may be submitted to FHWA's website via the link 
provided to the waiver page noted above.

    Authority:  23 U.S.C. 313; Pub. L. 110-161, 23 CFR 635.410

Nicole R. Nason,
Administrator, Federal Highway Administration.
[FR Doc. 2020-07145 Filed 4-3-20; 8:45 am]
 BILLING CODE 4910-22-P

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