[Federal Register Volume 74, Number 152 (Monday, August 10, 2009)]
[Notices]
[Pages 39959-39960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19069]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-8939-1]
Notice of Revised Nationwide Waiver of Section 1605 (Buy American
Requirement) of American Recovery and Reinvestment Act of 2009 (ARRA)
Based on Public Interest for de minimis Incidental Components of
Projects Financed Through the Clean or Drinking Water State Revolving
Funds Using Assistance Provided Under ARRA
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
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SUMMARY: The EPA is hereby granting a nationwide waiver of the Buy
American requirements of ARRA Section 1605 under the authority of
Section 1605(b)(1) (public interest waiver) for de minimis incidental
components of eligible water infrastructure projects funded by ARRA
This action revises the terms under which incidental components qualify
for coverage under the public interest de minimis waiver signed and
effective on May 22, 2009, and permits the use of non-domestic iron,
steel, and manufactured goods when they occur in de minimis incidental
components of such projects funded by ARRA that may otherwise be
prohibited under section 1605(a).
DATES: Effective Date: July 24, 2009.
FOR FURTHER INFORMATION CONTACT: Jordan Dorfman, Attorney-Advisor,
Office of Wastewater Management, (202) 564-0614, or Philip Metzger,
Attorney Advisor, Office of Ground Water and Drinking Water, (202) 564-
3776, Environmental Protection Agency, 1200 Pennsylvania Avenue, NW.,
Washington, DC 20460.
SUPPLEMENTARY INFORMATION: In accordance with ARRA Section 1605(c), the
EPA hereby provides notice that it is granting a nationwide waiver of
the requirements of section 1605(a) of Public Law 111-5, Buy American
requirements, based on the public interest authority of section
1605(b)(1), to allow the use of non-domestic iron, steel, and
manufactured goods when they occur in de minimis incidental components
of eligible projects for which a Clean or Drinking Water State
Revolving Fund (SRF) has concluded or will conclude an assistance
agreement using ARRA funds where such components cumulatively comprise
no more than a total of 5 percent of the total cost of the materials
used in and incorporated into a project.
Among the General Provisions of the American Recovery and
Reinvestment Act of 2009 (ARRA), Section 1605(a) requires that ``all of
the iron, steel, and manufactured goods used in'' a public works
project built with ARRA funds must be produced in the United States,
unless the head of the respective Federal department or agency
determines it necessary to waive this requirement based on findings set
forth in Section 1605(b). In addition, expeditious construction of SRF
projects is made a high priority by a provision in the ARRA Title VII
appropriations heading for the SRFs, which states ``[t]hat the
Administrator shall reallocate funds * * * where projects are not under
contract or construction within 12 months of'' ARRA enactment (February
17, 2010). The finding relevant to this waiver is that ``applying
[ARRA's Buy American requirement] would be inconsistent with the public
interest'' (1605(b)(l)).
EPA originally issued this waiver on May 22, 2009. This notice
revises the terms under which that waiver may be applied, and, in
accordance with the requirements of Section 1605(c) that all waivers
granted must include a ``detailed written justification'', adds new
information and repeats relevant information that continues to justify
this revised waiver.
In implementing ARRA section 1605, EPA must ensure that the
section's requirements are applied consistent with congressional intent
in adopting this section and in the broader context of the purposes,
objectives, and other provisions of ARRA applicable to projects funded
under the Clean Drinking Water State Revolving Funds (SRF),
particularly considering the SRFs' 12 month ``contract or
construction'' requirement. Further, in the context of ARRA's SRF
``contract or construction'' deadline, Congress' overarching directive
to
[t]he President and the heads of Federal departments and agencies
[is that they] shall manage and expend the funds made available in
this Act so as to achieve the purposes [of this Act], including
commencing expenditures and activities as quickly as possible
consistent with prudent management. [ARRA Section 3(b)]
Water infrastructure projects typically contain a relatively small
number of high-cost components incorporated into the project that are
iron, steel, and manufactured goods, such as pipe, tanks, pumps,
motors, instrumentation and control equipment, treatment process
equipment, and relevant materials to build structures for such
facilities as treatment plants, pumping stations, pipe networks, etc.
In bid solicitations for a project, these high-cost components are
generally described in detail via project specific technical
specifications. For these major components, utility owners and their
contractors are generally familiar with the conditions of availability,
the potential alternatives for each detailed specification, the
approximate cost, and the country of manufacture of the available
components.
Every water infrastructure project also involves the use of
literally thousands of miscellaneous, generally low-cost components
that are essential for, but incidental to, the construction and are
incorporated into the physical structure of the project, such as nuts,
bolts, other fasteners, tubing, gaskets, etc. For many of these
incidental components, the country of manufacture and the availability
of alternatives is not always readily or reasonably identifiable prior
to procurement in the normal course of business; for other incidental
components, the country of manufacture may be known but the
miscellaneous character in conjunction with the low cost, individually
and (in total) as typically procured in bulk, mark them as properly
incidental.
EPA undertook multiple inquiries to identify the approximate scope
of these de minimis incidental components within water infrastructure
projects. EPA consulted informally with many major associations
representing equipment manufacturers and suppliers, construction
contractors, consulting engineers, and water and wastewater utilities,
and a contractor performed targeted interviews with several well-
established water infrastructure contractors and firms who work in a
variety of project sizes, and regional and demographic settings. The
contractor asked the following questions:
--What percentage of total project costs were consumables or incidental
costs?
--What percentage of materials costs were consumables or incidental
costs?
--Did these percentages vary by type of project (drinking water vs.
wastewater treatment plant vs. pipe)?
The responses were consistent across the variety of settings and
project types, and indicated that the percentage of
[[Page 39960]]
total costs for drinking water or wastewater infrastructure projects
represented by these incidental components is generally not in excess
of 5 percent of the total cost of the materials used in and
incorporated into a project. In drafting this waiver, EPA has
considered the de minimis proportion of project costs generally
represented by each individual type of these incidental components
within the hundreds or thousands of types of such components comprising
those percentages, the fact that these types of incidental components
are obtained by contractors in many different ways from many different
sources, and the disproportionate cost and delay that would be imposed
on projects if EPA did not issue this waiver.
Subsequent to the issuance of the original public interest de
minimis waiver on May 22, 2009, EPA has received many, similar waiver
requests from numerous assistance recipients (located in a few States
that have issued a substantial number of SRF assistance agreements
funded by ARRA) on a variety of low-cost components whose national
origin can be identified. Even as typically procured in bulk (several
dozen for small projects), the total cost of these components is much
less than 5 percent of the total materials cost of these projects.
These types of components would properly be considered subject to the
previous nationwide public interest de minimis waiver but for the
requirement in that waiver that the national origin of these low-cost,
miscellaneous components ``not [be] readily or reasonably identifiable
prior to procurement in the normal course of business.'' It also
appears that when EPA inquired of various parties to develop the
percentage limit on the waiver, the percentages were identified with
the inclusion of these types of components in mind.
Due to the diverse characteristics of the specific configurations
of these individually low-cost components, the analysis and
consideration of waiver requests for them--and particularly of
ascertaining whether U.S.-made products exist or can be made to meet
these diverse configurations--is already becoming a demanding and time-
consuming task far out of proportion to the percentage of total project
materials cost they comprise. As a rapidly increasing number of States
begin to issue numerous assistance agreements, EPA recognizes the
prospect of considering dozens of differently framed waivers in most if
not all States for each of these types of components, in addition to
those for major components that are most appropriately the focus of the
waiver process set forth in Section 1605. Because the established
practices of specification and use of these low-cost components appear
to be widely varied by Region and to some extent by State and
individual recipient, it is unlikely to be practicable to formulate
categorical waivers for such components, even if justified. If this
pattern of waiver requests is allowed to expand to a national scale,
the resources and capacities of the waiver program, for EPA and
assistance recipients alike, will be so consumed by necessary analysis
of the minute variations in circumstances among these low-cost items
that this will become a serious obstacle to ensuring that all
recipients will be able to sign construction contracts by February 17,
2010.
Assistance recipients who do not have their compliance with respect
to section 1605 clarified may in many cases be unable to sign contracts
by the February 17, 2010 date, causing these communities to lose their
ARRA assistance and requiring EPA to reallocate to other States all
ARRA funds not under contract by that date. This in turn will lead to
further delay in placing the reallotted funds into other projects,
which is inconsistent with the public interest and the intent and
purpose of ARRA. It would be further inconsistent with ARRA to deprive
of ARRA assistance these States and communities whose funds are
reallocated due to a waiver process that would have become backlogged
under the complexity of investigating waiver requests for incidental
components costing a fraction of the 5 percent of the materials cost of
a project.
Under these circumstances, EPA must place the highest priority on
enabling States and their assistance recipients to meet this February
17, 2010 deadline set by Congress for the SRFs specifically. As the
situations described above would be effectively addressed by a more
comprehensive application of the de minimis waiver, EPA has found that
it would be inconsistent with the public interest--and particularly
with ARRA's directives to ensure expeditious SRF construction
consistent with prudent management, as cited above--to apply the Buy
American requirement to incidental components when they in total
comprise no more than 5 percent of the total cost of the materials used
in and incorporated into a project. Accordingly, EPA is hereby issuing
a national waiver from the requirements of ARRA Section 1605(a) for any
components described above as incidental that comprise in total a de
minimis amount of the project, that is, for any such incidental
components up to a limit of no more than 5 percent of the total cost of
the materials used in and incorporated into a project.
Assistance recipients who wish to use this waiver should in
consultation with their contractors determine the items to be covered
by this waiver, must retain relevant documentation as to those items in
their project files, and must summarize in reports to the State the
types and/or categories of items to which this waiver is applied, the
total cost of incidental components covered by the waiver for each type
or category, and the calculations by which they determined the total
cost of materials used in and incorporated into the project.
In using this waiver, assistance recipients should consider that
all SRF-funded construction projects by definition require the
expenditure of a certain amount of project funds on the literal ``nuts
and bolts''-type components whose origins cannot readily be identified
prior to procurement. As described above, EPA has determined the 5
percent limit based on research and informed professional judgment as
to the maximum total amount of incidental goods used in most water and
wastewater projects. In a few, exceptional cases, assistance recipients
using this waiver may have multiple types of low-cost components which,
when combined and in conjunction with those literal ``nuts and bolts''-
type components, may total more than 5 percent. Assistance recipients
in such cases will have to choose which of these incidental components
will be covered by the waiver and which will not, and will include the
type and amount of such items covered in the reports to the State as
required above. Components which the recipient is unable to include
within the 5 percent limit of this waiver must comply with the
requirements of section 1605 by appropriate means other than coverage
under this waiver.
Therefore, for the foregoing reasons, imposing ARRA's Buy American
requirements for the category of de minimis incidental components
described herein is not in the public interest. This supplementary
information constitutes the ``detailed written justification'' required
by Section 1605(c) for waivers ``based on a finding under subsection
(b).''
Authority: Public Law 111-5, section 1605.
Dated: July 24, 2009.
Michael H. Shapiro,
Acting Assistant Administrator for Water.
[FR Doc. E9-19069 Filed 8-7-09; 8:45 am]
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