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Request

Action: Notice, request for comments.

Web posting date: 09/05/2013

Federal Register Notice of Finding Publication Date: 11/25/13

Effective Date of Federal Register: 11/26/13

Close of public comment period: 12/11/13

Summary: The FHWA proposes to grant a waiver from Buy America, on the basis that such waiver is in the public interest, for vehicle projects in Chicago, IL, that are to be funded with Federal-aid highway funds on the condition that such vehicles are assembled in the United States. The incoming request from the Chicago Department of Transportation (DOT) can be viewed here.

FHWA's Buy America requirements provide that 100 percent of all steel and iron that is permanently incorporated into a project must be domestically manufactured. With respect to vehicles, manufacturers typically assemble these products with many different components and subcomponents containing steel and iron. As a result, vehicles are typically referred to as being made where the final product rolls off the assembly line for delivery into the marketplace. The FHWA is unaware of any vehicle that is comprised of 100 percent domestically produced steel and iron, resulting in a need for a Buy America waiver for these projects to proceed.

The FHWA proposes to grant a waiver to enable the Chicago DOT to use Federal funds for to purchase light, medium, and heavy duty plug-in batter electric and compressed natural gas vehicles so long as the vehicle is assembled in the United States. Because many vehicles are assembled in the United States, the FHWA believes that it is in the public interest to process waivers for these vehicles on the condition that the vehicles are assembled in the United States. Such approach would give effect to the intent of Buy America by ensuring that Federal highway funds are used to support American jobs in a reasonable and meaningful way given the nature of the U.S. vehicle manufacturing industry.

FHWA will only consider a Buy America waiver when the conditions of 23 CFR 635.410( c) have been met: (1) when the application of the provision would be inconsistent with the public interest; or (2) when steel and iron products are not produced in the United States in sufficient and reasonably available quantities, which are of a satisfactory quality.

The FHWA will consider all comments received in the initial 15-day comment period during our evaluation of the waiver request. Comments received after this period, but before notice of our finding is published in the Federal Register, will be considered to the extent practical. Follow-up coordination on the comments received may result in a delay in the publication of our waiver finding in the Federal Register. Comments received during the 15-day comment period after notice of our finding is published in the Federal Register will be reviewed, but the finding will continue to remain valid. Comments received during the comment period after the effective date of the finding will be reviewed, and may influence the FHWA's decision to terminate or modify a finding.

[Incoming Chicago DOT Letter (.pdf, 0.1 mb)]

Comments

Don Morton, Alliance for American Manufacturing 11/27/2013
Dear Administrator Mendez:

The Alliance for American Manufacturing (a non-profit, non-partisan partnership formed in 2007 by some of America’s leading manufacturers and the United Steelworkers) is a strong proponent of this nation’s Buy America laws, which help ensure that taxpayer dollars are reinvested in the American economy, creating and maintaining jobs here at home and strengthening our manufacturing base.

Auto parts (aka “components”) production accounts for seventy-five percent of the jobs in the U.S. automotive sector. The U.S. automotive and automotive parts sectors have proven to be highly susceptible to unfair foreign competition. More than 400,000 jobs in the U.S. auto supply chain have been lost since 2000 and another 1.6 million are at risk because of foreign illegal trading practices.

FHWA’s proposed partial waiver for vehicles assembled in the United States greatly diminishes the job-creating potential of the Buy America preference as applied to vehicles and retrofit systems procured with Congestion Mitigation and Air Quality Improvement (CMAQ) program funds. AAM believes that a meaningful domestic content standard for vehicles purchased or retrofitted using FHWA funds could be administered in a way that is not unduly burdensome. The Federal Transit Authority (FTA) and the Federal Railroad Administration (FRA) both apply domestic content standards to vehicles and require assembly in the United States. Not only do other Department agencies require a threshold basis of domestic component content for vehicles procured for federal-aid transportation infrastructure, an annual listing of the domestic content and place of manufacture of commercial vehicles that could be purchased with these CMAQ funds is already made publicly available by another Department agency.

In addition to being administrable, application of a Buy America standard requiring a meaningful amount of domestic component content in vehicles purchased or retrofitted using CMAQ funds comports with the original intent underlying Section 165 of the 1982 STAA. Employment in the U.S. auto sector would see significant benefits from a Buy America preference for CMAQ vehicle purchases that requires some degree of domestic component content.

Buy America policies ensure that the iron, steel, and manufactured goods procured for public works projects are produced using the cleanest manufacturing standards in the world. The FHWA should require that vehicles purchased or retrofitted with CMAQ monies be comprised, in the majority, of U.S.-origin components, and be assembled into their final form in the United States.

Christopher Weld 12/10/2013
December 10, 2013

The Honorable Victor M. Mendez Administrator Federal Highway Administration 1200 New Jersey Ave., SE Washington, DC 20590

Dear Administrator Mendez:

On behalf of Nucor Corporation (“Nucor”), a major steel producer and recycler in the United States, we hereby submit the following comments on the Federal Highway Administration’s (“FHWA”) Buy America waiver notification regarding the purchase of 378 electric and compressed natural gas vehicles by the Chicago Department of Transportation pursuant to the Congestion Mitigation and Air Quality Improvement (“CMAQ”) program. (See 78 Fed. Reg. 70395 (Nov. 25, 2013)). For the reasons detailed below, we respectfully request that FHWA reconsider certain conclusions contained in its November 25, 2013 waiver notification.

In its November 25, 2013 waiver notification, FHWA issued a one-time waiver of the Buy America requirements for the purchase of certain vehicles by the Chicago Department of Transportation. However, in the same notification, FHWA went beyond the project-specific waiver and set forth arguments for not applying Buy America to the purchase of any vehicle. Specifically, FHWA stated that “[i]n today’s global industry, vehicles are assembled with components that are made all over the world” and “FHWA is not aware of any vehicle on the market that can claim to incorporate 100 percent domestic steel and iron content.” As a result, FHWA stated that it “does not believe that application of a domestic content standard should be applied to the purchase of vehicles.” FHWA noted, however, that it will still require that vehicles be “assembled in the United States.”

These statements are contrary to current FHWA practice, which is to apply Buy America requirements to certain vehicles, including vehicles funded pursuant to the CMAQ program. Indeed, less than five months ago, FHWA emphasized that the “Buy America program is appropriate to apply” to the acquisition of vehicles funded through the CMAQ program – the very program at issue in this waiver notification. (See Notice and Request for Comments, Buy America Policy, 78 Fed. Reg. 41,492 (Dep’t Transportation (FHWA) July 10, 2013).

To the extent that FHWA’s statements constitute a change in its Buy America policy, such a change is unwarranted and inappropriate. Contrary to FHWA’s apparent conclusion, final assembly of a vehicle in the United States is not sufficient to satisfy the Buy America requirements. FHWA’s regulations and policy have consistently required that “all manufacturing processes” for steel products used in FHWA-funded projects, from the initial melting and mixing of the steel through the coating stage, occur in the United States. For more than thirty years, FHWA’s policy and practice has been that all steel components and subcomponents must be manufactured in the United States to comply with the Buy America requirements. Final assembly has never been deemed sufficient to satisfy the Buy America requirements.

Moreover, applying Buy America requirements to vehicles is not unduly burdensome, as FHWA appears to suggest. A number of agencies within the Department of Transportation successfully apply Buy America requirements to vehicles, and vehicle manufacturers are able to trace the origin of the steel used in the production of their vehicles, despite FHWA’s assertions to the contrary. The Federal Transit Administration (“FTA”), for example, requires that its contractors track the origin of components used in rolling stock procured with FTA-funds. (49 C.F.R. §§ 661.3, 661.11). Specifically, FTA requires that the “cost of components produced in the United States is more than 60 percent of the cost of all components and final assembly takes place in the United States.” (49 C.F.R. §§ 661.3, 661.11 (emphasis added)). In addition, the Federal Railroad Administration’s Buy America requirements require final assembly in the United States and that all components (including components purchased for retrofits) be manufactured in the United States. These examples demonstrate that applying domestic content requirements and tracking the specific country of origin of steel components in vehicles is not impracticable, and that other DOT agencies have devised successful methods for doing so.

Finally, to the extent that FHWA’s statements constitute a change in its Buy America policy, the November 25 project-specific waiver notification is not the appropriate means of announcing such a change. In July 2013, FHWA requested and subsequently received comments from interested parties on a variety of issues related to its Buy America program, including application of Buy America requirements to vehicles purchased pursuant to the CMAQ program. FHWA has yet to respond publicly to any of the comments received. Any reconsideration of FHWA’s current practice of applying Buy America requirements to vehicles should occur in the context of an analysis of the comments submitted to the agency, and FHWA must provide proper notice for any such change in policy.

In sum, FHWA should continue to apply its Buy America policy to the acquisition and retrofit of vehicles and require that the steel products used to produce such vehicles be manufactured in the United States.

Thank you for your consideration of this request.

Sincerely,

Christopher B. Weld Counsel to Nucor Corporation

Holly Hart 12/11/2013
Dear Administrator Mendez:

I write on behalf of the 850,000 active members of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union (USW) in response to your request for comments concerning the Federal Highway Administration (FWHA) proposal to grant a Buy America waiver to the Chicago Department of Transportation (CDOT) “Chicago Area Alternative Fuels Deployment Program –Phase 2”. USW would urge you to reconsider the waiver proposal to CDOT.

Some 350,000 Steelworkers make traditional auto parts and products that can end up in an auto - steel, rubber, aluminum, plastics and other products. The health of the sector is vital, as is the assembly of vehicles here in this country. In FWHA’s request for comments FWHA justified a partial Buy America waiver by allowing the CDOT to acquire vehicles with less than 100% domestic content so long as the final assembly is completed in the United States. Final assembly will lower the overall job creation potential that a high or stepped domestic content percentage would create. FWHA is unfortunately correct to note that no domestically assembled passenger vehicle meets 100% domestic content, however vehicles which could qualify for Congestion Mitigation and Air Quality Improvement (CMAQ) funds and adequately work for the intent of CDOT’s program could reach a domestic content of over 70%.

CDOT’s proposal to provide financial incentives to private industries to upgrade their fleets will have long term maintenance and part implications for that fleet of vehicles for years to come. With more than 400,000 jobs in the U.S. auto supply chain lost since 2000 and another 1.6 million jobs at risk unless foreign illegal trading practices are curtailed it is critical that Federal dollars are maximized for jobs in America.

In FWHA’s November 2013 guidance for Congestion Mitigation and Air Quality (CMAQ) under MAP-21, FWHA notes that goals of CMAQ are to improve air quality and relieve congestion. While CDOT’s program potentially meets those goals the opportunity for job creation and retention will be assured if a Buy America preference for CMAQ vehicle purchases requires some degree of domestic component content. Adherence to Buy America can also drive innovation in the US market. Model vehicles with higher domestic content percentages will, over the long term, sustain American auto-part manufacturers, many of whom reside in the state of Illinois.

Buy America policies applied to CMAQ funds and CDOT’s proposal have the potential to spur innovation and domestic job creation right here at home, in the US. The FWHA should require vehicles purchased or retrofitted with CMAQ funds be comprised with the highest US domestic content possible.

Sincerely, Holly R. Hart Assistant to the International President Legislative Director

Edward Wytkind 12/11/2013

December 11, 2013

Mr. Gerald Yakowenko Office of Program Administration Federal Highway Administration 1200 New Jersey Ave., SE Washington, DC 20590

RE: Buy America Policy Docket No. FHWA-2013-28186 Buy America Waiver Request, Chicago DOT

On behalf of the Transportation Trades Department, AFL-CIO, I write in response to the Federal Highway Administration's (FHWA) notice regarding the Chicago Department of Transportation’s (CDOT) request for a Buy America waiver. By way of background, TTD consists of 32 affiliated unions including those representing workers employed in the production of vehicles parts who would be impacted by the outcome of this proceeding. For the reasons explained below, TTD opposes the FHWA waiver as it is currently proposed.

TTD and our member unions have long embraced the principle that the strength of our transportation system and manufacturing sector are intrinsically linked. To help maximize the benefits of federal transportation investments, we have consistently insisted on strong Buy America policies that will sustain domestic manufacturing and the millions of jobs it supports.

With this notice, FHWA proposes to issue a partial waiver from its Buy America standards in order to allow CDOT to use Congestion Mitigation and Air Quality (CMAQ) Improvement Program funds to offer rebates and vouchers as incentives to purchase 378 alternative-fueled and electric-powered vehicles. Under the terms of the proposed partial waiver, FHWA would only require that the vehicles purchased by CDOT be assembled in the U.S. While we agree with the agency that these vehicles must be subject to a final assembly requirement, we urge FHWA to apply a minimum domestic content standard to the vehicles as well.

We believe the addition of a domestic content standard is imperative to supporting those employed in the manufacturing of vehicle parts, components and subcomponents. Without applying this standard, federal tax dollars could be used to purchase vehicles with little or no domestically produced materials. We believe that allowing this to occur would actually encourage the offshoring of the production of vehicle parts rather than supporting domestic manufacturers, and doing so would run counter to the intent of the Buy America principles.

When a final assembly requirement is coupled with a reasonable domestic content standard, the agency supports not only the workers assembling vehicles at U.S. assembly plants, but also those who manufacture those auto parts. By encouraging the use of domestic products, FHWA helps expand our domestic supply chains for alternative fuel and low emission vehicles, which creates incentives for investing in our manufacturing sector while creating new middle-class jobs.

We understand that the agency has concerns about whether it is capable of determining where parts are manufactured. We note that for the passenger cars and trucks CDOT may likely purchase, resources are already available through the National Highway Traffic Safety Administration and other entities that provide such information to the public, including data identifying the country of origin of the vehicle and its parts, the country of final assembly and the percentage value of domestic content. Further, we believe FHWA can follow the practice of other DOT modal agencies, including the Federal Transit Administration and the Federal Railroad Administration, which currently apply comparable domestic sourcing standards for equally complex items, such as rolling stock and high speed rail cars.

As the agency stated in its July 2013 notice, state and local governments are increasingly using CMAQ funds to purchase low emission and fuel efficient vehicles. Given that the vehicle supply chain has lost an estimated 400,000 jobs since 2000, the time is now to support these workers by applying strong Buy America standards to CMAQ funds. To maximize the impact of federal tax dollars on local economies and support for domestic manufacturers, FHWA must require vehicles purchased with CMAQ funds be assembled in the U.S. and meet a reasonable minimum level of domestic content.

We appreciate the opportunity to comment on the partial waiver, and we urge the agency to reconsider its proposal.

Sincerely, Edward Wytkind President

http://www.nhtsa.gov/Laws+&+Regulations/Part+583+American+Automobile+Labeling+Act+(AALA)+Reports Buy America Policy, Notice and Request for Comments, 78 Fed. Reg. 41492-41496 (July 10, 2013), Page 41494. TTD submitted comments to this notice, urging FHWA to apply a final assembly requirement and a 60% domestic content standard, implemented over time, to vehicles purchased with CMAQ funds.

Contact

Edwin Okonkwo
Office of Program Administration
202-366-1558
E-mail Edwin

 
 
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Updated: 06/23/2014
 

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