[Federal Register Volume 74, Number 104 (Tuesday, June 2, 2009)]
[Notices]
[Pages 26398-26399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12792]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-8911-8]


Notice of Nationwide Waiver of Section 1605 (Buy American 
Requirement) of American Recovery and Reinvestment Act of 2009 (ARRA) 
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 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: May 22, 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, allowing 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 comprise no more than 
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)(1)).

[[Page 26399]]

    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 and Drinking Water State Revolving Funds (SRF), 
particularly considering the SRFs' 12 month ``contract or 
construction'' requirement.
    Further, also 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 clearly described via project specific technical 
specifications. For these major components, utility owners and their 
contractors are generally familiar with the conditions of availability, 
the approximate cost, and the country of manufacture of 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. These incidental 
components are subject to the Buy American requirement of ARRA Section 
1605(a), as stated above.
    In contrast with the situation applicable to major components with 
regard to country of manufacture, availability, and procurement 
process, the situation applicable to these incidental components is one 
where the country of manufacture and the availability of alternatives 
are not readily or reasonably identifiable prior to procurement in the 
normal course of business. Particular under the time constraints 
outlined above, it would be laborious, likely unproductive as to 
feasible alternatives, and disproportionate to the costs and time 
involved for an owner or their contractor to pursue such inquiries.
    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 total costs for 
drinking water or wastewater infrastructure projects comprised 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.
    Under such specific circumstances associated with these particular 
types of incidental components, 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 require that the national 
origins of these components be identified in compliance with Section 
1605(a). Accordingly, EPA is hereby issuing a national waiver from the 
requirements of ARRA Section 1605(a) for the incidental components 
described above as a de minimis factor in the project, where such 
components comprise 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.
    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: Pub. L. 111-5, section 1605.

    Dated: May 22, 2009.
Michael H. Shapiro,
Acting Assistant Administrator for Water.
[FR Doc. E9-12792 Filed 6-1-09; 8:45 am]
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