[Federal Register Volume 81, Number 201 (Tuesday, October 18, 2016)]
[Notices]
[Pages 71784-71788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25116]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA-2016-0028]


Buy America Nationwide Waiver Notification for Commercially 
Available Off-the-Shelf (COTS) Products With Steel or Iron Components 
and for Steel Tie Wire Permanently Incorporated in Precast Concrete 
Products

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice.

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SUMMARY: The FHWA is proposing two nationwide waivers from the Buy 
America requirements for COTS products with steel or iron components 
and steel tie wire permanently incorporated into precast concrete 
products.
    Specialty steel or iron items, or any steel or iron item that is 
built to contract specification for a Federal-aid project, would remain 
subject to FHWA's Buy America requirements. The FHWA is requesting 
comments on these two proposed nationwide waivers, including the impact 
this proposal would have on State and local agencies administering 
Federal-aid projects; contractors; materials suppliers; railroads and 
utilities performing work related to a Federal-aid highway construction 
contract; and manufacturers.

DATES: Comments must be received on or before December 2, 2016.

ADDRESSES: Mail or hand deliver comments to Docket Management Facility: 
U.S. Department of Transportation, 1200 New Jersey Avenue SE., Room 
W12-140, Washington, DC 20590. You may also submit comments 
electronically at www.regulations.gov. All comments should include the 
docket number that appears in the heading of this document. All 
comments received will

[[Page 71785]]

be available for examination and copying at the above address from 9 
a.m. to 5 p.m., e.t., Monday through Friday, except Federal holidays. 
Those desiring notification of receipt of comments must include a self-
addressed, stamped postcard or you may print the acknowledgment page 
that appears after submitting comments electronically. Anyone is able 
to search the electronic form of all comments in any one of our dockets 
by the name of the individual submitting the comment (or signing the 
comment, if submitted on behalf of an association, business, or labor 
union). The DOT posts these comments, without edits, including any 
personal information the commenter provides, to www.regulations.gov, as 
described in the system of records notice (DOT/ALL-14 FDMS), which can 
be reviewed at www.dot.gov/privacy.

FOR FURTHER INFORMATION CONTACT: Mr. Gerald Yakowenko, FHWA Office of 
Program Administration, (202) 366-1562, [email protected], or 
Mr. William Winne, FHWA Office of the Chief Counsel, (202) 366-1397, 
[email protected], Federal Highway Administration, Department of 
Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590. 
Office hours 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 notice may be downloaded from the 
specific docket page at www.regulations.gov.

Background

    The FHWA's Buy America regulation at 23 CFR 635.410 requires a 
domestic manufacturing process for steel or iron materials that are 
permanently incorporated into a Federal-aid construction project. The 
FHWA interprets domestic manufacturing process to include steel 
manufacturing processes such as melting, rolling, cutting, welding, 
fabrication, and the process of applying a coating. The regulation is 
based on the statutory mandate in 23 U.S.C. 313(a).
    The statute requires the application of the FHWA Buy America 
requirements to any project receiving Federal assistance under Title 
23; however, the statute provides exceptions if the Secretary finds: 
(1) The application of the requirement would be inconsistent with the 
public interest; (2) where materials and products are not produced in 
the United States in sufficient and reasonably available quantities and 
of a satisfactory quality; or (3) the inclusion of domestic material 
will increase the cost of the overall project contract by more than 25 
percent. See 23 U.S.C. 313(b).
    A request for a waiver may be made for specific projects, for 
certain materials or products in specific geographic areas, or waivers 
regarding nationwide public interest or availability issues. See 23 
U.S.C. 313(c). Not less than 15 days before waiving any Buy America 
requirement for Federal-aid highways projects, FHWA is required to 
notify the public on its intent to issue such a waiver.\1\ The FHWA's 
implementing regulations also allow the Agency to publish its decisions 
on nationwide waivers in the Federal Register for public comment. 23 
CFR 635.410(c)(6). Based on the Secretary's authority to grant waivers 
from Buy America, FHWA has issued three nationwide waivers: for 
manufactured products other than steel and iron manufactured products 
(1983), for certain ferry boat equipment (1994), and for pig iron and 
processed, pelletized, and reduced iron ores (1995).
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    \1\ Section 122, Division L, of the Consolidated Appropriations 
Act of 2016 (Pub. L. 114-113) provides: ``Not less than 15 days 
prior to waiving, under his or her statutory authority, any Buy 
America requirement for Federal-aid highways projects, the Secretary 
of Transportation shall make an informal public notice and comment 
opportunity on the intent to issue such waiver and the reasons 
therefor.'' This provision has been included in each Appropriations 
Act since 2008. In addition, Section 117(a) of the SAFETEA-LU 
Technical Corrections Act of 2008 (Pub. L. 110-244) requires that
    (1) If the Secretary of Transportation makes a finding under 
section 313(b) of Title 23, United States Code, with respect to a 
project, the Secretary shall:
    (A) publish in the Federal Register, before the date on which 
such finding takes effect, a detailed written justification as to 
the reasons that such finding is needed; and
    (B) provide notice of such finding and an opportunity for public 
comment on such finding for a period of not to exceed 60 days.
    (2) Nothing in paragraph (1) shall be construed to require the 
effective date of a finding referred to a in paragraph (1) to be 
delayed until after the close of the public comment period referred 
to in paragraph (1)(B).
    The FHWA interprets both of these provisions to apply to 
project-specific waiver requests, not to nationwide waivers, but the 
Agency is choosing to follow a similar process for nationwide 
waivers. For nationwide waivers, the Agency will publish a Federal 
Register Notice on the intent to issue the waiver with an 
opportunity for public review and comment, followed by a Federal 
Register Notice on the final decision of the waiver after 
consideration of comments. The Agency believes that the waiver 
should not take effect before this process is complete. This process 
is consistent with 23 CFR 635.410(c)(6) and the nationwide waivers 
issued in the past.
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    The FHWA Buy America regulations also contain a regulatory 
exception for minimal use of foreign iron and steel. See 23 CFR 
635.410(b)(4). This exception allows for a small use of foreign iron 
and steel materials if ``the cost of such materials used does not 
exceed one-tenth of one percent (0.1 percent) of the total contract 
cost or $2,500, whichever is greater.'' The FHWA expects that the 
contracting agency will maintain a running list of foreign steel or 
iron material as a project proceeds to be able to confirm compliance 
with this provision. The intent of this provision was to ``eliminate an 
administrative burden placed on the States for truly minor items.'' 48 
FR 1946, 1947 (Jan. 17, 1983); 48 FR 53099, 53103 (Nov. 25, 1983).

Manufactured Products Waiver of 1983

    In its final rule issued on November 25, 1983, FHWA also discussed 
a nationwide waiver for manufactured products other than steel and 
cement manufactured products. 48 FR 53099, 53102 (Nov. 25, 1983). In 
the final rule, FHWA stated that materials and products other than 
steel, cement, asphalt, and natural materials comprised a small percent 
of the highway construction program, and it was very difficult to 
identify the various materials and trace their origin. Id. The FHWA 
found that it was ``in the public interest to waive the application of 
Buy America to manufactured products other than steel and cement \2\ 
manufactured products.''
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    \2\ Congress modified the 1983 Buy America statute to repeal the 
statute's coverage of cement (Pub. L. 98-229, Section 10 (1984) and 
to add coverage for iron (Intermodal Surface Transportation 
Efficiency Act (ISTEA), Pub. L. 102-240, Section 1048(a) (1991)).
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    As a result of the heightened awareness on projects funded under 
the American Recovery and Reinvestment Act of 2009 (Recovery Act) (Pub. 
L. 111-5), project inspectors and auditors spent significant resources 
examining compliance with FHWA's Buy America requirements for all steel 
or iron products in highway projects and noted compliance issues with 
Buy America certifications. In working to address these findings, FHWA 
realized that there was confusion regarding the application of Buy 
America requirements to COTS products with steel or iron components, 
such as sinks, toilets, faucets, traffic controller cabinets, and 
circuit breaker panels. Some FHWA Divisions were requiring Buy America 
compliance for steel and iron components and subcomponents of 
manufactured products. Other Divisions were treating these steel or 
iron components of manufactured products as excluded from Buy America 
requirements through the manufactured products waiver. On December 21, 
2012, FHWA issued a memorandum intended

[[Page 71786]]

to clarify the scope and meaning of the manufactured products waiver 
and indicated that the waiver was intended to encompass miscellaneous 
steel or iron components and subcomponents that are commonly available 
as off-the-shelf products.\3\
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    \3\ Memorandum from John Baxter to the Divisions--Clarification 
of Manufactured Products under Buy America (Dec. 21, 2012), http://www.fhwa.dot.gov/construction/contracts/121221.cfm.
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December 2015 District Court Decision

    On October 12, 2014, the United Steelworkers Union and a group of 
eight manufacturing corporations filed a lawsuit challenging FHWA's 
December 21, 2012, Buy America memorandum, claiming that it was a 
substantive rule that required notice and comment pursuant to the 
Administrative Procedure Act, 5 U.S.C. 553.\4\
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    \4\ United Steelworkers Union, et al. v. FHWA, No. 13-1301 
(D.D.C. Dec. 22, 2015).
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    On December 22, 2015, the U.S. District Court for the District of 
Columbia rendered its decision in the United Steelworkers Union case. 
The Court found against FHWA and vacated the December 21, 2012, 
memorandum. The Court also found that the COTS exception was a separate 
waiver from the manufactured products waiver in the November 25, 1983, 
rule. Id. at 26. The court concluded, as a result, that FHWA had to 
provide notice and an opportunity for comment in accordance with 
SAFETEA-LU Technical Correction Act of 2008 and the Consolidated and 
Further Continuing Appropriations Act, 2012 before the Agency could 
implement that exception.\5\
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    \5\ See footnote 1.
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    The decision returned matters to pre-2012 memorandum conditions, 
when there was ambiguity and uncertainty on whether the FHWA Buy 
America requirements applied to COTS products with steel or iron 
components. As before December 21, 2012, FHWA Divisions and State DOTs 
are currently left to interpret the applicability of Buy America in 
this gray area, creating potential inconsistency in the application of 
Buy America. In response, FHWA evaluated options to achieve greater 
nationwide uniformity in the application of its Buy America 
requirements in a manner consistent with the Court's ruling. The FHWA 
has also received a number of requests to take action in this 
regard.\6\
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    \6\ These requests have been placed in the docket for this 
notice at www.regulations.gov using the docket number identified in 
the heading of this notice.
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Covered Materials

    In keeping with the statutory text and the purpose of the Buy 
America requirements, the following covered materials, among others, 
have been and continue to be subject to Buy America requirements:
    (1) Structural steel (any structural steel shapes used as load-
bearing members);
    (2) reinforcing steel used in cast-in-place, precast, pre-stressed 
or post-tensioned concrete products (including reinforcing steel 
couplers, connectors, wire mesh, steel fibers, pre-stressing or post-
tensioning strand, wire rope or cable);
    (3) steel or iron materials used in pavements, bridges, tunnels, or 
other structures: High strength bolts/nuts (any threaded fastening 
element with a nominal diameter greater than \3/4\ inch inclusive and 
any matching components to it such as nuts and washers), anchor bolts, 
anchor rods, dowel bars, bridge bearings, and cable wire/strand;
    (4) motor/machinery brakes and other equipment for moveable 
structures;
    (5) guardrail, guardrail posts, offset blocks, guardrail related 
hardware, transitions, end sections, end treatments, terminals, cable 
barriers;
    (6) steel fencing or steel fabric material, fence posts, fence 
rails;
    (7) steel or iron pipe, casing, conduit, ducting, fire hydrants, 
manhole covers, rims, risers, drop inlet grates;
    (8) mast arms, poles, cross arms, standards, trusses, or supporting 
structural members for signs, luminaires, or traffic control systems;
    (9) incidental steel or iron items that are not explicitly defined 
in the contract documents but are permanently incorporated. This 
includes items that are impractical to remove due to design, 
construction, staging, or other functional requirements. If a steel or 
iron item is necessary for construction and it is impossible or 
impractical to remove, then Buy America requirements apply. This 
category includes, but is not limited to: Corrugated steel stay-in-
place forms, sheet piling, steel casing for micropile construction, tie 
wire, filler metal/green rod for welding operations, etc.; \7\
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    \7\ An interpretation of the applicability of Buy America 
requirements to items that are used or permanently incorporated is 
addressed in an agency policy memo dated June 13, 2011 (see: http://www.fhwa.dot.gov/construction/contracts/110613.cfm).
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    (10) steel or iron materials that are specified and manufactured 
for a specific Federal-aid project (for example, a lifting cable that 
is designed and manufactured for a specific project, or ductile iron 
pipe fittings built to contractor specifications); and
    (11) rails for railroad or transit infrastructure funded under 
Title 23.
    Pursuant to 23 U.S.C. 313(b), however, FHWA finds that the 
application of the Buy America requirements in certain limited 
circumstances is inconsistent with the public interest. Accordingly, 
FHWA is proposing two new nationwide waivers.

Proposed Nationwide Waivers

    The FHWA continues to carry out and require compliance with the Buy 
America requirements, but it is also cognizant of the practical and 
administrative issues associated with its implementation. Contracting 
agencies must document and trace the origin of all steel components for 
products not waived under the 1983 regulations that are permanently 
incorporated in a Federal-aid project. If they are not able to document 
the domestic manufacturing processes for steel components (melted and 
manufactured in the United States), they must assume the steel is non-
domestic and track each component to ensure compliance with the minimal 
use provisions of 23 CFR 635.410(b)(4) or request a waiver for each 
product under 23 CFR 635.410(c)(1).
    From a practical viewpoint, manufacturers of electrical and 
mechanical products rely on multiple suppliers, both domestic and 
foreign, to source steel components for their products. Some steel 
components may be comprised of subcomponents that originate from 
different global suppliers with separate manufacturing processes. For 
many electrical and mechanical products, the Federal-aid highway 
program represents only a small fraction of the market for that 
product. For a contracting agency to comply with the Buy America 
requirements, it would need manufacturers to source and track 
components separately from its suppliers and provide certifications for 
all steel components. Only upon issuance of such certifications by 
manufacturers would contracting agencies be able to properly certify 
compliance with Buy America requirements. Thus, manufacturers would 
need to implement new sourcing, inventory, and tracking processes for 
contracting agencies to fully comply with the Buy America requirements.
    Several State DOTs recently informed FHWA that manufacturer's 
certifications documenting compliance with the Buy America requirements 
are not available, and as a result, the State DOT must assume that all 
of the steel components are non-domestic and request a waiver.

[[Page 71787]]

Oregon DOT's January 15, 2016, waiver request for the steel components 
of more than 50 manufactured products illustrates the challenges and 
administrative burdens faced by contracting agencies.
    The FHWA recognizes that verifying compliance with the Buy America 
requirements may be burdensome for some materials. For others, it is 
virtually impossible to trace the processes from the melting of the 
steel through the manufacturing and coating of the steel or iron 
materials. The FHWA believes that requiring contracting agencies to 
document the origin of every amount of steel or iron subcomponent of 
commercially available off-the-shelf products places an unreasonable 
burden on recipients and increases their administrative costs without 
significantly furthering the objectives and policies of Buy America. 
Therefore, FHWA seeks comments about the administrative costs of 
documenting the origin of steel or iron used in subcomponents of COTS 
products.

Proposed Nationwide Waiver for Commercially Available Off-the-Shelf 
Products With Steel or Iron Components

    The first proposed nationwide waiver is for COTS incorporating 
steel or iron components. The term COTS means any manufactured product 
incorporating steel or iron components (excluding the covered materials 
discussed above, vehicles, or tie wire permanently incorporated in 
precast concrete) that:
    (1) Is available and sold to the public in the retail and wholesale 
market;
    (2) is offered to a contracting agency, under a contract or 
subcontract at any tier, without modification, and in the same form in 
which it is sold in the retail or wholesale market; and
    (3) is broadly used in the construction industry.
    The COTS products are limited to manufactured products with steel 
or iron components, such as sinks, faucets, toilets, door hinges, 
electrical products, and ITS hardware that are not made specifically 
for highway projects but are incidental to such projects. By contrast, 
products produced of steel or iron that are permanent features of a 
highway project that are specifically manufactured or modified for 
construction of such projects are excluded from COTS items and must 
comply with FHWA's Buy America requirements.
    The FHWA believes that tracking the country of origin of steel or 
iron components of COTS places an unreasonable administrative burden on 
Federal-aid recipients, distributors, and contractors, including small 
businesses. These entities would likely have to establish costly 
material inventory tracking systems to ensure that all steel or iron 
components meet the Buy America requirements. The FHWA believes that 
manufacturers, distributors, contractors, and Federal-aid recipients 
would incur significant and unreasonable costs to document and track 
information regarding manufacturing operations. The FHWA also believes 
that steel or iron components of COTS constitute a relatively small 
percentage of the overall steel and iron materials used on Federal-aid 
projects, and the administrative costs associated with ensuring 
compliance would be disproportional to the value of the material. The 
FHWA believes that it may be in the public's interest that related 
administrative costs are better allocated to other oversight actions 
that reduce costs or accelerate project delivery. Accordingly, and 
pursuant to the exception provided under 23 U.S.C. 313(b) when 
application of the Buy America requirements is inconsistent with the 
public interest, FHWA proposes to issue this nationwide waiver for COTS 
with steel or iron components.

Proposed Temporary Nationwide Waiver for Steel Tie Wire Permanently 
Incorporated in Precast Concrete Products

    The second proposed nationwide waiver is for steel tie wire that is 
permanently incorporated into precast concrete products. Steel tie wire 
may be shown or referenced in standard plans, specifications, special 
provisions, or are standard industry practice. Even when tie wire is 
permanently incorporated in a precast concrete product, it is 
considered incidental to the design and construction of the product. 
Steel tie wire facilitates or allows the final product to be 
constructed but does not provide a structural function in the final 
product.
    Manufacturers in the precast concrete industry rely extensively on 
rebar tying guns to tie reinforcing steel. The benefits of using rebar 
tying guns include the reduction of repetitive stress workplace 
injuries, such as carpal tunnel syndrome, and an increase in 
production. These rebar tying guns use tie wire supplied on spools. 
Although tie wire is domestically produced, patent requirements for the 
tying guns that are widely used by the precast concrete industry limit 
the use of tie wire to non-domestic sources. The patented design of 
these guns requires the use of specific tie wire spools, which are not 
compatible with the tie wire that is currently produced in the United 
States. Although there may be companies interested and able to supply 
Buy America-compliant tie wire, the supply of this product may be 
limited to specific applications due to its lack of compatibility with 
the rebar tying guns. The FHWA does not want to discourage innovation 
or create artificial barriers to continued process improvements in the 
construction industry. However, the Agency recognizes that more time 
may be needed to accommodate the demand for Buy America-compliant tie 
wire (supplied on spools for the proprietary tie wire guns commonly 
used in the industry) because it may not be domestically produced in 
sufficient and reasonably available quantities at this time.
    The FHWA recognizes the impacts to the precast concrete industry 
related to the Court's decision to vacate FHWA's December 21, 2012, 
memorandum, and believes that it is appropriate to issue a 1-year 
temporary waiver of the Buy America requirements to allow suppliers in 
the precast industry to provide Buy America compliant tie wire. 
Accordingly, and pursuant to the exception provided under 23 U.S.C. 
313(b) when materials and products are not produced in the United 
States in sufficient and reasonably available quantities, FHWA proposes 
to temporarily waive Buy America requirements for tie wire permanently 
incorporated into precast concrete products for a 1-year period from 
the date of issuance of the waiver. At the end of the 1-year period, 
FHWA will assess whether to continue the waiver or apply Buy America 
requirements to tie wire permanently incorporated into precast concrete 
products. The FHWA also seeks comments about the domestic availability 
of tie wire and lifting devices.

Other Steel and Iron Products Permanently Incorporated in Precast 
Concrete Products

    The FHWA is considering whether to issue a nationwide waiver for 
specialized lifting devices incorporated in precast concrete products. 
Over the years, suppliers in the precast industry have developed many 
types of specialized steel lifting devices that are designed and used 
to lift and move different precast concrete products used in highway 
and infrastructure projects. Many in the precast concrete industry may 
have come to rely on non-domestic lifting devices. The Court's decision 
to vacate FHWA's December 21, 2012, memorandum may result in an 
increase in demand for Buy America compliant

[[Page 71788]]

lifting devices. It is uncertain whether the current supply of Buy 
America compliant lifting devices would be sufficient to meet such an 
increase in demand. The Agency recognizes that more time may be needed 
to accommodate an increase in demand for Buy America compliant lifting 
devices. The FHWA seeks comments and additional information about the 
supply and availability of Buy America compliant lifting devices that 
are permanently incorporated into precast concrete products.

Invitation for Public Comment

    The FHWA requests public comment and input on this proposal for two 
nationwide waivers for manufactured items. Specifically, FHWA invites 
public comment on the following issues:

Proposed Nationwide Waiver for Commercially Available Off-the-Shelf 
Products With Steel or Iron Components

    1. Does the COTS definition provide a reasonable description of 
commercially available off-the-shelf steel or iron items?
    2. Are there COTS products that should be on the covered steel or 
iron materials list? If so, why?
    3. Should there be a per-item cost cap for COTS items? If so, what 
should the cap be?
    4. What is the burden, time, and cost associated with enforcing or 
complying with Buy America requirements for COTS items?
    5. Are certifications and/or other documents available to allow 
owner agencies to trace and verify domestic melting and manufacturing 
processes for steel or iron products?
    6. Does your agency or company track costs associated with the 
administrative or compliance efforts associated with the Buy America 
requirements?

Proposed Temporary Nationwide Waiver for Steel Tie Wire Permanently 
Incorporated in Precast Concrete Products

    7. Is the temporary waiver for tie wire permanently incorporated 
into precast concrete necessary and appropriate, and if yes, is 1 year 
the appropriate length?

Additional Question Regarding Other Steel and Iron Products Permanently 
Incorporated in Precast Concrete Products

    8. Is domestically produced supply sufficient to meet demand for 
Buy America compliant lifting devices permanently incorporated into 
precast concrete?
    9. Does your agency or company have concerns regarding the 
administrative burden, time, and cost associated with enforcing or 
complying with Buy America requirements on steel or iron products 
permanently incorporated into precast concrete products?
    10. Does your agency or company have concerns regarding the 
availability of materials and products that comply with Buy America 
requirements on steel or iron products permanently incorporated into 
precast concrete products?
    11. Does your State DOT have data that document the relative use of 
steel or iron products incorporated into precast products in comparison 
with all steel/iron materials used in your highway program?

(Authority: 23 U.S.C. 313; 23 CFR 635.410)

    Dated: October 11, 2016.
Gregory G. Nadeau,
Administrator, Federal Highway Administration.
[FR Doc. 2016-25116 Filed 10-17-16; 8:45 am]
 BILLING CODE 4910-22-P