ALSTOM Transportation, Inc. - March 27, 2013
March 27, 2013
Mr. Joe Quigley
ALSTOM Transportation Inc.
1001 Frontenac Road
Naperville, Illinois 60563
Dear Mr. Quigley:
I write in response to the October 30, 2012 letter in which you asked the Federal Transit Administration (FTA) to waive its Buy America rules for the Insulated Gate Bipolar Transistor (IGBT) based inverter/converter system used in the propulsion system of a light rail vehicle (LRV) manufactured by Alstom Transportation, Inc. (Alstom). For the reasons stated below, I deny your request for a waiver of the IGBT.
On May 4, 2009, FTA granted a non-availability waiver for the IGBT.1 This waiver was effective for two years or until such time as a domestic supplier becomes available, whichever occurred first. The waiver expired on May 3, 20 II, two years after it was issued.
Subsequently, on October 30, 2012, you requested a non-availability waiver under 49 C.F.R. § 661.7(f), which allows, among other things, for FTA to grant waivers under 49 U.S.C. § 661.7(c) (non-availability waivers) for rolling stock. According to your letter, Alstom is competing for a contract with the Maryland Transit Administration (MTA) for the overhaul of its t1eet of 53 LRVs. The scope of the overhaul includes the upgrade ofthe existing propulsion and auxiliary inverter/converter systems with an IGBT. You assert that the IGBT is still unavailable from a U.S. manufacturer.2
II. Legal Framework
Under 49 U.S.C. § 5323(j)(1), FTA may not obligate funds for a project unless the steel, iron, and manufactured goods used in a project are produced in the United States. For rolling stock procurements, this requirement does not apply if 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.3 A component is considered of domestic origin if more than 60 percent of the subcomponents of that component, by cost. are of domestic origin and the component is manufactured in the United States.4 A subcomponent is considered of domestic origin if it is manufactured in the United States.5 Please note that while FTA is currently permitting its grantees to apply the rolling stock waiver to overhaul projects, this interpretation was the subject of a recent Federal Register notice and remains under review.6
FTA may waive its Buy America requirements ifthe materials for which a waiver is requested are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.7
While FTA has previously issued a non-availability waiver for the IGBT to be used in an LRV propulsion system, FT A has been revisiting and heavily scrutinizing waivers and waiver requests under Buy America and has emphasized on numerous occasions the importance it places on its duty to protect and promote U.S. manufacturing through strict interpretation and enforcement of its Buy America rules.8 Only if a waiver is absolutely necessary, FTA will grant such a request. Here, as the rolling stock requirements under 49 C.F.R. § 661.11 pem1it up to 40 percent foreign content, FTA finds that a non-availability waiver is unnecessary.9
Inasmuch as FT A grantees may currently apply the statutory rolling stock waiver to overhauls and rebuilds, and thus allow up to 40 percent foreign components, FT A finds that Alstom has not shown how it cannot respond to open procurements, Alstom may include the foreign-made IGBT as part of the 40 percent foreign content that 49 U.S.C. § 5323(j)(2)(C) and 49 C.F.R. § 661.11 permit. Therefore, I deny the waiver.
Based upon the foregoing reasons, I deny the request for a waiver of the IGBT. Accordingly, a notice in the Federal Register allowing for public comment on this decision pursuant to 49 U.S.C. § 5323(j)(3)(A) is not necessary.
Please contact Mary J. Lee at (202) 366-0985 or firstname.lastname@example.org with any questions.
Dorval R. Carter. Jr.
1 Letter from Scott A. Biehl, Acting Chief Counsel, FTA, to Joe Quigley. Customer Director, Alstom (May 4, 2009).
2 FTA granted a non-availability waiver for the IGBT on two previous occasions. Letter from Severn E.S. Miller, Chief Counsel. Federal Transit Administration (FTA). to Keith Stentiford, Customer Director, ALSTOM Transportation Inc. (Alstom) (June I 8. 2008) (for a Metropolitan Transit Authority of Harris County, Texas, procurement of light rail vehicles); Letter from Scott A. Biehl. Acting Chief Counsel. FTA, to Joe Quigley, Customer Director, Alstom (May 4, 2009).
3 49 U.S.C. § 5323(j)(2)(C); 49 C.F.R. § 661.11 (a).
4 49 C.F.R. § 66 1.11(g).
5 49 C.F.R. § 66 l .11(h).
6See 77 FED. REG. 29953 (May 2 1, 2012) (proposed FT A policy change on treatment of rolling stock overhauls and rebuilds for purposes of Buy America waivers).
7 49 U.S.C. § 5323(j)(2)(8); 49 C.F.R. § 661.7(c).
8See FTA Dear Colleague Letter (Feb. 16, 2011).
9 Note that although FTA denies the request for a waiver on the grounds that rolling stock purchased with FTA funds are permitted to have up to 40 percent foreign content, FTA engineers have indicated that U.S. manufacturers of the IGBT now exist.