2010-27279. Notice of a Project Waiver of Section 1605 (Buy American Requirement) of the American Recovery and Reinvestment Act of 2009 (ARRA) to the Newport Borough Water Authority, Pennsylvania

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

The Regional Administrator of EPA Region 3 is hereby granting a project waiver of the Buy American requirements of ARRA Section 1605 under the authority of Section 1605(b)(2) [manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality] to the Newport Borough Water Authority (NBWA) for the purchase of membrane filtration cassettes, supplied by GE Water & Process Technologies (GE), that contains a primary component not manufactured in America, at its new Water Treatment Plant (WTP). NBWA indicates that the membrane filtration cassettes at its new WTP are necessary to replace groundwater wells that cannot meet the system demands during drought conditions and provide for the removal of Cryptosporidium and Giardia. The membrane cassettes under consideration are manufactured by a company located in Hungary and no United States manufacturer produces an alternative that meets the NBWA's technical specifications. This is a project specific waiver and only applies to the use of the specified product for the ARRA funded project being proposed. Any other ARRA project that may wish to use the same product must apply for a separate waiver based on the specific project circumstances. The Regional Administrator is making this determination based on the review and recommendations of the EPA Region III, Water Protection Division, Office of Infrastructure and Assistance. The NBWA has provided sufficient documentation to support its request.

The Assistant Administrator of the EPA's Office of Administration and Resources Management has concurred on this decision to make an exception to Section 1605 of ARRA. This action permits the purchase of membrane filtration cassettes for the proposed project being implemented by the NBWA.

DATES:

Effective Date: October 7, 2010.

FOR FURTHER INFORMATION CONTACT:

Robert Chominski, Deputy Associate Director, [phone], or David McAdams, Environmental Engineer, [phone], Office of Infrastructure & Assistance (OIA), Water Protection Division, U.S. EPA Region III, 1650 Arch Street, Philadelphia, PA 19103-2029.

SUPPLEMENTARY INFORMATION:

In accordance with ARRA Sections 1605(c) and 1605(b)(2), EPA hereby provides notice that it is granting a project waiver of the requirements of Section 1605(a) of Public Law 111-5, Buy American requirements to the Newport Borough Water Authority (NBWA) for the acquisition of a “GE ZeeWeed® 500 D membrane cassettes.” NBWA has been unable to find membrane filtration equipment that contains American-made membrane cassettes to meet its specific water requirements.

Section 1605 of the ARRA requires that none of the appropriated funds may be used for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States unless a waiver is provided to the recipient by EPA. A waiver may be provided if EPA determines that (1) applying these requirements would be inconsistent with public interest; (2) iron, steel, and the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or (3) inclusion of iron, steel, and the relevant manufactured goods produced in the United States will increase the cost of the overall project by more than 25 percent.

EPA has determined that NBWA's waiver request may be treated as timely even though the request was made after the construction contract was signed. Consistent with the direction of the OMB Guidance at 2 CFR 176.120, EPA has evaluated the NBWA's request to determine if the request, though made after the contract date, can be treated as if it were timely made. EPA will generally regard waiver requests with respect to components that were specified in the bid solicitation or in a general/primary construction contract as “late” if submitted after the contract date. However, in this case EPA has determined that the NBWA's request may be treated as timely because the need for a waiver was not foreseeable at the time the contract was signed. The project was bid and the general contractor for the NBWA project submitted documentation that the equipment utilized in preparing their bid met the ARRA Buy American provisions. Contracts were awarded in December 2009. GE initially believed that its ZeeWeed® 500 D membrane cassettes, though manufactured outside of the United States, would fulfill the Buy American provisions through the Substantial Transformation test. In May 2010, GE sent a letter to the General Contractor stating that the membrane cassettes would not be substantially transformed in the United States. NBWA responded back to GE inquiring if the cassettes were the only piece of equipment in the ZeeWeed® 500 D ultra filtration membrane system that would require a Buy American waiver if the product was used. GE responded back on July 14, 2010 that only the cassettes required the Buy American waiver. The need for a waiver was not determined until after the contractor had completed their review of information provided by GE and had confirmed that there were no domestically made membrane cassettes available to meet project specifications. Accordingly, EPA will evaluate the request as a timely request.

NBWA's waiver request is to allow for the purchase of the GE ZeeWeed® 500 D ultra filtration membrane system with thirty-two membrane filtration cassettes, manufactured by GE Water & Process Technologies of Hungary, for use in a new WTP in Pennsylvania. The membrane filtration cassettes are an integral component of the ultra filtration membrane process because it achieves the 4 log removal of Cryptosporidium and Giardia from drinking water. After an engineering analysis of alternate treatment processes, the NBWA determined that the ultra filtration membrane system to be the most environmentally sound and cost effective solution. The ultra filtration membrane system is an advanced water treatment process which is designed to achieve 4 log removal of Cryptosporidium and Giardia. In addition, in anticipation of procuring the ultra filtration membrane system, the NBWA has already incorporated specific technical design requirements for installation of membrane filter cassettes with the ultra filtration membrane process at their WTP, including specific tankage footprint, geometry and configuration. To require NBWA to redesign its project would cause an unacceptable delay to the completion of the project.

The NBWA has provided information to the EPA demonstrating that there are no membrane filtration cassettes manufactured in the United States in sufficient and reasonable quantity and of a satisfactory quality to meet the required technical specification. Three companies were considered for the membrane filtration cassettes that either manufactured their membranes outside the United States or did not meet the specifications of the project. The NBWA has performed market research but was unsuccessful in its effort to locate any domestic manufacturers of membrane filtration cassettes for its WTP.

The April 28, 2009 EPA HQ Memorandum, Implementation of Buy American provisions of Public Law 111-5, the “American Recovery and Reinvestment Act of 2009,” defines reasonably available quantity as “the quantity of iron, steel, or relevant manufactured good that is available or will be available at the time needed and place needed, and in the proper form or specification as specified in the project plans and design.” The NBWA has incorporated specific technical design requirements for installation of membrane filtration cassettes at its WTP.

The purpose of the ARRA is to stimulate economic recovery in part by funding current infrastructure construction, not to delay projects that are “shovel ready” by requiring utilities, such as the NBWA, to revise their standards and specifications, institute a new bidding process, and potentially choose a more costly, less efficient project. The imposition of ARRA Buy American requirements on such projects otherwise eligible for State Revolving Fund assistance would result in unreasonable delay and thus displace the “shovel ready” status for this project. To further delay construction is in direct conflict with a fundamental economic purpose of the ARRA, which is to create or retain jobs.

Based on additional research conducted by EPA's Office of Infrastructure and Assistance (OIA) in Region 3, and to the best of the Region's knowledge at the time of review, there do not appear to be other membrane filtration cassettes manufactured domestically that would meet the NBWA's technical specification. EPA's national contractor prepared a technical assessment report dated August 18, 2010 based on the waiver request submitted. This report included a detailed review intended to enable EPA to determine if any company could be considered to substantially transform these cassettes in the United States. However, sufficient information was not available or made available to establish either performance characteristics for any potential alternative product, or the substantial transformation of any such product in the United States. Accordingly, the report determined that the waiver request submittal was complete, that adequate technical information was provided, and that there were no significant weaknesses in the justification provided. The report confirmed the waiver applicant's claim that there are no American-made membrane filtration cassettes available from a domestic manufacturer in the proper form or specification as specified in the project plans and design, and the quality specified in the project plans and designs.

The OIA has reviewed this waiver request and to the best of our knowledge at the time of review has determined that the supporting documentation provided by the NBWA is sufficient to meet the criteria listed under Section 1605(b) and in the April 28, 2009, “Implementation of Buy American provisions of Public Law 111-5, the `American Recovery and Reinvestment Act of 2009' Memorandum:” Iron, steel, and the manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality. The basis for this project waiver is the authorization provided in Section 1605(b)(2). Due to the lack of production of this product in the United States in sufficient and reasonably available quantities and of a satisfactory quality in order to meet the NBWA's technical specifications, a waiver from the Buy American requirement is justified.

The March 31, 2009 Delegation of Authority Memorandum provided Regional Administrators with the authority to issue exceptions to Section 1605 of ARRA within the geographic boundaries of their respective regions and with respect to requests by individual grant recipients. Having established both a proper basis to specify the particular good required for this project, and that this manufactured good was not available from a producer in the United States, the Newport Borough Water Authority is hereby granted a waiver from the Buy American requirements of Section 1605(a) of Public Law 111-5 for the purchase of thirty-two membrane filtration cassettes using ARRA funds as specified in the Newport Borough Water Authority's request of August 4, 2010. 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: October 7, 2010.

W.C. Early,

Acting Regional Administrator, U.S. Environmental Protection Agency, Region III.