[Federal Register Volume 64, Number 195 (Friday, October 8, 1999)]
[Proposed Rules]
[Pages 54855-54857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26285]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
49 CFR Part 661
[Docket No. FTA-99-5709]
RIN 2132-AA68
Buy America Requirements; Permanent Waiver for Microcomputers
AGENCY: Federal Transit Administration, DOT.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: In 1986, the Federal Transit Administration (FTA) adopted a
waiver of its Buy America requirements for the purchase of
microcomputers. FTA has been asked to review whether this waiver should
be retained, revoked, or modified in light of changes in the computer
industry since then. This Advance Notice of Proposed Rulemaking (ANPRM)
solicits public comment on this question.
DATES: Comments on this ANPRM must be submitted by December 7, 1999.
ADDRESSES: Written comments must refer to the docket number appearing
above and must be submitted to the Docket Clerk, United States
Department of Transportation, Central Dockets Office, PL-401, Nassif
Building, 400 Seventh Street SW, Washington, DC 20590. All comments
received will be available for examination at the above address. Docket
hours at the Nassif Building are from 10:00 a.m. to 5:00 p.m., Monday
through Friday, except Federal holidays. Those desiring agency
notification of receipt of their comments should include a self-
addressed stamped envelope or postcard with their comments.
FOR FURTHER INFORMATION CONTACT: For legal issues: Meghan G. Ludtke,
Office of Chief Counsel, Federal Transit Administration, Room 9316,
(202) 366-4011 (telephone) or (202) 366-3809 (fax) program/technical
issues: Spiro M. Colivas, Office of Program Management, Acting
Director, Office of Engineering, Federal Transit Administration, same
address, Room 9311, (202) 493-0107 (telephone) or (202) 366-7951 (fax).
Electronic access to this and other rules may be obtained through the
FTA World Wide Web home page at http://www.fta.dot.gov, or by using the
Universal Resources Locator (URL); both services are available seven
days a week.
SUPPLEMENTARY INFORMATION:
I. Background
In section 401 of the Surface Transportation Assistance Act of 1978
(Pub. L. 95-594, 92 Stat. 2689), Congress first enacted the Buy America
legislation applicable to the expenditure of Federal funds by
recipients under FTA grant programs. FTA's implementing regulation was
issued at 49 Part CFR 661. In January 1983, Congress repealed section
401 and substituted section 165 of the Surface Transportation
Assistance Act of 1982 (Pub. L. 97-424, 96 Stat. 2097). On July 5,
1994, section 165 was codified at 49 U.S.C. 5323(j).
The FTA Buy America Regulations, 49 CFR Part 661, apply to all
federally assisted procurements using funds authorized by the Federal
transit laws, 49 U.S.C. Chapter 53. The general Buy America requirement
is that all manufactured products procured in projects funded under the
Federal transit laws be produced in the United States. In 1986 under 49
U.S.C. 5323(j)(2)(A) and (B) and the implementing regulations at 49 CFR
661.7(b) and (c). FTA granted a general waiver of the Buy America
requirements for microcomputer equipment and software of foreign
origin. 49 CFR 661.7, Appendix A(d).
On February 26, 1999, FTA received a request from Prima Facie, Inc.
(petitioner) to re-examine the permanent waiver for microcomputers to
determine if the basis for the subject waiver still exists, and, if
not, whether it is appropriate for FTA to revoke the general waiver.
Additionally, petitioner requests that FTA seek comments on whether
modification of the waiver to include only selected types of
microcomputer equipment is necessary and whether the inclusion of a
microcomputer (chip) in a manufactured product should result in the
entire product's being considered a microcomputer.
[[Page 54856]]
II. Petition for Removal or Modification of Permanent Waiver for
Microcomputers
A. History of the Permanent Waiver
Under 49 U.S.C. 5323(j), FTA may not obligate Federal funds for
mass transportation projects unless all iron, steel, and manufactured
products used in the project are produced in the United States. This
requirement can be waived if, inter alia, its application would be
inconsistent with the public interest (section 5323(j)(2)(A)) or if the
goods are not reasonably available from domestic sources (section
5323(j)(2)(3)).
On January 5, 1985, in response to a request from the American
Association of State Highway and Transportation Officials (AASHTO), FTA
solicited comments from interested parties regarding the question of
whether its grantees were experiencing difficulty in purchasing
domestically produced microcomputer equipment appropriate to their
needs (50 FR 1156). AASHTO requested that FTA amend its Buy America
rule, arguing that small transit systems were unable to procure
domestically produced equipment because chips and some other major
components were not made in the United States. Because the rule
required transit systems to obtain individual non-availability waivers,
which was burdensome, AASHTO requested a general waiver. After
reviewing the comments received, FTA provided a one-year waiver from
the Buy America requirement for microcomputers because of the rapid
technological changes in an expanding market for domestically produced
computers (50 FR 18760). That waiver was extended for a second comment
period a year later and subsequently made permanent (51 FR 19653, 51 FR
36126). FTA noted that while new technology had increased the
availability of hardware and software components, many product
components were still made and assembled abroad, and it would be
difficult to determine when, if ever, microcomputer component
manufacturing would be relocated to the United States.
B. The Petition
The petition from Prima Facie, Inc. is as follows:
ECKERT SEAMANS CHERIN & MELLOT, LLC
February 26, 1999
Patrick Reilly,
Chief Counsel, Federal Transit Administration, 400 7th Street,
SW, Washington, DC 20590.
Dear Mr. Reilly: Under the provisions of 49 U.S.C.
5323(j)(3)(2)(A) and (B) and implementing regulations set forth at
49 CFR 661.7(b) and (c), the Federal Transit Administration (FTA)
has granted a general waiver of the Buy America requirements for
microcomputer equipment of foreign origin. This waiver is set forth
in Appendix A of 49 CFR 661.7.
It is clear that, without the waiver, microcomputer equipment
would have to meet the requirements of 49 U.S.C. 5323(j)(1) and the
implementing regulations at 49 CFR 661.5 which require that no FTA
funds may be obligated for the procurement of manufactured products
unless such manufactured products are produced in the United States.
On behalf of Prima Facie, Inc., this letter will serve as a
petition to the FTA to re-examine the subject waiver to determine if
the basis for the waiver that existed at the time it was originally
granted still exists; and, if not, whether it is appropriate for the
FTA to revoke the general waiver.
The original petition for the general waiver was made by the
American Association of State Highway and Transportation Officials
(AASHTO) to FTA's predecessor agency (the Urban Mass Transportation
Administration [UMTA]) in 1985. The petition was based on the fact
that many smaller transit systems were using microcomputers for
their daily transit planning and daily programming needs and were
unable to procure domestically produced equipment since chips and
some major components were not made in the United States. AASHTO
indicated that the public interest would be best served by the
granting of a general public interest waiver. AASHTO stated that
since transit systems were required to seek individual ``non-
availability'' waivers, the purchasing process for transit systems
who would need or expect to need microcomputer equipment would be
streamlined by the granting of the general waiver.
It should be noted that UMTA originally granted the public
interest waiver for a one-year period because of the ``rapid
technological changes in an expanding market for domestically
produced computers.''
The waiver was made permanent in 1986, and has not been re-
examined since that time. At the time that the permanent waiver was
granted, UMTA stated that the waiver was being made permanent
because ``although new technology had increased the availability of
hardware and software components, many product component(s)
(microchips) are still made and assembled abroad.'' UMTA further
stated that it would be difficult to estimate when, if ever,
microcomputer component manufacturing would be relocated to the
United States.
``Microcomputer'' was defined in the original waiver as ``[a]
computer system whose processing unit is a microprocessor. A basic
microcomputer includes a microprocessor, storage, and input/output
facility, which may or may not be on one chip.'' In addition,
``computer system'' was defined as
``[a] functional unit consisting of one or more computers and
associated software that uses common storage for all or part of a
program and also for all or part of the data necessary for the
execution of the program; executes user-written or user-designated
programs; performs user-designated data manipulation, including
arithmetic operations and logic operations; and that can execute
programs that modify themselves during their executions. A computer
system may be a stand-alone unit or may consist of several
interconnected units. Synonymous with ADP system, computing
system.''
Prima Facie believes that it is appropriate to re-examine the
permanent waiver at this time for several reasons. First, the state
of the microcomputer and microprocessor industry in the United
States today is significantly different than when the waiver was
originally issued in 1985/86. Second, the original intent of the
waiver was to address the procurement of a significantly different
type of equipment (the traditional ``desk-top'' computer) than
recent application of the waiver by FTA (i.e., digital recording
equipment). Third, the definition cited above may not be appropriate
for the myriad of products to which the general waiver now applies
under FTA's current application.
A logical extension of FTA's current application of the waiver
would be that any manufactured product that contains a data storage
or processing unit should be granted a waiver from the Buy America
requirements. This, in effect, would mean the almost total waiving
of the Buy America requirements since the vast majority of products
used today by transit systems contain some type of microprocessor
which is significantly different than the microcomputer that was
granted a waiver in 1985 (e.g., the following types of equipment all
contain microprocessors--fare collection equipment; bus destination
signs; rail car train control systems; radios; and bus diesel
engines). As indicated above, in granting the original waiver, UMTA
was examining the traditional ``desk-top'' computer--it was not
examining the types of equipment cited in the previous sentence
because the usage of microprocessors in that equipment just simply
did not exist in general, broad application in 1985.
In petitioning for the re-examination of the general waiver,
Prima Facie specifically requests that FTA seek public comment on
the following issues:
Is the waiver out of date?
Should the waiver, apply, if at all, only to selected
types of microcomputer equipment?
Is there any necessity for a waiver since the domestic
market has changed so dramatically since 1985?
Should the inclusion of a microcomputer (chip) in a
manufactured product result in the entire product being considered
as a microcomputer?
Prima Facie certainly appreciates your immediate attention to
this request. If I can provide any more information at this time,
please do not hesitate to contact me.
Sincerely,
Edward J. Gill, Jr.
On Behalf of Prima Facie, Inc.
cc: Shawn Marcell
[[Page 54857]]
III. Issues for Comment
FTA invites public comment on the following issues:
A. Is the microcomputer waiver out of date? The Petitioner believes
that the state of the microcomputer as well as the microcomputer
industry in the United States is significantly different today that
when the waiver was issued in 1986.
B. What are these differences, and are they relevant to the
existing waiver?
C. Should the permanent microcomputer waiver apply only to selected
types of microcomputer equipment? The Petitioner asserts that the
original intent of the waiver was to address the procurement of a
significantly different type of equipment, specifically, the ``desk-
top'' computer. The recent application of the microcomputer waiver has
been extended to such items as digital recording equipment.
D. How is the use to which a microcomputer is put relevant to FTA's
Buy America requirements?
E. Petitioner asserts that the logical extension of FTA's current
application of the permanent microcomputer waiver would be that any
manufactured product that contains a data storage or processing unit
qualifies for the permanent microcomputer waiver from the Buy America
requirements. Further, petitioner asserts that such an application by
FTA is essentially a total waiving of Buy America requirements, since
the vast majority of manufactured products used by transit systems
contain some type or form of microprocessor, and that is radically
different than the microcomputer waiver that was granted by FTA in
1985.
IV. Regulatory Analyses and Notices
It does not appear, at this point, that any regulatory action with
respect to the existing microcomputer waiver would be significant under
Executive order 12866 or under the Department's Regulatory Policies and
Procedures. We further believe that such action would require the
preparation of a Federalism Assessment. We also do not believe that it
would have a significant economic impact on a substantial number of
transit systems because of the changes in the computer industry. This
notice does not propose or contemplate new information collection
requirements for purposes of the Paperwork Reduction Act of 1995, 44
U.S.C. 3501-3520, nor would any subsequent action pursuant to this
notice likely do so.
Issued on: October 4, 1999.
Gordon J. Linton,
Administrator.
[FR Doc. 99-26285 Filed 10-7-99; 8:45 am]
BILLING CODE 4910-57-U
