2011-7602. Notice of a Project Waiver of Section 1605 (Buy American Requirement) of the American Recovery and Reinvestment Act of 2009 (ARRA) to the DeSoto Parish Waterworks District 1, Louisiana

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

The Regional Administrator of EPA Region 6 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 DeSoto Parish Waterworks District 1 (“the District”) for three (3) packaged, Memcor XS 48 submerged membrane filtration Systems (MFSs), manufactured by Siemens Water Technologies Corporation, proposed for the expansion of its existing water treatment plant. The District requires a submerged membrane treatment system capable of a 4-log removal of Giardia and Cryptosporidium at a production rate of 1 million gallons per day (MGD). The packaged, Memcor XS 48 submerged MFS is manufactured by foreign manufacturers and no United States manufacturer produces an alternative that meets the District'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 6, Water Quality Protection Division. The District 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 three packaged, Memcor XS 48 submerged MFSs not manufactured in the United States, for the proposed project being implemented by the District.

DATES:

Effective Date: March 8, 2011.

FOR FURTHER INFORMATION CONTACT:

Nasim Jahan, Buy American Coordinator, [phone], SRF & Projects Section, Water Quality Protection Division, U.S. EPA Region 6, 1445 Ross Avenue, Dallas, Texas 75202-2733.

SUPPLEMENTARY INFORMATION:

In accordance with ARRA Section 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 District for the acquisition of three packaged, Memcor XS 48 submerged membrane filtration systems (MFSs). The District has been unable to find an American made MFS to meet its specific water requirements.

Section 1605 of 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.

The District has provided information to the EPA demonstrating that there is no packaged, Memcor XS 48 submerged MFS manufactured in the United States in sufficient and reasonable quantity and of a satisfactory quality to meet the required technical specification. The District initiated planning on the water treatment plant expansion in 2008. They completed a pilot study of the submerged membrane filtration/treatment system and a System Improvement Plan, which were approved by the Louisiana Department of Health and Hospitals (LDHH).

The District requires a submerged membrane treatment system capable of a 4-log removal of Giardia and Cryptosporidium at a production rate of 1 MGD (694 gpm). As required by the project specifications, each skid-mounted packaged MFS must include the backwash system, clean in place (CIP) system, process control panel, compressed air system, automatic feed strainers, block and bleed valves for isolation during cleaning, and feed and filtrate turbidimeters. The specifications also require that the frequency of chemical cleaning must not exceed once per month, on average, while the frequency of maintenance washing must not exceed once per day.

Based on additional research conducted by EPA Region 6, there do not appear to be any domestic packaged, Memcor XS 48 submerged MFS manufacturers that would meet the District's technical specifications. EPA's national contractor prepared a technical assessment report based on the waiver request submittal, which confirmed the waiver applicant's claim that there are no American-made submerged MFS available for use in the proposed water treatment system.

EPA has also evaluated the District's request to determine if its submission is considered late or if it could be considered timely, as per the OMB Guidance at CFR 176.120. 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, EPA could also determine that a request be evaluated as timely, though made after the date that the contract was signed, if the need for a waiver was not reasonably foreseeable. If the need for a waiver is reasonably foreseeable, then EPA could still apply discretion in these late cases as per the OMB Guidance, which says “the award official may deny the request.” For those waiver requests that do not have a reasonably unforeseeable basis for lateness, but for which the waiver basis is valid and there is no apparent gain by the ARRA recipient or loss on behalf of the government, then EPA will still consider granting a waiver.

In this case, the waiver request was submitted after the contract date because the District initiated an evaluation of substantial transformation for the submerged MFS; however, after having a thorough discussion at the Regional level, the District has made a decision that the issuance of the project specific waiver for the membrane equipment is the best way to ensure that the District is in compliance with the Buy American provisions of ARRA. There is no indication that the District failed to request a waiver in order to avoid the requirements of the ARRA, particularly since there are no domestically manufactured products available that meet the project specifications. EPA will consider the District's waiver request, a foreseeable late request, as though it had been timely made since there is no gain by the District and no loss by the government due to the late request.

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 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 District has incorporated specific technical design requirements for installation of membrane filtration cassettes at its wastewater treatment plant.

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 District, 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.

The Region 6 Water Quality Protection Division has reviewed this waiver request, and has determined that the supporting documentation provided by the District is sufficient to meet the criteria listed under ARRA, Section 1605(b), Office of Management and Budget (OMB) regulations at 2 CFR 176.60-176.170, and in the April 28, 2009, memorandum, “Implementation of Buy American provisions of Public Law 111-5, the American Recovery and Reinvestment Act of 2009''. The basis for this project waiver is the authorization provided in ARRA, 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 District's technical specifications, a waiver from the Buy American requirement is justified.

EPA headquarters' 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 District is hereby granted a waiver from the Buy American requirements of ARRA, Section 1605(a) of Public Law 111-5 for the purchase of three packaged, Memcor XS 48 submerged MFSs, using ARRA funds, as specified in the District's request. This supplementary information constitutes the detailed written justification required by ARRA, Section 1605(c), for waivers “based on a finding under subsection (b).”

Authority: Public Law 111-5, section 1605.

Issued on: March 8, 2011.

Al Armendariz,

Regional Administrator, U.S. Environmental Protection Agency, Region 6.