2010-14992. Notice of Buy America Waiver for Minivans and Minivan Chassis

AGENCY:

Federal Transit Administration (FTA), DOT.

ACTION:

Notice of Buy America Waiver.

SUMMARY:

In response to formal requests from El Dorado National, Kansas, and Chrysler Group LLC, and informal requests from several other parties, and based on the fact that no manufacturer has identified itself as willing and able to supply minivans or minivan chassis that are assembled in the United States, the Federal Transit Administration hereby waives its Buy America final assembly requirement for minivans and minivan chassis. This waiver is valid until such time as a domestic source becomes available.

FOR FURTHER INFORMATION CONTACT:

For questions please contact Jayme L. Blakesley at [phone] or [e-mail].

SUPPLEMENTARY INFORMATION:

El Dorado National, Kansas (“El Dorado”) asked the Federal Transit Administration (“FTA”) to waive its Buy America requirements, on the basis of non-availability, for minivan chassis manufactured and assembled by Chrysler in Ontario, Canada. El Dorado uses Chrysler minivan chassis to manufacture its Amerivan lowered-floor minivans. In its request for a waiver, El Dorado asserts that General Motors and Chrysler minivan chassis, including those used on the Chevrolet Uplander, Pontiac Montana, Buick Terraza, Saturn Relay, Chrysler Town & Country, and Dodge Grand Caravan, are no longer manufactured in the United States. El Dorado manufactures its product by purchasing Chrysler minivan chassis, replacing the floor, installing wheelchair securement equipment, and adding a ramp to the side door. According to El Dorado, in 2008 General Motors and Chrysler stopped manufacturing minivans in the United States. The absence of a domestic source for minivan chassis has severely impacted El Dorado; 75% of its sales are to FTA grantees.

By subsequent letter dated March 5, 2010, the Chrysler Group LLC (“Chrysler”) requested a public interest waiver of the final assembly requirements for minivans and minivan chassis. According to Chrysler, minivans are no longer available from a domestic source—Chrysler closed its St. Louis final assembly facility in 2008; Honda has declined to make its minivans eligible for purchase with FTA funds; Nissan may change its final assembly location from the United States to Japan; and Toyota has not responded to public procurements.^[1]

In addition to the requests from El Dorado and Chrysler, FTA has received many inquiries from its grantees about the non-availability of minivans from a domestic source. According to these grantees, minivans are no longer available from a source that is willing or able to comply with FTA's Buy America requirements.

With certain exceptions, FTA's “Buy America” requirements prevent FTA from obligating an amount that may be appropriated to carry out its program for a project unless “the steel, iron, and manufactured goods used in the project are produced in the United States.” 49 U.S.C. 5323(j)(1). One such exception is if “the steel, iron, and goods produced in the United States are not produced in a sufficient and reasonably available amount or are not of a satisfactory quality.” 49 U.S.C. 5323(j)(2)(B). In the case of a specific procurement, FTA presumes that the conditions exist to a waiver if no responsive and responsible bid is received offering an item produced in the United States. For requests that will affect an entire industry, FTA will not waive its Buy America requirements until it can ascertain whether the item truly is not available from a domestic source.

In order to verify El Dorado's assertion that minivans and minivan chassis are not available from a domestic source, on April 2, 2009, FTA published a notice in the Federal Register seeking public comment. Unlike with public interest waivers, FTA is not required to publish a notice in the Federal Register before waiving its Buy America requirements on the basis of non-availability. In this instance, however, FTA proceeded with an abundance of caution because a non-availability waiver would have a national impact. In order to understand completely the facts surrounding the El Dorado's request, FTA asked for comment from all interested parties regarding the availability of domestically manufactured minivans and minivan chassis.

Approximately three dozen parties responded to FTA's notice by submitting comments to the Docket, including vehicle manufacturers, transit service providers, transit agencies, cities, counties, metropolitan planning organizations, transportation associations, and state departments of transportation. The overwhelming majority of comments expressed support for a waiver, recognizing the fact that minivans are not available from a domestic source. One commenter asked for additional information. Three parties opposed a waiver. Of note, FTA received comments from a direct competitor to El Dorado—the Braun Corporation—and two minivan manufacturers—Chrysler and Honda. With the exception of Honda, all parties confirmed El Dorado's assertion that minivans and minivan chassis are not available from a domestic source. Toyota, Nissan and other minivan manufacturers did not submit comments.

In a short, three-paragraph comment dated June 11, 2009, Honda indicated that it manufactures its Odyssey LX model minivan in Lincoln, Alabama, and asserted that it complies with FTA's Buy America domestic content and final assembly requirements. However, after several months of correspondence with FTA, Honda declined to make its minivans available for procurement by FTA grantees based on concerns about the disclosure of detailed cost information. Thus, while Honda claims that its Odyssey model minivan meets the domestic content and final assembly requirements of FTA's regulations, FTA grantees would still be precluded from purchasing the Odyssey because Honda is unwilling to comply with FTA's pre-award/post-delivery audit requirements.

Of the many comments favoring a waiver, most expressed support only because minivans are not, in fact, available from a domestic source. Several commenters noted their desire to see minivan production return to the United States. FTA shares this desire. FTA regrets the fact that Chrysler elected to close its St. Louis final assembly facility and that other manufacturers of minivans have decided not to make their vehicles available for purchase with FTA funds.

The above reservations notwithstanding, the fact remains—minivans and minivan chassis are not available from a domestic source. Therefore, after careful consideration, and based on the fact that no manufacturer has identified itself as willing and able to supply minivans or minivan chassis that are assembled in the United States, FTA hereby waives its Buy America final assembly requirement of 49 CFR 661.11 for all minivans and minivan chassis, regardless of manufacturer. Minivan manufacturers will need to comply with FTA's domestic content requirement as well as the pre-award and post-delivery audit requirements of 49 CFR part 663. This waiver is valid until such time as a domestic source, as verified by FTA, becomes available.

Issued this 15th day of June, 2010.

Dorval R. Carter, Jr.,

Chief Counsel.

Footnotes

1.  Contrary to Chrysler's assertion that Toyota has not responded to public procurements, in May 2010 FTA learned that Toyota may have certified compliance with the Buy America requirements when it supplied minivans to a transit provider. FTA attempted to communicate with Toyota by letter, e-mail, and telephone to determine whether Toyota is willing and able to supply Buy America-compliant minivans. Toyota has not responded. Therefore, until such time as Toyota can document its willingness and ability to comply with FTA's Buy America requirements, Toyota minivans will not be eligible for purchase with FTA funds.