2010-15030. Buy American Exception Under the American Recovery and Reinvestment Act of 2009; Nationwide Limited Public Interest and Domestic Nonavailability Waivers Under Section 1605

AGENCY:

Office of Energy Efficiency and Renewable Energy (EERE), U.S. Department of Energy (DOE).

ACTION:

Notice of a determination of inapplicability (waiver).

SUMMARY:

The U.S. Department of Energy (DOE) is providing notice of a determination of inapplicability (waiver) of the American Reinvestment and Recovery Act of 2009 (Recovery Act) to EERE-funded projects for non-residential programmable thermostats; commercial scale fully-automatic wood pellet boiler systems; facility and small district wood pellet and chip boiler furnaces; variable refrigerant flow zoning and inverter-driven ductless mini-split HVAC systems; electrical “smart” strips/surge protectors; gas or propane tankless water heaters up to 200,000 BTUs; and fully-enclosed continuous composting systems (additional technical information for these items is detailed below).

DOE is also providing notice of a determination that the application of the restrictions of section 1605 of the Recovery Act would be inconsistent with the public interest with respect to incidental items that comprise in total a de minimis amount of the total cost of the iron, steel and manufactured goods used in the project; that is, any such incidental items up to a limit of no more than 5 percent of the total cost of the iron, steel, and manufactured goods used in and incorporated into a project.

FOR FURTHER INFORMATION CONTACT:

Benjamin Goldstein, Energy Technology Program Specialist, Office of Energy Efficiency and Renewable Energy (EERE), [phone], Department of Energy, 1000 Independence Avenue, SW., Mailstop EE-2K, Washington, DC 20585.

SUPPLEMENTARY INFORMATION:

Under the authority of the Recovery Act, section 1605(b)(1) and (2), the head of a Federal department or agency may issue a “determination of inapplicability” (a waiver of the Buy American provisions) if the application of the restrictions of section 1605 would be inconsistent with the public interest, or if the iron, steel, or relevant manufactured good is not produced or manufactured in the United States in sufficient and reasonably available quantities and of a satisfactory quality (“nonavailability”). On November 10, 2009, the Secretary of Energy delegated the authority to make all inapplicability determinations under the Buy American provisions of the Recovery Act to the Assistant Secretary for Energy Efficiency and Renewable Energy (EERE) for EERE projects under the Recovery Act.

Waiver for Nonavailability

Pursuant to the above-referenced delegation the Assistant Secretary, EERE, has concluded that non‐residential programmable thermostats; commercial scale fully-automatic wood pellet boiler systems; facility and small district wood pellet and chip boiler furnaces; variable refrigerant flow zoning and inverter-driven ductless minisplit HVAC systems; electrical “smart” strips/surge protectors; gas or propane tankless water heaters up to 200,000 BTUs; and fully‐enclosed continuous composting systems all qualify for the “nonavailability” waiver determination.

EERE has developed a process to ascertain in a systematic and expedient manner whether domestic manufacturing capacity exists for the items submitted for a waiver of the Recovery Act Buy American provision. This process involves a close collaboration with the National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership (MEP), to disseminate the technical specifications for the manufactured goods being submitted to EERE for waiver consideration, in order to scour the manufacturing landscape in search of producers before making any nonavailability determination.

Many of the items contained in this nonavailability waiver issued by the Assistant Secretary, EERE, were submitted to EERE as a result of a Request for Information published in the Federal Register on February 4, 2010, 75 FR 5783. Upon receipt of completed waiver requests in response to the RFI or independently, EERE reviewed the information provided and submitted the relevant technical information to the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST MEP). MEP has a network of 59 centers across the country that work directly with domestic manufacturers and possess extensive knowledge of their specific capabilities. The EERE—MEP collaboration draws on these extensive network centers to “scout” for domestic manufacturers for the items submitted for Buy American waiver consideration by EERE Recovery Act grantees. The MEP centers reported that their scouting process did not locate any domestic manufacturers for these items.

In addition to the MEP collaboration outlined above, the EERE Buy American Coordinator worked with labor unions, trade associations and other manufacturing stakeholders to scout for domestic manufacturing capacity or an equivalent product for each item contained in this waiver. EERE also conducted significant amounts of independent research to supplement the MEP's scouting efforts. EERE's efforts revealed that the goods included in the waiver issued by the Assistant Secretary, EERE, are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.

The nonavailability determination was also informed by the communications to EERE from recipients of EERE Recovery Act funds, and from suppliers, distributors, retailers and trade associations—all stating that their individual efforts to locate domestic manufacturers have been unsuccessful. For example, EERE received four separate individual waiver requests for the types of HVAC systems included in the nonavailability waiver.

Specific technical information for the manufactured goods included in the nonavailability determination is detailed below:

(1) Programmable Thermostats—Includes devices that permit adjustment of heating or air-conditioning operations according to a pre-set schedule. Applies only to nonresidential programmable thermostat units.

(2) Commercial Scale Fully-Automatic Wood Pellet Boiler System—Includes wood pellet boilers featuring a pneumatic conveyance system to transport wood pellets to the boiler, an automatic ignition system, continuously monitored and optimized combustion, ash removal/management system and the ability to control and integrate with other existing heat systems.

(3) Facility and Small District Wood Pellet and Chip Boiler Furnaces—Includes high efficiency, ultra-low emission biomass boilers for facility and small district heating, ranging from 35,000 Btu to 15,000,000 Btu.

(4) Variable Refrigerant Flow Zoning HVAC Systems and Inverter-Driven Ductless Mini-Split HVAC Systems—Includes variable refrigerant flow (VRF) multi-split heat pump (with or without heat recovery) and air conditioning systems; and inverter-driven ductless mini-split heat pump and air conditioner systems. This waiver includes the main condensor and heat pump units, wall and fan coil units, zone controllers, remote controls, and any other component of the larger HVAC system.

(5) Electrical “Smart” Strips/Surge Protectors—Includes power strips that detect activity in the attached equipment and cut power during periods of inactivity.

(6) Gas or Propane Tankless Water Heaters up to 200,000 BTUs—Does not apply to electric tankless water heaters, which are widely manufactured in the United States.

(7) Fully-Enclosed Continuous Composting Systems—Includes multi-zone, continuous loading, odor and moisture controlled composter with leachate recirculation and in-situ mixing capabilities.

De Minimis Public Interest Waiver

Pursuant to the above-referenced delegation the Assistant Secretary, EERE, determined that application of section 1605 restrictions would be inconsistent with the public interest for incidental items that comprise in total a de minimis amount of the total cost of the iron, steel and manufactured goods used in the project; that is, any such incidental items up to a limit of no more than 5 percent of the total cost of the iron, steel, and manufactured goods used in and incorporated into a project.

Recovery Act projects funded by EERE typically involve the use of literally thousands of miscellaneous, generally low-cost items that are essential for, but incidental to, the construction, alteration, maintenance or repair of a public building or public work and are incorporated into the physical structure of the project, such as nuts, bolts, wires, cables, switches, etc. For many of these incidental items, the country of manufacture and the availability of alternatives are not always readily or reasonably identifiable in the normal course of business. More importantly, the miscellaneous character of these items, together with their low cost (both individually and when procured in bulk), characterize them as incidental to the project.

The Assistant Secretary, EERE, determined that there is a compelling case for adopting a de minimis waiver for recipients of EERE Recovery Act funding. The EERE waiver is 5 percent of the total iron, steel, and manufactured goods as opposed to the total materials cost.

Issuing the waiver will help EERE grantees avoid unnecessary delays in carrying out the Recovery Act. Requiring individual waivers for incidental items would be time prohibitive and overly burdensome for both applicants and for EERE. Therefore, a nationwide limited de minimis waiver of incidental items up to a limit of no more than 5 percent of the total cost of the iron, steel and manufactured goods used in and incorporated into a project is justified in the public interest.

This SUPPLEMENTARY INFORMATION constitutes the detailed written justification required by section 1605(c) for waivers based on a finding under subsection (b).

The waiver determination is pursuant to the delegation of authority by the Secretary of Energy to the Assistant Secretary for EERE with respect to EERE Recovery Act-funded projects. Consequently, the waiver applies to EERE projects carried out under the Recovery Act. The Assistant Secretary reserves the right to revisit and amend the determinations based on new developments or new information.

Authority: Pub. L. 111-5, section 1605.

Dated: June 16, 2010.

Cathy Zoi,

Assistant Secretary for Energy Efficiency and Renewable Energy.