2011-13829. Notice of a Project Waiver of Section 1605 (Buy American Requirement) of the American Recovery and Reinvestment Act of 2009 (ARRA) to Montgomery Township, NJ

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

The EPA 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 Montgomery Township, New Jersey (the Township), for the purchase of specific foreign manufactured immersed hollow fiber ultrafiltration membrane cassettes, ZeeWeed® 500D, which are the effluent filtration component of the Membrane Bioreactor (MBR) for the Skillman Village Wastewater Treatment Plant (WWTP) upgrade project. The ZeeWeed® 500D immersed ultrafiltration membrane cassettes are manufactured outside of the United States by GE Water & Processes Technologies (GEW&PT), in Oroszlany, Hungary. The design and specifications of the Township's proposed Skillman Village WWTP upgrade project were based on the recommendations provided by an engineering study and pilot testing conducted in 2005, which concluded that the WWTP facility be upgraded with a MBR process.

This is a project specific waiver and only applies to the use of the specified product for the ARRA project being proposed. Any other ARRA project that may wish to use the same product must apply for a separate waiver based on project specific circumstances. Based upon information submitted by the Township and its consulting engineer, EPA has concluded that there are currently no domestic manufactured submerged hollow fiber ultrafiltration MBR membranes available in sufficient and reasonable quantity and of a satisfactory quality to meet the Township's project design and performance specifications and that a waiver is justified. The Regional Administrator is making this determination based on the review and recommendations of the State Revolving Fund Program Team. The Assistant Administrator of the Office of Administration and Resources Management has concurred on this decision to make an exception to Section 1605(a) of ARRA. This action permits the purchase of foreign manufactured submerged hollow fiber ultrafiltration membrane cassettes by the Township, as specified in its January 18, 2011 waiver request and February 4, 2011 supplemental submittal to EPA.

DATES:

Effective Date: June 3, 2011.

FOR FURTHER INFORMATION CONTACT:

Alicia Reinmund-Martínez, Environmental Engineer, [phone], State Revolving Fund Program Team, Division of Environmental Planning and Protection, U.S. EPA, 290 Broadway, New York, NY 10007.

SUPPLEMENTARY INFORMATION:

In accordance with ARRA Sections 1605(c) and 1605(b)(2), the 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 Township for the purchase of ZeeWeed® 500D immersed hollow fiber ultrafiltration membrane cassettes manufactured in Hungary by GEW&PT that meet the Township's design and performance specifications of its Skillman Village WWTP upgrade project. EPA has evaluated the Township's basis for the procurement of the foreign made immersed hollow fiber ultrafiltration membrane cassettes. Based upon information submitted by the Township and its consulting engineer, EPA has concluded that there are currently no domestic manufactured immersed hollow fiber ultrafiltration membrane cassettes available in sufficient and reasonable quantity and of a satisfactory quality to meet the Township's project design and performance specifications.

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 a public works project unless all of the iron, steel, and manufactured goods used in the project are produced in the United States, or unless a waiver is provided to the recipient by the head of the appropriate agency, here the EPA. A waiver may be provided under Section 1605(b) of ARRA 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 the Township's waiver request is timely even though the request was made after the construction contract was signed. Consistent with the direction of the Office of Management and Budget (OMB) regulations at 2 CFR 176.120, EPA has evaluated the Township'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 Township's request may be treated as timely because the need for a waiver was not foreseeable at the time the contract was signed. The Township submitted this waiver request after the contract date because on June 22, 2009, GEW&PT had provided a Buy American compliance certification letter to the Township indicating that the MBR system would comply with ARRA Section 1605 pursuant to the “substantial transformation” test. At that time, the Township considered this rationale reasonable and anticipated full compliance with the Buy American provisions of ARRA. The Township did not determine the need for a waiver until on or about May 25, 2010, when GEW&PT notified the Township that the ZeeWeed® 500D immersed hollow fiber ultrafiltration membrane cassettes of its MBR system did not comply with the substantial transformation test and that the Township should seek a waiver from Buy American requirements based on no availability of domestic manufactured membrane cassettes that meet project specifications. Accordingly, EPA will evaluate the request as a timely request.

The Township's Skillman Village WWTP upgrade project includes the installation of a MBR system that will enable the WWTP's effluent quality to meet the new stringent effluent limitations stipulated in its New Jersey Pollutant Discharge Elimination System (NJPDES) wastewater discharge permit. The documentation provided by the Township indicates that with the exception of the actual ZeeWeed®500D membrane cassettes, GEW&PT will fabricate and assemble all of the MBR system components in its Minnetonka, Minnesota facility. The ZeeWeed® 500D immersed hollow fiber ultrafiltration membrane cassettes are manufactured in Hungary and will be shipped directly from the manufacturing facility in Hungary to the project site.

The Township is requesting a waiver for the purchase of ZeeWeed® 500D immersed hollow fiber ultrafiltration membrane cassettes because there are no submerged hollow fiber ultrafiltration MBR membranes manufactured in the United States that meet the design specifications for the project. Based on an engineering study and pilot testing conducted in 2005, the Township identified MBR technology as the most appropriate and best demonstrable technology for the Skillman Village WWTP upgrade project. During the design and bidding phase of the project, the Township evaluated multiple manufacturers of MBR systems, and fully anticipated, by way of manufacturer/supplier confirmation, that the specified GEW&PT membrane cassettes would be fully compliant with ARRA Buy American requirements.

Upon learning from GEW&PT on May 25, 2010, that the ZeeWeed® 500D membranes would not meet the substantial transformation test and therefore, is not in compliance with ARRA Buy American requirements, the Township repeated its efforts to find domestic manufactured ultrafiltration hollow fiber membranes that would meet the Skillman Village WWTP upgrade project specifications. The Township's research confirmed that no additional manufacturers of such membranes suitable for the WWTP project had entered the North American market since the design phase of the project The Township's research revealed that, the MBR market is dominated by four manufacturers of MBR systems, including General Electric (Zenon), Kubota, Siemens and Koch-Puron, and all four companies manufacture their cassettes abroad. Of these manufacturers, only General Electric and Siemens manufacture the specified immersed hollow fiber ultrafiltration membrane cassettes. Therefore, the Township concluded that there is no domestically available immersed hollow fiber ultrafiltration membrane cassette and that a waiver from Buy American requirements would be required. Based on the technical evaluation of the Township's waiver request and supporting documentation as well as the additional research conducted by EPA's national contractor, the Township's claim that there are no submerged hollow fiber ultrafiltration MBR membranes manufactured in the United States that meet the design specification is supported by the available evidence.

The purpose of the ARRA is to stimulate economic recovery in part by funding current infrastructure construction, not to delay projects that are already “shovel ready” by requiring entities, such as the Township, to revise their design standards and specifications 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 potentially the cancellation of this project as sited. The delay or cancellation of this construction would directly conflict with the fundamental economic purpose of ARRA, which is to create or retain jobs.

The April 28, 2009, EPA Headquarters Memorandum, “Implementation of Buy American provisions of Public Law 111-5, the `American Recovery and Reinvestment Act of 2009'” (Memorandum), defines: reasonably available quantity as “the quantity of iron, steel, or the 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,” and satisfactory quality as “the quality of iron, steel, or the relevant manufactured good as specified in the project plans and designs.”

The Region 2 State Revolving Fund Program Team has reviewed this waiver request and has determined that the supporting documentation provided by the Township establishes both a proper basis to specify the particular good required and that the manufactured good is not available from a producer in the United States to meet the design specifications for the proposed project. The information provided is sufficient to meet the criteria listed under Section 1605(b) of ARRA, OMB regulations at 2 CFR 176.60-176.170, and in the EPA Headquarters April 28, 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 Township's technical specifications, a waiver from the Buy American requirement is justified.

The Administrator's 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 Township is hereby granted a waiver from the Buy American requirements of Section 1605(a) of Public Law 111-5 for the purchase of the ZeeWeed® 500D immersed hollow fiber ultrafiltration membrane cassettes, as specified in its January 18, 2011 waiver request and February 4, 2011 supplemental submittal to EPA. 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: April 25, 2011.

Judith A. Enck,

Regional Administrator, Environmental Protection Agency, Region 2.