2010-13529. Notice of a Regional Waiver of Section 1605 (Buy American Requirement) of the American Recovery and Reinvestment Act of 2009 (ARRA) to the City of Bridgeport (the City) Washington

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

The Regional Administrator of EPA Region 10 is hereby granting a late waiver request from the Buy America requirements of ARRA section 1605(a) under the authority of section 1605(b)(1) [applying subsection (a) would be inconsistent with the public interest] to the City for the purchase and use of 280 linear feet of large diameter 36″ PVC pipe, manufactured in Edmonton, Alberta, Canada and which was used in and incorporated into an ARRA project prior to December 3, 2009. This is a project specific waiver and only applies to the use of the specified product for the ARRA project discussed in this notice. Any other ARRA recipient that wishes to use the same product must apply for a separate waiver based on project specific circumstances. The City's waiver request included a timeline summary from October 3, 2009 thru December 30, 2009 describing the attempted Buy American compliance by the applicant, consulting engineer, contractor and pipeline materials supplier. Thus, it appears that the supplier on behalf of the City, the ARRA recipient, did an extensive, seemingly comprehensive, and ultimately unsuccessful search for a U.S. manufacturer who could meet the project specifications.

The Regional Administrator is making this determination based on the review and recommendations of the Drinking Water Unit. The City has provided sufficient documentation to support their request.

DATES:

Effective Date: May 25, 2010.

FOR FURTHER INFORMATION CONTACT:

Johnny Clark, DWSRF ARRA Program Management Analyst, Drinking Water Unit, Office of Water & Watersheds (OWW), [phone], U.S. EPA Region 10 (OWW-136), 1200 Sixth Avenue, Suite 900, Seattle, WA 98101.

SUPPLEMENTARY INFORMATION:

In accordance with ARRA Section 1605(c) and OMB's regulations at 2 CFR Part 176, Subpart B, the EPA hereby provides notice that it is granting a late project waiver request of the requirements of Section 1605(a) of Public Law 111-5, Buy American requirements, to the City for the purchase and use of 280 linear feet of large diameter 36″ PVC pipe, manufactured in Edmonton, Alberta, Canada, which was incorporated into an ARRA project prior to December 3, 2009. The City was unable to find an American manufacturer to meet the project specific requirements for what by industry's standards is a small amount of large diameter 36″ PVC pipe.

There are several noteworthy factors regarding this waiver analysis. First, it is a late request because the waiver request came after the goods had been used in the project. Second, under 2 CFR 176.130(c)(1), the applicable non-compliance provision regarding unauthorized use of foreign manufactured goods, EPA is authorized to process a waiver under 2 CFR 176.120(a) if “the need for such determination otherwise was not reasonably foreseeable.” EPA has further outlined this process in its April 28, 2009 memorandum: Implementation of Buy American provisions of Public Law 111-5, the “American Recovery and Reinvestment Act of 2009” (the April 28 memorandum). Third, EPA has determined that the reason the City did not seek a waiver when they procured the foreign pipe was based on a mistaken interpretation of the international agreements provision of section 1605(d). However, at the time of that mistake, Bridgeport had done all due diligence in seeking a U.S.-made alternative and had developed all necessary information to support an availability waiver at that time. Fourth, EPA has determined, with the assistance of a technical review produced by its national contractor, that the documentation the City developed in the course of due diligence conducted at the time of that mistake and subsequent due diligence upon learning of the mistaken interpretation of section 1605(d) was sufficient to support both a determination by EPA that the City implemented the requirements of Section 1605 in good faith and the grant of a waiver by EPA. Fifth, EPA has determined under these circumstances that the need for such a waiver was not reasonably foreseeable. Therefore, under the authority of 2 CFR 176.120 and 176.130(c)(1), and as explained in the April 28 memorandum, EPA will process the waiver request as if it was requested in a timely manner. Sixth, EPA has determined that it would have evaluated a waiver request had the recipient applied for a waiver prior to using the foreign pipe in the ARRA project. EPA has determined that granting this waiver will serve the public interest because it avoids penalizing the City for the use of a non-U.S.-made good for which the City has sufficiently established that there were no U.S.-made alternatives. And, this determination takes into account the City's due diligence and good faith effort to implement the requirements of section 1605.

The non-compliant pipe was installed due to the City's pipeline materials supplier's (United Pipe & Supply) assumption and interpretation that the Canadian-manufactured pipe was acceptable under the North American Free Trade Agreement (NAFTA). The pipeline materials supplier, on behalf of the City, completed an unsuccessful search for a U.S. manufacturer that could meet the project specifications and timeline after the pipe was installed. The City's waiver request dated January 4, 2010, describes actions taken with regards to the attempted Buy American compliance by the applicant, consulting engineer, contractor, pipeline materials supplier, and EPA Region 10. The memorandum notes that “While an honest oversight was made by the supplier, it is apparent that not only could their domestic manufacturer not supply the material, but all other American companies were and are unable to do so”.

A Canadian-manufactured 280 linear feet of large diameter 36″ PVC pipe was installed as part of the applicant's ARRA project between October 13, 2009 and December 3, 2009. Prior to the installation, United Pipe & Supply had intended to use pipe manufactured domestically and supplied by JM Eagle, based in Los Angeles, California. However, the specified pipe was unavailable and JM Eagle required an order of 5,000 linear feet of pipe to run production. Only 280 feet was needed for the project. JM Eagle was able to supply sun bleached pipe, but this option would not meet specifications for the project. United Pipe & Supply conducted its own search for domestic manufacturers. The pipeline material supplier contacted manufacturer representatives from five manufacturers: Vinyl Tech, Crestline, Royal Group, and IPEX, based in Phoenix, Arizona, Chehalis, Washington, Woodbridge, Ontario, and Toronto, Ontario, respectively. Only IPEX, in addition to JM Eagle, had the capacity to produce this specific large-diameter pipe, and only IPEX had the pipe in stock. The pipe was purchased from IPEX and installed prior to December 3, 2009. A subsequent request for a Buy American certification uncovered that the specific IPEX pipe was manufactured in Edmonton, Alberta, Canada. At that time, United Pipe & Supply believed that although the pipe was manufactured in Canada, it “would be an acceptable option under NAFTA,” and that “the interpretation [that] the `obligation' of the act did not apply since this project was under the threshold of the [$]7.443 million dollars.” United Pipe & Supply was later informed by its attorney that it misunderstood the interaction between ARRA and NAFTA. EPA Region 10 asked the applicant to research “the domestic availability of this material and gather documentation.” On December 29, 2009, United Pipe & Supply contacted IPEX, in addition to the three domestic suppliers JM Eagle, Diamond Plastics (Grand Island, Nebraska), and North American Pipe (Houston, Texas), to inquire about the general availability of the pipe. Diamond Plastics did not have the requested amount of pipe in stock and required a minimum order (approximately 4,000 feet) to run production. North American Pipe also did not have any in stock and would not produce such a limited amount of pipe. To confirm these findings on domestic suppliers, United Pipe & Supply contacted the Uni-Bell PVC Pipe Association, the North American association of PVC pipe manufacturers. A regional representative of the organization confirmed these findings.

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 public work unless all of the iron, steel, and manufactured goods used in the project is produced in the United States unless a waiver is provided to the recipient by EPA. A waiver may be provided under section 1605(b) 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.

This ARRA-funded project involved installation of new PVC pipe used as a contact chamber in an effort to provide sufficient chlorination to the distribution system, thereby allowing the City to continue providing water disinfection to the consumers. A primary water supply well for the City was shown to be hydraulically connected to the Columbia River and chlorination was required. Prior to installation of the Canadian-manufactured PVC pipe and completion of the proposed project, the distribution system configuration did not allow for sufficient chlorine contact time. Without the appropriate contact time, the disinfection process could not have been completed prior to water reaching the consumers. The project originally estimated the need for 340 linear feet of large diameter 36″ pipe to allow for ample and sufficient chlorine contact time to provide treatment and disinfection to the water however, after additional engineering analysis, it was noted that only 280 linear feet was needed for project specifications. EPA finds these considerations as stated by the City provide ample functional justification for their specification.

The April 28 memorandum defines “public interest” as those cases which possibly involve national implications of such a waiver. Based on additional research by EPA's consulting contractor (Cadmus), and to the best of the Region's knowledge at this time, the City attempted without success, to meet the Buy American requirements. Furthermore, the purpose of the ARRA provisions is to stimulate economic recovery by funding current infrastructure construction, not to delay projects that are already shovel ready by requiring entities, like the City, to revise their design or potentially choose a more costly and less effective project. The imposition of ARRA Buy American requirements on such projects eligible for DWSRF 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 the most fundamental economic purposes of ARRA; to create or retain jobs.

The Drinking Water Unit has reviewed this waiver request and has determined that the supporting documentation provided by the City is sufficient to meet the following criteria listed under section 1605(b) and in the April 28 memorandum: Applying the Buy American requirements of ARRA would be inconsistent with the public interest.

The basis for this project waiver is the authorization provided in section 1605(b)(1), due to the lack of any U.S. production of what by industry's standards is a small amount (280 linear feet) of large diameter 36″ PVC pipe, in order to meet the City's design schedule and specifications. The 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 reviewed all available documentation, statements, invoices, and related correspondence, EPA has established both a proper basis to specify the particular good required for this project, and that categorization of similar waiver requests from Gwinnett County, GA (granted 12/18/09) and Old Town, ME (granted 2/12/10) when the manufactured goods involved there had already been used in and incorporated into the ARRA project, that EPA has evaluated and considered the City's waiver request as of January 4, 2010 to be considered under section 1605(b)(1) authority for public interest waivers. The City is hereby granted a waiver from the Buy American requirements of section 1605(a) of Public Law 111-5 for the purchase of 280 linear feet of large diameter 36″ PVC pipe. This supplementary information constitutes the detailed written justification required by section 1605(c) for waivers based on a finding under subsection (b).

Authority: Public Law 111-5, section 1605.

Dated: May 25, 2010.

Dennis J. McLerran,

Regional Administrator, EPA, Region 10.