2024-21574. Notice of Proposed Nonavailability Waiver of Buy America Requirements for Certain High-Speed Rail Products for the California Inaugural High-Speed Rail Service Project

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Department of Transportation

Federal Railroad Administration

1. [Docket No. FRA-2024-0104]

AGENCY:

Federal Railroad Administration (FRA), Department of Transportation (DOT).

ACTION:

Notice; request for comment.

SUMMARY:

The Federal Railroad Administration (FRA) is seeking comments on whether to grant a waiver of its Buy America requirements to the California High-Speed Rail Authority (the Authority) to use certain products that are not produced in the United States for use in the California Inaugural High-Speed Rail Service Project between Merced, California and Bakersfield, California (Project). FRA is funding the Project under the Federal-State Partnership for Intercity Passenger Rail Program (FSP Program); therefore, FRA's Buy America requirements apply to the Project. FRA's Buy America requirements include both FRA's statutory requirements, which require 100 percent of the manufactured products and steel and iron used in an FRA-funded project to be produced in the United States, and the Build America, Buy America Act (BABA), which requires that all construction materials used in the FRA-funded project be produced in the United States. FRA is not proposing to waive the applicable BABA requirements for construction materials used in the Project. The proposed waiver would apply to the aluminum car shells, signal systems, high-speed rail turnouts and fire alarm systems based on the domestic nonavailability of such ( print page 77225) products, as identified by the Authority. The Authority estimates that over 98 percent of the total direct dollar expenditures for the Project would be spent on domestically sourced products and labor, including 100 percent of the civil infrastructure costs.

DATES:

Comments must be received by October 7, 2024.

ADDRESSES:

Please submit all comments electronically to the Federal eRulemaking Portal. Go to https://www.regulations.gov and follow the instructions for submitting comments.

Instructions: All submissions must refer to the Federal Railroad Administration and the docket number in this notice (FRA-2024-0104). Note that all submissions received, including any personal information provided, will be posted without change and will be available to the public on https://www.regulations.gov. You may review DOT's complete Privacy Act Statement in the Federal Register published April 11, 2000 (65 FR 19477), or at https://www.transportation.gov/​privacy.

FOR FURTHER INFORMATION CONTACT:

For questions about this notice, please contact Shreyas Bhatnagar, Regional Supervisor, Office of Regional Outreach & Project Delivery, Office of Railroad Development, FRA, telephone: [phone], email: [e-mail] or Ryan Arbuckle, Chief, Program Coordination and Strategy, Office of Railroad Development, FRA, telephone: [phone], email: [e-mail]. For legal questions, please contact Faris Mohammed, Attorney-Adviser, Office of the Chief Counsel, FRA, telephone: [phone], email: [e-mail].

SUPPLEMENTARY INFORMATION:

I. Project History and Background

On December 7, 2022, FRA published a Notice of Funding Opportunity (NOFO) announcing application requirements and procedures to obtain grant funding under the FSP Program for projects not located on the Northeast Corridor for Fiscal Year 2022. The FSP Program provides a Federal funding opportunity to improve passenger rail service. On February 3, 2023, FRA published a notice adding funding and extending the application period for the FSP Program NOFO. On March 22, 2023, FRA published a notice (March Notice) inviting high-speed rail project sponsors to voluntarily submit, in advance of being selected to receive FRA funding, a domestic sourcing and workforce plan (DSWP) to demonstrate how the sponsor will maximize the use of domestic goods, products and materials, consistent with FRA's Buy America requirements.^[1]

The Authority applied for FSP Program funding expressing its intent to advance the California High-Speed Rail System through completion of the Inaugural High-Speed Rail Service Project between the cities of Merced and Bakersfield in the Central Valley of California.^[2] Consistent with FRA's March Notice, the Authority submitted a DSWP,^[3] which included an initial request for a waiver of FRA's Buy America requirements for certain products that the Authority indicated are not produced in the United States. In December 2023, FRA selected the Project to receive $3,073,600,000 in funding under the FSP Program. In a letter dated September 13, 2024, the Authority requested a waiver from FRA's Buy America requirements consistent with the Authority's DSWP.

The Authority is responsible for developing product specifications and procuring materials for use in the Project and expects to use FSP Program funds for costs associated with those procurements. The Authority's procurement process is separate from FRA's review of the Authority's request for a waiver of Buy America requirements, and FRA is not involved in the development of product specifications or the Authority's procurement process. FRA's role is limited to reviewing the Authority's request for a waiver, consistent with 49 U.S.C. 22905(a)(2).

In August 2023, the Authority issued a Request for Qualifications (RFQ) to procure six trainsets for the Project that could meet FRA's Passenger Equipment Safety Standards governing Tier III equipment (Tier III Rule), which establishes safety standards for high-speed rail equipment and operations that travel at speeds above 125 mph.^[4] Two Original Equipment Manufacturers (OEMs) responded to the Authority's RFQ; however, neither OEM indicated that they would be able to supply a fully Buy America-compliant trainset in their responses. Both OEMs indicated they would need a waiver from FRA's Buy America requirements for the aluminum car shells (shell, structure, and vehicle paintwork), as the car shells are not produced in the United States. In April 2024, the Authority issued a Request for Proposals for the six trainsets. In addition to trainsets, the Authority identified additional products that are not produced domestically, which would also require a waiver. The Authority expects to complete its procurement process for the trainsets and other contracts later this year.

Based on information gathered through the procurement process and through market research, the Authority revised its initial DSWP, which further explains how the Authority will meet FRA's Buy America requirements and identifies any necessary waivers for noncompliant products. FRA reviewed the DSWP, including the market research conducted by the Authority.

This notice summarizes FRA's Buy America requirements, the Authority's request for a waiver, and FRA's findings and proposed waiver.

II. FRA's Buy America Requirements and Policy

Projects that receive funding under FRA's FSP Program are subject to FRA's Buy America requirements. FRA's Buy America requirements include both: (i) FRA's statutory requirements for steel, iron, and manufactured goods at 49 U.S.C. 22905(a); and (ii) requirements under the Build America, Buy America Act (BABA) and related guidance at 2 CFR 184.6 for construction materials. This means that FRA can fund a project only if the steel, iron, and manufactured goods used in the project are produced in the United States. 49 U.S.C. 22905(a). In addition, FRA-funded projects must also comply with the relevant provisions of BABA, including the requirement that all construction materials used in the project must also be produced in the United States. Public Law 117-58, 70914(a); 2 CFR 184.6.

FRA strictly enforces compliance with its Buy America requirements to ensure that FRA-funded projects maximize the use of materials produced in the United States. FRA expects recipients to work with suppliers to conduct thorough market research and adequately consider, where appropriate, qualifying alternate items, products, or materials that can also meet the recipient's technical specifications. Compliance with FRA's Buy America requirements supports domestic industry and well-paying jobs. ( print page 77226)

III. FRA's Authority To Waive Buy America Requirements

There are limited circumstances in which FRA can waive its Buy America requirements under 49 U.S.C. 22905(a) and BABA. FRA will grant a waiver request that is consistent with the statutory criteria for a waiver and where a project sponsor has adequately justified the need for a waiver.

FRA may waive its Buy America requirements if FRA determines that: applying the Buy America requirements would be inconsistent with the public interest; 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; rolling stock or power train equipment cannot be bought and delivered in the United States within a reasonable time; or including domestic material will increase the cost of the overall project by more than 25 percent. 49 U.S.C. 22905(a)(2); see alsoPublic Law 117-58, 70914(b) (prescribing similar statutory conditions for waivers); and 2 CFR 184.7 (doing the same).

Specifically, when determining whether 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 pursuant to 49 U.S.C. 22905(a)(2)(B), FRA considers whether the recipient has used appropriate due diligence, such as market research or by soliciting proposals through an open procurement process, to identify domestic products or domestically available alternative products that meet the recipient's specifications. A comparable product that performs a similar function is not necessarily a domestic alternative; the product must also meet the recipient's specific requirements. FRA's statutory requirements do not require recipients to change product specifications in order to utilize domestic products that do not meet the recipient's original specifications. If there are no domestically produced products that also meet the recipient's specifications, and the recipient has exercised appropriate diligence, FRA may waive its Buy America requirements based on nonavailability, consistent with 49 U.S.C. 22905(a)(2)(B).

If FRA determines a waiver is appropriate, FRA will provide notice and seek comment from the public in accordance with the requirements of both section 22905(a) and BABA, if applicable. In addition, FRA will consult with the National Institute of Standards and Technology's Manufacturing Extension Partnership (NIST MEP) before granting a waiver, consistent with section 70916 of BABA. Unless otherwise specified, waiver decisions are non-precedential and are only applicable to the entities and products for the specific project identified in the final waiver.

IV. The Authority's Request for Waiver

In response to FRA's March Notice, the Authority submitted a DSWP outlining the efforts that would be used to ensure maximum use of available domestic materials in the Project if the Authority's application was selected for funding under the FSP Program. In the DSWP, the Authority explained that the Project would require the use of products that are not produced in the United States, which would require a waiver of FRA's Buy America requirements. The Authority did not identify any construction materials covered under BABA that would require a waiver. The Authority explained that the use of these non-compliant products is necessary to ensure the safety and reliability of the high-speed rail system. Specifically, the Authority requested a waiver for the following:

• Car Shells (shell structure, frame, vehicle paintwork) for six trainsets

Eurobalises and Euroloops ^[5]

• Counting Heads and Axle Counter Sensors
• Truck Press (test stand)
• Turnout Systems including Derailers
• Fire Alarm Systems

FRA recently conducted a similar analysis for these high-speed rail products in its final nonavailability waiver for the Brightline West High-Speed Passenger Train Project (Brightline West Waiver) based on a request from the Nevada Department of Transportation (NDOT) and Brightline West, the private project sponsor.^[6] Brightline West conducted market research for these same products and coordinated with potential suppliers and the NIST MEP to locate domestic suppliers. In the final waiver, FRA concluded that the high-speed rail products, which are the same items for which the Authority seeks a waiver, are not produced in the United States based on Brightline West's market research and coordination with potential suppliers. In developing its waiver request, the Authority noted that it closely coordinated with Brightline West to identify products that are not currently produced in the United States.

The Authority requested a waiver for aluminum car shells for the six trainsets that will be purchased for and used in the Project. The request is based on responses from two OEMs that indicated they could not provide a fully compliant trainset without a waiver for the car shells, which are not produced in the United States. The Authority notes that the car shells are a necessary feature for the safe and efficient operation of the high-speed rail trainset. Specifically, the Authority explains the car shells are required to achieve high speeds, due to aluminum's strength and light weight, and it has taken decades of development in technology by highly specialized experts that can shape, mold, and weld these car shells to the required safety and quality standards, including crashworthiness.

FRA previously considered the domestic availability of aluminum car shells in the Brightline West Waiver, sought public comment on this finding and utilized the NIST MEP's supplier scouting program to identify potential domestic suppliers. FRA concluded the car shells are not produced in the United States. Here, the Authority proposes to use the same, or substantially similar, car shells to those described in the Brightline West Waiver.

Similar to the Brightline West High-Speed Passenger Train Project, the Authority proposes to use the European Rail Traffic Management System (ERTMS) for the Project. The Authority proposes to use ERTMS to ensure safety of the high-speed rail system and expects to conform to FRA's Tier III Rule, which allows for service-proven high-speed rail technologies from around the world (in this case, Europe) to be introduced to the United States with minimal modification.^[7]

Although the Authority's procurement process for the signal system is still ongoing, the Authority requested a waiver for eurobalises and euroloops that can be used in the ERTMS for the Project, as these products will be required for the ERTMS regardless of the selected supplier. FRA previously considered the ( print page 77227) availability of eurobalises and euroloops in the Brightline West Waiver and concluded these products are not produced in the United States.

In addition, and similar to the Brightline West Waiver, the Project will also require the use of specialty high-speed rail turnouts to allow trains to smoothly diverge to a passing siding, which plays a key role in safety and stability of train operations. The Project will also require fire alarm panels and devices for use in stations, garages, and maintenance facilities. The Authority has researched known suppliers but did not identify a domestic manufacturer for these products, which FRA also previously concluded are not produced in the United States.^[8]

The Authority explains in the DSWP that over 98 percent of the total direct dollar expenditures for the Project will be spent on domestically sourced products and labor, including 100 percent of the civil infrastructure costs. In addition, the Project has created approximately 13,000 domestic jobs across the construction period and includes a community benefits agreement designed to assist small businesses and job seekers in finding or obtaining construction contracts.^[9] The Authority has also reached an agreement with rail labor, which may result in ongoing operations and maintenance work being performed by union labor.^[10] The DSWP further explains efforts the Authority will take to facilitate, where feasible, a ramp up in domestic production capabilities.

At the time of this proposed waiver, the Authority has not selected an OEM for the trainsets and has not completed its procurement process for the Project. As noted above, the Authority's procurement process is separate from FRA's consideration of nonavailability under 49 U.S.C. 22905(a)(2)(B). FRA expects the Authority to make its procurement decision based on the needs for the Project and to select products that meet the Authority's specifications. If, based on the final procurement, there are changes to the items described in the final waiver, the Authority may need to request additional waivers from FRA.

V. Findings and Proposed Waiver

FRA has preliminarily determined that these products are not produced in the United States in a sufficient and reasonably available amount or are not of a satisfactory quality, consistent with 49 U.S.C. 22905(a)(2)(B). FRA finds that the Authority has conducted appropriate due diligence through market research to identify potential suppliers for the Project. The Authority's research included discussions with potential suppliers and coordination with Brightline West. FRA previously considered the products described in the Authority's request with respect to the Brightline West High-Speed Passenger Train Project and determined the products were not produced in the United States, which included consultation with NIST-MEP through its supplier scouting program.^[11] Given the short amount of time between FRA's previous findings and the Authority's request, FRA is relying on its findings in the Brightline West Waiver to support its determination with respect to the Authority's request. Based on its review of the waiver request, the Authority's DSWP, and FRA's previous findings in the Brightline West Waiver, FRA proposes to waive its Buy America requirements for the products listed above in Section IV.

The proposed waiver would apply only to products listed in Section IV for use in the Project. FRA is not proposing to waive any requirements under BABA, as the proposed waiver does not apply to any construction materials used in the Project. The proposed waiver would not apply to other FRA recipients or to other grants that might be made to the Authority for other projects (including any future phases related to the Project). This proposed waiver will expire upon the end of the period of performance and closeout of the grant agreement for the Project.

VI. Request for Comment

FRA will consider comments received during the comment period, consistent with BABA and 2 CFR 184.7. FRA may consider comments received after this period to the extent practicable. Consistent with 49 U.S.C. 22905(a)(4), if FRA determines it is necessary to waive its Buy America requirements, FRA will publish its decision in the Federal Register and provide an opportunity for public comment on such finding for a reasonable period of time not to exceed 15 days. After such period, FRA's decision will be effective.

Issued in Washington DC

Amitabha Bose,

Administrator.

Footnotes

1.  Advancing High-Speed Rail Projects Intended for Operations Over 160 Miles Per Hour Through Domestic Sourcing Plans and Buy America Compliance, 88 FR 17289 (March 22, 2023).

2.  The California High-Speed Rail System is a multi-phase effort that is planned between to provide service between San Francisco to Los Angeles and provide a competitive transportation mode with estimated speeds capable of 186 (or greater) miles per hour.

3.  The DSWP contains proprietary information that FRA has determined is confidential business information. As such, FRA is not making the DSWP available to the public at this time; however, pertinent non-proprietary information provided in the DSWP is discussed in this notice.

4.   See49 CFR part 238.

5.  Eurobalise and euroloops are products installed between the rails of a railway that are part of the European train control system. These products store infrastructure data ( e.g., position reference, speed limits, line gradient, works on the line) and can send this information to the train.

6.  Notice of Nonavailability Waiver of Buy America Requirements for the Nevada Department of Transportation to Purchase Certain High-Speed Rail Products, 89 FR 45934 (May 24, 2024).

7.  ERTMS has not yet been tested, certified, and approved for operation in the United States. Design documentation, testing, and submission of a PTC Safety Plan and associated HSR-125 document will be required to obtain PTC certification and approval to operate. The operational experience of ERTMS across the European high-speed rail network will provide operational safety and reliability data to support the PTC Safety Plan and HSR-125 document.

8.  89 FR 45934.

9.  For more information on the Community Benefits Agreement, see: https://hsr.ca.gov/​business-opportunities/​general-info/​community-benefits-agreement/​.

10.  In November 2023, 13 rail unions representing more than 160,000 workers signed a Memorandum of Understanding with California High-Speed Rail Authority, establishing a commitment for the use of highly skilled union labor required to operate and maintain the system.

11.  89 FR 45934.