2010-13619. 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 Richland (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 American requirements of ARRA Section 1605(a) 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 the City for the purchase and use of a 42-inch by 24-inch AWWA C153 cement lined mechanical joint reducer tee fitting, manufactured outside of the U.S. 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 the project schedule and purchasing efforts attempting to meet Buy American compliance by the applicant, contractor and pipeline materials supplier. The domestic manufacturer notified the piping supplier that the shipment of the product would be delayed and 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 in accordance with the construction schedule.

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

DATES:

Effective Date: May 21, 2010.

FOR FURTHER INFORMATION CONTACT:

Bryan Fiedorczyk, CWSRF ARRA Program Management Analyst, Grants and Strategic Planning Unit, Office of Water & Watersheds (OWW), [phone], U.S. EPA Region 10 (OWW-137), 1200 Sixth Avenue, Suite 900, Seattle, WA 98101.

SUPPLEMENTARY INFORMATION:

In accordance with ARRA Section 1605(c) and OMB 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 a 42-inch by 24-inch AWWA C153 cement lined mechanical joint reducer tee fitting, manufactured outside of the U.S. The AWWA C153 reducer fittings will be incorporated as part of a wastewater treatment system upgrade project that will replace an energy intensive inefficient aeration treatment process with a plug flow fine bubble aeration system. The improvements will reduce energy consumption by more than 70% and reduce the discharge of suspended solids, biochemical oxygen demand and nitrogen into the Columbia River. The City received $3,049,304 of ARRA funding through the Clean Water State Revolving Fund to complete this project. The City was unable to find a supplier that could provide American manufactured reducer fittings to meet the project specific requirements and the construction schedule agreed upon for the project.

There are several noteworthy factors that impact this waiver analysis: (a) It is a late request because the waiver request came after the construction contract was signed; (b) 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,” and 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); (c) EPA has determined that the applicant ordered domestically manufactured AWWA C153 reducer fittings, and due to the supplier's inability to deliver one of the fittings on schedule, the applicant could not reasonably foresee they would need to request a waiver for a foreign made product.

The project contractor's piping supplier (H.D. Fowler) issued a purchase order to the manufacturer (Star Pipe Products) for the AWWA C153 reducer fittings (2 each) on February 23, 2010. One fitting is associated with the modification to the WWTF Aeration Basin 2 and the second fitting is associated with the modification to the WWTF Aeration Basin 1. The contract schedule requires that the subject product for Basin 2 be delivered to the project site by June 2, 2010, which will ensure the startup of Basin 2 by August 5, 2010 and the commissioning of Basin 2 by September 15, 2010. Work on the modification to Basin 1 is scheduled to commence immediately following the commissioning of Basin 2. The piping supplier placed the order with the manufacturer on the basis of an agreed ship date of May 24, 2010 [90 days from receipt of purchase order] for one of the two products and an agreed ship date of June 23, 2010 [120 days from receipt of purchase order] for the second of the two products. On March 30, 2010, the manufacturer notified the piping supplier that the shipment of the product would be delayed. The estimated time of arrival at the site would be June 26, 2010. The delay in shipment poses a negative impact to project construction costs, schedule, and employment. Late delivery would push the site piping installation into the same time frame as the diffuser installation in order to meet the project's contractual completion schedule. Since the reducer fitting is a central part of the piping scheme, most pipe cannot be installed prior to this central node being completed. Delay of the piping installation would impose extra costs of installation equipment (excavator, dump truck, and loader) that would need to remain on site for an additional month. Additionally, the contractor would need to lay off two full-time equivalent (FTE) employees (of the three FTE positions assigned to the project) for approximately 18 work days (between June 2nd and June 26th, 2010). Based on the technical evaluation conducted by EPA's consulting contractor (Cadmus), the available evidence supports the applicant's claim that the AWWA C153 reducer fitting for Basin 2 is not available from a domestic manufacturer within a timeframe that meets the project's schedule (i.e., delivery to the project site by June 2, 2010). Further, the domestic manufacturer has advised the Grants and Strategic Planning Unit that it has a substantial back log of orders and will not be adversely affected if the City cancels the purchase order.

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.

The April 28 memorandum defines “reasonably available quantity” as the quantity of iron, steel, or 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. 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 was 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 halt construction pending manufacture of domestically produced goods. To further delay construction is in direct conflict with the most fundamental economic purposes of ARRA; to create or retain jobs.

The Grants and Strategic Planning 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: Iron, Steel, and 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 U.S. production of a 42-inch by 24-inch AWWA C153 cement lined mechanical joint reducer tee fitting, 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 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 City is hereby granted a waiver from the Buy American requirements of Section 1605(a) of Public Law 111-5 for the purchase of a 42-inch by 24-inch AWWA C153 cement lined mechanical joint reducer tee fitting from a manufacturer outside of the U.S. 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: May 21, 2010.

Dennis J. McLerran,

Regional Administrator EPA, Region 10.