Buy America Requirements; Permanent Waiver for Microcomputers


Printer Friendly Number 64 FR 54855
10-08-99

[Federal Register:  October 8, 1999  (Volume 64, Number 195)]
[Proposed Rules]               
[Page 54855-54857]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08oc99-51]                         
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
49 CFR Part 661
[Docket No. FTA-99-5709]
RIN 2132-AA68
 
Buy America Requirements; Permanent Waiver for Microcomputers
AGENCY: Federal Transit Administration, DOT.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: In 1986, the Federal Transit Administration (FTA) adopted a 
waiver of its Buy America requirements for the purchase of 
microcomputers. FTA has been asked to review whether this waiver should 
be retained, revoked, or modified in light of changes in the computer 
industry since then. This Advance Notice of Proposed Rulemaking (ANPRM) 
solicits public comment on this question.
DATES: Comments on this ANPRM must be submitted by December 7, 1999.
ADDRESSES: Written comments must refer to the docket number appearing 
above and must be submitted to the Docket Clerk, United States 
Department of Transportation, Central Dockets Office, PL-401, Nassif 
Building, 400 Seventh Street SW, Washington, DC 20590. All comments 
received will be available for examination at the above address. Docket 
hours at the Nassif Building are from 10:00 a.m. to 5:00 p.m., Monday 
through Friday, except Federal holidays. Those desiring agency 
notification of receipt of their comments should include a self-
addressed stamped envelope or postcard with their comments.
FOR FURTHER INFORMATION CONTACT: For legal issues: Meghan G. Ludtke, 
Office of Chief Counsel, Federal Transit Administration, Room 9316, 
(202) 366-4011 (telephone) or (202) 366-3809 (fax) program/technical 
issues: Spiro M. Colivas, Office of Program Management, Acting 
Director, Office of Engineering, Federal Transit Administration, same 
address, Room 9311, (202) 493-0107 (telephone) or (202) 366-7951 (fax). 
Electronic access to this and other rules may be obtained through the 
FTA World Wide Web home page at http://www.fta.dot.gov, or by using the 
Universal Resources Locator (URL); both services are available seven 
days a week.
SUPPLEMENTARY INFORMATION:
I. Background
    In section 401 of the Surface Transportation Assistance Act of 1978 
(Pub. L. 95-594, 92 Stat. 2689), Congress first enacted the Buy America 
legislation applicable to the expenditure of Federal funds by 
recipients under FTA grant programs. FTA's implementing regulation was 
issued at 49 Part CFR 661. In January 1983, Congress repealed section 
401 and substituted section 165 of the Surface Transportation 
Assistance Act of 1982 (Pub. L. 97-424, 96 Stat. 2097). On July 5, 
1994, section 165 was codified at 49 U.S.C. 5323(j).
    The FTA Buy America Regulations, 49 CFR Part 661, apply to all 
federally assisted procurements using funds authorized by the Federal 
transit laws, 49 U.S.C. Chapter 53. The general Buy America requirement 
is that all manufactured products procured in projects funded under the 
Federal transit laws be produced in the United States. In 1986 under 49 
U.S.C. 5323(j)(2)(A) and (B) and the implementing regulations at 49 CFR 
661.7(b) and (c). FTA granted a general waiver of the Buy America 
requirements for microcomputer equipment and software of foreign 
origin. 49 CFR 661.7, Appendix A(d).
    On February 26, 1999, FTA received a request from Prima Facie, Inc. 
(petitioner) to re-examine the permanent waiver for microcomputers to 
determine if the basis for the subject waiver still exists, and, if 
not, whether it is appropriate for FTA to revoke the general waiver. 
Additionally, petitioner requests that FTA seek comments on whether 
modification of the waiver to include only selected types of 
microcomputer equipment is necessary and whether the inclusion of a 
microcomputer (chip) in a manufactured product should result in the 
entire product's being considered a microcomputer.
[[Page 54856]]
II. Petition for Removal or Modification of Permanent Waiver for 
Microcomputers
A. History of the Permanent Waiver
    Under 49 U.S.C. 5323(j), FTA may not obligate Federal funds for 
mass transportation projects unless all iron, steel, and manufactured 
products used in the project are produced in the United States. This 
requirement can be waived if, inter alia, its application would be 
inconsistent with the public interest (section 5323(j)(2)(A)) or if the 
goods are not reasonably available from domestic sources (section 
5323(j)(2)(3)).
    On January 5, 1985, in response to a request from the American 
Association of State Highway and Transportation Officials (AASHTO), FTA 
solicited comments from interested parties regarding the question of 
whether its grantees were experiencing difficulty in purchasing 
domestically produced microcomputer equipment appropriate to their 
needs (50 FR 1156). AASHTO requested that FTA amend its Buy America 
rule, arguing that small transit systems were unable to procure 
domestically produced equipment because chips and some other major 
components were not made in the United States. Because the rule 
required transit systems to obtain individual non-availability waivers, 
which was burdensome, AASHTO requested a general waiver. After 
reviewing the comments received, FTA provided a one-year waiver from 
the Buy America requirement for microcomputers because of the rapid 
technological changes in an expanding market for domestically produced 
computers (50 FR 18760). That waiver was extended for a second comment 
period a year later and subsequently made permanent (51 FR 19653, 51 FR 
36126). FTA noted that while new technology had increased the 
availability of hardware and software components, many product 
components were still made and assembled abroad, and it would be 
difficult to determine when, if ever, microcomputer component 
manufacturing would be relocated to the United States.
B. The Petition
    The petition from Prima Facie, Inc. is as follows:
ECKERT SEAMANS CHERIN & MELLOT, LLC
February 26, 1999
Patrick Reilly,
    Chief Counsel, Federal Transit Administration, 400 7th Street, 
SW, Washington, DC 20590.
    Dear Mr. Reilly: Under the provisions of 49 U.S.C. 
5323(j)(3)(2)(A) and (B) and implementing regulations set forth at 
49 CFR 661.7(b) and (c), the Federal Transit Administration (FTA) 
has granted a general waiver of the Buy America requirements for 
microcomputer equipment of foreign origin. This waiver is set forth 
in Appendix A of 49 CFR 661.7.
    It is clear that, without the waiver, microcomputer equipment 
would have to meet the requirements of 49 U.S.C. 5323(j)(1) and the 
implementing regulations at 49 CFR 661.5 which require that no FTA 
funds may be obligated for the procurement of manufactured products 
unless such manufactured products are produced in the United States.
    On behalf of Prima Facie, Inc., this letter will serve as a 
petition to the FTA to re-examine the subject waiver to determine if 
the basis for the waiver that existed at the time it was originally 
granted still exists; and, if not, whether it is appropriate for the 
FTA to revoke the general waiver.
    The original petition for the general waiver was made by the 
American Association of State Highway and Transportation Officials 
(AASHTO) to FTA's predecessor agency (the Urban Mass Transportation 
Administration [UMTA]) in 1985. The petition was based on the fact 
that many smaller transit systems were using microcomputers for 
their daily transit planning and daily programming needs and were 
unable to procure domestically produced equipment since chips and 
some major components were not made in the United States. AASHTO 
indicated that the public interest would be best served by the 
granting of a general public interest waiver. AASHTO stated that 
since transit systems were required to seek individual ``non-
availability'' waivers, the purchasing process for transit systems 
who would need or expect to need microcomputer equipment would be 
streamlined by the granting of the general waiver.
    It should be noted that UMTA originally granted the public 
interest waiver for a one-year period because of the ``rapid 
technological changes in an expanding market for domestically 
produced computers.''
    The waiver was made permanent in 1986, and has not been re-
examined since that time. At the time that the permanent waiver was 
granted, UMTA stated that the waiver was being made permanent 
because ``although new technology had increased the availability of 
hardware and software components, many product component(s) 
(microchips) are still made and assembled abroad.'' UMTA further 
stated that it would be difficult to estimate when, if ever, 
microcomputer component manufacturing would be relocated to the 
United States.
    ``Microcomputer'' was defined in the original waiver as ``[a] 
computer system whose processing unit is a microprocessor. A basic 
microcomputer includes a microprocessor, storage, and input/output 
facility, which may or may not be on one chip.'' In addition, 
``computer system'' was defined as
    ``[a] functional unit consisting of one or more computers and 
associated software that uses common storage for all or part of a 
program and also for all or part of the data necessary for the 
execution of the program; executes user-written or user-designated 
programs; performs user-designated data manipulation, including 
arithmetic operations and logic operations; and that can execute 
programs that modify themselves during their executions. A computer 
system may be a stand-alone unit or may consist of several 
interconnected units. Synonymous with ADP system, computing 
system.''
    Prima Facie believes that it is appropriate to re-examine the 
permanent waiver at this time for several reasons. First, the state 
of the microcomputer and microprocessor industry in the United 
States today is significantly different than when the waiver was 
originally issued in 1985/86. Second, the original intent of the 
waiver was to address the procurement of a significantly different 
type of equipment (the traditional ``desk-top'' computer) than 
recent application of the waiver by FTA (i.e., digital recording 
equipment). Third, the definition cited above may not be appropriate 
for the myriad of products to which the general waiver now applies 
under FTA's current application.
    A logical extension of FTA's current application of the waiver 
would be that any manufactured product that contains a data storage 
or processing unit should be granted a waiver from the Buy America 
requirements. This, in effect, would mean the almost total waiving 
of the Buy America requirements since the vast majority of products 
used today by transit systems contain some type of microprocessor 
which is significantly different than the microcomputer that was 
granted a waiver in 1985 (e.g., the following types of equipment all 
contain microprocessors--fare collection equipment; bus destination 
signs; rail car train control systems; radios; and bus diesel 
engines). As indicated above, in granting the original waiver, UMTA 
was examining the traditional ``desk-top'' computer--it was not 
examining the types of equipment cited in the previous sentence 
because the usage of microprocessors in that equipment just simply 
did not exist in general, broad application in 1985.
    In petitioning for the re-examination of the general waiver, 
Prima Facie specifically requests that FTA seek public comment on 
the following issues:
     -  Is the waiver out of date?
     -  Should the waiver, apply, if at all, only to selected 
types of microcomputer equipment?
     -  Is there any necessity for a waiver since the domestic 
market has changed so dramatically since 1985?
     -  Should the inclusion of a microcomputer (chip) in a 
manufactured product result in the entire product being considered 
as a microcomputer?
    Prima Facie certainly appreciates your immediate attention to 
this request. If I can provide any more information at this time, 
please do not hesitate to contact me.
  Sincerely,
Edward J. Gill, Jr.
On Behalf of Prima Facie, Inc.
cc: Shawn Marcell
[[Page 54857]]
III. Issues for Comment
    FTA invites public comment on the following issues:
    A. Is the microcomputer waiver out of date? The Petitioner believes 
that the state of the microcomputer as well as the microcomputer 
industry in the United States is significantly different today that 
when the waiver was issued in 1986.
    B. What are these differences, and are they relevant to the 
existing waiver?
    C. Should the permanent microcomputer waiver apply only to selected 
types of microcomputer equipment? The Petitioner asserts that the 
original intent of the waiver was to address the procurement of a 
significantly different type of equipment, specifically, the ``desk-
top'' computer. The recent application of the microcomputer waiver has 
been extended to such items as digital recording equipment.
    D. How is the use to which a microcomputer is put relevant to FTA's 
Buy America requirements?
    E. Petitioner asserts that the logical extension of FTA's current 
application of the permanent microcomputer waiver would be that any 
manufactured product that contains a data storage or processing unit 
qualifies for the permanent microcomputer waiver from the Buy America 
requirements. Further, petitioner asserts that such an application by 
FTA is essentially a total waiving of Buy America requirements, since 
the vast majority of manufactured products used by transit systems 
contain some type or form of microprocessor, and that is radically 
different than the microcomputer waiver that was granted by FTA in 
1985.
IV. Regulatory Analyses and Notices
    It does not appear, at this point, that any regulatory action with 
respect to the existing microcomputer waiver would be significant under 
Executive order 12866 or under the Department's Regulatory Policies and 
Procedures. We further believe that such action would require the 
preparation of a Federalism Assessment. We also do not believe that it 
would have a significant economic impact on a substantial number of 
transit systems because of the changes in the computer industry. This 
notice does not propose or contemplate new information collection 
requirements for purposes of the Paperwork Reduction Act of 1995, 44 
U.S.C. 3501-3520, nor would any subsequent action pursuant to this 
notice likely do so.
    Issued on: October 4, 1999.
Gordon J. Linton,
Administrator.
[FR Doc. 99-26285 Filed 10-7-99; 8:45 am]
BILLING CODE 4910-57-U