September 10, 2004
Mr. Christopher Crassweller
Manager Corporate and Legal Affairs
Orion Bus Industries
350 Hazelhurst Road
Mississauga, Ontario L5J 4T8
Dear Mr. Crassweller:
This letter responds to your correspondence of July 23, 2004, in which you request an extension of a Buy America waiver granted for the procurement of the GKN axle for use in your Orion II paratransit vehicle. On September 1, 2004, you modified your request, and explained that the Orion II has been discontinued, and accordingly, you request the waiver for only the remaining 18 units.
The Federal Transit Administration’s (FTA) requirements concerning domestic preference for federally funded transit projects are set forth in 49 U.S.C. 5323(j). Section 5323(j)(2)(C) addresses the general requirements for the procurement of rolling stock. This section provides that all rolling stock procured with FTA funds must have a domestic content of at least 60 percent and must undergo final assembly in the U.S. You request a waiver under 49 U.S.C. 5323(j)(2)(B), which states the Buy America requirements shall not apply if the item or items are not produced in the U.S. in sufficient and reasonably available quantities or are not of a satisfactory quality. The implementing regulation provides that non-availability waivers may be granted for a component and if granted, the component will be considered domestic when calculating domestic content for the purposes of 49 C.F.R. 661.11. 49 C.F.R. §661.7(f).
Background and Orion Arguments
You claim that the type of axle necessary for the production of the Orion II is not available from a domestic source, and that the circumstances which justified prior waivers in 1998, 2000, and 2002, have not changed. You also explain that you have not attempted to develop domestic sources for the axles because the Orion II has been discontinued. In addition to the representations in your correspondence, you have also provided me with a letter from Orion’s axle manufacturer, Arvin Meritor, who explains that it does not manufacture an axle suitable for the Orion II.
Summary of Comments
FTA posted a request for comments on this matter on our website. We received four comments, two against and two in favor of granting the waiver. Penn Machine Company suggested that before a waiver is granted, the domestic sources should be re-examined. Specifically, that the U.S. has a large automotive and truck manufacturing industry and that Orion should be able to identify several companies interested in a partnership. The Transit Marketing Group argued that granting these waivers is effectively raising the 40 percent foreign content permitted by statute and that vehicle manufacturers need to manage their content more effectively. Central Ohio Transit Authority and Trillium USA, LLC both stated that since there is no domestic source for the axle, a waiver should be granted.
The waiver granted on August 9, 2002, was “for the procurement of heavy-duty axles for the Orion II for the period of two years.” That waiver applies to these vehicles, which were manufactured within that period. Accordingly, Orion may certify compliance with Buy America when selling these vehicles.
If you have any questions, please contact Meghan G. Ludtke at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel