Mr. Richard Sherrer
OEM Account Manager Bus & Transit
Webasto Product North America, Inc.
326 Kings Highway
Clarksboro, New Jersey 08020-1404
Dear Mr. Sherrer:
This letter responds to your correspondence of July 22, 2004, in which you request, on behalf of Webasto and your competitors Espar Products, Inc., and Teleflex Thermo Technology, a Buy America non-availability component waiver for certain diesel and natural gas auxiliary heaters used on transit bus heating systems. For the following reasons, I have determined that a waiver is not appropriate here.
Applicable Law and Policy
Section 5323(j)(2)(C) of the Federal transit laws (49 U.S.C. 5301, et seq.) sets forth the general requirements for the procurement of rolling stock. This section provides that when rolling stock is procured with FTA funds, the cost of the components and subcomponents produced in the United States must be at least 60 percent of the cost of the components of the rolling stock; and the vehicle must undergo final assembly in the U.S.
The implementing regulations for rolling stock can be found at 49 C.F.R. 661.11. A component is considered domestic and, therefore, may be counted towards the 60 percent domestic content if “more that 60 percent of the subcomponents of that component, by cost, [are] of domestic origin; and the manufacture of the component [takes] place in the United States.” 49 C.F.R. 661.11(g). A subcomponent is an item one step removed from a component in the manufacturing process and incorporated directly into the component, and is of domestic origin if it is manufactured in the U.S. 49 C.F.R. 661.11(f) and (h).
On May 15, 2002, FTA granted a two-year component waiver for auxiliary heaters which expired on May 15, 2004. Webasto seeks a new waiver on the basis of domestic non-availability. In support of this request, you state that the waiver would allow your “OEM equipment-manufacturing partners, Gillig Corporation, New Flyer Industries, Neoplan USA, North American Bus Industries, BlueBird Coachworks and Daimler Chrysler Commercial Buses to count Webasto Product North America, Inc.’s auxiliary heaters as domestic for the purpose of calculating the aggregate domestic content of the vehicle.”
However, in response to FTA’s request for comments on this waiver request, three of the manufacturers you cite, Blue-Bird, Gillig, and Neoplan, stated that they use Webasto heaters in their buses and include them in the non-domestic (40 percent) category in their Buy America calculations. Because these manufacturers are able to comply with the requirements of Buy America, notwithstanding that they count the auxiliary heaters as foreign-sourced, and that other bus manufacturers may do likewise, there is no justification for granting the component waiver.
If you have any questions, please contact Joseph A. Pixley at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel