Ms. Joni Earl
Chief Executive Officer
401 South Jackson Street
Seattle, Washington 98104
Dear Ms. Earl:
This responds to your letter dated March 10, 2004, requesting a waiver of the final assembly requirements of Buy America for two prototype light rail vehicles (LRV) for Sound Transit. For the reasons below, I have determined that such a waiver is in the public interest.
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 Federal Transit Administration (FTA) funds, the cost of the components and subcomponents produced in the U.S. must be at least 60 percent of the total component cost and the vehicle must undergo final assembly in the U.S. You request a public interest waiver of the final assembly requirements for the first two vehicles.
49 U.S.C. 5323(j)(2)(A). This section provides that the general Buy America requirements may be waived if their application “would be inconsistent with the public interest.” The regulations implementing this section provide that “[i]n determining whether the conditions exist to grant this public interest waiver, the [FTA] will consider all appropriate factors on a case-by-case basis . . . .” 49 C.F.R. 661.7(b).
Arguments Made in Support of a Waiver
According to the information in your letter, Sound Transit issued a Request for Proposals (RFP) for 31 LRVs. The highest rated proposer, Kinkisharyo International and Mitsui and Co., CPEV Joint Venture (Kinkisharyo), certified non-compliance with the Buy America requirements for the assembly of two prototype vehicles.
You explain that these will be the first modern 1500 Vdc LRVs in the United States. According to your letter, there are some 1500 Vdc commuter rail operations in the Chicago area, but the technology has not been used for light rail anywhere in the U.S. Therefore, you argue, it is critical that Kinkisharyo test and qualify the electrical systems. According to your letter, this is best accomplished if Kinkisharyo is allowed to assemble and test the prototypes in its primary facility, with the accompanying expertise and test tracks, in Osaka, Japan. Japanese final assembly will allow Kinkisharyo to establish a quality control model, expedite vehicle production, and qualify the vehicle design. This will also ensure that the components and assemblies of the vehicles will interface properly and operate in accordance with its performance parameters. Testing in Japan will also improve the production and delivery schedule for the vehicles.
Summary of Comments
FTA posted a request for comments on this matter on our website and received 20 comments, 19 in support of the waiver and one against it. The argument against the waiver was made by Mackenzie Laboratories, Inc., who argued that the spirit of the Buy America Act is to promote domestic jobs and technology development unless it is not feasible. This commenter noted that Kinkisharyo would also need to test the production vehicles, and asked why not start the domestic testing with the pre-production vehicles? Mackenzie commented that testing in the Pacific Northwest would provide weather and infrastructure variables that a foreign test track may not take into consideration.
Southern California Regional Rail Authority commented that testing for new technology is best accomplished at the manufacturer’s primary facility and that the goals of Buy America should be balanced with the need for efficient testing. An individual electrical engineer supported testing equipment where it is developed because there are often modifications to be made during the commissioning process. An individual from Parsons Brinckerhoff Ohio commented that the development of 1500 Vdc LRVs could lower the cost of transit overall. The Southeastern Pennsylvania Transportation Authority (SEPTA) commented that final assembly of the pilot cars at a manufacturer’s facility is a key element in developing the detailed specifications and manufacturing procedures for the production vehicles. SEPTA also explained that proper design, production, and testing of the pilot vehicles at the home plant help insure a better quality and safer final product. 1 Richard Trail of Penn Machine noted that FTA has granted similar waivers in the past, and that this testing is critical. Fourteen commenters generally supported the waiver or provided comments similar to others already discussed.2
Consistent with our December 16, 2003, and our March 26, 2004, decisions where we granted public interest waivers for prototype vehicles, I find that the information provided here supports the issuance of this waiver. Given the public’s interest in riding and paying for properly tested trains, FTA believes that a final assembly waiver for the prototypes is in the public interest.
If you have any questions, please contact Meghan G. Ludtke, at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
cc: Ted Uyeno, Regional Counsel
1 SEPTA received a similar waiver from FTA on December 16, 2003.
2 DMJM+Harris; an individual commenter; two commenters from Washington Group International; a commenter from PB Transit & Rail Systems, Inc.; a commenter from Parsons; Mac Products, Inc.; Capital Metropolitan Transportation Authority; Transmetrics; Indianapolis Public Transportation Corporation; Fluor Corporation; Wilbur Smith Associates; Victor Valley Transit Authority; and Irwin Transportation Seating Company.