[Federal Register Volume 80, Number 218 (Thursday, November 12, 2015)]
[Notices]
[Pages 70074-70077]
[FR Doc No: 2015-28708]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket No. FRA-2012-0033]

Notice of Intent to Grant a Buy America Waiver to the National
Railroad Passenger Corporation (Amtrak) for the Use of Eight (8) Non-
Domestic Components in Tier III High-Speed Rail Trainsets

AGENCY: Federal Railroad Administration (FRA), United States Department
of Transportation (DOT).

ACTION: Notice of intent to grant Buy America waiver.

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SUMMARY: : FRA is issuing this notice to advise the public that it
intends to grant Amtrak a waiver from FRA's Buy America policy for the
use of eight components of Tier III high-speed rail (HSR) trainsets.

DATES: Written comments on FRA's determination to grant Amtrak's Buy

America waiver request should be provided to the FRA on or before
November 27, 2015.

ADDRESSES: Please submit your comments by one of the following means,
identifying your submissions by docket number FRA-2012-0033. All
electronic submissions must be made to the U.S. Government electronic
site at http://www.regulations.gov. Commenters should follow the
instructions below for mailed and hand-delivered comments:
    (1) Web site: http://www.regulations.gov. Follow the instructions
for submitting comments on the U.S. Government electronic docket site;
    (2) Fax:<PHONE_NUMBER>;
    (3) Mail: U.S. Department of Transportation, 1200 New Jersey Avenue
SE., Docket Operations, M-30, Room W12-140, Washington, DC 20590-0001;
or
    (4) Hand Delivery: Room W12-140 on the first floor of the West
Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    Instructions: All submissions must reference the ``Federal Railroad
Administration'' and include docket number FRA-2012-0033. Due to
security procedures in effect since October 2001, mail received through
the U.S. Postal Service may be subject to delays. Parties making
submissions responsive to this notice should consider using an express
mail firm to ensure the prompt filing of any submissions not filed
electronically or by hand. Note that all submissions received,
including any personal information therein, will be posted without
change or alteration to http://www.regulations.gov. For more
information, you may review DOT's complete Privacy Act Statement in the
Federal Register published on April 11, 2000 (65 FR 19477), or visit
http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Mr. John Johnson, Attorney-Advisor,
FRA Office of Chief Counsel, 1200 New Jersey Avenue SE., Mail Stop 25,
Washington, DC 20590,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: FRA is issuing this notice to advise the
public that it intends to grant Amtrak a waiver from FRA's Buy America
policy for the use of the following eight components of Tier III high-
speed rail (HSR) trainsets: (1) Aluminum car body shells (shell
structure/frame-end, floor, roof, side); (2) Integrated cab/CEM
structure; (3) vehicle paint; (4) brake control unit; (5) disc brake
equipment; (6) tread brake equipment/tread cleaners; (7) brake valves,
and (8) parking brake units (collectively ``Components''). The total
estimated cost of the Components under this waiver is $108.3 million,
or 6.8 percent of the estimated $1.6 billion cost for the 28 HSR
trainsets and spare Components Amtrak will purchase. Amtrak is seeking
a loan under FRA's Railroad Rehabilitation & Improvement Financing
(RRIF) loan program to finance its HSR trainset procurement. FRA
believes a waiver is appropriate because domestically-produced HSR
Components are not currently available in the United States, and even
if they could be produced in the United States, they would not be
delivered within a reasonable time. Although FRA is granting Amtrak's
request for these Components, Amtrak's HSR trainset supplier must
assemble the HSR trainsets (other than two (2) prototypes under a
previous FRA waiver) in the United States using Components and the
other 126 HSR components the supplier or its contractors will
manufacture in United States.
    The letter granting Amtrak's request is quoted below:
Bernard F. Reynolds, Vice President--Procurement & Logistics, National
Railroad Passenger Corporation, 60 Massachusetts Ave NE., Washington,
DC 20002.

Re: Request for Waiver of Buy America Requirement for Components of
Next Generation Trainsets

    Dear Mr. Reynolds:
    This letter is in response to your request dated November 3, 2014,
that the Federal Railroad Administration (FRA) grant the National
Railroad Passenger Corporation (Amtrak), a waiver from FRA's Buy
America policy applicable to FRA's Railroad Rehabilitation &
Improvement Financing (RRIF) loan program, which follows the
requirements of 49 U.S.C. 24405(a). FRA's Buy America requirement for
rolling stock, including HSR trainsets, requires domestic final
assembly of the trainsets and that all the components be manufactured
in the United States.
    FRA may waive the Buy America requirements if FRA finds that: (A)
Applying the requirements would be inconsistent with the public
interest; (B) the steel, iron, and goods manufactured in the United
States are not produced in sufficient and reasonably available amounts
or are not of a satisfactory quality; (C) rolling stock or power train
equipment cannot be bought or delivered to the United States within a
reasonable time; or (D) including domestic material will increase the
cost of the overall project by more than 25 percent.
    Amtrak seeks a waiver for the following components of Tier III
high-speed rail (HSR) trainsets: (1) Aluminum car body shells (shell
structure/frame-end, floor, roof, side); (2) Integrated cab/CEM
structure; (3) vehicle paint; (4) brake control unit; (5) disc brake
equipment; (6) tread brake equipment/tread cleaners; (7) brake valves,
and (8) parking brake units (Components). For the reasons contained in
this letter, FRA is granting Amtrak's request.
    Although FRA is granting Amtrak's request for these eight (8)
Components, Amtrak's HSR supplier or its contractors will manufacture
the other 126 HSR components, or 94 percent of all components, in the
United States. Amtrak estimates the total cost of the Components under
this waiver request is approximately 6.8 percent of the estimated $1.6
billion cost for the 28 HSR trainsets and spare Components Amtrak will
purchase. The cost by component per trainset is:

------------------------------------------------------------------------
                                                          Estimated cost
                        Component                          per trainset
------------------------------------------------------------------------
(1) Aluminum car body shells (shell structure/frame-end,      $2,960,000
 roof, side)............................................
(2) Integrated cab/CEM structure........................         $71,000
(3) Vehicle paint.......................................         $78,000
(4) Brake control unit; (5) disc brake equipment; (6)           $659,000
 tread brake equipment/tread cleaners; (7) brake valves,
 and (8) parking brake units............................
------------------------------------------------------------------------
    Total per Trainset..................................      $3,768,000
------------------------------------------------------------------------

    In July 2014, Amtrak issued a Request for Proposal for its
procurement of HSR trainsets. In October 2014, Amtrak received
technical proposals from manufacturers in response to its Request for
Proposals. After reviewing the proposals, Amtrak determined there were
seven (7) Components of the trainsets' 134 components that each
manufacturer indicated it could not source domestically. On November 3,
2014, Amtrak requested from the FRA a Buy America waiver for these
seven (7) components and the HSR trainset paint (discussed in more
detail below).
    Coordinating with FRA, in February 2015 Amtrak engaged the
Department of Commerce's National Institute of Standards and
Technology's Hollings Manufacturing Extension Partnership (NIST-MEP) to
scout for domestic manufacturers of the Components. In its April 2015
report, NIST-MEP did not

identify any suppliers making the exact Components. NIST-MEP did
identify a total of 23 potential suppliers that either make products
similar to the Components or claim to have the capability to
manufacture the Components. FRA asked Amtrak to investigate whether any
of the potential suppliers could manufacture the Components. After
analyzing the NIST-MEP report and Amtrak's report regarding follow-up
discussions with the potential suppliers, FRA finds that none of the
potential suppliers currently manufacture the Components.
    FRA supports Amtrak's required procurement timeline because the
timeline addresses current capacity constraints on the Northeast
Corridor and increasing demand for passenger rail. Further Amtrak's
timeline meets FRA's goal of establishing Tier III HSR \1\ in the
United States as soon as possible. Amtrak wants the HSR trainsets to be
in revenue service by 2018. To meet this date, the first body shell
deliveries must arrive approximately seventeen (17) months after notice
to proceed, which is scheduled for February 2016. Final assembly and
126 of the 134 trainsets' components will be manufactured in the United
States. FRA believes that operational Tier III HSR in the United States
will increase the attractiveness for manufacturers to establish more
HSR factories in the United States, strengthen the business case for a
new domestic HSR trainset industry to develop, stimulate the domestic
supply chain, and bring new high quality jobs to the United States. As
a result, FRA concludes that none of the NIST-MEP identified suppliers
could design, test, manufacture, and deliver the Components to meet
Amtrak's FRA-supported timeline, which means they cannot deliver the
Components within a reasonable time.
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    \1\ Tier III HSR trainsets are capable of traveling 220 miles
per hour.
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    Here is a summary of FRA's analysis based on Amtrak's and NIST-
MEP's outreach efforts:

------------------------------------------------------------------------
                                    Number of
           Component                potential          FRA findings
                                    suppliers
------------------------------------------------------------------------
(1) Car body Shell.............              12   None of the 12
                                                  potential suppliers
                                                  currently manufacture
                                                  aluminum car body
                                                  shells for passenger/
                                                  HSR trains.
                                                  After learning
                                                  more about the
                                                  requirements of the
                                                  project, 6 of 12
                                                  potential suppliers
                                                  expressed that they
                                                  are not interested in
                                                  the opportunity.
                                                  For the
                                                  remaining 6 potential
                                                  suppliers, FRA found
                                                  at least one of the
                                                  following applied to
                                                  each manufacturer.
                                                 [cir] inexperience
                                                  working with aluminum.
                                                 [cir] no experience
                                                  building passenger/HSR
                                                  aluminum car bodies.
                                                 [cir] no relevant
                                                  experience
                                                  manufacturing aluminum
                                                  car bodies; and/or.
                                                 [cir] have no equipment
                                                  to manufacture larger
                                                  extrusions necessary
                                                  for HSR car body
                                                  shell.
                                                  FRA estimates
                                                  that it could take car
                                                  body shell
                                                  manufacturers a
                                                  minimum of 18 to 24
                                                  months to establish
                                                  the required
                                                  facilities and
                                                  techniques. As a
                                                  result, FRA finds the
                                                  remaining 6 potential
                                                  suppliers not capable
                                                  of manufacturing the
                                                  car body shell within
                                                  a reasonable time.
(2) Integrated cab/CEM                        5   None of the 5
 structure.                                       potential suppliers
                                                  currently manufacture
                                                  CEM structures.
                                                  3 of 5
                                                  potential suppliers
                                                  were not interested in
                                                  the opportunity after
                                                  learning more about
                                                  it.
                                                  For the
                                                  remaining 2 potential
                                                  suppliers, FRA found
                                                  at least one of the
                                                  following applied to
                                                  each manufacturer.
                                                 [cir] no relevant
                                                  experience
                                                  manufacturing CEM
                                                  structures; and/or
                                                 [cir] no experience
                                                  building passenger/HSR
                                                  CEM structures or
                                                  similar relevant
                                                  experience fabricating
                                                  aluminum CEM
                                                  structures.
                                                 FRA estimates it could
                                                  take CEM structure
                                                  manufacturers a
                                                  minimum of 18 to 24
                                                  months to establish
                                                  the required
                                                  facilities and
                                                  techniques. As a
                                                  result, FRA finds the
                                                  remaining 2 potential
                                                  suppliers not capable
                                                  of manufacturing the
                                                  CEM structure shell
                                                  within a reasonable
                                                  time.
(3) Paint......................               3   As applied to
                                                  all 3 potential
                                                  suppliers.
                                                 [cir] Paint must be
                                                  applied where car body
                                                  shells are
                                                  manufactured to
                                                  protect against
                                                  corrosion and
                                                  oxidation while in
                                                  transit to the U.S.
                                                 [cir] The requirements,
                                                  including foreign
                                                  environmental
                                                  standards, for the
                                                  trainsets' paint would
                                                  involve at least one
                                                  year to develop the
                                                  paint, have it tested
                                                  and qualified for this
                                                  particular use, and
                                                  then exported.
                                                 As a result, FRA finds
                                                  that paint cannot be
                                                  manufactured and
                                                  delivered in a
                                                  reasonable time.
Brake System--(4) Brake Control               6   For safety
 Unit; (5) Disc Brake                             critical items such as
 Equipment; (6) Tread Brake                       the brake system, FRA
 Equipment/Tread Cleaners; (7)                    believes the brake
 Brake Valves, and (8) Parking                    system and its
 Brake Units.                                     components must be
                                                  supplied by a single,
                                                  service-proven
                                                  supplier.
                                                  None of the 6
                                                  potential suppliers
                                                  currently manufacture
                                                  brake systems for HSR
                                                  trains.
                                                  5 of 6
                                                  potential suppliers
                                                  have no experience
                                                  manufacturing rail
                                                  brake systems.
                                                 [cir] FRA finds that
                                                  these 5 potential
                                                  suppliers cannot
                                                  supply the brake
                                                  system.
                                                  1 potential
                                                  supplier is a major
                                                  domestic brake system
                                                  supplier that has
                                                  experience
                                                  manufacturing other
                                                  types of non-HSR
                                                  passenger rail brake
                                                  systems.
                                                 [cir] FRA estimates it
                                                  would take at least
                                                  two years to deliver a
                                                  HSR brake system.

                                                 [cir] FRA finds that
                                                  the time to design,
                                                  test, and manufacture
                                                  a HSR brake system
                                                  precludes this
                                                  manufacturer from
                                                  delivering the system
                                                  in a reasonable time.
------------------------------------------------------------------------

    On November 20, 2014, FRA published on its Web site public notice
of Amtrak's waiver request. FRA received thirteen (13) online comments
to this notice. Only one of the commenters identified a domestic source
for any of the Components. The commenter asserted that the potential
supplier identified in the table above is a major domestic brake system
supplier and is capable of providing the brake systems. However, as
described above, FRA has determined that brake systems are not
domestically available for HSR trainsets nor can the one potential
supplier deliver a brake system within a reasonable time. Of the
thirteen (13) comments, ten (10) commenters were in favor of granting
the waiver and three were against granting the waiver. Several of the
ten (10) commenters in favor of granting the waiver cited safety as
their reason. Many commenters also asserted that granting the waiver
would be necessary to establish HSR in the United States and would lay
a foundation for future domestic HSR manufacturing.
    The three commenters opposing the waiver argued that granting a
waiver will lead to more waivers and that manufacturers could produce
the HSR trainset components in the United States. Though domestic
production of the HSR trainset components for which a waiver has been
requested is theoretically possible, FRA believes significant safety,
capacity, and technology transfer problems would result. Moreover, the
delays to overcome these issues would negatively impact the schedules
proposed by Amtrak.
    FRA believes a waiver is appropriate because the Components are not
manufactured in the United States and because domestically-produced
Components meeting the specific safety/service-proven, technical,
design, and schedule needs of Amtrak cannot be delivered within a
reasonable time. FRA bases its determination on the following:
     All of Amtrak's bidders independently indicated in their
responses to Amtrak's Request for Proposal that the Components, other
than vehicle paint, could not be sourced domestically. As noted above,
the paint may be able to be manufactured domestically but cannot be
produced and exported in time to for use on the car shell components.
     The National Institute of Standards and Technology's
Hollings Manufacturing Extension Partnership (NIST-MEP) did not
identify any domestic manufacturer currently producing the Components.
     Amtrak conducted extensive outreach with manufacturers
NIST-MEP identified as potential future manufacturers for the non-
available components. FRA agrees with Amtrak's assertion that even if
any of the identified manufacturers would attempt to produce the
Components domestically, the Components could not be bought or produced
in the United States within a reasonable time.
    Pursuant to 49 U.S.C. 24405(a)(4), FRA is publishing notice of its
decision to grant Amtrak's waiver request in the Federal Register to
provide notice of such finding and an opportunity for public comment
after which this waiver will become effective. This waiver applies only
to the HSR trainset Components, including spares, for Amtrak's HSR
trainset procurement as identified in its November 3, 2014 waiver
request. Moreover, excluding assembly of prototype trainsets, which
have been addressed in a separate waiver, the trainsets must be finally
assembled in the United States, and all other components that are not
described in this waiver must have been produced in the United States
or be the subject of a future waiver.
    Questions about this letter can be directed to, John Johnson,
Attorney-Advisor, at<EMAIL_ADDRESS>or<PHONE_NUMBER>.

Sincerely,

Sarah Feinberg
Administrator

Sarah L. Inderbitzin,
Acting Chief Counsel.
[FR Doc. 2015-28708 Filed 11-10-15; 8:45 am]
BILLING CODE 4910-06-P