[Federal Register Volume 73, Number 154 (Friday, August 8, 2008)]
[Notices]
[Pages 46350-46352]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18313]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2008-0024]


Notice of Buy America Waiver for the National Fuel Cell Bus 
Technology Development Program

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of Buy America waiver.

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SUMMARY: On May 22, 2008, the Federal Transit Administration (FTA) 
published a Notice of Proposed Buy America Waiver for the National Fuel 
Cell Bus Technology Development Program (Fuel Cell Bus Program). After 
careful review of comments, FTA has decided to waive its Buy America 
requirements for projects funded under the Fuel Cell Bus Program. This 
Notice sets forth FTA's justification and response to comments.

FOR FURTHER INFORMATION CONTACT: For program questions please contact 
Christina Gikakis at (202) 366-2637 or christina.gikakis@dot.gov. For 
legal questions please contact Jayme L. Blakesley at (202) 366-0304 or 
jayme.blakesley@dot.gov.

SUPPLEMENTARY INFORMATION: This Notice sets forth the Federal Transit 
Administration's (FTA) justification for waiving its Buy America 
requirements for projects funded under the National Fuel Cell Bus 
Technology Development Program (Fuel Cell Bus Program).

The National Fuel Cell Bus Technology Development Program

    Section 3046 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU), Public Law 
109-59, instructed FTA ``to establish a national fuel cell bus 
technology program [Fuel Cell Bus Program] to facilitate the 
development of commercially viable fuel cell bus technology and related 
infrastructure.''
    By notice dated April 14, 2006, FTA solicited applications to the 
Fuel Cell Bus Program and restated the statutory criteria for 
evaluating applications. These criteria included the ability of the 
project ``to contribute significantly to furthering fuel cell 
technology as it relates to transit bus operations, including hydrogen 
production, energy storage, fuel cell technologies, vehicle systems 
integration, and power electronics technology,'' and to advance 
``different fuel cell technologies, including hydrogen-fueled and 
methanol-powered liquid-fueled fuel cell technologies, that may be 
viable for public transportation systems.'' 71 FR 19612 (April 14, 
2006).
    FTA selected three consortia to participate in the Fuel Cell Bus 
Program: the Center for Transportation and the Environment in Atlanta, 
the Northeast Advanced Vehicle Consortium in Boston, and Westart/
CALSTART in Pasadena. These consortia will manage fourteen projects. Of 
these, eight are development and demonstration projects, two are 
component technology development, and four support analysis, outreach 
and coordination.
    The Fuel Cell Bus Program seeks to develop commercially viable fuel 
cell buses by demonstrating that buses powered by fuel cell technology 
can achieve several technical targets, including a four to six year 
(20,000 to 30,000 hour) fuel cell durability, a cost of less than five 
times that of an equivalent diesel, greater than 90% reliability, twice 
the fuel efficiency of a comparable bus, emissions below the 2010 
Environmental Protection Agency standards and vehicle performance 
comparable to a diesel bus.

Public Interest Waiver

    The purpose of this notice is to articulate FTA's justification for 
waiving its Buy America requirements for all projects funded under the 
Fuel Cell Bus Program.
    With certain exceptions, FTA's ``Buy America'' requirements prevent 
FTA from obligating an amount that may be appropriated to carry out its 
program for a project unless ``the steel, iron, and manufactured goods 
used in the project are produced in the United States.'' 49 U.S.C. 
5323(j)(1). One such exception is if applying the Buy America 
requirements ``would be inconsistent with the public interest.'' 49 
U.S.C. 5323(j)(2)(A). After considering all appropriate factors on a 
case-by-case basis, 49 CFR 661.7(b), if FTA determines that the 
conditions exist to grant a public interest waiver, FTA will issue a 
detailed written statement justifying why the waiver is in the public 
interest, and will publish this justification in the Federal Register, 
providing the public with a reasonable time for notice and comment of 
not more than seven calendar days. 49 CFR 661.7(b).

Justification

    Because the U.S. market for fuel cell bus technology and related 
infrastructure is not fully developed, participants in the Fuel Cell 
Bus Program asked FTA to waive its Buy America requirements for 
projects funded under the Fuel Cell Bus Program. According to one 
participant, ``[a] successful Fuel Cell transit bus must meet and be 
consistent with the public transit market's ability to incorporate and 
afford such technology on a mass scale. * * * At this stage of 
technology development more engineering data is necessary to accurately 
specify a fuel cell for a competitive bid. [Requiring participants to 
comply with FTA's Buy America requirements] would significantly delay 
the development effort, would be extremely expensive, and would result 
in a huge set back to the overall development of Fuel Cell technology. 
[Allowing participants to use all available technology, regardless of 
origin,] is the fastest, soundest method to perfect the technology, 
assure future competition, and hasten the advent of fuel cell buses in 
transit.''
    In order to develop commercially viable fuel cell buses, FTA's Fuel 
Cell Bus Program must examine all current technologies. But at this 
time, because fuel cell technologies for transit are still in the 
developmental and technical validation phase, it is impossible to 
determine which configurations are most likely to reach 
commercialization. As development continues, the industry will require 
objective demonstrations and evaluations of different bus propulsion 
systems. Permitting participants to use foreign and domestic suppliers 
will allow FTA to evaluate which technologies are closest to successful 
deployment. If certain

[[Page 46351]]

technologies are omitted from the program because they are of foreign 
origin, it will severely affect FTA's ability to fully analyze fuel 
cell bus technology.
    There are several benefits to waiving FTA's Buy America 
requirements on a program-wide basis. FTA selected projects to include 
all significant technologies within a centrally managed program. By 
granting a waiver for the entire program, FTA can decrease the start-up 
time for individual projects. Otherwise, each project would have to 
apply for waivers on a case-by-case basis. This is impractical in a 
research setting. Research projects often encounter unexpected problems 
that require changes to the scope of work. The continued development of 
Fuel Cell technology will result in more choices for FTA grantees and 
better, more environmentally friendly, buses for the riding public. 
Successful demonstrations through the Fuel Cell Bus Program will 
increase awareness of fuel cell technology and foster a domestic 
industry by identifying and mitigating barriers and uncertainties in 
the market. A limited waiver to support research and development will 
increase and improve domestic technical expertise. Moreover, a fully 
inclusive public interest waiver will allow Fuel Cell Bus Program 
participants to collaborate to achieve the program goals in an 
appropriate timeframe. By reducing risk and expanding expertise, the 
Fuel Cell Bus Program will improve the availability of capital for a 
self-sustaining domestic fuel cell industry.

Summary of Comments

    On May 22, 2008, pursuant to 49 CFR 661.7(b), FTA published a 
detailed written statement in the Federal Register at 73 FR 29841. This 
notice stated why FTA proposed to waive its Buy America requirements 
for projects funded under the Fuel Cell Bus Program and allowed 
interested parties a reasonable time to comment on the proposed waiver.
    By an overwhelming margin, the commenters supported waiving FTA's 
Buy America requirements. Of the nine parties that submitted comments, 
six favor and only one opposes waiving FTA's Buy America requirements. 
The remaining two comments were ambiguous. One expressed interest in 
working with FTA but did not state its position on waiving FTA's Buy 
America requirements. The other stated the commenter's intent to submit 
comments at a later date (this intent was not realized as this party 
has not submitted comments to date). The following is a summary of the 
comments received.
    1. GE Global Research stated, ``[t]his program is supporting 
leading-edge research that requires sourcing partners from around the 
world to satisfy the challenging requirements set forth in the 
program.''
    2. The Northeast Advanced Vehicle Consortium commented, ``[t]he 
very nature of the research * * * requires that participating 
corporations are granted access to the most appropriate and advanced 
technologies in, what is in the United States, a nascent industry. 
Several of the participating business [sic], all experts in fuel-cell 
transportation research and development, have determined that procuring 
the best possible technologies will at times require them to acquire 
parts from foreign sources if they are to develop internationally 
competitive transportation products. * * * any delay in this critical 
development program [is] a lost opportunity to satisfy America's 
transportation needs for the twenty-first century.''
    3. Alameda-Contra Costa Transit District (AC Transit), an entity 
that has been developing fuel cell bus technology and supporting 
hydrogen fueling infrastructure since 1999, expressed its support of 
FTA's recommendation to waive the Buy America requirements for projects 
funded under the Fuel Cell Bus Program, stating that ``FTA staff has 
made a convincing case for a sound and reasonable process to expedite 
the research and development efforts in support of the deployment of 
fuel cell technology in the United States.'' According to AC Transit, 
demonstrating ``overall vehicle reliability and durability under real-
world, heavy-duty operating conditions'' will open up ``a new 
generation of technology * * * that not only can deliver significant 
benefits in air quality, noise reduction, and carbon emissions 
reductions, but will serve to help diversify our nation's fuel supply 
towards the goal of energy independence.''
    4. Nuvera Fuel Cells, a U.S.-based company that utilizes 
international cooperation for the fuel cell engine that will be used in 
the Fuel Cell Bus Program, supports a waiver, stating that ``[t]his 
waiver is important to ensure timely access to the latest engine 
technology.''
    5. UTC Power, a United Technologies Company based in South Windsor, 
Connecticut, supports waiving FTA's Buy America requirements because 
(1) ``the waiver will facilitate timely achievement of the Fuel Cell 
Bus Program objectives''; (2) ``validation of the commercial viability 
of fuel cell buses will stimulate and further expand the U.S. fuel cell 
industry''; and (3) ``the scope of the waiver is limited solely to the 
Fuel Cell Bus Program.''
    6. Santa Clara Valley Transportation Authority supports FTA's 
proposal ``so that [fuel cell bus] technology can develop beyond the 
present developmental/technical validation phase.''
    7. Delphi Corporation submitted comments but did not state whether 
it favored or disfavored waving FTA's Buy America requirements for 
projects funded under the Fuel Cell Bus Program. Delphi believes that 
its ``U.S.-developed fuel cell technology is applicable to heavy duty 
vehicle applications,'' and ``look[s] forward to any current or future 
opportunities to work with the FTA on assessing, developing, 
demonstrating and commercializing solid oxide fuel cell systems in 
public transit applications.''
    8. Air Products and Chemicals, Inc. (Air Products) submitted 
comments opposed to waiving FTA's Buy America requirements. According 
to Air Products, ``domestic sourcing difficulty does not apply to 
hydrogen fueling infrastructure and hydrogen'' because ``the two 
largest merchant hydrogen producers in the world are United States 
companies. The production capacity of these two firms can easily fuel 1 
million personal vehicles or 30,000 buses.''
    9. North American Bus Industries (NABI) submitted a comment stating 
that it ``intends to provide comments on the captioned matter within 
the next seven to ten days.'' To date, FTA has not received comments 
from NABI.

Response to Comments

    While it is not the intent of FTA to support or fund foreign 
suppliers of fueling infrastructure, FTA does feel that restricting the 
selected projects to U.S. suppliers would limit the ability of the 
managing consortia to select and demonstrate a range of innovative 
technologies.
    FTA agrees with Air Products that the Nation would be poorly served 
by a research program that contributes to the transfer of market 
leadership or Intellectual Property (IP) to foreign interests in the 
market for hydrogen infrastructure. FTA has determined that the 
infrastructure components of the Fuel Cell Bus Program are very small 
relative to the national hydrogen infrastructure markets, and appear to 
involve predominantly U.S. suppliers of infrastructure. Furthermore, 
some demonstration sites have not finalized plans for fueling 
infrastructure. Requiring project managers to apply for individual 
waivers as these decisions are finalized will significantly delay

[[Page 46352]]

project implementation. It would also restrict the flexibility of the 
sites to quickly change project partners and cost share, which is 
important in research programs to respond to unforeseen problems.
    Therefore, FTA feels there is no risk that this research program 
will contribute to the transfer of market leadership from a U.S. to a 
foreign entity in the national market for hydrogen infrastructure.
    In regard to IP, FTA fully appreciates the importance of IP in 
highly competitive industries. FTA has no interest in facilitating the 
transfer of IP from U.S. firms to foreign entities. FTA assures all 
concerned that, within the Fuel Cell Bus Program, all IP developed or 
retained by U.S. interests will remain under the control of those 
interests. There is no additional risk that IP belonging to U.S. 
interests will be unwittingly transferred to outside entities. Foreign 
companies participating in the National Fuel Cell Bus Program are 
required to agree to standardized data collection. Objective 
evaluations of the bus demonstration programs are a major component of 
the program and will provide U.S. companies non-proprietary performance 
data and analysis of all fueling infrastructure used in the program.
    FTA recognizes that U.S. companies have significant experience 
developing and operating hydrogen fueling stations. However, though 
hydrogen production has advanced further than fuel cell technology, FTA 
determines it is still beneficial to examine all available and 
developing technologies. In cases where infrastructure funding is a 
major component of the project, it is focused on novel applications, 
not on replicating or competing with efforts where U.S. companies have 
already proven to be capable leaders.
    In conclusion, FTA's review of the selection process and industry 
comments relating to the Fuel Cell Bus Program support our judgment 
that the transit industry and American public at large will best be 
served by a fuel cell bus research program not bound by Buy America 
requirements.

Waiver

    Therefore, after carefully considering all comments, and for the 
reasons stated in its justification above, FTA hereby waives its Buy 
America requirements for all projects funded through its Fuel Cell Bus 
Program. Quick and successful deployment of fuel cell bus technology 
and infrastructure is in the public interest. Fuel cell technology will 
benefit the environment by lessening carbon emissions and decreasing 
the use of petroleum and other fossil fuels. Allowing foreign 
technologies will allow the project teams to focus on commercial 
viability instead of having to make fundamental advances independent of 
existing technology. Ultimately, this will lead to increased domestic 
demand for fuel cell bus technology and infrastructure, resulting in a 
sustainable U.S. market.

    Issued this 31st day of July, 2008.
Severn E.S. Miller,
Chief Counsel.
[FR Doc. E8-18313 Filed 8-7-08; 8:45 am]
BILLING CODE 4910-57-P