[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Proposed Rules]
[Pages 26723-26724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10851]



Federal Transit Administration

49 CFR Part 661

[Docket No. FTA-2012-0009]

Notice of Proposed Buy America Waivers

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Notice of proposed Buy America waivers and request for 


SUMMARY: The Federal Transit Administration (FTA) received several 
requests to waive its Buy America requirements for products used in 
ticket vending machines--the Mars Electronics International (MEI) 
Sodeco BNA57/542 Bill Handling Unit, and BNR3-XX, BNR4-XX and BNR5-XX 
Bank Note Recycler product; and the Nextek Corporation (Nextek) BV-
6000AG (BV-6000) Currency Validator Tekpak. FTA seeks public comment 
before deciding whether to grant the requests.

DATES: Comments must be received by June 6, 2012. Late filed comments 
will be considered to the extent practicable.

ADDRESSES: Please submit your comments by only one of the following 
means, identifying your submissions by docket number FTA-2012-0009. All 
electronic submissions must be made to the U.S. Government electronic 
site at www.regulations.gov. Commenters should follow the instructions 
below for mailed and hand delivered comments.
    (1) Web site: www.regulations.gov. Follow the instructions for 
submitting comments on the U.S. Government electronic docket site;
    (2) Fax: (202) 493-2251;
    (3) Mail: U.S. Department of Transportation, 1200 New Jersey Avenue 
SE., Docket Operations, M-30, Room W12-140, Washington DC, 20590-0001.
    (4) Hand Delivery: Room W12-140 on the first floor of the West 
Building, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9:00 
a.m. and 5:00 p.m., Monday through Friday, except Federal holidays.
    Instructions: All submissions must refer to the ``Federal Transit 
Administration'' and include docket number FTA-2012-0009. 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 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 

FOR FURTHER INFORMATION CONTACT: Jayme L. Blakesley at (202) 366-0304 
or [email protected].

SUPPLMENTARY INFORMATION: The purpose of this notice is to seek public 
comment on whether the Federal Transit Administration should continue 
to waive its Buy America requirements for two years for Mars 
Electronics International (MEI)'s Sodeco BNA57/542 Bill Handling Unit 
BNR3-XX, BNR4-XX and BNR5-XX Bank Note Recycler products, and the 
Nextek Corporation's (Nextek) BV-6000AG (BV-6000) Currency Validator 
Tekpak, or whether FTA should extend the non-shift approach adopted in 
its 2007 Final Rule (72 FR 53688, September 20, 2007) to the 
procurement of such devices.

Waiver Request: MEI Sodeco BNA57/542 Bill Handling Unit

    MEI requested an extension of the Buy-America non-availability 
component waiver under CFR 661.7(g) for the MEI Sodeco BNA57/542 Bill 
Handling Units. The FTA granted the initial waiver for these products 
on July 21, 2000, and has extended the waiver periodically ever since, 
on December 10, 2003, November 12, 2004, October 20, 2006, and February 
23, 2009.
    Buy America requires, with few exceptions, that all steel, iron and 
manufactured goods used in FTA-funded projects be produced in the 
United States. One such exception is that of non-availability, that in 
some instances steel, iron, and goods produced in the United States are 
not produced in the United States in sufficient and reasonably 
available quantities or are not of a satisfactory quality. Therefore, 
Congress authorized FTA to waive the above requirement and allow, based 
on non-availability, the use in an FTA-funded project of steel, iron or 
manufactured goods produced outside the United States.
    According to MEI, the Sodeco BNA57/542 Bill Handling Units includes 
a multiple bill escrow (up to 15 bills) that enables return of the 
customer's inserted bills in situations where the transaction is not 
complete. The unit has the ability to identify, validate and accept 
multiple note denominations (US $1, $5, $10, $20, $50, $100) utilizing 
all optical recognition, and allowing for the acceptance of bills in a 
face up or face down orientation. It also supports remote download, 
giving a transit agency the option of downloading new bill recognition 
software (bill variants) via network from one central location.
    MEI's customers include the Washington Metropolitan Area Transit 
Authority (WMATA), New York City Transit (MTA), and the Bay Area Rapid 
Transit Authority (BART).
    In 1999, to support its initial waiver request, MEI performed a 
market research study. It found no equivalent products manufactured 
within the United States. In preparation of the instant waiver request, 
MEI reviewed its earlier findings and compared them with the known 
providers of payment systems to the transit market. They found no US 
manufacturers of functionally equivalent products. Companies they 
identified who supply a similar product--GAO/Geiseke & Deviran (G&D), 
Toyocom, and Cashcode--all manufacture their products outside of the 
United States.

Waiver Request: MEI BNY3-XX & BNR5-XX Bank Note Recycler Products

    In a letter dated February 28, 2011, MEI requested an extension of 
the Buy America non-availability component waiver under CFR 667.7(g) 
for BNY3-XX & BNR5-XX Bank Note Recycler products. The initial waiver 
was granted by FTA on October 20, 2008. The Bank Note Recycler (BNR) 
can accept and validate bank notes and pay them back out as change. The 
unit has the ability to identify, validate and accept multiple bank 
note denominations (US $1, $5, $10, $20, $50, $100) utilizing all 
optical recognition. This allows for the acceptance of bank notes in a 
face-up or facedown orientation. The unit has multiple-note escrow 
function (up to 15 Bank notes) that enables return of the customer's 
inserted bank notes, in situations where the transaction is not 
complete, or presentation of bank notes

[[Page 26724]]

being paid back as change in one bundle. The BNR performs this 
operation through a single hole in the Ticket Vending Machine (TVM) 
cabinet. It can utilize up to four separate recycling devices on which 
bank notes are accumulated and from which bank notes are dispensed as 
change. The unit also has a ``loader cassette'' which provides 
temporary storage of bank notes that are used to restock the recyclers 
when they become empty due to excessive change making. This ``loader 
cassette'' is protected against theft by lock and key and remote 
download. MEI asserts that there are no US manufacturers of 
functionally equivalent products. The only other manufacturer they 
identified is Cashcode, which manufactures outside the United States.

Waiver Request: Nextek Corporation: BV-6000AG (BV-6000) Currency 

    Nextek Corporation (Nextek) requests a Buy America waiver for the 
BV-6000AG (BV-6000) Currency Validator; which is manufactured in Japan 
by Toyo Networks & System Integration, Ltd. (TNSi) for use in ticket 
vending machines. After calling for notice and comment, FTA granted a 
non-availability waiver to the Nextek Corporation for the BV-6000 on 
October 20, 2006. No domestic supplier has made itself known to FTA.

Applicability of FTA's 2007 Regulatory Amendments

    In its September 2007 Final Rule (72 FR 53688), FTA adopted a non-
shift approach to address the aftermarket procurement of replacement 
components and subcomponents. Prior to the adoption of the Final Rule, 
procurements of replacements parts were treated as procurements of end 
products, i.e., not only must the deliverable item be manufactured in 
the United States, but each component must also be of domestic origin. 
Implementation of this policy led to confusion and inconsistencies 
among transit operators and their suppliers, who urged FTA to adopt a 
non-shift approach that would treat replacement parts consistent with 
the procurement of the original product, i.e., if a product was a 
subcomponent in the initial procurement, it would be treated as a 
subcomponent in all subsequent procurements. This approach, according 
to proponents, would foster reasonable predictability and stability in 
the transit business community, enable bidders and vendors to price 
proposals more accurately, and allow transit agencies to obtain more 
competitive pricing.
    In the same rulemaking, FTA added the term ``system'' to its 
definition of ``end product.'' Prior to the rulemaking, the 
manufacturer of a fare collection system filed complaints with FTA 
concerning the regulatory compliance of a fare collection system 
manufactured by a competitor. The complainant posited that every 
mechanical component of the fare collection system should be treated as 
an end product--ticket vending machines, fareboxes, faregates, etc. not 
only would have to be manufactured in the United States, but each 
component of those devices would similarly need to be of domestic 
origin. Under this interpretation, the petitioners and their customers 
would have needed a Buy America waiver in order to install a foreign-
made bill-handler, bank note recycler, and currency validator into a 
US-made fare collection device.
    In the Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) (Pub L. 109-59, August 10, 2005), 
Congress directed FTA to address the procurement of systems to ensure 
that major system procurements were not used to circumvent Buy America 
requirements. FTA sought comment on whether it should include 
``systems'' within the definition of ``end product.'' Commenters 
generally supported this approach, with a caveat that FTA should 
tightly monitor the treatment of systems to ensure that procurements of 
extremely large and complex super-systems would not be able to 
undermine the intent of FTA's Buy America requirements. Among the 
factors FTA examines in assessing whether a ``system'' is an ``end 
product'' are: (1) Whether the items are the subject of a single 
procurement; (2) whether the parts of that system are under a single 
warranty; (3) whether the resulting end product was functionally 
different from a mere assembly of elements or materials; and most 
importantly; (4) whether the individual parts performed on a integrated 
basis with the other parts of the system.
    Based on SAFETEA-LU and its 2007 rulemaking, FTA believes fare 
collection devices can be regarded as components, and their constituent 
parts treated as subcomponents, which, consistent with 49 CFR 
661.5(d)(2), could come from any foreign or domestic source, provided 
that the component itself was manufactured in the United States. A 
formal FTA adoption of this approach would eliminate the need for firms 
such as MEI and Nextek to seek biennial waivers that would permit the 
inclusion of foreign subcomponents into their devices, particularly 
when no interested domestic vendor has identified itself to FTA or the 
two petitioners during the intervening decade.
    FTA invites comment on MEI and Nextek's waiver request and the 
classification of such devices as subcomponents from all interested 
parties. Commenters may wish to address potential ramifications of 
categorizing these devices as subcomponents, whether there are 
domestically-manufactured substitutes, whether petitioners have done an 
adequate job of reaching out to potential domestic manufacturers, and 
what FTA can do to encourage domestic firms to manufacture products 
that are the subject of these non-availability waiver requests.
    In the interest of transparency, FTA has published copies of MEI's 
and Nextek's requests to the docket. Interested parties may submit 
comments on or before June 6, 2012. Late-filed comments will be 
considered to the extent practicable.

    Issued this 1st day of May 2012.
Dorval R. Carter, Jr.,
Chief Counsel.
[FR Doc. 2012-10851 Filed 5-4-12; 8:45 am]