IVIL Andrew C. Ertley
Hogan LoveHs US LLP
Columbia Square
55 5 Thirteenth Street, NW
Washington, DC 20004

Dear Mr. Ertley:

This responds to your request for a letter of interpretation regarding the applicability of the Federal Transit Administration's (FTA) Buy America regulation ( 49 CFR Part 661) to an engine aftertreatment by your client, Detroit Diesel Corporation (Detroit Diesel).

According to your letter, Detroit Diesel seeks an interpretation that its BlueTEC engine aftertreatment is a subcomponent of the bus engine, which itself is a component of rolling stock under 49 CFR 661.11, Appendix B. In support of its position, Detroit Diesel arguesthat BlueTEC is an integrated part of the engine for several reasons:

First, the United States Environmental Protection Agency (EPA) requires engine manufacturers to comply with heavy-duty diesel truck engine emission requirements by supplying a complete engine and aftertreatment system. Under the EPA's 2007 HeavyDuty Highway Final Rule, an integrated single system approach complies with the EPA's heavy duty diesel truck engine standard, which recognizes that an engine and its aftertreatment may interact with one another to form an integrated system. Although EPA regulations allow manufacturers some flexibility in meeting the requirements, the only current approach that meets the strict requirements is an engine/aftertreatment system.

According to your letter, once the EPA has certified a engine/aftertreatmnt system, a manufacturer cannot legally sell the engine and aftertreatment separately in the United States.  Furthermore, youstatethat Detroit Diesel would not be able to comply with the EPA's near-zero NOx emissions requirement without the integrated BlueTEC engine/aftertreatment system.  You also note that in its Clean Fuels Formula Grant Program Final Rule 7 FR 15051, March 30, 2007), FTA acknowledged exhaust aftertreatment technology such as diesel particulate filters and cooled exaust gas recirculating technology could be used to comply with EPA's 2007 and 2010 engine standards, and that such missions control devices could be considered as part of a singl system.

Second, you believe that technical considerations support analyzin BlueTEC as an integrated system.  According to your letter, BlueTEC operates as a technically integrated system, combining a number of technologie, including Exhaust Gas Recirculation (EGR), a Diesel Oxidaton Catalyst (DOC), a Diesel ParticulateFilter (DPF), and Selective Catalytic Reduction (SCR).  The EGR recirculates part of the cooled exhaust gas to the engine cylinders, which reduces NOx formation at its source.  As the exhaut leaves the engine, it then encounters the DOC, which uses a chemical reaction based on the DOC's internal palladium and platinum catalysts to reduce particulate matter and cabon monoxide emitted from the engine  The exhaust then travels through the DPF, which captures additional particulate matter and soot. The DPF will be periodically cleaned by running an active exhaust regeneration mode.  After leaving the DPF, the exhaust will then travel through the SCR devices, which uses a metal catalyst and urea-based Diesel Exhaust Fluid (DEF) additive to further reduce NOx in the exhaust stream. Finally, an on-board diagnostics (OBD) system monitors the health and performance of the engine and aftertreatment. The result of all of these interactive processes is an EPA-compliant exhaust. 

Finally, you state that FTA's regulations support an integrated analysis of BlueTEC. FTA's representative list of typical bus components in Appendix B to 49 CFR 661.11 lists "engines" as a rolling stock component, but as you point out, it does not address aftertreatment or exhaust or emissions devices. As part of your request, you provided a listing of representative components and their subassemblies or subcomponents that are either attached at the point of final assembly or at non-contiguous locations on the vehicle, such as the HVAC system, the pneumatic system, the electrical system, and the steering system. You note that PTA's grouping of these systems is not based on the physical clustering of the respective elements, but rather, on an analysis of how these
 interrelated elements function together in an integrated manner to effect a result.

Based on the foregoing, FTA concurs in your assessment that the BlueTEC aftertreatment system is a subcomponent of an engine, and the integrated elements should be treated as single component for purposes of compliance with FT A's Buy America regulation. FTA recognizes that although EPA regulations permit engine manufacturers with discretion in how best to comply with its emissions standards, an engine/aftertreatment system is the only system that currently complies with EPA regulations.  FTA also recognizes that under its Clean Fuels Formula Grant Program, an integrated engine/aftertreatment system may be considered as part of a single system.  FTA agrees with you that the engine and the related aftertreatment processes--the EGR, DOC, DPF, SCR, and OBD--are all part of an integrated system that functions interactively to result in an EPA-compliant exhaust.  Finally, FTA agrees that the regulatory definition of a rolling stock "component," particularly when addressing integrated systems such as those listed in Appendix B, can be based on a practical or functional rationale, rather than on a precise physical clustering on a vehicle.

Please keep in mind that under section 661.11 of FTA's Buy America regulation, at least sixty percent of rolling stock components, by cost, must be manufactured in the United States, and that at least sixty percent of a component's subcomponents must come from domestic sources in order for the component to be considered of domestic origin.  In order for a subcomponent to be considered of domestic origin, it must be manufactured in the United States, although its respective sub-subcomponents can come from any source, foreign or domestic.

Thank you for taking the time to contact me.  Feel free to contact Richard Wong (richard.wong@dot.gov) of my staff if you have any additional questions.

Sincerely,

Dorval R. Carter, Jr.