Notice2022-27097
Public Interest De Minimis and Small Grants Waiver of Build America, Buy America Provisions as Applied to Recipients of HUD Federal Financial Assistance
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Published
December 14, 2022
Effective
November 23, 2022
Issuing agencies
Housing and Urban Development Department
Abstract
In accordance with the Build America, Buy America Act ("BABA" or "the Act") this notice advises that HUD has issued a departmentwide public interest De Minimis and Small Grants waiver to the Buy America Domestic Content Procurement Preference ("Buy America Preference," or "BAP") as applied to the iron, steel, manufactured products, and construction materials requirement of the Act for recipients of Federal Financial Assistance ("FFA"). For the purposes of this waiver, HUD has waived the application of the BAP for infrastructure projects whose total cost (including HUD funding and funding from any other source) is an amount equal to or less than the Simplified acquisition threshold, which is currently $250,000. HUD has also waived the application of the BAP for all Small Grants of FFA provided by HUD that are equal to or below the Simplified acquisition threshold, which is currently $250,000. However, if FFA provided by HUD is combined with other FFA from another Federal agency, and the total amount of FFA in a single project is greater than the Simplified acquisition threshold, currently $250,000, then the waiver shall not apply to the FFA provided by HUD. Additionally, HUD has waived the application of the BAP for a De Minimis portion of an infrastructure project, meaning a cumulative total of no more than 5 percent of the total cost of the iron, steel, manufactured products, and construction materials used in and incorporated into the infrastructure project, up to a maximum of $1 million. In accordance with the Act, HUD has found that such De Minimis and Small Grants waivers are in the public interest. The waiver will assist HUD and its grantees and funding recipients in preventing immediate delays to critically important projects that serve to ensuring the safety and health of HUD constituents and continuing to provide economic opportunity through housing and community development projects. Moreover, this waiver will assist HUD in working to strengthen the housing market to bolster the economy and protect consumers, meet the need for quality affordable rental homes, utilize housing as a platform for improving quality of life, and build inclusive and sustainable communities free from discrimination.
Full Text
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<title>Federal Register, Volume 87 Issue 239 (Wednesday, December 14, 2022)</title>
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[Federal Register Volume 87, Number 239 (Wednesday, December 14, 2022)]
[Notices]
[Pages 76502-76505]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27097]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6331-N-08A]
Public Interest De Minimis and Small Grants Waiver of Build
America, Buy America Provisions as Applied to Recipients of HUD Federal
Financial Assistance
AGENCY: Office of the Secretary, U.S. Department of Housing and Urban
Development (HUD).
ACTION: Final notice.
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[[Page 76503]]
SUMMARY: In accordance with the Build America, Buy America Act
(``BABA'' or ``the Act'') this notice advises that HUD has issued a
departmentwide public interest De Minimis and Small Grants waiver to
the Buy America Domestic Content Procurement Preference (``Buy America
Preference,'' or ``BAP'') as applied to the iron, steel, manufactured
products, and construction materials requirement of the Act for
recipients of Federal Financial Assistance (``FFA''). For the purposes
of this waiver, HUD has waived the application of the BAP for
infrastructure projects whose total cost (including HUD funding and
funding from any other source) is an amount equal to or less than the
Simplified acquisition threshold, which is currently $250,000. HUD has
also waived the application of the BAP for all Small Grants of FFA
provided by HUD that are equal to or below the Simplified acquisition
threshold, which is currently $250,000. However, if FFA provided by HUD
is combined with other FFA from another Federal agency, and the total
amount of FFA in a single project is greater than the Simplified
acquisition threshold, currently $250,000, then the waiver shall not
apply to the FFA provided by HUD. Additionally, HUD has waived the
application of the BAP for a De Minimis portion of an infrastructure
project, meaning a cumulative total of no more than 5 percent of the
total cost of the iron, steel, manufactured products, and construction
materials used in and incorporated into the infrastructure project, up
to a maximum of $1 million.
In accordance with the Act, HUD has found that such De Minimis and
Small Grants waivers are in the public interest. The waiver will assist
HUD and its grantees and funding recipients in preventing immediate
delays to critically important projects that serve to ensuring the
safety and health of HUD constituents and continuing to provide
economic opportunity through housing and community development
projects. Moreover, this waiver will assist HUD in working to
strengthen the housing market to bolster the economy and protect
consumers, meet the need for quality affordable rental homes, utilize
housing as a platform for improving quality of life, and build
inclusive and sustainable communities free from discrimination.
DATES: As required under section 70914 of the Act, HUD published this
proposed waiver on its website on October 31, 2022, for public comment.
In addition, HUD published the proposed waiver in the Federal Register.
Comments on the proposed waiver set out in this document were due on or
before November 15, 2022. Through this final notice, HUD is announcing
that it has issued this waiver effective November 23, 2022. This waiver
will remain effective for a period of five years or such shorter time
period as HUD may announce via notice.
FOR FURTHER INFORMATION CONTACT: Joseph Carlile, Department of Housing
and Urban Development, 451 Seventh Street SW, Room 10226, Washington,
DC 20410-5000, at (202) 402-7082 (this is not a toll-free number). HUD
welcomes and is prepared to receive calls from individuals who are deaf
or hard of hearing, as well as individuals with speech and
communication disabilities. To learn more about how to make an
accessible telephone call, please visit <a href="https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>. HUD encourages submission
of questions about this document be sent to
<a href="/cdn-cgi/l/email-protection#5e1c2b37323a1f333b2c373d3f1c2b271f333b2c373d3f1e362b3a70393128"><span class="__cf_email__" data-cfemail="baf8cfd3d6defbd7dfc8d3d9dbf8cfc3fbd7dfc8d3d9dbfad2cfde94ddd5cc">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Build America, Buy America
The Build America, Buy America Act (``BABA'' or ``the Act'') was
enacted on November 15, 2021, as part of the Infrastructure Investment
and Jobs Act (IIJA). Public Law 117-58. The Act establishes a domestic
content procurement preference, the BAP, for Federal infrastructure
programs. Section 70914(a) of the Act establishes that no later than
180 days after the date of enactment, HUD must ensure that none of the
funds made available for infrastructure projects may be obligated by
the Department unless it has taken steps to ensure that the iron,
steel, manufactured products, and construction materials used in a
project are produced in the United States. In section 70912, the Act
further defines a project to include ``the construction, alteration,
maintenance, or repair of infrastructure in the United States'' and
includes within the definition of infrastructure those items
traditionally included along with buildings and real property. Thus,
starting May 14, 2022, new awards of FFA from a program for
infrastructure, and any of those funds obligated by the grantee, are
covered under BABA provisions of the Act, 41 U.S.C. 8301 note, unless
covered by a waiver.
II. HUD's Progress in Implementation of the Act
Since the enactment of the Act, HUD has worked diligently to
implement the BAP. Consistent with the requirements of section 70913 of
the Act, HUD produced a report identifying and evaluating all of HUD's
FFA programs for compliance with the BAP on January 19, 2022, through
Federal Register notice ``Identification of Federal Financial
Assistance Infrastructure Programs Subject to the Build America, Buy
America Provisions of the Infrastructure Investment and Jobs Act.'' (87
FR 2894) In order to ensure orderly implementation of the BAP across
HUD's programs, HUD published two general applicability waivers for
HUD's programs on May 3, 2022. The first notice, ``General
Applicability Waiver of Build America, Buy America Provisions as
Applied to Recipients of HUD Federal Financial Assistance'' (87 FR
26219), extended the implementation date for the BAP until November 14,
2022, unless covered by a subsequent waiver. Thus, no funds obligated
by HUD before November 14, 2022, are subject to the BAP. The second
notice, ``General Applicability Waiver of Build America, Buy America
Provisions as Applied to Tribal Recipients of HUD Federal Financial
Assistance'' (87 FR 26221), extended the implementation date for the
BAP for Federal Financial Assistance (``FFA'') provided to Tribal
recipients for a period of one year. HUD published a notice proposing
the waiver that is being finalized through this notice on its website
on October 31, 2022, and via the Federal Register. Additional details
on HUD's implementation of the BABA requirements can be found at
<a href="https://www.hud.gov/programoffices/generalcounsel/BABA">https://www.hud.gov/programoffices/generalcounsel/BABA</a>.
III. Waiver Authority
Under section 70914(b), HUD has authority to waive the application
of a domestic content procurement preference when (1) application of
the preference would be contrary to the public interest, (2) the
materials and products subject to the preference are not produced in
the United States at a sufficient and reasonably available quantity or
satisfactory quality, or (3) inclusion of domestically produced
materials and products would increase the cost of completing the
infrastructure project by more than 25 percent. Section 70914(c)
provides that a waiver under 70914(b) must be published by the agency
with a detailed written explanation for the proposed determination and
provide a public comment period of not less than 15 days.
[[Page 76504]]
IV. Public Interest in This General Applicability Waiver of Buy America
Provisions
The Office of Management and Budget's April 18, 2022, memorandum,
``Initial Implementation Guidance on Application of Buy America
Preference in Federal Financial Assistance Programs for
Infrastructure'' (M-22-11) encourages agencies to consider whether it
is in the public interest to waive application of a BAP to awards below
the Simplified acquisition threshold. HUD is issuing this waiver not as
an alternative to increasing domestic production, but as an important
tool to implement the Buy American provisions in the most efficient
manner. HUD understands that advancing Made in America objectives is a
continuous effort. HUD plans to move forward to implement the new
requirements in a way that maximizes coordination and collaboration to
support long-term investments in domestic production.
Through this notice, HUD has waived the application of the BAP for
infrastructure projects whose total cost (including HUD funding and
funding from any other source) is an amount equal to or less than the 2
CFR 200.1 Simplified acquisition threshold, which is currently
$250,000. HUD has also waived the application of the BAP for all Small
Grants of Federal Financial Assistance provided by HUD that are equal
to or below the 2 CFR 200.1 Simplified acquisition threshold, which is
currently $250,000. However, if FFA provided by HUD is combined with
other FFA from another Federal agency, and the total amount of FFA in a
single project is greater than the Simplified acquisition threshold,
currently $250,000, then the waiver shall not apply to the FFA provided
by HUD. HUD has also waived the application of the BAP for a De Minimis
portion of an infrastructure project, meaning a cumulative total of no
more than 5 percent of the total cost of the iron, steel, manufactured
products, and construction materials used in and incorporated into the
infrastructure project, up to a maximum of $1 million.
For purposes of the Act, an infrastructure project involves the
undertaking of any ``construction, alteration, maintenance, or repair''
of ``infrastructure,'' which includes, among other things, the
``structures, facilities and equipment'' of ``buildings and real
property.''
In accordance with the Act, HUD has found that such De Minimis and
Small Grants waivers are in the public interest. Such waivers will
allow HUD, grantees and funding recipients to focus their efforts on
such critical projects. Issuing the waivers is not an alternative to
increasing domestic production. The waivers are in the interest of
efficiency, to ease burdens for HUD grantees and funding recipients,
and will also allow HUD to focus, particularly in the early phases of
BABA implementation, on key products, and critical supply chains where
increased U.S. manufacturing can best advance our economic and national
security. These waivers will allow HUD grantees and funding recipients
to continue with projects. Without these waivers, HUD grantee and
funding recipient participation could be impacted, such as modification
of current plans.
HUD is issuing this waiver to facilitate the effective
implementation of the BAP and will therefore not permit the artificial
subdivision of infrastructure projects to fit within the scope of this
waiver of the BAP. Thus, for purposes of this waiver, HUD will evaluate
the total cost of the infrastructure project as it would for purposes
of the review contemplated under 24 CFR part 58, i.e., by defining the
scope consistent with 24 CFR 58.2(a)(4), as ``the activity, or a group
of integrally related activities, designed by the recipient to
accomplish, in whole or in part, a specific objective.'' HUD believes
its grantees and recipients of FFA that will be used for infrastructure
projects are familiar with this regulation and understand the proper
application of the concept in connection with their activities, or as
otherwise defined by HUD in a notice. However, in connection with the
public housing program, evaluation of certain maintenance and repair
activities within the definition of infrastructure projects under the
Act is not appropriate using this standard. Therefore, for the purposes
of determining the applicability of this waiver in connection with the
maintenance and repair of public housing, HUD will evaluate the
infrastructure project as including the single relevant procurement
contract for such maintenance or repairs, or, where applicable, the
collection of procurements focused on the same specific objective
(e.g., construction of a resident service space) or limited scope of
work (e.g., lead based paint abatement).
In fiscal year 2022, HUD grantees will receive more than $15
billion through the Department's programs where infrastructure is an
eligible activity and may be subject to the BAP. For example, Community
Development Block Grant (``CDBG'') funds may be used for infrastructure
projects (e.g., water and sewer improvements, street improvements,
neighborhood facilities) or non-infrastructure uses (e.g., senior
services, youth services, operation of food banks, administrative and
planning expenses). HUD estimates that 40 percent of CDBG funds awarded
in 2021 ($1.4 billion of $3.5 billion total) were used on
infrastructure projects where the BAP could apply.
As HUD's initial waivers advised and as supported by several
comments received during the comment period on those waivers, many of
HUD's programs may be subject to the BAP and have previously not
required compliance with similar Buy American preferences. Because the
potential application of BAP mandated by the Act is new to the majority
of HUD's programs and FFA, this waiver advances BABA by reducing the
administrative burden to potential assistance recipients where the
costs of compliance with BABA could distract from the focus on higher
value BABA compliant items. Failure to provide recipients such
flexibilities could delay the award for infrastructure projects as
grantees and funding recipients must exert considerable effort
accounting for the sourcing for miscellaneous, low-cost items.
Moreover, HUD does not believe the waiver of the BAP for such awards
will undermine the full and robust implementation of the Act or the
ability of the agency to support the purposes behind the Act.
HUD expects to review this waiver every five years from the
effective date of this waiver or more often as appropriate. No funds
obligated by HUD or the grantee/funding recipient during the period of
the waiver that are exempted from compliance with BAP as a result of
the waiver will be required to apply the BAP.
V. Public Comments on the Waiver
As required under section 70914 of the Act, HUD solicited comment
from the public on the public interest waiver announced in this notice
on its website and then published the proposed waiver in the Federal
Register. A total of 14 comments were received in response to the
proposed waiver. HUD thoroughly reviewed and considered each of the
comments in determining to move forward with the issuance of this
waiver as published in this final notice. The comments generally
favored a De Minimis and Small Dollar waiver as proposed.
A few commenters expressed support for a broader scope waiver,
including requesting higher limits for a Small Grants exclusion, a
higher percentage exclusion on portions of infrastructure
[[Page 76505]]
projects, and a higher cap on the total cost under the De Minimis
waiver. A similar number of commenters requested that the limits be
lowered to afford more opportunities for the application of the BAP.
HUD appreciates the comments from both perspectives, but believes that,
as an initial matter, the limits proposed in the initial waiver are set
at the appropriate levels to balance the intent of the Act with the
public interest in the continued efficiency and success of
infrastructure projects funded through HUD's affordable housing and
community development programs. HUD declines to make changes to the
amounts represented by these limits at this time, but is clarifying
that all FFA, whether received by HUD or from another Federal source,
in connection with infrastructure projects must be used to calculate
the total, cumulative FFA in a single project to determine the
applicability of a Small Grants waiver. HUD will continue to monitor
the implementation of the BAP across its programs to ensure the most
robust application possible in light of the important public interests
discussed above.
Several proponents of the waiver requested that HUD provide greater
clarity regarding the implementation of the BAP and the appropriate
application of this waiver. HUD appreciates these comments and will
continue to work to develop robust guidance regarding the
implementation of the BAP across its programs. HUD remains committed to
reviewing the waivers it issues every five years or more often if
necessary and appropriate.
A few comments were received from manufacturers and trade
organizations that opposed portions of the proposed waiver because they
would prefer a more narrowly tailored waiver, if a waiver is issued at
all. These commenters expressed confusion over the reference to Minor
Components in the proposed waiver. HUD agrees that use of the term
Minor Components did not accurately reflect the waiver HUD was
proposing. As a result, the waiver issued by HUD and announced via this
final notice deletes all references to Minor Components and instead
focuses on the true intent of the waiver--coverage for small grants and
a De Minimis waiver.
Additionally, several of the opponents expressed concern that the
waiver could give rise to a loophole to avoid compliance with the BAP.
HUD appreciates the comments but believes that the waiver is
sufficiently narrowly tailored with protections in place to avoid
artificial manipulation of project size and that the risk of abuse is
outweighed by the need to provide this important flexibility for Small
Grants and the De Minimis portions of larger infrastructure projects.
HUD expects the future guidance and technical assistance it provides to
grantees regarding the implementation of the Act to further address any
concerns that the scope or applicability of this waiver will be
misconstrued by grantees. HUD will not allow the use of the waiver in
any artificial or contrived circumstances designed to avoid the proper
application of the BAP requirements. HUD has therefore declined to
modify the waiver at this time, beyond the clarification of the use of
the cumulative total of all FFA funding the infrastructure project in
determining application of this waiver. As previously indicated, HUD
will continue to monitor the usage of the waiver so it may swiftly
address any potential confusion concerning the proper application of
the waiver.
The complexities of applying the BAP in connection with Small
Grants and De Minimis portions of projects are such that the Agency
maintains, for the reasons outlined herein, the public interest
necessitates this waiver of the BAP. HUD will continue its work to
assess compliance alternatives and options best suited to enable
grantees and funding recipients to more efficiently and effectively
implement the BAP in connection with Small Grants and De Minimis
portions of infrastructure projects and will reevaluate this waiver in
five years or sooner as appropriate. Additionally, HUD will continue to
assess the need for and provide additional guidance for funding
recipients and grantees to ensure the appropriate implementation of the
BAP in its programs. At this time, however, HUD has issued this Small
Grant and De Minimis waiver with the minimal substantive changes
described herein and with other minor, inconsequential grammatical
revisions.
V. Impact of This Waiver on Other Federal Financial Assistance
Where the BAP or other BABA requirements are made applicable to
projects of a grantee or funding recipient by another Federal agency,
the grantee or funding recipient may not rely on this waiver as a
waiver of any requirement imposed by the other Federal agency for the
projects, nor is the grantee or funding recipient exempt from the
application of those requirements in accordance with the requirements
of the Federal agency providing such FFA.
VI. Assessment of Cost Advantage of a Foreign-Sourced Product
Under OMB Memorandum M-22-11, ``Memorandum for Heads of Executive
Departments and Agencies,'' published on April 18, 2022, agencies are
expected to assess ``whether a significant portion of any cost
advantage of a foreign-sourced product is the result of the use of
dumped steel, iron, or manufactured products or the use of injuriously
subsidized steel, iron, or manufactured products'' as appropriate
before granting a public interest waiver.\i\ HUD's analysis has
concluded that this assessment is not applicable to this waiver, as
this waiver is not based in the cost of foreign-sourced products. HUD
will perform additional market research during the duration of the
waiver to better understand the market to limit the use of waivers
caused by dumping of foreign-sourced products.
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\i\ See OMB Memorandum M-22-08, Identification of Federal
Financial Assistance Infrastructure Programs Subject to the Build
America, Buy America Provisions of the Infrastructure Investment and
Jobs Act, <a href="https://www.whitehouse.gov/wp-content/uploads/2021/12/M-22-08.pdf">https://www.whitehouse.gov/wp-content/uploads/2021/12/M-22-08.pdf</a>.
Marcia L. Fudge,
Secretary.
[FR Doc. 2022-27097 Filed 12-13-22; 8:45 am]
BILLING CODE 4210-67-P
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