Notice2023-17003
Notice of Proposed Waiver of Buy America Requirements for the Pacific Island Territories and the Freely Associated States
Primary source
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Published
August 9, 2023
Issuing agencies
Transportation Department
Abstract
The Department of Transportation (DOT) is seeking comments on a proposed temporary general applicability public interest waiver of the requirements of section 70914(a) of the Build America, Buy America Act (BABA) included in the Infrastructure Investment and Jobs Act (IIJA) and related domestic preference statutes administered by DOT and its Operating Administrations (OAs) for federal financial assistance awarded for infrastructure projects located in the Commonwealth of Northern Mariana Islands (CNMI), Guam, and American Samoa, collectively referred to as the Pacific Island territories. The proposed waiver would also apply to financial assistance that is subject to a DOT domestic preference statute and provided by DOT to the Freely Associated States in the Pacific (the Republic of Palau, Republic of the Marshall Islands, and Federated States of Micronesia). BABA only applies to the United States and its territories. The waiver would provide time for the Department to collect and analyze evidence to determine if a more targeted waiver of these requirements is in the public interest. The waiver would also allow time for the Department and its OAs to offer technical assistance to potential assistance recipients in the remote communities in the Pacific Island territories and Freely Associated States. The waiver will remain in effect for 18 months after the effective date of the final waiver and will be reviewed as often as necessary.
Full Text
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<title>Federal Register, Volume 88 Issue 152 (Wednesday, August 9, 2023)</title>
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[Federal Register Volume 88, Number 152 (Wednesday, August 9, 2023)]
[Notices]
[Pages 53949-53951]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-17003]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
[Docket No.: DOT-OST-2023-0120]
Notice of Proposed Waiver of Buy America Requirements for the
Pacific Island Territories and the Freely Associated States
ACTION: Notice; request for comments.
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SUMMARY: The Department of Transportation (DOT) is seeking comments on
a proposed temporary general applicability public interest waiver of
the requirements of section 70914(a) of the Build America, Buy America
Act (BABA) included in the Infrastructure Investment and Jobs Act
(IIJA) and related domestic preference statutes administered by DOT and
its Operating Administrations (OAs) for federal financial assistance
awarded for infrastructure projects located in the Commonwealth of
Northern Mariana Islands (CNMI), Guam, and American Samoa, collectively
referred to as the Pacific Island territories. The proposed waiver
would also apply to financial assistance that is subject to a DOT
domestic preference statute and provided by DOT to the Freely
Associated States in the Pacific (the Republic of Palau, Republic of
the Marshall Islands, and Federated States of Micronesia). BABA only
applies to the United States and its territories. The waiver would
provide time for the Department to collect and analyze evidence to
determine if a more targeted waiver of these requirements is in the
public interest. The waiver would also allow time for the Department
and its OAs to offer technical assistance to potential assistance
recipients in the remote communities in the Pacific Island territories
and Freely Associated States. The waiver will remain in effect for 18
months after the effective date of the final waiver and will be
reviewed as often as necessary.
DATES: Comments must be received by August 24, 2023.
ADDRESSES: Please submit your comments to the U.S. Government
electronic docket site at <a href="http://www.regulations.gov">http://www.regulations.gov</a>, Docket: DOT-OST-
2023-0120. Note: All submissions received, including any personal
information therein, will be posted without change or alteration to
<a href="http://www.regulations.gov">http://www.regulations.gov</a>. For more information, you may review DOT's
complete Privacy Act Statement published in the Federal Register on
April 11, 2000 (65 FR 19477).
FOR FURTHER INFORMATION CONTACT: For questions about this notice,
please contact Darren Timothy, DOT Office of the Assistant Secretary
for Transportation Policy, at <a href="/cdn-cgi/l/email-protection#2440455656414a0a504d494b504c5d64404b500a434b52"><span class="__cf_email__" data-cfemail="c6a2a7b4b4a3a8e8b2afaba9b2aebf86a2a9b2e8a1a9b0">[email protected]</span></a> or at 202-366-
4051. For legal questions, please contact Jennifer Kirby-McLemore, DOT
Office of the General Counsel, 405-446-6883, or via email at
<a href="/cdn-cgi/l/email-protection#cda7a8a3a3a4aba8bfe3a0aea1a8a0a2bfa88da9a2b9e3aaa2bb"><span class="__cf_email__" data-cfemail="d2b8b7bcbcbbb4b7a0fcbfb1beb7bfbda0b792b6bda6fcb5bda4">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
The Buy America preferences set forth in Section 70914(a) of BABA
included in the IIJA require that all iron, steel, manufactured
products, and construction materials used for infrastructure projects
in the United States under federal financial assistance awards be
produced in the United States.
Under Section 70914(b) and in accordance with the Office of
Management and Budget (OMB)'s Guidance Memorandum M-22-11, Initial
Implementation Guidance on Application of Buy America Preference in
Federal Financial Assistance Programs for Infrastructure, DOT may waive
the BABA application in any case in which it finds that: (i) applying
the domestic content procurement preference would be inconsistent with
the public interest; (ii) types of iron, steel, manufactured products,
or construction materials are not produced in the U.S. in sufficient
and reasonably available quantities or of a satisfactory quality; or
(iii) the inclusion of iron, steel, manufactured products, or
construction materials produced in the U.S. will increase the cost of
the overall project by more than 25 percent. All waivers must have a
written explanation for the proposed determination; provide a period of
not less than fifteen (15) calendar days for public comment on the
proposed waiver; and submit the proposed waiver to the OMB Made in
America Office (MIAO) for review to determine if the waiver is
consistent with policy.
BABA also provides that the preferences under Section 70914 apply
only to the extent that a domestic content procurement preference as
described in section 70914 does not already apply to iron, steel,
manufactured products, and construction materials. IIJA section
70917(a)-(b). Federal financial assistance programs administered by
DOT's Operating Administrations (OAs) \1\ are subject to a variety of
mode-specific statutes that apply particular Buy America \2\
requirements to iron, steel, and manufactured products, including 49
U.S.C. 50101 (FAA); 23 U.S.C. 313 (FHWA); 49 U.S.C. 5323(j) (FTA); and
46 U.S.C. 54101(d)(2) (MARAD). Recent annual appropriations acts have
also required DOT to apply the Buy American Act (41 U.S.C. chapter 83)
to funds appropriated under those acts,\3\ where a mode-
[[Page 53950]]
specific statute is not in place. These statutes also allow for waivers
of the Buy America requirements to be issued when the Department
determines that doing so is in the public interest.
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\1\ DOT OAs that provide or administer financial assistance
covered under this proposed waiver include the Federal Aviation
Administration (FAA); Federal Highway Administration (FHWA); Federal
Transit Administration (FTA); and the Maritime Administration
(MARAD).
\2\ In this notice, references to ``Buy America'' include
domestic preference laws called ``Buy American'' that apply to DOT
financial assistance programs.
\3\ For example, section 409 of the Transportation, Housing and
Urban Development, and Related Agencies Appropriations Act, 2022
states that ``no funds appropriated pursuant to this Act may be
expended by an entity unless the entity agrees that in expending the
assistance the entity will comply with sections 2 through 4 of the
Act of March 3, 1933 (41 U.S.C. 8301-8305, popularly known as the
``Buy American Act'').''
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DOT and its OAs provide financial assistance to the three Pacific
Island territories of Guam, American Samoa, and CNMI through both
discretionary grants and allocated programs, including assistance
programs for highways and bridges, public transportation, airports, and
port facilities. The Freely Associated States (the Republic of Palau,
Republic of the Marshall Islands, and Federated States of Micronesia)
in the Pacific region are also eligible recipients of discretionary
grants under FAA's Airport Improvement Program (AIP).
Over five years from FY 2018 to FY 2022, DOT OAs provided over $340
million in financial assistance for 160 capital projects in the Pacific
Island territories under various programs where infrastructure is an
eligible activity and may be subject to BABA or other existing DOT Buy
America requirements. FAA also provided $88 million in AIP
discretionary grants to the Freely Associated States in the Pacific
region for 20 projects over that same time period.
Economies in the Pacific Islands are over 5,000 miles from the
mainland United States and must import products via air or sea. These
economies have few local heavy manufacturers and largely rely on
established regional supply chains from east Asia, Australia, and New
Zealand. Most goods, equipment, materials, and supplies are imported
and rely on shipping with associated timelines and unpredictable
shipping fuel costs fluctuations. Moreover, materials sourced from the
United States lead to additional shipping fees and longer lead times,
thus significantly extending construction activity schedules. Lastly,
ongoing gaps in supply chain availability impact lead times for
materials, increasing project timelines. For these reasons, DOT is
concerned that complying with Buy America requirements may increase
already elevated project time and costs--particularly in the short
run--and seeks time to better understand the local manufacturing
footprint and the balance of equities for residents of the Pacific
Island territories. DOT is aware that substantial changes to shipping
and supply chains to incorporate domestic sourcing requirements in the
Pacific Island territories could take multiple years to establish.
In considering this waiver, DOT consulted with the relevant Federal
assistance programs in the respective OAs, including the regional
offices in those agencies that directly administer DOT funding programs
in the Pacific Island territories and Freely Associated States. DOT
also relied on other communications that it has received from
stakeholders in those territories. For example, CNMI and Guam have
cited their isolated location in the Western Pacific and reliance on
ocean freight as the only mode of transporting commodities to the
island as creating significant challenges in obtaining materials from
domestic sources, with impacts on both project costs and delivery
schedules. The two territories have also indicated that shipping
construction materials from the continental United States raises
shipping costs by approximately 30 percent above the cost to ship
directly to the islands from Asia.
Other Federal agencies have also conducted outreach efforts to the
Pacific Island territories and received similar feedback. For example,
representatives from American Samoa have indicated to the Federal
Emergency Management Agency that ``As a containerized community, our
territories depend on goods, equipment, materials, and supplies to be
imported.'' They further stated that ``we can purchase equipment from
foreign countries closer to American Samoa and with reasonable prices
and shorter shipping time.'' American Samoa representatives also noted
that availability of materials from nearby foreign countries such as
New Zealand and Australia would result in a significant cost savings to
the grantors.
Proposed Waiver and Request for Comments
DOT is proposing to use its authority under Section 70914(b)(1) to
waive the Act's Buy America preferences for iron and steel,
manufactured products, and construction materials used in
infrastructure projects located within the Pacific Island territories
of CNMI, Guam, or American Samoa and funded under DOT-administered
financial assistance programs. The proposed waiver would apply to all
awards obligated after the effective date and, in the case of awards
obligated prior to the effective date, all expenditures for non-
domestic iron, steel, manufactured products, and construction materials
incurred after the effective date.
Because many DOT-administered financial assistance programs are
also subject to program-specific domestic preference requirements, the
waiver proposed in this notice would also apply to those requirements.
Specifically, the waiver would also be an exercise of DOT's authority
to issue public interest waivers under 23 U.S.C. 313(b)(1), 49 U.S.C.
5323(j); 46 U.S.C. 54101(d)(2)(B)(i)(I), 49 U.S.C. 50101(b)(1), and 41
U.S.C. chapter 83. Under those DOT authorities, the proposed waiver
would also apply to projects in the Freely Associated States (the
Republic of Palau, Republic of the Marshall Islands, and Federated
States of Micronesia).\4\
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\4\ The proposed waiver under section 70914(b)(1) of the Act
excludes projects in the Freely Associated States because the
requirements under section 70914(a) are applicable only to
infrastructure projects ``in the United States'' and, therefore, the
BABA requirements to not apply to projects in the Freely Associated
States. However, airports located in the Freely Associated States
are eligible recipients under FAA's Airport Improvement Program, and
the Buy American requirements specific to that program would thus
also apply to the Freely Associated States.
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The proposed duration of the waiver is 18 months after the
effective date of the final waiver. The Department will review this
waiver in 12 months to assess whether it remains necessary to the
fulfillment of DOT's missions and goals and consistent with applicable
legal authorities, such as the IIJA, Executive Order 14005, and OMB M-
22-11. The Department may, based on the results of that review,
terminate the waiver, or take action to develop a new waiver in
consultation with the MIAO.
Without the waiver, DOT-assisted infrastructure projects located
within the Pacific Island territories and Freely Associated States will
continue to experience challenges with product delivery, availability,
reliability, and project scheduling. Infrastructure project schedules
rely on readily available products delivered within reasonable
timeframes. Due to the extreme distances that manufacturers for
products produced in the mainland United States would have to ship
products to the Pacific Island territories and Freely Associated States
and due to the lack of existing local product supply networks for these
products, manufacturers may not be able to assure on-time delivery of
compliant products and associated projects in the Pacific Island
territories and Freely Associated States could potentially face
unreasonable scheduling uncertainty.
On the other hand, the proposed waiver will likely help grant
recipients establish rules and procedures to manage Buy America
requirements. Furthermore, the waiver will provide recipients more
options to efficiently complete projects.
[[Page 53951]]
Uncertainties regarding capacity, shipping, and supply networks
make domestic sourcing in the Pacific Island territories and Freely
Associated States challenging for assistance recipients, shippers, and
DOT staff in the short run. DOT is engaging to understand opportunities
to leverage existing shipping and transportation processes to make
domestic sourcing feasible over the longer term.
Under OMB Memorandum M-22-11, 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. DOT's analysis has concluded that this assessment is
not applicable to this waiver.
DOT will consider all comments received in the initial 15-day
comment period during our consideration of the proposed waiver, as
required by Section 70914(c)(2) of the BIL. Comments received after
this period, but before notice of our finding is published in the
Federal Register, will be considered to the extent practicable.
Pursuant to Section 117 of the SAFETEA-LU Technical Corrections Act of
2008 (Pub. L. 110-244, 122 Stat. 1572), if FHWA makes a finding that a
waiver is appropriate under 23 U.S.C. 313(b), FHWA will also invite
public comment on this finding for an additional 5 days following the
date of publication of the finding. Comments received during that
period will be reviewed, but the finding will continue to remain valid.
Those comments may influence DOT/FHWA's decision to terminate or modify
a finding.
Issued in Washington, DC, on: August 3, 2023.
Carlos Monje, Jr.,
Under Secretary of Transportation for Policy.
[FR Doc. 2023-17003 Filed 8-8-23; 8:45 am]
BILLING CODE 4910-9X-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.