Notice2023-25650
Public Interest, General Applicability Waiver of Build America, Buy America Provisions as Applied to Pacific Island Territory Recipients of HUD Federal Financial Assistance: Final Notification
Primary source
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Published
November 21, 2023
Issuing agencies
Housing and Urban Development Department
Abstract
In accordance with the Build America, Buy America Act (BABA), this Final Notice advises that HUD is providing a public interest, general applicability waiver for a period of 15-months to the Buy America Domestic Content Procurement Preference ("Buy America Preference," or "BAP") as applied to Federal Financial Assistance ("FFA") used for infrastructure projects in the Commonwealth of Northern Mariana Islands ("CNMI"), Guam, and American Samoa (hereinafter collectively "Pacific Island Territories").
Full Text
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<title>Federal Register, Volume 88 Issue 223 (Tuesday, November 21, 2023)</title>
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[Federal Register Volume 88, Number 223 (Tuesday, November 21, 2023)]
[Notices]
[Pages 81094-81097]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25650]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6407-N-02]
Public Interest, General Applicability Waiver of Build America,
Buy America Provisions as Applied to Pacific Island Territory
Recipients of HUD Federal Financial Assistance: Final Notification
AGENCY: Office of the Secretary, U.S. Department of Housing and Urban
Development (HUD).
ACTION: Notice.
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SUMMARY: In accordance with the Build America, Buy America Act (BABA),
this Final Notice advises that HUD is providing a public interest,
general applicability waiver for a period of 15-months to the Buy
America Domestic Content Procurement Preference (``Buy America
Preference,'' or ``BAP'') as applied to Federal Financial Assistance
(''FFA'') used for infrastructure projects in the Commonwealth of
Northern Mariana Islands (``CNMI''), Guam, and American Samoa
(hereinafter collectively ``Pacific Island Territories'').
DATES: Applicable November 15, 2023. This waiver is effective for all
FFA obligated by HUD on or after the effective date of this waiver and
to the expenditure of funds on or after the effective date of this
waiver for any FFA obligated by HUD prior to the effective date of this
waiver, through the limited period of 15-months following the effective
date of this waiver.
FOR FURTHER INFORMATION CONTACT: Faith Rogers, Department of Housing
and Urban Development, 451 Seventh Street SW, Room 10126, 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#195b6c70757d58747c6b707a785b6c6058747c6b707a7859716c7d377e766f"><span class="__cf_email__" data-cfemail="501225393c34113d3522393331122529113d3522393331103825347e373f26">[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'') (Pub. L. 117-58). The Act establishes a
domestic content procurement preference, the BAP, for Federal
infrastructure programs. Section
[[Page 81095]]
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 HUD FFA, and any of those funds
newly obligated by HUD then obligated by the grantee for infrastructure
projects, 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 Generally
Since the enactment of the Act, HUD has worked diligently to
develop a plan to fully implement the BAP across its FFA programs. HUD
understands that advancing Made in America objectives is a continuous
effort and believes setting forth a transparent schedule of future
implementation for FFA programs provides recipients, stakeholders, and
industry partners with the time and notice necessary to efficiently and
effectively implement the BAP in Pacific Island Territories, which are
Commonwealth of Northern Mariana Islands (CNMI), Guam, and American
Samoa. Additionally, HUD understands that Pacific Island Territories
have significant complications accessing construction materials,
manufactured products, and steel needed for infrastructure projects.
HUD recently announced plans to move forward with the implementation of
the new BAP requirements in connection with its award of FFA to non-
Tribal recipients in a manner designed to maximize coordination and
collaboration to support long-term investments in domestic production.
HUD continues its efforts to implement the Act in those programs
consistent with the guidance and requirements of the Made in America
Office of the Office of Management and Budget, including guidance
concerning compliance with the BAP.
In order to ensure orderly implementation of the BAP across HUD's
FFA programs, HUD has provided public interest, general applicability
waivers in order to implement the BAP in phases in connection with the
application of the BAP in such programs and announced a corresponding
implementation plan. As part of those efforts, HUD has published two
general applicability, public interest waivers covering Exigent
Circumstances and De Minimis and Small Grants, which can be found at
<a href="https://www.hud.gov/program_offices/general_counsel/build_america_buy_america/waiver">https://www.hud.gov/program_offices/general_counsel/build_america_buy_america/waiver</a>.
Additionally, HUD proposes that it is in the public interest to
waive the BABA requirements for FFA awarded for infrastructure projects
in Pacific Island Territories while HUD works to gather more
information on supply chains, costs, and impacts. This proposed waiver
is critical to provide the time for HUD to collect and analyze evidence
to determine if a more targeted waiver of these requirements is in the
public interest. This waiver would provide the time for the agency 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 agency to offer technical assistance to potential
assistance recipients in the remote communities in the Pacific Island
Territories. The waiver would also allow time for HUD to offer
technical assistance to reduce the administrative burden to recipients
for projects in the remote Pacific Island Territories were complying
with the domestic sourcing requirements in BABA presents challenges.
HUD is concerned that failure to provide these remote infrastructure
projects such flexibilities could perpetuate systemic barriers to
opportunities and benefits and limit HUD's ability to deliver resources
and benefits equitably to all in these Pacific Island Territories.
Additionally, HUD may need to dedicate significant staff and contractor
time to assist extremely remote Pacific Island Territories with
implementing preference requirements for the first time and to support
the increased workload to process project-specific waivers. As such,
HUD is interested in determining if these concerns justify a targeted
waiver and whether its initial assessment may or may not be borne out
by evidence.
III. Waivers
Under section 70914(b), HUD and other Federal agencies have
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 the overall project by more than 25 percent. Section 70914(c)
provides that a waiver under section 70914(b) must be published by the
agency with a detailed written explanation for the proposed
determination and provide an appropriate public comment period of 15 or
30 days depending on the substance of the waiver.
IV. Pacific Island Territories Infrastructure and HUD Programs
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, the agency
is concerned that complying with the domestic sourcing requirements in
BABA 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.
HUD is aware that substantial changes to shipping and supply chains
to incorporate domestic sourcing requirements for infrastructure
projects in Pacific Island Territories could take multiple years to
establish. For example, these economies have few local heavy
manufacturers and largely rely on established regional supply chains.
With the distance of economies in the Pacific Island Territories, these
communities must import products via air or sea. Most goods, equipment,
materials, and supplies are imported and rely on shipping with
associated timelines and unpredictable shipping fuel cost fluctuations.
Moreover, materials sourced from the United States may lead to
additional shipping fees and longer lead times, thus significantly
extending construction activity schedules. For these reasons, HUD is
seeking time to better understand the local manufacturing
[[Page 81096]]
footprint and the balance of equities for residents of the Pacific
Island Territories.
For example, HUD Community Planning and Development Formula Program
Allocations for Pacific Island Territories include Community
Development Block Grant (``CDBG''), HOME, Emergency Solutions Grant
(``ESG''), Housing Opportunities for Persons With AIDS Program
(``HOPWA''), and Housing Trust Fund (``HTF''). As shown below, there
are HUD CDBG formula grant recipients that are subject to the BAP
pursuant to HUD's Public Interest Phased Implementation Waiver \1\ of
Build America, Buy America Provisions as Applied to Recipients of HUD
Federal Financial Assistance, for the purchase of iron or steel
products in infrastructure projects funded by CDBG formula grants
obligated by HUD on or after November 15, 2022. For HOME and HTF, BABA
applicability will be in effect for funds obligated by HUD on or after
August 23, 2024. For all other HUD FFA including ESG and HOPWA, BABA
applicability will be in effect for FFA used to purchase iron and steel
used in infrastructure projects for funds obligated by HUD on February
22, 2024. Subsequently, BABA applicability will be in effect for HUD
FFA obligated on or after August 23, 2024, for construction materials
and manufactured products. Therefore, without a waiver, HUD FFA used in
Pacific Island Territories for infrastructure projects will be subject
to the BAP.\2\
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\1\ See <a href="https://www.hud.gov/sites/dfiles/GC/documents/6331-N-06%20Phased%20Implementation%20Waiver.pdf">https://www.hud.gov/sites/dfiles/GC/documents/6331-N-06%20Phased%20Implementation%20Waiver.pdf</a>.
\2\ See <a href="https://www.hud.gov/program_offices/comm_planning/budget">https://www.hud.gov/program_offices/comm_planning/budget</a>.
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Additionally, the Public and Indian Housing (``PIH'') Program
Allocations for Pacific Island Territories include the Guam Housing &
Urban Renewal Authority in Guam and the Northern Marianas Housing
Corporation in the CNMI. Pursuant to the phased implementation waiver,
BABA applicability will be in effect for funds obligated by HUD on or
after August 23, 2024, for public housing FFA used to purchase iron and
steel, construction materials, and manufactured products for
maintenance projects.
The above-named programs are critical because they allow HUD to
support affordable housing and infrastructure needs in these specific
Pacific Island Territories--particularly for the benefit of low- and
moderate-income families. As of November 15, 2022, the BAP applies to
CDBG formula grants used to purchase iron and steel for infrastructure
projects. Accordingly, HUD must ensure that Pacific Island Territories
Recipients are able to effectively implement the BAP in a manner that
ensures that the purposes of BABA are carried out, while at the same
time preventing additional undue barriers to the development of Pacific
Island Territories infrastructure, which has suffered from decades of
underinvestment.
HUD has determined that additional time is needed to fully assess
the impacts that the BAP will have on Pacific Island Territories
recipients and to plan for the efficient and orderly implementation of
the BAP. With the benefit of HUD's recently published phased
implementation waiver and Tribal consultation waiver extension, HUD
seeks additional time to seek feedback from Pacific Island Territories,
and funding recipients on whether and when HUD should take a similar
phased approach with respect to the implementation of the BAP under its
Pacific Island Territories programs.
V. Public Interest in a General Applicability Waiver of Buy America
Provisions for Pacific Island Territories Recipients
In this Final Notice, HUD is providing a new and limited, 15-month
public interest, general applicability waiver of the BAP in connection
with HUD's FFA used for infrastructure in Pacific Island Territories.
Infrastructure is an eligible activity under some of the above-named
programs and will be subject to the BAP. Because the application of BAP
mandated by the Act is new to all HUD FFA for Pacific Island
Territories infrastructure projects, HUD needs additional time to
engage Pacific Island Territories about the application of the BAP for
Pacific Island Territories projects it is imperative to determine how
the BAP should be effectively applied to HUD's various FFA for Pacific
Island Territories projects, how the BAP should be phased in to allow
for successful implementation, and how compliance will be verified--all
in a way to enhance infrastructure projects in these areas. As such,
there is a significant need for HUD to further engage with Pacific
Island Territories recipients. HUD now has the benefit of having fully
considered an appropriate method of phased implementation across its
other FFA programs and has begun the methodical implementation of the
BAP in those other FFA programs. At the same time, HUD has determined
that it is in the public's interest to not apply the BAP to FFA awarded
for infrastructure projects in Pacific Island Territories prior to
additional engagement.
VI. Planned Pacific Island Territory Engagement
Based on HUD's observations it is necessary for HUD to solicit
feedback from Pacific Island Territories on issues including how to
effectively implement the BAP for extremely remote communities, such as
American Samoa. HUD acknowledges that Pacific Island Territories have
major concerns about availability of American-made products from the
U.S. Mainland and continue to struggle with challenges because of their
distance away from main supply sources. Pacific Island Territories are
already facing major challenges with accessing construction materials,
and major cost overruns due to a lack of available materials--
particularly in remote Pacific Island Territories.
During the 15-month waiver period, HUD will thoroughly engage
Pacific Island Territories housing practitioners, stakeholders, and FFA
recipients. HUD will do so by soliciting feedback from Pacific Island
Territories and stakeholders specifically addressing the impact of the
BAP on HUD's Pacific Island Territories programs. After engaging and
receiving feedback, HUD will seek to implement the BAP in a manner that
advances the Made in America objectives which can also support local
supply chains. HUD will implement the BAP in a thoughtful manner that
ensures that Pacific Island Territories recipients can effectively
implement the BAP without substantially negative impacts on planned and
ongoing critical infrastructure projects. HUD will also seek to provide
additional technical assistance resources to ensure that Pacific Island
Territories recipients can build capacity and be in a better position
to comply with the BAP.
VII. 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. HUD's analysis has concluded
that this assessment is not applicable to this waiver, as this waiver
is not based on the cost of foreign-sourced products.
[[Page 81097]]
VIII. Limited Duration of the Waiver
The duration of the waiver is 15-months after the effective date of
the final waiver. HUD remains committed to the successful
implementation of the important BAP across its programs providing
covered FFA for infrastructure projects, while recognizing the unique
needs and geographically related challenges of Pacific Island
Territories. HUD is committed to engaging with Pacific Island
Territories, stakeholders, and FFA recipients as noted above to further
this goal during this 15-month waiver period. HUD will review this
waiver in 12 months to assess whether it remains necessary to the
fulfillment of HUD's missions and goals and consistent with applicable
legal authorities, such as the IIJA, Executive Order 14005, and OMB M-
22-11. HUD may, based on the results of that review, terminate the
waiver, or take action to develop a new waiver in consultation with the
MIAO.
IX. Solicitation of Comments
HUD solicited comments from the public on its proposed waiver
described in a Notice publicly available on its website for a period of
30 days from August 2, 2023 to September 1, 2023, and published in the
Federal Register. A total of two 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 and implementation plan as published in this Final Notice. One
commenter was supportive of the waiver. One commenter was opposed to
the waiver with respect to steel, citing underutilized domestic
capacity for the steel industry. The commenter suggested if a steel
product were not available from domestic sources, a grant recipient
could pursue a product-specific nonavailability waiver for that item.
HUD appreciates the comments and did not make any substantive changes
to the waiver based on the comments received. The proposed waiver had a
duration of 18-months. HUD is issuing the final waiver with a duration
of 15-months to better align with the coordinated strategy for the
issuance of this waiver type across the Federal Government. HUD
believes the 15-month waiver of the application of the BAP as set forth
in this Final Notice is appropriate and in the public interest in light
of the importance of HUD's planned engagement with Pacific Island
Territories and recipients. 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.
Dated: November 15, 2023.
Marcia L. Fudge,
Secretary.
[FR Doc. 2023-25650 Filed 11-20-23; 8:45 am]
BILLING CODE 4210-67-P
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