Notice2024-09052
Waiver of Buy America Requirements for the Pacific Island Territories and the Freely Associated States
Primary source
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Published
April 29, 2024
Issuing agencies
Transportation Department
Abstract
The Department of Transportation (DOT) seeks to maximize the use of American-made products and materials in all federally funded projects as part of the Biden-Harris Administration's implementation of the historic Bipartisan Infrastructure Law (BIL). In this notice, DOT is taking action to finalize a temporary general applicability waiver of the requirements of section 70914(a) of the Build America, Buy America Act (BABA), included in BIL, and related domestic preference statutes administered by DOT and its Operating Administrations (OAs) for federal financial assistance awarded by DOT and its OAs 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 waiver also applies to discretionary grant assistance provided by DOT and its OAs to the Freely Associated States (the Republic of Palau, Republic of the Marshall Islands, and Federated States of Micronesia) in the Pacific that are subject to a domestic preference statute. As it applies to the Freely Associated States, the waiver does not include BABA, which only applies to infrastructure projects in the United States and its territories. The waiver will provide time for DOT to collect and analyze evidence to determine if a more targeted waiver of these requirements is in the public interest. The waiver allows time for DOT 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 be reviewed prior to its expiration.
Full Text
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<title>Federal Register, Volume 89 Issue 83 (Monday, April 29, 2024)</title>
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[Federal Register Volume 89, Number 83 (Monday, April 29, 2024)]
[Notices]
[Pages 33440-33443]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-09052]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
[Docket No.: OST-2023-0111]
Waiver of Buy America Requirements for the Pacific Island
Territories and the Freely Associated States
ACTION: Notice.
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SUMMARY: The Department of Transportation (DOT) seeks to maximize the
use of American-made products and materials in all federally funded
projects as part of the Biden-Harris Administration's implementation of
the historic Bipartisan Infrastructure Law (BIL). In this notice, DOT
is taking action to finalize a temporary general applicability waiver
of the requirements of section 70914(a) of the Build America, Buy
America Act (BABA), included in BIL, and related domestic preference
statutes administered by DOT and its Operating Administrations (OAs)
for federal financial assistance awarded by DOT and its OAs 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 waiver also applies to
discretionary grant assistance provided by DOT and its OAs to the
Freely Associated States (the Republic of Palau, Republic of the
Marshall Islands, and Federated States of Micronesia) in the Pacific
that are subject to a domestic preference statute. As it applies to the
Freely Associated States, the waiver does not include BABA, which only
applies to infrastructure projects in the United
[[Page 33441]]
States and its territories. The waiver will provide time for DOT to
collect and analyze evidence to determine if a more targeted waiver of
these requirements is in the public interest. The waiver allows time
for DOT 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 be reviewed
prior to its expiration.
DATES: The waiver is applicable to awards that are obligated on or
after April 29, 2024 until March 1, 2025.
FOR FURTHER INFORMATION CONTACT: For questions about this notice,
please contact Elizabeth Fox, DOT Office of the Assistant Secretary for
Transportation Policy, at <a href="/cdn-cgi/l/email-protection#5431383d2e353631203c7a323b2c14303b207a333b22"><span class="__cf_email__" data-cfemail="53363f3a29323136273b7d353c2b13373c277d343c25">[email protected]</span></a> or at 202-981-2838. 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#0e646b606067686b7c20636d626b63617c6b4e6a617a20696178"><span class="__cf_email__" data-cfemail="2a404f4444434c4f58044749464f4745584f6a4e455e044d455c">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
The Buy America preferences set forth in section 70914(a) of BABA
included in BIL 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 Memorandum M-24-02, 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. BIL Sec. 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 specific 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-specific statute
is not in place. These statutes also allow for waivers of the Buy
America requirements to be issued when the DOT 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 DOT existing 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 rely largely 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
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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.
Issuance of the Proposed Waiver and Discussion of Comments Received
On August 9, 2023, DOT published a proposed Buy America waiver for
projects located within the Pacific Island territories of CNMI, Guam,
or American Samoa and funded under DOT-administered financial
assistance programs in the Federal Register 88 FR 53949. DOT received
five comments on the proposed waiver. Three of the comments were
supportive of the waiver, while two opposed the waiver.
The opposing commenters noted that there are existing opportunities
to purchase both US made equipment and steel in the Pacific Island
territories. One commenter noted they have supplied BABA compliant
equipment to Guam in the recent past. The other commenter noted that
the domestic steel industry has capacity to support infrastructure in
the Pacific Island territories.
The supportive commenters noted that higher costs and longer lead
times are barriers to Buy America compliance in the Pacific Island
territories. Additionally, higher cost estimates were cited as a reason
for grant applications being less competitive with other states.
Similarly, one commenter noted they have experienced considerable risk
and uncertainty when bidding due to the limited time manufacturers and
suppliers can hold steel pricing quotes and noted that in the recent
past several projects have gone through the Invitation for Bid
procurement process and received proposals that greatly exceed the
grant funding allocation. The commenters also noted the impacts of
fluctuating shipping costs add to the overall cost and uncertainty
around procurement.
DOT acknowledges that there are current opportunities for purchase
of Buy America compliant products in the territories; however, DOT also
recognizes that the purchase of those compliant products may result in
substantially higher costs and require longer lead times to procure,
leading to impacts on both project competitiveness and project
delivery. Moreover, the stated intent of the waiver is to provide time
for DOT to collect and analyze evidence to determine if a more targeted
waiver of these requirements is in the public interest and allow time
for DOT and its OAs to offer technical assistance to potential
assistance recipients in the remote communities in the Pacific Island
territories and Freely Associated States. Thus, during this temporary
general applicability waiver period, DOT will come to better understand
the local manufacturing footprint, consider how to best balance the
equities for residents of the Pacific Island territories, and work with
other federal agencies on ways to help ease supply chain challenges for
domestic sources in those territories.
One commenter also noted that the region's strategic locations
should be guarded against technology that could be detrimental to their
security. Another commenter also recognized the strategic importance of
their location, but noted that a waiver is necessary to allow purchases
even from countries who are in strategic defense alliances with the
United States. DOT recognizes the importance of security considerations
for port equipment purchases, particularly for ship to shore cranes,
and the recently announced Biden-Harris Administration effort to
bolster port security.\4\ The Department also recognizes that the
issues extend to U.S. ports more broadly, beyond those in the Pacific
Island territories. As a result, DOT has chosen to exempt ship to shore
cranes from the waiver and will address domestic supply issues for
these critical assets through separate actions. DOT will exercise
additional oversight for assistance agreements involving ports during
the period the waiver is active.
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\4\ <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/02/21/fact-sheet-biden-harris-administration-announces-initiative-to-bolster-cybersecurity-of-u-s-ports/">https://www.whitehouse.gov/briefing-room/statements-releases/2024/02/21/fact-sheet-biden-harris-administration-announces-initiative-to-bolster-cybersecurity-of-u-s-ports/</a>.
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One opposing commenter noted that the waiver would be inconsistent
with Congressional intent and Administration policy because it would
not be maintaining and strengthening the existing DOT Buy America
requirements. DOT believes that this waiver will help ensure that all
Americans, including those in the Pacific Island Territories, are able
to access the benefits provided by the once in a generation investment
in infrastructure provided by BIL. Providing these short-term
flexibilities to projects in that region will help alleviate systemic
barriers to opportunities that have limited DOT's ability to deliver
resources and benefits equitably to all in these territories. The
waiver will allow DOT to work with other infrastructure agencies to
ensure that the shipping and supply chains to the Pacific Island
territories integrate domestic sourcing requirements in a feasible and
equitable way over the longer term.
One supporting commenter noted that they believe that the
challenges they outlined in complying with Buy America requirements
fully support a waiver for at least 18 months, potentially permanently.
DOT believes that the time frame is appropriate and will reevaluate if
a more targeted waiver is in the public interest as it gathers
additional information.
DOT-assisted infrastructure projects located within the Pacific
Island territories and Freely Associated States are expected continue
to experience challenges with product delivery, availability,
reliability, and project scheduling without the waiver. Infrastructure
project schedules rely on readily available products delivered within
reasonable timeframes. Due to the extreme shipping distances required
for products produced in mainland United 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. As a consequence, associated projects in the Pacific Island
territories and Freely Associated States may face unreasonable
scheduling uncertainty. The waiver will help grant recipients establish
rules and procedures to manage Buy America requirements. Furthermore,
the waiver will provide recipients more options to efficiently complete
projects.
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 taking steps to understand
opportunities to leverage existing shipping and transportation
processes to make domestic sourcing more feasible over the longer term.
Finding on the Waiver
Based on all the information available to the Agency, DOT finds
that it is in the public interest to issue a temporary general
applicability public interest waiver of the requirements of 70914(a) of
the Build America, Buy America preferences for iron, 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 waiver applies to recipients located
in
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CNMI, Guam or America Samoa of all DOT-administered financial
assistance programs, including those subject to program-specific
domestic preference requirements. The waiver applies 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. However, this waiver does not apply to purchases of
ship to shore cranes.
DOT is issuing this temporary general applicability public interest
waiver under the following authorities; 70914(b) of BIL, 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). As it applies to the Freely Associated
States, the waiver does not include BABA, which only applies to
infrastructure projects in the United States and its territories.
The duration of the waiver is from the effective date April 29,
2024 until March 1, 2025. The proposed waiver had a duration of 18
months from the effective date of the final waiver. DOT is issuing the
final waiver with a sunset date of March 1, 2025 to better align with
the coordinated strategy for the issuance of this waiver type across
the Federal government. DOT will review this waiver prior to its
expiration to assess whether it remains necessary to the fulfillment of
DOT's missions and goals and consistent with applicable legal
authorities, such as BABA, Executive Order 14005, 2 CFR part 184, and
OMB Memorandum M-24-02. DOT may, based on the results of that review,
terminate the waiver, or take action to develop a new waiver in
consultation with the MIAO.
Section 117 of the SAFETEA-LU Technical Corrections Act of 2008
(Pub. L. 110-244, 122 Stat. 1572) also requires an additional five-day
comment period after FHWA publishes a waiver finding notice. 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.
Christopher Coes,
Acting Under Secretary for Policy.
[FR Doc. 2024-09052 Filed 4-26-24; 8:45 am]
BILLING CODE 4910-9X-P
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