Notice2025-00713
Waiver of Buy America Requirements for the Pacific Island Territories and the Freely Associated States
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Published
January 15, 2025
Issuing agencies
Transportation Department
Abstract
The Department of Transportation (DOT) is finalizing a general applicability public interest waiver of the requirements of section 70914(a) of the Build America, Buy America Act (BABA) 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 waiver would also apply to discretionary grant assistance provided by DOT to the Freely Associated States (the Republic of Palau, Republic of the Marshall Islands, and Federated States of Micronesia) in the Pacific that is subject to a domestic preference statute (which does not include BABA, as that statute only applies to the United States and its territories). The waiver will remain in effect for five years after the effective date of the final waiver. This action also terminates the previously issued temporary general applicability waiver for this region.
Full Text
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<title>Federal Register, Volume 90 Issue 9 (Wednesday, January 15, 2025)</title>
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[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Notices]
[Pages 3999-4002]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00713]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
[Docket No.: DOT-OST-2024-0129]
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 finalizing a general
applicability public interest waiver of the requirements of section
70914(a) of the Build America, Buy America Act (BABA) 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 waiver would also apply to
discretionary grant assistance provided by DOT to the Freely Associated
States (the Republic of Palau, Republic of the Marshall Islands, and
Federated States of Micronesia) in the Pacific that is subject to a
domestic preference statute (which does not include BABA, as that
statute only applies to the United States and its territories). The
waiver will remain in effect for five years after the effective date of
the final waiver. This action also terminates the previously issued
temporary general applicability waiver for this region.
DATES: The waiver is applicable to awards that are obligated on or
after January 10, 2025, until January 9, 2030.
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#c0a5aca9baa1a2a5b4a8eea6afb880a4afb4eea7afb6"><span class="__cf_email__" data-cfemail="a5c0c9ccdfc4c7c0d1cd8bc3cadde5c1cad18bc2cad3">[email protected]</span></a> or at 202-366-4540. 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#80eae5eeeee9e6e5f2aeede3ece5edeff2e5c0e4eff4aee7eff6"><span class="__cf_email__" data-cfemail="98f2fdf6f6f1fefdeab6f5fbf4fdf5f7eafdd8fcf7ecb6fff7ee">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
The Buy America preferences set forth in section 70914(a) of BABA
\1\ 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.
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\1\ The Build America, Buy America Act was included as title XI,
subtitle A of the Infrastructure Investment and Jobs Act (IIJA)
(Pub. L. 117-58).
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Under section 70914(b) and in accordance with the Office of
Management and Budget (OMB)'s Guidance Memorandum M-24-02,
Implementation Guidance on Application of Buy America Preference in
Federal Financial Assistance Programs for Infrastructure, DOT may waive
the application of BABA requirements 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.
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 Sec. 70917(a)-
(b). Federal financial assistance programs administered by DOT's
Operating Administrations (OAs) \2\ are
[[Page 4000]]
subject to a variety of mode-specific statutes that apply particular
Buy America \3\ requirements to iron, steel, and manufactured products,
including 49 U.S.C. 50101(a) (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,\4\
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
Department determines that doing so is in the public interest.
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\2\ DOT OAs that provide or administer financial assistance
covered under this waiver include the Federal Aviation
Administration (FAA); Federal Highway Administration (FHWA); Federal
Transit Administration (FTA); and the Maritime Administration
(MARAD).
\3\ In this notice, references to ``Buy America'' include
domestic preference laws referred to ``Buy American'' that apply to
DOT financial assistance programs.
\4\ For example, Section 409 of the Transportation, Housing and
Urban Development, and Related Agencies Appropriations Act, 2024
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).
During FY 2024, DOT OAs provided more than $132.7 million in
financial assistance for at least 20 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. DOT also provided $47.6 million in AIP
discretionary grants to the Freely Associated States in the Pacific
region for 3 projects during that time.
On April 29, 2024, DOT issued a temporary general applicability
waiver of the requirements of Section 70914(a) of BABA and related
domestic preference statutes administered by DOT and its OAs. The DOT
waiver was part of an interagency effort, led by the OMB, to provide
time for DOT and other infrastructure agencies to collect and analyze
evidence to determine if a long-term 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.
During the temporary general applicability waiver period, DOT has
worked with OMB's Made in America Office (MIAO) and with other
infrastructure agencies to better understand the local manufacturing
environment, consider how to best balance the equities for residents of
the Pacific Island territories and domestic suppliers, and explore ways
to potentially ease supply chain challenges for infrastructure projects
in those territories. 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
regional supply chains from east Asia, Australia, and New Zealand. Most
goods, equipment, materials, and supplies are imported and rely on
shipping with extended timelines and unpredictable shipping cost
fluctuations. Moreover, materials sourced from the mainland U.S. lead
to additional shipping fees and longer lead times, thus significantly
extending construction activity schedules.
Along with other Federal agencies, DOT has reviewed the U.S.
International Trade Commission's 2023 report U.S.-Pacific Islands Trade
and Investment: Impediments and Opportunities, which noted the
geographic isolation, high costs of shipping, dependence on imports,
regulatory barriers, limited economies of scale, and environmental
challenges as persistent barriers that the Pacific Island territories
face. Additionally, the lack of available land on the Pacific Island
territories creates barriers for developing new manufacturing and
assembly facilities. Those infrastructure products readily available
and produced locally on the Pacific Islands, such as aggregates and
cement products, are mostly statutorily exempt from BABA requirements.
For these reasons, the DOT remains concerned that complying with the
domestic sourcing requirements may increase already elevated project
time and costs.
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.
In August 2024, the U.S. Department of the Interior (DOI) hosted
the third Territorial Climate and Infrastructure Workshop in Honolulu,
HI, which included many representatives from various territorial
agencies and departments. During the workshop, DOI and DOT led a
session on the Build America, Buy America Act, during which many
participants described the structural challenges the territories face
in complying with Buy America requirements and the desire for relief
due to the significant cost increases and delays in project timelines
that would ensue. In addition, in February 2023, DOI hosted the
Interagency Group on Insular Areas, at which the governors of the
Territories expressed concerns related to BABA implementation and
potential project delays and requested that federal agencies be
flexible in these requirements, including consideration of waivers.
Additionally, 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.
Issuance of Waiver and Discussion of Comments Received
On December 16, 2024, DOT published a proposed Buy America waiver
for projects located within Pacific Island territories of CNMI, Guam,
or American Samoa and funded under DOT-administered financial
assistance programs in the Federal Register (89 FR 101688). DOT
received 12 comments on the proposed waiver from individuals and
government representatives in both the Pacific
[[Page 4001]]
Island territories and the Freely Associated States and from the
general public, a steel manufacturer, and a trade organization. Ten of
the comments received were supportive of the waiver as proposed, while
two expressed opposition to the waiver.
Supportive comments noted the difficulties in complying with
domestic content requirements that the distance from the mainland US
creates. Shipping materials from the U.S. mainland incurs additional
costs and lengthy delays that, in turn, imperil project timelines and
budgets, with one commenter citing cost increases of 50-100%.
Supportive commenters also noted that the small size of the
infrastructure projects can also create compliance issues noting
difficulties contractors face in obtaining Buy America certifications
from manufacturers for small orders. Additionally, the length of the
waiver was supported by more than one commenter, noting that the time
will help entice contractors to bid on their projects and ensure
projects are completed on time and on budget.
One commenter requested that the waiver cover specific types of
vehicles and associated infrastructure. DOT appreciates this comment
and notes that as the waiver would apply to both manufactured products
and iron and steel, vehicles should be covered, regardless of which
category they fall into. Another supportive commenter requested that
the waiver apply standards to the items procured. DOT notes that the
waiver only applies to the domestic content requirements, and that the
materials procured must still meet the necessary performance criteria
and be suitable for their intended applications, regardless of their
manufacturing location.
One commenter raised concerns that the proposed waiver would result
in tax dollars being utilized for the sourcing of iron and steel,
manufactured products, and construction materials produced in countries
of concern or by entities of concern. The commenter also raised
concerns that the proposed waiver would render the territories'
projects less resilient because they could foster a reliance on
regional, rather than allied trading partners. Though DOT acknowledges
this concern, DOT is confident that, through the implementation of
existing prohibitions and the exclusion of the specified list of items
provided in the waiver, this concern is addressed to the fullest extent
possible under available legal authorities. With respect to existing
prohibitions, various DOT OAs have prohibitions against use of funds
for rolling stock purchases from certain entities found at 49 U.S.C.
5323(u) and 49 U.S.C. 50101(d). This waiver does not impact such
prohibitions. Furthermore, DOT notes that the waiver applies only to
domestic sourcing requirements; thus, all other restrictions on the use
of Federal funding must still be followed, including any funding
specific restrictions on purchases outside the Buy American statutes,
and any limitations on funding imposed by the notice of funding
opportunity or grant agreements. Lastly, the list of products excluded
from this waiver was crafted with this concern in mind; accordingly,
DOT incorporated this list of excluded products in this waiver to
protect against related national security concerns. Taken together,
these safeguards will ensure that the Pacific Island territories are
able to rely on nearby allied trading partners for their purchases of
materials, thereby improving resilience for their critical
infrastructure projects.
One commenter questioned DOT's conclusion that the assessment
required under OMB Memorandum M-24-02 regarding dumping or injuriously
subsidized products is not applicable to this waiver. To mitigate this
concern, DOT has added language noting that the cost considerations
driving this public interest waiver are not due to the use of dumped
steel, iron, or manufactured products or of injuriously subsidized
steel, iron, or manufactured products but rather to the increased costs
of shipping domestic items from the mainland U.S.
A commenter also questioned DOT's authority to issue a waiver for a
``deficient program,'' as defined in sections 70912 and 70913(c) of
BABA. However, DOT notes the identification of a program as
``deficient'' under the BABA statute does not have any bearing on the
agency's ability to issue new waivers of Buy America requirements under
the respective statutes applicable to those programs.\5\ The commenter
also indicated that they were ``unaware of any instance in which the
1933 BAA has been deemed applicable to federally assisted building and
infrastructure construction.'' DOT notes that provisions included in
annual appropriations acts in recent fiscal years provide the basis for
applying Buy American Act requirements to financial assistance programs
administered by DOT.\6\
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\5\ For more discussion of ``deficient programs,'' see DOT's
Identification of Federal Financial Assistance Infrastructure
Programs Subject to the Build America, Buy America Provisions of the
Infrastructure Investment and Jobs Act, January 2022, available at
<a href="https://www.transportation.gov/office-policy/transportation-policy/made-in-america/build-america-buy-america-60-day-report">https://www.transportation.gov/office-policy/transportation-policy/made-in-america/build-america-buy-america-60-day-report</a>.
\6\ See, for example, section 409 of the Transportation, Housing
and Urban Development, and Related Agencies Appropriations Act,
2024.
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Some of the commenters, both supporting and opposing, either
directly or indirectly referenced the temporary waiver issued by DOT on
April 29, 2024, apparently viewing the proposed waiver as an extension
of that waiver. In the Findings section below, DOT is clarifying that
this is a new, longer-duration waiver with a different public interest
basis and justification, and the temporary waiver issued April 29,
2024, is being terminated concurrent with issuance of this waiver.
Finally, one commenter stated that the 15-day comment period on the
proposed waiver was insufficient. DOT notes that the comment period
provided for this waiver is consistent with the requirements of BABA
and related statutes for new Buy America waivers.
Finding on Waiver and Termination of Temporary Waiver
DOT is using 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, on the basis that doing so would be in the public interest.
The waiver applies to all awards obligated after the effective date
and, in the case of awards obligated prior to the effective date, the
waiver applies to all expenditures for non-domestic iron, steel,
manufactured products, and construction materials incurred after the
effective date. The waiver does not apply to the following products
that have been identified by OMB as critical supply chains that warrant
special consideration:
<bullet> Telecommunications infrastructure:
[cir] Telecommunications equipment used to transmit and receive
digital signals across constructed networks (e.g., vaults, cabinets,
routers, switches, optical line terminals (OLTs), optical network
terminals (ONTs), wi-fi capable customer equipment, and other
electronic hardware used to connect the network). This includes:
[ssquf] Video surveillance equipment, including any equipment that
is used in fixed and mobile networks that provides advanced
communications service in the form of a video surveillance service,
provided the equipment includes or uses electronic components. This
[[Page 4002]]
encompasses any equipment that can be used in a fixed or mobile
broadband network to enable users to originate and receive high quality
voice, data, graphics, and video telecommunications using technology
with connection speeds of at least 200 kbps in either direction.\7\
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\7\ <a href="https://www.fcc.gov/laboratory-division/equipment-authorization-approval-guide/equipment-authorization-system#step2">https://www.fcc.gov/laboratory-division/equipment-authorization-approval-guide/equipment-authorization-system#step2</a>.
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[ssquf] Broadcasting equipment, including radio frequency devices
contained in electronic-electrical products that are capable of
emitting radio frequency energy by radiation, conduction, or other
means. These products have the potential to cause interference to radio
services operating in the radio frequency range of 9 kHz to 3000
GHz.\8\
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\8\ <a href="https://www.fcc.gov/oet/ea/rfdevice">https://www.fcc.gov/oet/ea/rfdevice</a>.
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[cir] Broadband equipment (e.g., fiber/coax cable, conduit,
pedestals, handholes, tower structures, and other physical components
used to connect to telecommunication equipment).
<bullet> Grid-connected utility-scale energy generation and
stationary storage (>5MW).
<bullet> Cargo handling equipment, including cranes, that are
manufactured by or contain any networks, operating systems, or software
identified in U.S. Maritime Advisory 2024-0026 or successor
advisories.\9\
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\9\ 2024-002--Worldwide-Foreign Adversarial Technological,
Physical, and Cyber Influence <a href="https://www.maritime.dot.gov/msci/2024-002-worldwide-foreign-adversarial-technological-physical-and-cyber-influence">https://www.maritime.dot.gov/msci/2024-002-worldwide-foreign-adversarial-technological-physical-and-cyber-influence</a>.
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While these items are excluded from this general waiver, DOT
recognizes that purchases of these items from non-domestic sources as
part of a federally-assisted project may be warranted in certain
circumstances. For those individual projects, DOT and its OAs will
consider requests for potential waivers of BABA or other Buy America
requirements on a case-by-case basis, with special attention to any
strategic security issues that may be associated with those purchases.
Separately, DOT also notes that the waiver does not waive the
requirements of 49 U.S.C. 50101(d) or 49 U.S.C. 5323(u), or any other
requirements for federal financial assistance. Because many DOT-
administered financial assistance programs are also subject to program-
specific domestic preference requirements, the waiver 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 waiver also applies to projects in the Freely
Associated States (the Republic of Palau, Republic of the Marshall
Islands, and Federated States of Micronesia).\10\
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\10\ The proposed waiver under section 70914(b)(1) of BABA
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 duration of the waiver will be for five years, from its
effective date of January 10, 2025, until January 9, 2030. The
Department will periodically review this waiver 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-24-02. 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.
This action is a new public interest waiver being issued on the
basis of the unique circumstances and ongoing challenges faced by the
Pacific Island territories and Freely Associated States due to their
remote location. Accordingly, effective with the issuance of the new
waiver on January 10, 2025, DOT is also terminating the existing
temporary general applicability waiver for the Pacific Island
Territories, which DOT issued on April 29, 2024, to provide time to
collect and analyze evidence to determine if a more targeted waiver of
these requirements would be in the public interest.
Under OMB Memorandum M-24-02, 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 not found that the cost
considerations driving this public interest waiver are due to the use
of dumped steel, iron, or manufactured products or of injuriously
subsidized steel, iron, or manufactured products but rather to the
increased costs of shipping domestic items from the mainland U.S.
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 five 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 January 8, 2025.
Polly E. Trottenberg,
Deputy Secretary.
[FR Doc. 2025-00713 Filed 1-14-25; 8:45 am]
BILLING CODE 4910-9X-P
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