Notice of Buy American Exception Under the American Recovery and Reinvestment Act of 2009, 48901-48902 [E9-23202]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Utilities Service

[Federal Register Volume 74, Number 185 (Friday, September 25, 2009)]
[Notices]
[Pages 48901-48902]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-23202]


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Federal Register / Vol. 74, No. 185 / Friday, September 25, 2009 / 
Notices

[[Page 48901]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service


Notice of Buy American Exception Under the American Recovery and 
Reinvestment Act of 2009

AGENCY: Rural Utilities Service, U.S. Department of Agriculture.

ACTION: Notice.

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SUMMARY: The Rural Utilities Service (RUS) hereby gives notice of a 
nationwide exception to the Buy American requirements of Section 1605 
of the American Recovery and Reinvestment Act of 2009 (``ARRA'') under 
the authority of Section 1605(b)(1) (public interest waiver) for de 
minimis incidental components of eligible water infrastructure projects 
using assistance provided under ARRA. This action permits the use of 
non-domestic iron, steel and manufactured goods when they occur in de 
minimis incidental components that may otherwise be prohibited under 
Section 1605(a). As used in this Notice, ``de minimis incidental 
components'' means those components otherwise prohibited under Section 
1605(a) that cumulatively comprise no more than a total of 5 percent of 
the total cost of the materials used in a project funded in whole or in 
part with ARRA assistance.

DATES: Effective Date: September 25, 2009.

ADDRESSES: Send any correspondence regarding this notice to Jacqueline 
M. Ponti-Lazaruk, Assistant Administrator, Water and Environmental 
Programs, Rural Utilities Service, U.S. Department of Agriculture, 1400 
Independence Avenue, SW., Washington, DC 20250-1548.

FOR FURTHER INFORMATION CONTACT: Benjamin Shuman, Senior Environmental 
Engineer, Engineering and Environmental Staff, (202) 720-1784, Rural 
Utilities Service, U.S. Department of Agriculture, 1400 Independence 
Avenue, SW., Washington, DC 20250-1571.

SUPPLEMENTARY INFORMATION: In accordance with section 1605(c) of ARRA 
and Section 176.80 of the rules of the Office of Management and Budget 
(OMB) (2 CFR 176.80), RUS hereby provides notice that it is granting a 
nationwide exception to Section 1605 of the Recovery Act with respect 
to de minimis incidental components of eligible water infrastructure 
projects funded under the ARRA. The basis for this waiver is a public 
interest determination pursuant to Section 1605(b)(1) of ARRA.

I. Background

    The American Recovery and Reinvestment Act of 2009 made available 
$3,672,475,732 to RUS to make direct loans and grants for rural water, 
wastewater and waste disposal programs authorized by Sections 306 and 
310B and described in Section 381E(d)(2) of the Consolidated Farm and 
Rural Development Act. Section 1605(a) of ARRA, the ``Buy American'' 
provision, states that ``none of the funds appropriated or otherwise 
made available by this Act may be used for a project for the 
construction, alteration, maintenance, or repair of a public building 
or public work unless all of the iron, steel and manufactured goods 
used in the project are produced in the United States.''
    Section 1605(b) of ARRA authorizes the head of a Federal department 
or agency to waive the Buy American provision by one of the following 
three determinations: (1) Applying the Buy American provision would be 
inconsistent with the public interest; (2) the iron, steel, and 
relevant manufactured goods are not produced in the United States in 
sufficient and reasonably available quantities and of a satisfactory 
quality; or (3) the inclusion of the iron, steel, and manufactured 
goods produced in the United States will increase the cost of the 
project by more than 25 percent. If a determination is made to waive 
the requirements of Section 1605(a) based on a finding under Section 
1605(b), then Section 1605(c) requires the head of the department or 
agency to publish a detailed justification in the Federal Register as 
to why the provision is being waived. Finally, Section 1605(d) requires 
that the Buy American provision must be applied in a manner consistent 
with the United States' obligations under international agreements.

II. Public Interest Finding

    RUS has determined that, as applied to water and wastewater 
projects, the application of the Buy American restrictions to de 
minimis situations would be inconsistent with the public interest.
    Water and wastewater infrastructure projects typically contain a 
relatively small number of high-cost components incorporated into the 
project that are iron, steel and manufactured goods, such as pipe, 
tanks, pumps, motors, instrumentation and control equipment, treatment 
process equipment, and relevant materials to build structures for 
facilities such as treatment plants, pumping stations and pipe 
networks. In bid solicitations for water and wastewater projects, these 
high-cost components are generally described in detail in project-
specific technical specifications, and utility owners and their 
contractors are generally familiar with the conditions of availability, 
the potential alternatives for each detailed specification, the 
approximate cost and, most relevant to this Notice, the country of 
manufacture of such components.
    Every water or wastewater infrastructure project also involves the 
use of thousands of miscellaneous, generally low-cost components that 
are essential for, but incidental to, construction of the project. 
During construction, these components (for example, nuts, bolts, 
fasteners, tubing, and gaskets), are incorporated into the physical 
structure of the project. For many of these incidental components, the 
country of manufacture and the availability of alternatives are not 
always readily or reasonably identifiable. More importantly, the 
miscellaneous character of these components, together with their low 
cost (both individually and when procured in bulk), characterize them 
as incidental to the facility or project.
    RUS finds that it would be inconsistent with the public interest to 
apply the Buy American requirement to incidental components when they 
in total comprise no more than 5 percent of the total cost of the 
materials used in and incorporated into a project. While individual 
components may have the

[[Page 48902]]

same function (e.g., brackets), the specific manufacturer and 
configuration may vary from project to project, making the analysis and 
consideration of individual waiver requests for them, including 
determining whether or not U.S. made products exist, is expected to be 
time-consuming and labor intensive far out of proportion to the 
percentage of total project materials they comprise. Further, since the 
specific use of these low-cost components can be expected to be widely 
varied, formulating categorical waivers for specific types of 
components would be impractical. Because the situations described 
above, i.e. a high number of low-cost, miscellaneous components, can be 
effectively addressed by a comprehensive application of a nationwide de 
minimis waiver, RUS finds that it would be inconsistent with the public 
interest to apply the Buy American requirement to incidental components 
when they in total comprise no more that 5 percent of the total cost of 
the materials used in and incorporated into a project.
    In some instances, the Rural Utilities Service and the 
Environmental Protection Agency's (EPA) Clean Drinking Water State 
Revolving Funds (SRF) program jointly fund water infrastructure 
projects. The EPA undertook inquiries to identify the approximate scope 
of incidental components within its SRF water infrastructure projects. 
The responses were consistent and indicated that the percentage of 
total costs for drinking water or wastewater treatment infrastructure 
projects represented by these incidental components is generally not in 
excess of 5 percent of the total costs of the materials used in and 
incorporated into a project.
    As a result of its research and analysis, EPA published two Federal 
Register notices of de minimis waivers. The first was published on 
Tuesday, June 2, 2009 (FR Vol. 74, No. 104, pp. 26398 and 26399), and 
set forth the EPA's determination with respect to a public interest 
finding on de minimis. The second notice, which revised the first, was 
published on Monday, August 10, 2009 (FR Vol. 74, No. 152, pp. 39959 
and 39960). By these waivers the EPA has also determined that imposing 
ARRA's Buy American requirements for the category of de minimis 
incidental components is not in the public interest.
    While the authorizing statutes and funding sources for the EPA and 
RUS borrowers are different, the types of projects that EPA finances 
under its SRF program are substantially similar in size, scope and 
purpose as those funded by RUS and, as stated above, some projects are 
jointly funded by RUS and EPA. The Rural Utilities Service has decades 
of experience in financing water and wastewater projects in rural 
America and shares the EPA's rationale with respect to incidental 
components used in similar projects. With respect to jointly-funded 
projects, it is desirable to avoid disparate treatment of components 
based on whether or not ARRA funds come from EPA or RUS. Section 1605 
should be administered consistently, both within a particular Federal 
agency and, to the extent possible, between agencies. Promoting 
consistent treatment and avoiding unnecessary delays in committing ARRA 
financing to projects around the country are crucial to the success of 
ARRA. Requiring individual waivers for incidental components would be 
time prohibitive and overly burdensome for applicants and RUS. The 
purpose of ARRA is to stimulate economic recovery by funding current 
infrastructure construction, not to delay projects that are ``shovel 
ready.'' Therefore, a de minimis waiver of incidental components 
totaling no more that 5 percent of total project costs is in the public 
interest.

III. Waiver

    Based on the public interest finding discussed above and pursuant 
to Section 1605(c), USDA hereby issues a national waiver from the 
requirements of ARRA Section 1605 for any incidental components of the 
type described above that comprise in total a de minimis amount of the 
project, specifically, for any such incidental components up to a limit 
of no more than 5 percent of the total cost of the materials used in 
and incorporated into a project.
    Assistance recipients who elect to use this waiver shall, in 
consultation with their contractors, determine the items to be covered 
by this waiver, retain relevant documentation as to those items in 
their project files, and be able to summarize in reports to RUS, if so 
requested, the types and/or categories of items to which this waiver is 
applied, the total cost of incidental components covered by the waiver 
for each type or category, and the calculations by which they 
determined the total cost of materials used in and incorporated into 
the project.
    In using this waiver, assistance recipients must consider that 
there may be circumstances where there are multiple types of low-cost 
components which, when combined with the incidental components 
described above, may total more than 5 percent.
    Assistance recipients in such cases will have to choose which of 
these incidental components will be covered by the waiver and which 
will not. Components that the recipient is unable to include within the 
5 percent limit of this waiver must comply with the requirements of 
section 1605 of ARRA by appropriate means other than reliance on this 
waiver.
    Further, as described above, in some cases RUS and EPA jointly fund 
projects. Both RUS and EPA have issued de minimis waivers that have a 
cap of a total of 5 percent of project costs. In the case of a jointly 
funded project, these waivers shall not be combined to create a waiver 
of greater than 5 percent of total project costs.
    This supplementary information constitutes the ``detailed written 
justification'' required by Section 1605(c) of ARRA and Section 176.80 
of the Office of Management and Budget's rules for waivers of the Buy 
American provisions.

    Authority:  Public Law 111-5, Section 1605.

    Dated: September 21, 2009.
Thomas J. Vilsack,
Secretary.
[FR Doc. E9-23202 Filed 9-24-09; 8:45 am]
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