Nationwide Limited Public Interest Waiver of Section 1605 (Buy American Requirement) of American Recovery and Reinvestment Act of 2009 (ARRA) For De Minimis Incidental Components of Sanitation Facilities Construction Projects Financed With Funds Provided Under ARRA, 33818-33820 [2010-14347]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Indian Health Service

[Federal Register Volume 75, Number 114 (Tuesday, June 15, 2010)]
[Notices]
[Pages 33818-33820]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-14347]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Indian Health Service


Nationwide Limited Public Interest Waiver of Section 1605 (Buy 
American Requirement) of American Recovery and Reinvestment Act of 2009 
(ARRA) For De Minimis Incidental Components of Sanitation Facilities 
Construction Projects Financed With Funds Provided Under ARRA

AGENCY: Indian Health Service, HHS.

ACTION: Notice.

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SUMMARY: The Indian Health Service (IHS) hereby gives notice of 
granting a nationwide limited waiver of the Buy American requirements 
of the American Recovery and Reinvestment Act of 2009 (ARRA) Section 
1605 under the authority of Section 1605(b)(1) (public interest waiver) 
for de minimis incidental components of sanitation facilities 
construction projects funded by ARRA. This action permits the use of 
non-domestic iron, steel, and manufactured goods when they occur in de 
minimis incidental components of projects funded by ARRA 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 of the materials used in a 
project funded in whole or in part with ARRA assistance.

DATES: Effective Date: Upon signature.

SUPPLEMENTARY INFORMATION: In accordance with ARRA Section 1605(c) and 
Section 176.80 of the rules of the Office of Management and Budget 
(OMB) (2 CFR 176.80), the IHS hereby provides notice that it is 
granting a nationwide limited waiver of the requirements of section 
1605(a) of Public Law 111-5, Buy American requirements, based on the 
public interest authority of section 1605(b)(1), to allow the use of 
non-domestic iron, steel, and manufactured goods when they occur in de 
minimis incidental components of eligible sanitation facilities 
construction projects, where such components cumulatively comprise no 
more than a total of 5 percent of the total cost of the materials used 
in and incorporated into a project funded in whole or in part by ARRA.
    ARRA 1605(a) prohibits the use of recovery funds 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

[[Page 33819]]

in the United States, or unless a waiver is granted by the head of the 
Federal department or agency. ARRA 1605(b) provides that the Buy 
American requirement shall not apply in any case or category in which 
the head of a Federal department or agency finds that: (1) Applying the 
Buy American requirement would be inconsistent with the public 
interest; (2) iron, steel, and the relevant manufactured goods are not 
produced in the U.S. in sufficient and reasonably available quantities 
or of satisfactory quality; or (3) inclusion of iron, steel, and 
manufactured goods will increase the cost of the overall project by 
more than 25 percent. ARRA 1605(c) provides that if the head of a 
Federal department or agency makes a determination under 1605(b), the 
head of the department or agency shall publish a detailed written 
justification in the Federal Register. The finding relevant to this 
waiver is at ARRA 1605(b)(l), that applying the Buy American 
requirement would be inconsistent with the public interest.
    The IHS's sanitation facilities construction 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, control equipment, 
treatment process equipment, and relevant materials to build structures 
for treatment plants, pumping stations, pipe networks, etc. In bid 
solicitations for a project, these high cost components are generally 
described in detail via project specific technical specifications. For 
these major components, Tribes, utility owners and their contractors 
are generally familiar with the conditions of availability, the 
potential alternatives for each detailed specification, the approximate 
cost, and the country of manufacture of the available components.
    Every sanitation facilities construction project also involves the 
use of thousands of miscellaneous, generally low-cost components that 
are essential for, but incidental to, the construction and incorporated 
into the physical structure of the project, such as nails, nuts, bolts, 
other fasteners, tubing, gaskets, etc. For many of these incidental 
components, the country of manufacture and the availability of 
alternatives is not always readily or reasonably identifiable prior to 
procurement in the normal course of business; for other incidental 
components, the country of manufacture may be known but the 
miscellaneous character in conjunction with the low cost, individually 
and (in total) as typically procured in bulk, characterize them as 
incidental to the facility or project.
    In drafting this waiver, because the majority of IHS sanitation 
facilities construction projects occur in remote locations, IHS 
considered the fact that these types of incidental components are 
obtained by contractors in many different ways from many different 
sources, and the disproportionate cost and delay that would be imposed 
on projects if the IHS did not issue this waiver. Such delays would 
jeopardize project completion and related jobs in remote areas 
including Alaska villages where the only means of transporting such 
components is by air.
    Due to the diverse characteristics of the specific configurations 
of these individually low-cost components, the analysis and 
consideration of waiver requests for them--and particularly of 
ascertaining whether U.S.-made products exist or can be made to meet 
these diverse configurations--have been a demanding and time consuming 
task far out of proportion to the percentage of total project materials 
cost 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. 
Recipients who do not have their compliance with respect to section 
1605 clarified may in many cases be unable to initiate or continue 
constructing their projects resulting in the loss of jobs that were a 
result of the project. Because the situations described above can be 
effectively addressed by a comprehensive application of a nationwide de 
minimis waiver, the IHS 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.
    For many years, the IHS and the Environmental Protection Agency's 
(EPA) Clean Water Act lndian Set Aside and Drinking Water 
Infrastructure Grants-Tribal Set Aside programs jointly funded water 
infrastructure projects. The EPA undertook inquiries to identify the 
approximate scope of incidental components within its 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 
IHS recipients are different, the types of projects that EPA finances 
under its programs are substantially similar in size, scope and purpose 
as those funded by the IHS and, as stated above, some projects are 
jointly funded by the IHS and the EPA. The IHS has decades of 
experience in constructing water and waste disposal facilities in rural 
Indian country 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 the EPA or 
the IHS. 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 the IHS. Therefore, a de minimis waiver of 
incidental components totaling no more that 5 percent of the total cost 
of the materials used in and incorporated into a project is in the 
public interest.
    Based on the public interest finding discussed above and pursuant 
to Section 1605(c), the IHS has found that it would be inconsistent 
with the public interest--and particularly with ARRA's directives to 
ensure expeditious construction consistent with prudent management, as 
cited above--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. 
Accordingly, IHS is hereby issuing a national waiver from the 
requirements of ARRA Section 1605(a) for any components described above 
as incidental that comprise in total a de

[[Page 33820]]

minimis amount of the project, that is, 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.
    Recipients who wish to use this waiver should in consultation with 
their contractors determine the items to be covered by this waiver. 
They must retain relevant documentation as to those items in their 
project files, including 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, recipients should consider that all 
sanitation facilities construction projects by definition require the 
expenditure of a certain amount of project funds on the literal ``nuts 
and bolts''-type components whose origins cannot readily be identified 
prior to procurement. The IHS has determined the 5 percent limit based 
on the previously mentioned EPA inquiries, its 50-year experience 
constructing sanitation facilities for American Indian and Alaska 
Native communities, and informed professional engineering judgment as 
to the maximum total amount of incidental goods used in most sanitation 
facilities construction projects. In a few, exceptional cases, 
recipients using this waiver may have multiple types of low-cost 
components which, when combined and in conjunction with those literal 
``nuts and bolts''-type components, may total more than 5 percent. 
Recipients in such cases will have to choose which of these incidental 
components will be covered by the waiver and which will not, and will 
document the type and amount of such items covered. Components which 
the recipient is unable to include within the 5 percent limit of this 
waiver must comply with the requirements of section 1605 by appropriate 
means other than coverage under this waiver.
    Further, as described above, in some cases projects are jointly 
funded by IHS and the EPA. Both the IHS and the EPA have issued de 
minimis waivers that have a cap of a total of 5 percent of the total 
cost of the materials used in and incorporated into a project. 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 OMB's rules for waivers of the Buy American provisions.

    Authority:  Public Law 111-5, Section 1605.

FOR FURTHER INFORMATION CONTACT: Ms. Betty Gould, Regulations Officer, 
801 Thompson Avenue, TMP, Suite 450, Rockville, MD 20852-1627; call 
non-toll free (301) 443-7899; send via facsimile to (301) 443-9879; or 
send your e-mail requests, comments, and return address to: 
Betty.Gould@ihs.gov.

    Dated: June 9, 2010.
Yvette Roubideaux,
Director, Indian Health Service.
[FR Doc. 2010-14347 Filed 6-14-10; 8:45 am]
BILLING CODE 4165-16-P