Public Interest De Minimis, Small Grants, and Minor Components Waiver of Build America, Buy America Provisions as Applied to Certain Recipients of HUD Federal Financial Assistance, 67051-67053 [2022-24296]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 87, Number 214 (Monday, November 7, 2022)]
[Notices]
[Pages 67051-67053]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24296]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6331-N-08]


Public Interest De Minimis, Small Grants, and Minor Components 
Waiver of Build America, Buy America Provisions as Applied to Certain 
Recipients of HUD Federal Financial Assistance

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'' or ``the Act'') this notice advises that HUD is proposing a 
departmentwide public interest de minimis, Small Grants, and Minor 
Components waiver to the Buy America Domestic Content Procurement 
Preference (``Buy America Preference,'' or ``BAP'') as applied to the 
iron, steel, manufactured products, and construction materials 
requirement of the Act for recipients of Federal Financial Assistance. 
For the purposes of this proposed waiver, HUD is proposing to waive the 
application of the BAP for infrastructure projects whose total cost is 
an amount equal to or less than the Simplified acquisition threshold, 
which is currently $250,000. HUD is also proposing to waive the 
application of the BAP for all Small Grants of Federal Financial 
Assistance that are equal to or below the Simplified acquisition 
threshold, which is currently $250,000. Additionally, HUD is proposing 
to waive the application of the BAP for Minor Components of an 
infrastructure project, such that a cumulative total of no more than a 
total of 5 percent of the total cost of the iron, steel, manufactured 
products, and construction materials used in and incorporated into the 
infrastructure project, up to a maximum of $1 million. In accordance 
with the Act, HUD has found that such proposed De Minimis, Small Grants 
and Minor Components waivers are in the public interest. The waiver 
will assist HUD and its grantees and funding recipients in preventing 
immediate delays to critically important projects that serve to 
ensuring the safety and health of HUD constituents and continuing to 
provide economic opportunity through housing and community development 
projects. Moreover, this waiver will assist HUD in working to 
strengthen the housing market to bolster the economy and protect 
consumers, meet the need for quality affordable rental homes, utilize 
housing as a platform for improving quality of life, and build 
inclusive and sustainable communities free from discrimination.

DATES: HUD published this proposed waiver on its website on October 31, 
2022. Comments on the proposed waiver set out in this document are due 
on or before November 15, 2022.

ADDRESSES: Interested persons are invited to submit comments on this 
proposed general applicability waiver. Copies of all comments submitted 
are available for inspection and downloading at www.regulations.gov.
    To receive consideration as public comments, comments must be 
submitted through one of two methods, specified below. All submissions 
must refer to the above docket number and title.
    1. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
www.regulations.gov.
    HUD strongly encourages commenters to submit comments 
electronically. Electronic submission of comments allows the commenter 
maximum time to prepare and submit a comment, ensures timely receipt by 
HUD, and enables HUD to make them immediately available to the public. 
Comments submitted electronically through the www.regulations.gov 
website can be viewed by other commenters and interested members of the 
public. Commenters should follow the instructions provided on that site 
to submit comments electronically.
    2. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW, Room 10276, 
Washington, DC 20410-0500.
    No Facsimile Comments. Facsimile (FAX) comments will not be 
accepted.
    3. Public Inspection of Comments. All properly submitted comments 
and communications submitted to HUD will be available for public 
inspection and copying between 8:00 a.m. and 5:00 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the submissions must be 
scheduled by calling the Regulations Division at (202) 708-3055 (this 
is not a toll-free number).

FOR FURTHER INFORMATION CONTACT: Joseph Carlile, Department of Housing 
and Urban Development, 451 Seventh Street SW, Room 10226, 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 https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. HUD encourages submission 
of questions about this document be sent to 
[email protected].

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). Public Law 117-58. The Act establishes a domestic 
content procurement preference, the BAP, for Federal infrastructure 
programs. Section 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,

[[Page 67052]]

new awards of Federal Financial Assistance from a program for 
infrastructure, and any of those funds obligated by the grantee, 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

    Since the enactment of the Act, HUD has worked diligently to 
implement the BAP. Consistent with the requirements of section 70913 of 
the Act, HUD produced a report identifying and evaluating all of HUD's 
Federal Financial Assistance programs for compliance with the BAP on 
January 19, 2022, through Federal Register notice ``Identification of 
Federal Financial Assistance Infrastructure Programs Subject to the 
Build America, Buy America Provisions of the Infrastructure Investment 
and Jobs Act''. (87 FR 2894) In order to ensure orderly implementation 
of the BAP across HUD's programs, HUD published two general 
applicability waivers for HUD's programs on May 3, 2022. The first 
notice, ``General Applicability Waiver of Build America, Buy America 
Provisions as Applied to Recipients of HUD Federal Financial 
Assistance'' (87 FR 26219), extended the implementation date for the 
BAP until November 14, 2022, unless covered by a subsequent waiver. 
Thus, no funds obligated by HUD before November 14, 2022, are subject 
to the BAP. The second notice, ``General Applicability Waiver of Build 
America, Buy America Provisions as Applied to Tribal Recipients of HUD 
Federal Financial Assistance'' (87 FR 26221), extended the 
implementation date for the BAP for Federal Financial Assistance 
provided to Tribal recipients for a period of one year. Additionally, 
HUD published a Request for Information ``Request for Information 
Relating to the Implementation of the Build America, Buy America Act'' 
to gather additional information necessary to fully implement the BAP 
for HUD programs and to adequately prepare necessary Paperwork 
Reduction Act notices relating to such implementation. (June 1, 2022, 
87 FR 33193)
    Additional details on HUD's implementation of the BABA requirements 
can be found at https://www.hud.gov/programoffices/generalcounsel/BABA.

III. Waiver Authority

    Under section 70914(b), HUD has 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 completing the 
Covered Activities by more than 25 percent. Section 70914(c) provides 
that a waiver under 70914(b) must be published by the agency with a 
detailed written explanation for the proposed determination and provide 
a public comment period of not less than 15 days.

IV. Public Interest in This General Applicability Waiver of Buy America 
Provisions

    The Office of Management and Budget's April 18, 2022, memorandum, 
``Initial Implementation Guidance on Application of Buy America 
Preference in Federal Financial Assistance Programs for 
Infrastructure'' (M-22-11) encourages agencies to consider whether it 
is in the public interest to waive application of a BAP to awards below 
the Simplified Acquisition Threshold. HUD is proposing this waiver not 
as an alternative to increasing domestic production, but as an 
important tool to implement the Buy American provisions in the most 
efficient manner in order to promote investment in HUD's domestic 
manufacturing base, strengthen critical supply chains, and position 
United States workers and businesses to compete and lead globally in 
the 21st century. HUD understands that advancing Made in America 
objectives is a continuous effort. HUD plans to move forward to 
implement the new requirements in a way that maximizes coordination and 
collaboration to support long-term investments in domestic production.
    Through this notice, HUD is proposing to waive the application of 
the BAP for infrastructure projects whose total cost is an amount equal 
to or less than the 2 CFR 200.1 Simplified acquisition threshold, which 
is currently $250,000. HUD is also proposing to waive the application 
of the BAP for all Small Grants of Federal Financial Assistance that 
are equal to or below the 2 CFR 200.1 Simplified acquisition threshold, 
which is currently $250,000. HUD is also proposing to waive the 
application of the BAP for Minor Components of an infrastructure 
project, such that a cumulative total of no more than a total of 5 
percent of the total cost of the iron, steel, manufactured products, 
and construction materials used in and incorporated into the 
infrastructure project, up to a maximum of $1 million.
    For purposes of the Act, an infrastructure project involves the 
undertaking of any ``construction, alteration, maintenance, or repair'' 
of ``infrastructure,'' which includes, among other things, the 
``structures, facilities and equipment'' of ``buildings and real 
property.''
    In accordance with the Act, HUD has found that such proposed De 
Minimis, Small Grants and Minor Components waivers are in the public 
interest. Such waivers will allow HUD, grantees and funding recipients 
to focus their efforts on such critical projects. Proposing the waivers 
is not an alternative to increasing domestic production. It is actually 
a tool to promote investment in HUD's domestic manufacturing base in 
the long term. The waivers are in the interest of efficiency, to ease 
burdens for HUD grantees and funding recipients, will also allow HUD to 
focus, particularly in the early phases of BABA implementation, on key 
products, and critical supply chains where increased U.S. manufacturing 
can best advance our economic and national security. These waivers will 
allow HUD grantees and funding recipients to continue with projects. 
Without these waivers, HUD will likely lose grantee and funding 
recipient participation, be exposed to liabilities if HUD forces 
grantees and funding recipients to modify their current plans to come 
into compliance or delay critical activities to protect life, safety 
and property, and will negatively impact the most vulnerable Americans 
HUD seeks to serve.
    For purposes of this waiver, HUD will evaluate the total cost of 
the infrastructure project as it would for purposes of the review 
contemplated under 24 CFR part 58, i.e., by defining the scope 
consistent with 24 CFR 58.2(a)(4), as ``the activity, or a group of 
integrally related activities, designed by the recipient to accomplish, 
in whole or in part, a specific objective.'' HUD believes its grantees 
and recipients of Federal Financial Assistance that will be used for 
Covered Activities are familiar with this regulation and understand the 
proper application of the concept in connection with their activities, 
or as otherwise defined by HUD in a notice. However, in connection with 
the public housing program, evaluation of certain maintenance and 
repair activities within the definition of infrastructure projects 
under the Act is not appropriate using this standard. Therefore, for 
the purposes of determining the applicability of this waiver in 
connection with the maintenance and

[[Page 67053]]

repair of public housing, HUD will evaluate the infrastructure project 
as including the single relevant procurement contract for such 
maintenance or repairs, or, where applicable, the collection of 
procurements focused on the same specific objective (e.g., construction 
of a resident service space) or limited scope of work (e.g., lead based 
paint abatement).
    In fiscal year 2022, HUD grantees will receive more than $15 
billion through the Department's programs where infrastructure is an 
eligible activity and may be subject to the BAP. For example, Community 
Development Block Grant (CDBG) funds may be used for infrastructure 
projects (e.g., water and sewer improvements, street improvements, 
neighborhood facilities) or non-infrastructure uses (e.g., senior 
services, youth services, operation of food banks, administrative and 
planning expenses). HUD estimates that 40 percent of CDBG funds awarded 
in 2021 ($1.4 billion of $3.5 billion total) were used on 
infrastructure projects where the BAP could apply.
    As HUD's previous Notice advised and as supported by several 
comments received during the comment period, many of HUD's programs may 
be subject to the BAP and have previously not required compliance with 
similar Buy American preferences. Because the potential application of 
BAP mandated by the Act is new to the majority of HUD's programs and 
Federal Financial Assistance, this waiver advances BABA by reducing the 
administrative burden to potential assistance recipients where the 
costs of compliance with BABA could distract from the focus on higher 
value BABA compliant items. Failure to provide recipients such 
flexibilities could delay the award for infrastructure projects as 
grantees and funding recipients must exert considerable effort 
accounting for the sourcing for miscellaneous, low-cost items. 
Moreover, HUD does not believe the waiver of the BAP for such awards 
will undermine the full and robust implementation of the Act or the 
ability of the agency to support the purposes behind the Act.
    HUD expects to review this waiver every five years from the 
effective date of this waiver or more often as appropriate. No funds 
obligated by HUD or the grantee/funding recipient during the period of 
the waiver that would be exempted from compliance with BAP as a result 
of the waiver will be required to apply the BAP.

V. Impact of This Waiver on Other Federal Financial Assistance

    Where the BAP or other BABA requirements are made applicable to 
projects of a grantee or funding recipient by another Federal agency, 
the grantee or funding recipient may not rely on this waiver as a 
waiver of any requirement imposed by the other Federal agency for the 
projects, nor is the grantee or funding recipient exempt from the 
application of those requirements in accordance with the requirements 
of the Federal agency providing such Federal Financial Assistance.

VI. 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.\1\ HUD's analysis has 
concluded that this assessment is not applicable to this waiver, as 
this waiver is not based in the cost of foreign-sourced products. HUD 
will perform additional market research during the duration of the 
waiver to better understand the market to limit the use of waivers 
caused by dumping of foreign-sourced products.
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    \1\ See OMB Memorandum M-22-08, Identification of Federal 
Financial Assistance Infrastructure Programs Subject to the Build 
America, Buy America Provisions of the Infrastructure Investment and 
Jobs Act, https://www.whitehouse.gov/wp-content/uploads/2021/12/M-22-08.pdf.
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VI. Solicitation of Comments on the Waiver

    As required under section 70914 of the Act, HUD is soliciting 
comment from the public on the waiver announced in this Notice. In 
particular, HUD invites comments on whether the reliance on the 
Simplified acquisition threshold is an appropriate measure and if it is 
set at an appropriate level for purposes of the waiver. Additionally, 
HUD seeks comments on the percentage of costs excluded from coverage 
and whether there should be a cap on the total amount excluded from 
coverage. For example, should the total costs allowed to be excluded be 
limited only by the 5% exclusion, is the cap of $1 million appropriate 
or should it be capped at some other threshold?

Marcia L. Fudge,
Secretary.
[FR Doc. 2022-24296 Filed 11-3-22; 11:15 am]
BILLING CODE 4210-67-P