Public Interest De Minimis and Small Grants Waiver of Build America, Buy America Provisions as Applied to Recipients of HUD Federal Financial Assistance, 76502-76505 [2022-27097]
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Federal Register / Vol. 87, No. 239 / Wednesday, December 14, 2022 / Notices
waiver is not an alternative to increasing
domestic production. Rather this waiver
will 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.
This waiver also allows grantees and
funding recipients to continue with
projects in connection with iron and
steel products where Made in America
requirements have long been
contemplated—providing greater ease of
implementation for HUD’s CDBG
formula grantees. Without this waiver,
HUD grantee and funding recipient
participation could be impacted, such as
modification of current plans.
By this notice, HUD announces that it
is waiving the application of the BAP
for all FFA obligated by HUD on or after
November 23, the effective date of this
waiver, and on or before February 21,
2023, except for those funds utilized in
connection with the purchase of iron or
steel products in infrastructure projects
funded by CDBG formula grants
obligated by HUD on or after November
15, 2022. In addition, in the case of FFA
obligated by HUD on or after November
15, 2022 but prior to the effective date
of the final waiver, HUD is waiving the
application of the BAP for all
expenditures incurred on or after the
date of the final waiver, except for those
funds utilized in connection with the
purchase of iron or steel products in
infrastructure projects funded by CDBG
formula grants obligated by HUD on or
after November 15, 2022.
As HUD’s previous notice advised
and as supported by several comments
received during the comment period for
that waiver, many of the HUD’s
programs that may be subject to the BAP
and have previously not required
compliance with similar Buy America
preferences. Because the potential
application of BAP mandated by the Act
is new to the majority of HUD’s FFA
programs, this waiver advances BABA
by targeting the initial phased
implementation to a well-developed
industry in connection with
infrastructure projects being undertaken
by sophisticated CDBG formula
grantees. HUD intends to focus specific
attention to the full implementation of
the BAP in connection with the use of
iron and steel in infrastructure projects
in other FFA programs utilizing HUD
funds within this waiver period.
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.
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V. Public Comments on the Waiver
As required under section 70914 of
the Act, HUD solicited comment from
the public on the public interest waiver
announced in this notice on its website
and then published the proposed waiver
in the Federal Register. A total of 15
comments were received in response to
the proposed waiver. HUD thoroughly
reviewed and considered each of the
comments in determining to move
forward with the issuance of this waiver
as published in this final notice. The
comments were supportive of the
orderly implementation of the BAP, but
were varied in the commenters’
recommendations as to how to best
accomplish such implementation.
A few commenters expressed support
for a waiver of broader scope,
potentially excluding all affordable
housing programs from requirements to
apply the BAP. A similar number of
commenters requested that HUD move
more expeditiously to fully implement
the BAP across all HUD FFA programs.
HUD appreciates the comments from
both perspectives, but believes that the
strategic implementation of iron and
steel purchase requirements of the BAP
in connection with CDBG formula
grants obligated by HUD on or after
November 15, 2022, is an appropriate
first step towards the appropriate
implementation of the BAP. Such a
measured step forward in
implementation of the Act represents an
appropriate balancing of the intent of
the Act with the public interest in the
continued efficiency and success of
infrastructure projects funded through
HUD’s affordable housing and
community development programs, the
majority of which have not previously
been subject to Buy America
requirements to the extent of those
included in the BAP. HUD therefore
declines to alter the scope of the
proposed phased implementation
waiver at this time. HUD will continue
to monitor the implementation of the
BAP across its programs to ensure the
most robust application possible in light
of the important public interests
discussed above.
Several proponents of the waiver
requested that HUD provide guidance
regarding the implementation of the
BAP and extend this waiver until after
the provision of such guidance. HUD
appreciates these comments as well and
will continue to work to develop robust
guidance regarding the implementation
of the BAP across its programs. HUD
remains committed to reviewing its
plans to provide for the effective and
efficient implementation of the Act
across its programs but is declining to
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extend the term of this waiver at this
time.
V. Impact of This Waiver on Other
Federal Financial Assistance
No funds that have been obligated by
HUD on or before November 14, 2022,
or during the pendency of this waiver
will require compliance with the BAP,
with the exception of iron and steel
products used in connection with
infrastructure projects funded through
CDBG formula grants obligated by HUD
on or after November 15, 2022, or unless
otherwise required by another FFA
award. Where the BAP or other BABA
requirements are made applicable to a
project of a grantee or funding recipient
by another Federal agency, those
requirements are not waived by this
waiver, 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,
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. 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 waiver period to better
understand the market and to limit the
use of waivers caused by dumping of
foreign-sourced products.
Marcia L. Fudge,
Secretary.
[FR Doc. 2022–27096 Filed 12–13–22; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–6331–N–08A]
Public Interest De Minimis and Small
Grants Waiver of Build America, Buy
America Provisions as Applied to
Recipients of HUD Federal Financial
Assistance
Office of the Secretary, U.S.
Department of Housing and Urban
Development (HUD).
ACTION: Final notice.
AGENCY:
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Federal Register / Vol. 87, No. 239 / Wednesday, December 14, 2022 / Notices
In accordance with the Build
America, Buy America Act (‘‘BABA’’ or
‘‘the Act’’) this notice advises that HUD
has issued a departmentwide public
interest De Minimis and Small Grants
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 (‘‘FFA’’).
For the purposes of this waiver, HUD
has waived the application of the BAP
for infrastructure projects whose total
cost (including HUD funding and
funding from any other source) is an
amount equal to or less than the
Simplified acquisition threshold, which
is currently $250,000. HUD has also
waived the application of the BAP for
all Small Grants of FFA provided by
HUD that are equal to or below the
Simplified acquisition threshold, which
is currently $250,000. However, if FFA
provided by HUD is combined with
other FFA from another Federal agency,
and the total amount of FFA in a single
project is greater than the Simplified
acquisition threshold, currently
$250,000, then the waiver shall not
apply to the FFA provided by HUD.
Additionally, HUD has waived the
application of the BAP for a De Minimis
portion of an infrastructure project,
meaning a cumulative total of no more
than 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 De Minimis and Small
Grants 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: As required under section 70914
of the Act, HUD published this
proposed waiver on its website on
October 31, 2022, for public comment.
In addition, HUD published the
proposed waiver in the Federal
Register. Comments on the proposed
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waiver set out in this document were
due on or before November 15, 2022.
Through this final notice, HUD is
announcing that it has issued this
waiver effective November 23, 2022.
This waiver will remain effective for a
period of five years or such shorter time
period as HUD may announce via
notice.
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/telecommunicationsrelay-service-trs. HUD encourages
submission of questions about this
document be sent to
BuildAmericaBuyAmerica@hud.gov.
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,
new awards of FFA 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
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of section 70913 of the Act, HUD
produced a report identifying and
evaluating all of HUD’s FFA 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 (‘‘FFA’’) provided to Tribal
recipients for a period of one year. HUD
published a notice proposing the waiver
that is being finalized through this
notice on its website on October 31,
2022, and via the Federal Register.
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 infrastructure
project 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.
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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 issuing 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. 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 has waived
the application of the BAP for
infrastructure projects whose total cost
(including HUD funding and funding
from any other source) is an amount
equal to or less than the 2 CFR 200.1
Simplified acquisition threshold, which
is currently $250,000. HUD has also
waived the application of the BAP for
all Small Grants of Federal Financial
Assistance provided by HUD that are
equal to or below the 2 CFR 200.1
Simplified acquisition threshold, which
is currently $250,000. However, if FFA
provided by HUD is combined with
other FFA from another Federal agency,
and the total amount of FFA in a single
project is greater than the Simplified
acquisition threshold, currently
$250,000, then the waiver shall not
apply to the FFA provided by HUD.
HUD has also waived the application of
the BAP for a De Minimis portion of an
infrastructure project, meaning a
cumulative total of no more than 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 De Minimis and Small
Grants waivers are in the public interest.
Such waivers will allow HUD, grantees
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and funding recipients to focus their
efforts on such critical projects. Issuing
the waivers is not an alternative to
increasing domestic production. The
waivers are in the interest of efficiency,
to ease burdens for HUD grantees and
funding recipients, and 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 grantee and funding
recipient participation could be
impacted, such as modification of
current plans.
HUD is issuing this waiver to
facilitate the effective implementation of
the BAP and will therefore not permit
the artificial subdivision of
infrastructure projects to fit within the
scope of this waiver of the BAP. Thus,
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
FFA that will be used for infrastructure
projects 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
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
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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 initial waivers advised and
as supported by several comments
received during the comment period on
those waivers, 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 FFA,
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 are
exempted from compliance with BAP as
a result of the waiver will be required
to apply the BAP.
V. Public Comments on the Waiver
As required under section 70914 of
the Act, HUD solicited comment from
the public on the public interest waiver
announced in this notice on its website
and then published the proposed waiver
in the Federal Register. A total of 14
comments were received in response to
the proposed waiver. HUD thoroughly
reviewed and considered each of the
comments in determining to move
forward with the issuance of this waiver
as published in this final notice. The
comments generally favored a De
Minimis and Small Dollar waiver as
proposed.
A few commenters expressed support
for a broader scope waiver, including
requesting higher limits for a Small
Grants exclusion, a higher percentage
exclusion on portions of infrastructure
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projects, and a higher cap on the total
cost under the De Minimis waiver. A
similar number of commenters
requested that the limits be lowered to
afford more opportunities for the
application of the BAP. HUD
appreciates the comments from both
perspectives, but believes that, as an
initial matter, the limits proposed in the
initial waiver are set at the appropriate
levels to balance the intent of the Act
with the public interest in the continued
efficiency and success of infrastructure
projects funded through HUD’s
affordable housing and community
development programs. HUD declines to
make changes to the amounts
represented by these limits at this time,
but is clarifying that all FFA, whether
received by HUD or from another
Federal source, in connection with
infrastructure projects must be used to
calculate the total, cumulative FFA in a
single project to determine the
applicability of a Small Grants waiver.
HUD will continue to monitor the
implementation of the BAP across its
programs to ensure the most robust
application possible in light of the
important public interests discussed
above.
Several proponents of the waiver
requested that HUD provide greater
clarity regarding the implementation of
the BAP and the appropriate application
of this waiver. HUD appreciates these
comments and will continue to work to
develop robust guidance regarding the
implementation of the BAP across its
programs. HUD remains committed to
reviewing the waivers it issues every
five years or more often if necessary and
appropriate.
A few comments were received from
manufacturers and trade organizations
that opposed portions of the proposed
waiver because they would prefer a
more narrowly tailored waiver, if a
waiver is issued at all. These
commenters expressed confusion over
the reference to Minor Components in
the proposed waiver. HUD agrees that
use of the term Minor Components did
not accurately reflect the waiver HUD
was proposing. As a result, the waiver
issued by HUD and announced via this
final notice deletes all references to
Minor Components and instead focuses
on the true intent of the waiver—
coverage for small grants and a De
Minimis waiver.
Additionally, several of the opponents
expressed concern that the waiver could
give rise to a loophole to avoid
compliance with the BAP. HUD
appreciates the comments but believes
that the waiver is sufficiently narrowly
tailored with protections in place to
avoid artificial manipulation of project
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size and that the risk of abuse is
outweighed by the need to provide this
important flexibility for Small Grants
and the De Minimis portions of larger
infrastructure projects. HUD expects the
future guidance and technical assistance
it provides to grantees regarding the
implementation of the Act to further
address any concerns that the scope or
applicability of this waiver will be
misconstrued by grantees. HUD will not
allow the use of the waiver in any
artificial or contrived circumstances
designed to avoid the proper application
of the BAP requirements. HUD has
therefore declined to modify the waiver
at this time, beyond the clarification of
the use of the cumulative total of all
FFA funding the infrastructure project
in determining application of this
waiver. As previously indicated, HUD
will continue to monitor the usage of
the waiver so it may swiftly address any
potential confusion concerning the
proper application of the waiver.
The complexities of applying the BAP
in connection with Small Grants and De
Minimis portions of projects are such
that the Agency maintains, for the
reasons outlined herein, the public
interest necessitates this waiver of the
BAP. HUD will continue its work to
assess compliance alternatives and
options best suited to enable grantees
and funding recipients to more
efficiently and effectively implement
the BAP in connection with Small
Grants and De Minimis portions of
infrastructure projects and will
reevaluate this waiver in five years or
sooner as appropriate. Additionally,
HUD will continue to assess the need
for and provide additional guidance for
funding recipients and grantees to
ensure the appropriate implementation
of the BAP in its programs. At this time,
however, HUD has issued this Small
Grant and De Minimis waiver with the
minimal substantive changes described
herein and with other minor,
inconsequential grammatical revisions.
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 FFA.
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76505
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 foreignsourced 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.i 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.
Marcia L. Fudge,
Secretary.
[FR Doc. 2022–27097 Filed 12–13–22; 8:45 am]
BILLING CODE 4210–67–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
[Docket No. FR–6331–N–05A]
Public Interest Waiver of Build
America, Buy America Provisions for
Exigent Circumstances as Applied to
Certain Recipients of HUD Federal
Financial Assistance
Office of the Secretary, U.S.
Department of Housing and Urban
Development (HUD).
ACTION: Final notice.
AGENCY:
In accordance with the Build
America, Buy America Act (‘‘BABA’’ or
‘‘the Act’’) this notice advises that HUD
is issuing a departmentwide public
interest waiver to the Buy America
Domestic Content Procurement
Preference (‘‘Buy America Preference,’’
or ‘‘BAP’’) for grantees and recipients of
Federal Financial Assistance (‘‘FFA’’)
from HUD as applied to the iron, steel,
manufactured products, and
construction materials requirement of
BABA in certain exigent circumstances.
In accordance with the Act, HUD has
found that this departmentwide waiver
for exigent circumstances is in the
public interest. The waiver will assist
HUD and its grantees and funding
SUMMARY:
i 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/wpcontent/uploads/2021/12/M-22-08.pdf.
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[Federal Register Volume 87, Number 239 (Wednesday, December 14, 2022)]
[Notices]
[Pages 76502-76505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27097]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6331-N-08A]
Public Interest De Minimis and Small Grants Waiver of Build
America, Buy America Provisions as Applied to Recipients of HUD Federal
Financial Assistance
AGENCY: Office of the Secretary, U.S. Department of Housing and Urban
Development (HUD).
ACTION: Final notice.
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[[Page 76503]]
SUMMARY: In accordance with the Build America, Buy America Act
(``BABA'' or ``the Act'') this notice advises that HUD has issued a
departmentwide public interest De Minimis and Small Grants 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 (``FFA''). For the purposes
of this waiver, HUD has waived the application of the BAP for
infrastructure projects whose total cost (including HUD funding and
funding from any other source) is an amount equal to or less than the
Simplified acquisition threshold, which is currently $250,000. HUD has
also waived the application of the BAP for all Small Grants of FFA
provided by HUD that are equal to or below the Simplified acquisition
threshold, which is currently $250,000. However, if FFA provided by HUD
is combined with other FFA from another Federal agency, and the total
amount of FFA in a single project is greater than the Simplified
acquisition threshold, currently $250,000, then the waiver shall not
apply to the FFA provided by HUD. Additionally, HUD has waived the
application of the BAP for a De Minimis portion of an infrastructure
project, meaning a cumulative total of no more than 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 De Minimis and
Small Grants 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: As required under section 70914 of the Act, HUD published this
proposed waiver on its website on October 31, 2022, for public comment.
In addition, HUD published the proposed waiver in the Federal Register.
Comments on the proposed waiver set out in this document were due on or
before November 15, 2022. Through this final notice, HUD is announcing
that it has issued this waiver effective November 23, 2022. This waiver
will remain effective for a period of five years or such shorter time
period as HUD may announce via notice.
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, new awards of FFA 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
FFA 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 (``FFA'') provided to Tribal
recipients for a period of one year. HUD published a notice proposing
the waiver that is being finalized through this notice on its website
on October 31, 2022, and via the Federal Register. 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
infrastructure project 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.
[[Page 76504]]
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 issuing 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. 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 has waived the application of the BAP for
infrastructure projects whose total cost (including HUD funding and
funding from any other source) is an amount equal to or less than the 2
CFR 200.1 Simplified acquisition threshold, which is currently
$250,000. HUD has also waived the application of the BAP for all Small
Grants of Federal Financial Assistance provided by HUD that are equal
to or below the 2 CFR 200.1 Simplified acquisition threshold, which is
currently $250,000. However, if FFA provided by HUD is combined with
other FFA from another Federal agency, and the total amount of FFA in a
single project is greater than the Simplified acquisition threshold,
currently $250,000, then the waiver shall not apply to the FFA provided
by HUD. HUD has also waived the application of the BAP for a De Minimis
portion of an infrastructure project, meaning a cumulative total of no
more than 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 De Minimis and
Small Grants waivers are in the public interest. Such waivers will
allow HUD, grantees and funding recipients to focus their efforts on
such critical projects. Issuing the waivers is not an alternative to
increasing domestic production. The waivers are in the interest of
efficiency, to ease burdens for HUD grantees and funding recipients,
and 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 grantee and
funding recipient participation could be impacted, such as modification
of current plans.
HUD is issuing this waiver to facilitate the effective
implementation of the BAP and will therefore not permit the artificial
subdivision of infrastructure projects to fit within the scope of this
waiver of the BAP. Thus, 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 FFA that will be used for infrastructure
projects 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 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 initial waivers advised and as supported by several
comments received during the comment period on those waivers, 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 FFA, 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 are exempted from compliance with BAP as a result of
the waiver will be required to apply the BAP.
V. Public Comments on the Waiver
As required under section 70914 of the Act, HUD solicited comment
from the public on the public interest waiver announced in this notice
on its website and then published the proposed waiver in the Federal
Register. A total of 14 comments were received in response to the
proposed waiver. HUD thoroughly reviewed and considered each of the
comments in determining to move forward with the issuance of this
waiver as published in this final notice. The comments generally
favored a De Minimis and Small Dollar waiver as proposed.
A few commenters expressed support for a broader scope waiver,
including requesting higher limits for a Small Grants exclusion, a
higher percentage exclusion on portions of infrastructure
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projects, and a higher cap on the total cost under the De Minimis
waiver. A similar number of commenters requested that the limits be
lowered to afford more opportunities for the application of the BAP.
HUD appreciates the comments from both perspectives, but believes that,
as an initial matter, the limits proposed in the initial waiver are set
at the appropriate levels to balance the intent of the Act with the
public interest in the continued efficiency and success of
infrastructure projects funded through HUD's affordable housing and
community development programs. HUD declines to make changes to the
amounts represented by these limits at this time, but is clarifying
that all FFA, whether received by HUD or from another Federal source,
in connection with infrastructure projects must be used to calculate
the total, cumulative FFA in a single project to determine the
applicability of a Small Grants waiver. HUD will continue to monitor
the implementation of the BAP across its programs to ensure the most
robust application possible in light of the important public interests
discussed above.
Several proponents of the waiver requested that HUD provide greater
clarity regarding the implementation of the BAP and the appropriate
application of this waiver. HUD appreciates these comments and will
continue to work to develop robust guidance regarding the
implementation of the BAP across its programs. HUD remains committed to
reviewing the waivers it issues every five years or more often if
necessary and appropriate.
A few comments were received from manufacturers and trade
organizations that opposed portions of the proposed waiver because they
would prefer a more narrowly tailored waiver, if a waiver is issued at
all. These commenters expressed confusion over the reference to Minor
Components in the proposed waiver. HUD agrees that use of the term
Minor Components did not accurately reflect the waiver HUD was
proposing. As a result, the waiver issued by HUD and announced via this
final notice deletes all references to Minor Components and instead
focuses on the true intent of the waiver--coverage for small grants and
a De Minimis waiver.
Additionally, several of the opponents expressed concern that the
waiver could give rise to a loophole to avoid compliance with the BAP.
HUD appreciates the comments but believes that the waiver is
sufficiently narrowly tailored with protections in place to avoid
artificial manipulation of project size and that the risk of abuse is
outweighed by the need to provide this important flexibility for Small
Grants and the De Minimis portions of larger infrastructure projects.
HUD expects the future guidance and technical assistance it provides to
grantees regarding the implementation of the Act to further address any
concerns that the scope or applicability of this waiver will be
misconstrued by grantees. HUD will not allow the use of the waiver in
any artificial or contrived circumstances designed to avoid the proper
application of the BAP requirements. HUD has therefore declined to
modify the waiver at this time, beyond the clarification of the use of
the cumulative total of all FFA funding the infrastructure project in
determining application of this waiver. As previously indicated, HUD
will continue to monitor the usage of the waiver so it may swiftly
address any potential confusion concerning the proper application of
the waiver.
The complexities of applying the BAP in connection with Small
Grants and De Minimis portions of projects are such that the Agency
maintains, for the reasons outlined herein, the public interest
necessitates this waiver of the BAP. HUD will continue its work to
assess compliance alternatives and options best suited to enable
grantees and funding recipients to more efficiently and effectively
implement the BAP in connection with Small Grants and De Minimis
portions of infrastructure projects and will reevaluate this waiver in
five years or sooner as appropriate. Additionally, HUD will continue to
assess the need for and provide additional guidance for funding
recipients and grantees to ensure the appropriate implementation of the
BAP in its programs. At this time, however, HUD has issued this Small
Grant and De Minimis waiver with the minimal substantive changes
described herein and with other minor, inconsequential grammatical
revisions.
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 FFA.
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.\i\ 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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\i\ 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.
Marcia L. Fudge,
Secretary.
[FR Doc. 2022-27097 Filed 12-13-22; 8:45 am]
BILLING CODE 4210-67-P
