[Federal Register Volume 74, Number 125 (Wednesday, July 1, 2009)]
[Notices]
[Pages 31402-31403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15511]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
Notice of Limited Waiver of Section 1605 (Buy American
Requirement) of the American Recovery and Reinvestment Act of 2009
(ARRA) for the Broadband Initiatives Program
AGENCY: Rural Utilities Service, U.S. Department of Agriculture.
ACTION: Notice.
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SUMMARY: The Rural Utilities Service (RUS) is hereby granting a limited
waiver of the Buy American requirements of ARRA Section 1605 with
respect to certain broadband equipment that will be used in projects
funded under the Broadband Initiatives Program (BIP). This action
permits the use of certain essential components of a modern broadband
infrastructure as specified in section III of this notice.
DATES: Effective Date: July 1, 2009.
ADDRESSES: Send any correspondence regarding this order to David J.
Villano, Assistant Administrator, Telecommunications Program, Rural
Utilities Service, U.S. Department of Agriculture, 1400 Independence
Avenue., SW., STOP 1590, Room 5151, Washington, DC 20250-1590.
FOR FURTHER INFORMATION CONTACT: Ken Kuchno, Director, Broadband
Division, Rural Utilities Service, U.S. Department of Agriculture, 1400
Independence Avenue., SW., STOP 1599, Room 2868-S, Washington, DC
20250-1590.
SUPPLEMENTARY INFORMATION: In accordance with section 1605(c) of the
Recovery Act and section 176.80 of the rules of the Office of
Management and Budget (OMB), RUS hereby provides notice that it is
granting a limited waiver of section 1605 of the Recovery Act with
respect to certain broadband equipment that will be used in projects
funded under BIP. (See American Recovery and Reinvestment Act of 2009,
Public Law 111-5, Sec. 1605, 123 Stat. 115, 303 (Feb. 17, 2009)
(``Recovery Act''); Requirements for Implementing Sections 1512, 1605,
and 1606 of the American Recovery and Reinvestment Act of 2009 for
Financial Assistance Awards, Interim Final Guidance, 74 FR 18449 (Apr.
23, 2009) (codifying the Buy American provisions at 2 CFR part 176,
subpart B) (``Buy American Guidance'')). The basis for this waiver is a
public interest determination pursuant to section 1605(b)(1) of the
Recovery Act.
I. Background
The Recovery Act appropriates $2.5 billion in budget authority to
RUS to establish BIP, through which RUS will provide grants, loans, and
loan/grant combinations for broadband initiatives throughout the United
States, including projects in unserved and underserved rural areas.
Section 1605(a) of the Recovery Act, the ``Buy American'' provision,
states that none of the funds appropriated by the Act, including the
funds that have been dedicated BIP, ``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.'' \1\
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\1\ Because the Buy American provision applies only to public
works and public buildings, completely private projects need not
obtain a waiver to utilize iron, steel, and manufactured goods
produced outside of the United States. Note, however, that public-
private partnerships are considered public for purposes of the Buy
American limitation.
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Sections 1605(b) and (c) of the Recovery Act authorize the head of
a Federal department or agency to waive the Buy American provision by
finding that: (1) Applying the provision would be inconsistent with the
public interest; (2) the 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 manufactured
goods produced in the United States will increase the cost of the
project by more than 25 percent. If the head of the Federal department
or agency determines that it is necessary to waive application of the
Buy American provision, then the head of the department or agency shall
publish a detailed justification in the Federal Register. Finally, the
Recovery Act states that the Buy American provision must be applied in
a manner consistent with the United States' obligations under
international agreements.
II. Public Interest Finding
The Agency has determined that, as applied to certain broadband
equipment used in a BIP project, the application of the Buy American
provision would be inconsistent with the public interest.
[[Page 31403]]
(See Recovery Act, Sec. 1605(b)(1), 123 Stat. at 303.) A modern
broadband network is generally composed of the following components:
Broadband switching, routing, transport, access, customer premises
equipment, end-user devices, and billing/operations systems. The Buy
American provision would prohibit RUS from awarding a BIP grant, loan
or loan/grant combination to a public applicant unless that applicant
could certify that each element of each broadband network component
containing iron, steel, and manufactured goods are produced in the
United States. As explained more fully below, it would be difficult, if
not impossible, for a BIP applicant to have certain knowledge of the
manufacturing origins of each component of a broadband network, and the
requirement to do so would be so overwhelmingly burdensome as to deter
participation in the program. Requiring a BIP applicant to request a
waiver on a case-by-case basis would also be such an administrative
burden on the applicant as to discourage participation in the program
and would increase RUS' time and costs for processing BIP applications
for broadband infrastructure projects. Thus, implementing BIP without a
limited programmatic waiver encompassing broadband network components
would jeopardize the success of the program and undermine President
Obama's broadband initiative.
First, RUS recognizes that much of the finished products used to
manage and operate broadband infrastructure and offer broadband service
are manufactured outside of the United States. The manufacturing supply
chain varies by product and changes constantly due to the influence of
global supply and demand. The result is a very competitive and complex
production landscape with components and end products being
manufactured and assembled in a large number of countries. While,
arguably, the Secretary could have relied on the ``non-availability''
exception for granting a waiver, the burden placed on the Department in
sourcing and evaluating the availability of each component of broadband
equipment would be significant, and the task of sourcing and evaluating
would be difficult to complete given the speed with which Congress has
told RUS to allocate funds under the Recovery Act. In addition,
requiring public entities to document the origin of broadband equipment
and their components in order to determine whether they fit within the
scope of the Buy American provision would severely complicate those
applicants' ability to apply for funds and would place an undue burden
on State and local governments. Taken as a whole, these burdens would
cause delays and would likely thwart the goal of Congress to
``establish and implement the [BIP] grant, loan and loan/grant
combination program as expeditiously as practicable,'' and the Recovery
Act's requirement that RUS obligate all funds under BIP by September
30, 2010. (See Recovery Act, Sec. 6001(d)(1)-(2), 123 Stat. at 513.)
Second, a limited waiver will help facilitate the construction of
modern broadband networks--an essential component of the Recovery Act.
Applicants to BIP must have the flexibility to incorporate the most
technically-advanced components into their infrastructure, and a
limited waiver gives them the ability to incorporate the latest
technologies. Third, consistent with the Recovery Act, a limited waiver
will help stimulate job growth for construction workers, technicians,
equipment designers, engineers, and others who will operate the
broadband infrastructure. Fourth, while OMB has clarified which
countries would be exempt from the Buy American provision, some of the
key countries that produce broadband equipment would not be exempt.
Finally, the broadband industry is very dynamic and global, and
equipment can change over the course of a build out. Subjecting public
applicants for BIP funds to the Buy American provision ultimately would
slow broadband deployment and undermine President Obama's broadband
initiatives.
III. Waiver
Based on the public interest finding discussed above and pursuant
to section 1605(c), RUS is granting a limited waiver of the Recovery
Act's Buy American requirements with respect to BIP funds used for the
following essential components of a modern broadband infrastructure:
Broadband Switching Equipment--Equipment necessary to
establish a broadband communications path between two points.
Broadband Routing Equipment--Equipment that routes data
packets throughout a broadband network.
Broadband Transport Equipment--Equipment for providing
interconnection within the broadband provider's network.
Broadband Access Equipment--Equipment facilitating the
last mile connection to a broadband subscriber.
Broadband Customer Premises Equipment and End-User
Devices--End-user equipment that connects to a broadband network.
Billing/Operations Systems--Equipment that is used to
manage and operate a broadband network or offer a broadband service.
Note that this list does not include fiber optic cables, cell
towers, and other facilities that are produced in the United States in
sufficient quantities to be reasonably available as end products. To
the extent that an applicant wishes to use equipment that is not
covered by the proposed waiver, it may seek a waiver on a case-by-case
basis as part of its application for BIP funds, stating the statutory
exemption upon which it is relying and its rationale for receiving a
waiver.
This supplementary information constitutes the ``detailed written
justification'' required by Section 1605(c) of the Recovery Act and
Section 176.80 of OMB's rules for waivers of the Buy American
provisions.
Authority: Public Law 111-5 Sec. 1605, 123 Stat. 115; 2 CFR
176.10 et seq.
Dated: June 26, 2009.
Thomas J. Vilsack,
Secretary, United States Department of Agriculture.
[FR Doc. E9-15511 Filed 6-30-09; 8:45 am]
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