[Federal Register Volume 75, Number 117 (Friday, June 18, 2010)]
[Notices]
[Pages 34685-34687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14812]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


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

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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

DATES: Effective Date: June 18, 2010.

ADDRESSES: Send any correspondence regarding this notice to William R. 
Downs, Program Support Staff, Rural Housing Service, U.S. Department of 
Agriculture, 1400 Independence Avenue, SW., STOP 0761, Washington, DC 
20250-0761.

FOR FURTHER INFORMATION CONTACT: William R. Downs, Program Support 
Staff, Rural Housing Service, U.S. Department of Agriculture, 1400 
Independence Avenue, SW., STOP 0761, Washington, DC 20250-0761, 
Telephone: 202-720-1499, e-mail: [email protected].

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

I. Background

    The American Recovery and Reinvestment Act of 2009 made funding

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available to RHS to make direct loans and grants for essential 
community facilities authorized by Sections 306(a)(1) and (a)(19) of 
the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)(1) 
and (a)(19), respectively). Section 1605(a) of ARRA, the ``Buy 
American'' provision, states that ``none of the funds appropriated or 
otherwise made available by this Act may be used for a project for the 
construction, alteration, maintenance, or repair of a public building 
or public work unless all of the iron, steel, and manufactured goods 
used in the project are produced in the United States.''
    Section 1605(b) of ARRA authorizes the head of a Federal department 
or agency to waive the Buy American provision by one of the following 
three determinations: (1) Applying the Buy American provision would be 
inconsistent with the public interest; (2) the iron, steel, and 
relevant manufactured goods are not produced in the United States in 
sufficient and reasonably available quantities and of a satisfactory 
quality; or (3) the inclusion of the iron, steel, and manufactured 
goods produced in the United States will increase the cost of the 
project by more than 25 percent.
    If a determination is made to waive the requirements of Section 
1605(a) based on a finding under Section 1605(b), then Section 1605(c) 
requires the head of the department or agency to publish a detailed 
justification in the Federal Register as to why the provision is being 
waived. Finally, Section 1605(d) requires that the Buy American 
provision must be applied in a manner consistent with the United 
States' obligations under international agreements.

II. Public Interest Finding

    RHS has determined that, as applied to Community Programs projects, 
the application of the Buy American restrictions to de minimis 
situations would be inconsistent with the public interest.
    Community Programs projects typically contain a relatively small 
number of high-cost components incorporated into the project that are 
iron, steel and manufactured goods, such as electrical and mechanical 
equipment, concrete and masonry products, wood and steel framing 
products, interior and exterior materials and finishes, and specialty 
equipment as well as other relevant materials to build structures for 
facilities such as community hospitals and clinics, fire stations, 
police stations and schools. In bid solicitations for Community 
Programs projects, these high-cost components are generally described 
in detail in project-specific technical specifications, and public 
owners and their contractors are generally familiar with the conditions 
of availability, the potential alternatives for each detailed 
specification, the approximate cost and, most relevant to this Notice, 
the country of manufacture of such components.
    Every Community Programs project also involves the use of thousands 
of miscellaneous, generally low-cost components that are essential for, 
but incidental to, construction of the project. During construction, 
these components (for example, nuts, bolts, fasteners, screws and 
nails), are incorporated into the physical structure of the project. 
For many of these incidental components, the country of manufacture and 
the availability of alternatives are not always readily or reasonably 
identifiable prior to procurement in the normal course of business. 
More importantly, even if for some of these incidental components the 
country of manufacture may be known, the miscellaneous character of 
these components, together with their low cost (both individually and 
when procured in bulk), characterize them as incidental to the facility 
or project.
    RHS finds that it would be inconsistent with the public interest to 
apply the Buy American requirement to incidental components when they, 
in total, comprise no more than 5 percent of the total cost of the 
materials used in and incorporated into a project. While individual 
components may have the same function (e.g. brackets), the specific 
manufacturer and configuration may vary from project to project; the 
analysis and consideration of individual waiver requests for them, 
including determining whether or not U.S. made products exist; 
therefore, is expected to be time-consuming and labor intensive far out 
of proportion to the percentage of total project materials they 
comprise. Further, since the specific use of these low-cost components 
can be expected to be widely varied, formulating categorical waivers 
for specific types of components would be impractical. Because the 
situations described above, i.e., a high number of low-cost, 
miscellaneous components, can be effectively addressed by a 
comprehensive application of a nationwide de minimis waiver.
    Rural Development reviewed an industry-wide survey regarding these 
incidental components prepared by an independent contractor on behalf 
of the Environmental Protection Agency (EPA). The survey results 
indicated that the percentage of total costs represented by these 
incidental components is generally not in excess of 5 percent of the 
total cost of the materials incorporated into a project. Rural 
Development then took the added step to verify the EPA findings by 
making similar inquiries to likely Rural Development project 
construction contractors to identify the approximate scope and cost of 
incidental components within these projects. The responses received by 
Rural Development were consistent with the EPA data.
    RHS has decades of experience in financing Community Programs 
projects in rural America and shares the rationale established by 
previous de minimis waivers authored by EPA and Rural Utilities 
Service, with respect to incidental components used in similar 
projects. Requiring individual waivers for incidental components would 
be time prohibitive and overly-burdensome for applicants and RHS. The 
purpose of ARRA is to stimulate economic recovery by funding current 
public construction. Therefore, a de minimis waiver of incidental 
components totaling no more than 5 percent of the total cost of the 
materials used in and incorporated into a project is in the public 
interest.

III. Waiver

    Based on the public interest finding discussed above and pursuant 
to Section 1605(c), USDA hereby issues a national waiver from the 
requirements of ARRA Section 1605 for any incidental components of the 
type described above that comprise in total a de minimis amount of the 
project, specifically, for any such incidental components up to a limit 
of no more than 5 percent of the total cost of the materials used in 
and incorporated into a project.
    Assistance recipients who elect to use this waiver shall, in 
consultation with their contractors, determine the items to be covered 
by this waiver, retain relevant documentation as to those items in 
their project files, and be able to summarize in reports to RHS, if so 
requested, the types and/or categories of items to which this waiver is 
applied, the total cost of incidental components covered by the waiver 
for each type or category, and the calculations by which they 
determined the total cost of materials used in and incorporated into 
the project.
    In using this waiver, assistance recipients must consider that 
there may be circumstances where there are multiple types of low-cost 
components which, when combined with the incidental components 
described above, may total more than 5 percent. Assistance recipients 
in such cases will

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have to choose which of these incidental components will be covered by 
the waiver and which will not. Components that the recipient is unable 
to include within the 5 percent limit of this waiver must comply with 
the requirements of Section 1605 of ARRA by appropriate means other 
than reliance on this waiver.
    This supplementary information constitutes the ``detailed written 
justification'' required by Section 1605(c) of ARRA and Section 176.80 
of the Office of Management and Budget's rules for waivers of the Buy 
American provisions.

    Dated: May 6, 2010.
Dallas P. Tonsager,
Under Secretary, Rural Development.

    May 11, 2010.
Thomas Vilsack,
Secretary, Department of Agriculture.
[FR Doc. 2010-14812 Filed 6-17-10; 8:45 am]
BILLING CODE 3410-XU-P