[Federal Register Volume 87, Number 214 (Monday, November 7, 2022)]
[Notices]
[Pages 67053-67056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24340]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6331-N-05]


Public Interest Exigent Circumstances 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.

-----------------------------------------------------------------------

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 waiver to the Buy America Domestic 
Content Procurement Preference (``Buy America Preference,'' or ``BAP'') 
for grantees and recipients of Federal Financial Assistance 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 proposed 
departmentwide exigent circumstances waiver is 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.

[[Page 67054]]

    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, new awards of Federal Financial Assistance from 
a program for infrastructure, and any of those funds obligated by the 
grantee, are covered under the BABA provisions of the Act, 41 U.S.C. 
8301 note, unless covered by a waiver. Section 70912(4)(B) of the Act 
specifically exempts from the term Federal Financial Assistance certain 
assistance authorized under certain sections of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act or pre and post disaster 
or emergency response expenditures.

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, by 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/program_offices/general_counsel/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 the overall 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.

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

    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 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

[[Page 67055]]

coordination and collaboration to support long-term investments in 
domestic production.
    HUD recognizes that there are exigent circumstances, particularly 
with respect to the conduct of maintenance and other rehabilitation and 
repair activities in connection with affordable housing and community 
development projects, that warrant the exclusion from the application 
of the BAP in the public interest. Specifically, where an award for 
Federal Financial Assistance is being utilized to repair or conduct 
maintenance of infrastructure within the meaning of the Act in exigent 
circumstances, the ability to quickly respond and address the need is 
critical to ensuring the protection of life, safety and property of 
residents and community members. This ability to immediately respond to 
such situations could be compromised if the grantee or recipient is 
required to navigate the complex BAP requirements for such an activity 
in the midst of the exigent circumstances.\1\ Such a waiver will allow 
HUD grantees and funding recipients to focus their efforts on such 
critical projects. Proposing the waiver is not an alternative to 
increasing domestic production. It is actually a tool to promote 
investment in our domestic manufacturing base in the long term. The 
waiver is in the interest of efficiency, to ease burdens for grantees 
and recipients, avoid unnecessary costs, and avoid delays to projects 
that are critical and time sensitive. The waiver 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 HUD's economic and national security. This waiver will 
also allow recipients to continue with projects. Without this waiver, 
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.
---------------------------------------------------------------------------

    \1\ Please note that section 70912(4)(B) of the Act excludes 
``pre and post disaster or emergency response expenditures from 
inclusion within the definition of Federal Financial Assistance 
subject to the BAP. 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) confirms that pre and post disaster 
or emergency response expenditures'' includes those expenditures 
``that are (1) authorized by statutes other than the Stafford Act, 
42 U.S.C. 5121 et seq., and (2) made in anticipation of or response 
to an event or events that qualify as an ``emergency'' or ``major 
disaster'' within the meaning of the Stafford Act, id. section 
5122(1), (2).'' As a result, HUD's provision of Federal Financial 
Assistance through specific emergency and disaster recovery grants, 
(e.g., CDBG-DR grants), which are appropriated by Congress in in 
response to an emergency or disaster within the meaning of the 
Stafford Act are statutorily excluded from the applicability of BAP.
---------------------------------------------------------------------------

    For example, if a public housing development is damaged by a boiler 
malfunction in the middle of the winter, the need to repair the damaged 
structure and replace the boiler is of immediate concern in protecting 
the life, safety, and property of the residents of that public housing 
development. Additionally, for example, if an emergency or fire exit 
door is damaged and becomes unusable, the need to repair the exit door 
is of immediate concern to protecting the life, safety and property of 
the residents of that public housing development. Included within the 
scope of exigent circumstances are the remediation of defects impacting 
housing quality standards that existing HUD policy requires to be 
completed within 30 days or less. The potential consequences and impact 
of incidents meeting these standards can endanger the life, safety or 
property of residents and the community, and necessitate urgent action 
to remediate the issue. Thus, for purposes of this waiver, HUD will 
consider exigent circumstances to include circumstances where 
undertaking the BAP covered activity without delay is necessary to 
protect life, safety or provide necessary security to residents or 
community members, or to prevent the destruction of property. The 
waiver of BAP will apply provided such remediation is carried out 
within the time period required by HUD policy.
    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. HUD does not 
currently track funds used on infrastructure projects for an exigent 
circumstance, but estimates that in an average year, less than 1 
percent of annual CDBG funds are used for urgent needs activities.
    HUD believes that full compliance with the BAP in exigent 
circumstances will create undue hardship due to the anticipated 
burdensome delays to ensure compliance with the BAP and, as noted, 
could jeopardize the life, health and safety of residents and community 
members unnecessarily for funds being utilized in exigent 
circumstances. As a result, HUD has determined that it is not in the 
public interest to impose the BAP on projects completing covered 
infrastructure activities in exigent circumstances.
    HUD expects to review this waiver every five years from the 
effective date of this waiver or more often as appropriate. Funds 
obligated by HUD during the time period this waiver is effective will 
not be required to apply the BAP when funds are expended by the grantee 
or funding recipient in connection with exigent circumstances as 
described in this waiver.

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.\2\ 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

[[Page 67056]]

use of waivers caused by dumping of foreign-sourced products.
---------------------------------------------------------------------------

    \2\ 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.
---------------------------------------------------------------------------

VII. Solicitation of Comments on the Waiver

    As required under section 70914 of the Act, HUD is soliciting 
comment from the public on the public interest waiver announced in this 
Notice. In particular, HUD invites comments on the definition of 
exigent circumstances that serves as the foundation for the application 
of the waiver, including the types of activities undertaken in response 
to such circumstances that should be considered within the scope of 
this waiver. HUD also invites comments on the process through which 
grantees or funding recipients may demonstrate or document reliance on 
this waiver.

Marcia L. Fudge,
Secretary.
[FR Doc. 2022-24340 Filed 11-3-22; 4:15 pm]
BILLING CODE 4210-67-P