[Federal Register Volume 87, Number 239 (Wednesday, December 14, 2022)]
[Notices]
[Pages 76505-76508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27095]


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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

AGENCY: Office of the Secretary, U.S. Department of Housing and Urban 
Development (HUD).

ACTION: Final 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 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

[[Page 76506]]

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 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 
FFA 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. 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/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 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.
    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 FFA 
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.\i\ Such a waiver will

[[Page 76507]]

allow HUD grantees and funding recipients to focus their efforts on 
such critical projects. Issuing this waiver is not an alternative to 
increasing domestic production. 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, delays 
may occur to critical activities to protect life, safety, and property, 
which may negatively impact the most vulnerable Americans HUD seeks to 
serve.
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    \i\ 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.
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    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 infrastructure project 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. Consideration of 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 11 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 an exigent circumstances waiver as proposed.
    A few commenters expressed support for a broader waiver and greater 
deference to the determinations of grantees in terms of projects that 
fall within the scope of exigent circumstances. 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. Several of these comments expressed concern that the waiver would 
give rise to a loophole to avoid compliance with the BAP. HUD 
appreciates the comments but believes that the waiver is sufficiently 
narrowly tailored to specific actions necessary to protect life, safety 
and property from imminent threats that the risk of abuse is outweighed 
by the need to provide flexibility to act swiftly in exigent 
circumstances.
    HUD expects the future guidance and technical assistance it 
provides to grantees regarding the implementation of the Act to 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, but will continue to monitor the usage 
of the waiver so it may swiftly address any future confusion over the 
proper application of the waiver. The complexities of applying the BAP 
in exigent circumstances where there is a risk posed to life, safety, 
or property are such that HUD 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 
swiftly address projects necessitated by exigent circumstances 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

[[Page 76508]]

recipients and grantees to ensure the appropriate implementation of the 
BAP in its programs. At this time, HUD is issuing, without substantive 
change other than minor, inconsequential grammatical revisions this 
Exigent Circumstances Waiver via this final notice.

VI. 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.

VII. 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.\ii\ 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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    \ii\ 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. 2022-27095 Filed 12-13-22; 8:45 am]
BILLING CODE 4210-67-P