[Federal Register Volume 87, Number 239 (Wednesday, December 14, 2022)]
[Notices]
[Pages 76500-76502]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27096]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6331-N-06A]


Public Interest Phased Implementation 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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SUMMARY: In accordance with the Build America, Buy America Act 
(``BABA'' or ``the Act'') this notice advises that HUD has issued a 
public interest waiver to further HUD's phased implementation of the 
Buy America Domestic Content Procurement Preference (``Buy America 
Preference,'' or ``BAP'') for recipients of Federal Financial 
Assistance (``FFA'') provided by HUD. On May 5, 2022, HUD previously 
issued a separate waiver covering all FFA obligated by HUD on or before 
November 14, 2022, including Community Development Block Grant 
(``CDBG'') formula grants. In order to fully focus on the successful 
implementation of the BAP in CDBG formula grants, one of HUD's largest 
grant programs, HUD has determined that it is in the public interest to 
issue a new public interest waiver of the application of the BAP for 
all other FFA obligated by HUD. By this notice, HUD announces that it 
is waiving the application of the BAP on or after the effective date of 
this waiver for all FFA obligated by HUD 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.

DATES: As required under section 70914 of the Act, HUD published a new 
proposed public interest phased implementation waiver on its website on 
November 3, 2022. In addition, HUD published the proposed waiver in the 
Federal Register. Comments on that proposed waiver were initially 
stated to be due on or before November 17, 2022, but HUD extended the 
deadline to comment until November 21, 2022. Through this final notice, 
HUD is announcing that it has issued this waiver effective November 23, 
2022. This waiver is effective as stated herein for FFA obligated on 
the effective date of the waiver and until February 21, 2023 for a 
total of ninety (90) days and, in the case of FFA obligated by HUD on 
or after November 15, 2022 but prior to the effective date of the final 
waiver, 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.

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 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'') (Pub. L. 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

[[Page 76501]]

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, 
beginning May 14, 2022, new awards of FFA by HUD through a program for 
infrastructure, and any of those newly obligated funds then 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 
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, 
on June 1, 2022 (87 FR 33193) 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.
    Following the expiration of the ``General Applicability Waiver of 
Build America, Buy America Provisions as Applied to Recipients of HUD 
Federal Financial Assistance'' (87 FR 26219), HUD published two 
additional long-term public interest waivers of the application of the 
BAP in exigent circumstances and in connection with Small Grants and De 
Minimis expenditures. Additionally, HUD determined that it will fully 
implement the BAP for purposes of the purchase of iron and steel 
products used in infrastructure projects funded with Federal Financial 
Assistance provided by HUD through its CDBG formula grants obligated by 
HUD on or after November 15, 2022, unless such purchases are covered by 
another applicable waiver issued by HUD. 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 and other Federal agencies have 
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, 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'' (``OMB Memorandum M-22-11''),\i\ encourages agencies 
to consider ways to provide the assistance to funding recipients that 
is necessary and effective for the implementation of the BAP, including 
consideration of phased implementation of BAP where appropriate.
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    \i\ https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf.
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    In Fiscal Year 2022, HUD grantees will receive more than $15 
billion through the Department's programs where infrastructure is an 
eligible activity that 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 previous notices advised and as supported by several 
comments received during the comment period, many of HUD's programs 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 programs and 
Federal Financial Assistance (``FFA''), HUD is choosing to implement 
the BAP first with respect to all iron and steel products used in 
infrastructure projects funded with FFA provided by HUD through its 
CDBG formula grants on or after November 15, 2022. In order to focus on 
this implementation, HUD is waiving the application of the BAP in 
connection with all other FFA provided by HUD. This will provide an 
additional limited period to allow for further consideration of the 
most efficient methods of implementation of the BAP across the 
remaining HUD programs for construction materials and manufactured 
products more generally. This waiver advances BABA by reducing the 
administrative burden to potential assistance recipients where the 
costs of uncertainty in compliance with BABA could distract from the 
focus on the efficient and effective implementation of BABA in one of 
HUD's largest FFA programs and allows for broader phased implementation 
once further clarity and guidance on the implementation is received. 
Failure to provide recipients such flexibilities could delay the award 
for infrastructure projects as grantees and funding recipients must 
exert considerable effort in accounting for the sourcing for 
miscellaneous, low-cost construction materials without the benefit of 
complete guidance on the Act's requirements.
    HUD believes that better coordination with HUD FFA recipients in 
the implementation of BABA will avoid unnecessary and undue hardship. 
Such a waiver will allow grantees and funding recipients to focus their 
efforts on such critical projects. Issuing this

[[Page 76502]]

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.

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 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