[Federal Register Volume 87, Number 239 (Wednesday, December 14, 2022)]
[Notices]
[Pages 76502-76505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27097]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6331-N-08A]


Public Interest De Minimis and Small Grants 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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[[Page 76503]]

SUMMARY: In accordance with the Build America, Buy America Act 
(``BABA'' or ``the Act'') this notice advises that HUD has issued a 
departmentwide public interest De Minimis and Small Grants waiver to 
the Buy America Domestic Content Procurement Preference (``Buy America 
Preference,'' or ``BAP'') as applied to the iron, steel, manufactured 
products, and construction materials requirement of the Act for 
recipients of Federal Financial Assistance (``FFA''). For the purposes 
of this waiver, HUD has waived the application of the BAP for 
infrastructure projects whose total cost (including HUD funding and 
funding from any other source) is an amount equal to or less than the 
Simplified acquisition threshold, which is currently $250,000. HUD has 
also waived the application of the BAP for all Small Grants of FFA 
provided by HUD that are equal to or below the Simplified acquisition 
threshold, which is currently $250,000. However, if FFA provided by HUD 
is combined with other FFA from another Federal agency, and the total 
amount of FFA in a single project is greater than the Simplified 
acquisition threshold, currently $250,000, then the waiver shall not 
apply to the FFA provided by HUD. Additionally, HUD has waived the 
application of the BAP for a De Minimis portion of an infrastructure 
project, meaning a cumulative total of no more than 5 percent of the 
total cost of the iron, steel, manufactured products, and construction 
materials used in and incorporated into the infrastructure project, up 
to a maximum of $1 million.
    In accordance with the Act, HUD has found that such De Minimis and 
Small Grants waivers are 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: 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 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 
FFA programs for compliance with the BAP on January 19, 2022, through 
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 (``FFA'') 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/programoffices/generalcounsel/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 completing the 
infrastructure 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.

[[Page 76504]]

IV. Public Interest in This 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'' (M-22-11) encourages agencies to consider whether it 
is in the public interest to waive application of a BAP to awards below 
the Simplified acquisition threshold. 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.
    Through this notice, HUD has waived the application of the BAP for 
infrastructure projects whose total cost (including HUD funding and 
funding from any other source) is an amount equal to or less than the 2 
CFR 200.1 Simplified acquisition threshold, which is currently 
$250,000. HUD has also waived the application of the BAP for all Small 
Grants of Federal Financial Assistance provided by HUD that are equal 
to or below the 2 CFR 200.1 Simplified acquisition threshold, which is 
currently $250,000. However, if FFA provided by HUD is combined with 
other FFA from another Federal agency, and the total amount of FFA in a 
single project is greater than the Simplified acquisition threshold, 
currently $250,000, then the waiver shall not apply to the FFA provided 
by HUD. HUD has also waived the application of the BAP for a De Minimis 
portion of an infrastructure project, meaning a cumulative total of no 
more than 5 percent of the total cost of the iron, steel, manufactured 
products, and construction materials used in and incorporated into the 
infrastructure project, up to a maximum of $1 million.
    For purposes of the Act, an infrastructure project involves the 
undertaking of any ``construction, alteration, maintenance, or repair'' 
of ``infrastructure,'' which includes, among other things, the 
``structures, facilities and equipment'' of ``buildings and real 
property.''
    In accordance with the Act, HUD has found that such De Minimis and 
Small Grants waivers are in the public interest. Such waivers will 
allow HUD, grantees and funding recipients to focus their efforts on 
such critical projects. Issuing the waivers is not an alternative to 
increasing domestic production. The waivers are in the interest of 
efficiency, to ease burdens for HUD grantees and funding recipients, 
and 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 our economic and national 
security. These waivers will allow HUD grantees and funding recipients 
to continue with projects. Without these waivers, HUD grantee and 
funding recipient participation could be impacted, such as modification 
of current plans.
    HUD is issuing this waiver to facilitate the effective 
implementation of the BAP and will therefore not permit the artificial 
subdivision of infrastructure projects to fit within the scope of this 
waiver of the BAP. Thus, for purposes of this waiver, HUD will evaluate 
the total cost of the infrastructure project as it would for purposes 
of the review contemplated under 24 CFR part 58, i.e., by defining the 
scope consistent with 24 CFR 58.2(a)(4), as ``the activity, or a group 
of integrally related activities, designed by the recipient to 
accomplish, in whole or in part, a specific objective.'' HUD believes 
its grantees and recipients of FFA that will be used for infrastructure 
projects are familiar with this regulation and understand the proper 
application of the concept in connection with their activities, or as 
otherwise defined by HUD in a notice. However, in connection with the 
public housing program, evaluation of certain maintenance and repair 
activities within the definition of infrastructure projects under the 
Act is not appropriate using this standard. Therefore, for the purposes 
of determining the applicability of this waiver in connection with the 
maintenance and repair of public housing, HUD will evaluate the 
infrastructure project as including the single relevant procurement 
contract for such maintenance or repairs, or, where applicable, the 
collection of procurements focused on the same specific objective 
(e.g., construction of a resident service space) or limited scope of 
work (e.g., lead based paint abatement).
    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.
    As HUD's initial waivers advised and as supported by several 
comments received during the comment period on those waivers, many of 
HUD's programs may be subject to the BAP and have previously not 
required compliance with similar Buy American preferences. Because the 
potential application of BAP mandated by the Act is new to the majority 
of HUD's programs and FFA, this waiver advances BABA by reducing the 
administrative burden to potential assistance recipients where the 
costs of compliance with BABA could distract from the focus on higher 
value BABA compliant items. Failure to provide recipients such 
flexibilities could delay the award for infrastructure projects as 
grantees and funding recipients must exert considerable effort 
accounting for the sourcing for miscellaneous, low-cost items. 
Moreover, HUD does not believe the waiver of the BAP for such awards 
will undermine the full and robust implementation of the Act or the 
ability of the agency to support the purposes behind the Act.
    HUD expects to review this waiver every five years from the 
effective date of this waiver or more often as appropriate. No funds 
obligated by HUD or the grantee/funding recipient during the period of 
the waiver that are 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 14 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 a De Minimis and Small Dollar waiver as proposed.
    A few commenters expressed support for a broader scope waiver, 
including requesting higher limits for a Small Grants exclusion, a 
higher percentage exclusion on portions of infrastructure

[[Page 76505]]

projects, and a higher cap on the total cost under the De Minimis 
waiver. A similar number of commenters requested that the limits be 
lowered to afford more opportunities for the application of the BAP. 
HUD appreciates the comments from both perspectives, but believes that, 
as an initial matter, the limits proposed in the initial waiver are set 
at the appropriate levels to balance 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. HUD declines to make changes to the 
amounts represented by these limits at this time, but is clarifying 
that all FFA, whether received by HUD or from another Federal source, 
in connection with infrastructure projects must be used to calculate 
the total, cumulative FFA in a single project to determine the 
applicability of a Small Grants waiver. 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 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. These commenters expressed confusion over the reference to Minor 
Components in the proposed waiver. HUD agrees that use of the term 
Minor Components did not accurately reflect the waiver HUD was 
proposing. As a result, the waiver issued by HUD and announced via this 
final notice deletes all references to Minor Components and instead 
focuses on the true intent of the waiver--coverage for small grants and 
a De Minimis waiver.
    Additionally, several of the opponents expressed concern that the 
waiver could give rise to a loophole to avoid compliance with the BAP. 
HUD appreciates the comments but believes that the waiver is 
sufficiently narrowly tailored with protections in place to avoid 
artificial manipulation of project size and that the risk of abuse is 
outweighed by the need to provide this important flexibility for Small 
Grants and the De Minimis portions of larger infrastructure projects. 
HUD expects the future guidance and technical assistance it provides to 
grantees regarding the implementation of the Act to further 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, beyond the clarification of the use of 
the cumulative total of all FFA funding the infrastructure project in 
determining application of this waiver. As previously indicated, HUD 
will continue to monitor the usage of the waiver so it may swiftly 
address any potential confusion concerning the proper application of 
the waiver.
    The complexities of applying the BAP in connection with Small 
Grants and De Minimis portions of projects are such that the Agency 
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 more efficiently and effectively 
implement the BAP in connection with Small Grants and De Minimis 
portions of infrastructure projects 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 
recipients and grantees to ensure the appropriate implementation of the 
BAP in its programs. At this time, however, HUD has issued this Small 
Grant and De Minimis waiver with the minimal substantive changes 
described herein and with other minor, inconsequential grammatical 
revisions.

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 FFA.

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.\i\ 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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    \i\ 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. 2022-27097 Filed 12-13-22; 8:45 am]
BILLING CODE 4210-67-P