[Federal Register Volume 88, Number 54 (Tuesday, March 21, 2023)]
[Notices]
[Pages 17001-17004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05698]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. 6331-N-10A]


Public Interest Phased Implementation Waiver for FY 2022 and 2023 
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: 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 of the Buy America Domestic Content Procurement 
Preference (``Buy America Preference,'' or ``BAP'') for recipients of 
Federal Financial Assistance (``FFA'') provided by HUD as set forth 
below. This notice provides a waiver and sets forth an updated 
implementation schedule for application of the BAP to HUD FFA. HUD is 
also announcing its BAP implementation schedule for all HUD FFA used to 
purchase iron or steel products in infrastructure projects in HUD 
programs, other than the CDBG formula grants addressed in the November 
23, 2022, waiver. HUD is also announcing its BAP implementation 
schedule for the purchase of four specifically-listed construction 
materials: non-ferrous metals; lumber; composite building materials; 
and plastic and polymer-based pipe and tube (herein after referred to 
as ``specifically-listed construction materials''), all manufactured 
products, and all other construction materials.

DATES: March 15, 2023. This waiver is effective as stated herein for 
FFA obligated by HUD on or after the effective date of the waiver until 
the implementation deadlines for the BAP as specifically shown below.

FOR FURTHER INFORMATION CONTACT: Faith Rogers, Department of Housing 
and Urban Development, 451 Seventh Street SW, Room 10126, 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'') (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 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 HUD FFA, and any of those 
newly obligated funds by HUD then obligated by the grantee for 
infrastructure projects, 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. HUD understands that advancing Made in America 
objectives is a continuous effort and believes this transparent 
schedule of future implementation will provide industry partners and 
FFA recipients with the time and notice necessary to efficiently and 
effectively implement the BAP. HUD's plans to move forward with the 
implementation of the new BAP requirements as set forth in this notice 
are designed to maximize coordination and collaboration to support 
long-term investments in domestic production. HUD will continue its 
efforts to implement the Act consistent with the guidance and 
requirements of the Made in America Office of the Office of Management 
and Budget, including anticipated guidance concerning appropriate 
compliance with the BAP.
    In order to ensure orderly implementation of the BAP across HUD's 
programs, HUD has provided public interest, general applicability 
waivers in order to implement the BAP in phases in connection with the 
application of the BAP across HUD's FFA programs and to provide HUD 
with sufficient time to solicit information from the public relating to 
the agency's implementation of the BAP in connection with FFA awards 
made by HUD. HUD has previously published general applicability, public 
interest waivers to the BAP to provide the agency with sufficient time 
to solicit information from the public relating to the agency's 
implementation of the BAP in connection with FFA awards made by HUD. On 
November 23, 2022, HUD issued a separate waiver covering all HUD FFA 
obligated by HUD on or before February 21, 2023, with the exception of 
the BAP as to the purchase of iron and steel for infrastructure 
projects funded by Community Development Block Grant (``CDBG'') formula 
grants on or after November 15, 2022. Separately, HUD waived the 
application of the BAP in connection with HUD FFA provided to Tribes, 
Tribally Designated Housing Entities (``TDHE''), and other Tribal 
Entities (referred to herein as ``Tribal FFA'') to allow time for HUD 
to complete the Tribal consultation process regarding implementation of 
the BAP in connection with infrastructure projects. This Notice does 
not apply to Tribal FFA covered by that separate waiver.\1\
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    \1\ General Applicability Waiver of Build America, Buy America 
Provisions as Applied to Tribal Recipients of HUD Federal Financial 
Assistance (Effective until May 14, 2023) address Tribes, Tribally 
Designated Housing Entities (``TDHE''), and other Tribal Entities' 
implementation of BABA. (May 5, 2022, 87 FR 26221).
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    Details on HUD's implementation of the BABA requirements, including 
two public interest waivers covering Exigent Circumstances and De 
Minimis and Small Grants and a separate public interest waiver for all 
Tribal FFA, 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

[[Page 17002]]

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'' (M-22-11), 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. Strategic and phased 
steps toward full BABA compliance refines the scope for what is exempt 
from BAP while providing a clear timeline for full implementation, 
consistent with the Congressional intent and stakeholder interest. It 
also allows HUD grantees and stakeholders the time needed to construct 
stronger supply channels to include new or amended vendor contracts 
that comply with BABA requirements.
    In fiscal year 2023, HUD grantees will receive $14 billion through 
the Department's programs where infrastructure is an eligible activity 
and may be subject to the BAP. For example, Choice Neighborhoods 
(``CN'') funds may be used for infrastructure projects (e.g., transform 
severely distressed public and assisted properties with high-quality 
mixed-income) or non-infrastructure uses (e.g., business services, 
safety, children's education and to improve employment, income, and 
health outcomes). HUD estimates that up to 85 percent of Choice 
Neighborhoods Implementation Grant funds to be awarded in 2023 ($289 
million of $340 million total) will be used on housing and 
infrastructure projects where the BAP may 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 American preferences. Because the potential application of 
BAP mandated by the Act is new to the majority of HUD's programs and 
FFA, HUD chose to implement the BAP first with respect to all iron and 
steel products used in infrastructure projects funded with HUD FFA on 
or after November 15, 2022, through its CDBG formula grants.
    As required under section 70914 of the Act, HUD published a 
proposed waiver on its website on February 15, 2023. In addition, HUD 
published the proposed waiver in the Federal Register. Comments on the 
proposed waiver were due on or before March 2, 2023. Through this Final 
Notice, HUD is announcing that it has issued this waiver effective 
March 15, 2023. This waiver is effective as stated herein for FFA 
obligated by HUD in listed programs on or after the effective date of 
the waiver until the implementation deadlines for the BAP as 
specifically shown below. In addition, in the case of FFA obligated by 
HUD in listed programs on or after February 22, 2023 but prior to the 
effective date of this Final Waiver, the waiver applies to all 
expenditures incurred on or after the effective date of the Final 
Waiver, except for FFA obligated by HUD after the deadline for 
implementation of the BAP with respect to the purchase of iron or steel 
products in infrastructure projects in CDBG formula grants, Choice 
Neighborhood, Lead Hazard Reduction, and Healthy Homes Production 
Grants.
    As such, through this Final Notice, HUD is expanding the 
application of the BAP to iron and steel products used in 
infrastructure projects funded with new Choice Neighborhood, Lead 
Hazard Reduction, and Healthy Homes Production Grants obligated by HUD 
on or after February 22, 2023. This waiver advances BABA by targeting 
the next phase of implementation to include Choice Neighborhoods 
(``CN''), a place-based grant program which helps communities develop 
and implement locally driven comprehensive plans to transform 
neighborhoods. In Fiscal Year 2023, HUD received $350 million for CN, 
which Public Housing Authorities and local jurisdictions apply for 
competitively. CN provides planning grants, which provide for the 
development of comprehensive plans, and implementation grants, which 
allow communities to implement their plans--including for use on 
infrastructure activities. This allows for efficient phased 
implementation while reducing the administrative burden to potential 
grantees and funding recipients where the costs of uncertainties 
surrounding 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.
    In connection with Choice Neighborhood grants, HUD is clarifying 
that this new required application of the BAP in connection with new 
Choice Neighborhood grants obligated by HUD on or after February 22, 
2023, will not extend to supplemental awards obligated by HUD to enable 
the completion of ongoing, pre-existing projects funded by Choice 
Neighborhood grants obligated by HUD prior to February 22, 2023. HUD is 
continuing to waive the application of the BAP in connection with any 
obligation of supplemental Choice Neighborhood grants because they are 
merely serving to add additional resources to allow completion of 
projects well underway with funding obligated prior to the application 
of the BAP and any application of the BAP at this late stage of the 
project would be inconsistent with the public interest and could 
jeopardize completion of those projects. HUD believes that this 
application is consistent with the intent of the proposed waiver and 
clarifies that previous awards are not subject to conversion to BAP 
applicability merely by the addition of minimal funding needed to 
complete projects funded primarily with previous FFA Choice 
Neighborhood grant awards.
    To focus its efforts on the implementation of the BAP for new FFA 
obligated by HUD on or after the dates shown below for each of the 
programs and for the items shown below, HUD is proposing to waive the 
application of the BAP: (1) as to FFA obligated by HUD and used to 
purchase iron and steel before the BAP implementation point shown 
below; (2) as to FFA obligated by HUD and used to purchase 
specifically-listed construction materials before the BAP 
implementation point shown below; (3) as to FFA obligated by HUD and 
used to purchase all construction materials not listed before the BAP 
implementation point shown below; and (4) as to FFA obligated by HUD 
and used to purchase any manufactured products before the BAP 
implementation point shown below. For purposes of HUD FFA, the BAP 
implementation point shall be the point shown in schedule set forth 
below. The table's columns describe four separate elements of the BAP 
and the rows describe various HUD FFA programs. The cells in the table 
set forth the point at which this waiver expires, and each element of 
the BAP becomes effective,

[[Page 17003]]

for the various HUD FFA programs for each BAP element. Regarding the 
second column, the specifically listed construction materials under 
this waiver are: (1) non-ferrous metals; (2) lumber; (3) composite 
building materials; and (4) plastic and polymer-based pipe and tube. 
Regarding the two rows that reference new FFA HUD obligates from the 
appropriations for a particular fiscal year (i.e., CDBG formula grants 
and RHP grants), except for iron and steel, the waiver will not expire 
on a single date for the entire program for any element of the BAP; 
instead, the waiver will remain effective and continue to waive the BAP 
for any FFA HUD obligates from the appropriations for prior fiscals 
years for the relevant element, but the waiver will not be effective 
for any FFA HUD obligates from the appropriations for the fiscal year 
referenced in the cell and following fiscal years, to which the 
relevant element of the BAP will apply. The implementation schedule 
established by HUD in this final waiver is as follows:

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                                                                                Construction
                                 Iron and steel--   Construction materials--   materials--not     Manufactured
                                       BAP          specifically-listed--BAP     listed--BAP      products--BAP
                                  implementation      implementation point     implementation    implementation
                                      point                                         point             point
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Tribes, Tribally Designated     Not Addressed in   Not Addressed in this      Not Addressed in  Not Addressed in
 Housing Entities, and Tribal    this Notice. See   Notice. See note 1.        this Notice.      this Notice.
 Entities.                       note 1.                                       See note 1.       See note 1.
CDBG Formula Grants...........  November 15,       As of the date HUD         As of the date    As of the date
                                 2022--as           obligates new FFA from     HUD obligates     HUD obligates
                                 described in the   Fiscal Year 2024           new FFA from      new FFA from
                                 November 23,       appropriations.            Fiscal Year       Fiscal Year
                                 2022 Final                                    2025              2025
                                 Waiver.                                       appropriations.   appropriations.
Choice Neighborhood, Lead       New FFA obligated  New FFA obligated by HUD   New FFA           New FFA
 Hazard Reduction, and Healthy   by HUD on or       on or after August 23,     obligated by      obligated by
 Homes Production Grants.        after February     2024.                      HUD on or after   HUD on or after
                                 22, 2023.                                     August 23, 2024.  August 23,
                                                                                                 2024.
Recovery Housing Program        New FFA obligated  As of the date HUD         As of the date    As of the date
 (``RHP'') Grants.               by HUD on or       obligates new FFA from     HUD obligates     HUD obligates
                                 after August 23,   Fiscal Year 2024           new FFA from      new FFA from
                                 2023.              appropriations.            Fiscal Year       Fiscal Year
                                                                               2025              2025
                                                                               appropriations.   appropriations.
All other HUD FFA except HOME,  New FFA obligated  New FFA obligated by HUD   New FFA           New FFA
 Housing Trust Fund, and         by HUD on or       on or after August 23,     obligated by      obligated by
 Public Housing FFA used for     after February     2024.                      HUD on or after   HUD on or after
 maintenance projects.           22, 2024.                                     August 23, 2024.  August 23,
                                                                                                 2024.
HOME, Housing Trust Fund, and   New FFA obligated  New FFA obligated by HUD   New FFA           New FFA
 Public Housing FFA used for     by HUD on or       on or after August 23,     obligated by      obligated by
 maintenance projects.           after August 23,   2024.                      HUD on or after   HUD on or after
                                 2024.                                         August 23, 2024.  August 23,
                                                                                                 2024.
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    This phased implementation of the BAP advances the goals of BABA by 
providing transparency in HUD's implementation of the BAP, 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 an 
orderly and efficient manner, and provides transparency concerning the 
full implementation plans in connection with HUD FFA used in 
infrastructure projects. Failure to provide recipients such 
flexibilities and transparency could delay the award for infrastructure 
projects as grantees and funding recipients must exert considerable 
effort in changing their plans and accounting for the sourcing of 
materials in construction projects without the benefit of complete 
guidance on the Act's requirements.
    Additionally, HUD believes that this coordination in the 
implementation of BABA will avoid unnecessary and undue hardship that 
could jeopardize the timely and cost-effective completion of such 
projects as grantees and funding recipients that have previously not 
been subject to requirements similar to BAP react to anticipated 
guidance on how to come into full compliance. This implementation 
schedule and corresponding waiver allows grantees and funding 
recipients to focus their efforts in beginning the implementation of 
the BAP and allows HUD to focus its training and technical assistance 
on those grantees beginning the implementation process. This waiver is 
not an alternative to increasing domestic production, but rather serves 
as a tool to assist HUD in its implementation of 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 
and lead globally in the 21st century. The implementation schedule is 
designed to ensure that domestic manufacturers have sufficient time to 
become aware of and respond to the market signals from HUD recipients 
that additional BABA compliant construction materials and manufactured 
products will be in demand. This waiver is in the interest of 
efficiency, to ease burdens for HUD grantees and funding recipients, 
avoid unnecessary costs, and avoid delays to projects that are critical 
and time sensitive. This waiver allows 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 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 
grantees. Without this waiver, HUD could 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 could negatively impact the most vulnerable Americans 
we seek to serve.

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

[[Page 17004]]

and then published the proposed waiver in the Federal Register. A total 
of 16 comments were received in response to the proposed waiver and 
implementation plan. HUD thoroughly reviewed and considered each of the 
comments in determining to move forward with the issuance of this 
waiver and implementation plan as published in this Final Notice. 
Several commenters were supportive of the orderly implementation of the 
BAP but requested further time and guidance prior to proceeding with 
such implementation. A few commenters again expressed support for a 
waiver of broader scope that could potentially exclude all affordable 
single and multifamily housing programs from the requirements of BABA. 
Additional commenters requested further delays in the implementation 
schedule, citing resource constraints and cost uncertainties in support 
of further delays in implementation. Other commenters expressed concern 
that the agency is not moving forward with the full implementation of 
the BAP across all programs immediately.
    HUD appreciates the comments from both perspectives, but given the 
totality of the comments, believes its implementation schedule and 
corresponding waiver of the application of the BAP as set forth in this 
Final Notice is appropriate and in the public interest.\2\
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    \2\ HUD has and will continue to provide training sessions with 
grantees to increase grantees' knowledge about Build America, Buy 
America and the Buy America Preference requirements as they relate 
to HUD programs and HUD FFA used by Non-Federal entities to purchase 
iron and steel, construction materials, and manufactured products to 
be used infrastructure projects.
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    HUD has expressed its desire to move forward with the full 
implementation of the BAP across its FFA programs, but believes that 
the public interest is served best by a measured approach to 
implementation of the Act, allowing for the 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. HUD therefore 
declines to alter the proposed phased implementation plan and 
corresponding waiver at this time, but is taking this opportunity to 
clarify that the application of the BAP for iron and steel will apply 
to new awards of FFA in connection with Choice Neighborhood grants and 
will not retroactively convert ongoing projects to required compliance 
with the BAP merely because additional supplemental funding awards have 
been made to facilitate orderly completion of those ongoing projects. 
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 further 
guidance regarding the implementation of the BAP and HUD commits to 
developing robust guidance regarding the implementation of the BAP 
across its programs. HUD further recognizes that proposed guidance \3\ 
has been issued by the Office of Management and Budget (OMB) concerning 
the implementation of BABA across FFA programs and will continue to 
monitor the outcome of the proposed effort to update OMB's guidance in 
connection with the development of its own guidance for grantees and 
funding recipients. HUD remains committed to reviewing its plans to 
provide for the effective and efficient implementation of the Act 
across its programs and providing timely and appropriate guidance but 
believes that further extension of its waiver of application of the BAP 
beyond the implementation points provided in this Final Notice is not 
necessary at this time.
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    \3\ Regulations.gov.
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VI. Impact of This Waiver on Other FFA

    HUD will not require compliance with the BAP in connection with the 
use of any HUD FFA obligated by HUD before November 14, 2022, or during 
the pendency of any other applicable BABA waiver issued by HUD, 
including this waiver, as applicable, after it is finalized. However, 
where the BAP or other ``Buy American'' 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 FFA.

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. 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. 2023-05698 Filed 3-20-23; 8:45 am]
BILLING CODE 4210-67-P