[Federal Register Volume 88, Number 150 (Monday, August 7, 2023)]
[Notices]
[Pages 52197-52200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16798]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6407-N-01]


Public Interest, General Applicability Waiver of Build America, 
Buy America Provisions as Applied to Pacific Island/Territory 
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), 
this notice advises that HUD is proposing a public interest, general 
applicability waiver for a period of 18 months to the Buy America 
Domestic Content Procurement Preference (``Buy America Preference,'' or 
``BAP'') as applied to Federal Financial Assistance (''FFA'') used for 
infrastructure projects in the Commonwealth of Northern Mariana Islands 
(``CNMI''), Guam, American Samoa, (hereinafter collectively ``Pacific 
Island/Territory Communities''). In the case of FFA obligated by HUD 
through its Community Development Block Grant (CDBG) programs on or 
after November 15, 2022, but prior to the effective date of the final 
waiver, the waiver applies to all expenditures incurred on or after the 
effective date of the final waiver up until the limited period of 18 
months. For expenditures incurred on or after the effective date of the 
final waiver, the waiver applies both to funds obligated by HUD on or 
after the effective date of the final waiver and any expenditures up 
and until 18 months from the effective date of the final waiver.

DATES: HUD published this proposed waiver for public comment on its 
website on August 2, 2023. Pursuant to section 70914(c)(2) of BABA, HUD 
is required to solicit comments from the public on this proposed 
waiver. As a matter of policy, HUD has elected to provide the public 
with an opportunity to comment for an extended period of thirty days 
from the date published on HUD's web page in this instance. Comments on 
the proposed waiver set out in this document are due on or before 
September 1, 2023. HUD will consider comments received in response to 
this Notice and announce its determination with respect to the adoption 
of this notice, including any changes that may be made in response to 
comments through a subsequent Notice.

ADDRESSES: Interested persons are invited to submit comments on the 
general applicability waiver. Copies of all comments submitted are 
available for inspection and downloading at www.regulations.gov. 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.
    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). 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. Copies of all 
submissions are available for inspection and downloading at 
www.regulations.gov.

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 
funds newly obligated 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 Generally

    Since the enactment of the Act, HUD has worked diligently to 
develop a plan to fully implement the BAP across its FFA programs. HUD 
understands that advancing Made in America objectives is a continuous 
effort and believes setting forth a transparent schedule of future 
implementation for FFA programs provides recipients, stakeholders, and 
industry partners with the time and notice necessary to efficiently and 
effectively implement the BAP in Pacific Island/Territory 
Communities.\1\ Additionally, HUD

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understands that similar to Tribal FFA Recipients, Pacific Island/
Territory Communities have significant complications accessing 
construction materials, manufactured products, and steel needed for 
infrastructure projects. HUD recently announced plans to move forward 
with the implementation of the new BAP requirements in connection with 
its award of FFA to non-Tribal Recipients in a manner designed to 
maximize coordination and collaboration to support long-term 
investments in domestic production. HUD continues its efforts to 
implement the Act in those programs consistent with the guidance and 
requirements of the Made in America Office of the Office of Management 
and Budget, including guidance concerning compliance with the BAP.
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    \1\ Pursuant to 42 U.S.C. 5302(a)(24)(24), the term ``insular 
area'' means each of Guam, the Northern Mariana Islands, the Virgin 
Islands, and American Samoa. As proposed, this waiver would only be 
applicable for CNMI, Guam, American Samoa, if made final.
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    In order to ensure orderly implementation of the BAP across HUD's 
FFA programs awarding funds to non-Tribal Recipients, HUD has provided 
public interest, general applicability waivers in order to implement 
the BAP in phases in connection with the application of the BAP in such 
programs and announced a corresponding implementation plan. As part of 
those efforts, HUD has published two general applicability, public 
interest waivers covering Exigent Circumstances and De Minimis and 
Small Grants, which can be found at https://www.hud.gov/program_offices/general_counsel/BABA.
    Additionally, HUD proposes that it is in the public interest to 
waive the BABA requirements for FFA awarded for infrastructure projects 
in Pacific Island/Territory Communities while HUD works to gather more 
information on supply chains, costs, and impacts. This proposed waiver 
is critical to provide the time for HUD to collect and analyze evidence 
to determine if a more targeted waiver of the BAP requirements is in 
the public interest. The waiver would also allow time for HUD to offer 
technical assistance to reduce the administrative burden to recipients 
for projects in the remote Pacific Island/Territory Communities were 
complying with the domestic sourcing requirements in BABA presents 
challenges. HUD is concerned that failure to provide these remote 
communities with flexibilities could perpetuate systemic barriers to 
opportunities and benefits and limit HUD's ability to deliver resources 
and benefits equitably to all in these Pacific Island/Territory 
Communities. Additionally, HUD may need to dedicate significant staff 
and contractor time to assist extremely remote Pacific Island/Territory 
Communities with implementing preference requirements for the first 
time and to support the increased workload to process project-specific 
waivers. As such, HUD is interested in determining if these concerns 
justify a targeted waiver and whether its initial assessment may or may 
not be borne out by evidence.

III. Waivers

    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 section 70914(b) must be published by the 
agency with a detailed written explanation for the proposed 
determination and provide an appropriate public comment period of 15 or 
30 days depending on the substance of the waiver.

IV. Pacific Island/Territory Infrastructure and HUD Programs

    Many Pacific Island/Territory Communities still lack basic 
infrastructure such as roads, running water, and indoor plumbing. The 
need for safe, decent, and sanitary housing is immense. For example, 
the Northern Marianas are very far away from the U.S. Mainland. This 
will create challenges with HUD providing technical assistance and 
monitoring the use of the funds. It is also a place with very different 
rules than the U.S. Mainland and is much more connected to Asia than to 
the U.S. Mainland. Standard products that are absolute necessities in 
the Pacific Island/Territory Communities, like typhoon-rated glass 
windows and aluminum shutters, also cost significantly more if sourced 
domestically. For example, representatives of Pacific Island/Territory 
communities stated, ``the cost of aluminum is double if sourced from 
the U.S. Mainland'' and ``The shipping cost from Korea or Asia for a 
20-footer container is $3,000 but shipping from the mainland United 
States is about $12,000.''
    HUD is aware that substantial changes to shipping and supply chains 
to incorporate domestic sourcing requirements for infrastructure 
projects in Pacific Island/Territory Communities could take multiple 
years to establish. For example, these economies have few local heavy 
manufacturers and largely rely on established regional supply chains 
from the Philippines. With the distance of economies in the Pacific 
Island/Territory Communities, these communities must import products 
via air or sea. Most goods, equipment, materials, and supplies are 
imported and rely on shipping with associated timelines and 
unpredictable shipping fuel cost fluctuations. Moreover, materials 
sourced from the United States lead to additional shipping fees and 
longer lead times, thus significantly extending construction activity 
schedules. Lastly, ongoing gaps in supply chain availability impact 
lead times for materials, increasing project timelines. For these 
reasons, HUD is concerned that requiring compliance with the domestic 
sourcing requirements in BABA at this time may increase already 
elevated project completion times and costs--particularly in the short 
run--and seeks time to better understand the local manufacturing 
footprint and the balance of equities for residents of the Pacific 
Island/Territory Communities.
    For example, HUD Community Planning and Development Formula Program 
Allocations for Pacific Island/Territory Communities include Community 
Development Block Grant, HOME, Emergency Solutions Grant (``ESG''), 
Housing Opportunities for Persons With AIDS Program (``HOPWA''), and 
Housing Trust Fund (``HTF''). As shown below, there are HUD CDBG 
formula grant recipients that are subject to the BAP pursuant to HUD's 
Public Interest Phased Implementation Waiver of Build America, Buy 
America Provisions as Applied to Recipients of HUD Federal Financial 
Assistance, for 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 HOME and HTF, BABA applicability 
will be in effect for funds obligated by HUD on or after August 23, 
2024. For all other HUD FFA including ESG and HOPWA, BABA applicability 
will be in effect for FFA used to purchase iron and steel used in 
infrastructure projects for funds obligated by HUD on February 22, 
2024. Subsequently, BABA applicability will be in effect for HUD FFA 
obligated on or after August 23, 2024, for construction materials and 
manufactured products. Therefore,

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without a waiver, HUD FFA used in Pacific Island/Territory Communities 
for infrastructure projects will be subject to the BAP.\2\
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    \2\ See https://www.hud.gov/program_offices/comm_planning/budget.

                                         FY 2023 Community Planning and Development Formula Program Allocations
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               Name                          STA                  CDBG               HOME               ESG               HOPWA               HTF
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American Samoa....................  AS...................         $1,029,433           $298,791            $85,296                 $0                 $0
Guam..............................  GU...................          3,185,755          1,256,171            263,963                  0         157,106.91
Northern Mariana Islands..........  MP...................            980,125            489,268             81,210                  0          76,533.43
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                              FY 2023 Public and Indian Housing Program Allocations
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              Name                        STA           Operating fund       Capital funds         Section 8
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Guam............................  GU................  $5.33 million.....  $3.2 million......  $38.3 million.
Northern Mariana Islands........  MP................  $0................  $0................  $3.3 million.
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    Additionally, the Public and Indian Housing (``PIH'') Program 
Allocations for Pacific Island/Territory Communities include the Guam 
Housing & Urban Renewal Authority in Guam and the Northern Marianas 
Housing Corporation in the Northern Marianas islands. Pursuant to the 
phased implementation waiver, BABA applicability will be in effect for 
funds obligated by HUD on or after August 23, 2024, for public housing 
FFA used to purchase iron and steel, construction materials, and 
manufactured products for maintenance projects.
    The above-named programs are critical because they allow HUD to 
support affordable housing and infrastructure needs in these specific 
Pacific Island/Territory Communities--particularly for the benefit of 
low- and moderate-income families. As of November 15, 2022, the BAP 
applies to CDBG formula grants used to purchase iron and steel for 
infrastructure projects. Accordingly, HUD must ensure that Pacific 
Island/Territory Recipients are able to effectively implement the BAP 
in a manner that ensures that the purposes of BABA are carried out, 
while at the same time preventing additional undue barriers to the 
development of Pacific Island/Territory infrastructure, which has 
suffered from decades of underinvestment.
    HUD has determined that additional time is needed to fully assess 
the impacts that the BAP will have on Pacific Island/Territory 
Recipients and to plan for the efficient and orderly implementation of 
the BAP, as appropriate. HUD is particularly interested in developing a 
specifically tailored waiver based on stakeholder and Pacific Island/
Territory Recipient feedback regarding the impact of the BAP on 
infrastructure projects that are funded under HUD's various Pacific 
Island/Territory programs. With the benefit of HUD's recently published 
phased implementation waiver and Tribal consultation waiver extension, 
HUD needs additional time to seek feedback from Pacific Island/
Territory Communities and funding recipients on whether and when HUD 
should take a similar phased approach with respect to the 
implementation of the BAP under its Pacific Island/Territory programs. 
HUD will also assess the unique and diverse conditions of Pacific 
Island/Territory Communities across the country and determine how the 
BAP should be applied after taking those conditions into account.

V. Public Interest in a General Applicability Waiver of Buy America 
Provisions for Pacific Island/Territory Recipients

    In this Notice, HUD is seeking comment on a new limited, 18-month 
public interest, general applicability waiver of the BAP in connection 
with HUD's FFA used for infrastructure in Pacific Island/Territory 
Communities to provide the Department with sufficient information to 
successfully implement BABA. Infrastructure is an eligible activity 
under some of the above-named programs and will be subject to the BAP. 
Because the application of BAP mandated by the Act is new to all HUD 
FFA for Pacific Island/Territory infrastructure projects, HUD needs 
additional time to engage Pacific Island/Territory Communities about 
the application of the BAP for Pacific Island/Territory projects--
particularly with the distance from economies, it is imperative to 
determine how the BAP should be effectively applied to HUD's various 
FFA for Pacific Island/Territory projects, how the BAP should be phased 
in to allow for successful implementation, and how compliance will be 
verified--all in a way to enhance infrastructure projects in these 
areas. As such, there is a significant need for HUD to further engage 
with Pacific Island/Territory Recipients. HUD now has the benefit of 
having fully considered an appropriate method of phased implementation 
across its other FFA programs and has begun the methodical 
implementation of the BAP in those other FFA programs. At the same 
time, HUD has determined that it is in the public's interest to not 
apply the BAP to FFA awarded for infrastructure projects in Pacific 
Island/Territory Communities prior to additional engagement.

VI. Planned Pacific Island/Territory Engagement

    Based on HUD's observations about disaster recovery for three 2018 
disasters in the Pacific--American Samoa's recovery from Cyclone Gita 
and the most severe disaster--Typhoon's Mangkhut and Super Typhoon Yutu 
in the Northern Marianas, it is necessary for HUD to solicit feedback 
from Pacific Island/Territory Communities on other related issues, 
including how to effectively implement the BAP for extremely remote 
communities, such as the American Samoa. For example, the Northern 
Marianas is comprised of fifteen islands, three of them that are 
populated. Of the three, the most populated is Saipan (population 
48,220), the nearby Tinian (3,136), and Rota (2,527), which is closer 
to Guam than it is to Saipan. Much different than American Samoa, the 
Northern Marianas are connected to Asia--two to four hours of flying to 
get to Asia is closer than anywhere on the U.S. Mainland except Guam. 
HUD acknowledges that Pacific Island/

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Territory Communities have major concerns about availability of 
American-made products from the U.S. Mainland and continue to struggle 
with challenges because of their distance away from main supply 
sources. Pacific Island/Territory Communities are already facing major 
challenges with accessing construction materials, and major cost 
overruns due to a lack of available materials--particularly in remote 
Pacific Island/Territory Communities.
    During the 18-month waiver period, HUD will thoroughly engage 
Pacific Island/Territory housing practitioners, stakeholders, and FFA 
recipients. HUD will do so by soliciting written feedback from Pacific 
Island/Territory Communities and stakeholders specifically addressing 
the impact of the BAP on HUD's Pacific Island/Territory programs. After 
engaging and receiving feedback, HUD will seek to implement the BAP in 
a manner that advances the Made in America objectives while also 
ensuring that the BAP implementation does not serve as a major barrier 
to Pacific Island/Territory Communities' efforts to develop critical 
infrastructure. HUD will implement the BAP in a thoughtful manner that 
ensures that Pacific Island/Territory Recipients can effectively 
implement the BAP without substantial negative impacts on planned and 
ongoing critical infrastructure projects. HUD will also seek to provide 
additional technical assistance resources to ensure that Pacific 
Island/Territory Recipients can build capacity and be in a better 
position to comply with the BAP.

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 on the cost of foreign-sourced products.

VIII. Limited Duration of the Waiver

    HUD remains committed to the successful implementation of the 
important BAP across its programs providing covered FFA for 
infrastructure projects, while recognizing the unique needs and 
geographically related challenges of Pacific Island/Territory 
Communities. HUD is committed to engaging with Island/Territory 
Communities, stakeholders, and FFA recipients as noted above to further 
this goal.

IX. Solicitation of Comments

    HUD is soliciting comment from the public on the proposed waiver 
described in this Notice for a period of 30 days from the date of 
publication on HUD's web page. If issued, this waiver will be 
applicable to Pacific Island/Territory FFA that HUD obligates on or 
after the effective date of the final waiver and in connection with the 
expenditure of FFA, which had been previously obligated by HUD, 
throughout the applicable waiver period.

    Dated: August 2, 2023.
Marcia L. Fudge,
Secretary.
[FR Doc. 2023-16798 Filed 8-4-23; 8:45 am]
BILLING CODE 4210-67-P