This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

60729 

Vol. 83, No. 228 

Tuesday, November 27, 2018 

DEPARTMENT OF AGRICULTURE 

Rural Utilities Service 

7 CFR Part 1787 

RIN 0572–AC42 

‘‘Buy American’’ Requirement 

AGENCY: Rural Utilities Service, USDA. 

ACTION: Final rule. 

SUMMARY: The Rural Utilities Service 

(RUS), a Rural Development Agency of 

the United States Department of 

Agriculture (USDA), hereinafter referred 

to as RUS or the Agency, is issuing a 

final rule to amend its regulations to 

address its ‘‘Buy American’’ 

requirement. This will codify longstanding RUS requirements which 

Agency borrowers have been required to 

follow pursuant to statute, bulletin, and 

contract as early as the 1950s. RUS will 

rescind Bulletin 43–9:344–3, ‘‘ ‘Buy 

American’ Requirement,’’ when this 

regulation becomes effective. 

DATES: This rule is effective November 

27, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Norris Nicholson, Electric Program, 

Rural Utilities Service, U.S. Department 

of Agriculture, 1400 Independence Ave. 

SW, Washington, DC 20250, Email: 

Norris.Nicholson@wdc.usda.gov; 

telephone number: (202) 720–1979. 

Kenneth Kuchno, Telecommunications 

Program, Rural Utilities Service, U.S. 

Department of Agriculture, 1400 

Independence Ave. SW, Washington, 

DC 20250, email: Kenneth.Kuchno@

wdc.usda.gov, phone number: 202–720– 

9424. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12372, 

Intergovernmental Consultation 

This final rule is excluded from the 

scope of Executive Order 12372, 

Intergovernmental Consultation, which 

may require consultation with State and 

local officials. A Notice of Final Rule 

titled Department Programs and 

Activities Excluded from Executive 

Order 12372 (50 FR 47034) exempts 

RUS loans and loan guarantees to 

governmental and nongovernmental 

entities from coverage under this Order. 

Executive Order 12866, Regulatory 

Planning and Review 

This final rule has been determined to 

be not significant for the purposes of 

Executive Order 12866, Regulatory 

Planning and Review, and therefore has 

not been reviewed by the Office of 

Management and Budget (OMB). 

Executive Order 12988, Civil Justice 

Reform 

This final rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. RUS has determined 

that this final rule meets the applicable 

standards provided in section 3 of the 

Executive Order. In addition, all State 

and local laws and regulations that are 

in conflict with this rule will be 

preempted, no retroactive effort will be 

given to this rule, and, in accordance 

with Sec. 212(e) of the Department of 

Agriculture Reorganization Act of 1994 

(7 U.S.C. Sec. 6912(e)), administrative 

appeal procedures, if any, must be 

exhausted before an action against the 

Department or its agencies may be 

initiated. 

Executive Order 13175, Consultation 

and Coordination With Indian Tribal 

Governments 

This final rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, ‘‘Consultation 

and Coordination with Indian Tribal 

Governments.’’ Executive Order 13175 

requires Federal agencies to consult and 

coordinate with tribes on a governmentto-government basis on policies that 

have tribal implications, including 

regulations, legislative comments or 

proposed legislation, and other policy 

statements or actions that have 

substantial direct effects on one or more 

Indian tribes, on the relationship 

between the Federal Government and 

Indian tribes or on the distribution of 

power and responsibilities between the 

Federal Government and Indian tribes. 

The policies contained in this final rule 

do not have Tribal implications that 

preempt Tribal law. The Agency will 

continue to work directly with Tribes 

and Tribal applicants to improve access 

to Agency programs. This includes 

providing focused outreach to Tribes 

regarding implementation of this rule 

change. Additionally, the Agency will 

respond in a timely and meaningful 

manner to all Tribal government 

requests for consultation concerning 

this rule. For further information on the 

Agency’s Tribal consultation efforts, 

please contact Rural Development’s 

Native American Coordinator at (720) 

544–2911 or AIAN@wdc.usda.gov. 

Regulatory Flexibility Act Certification 

The Agency has determined that this 

final rule will not have a significant 

economic impact on a substantial 

number of small entities, as defined in 

the Regulatory Flexibility Act (5 U.S.C. 

601 et seq.), given that the amendment 

is only an administrative act on the 

government’s part to codify a statute 

with respect to obligation of funds. 

Information Collection and 

Recordkeeping Requirements 

In accordance with the Paperwork 

Reduction Act, the paperwork burden 

associated with this final rule has been 

approved by the Office of Management 

and Budget (OMB) under the currently 

approved OMB Control Numbers 0572– 

0107. The Agency has determined that 

this regulatory action does not change 

any current data collection that would 

require approval under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35). 

Catalog of Federal Domestic Assistance 

The programs described by this rule 

are listed in the Catalog of Federal 

Domestic Assistance programs under 

No. 10.850, Rural Electrification Loans 

and Loan Guarantees; No. 10.851, Rural 

Telephone Loans and Loan Guarantees; 

and No. 10.852, Rural Telephone Bank 

Loans and No. 10.886, Rural Broadband 

Access Loans and Loan Guarantees. All 

active CFDA programs can be found at 

www.cfda.gov. The Catalog is available 

on the internet at http://www.cfda.gov 

and the General Services 

Administration’s (GSA’s) free CFDA 

website at http://www.cfda.gov. The 

CFDA website also contains a PDF file 

version of the Catalog that, when 

printed, has the same layout as the 

printed document that the Government 

Publishing Office (GPO) provides. GPO 

prints and sells the CFDA to interested 

buyers. For information about 

purchasing the Catalog of Federal 

Domestic Assistance from GPO, call the 


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60730 Federal Register / Vol. 83, No. 228 / Tuesday, November 27, 2018 / Rules and Regulations 

Superintendent of Documents at 202– 

512–1800 or toll free at 866–512–1800, 

or access GPO’s online bookstore at 

http://bookstore.gpo.gov. 

Unfunded Mandate 

This final rule contains no Federal 

mandates (under the regulatory 

provisions of Title II of the Unfunded 

Mandates Reform Act of 1995) for state, 

local, and tribal governments or the 

private sector. Therefore, this final rule 

is not subject to the requirements of 

sections 202 and 205 of the Unfunded 

Mandates Reform Act of 1995. 

National Environmental Policy Act 

Certification 

The Administrator of RUS has 

determined that this final rule will not 

significantly affect the quality of the 

human environment as defined by the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.). Therefore, 

this action does not require an 

environmental impact statement or 

assessment. 

E-Government Act Compliance 

The Agency is committed to the EGovernment Act, which requires 

Government agencies in general to 

provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. 

USDA Non-Discrimination Policy 

In accordance with Federal civil 

rights law and U.S. Department of 

Agriculture (USDA) civil rights 

regulations and policies, the USDA, its 

Agencies, offices, and employees, and 

institutions participating in or 

administering USDA programs are 

prohibited from discriminating based on 

race, color, national origin, religion, sex, 

gender identity (including gender 

expression), sexual orientation, 

disability, age, marital status, family/ 

parental status, income derived from a 

public assistance program, political 

beliefs, or reprisal or retaliation for prior 

civil rights activity, in any program or 

activity conducted or funded by USDA 

(not all bases apply to all programs). 

Remedies and complaint filing 

deadlines vary by program or incident. 

Persons with disabilities who require 

alternative means of communication for 

program information (e.g., Braille, large 

print, audiotape, American Sign 

Language, etc.) should contact the 

responsible Agency or USDA’s TARGET 

Center at (202) 720–2600 (voice and 

TTY) or contact USDA through the 

Federal Relay Service at (800) 877–8339. 

Additionally, program information may 

be made available in languages other 

than English. 

To file a program discrimination 

complaint, complete the USDA Program 

Discrimination Complaint Form, AD– 

3027, found online at http://

www.ascr.usda.gov/complaint_filing_

cust.html and at any USDA office or 

write a letter addressed to USDA and 

provide in the letter all of the 

information requested in the form. To 

request a copy of the complaint form, 

call (866) 632–9992. Submit your 

completed form or letter to USDA by: (1) 

Mail: U.S. Department of Agriculture, 

Office of the Assistant Secretary for 

Civil Rights, 1400 Independence 

Avenue SW, Washington, DC 20250– 

9410; (2) fax: (202) 690–7442; or (3) 

email: program.intake@usda.gov. 

USDA is an equal opportunity 

provider, employer, and lender. 

Background 

The Rural Electrification Act requires 

that in making loans pursuant to the 

Rural Electrification Act of 1936, the 

Secretary of Agriculture shall require 

that, to the extent practicable and the 

cost of which is not unreasonable, the 

borrower agrees to use in connection 

with the expenditure of such funds only 

such unmanufactured articles, 

materials, and supplies, as have been 

mined or produced in the United States 

or in any eligible country, and only such 

manufactured articles, materials, and 

supplies as have been manufactured in 

the United States or in any eligible 

country, substantially all from articles, 

materials, or supplies mined, produced 

or manufactured, as the case may be, in 

the United States or any eligible 

country. This regulation will codify 

long-standing RUS requirements which 

Agency borrowers have been required to 

follow pursuant to statute, bulletin, and 

contract as early as the 1950s, but which 

were inadvertently never codified when 

all existing RUS bulletins were 

incorporated into regulation. Nothing in 

this regulation will change or modify 

those procedures with respect to 

borrowers’ responsibilities in complying 

with the Buy American requirement, 

such as the waiver process, but will 

simplify compliance by compiling all 

such existing requirements into a single 

document. 

List of Subjects in 7 CFR Part 1787 

Communications equipment, Electric 

power, Loan programs— 

communications, Loan programs— 

energy, Reporting and recordkeeping 

requirements, Rural areas, Telephone. 

■ For the reasons set out in the 

preamble, RUS amends 7 CFR chapter 

XVII by adding part 1787 to reads as 

follows: 

PART 1787—THE ‘‘BUY AMERICAN’’ 

REQUIREMENT 

Sec. 

1787.1 General. 

1787.2 Definitions. 

1787.3 Products constituting a portion of a 

purchase order or contract. 

1787.4 Unmanufactured articles, materials, 

and supplies. 

1787.5 Eligible countries. 

1787.6 Nondomestic products. 

1787.7 Components. 

1787.8 Purchase of nondomestic products. 

1787.9 Waivers. 

1787.10 Application for specific waivers. 

1787.11 Cost differential. 

1787.12 Non-availability or shortages. 

1787.13 Public interest or impracticality. 

1787.14 General waivers. 

Appendix A to Part 1787—Product 

Procurement 

Authority: 7 U.S.C. 903. 

§ 1787.1 General. 

(a) The ‘‘Buy American’’ provision of 

the Rural Electrification Act of 1936 (RE 

Act) requires, to the extent practicable 

and the cost of which is not 

unreasonable, that RUS Borrowers use 

loan funds only for such manufactured 

articles, materials, and supplies as have 

been manufactured in the United States 

or in any eligible country, substantially 

all from articles, materials, or supplies 

mined, produced or manufactured, as 

the case may be, in the United States or 

any eligible country. 

(b) Each RUS Borrower is responsible 

for assuring that its use of loan funds 

complies with this requirement, and 

that the contracts it enters into for 

construction, materials and equipment, 

and purchases with vendors contain the 

Buy American requirement, along with 

certification as to compliance, made 

through RUS Form 213. 

§ 1787.2 Definitions. 

For purpose of this part, the following 

terms have the following meanings: 

Administrator. The Administrator of 

the RUS, or his/her designee. 

Buy American. A provision of the RE 

Act requiring that loan funds only be 

used to purchase products made in the 

U.S. or an eligible country. 

Component. Any article, material, or 

supply, whether manufactured or 

unmanufactured, that is directly 

incorporated into the end product at the 

final assembly location. 

Domestic product. A product or like 

product which both: 

(1) Is manufactured in the United 

States or in any eligible country; and 

(2) Contains components 

manufactured in the United States or in 


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any eligible country consisting of more 

than 50 percent of the total cost of all 

components used in the product. 

Eligible country. Any country that the 

United States Trade Representative 

determines as having corporations 

located therein, as eligible to enter into 

contract with an RUS Borrower, under 

which loan funds will be provided for 

unmanufactured and manufactured 

goods. 

Loan funds. Funds provided under an 

RUS direct or guaranteed loan. 

Manufactured. The application of 

processes to alter the form or function 

of materials or of elements of the 

product such that value is added or the 

materials or elements are transformed 

into a new end product functionally 

different from that which would result 

from mere assembly of the materials or 

elements. 

Nondomestic bid. An offer to sell a 

nondomestic product to an RUS 

borrower. 

Nondomestic product. Any product 

other than a domestic product or 

product from an eligible country. 

Product. An item of manufactured 

material or assembled components, 

which is complete and capable of 

performing an intended practical 

purpose. 

RE Act. Rural Electrification Act of 

1936, as amended (7 U.S.C. 901 et seq.). 

RUS. The Rural Utilities Service. 

RUS Borrower. Any organization that 

has an outstanding RUS loan made or 

guaranteed by RUS pursuant to the RE 

Act. 

Telecommunications. Any 

communication service for the 

transmission or reception of voice, data, 

sounds, signals, pictures, writings, or 

signs of all kinds, by wire, fiber, radio, 

light, or other visual or electromagnetic 

means, including all telephone lines, 

facilities, or systems used in the 

rendition of such service; but shall not 

be deemed to mean message telegram 

service or community antenna 

television system services or 

broadcasting facilities other than those 

intended exclusively for educational 

purposes, or radio broadcasting services 

or facilities within the meaning of 

section 3(o) of the Communications Act 

of 1934, as amended. 

Unmanufactured. With respect to 

articles, materials, or supplies, refers to 

such goods that have not been 

manufactured. 

§ 1787.3 Products constituting a portion of 

a purchase order or contract. 

Where a supplier or contractor offers 

or furnishes several products under a 

purchase order or contract, the 

provisions of this part apply to each 

product individually. 

§ 1787.4 Unmanufactured articles, 

materials, and supplies. 

The Buy American requirement also 

applies to unmanufactured articles, 

materials, and supplies to be financed 

with RUS loan funds, and will be 

considered domestic if mined or 

produced in the United States or in an 

eligible country. 

§ 1787.5 Eligible countries. 

The United State Trade 

Representative (USTR) determines what 

countries are eligible countries with 

respect to purchases made by electric 

borrowers or telecommunications 

borrowers. A particular country may be 

determined to be an eligible country for 

purchases made by telecommunications 

borrowers, for electric borrowers, or 

both. RUS maintains the latest Federal 

Register notice on its website which sets 

out the list of Eligible Countries for each 

RUS program at https://

www.rd.usda.gov/files/UEP_

Engineering_EligibleCountries.pdf. 

§ 1787.6 Nondomestic products. 

A product is considered to be 

nondomestic for the purpose of 

compliance with the ‘‘Buy American’’ 

requirement if: 

(a) The product is manufactured 

outside the United States or any eligible 

country; or 

(b) The product is manufactured in 

the United States or in any eligible 

country, but the cost of nondomestic 

components used therein constitutes 50 

percent or more of the cost of all 

components. The cost of components 

shall be determined on a comparable 

basis, so that only the cost of domestic 

and nondomestic components, up to the 

point where they are combined and 

manufactured into a complete product 

shall be considered. 

(1) The determination of the cost of 

the nondomestic components of a 

product shall include: 

(i) The price paid to the nondomestic 

source; 

(ii) The cost of shipment to the port 

of entry into the United States; 

(iii) Applicable tariffs or duties; 

(iv) The cost of transportation from 

the port of entry to the distributor’s 

plant or warehouse; and 

(v) Profit, overhead, and commissions 

of domestic and nondomestic suppliers 

and subcontractors of the components. 

(2) The following items shall not be 

considered in determining the cost of 

components, although they are proper 

elements in the determination of the 

final selling price of the product: 

(i) Fabrication or processing costs, if 

any, of nondomestic or domestic 

components at the assembly plant, or 

any other place of fabrication in the 

United States or any eligible country; 

(ii) Testing costs at the assembly plant 

or at the installation site; 

(iii) Direct profit, overhead, and 

commissions of the domestic 

distributor; and 

(iv) Cost of transportation from the 

domestic assembly point to the 

installation site. 

§ 1787.7 Components. 

Where a component is manufactured 

only determines whether the component 

is classified as domestic or nondomestic 

even if all the materials and 

subcomponents comprising the 

component are manufactured in 

ineligible countries. A component 

manufactured in the United States or in 

an eligible country shall be considered 

domestic when determining whether a 

product is classified as domestic or 

nondomestic. A component 

manufactured in an ineligible country 

shall be considered nondomestic. 

§ 1787.8 Purchase of nondomestic 

products. 

An RUS Borrower may only use loan 

funds to purchase a nondomestic 

product if a waiver pursuant to 

§ 1787.10 has been received by the 

Administrator before entering into a 

contract with the vendor. Should the 

Administrator deny the waiver request, 

the RUS Borrower must use its own 

funds for the expenditure. 

§ 1787.9 Waivers. 

Under limited circumstances the 

Administrator may waive the Buy 

American requirement with respect to a 

specific contract entered into between 

an RUS Borrower and a third party 

which will be paid for with loan funds, 

subject to §§ 1787.10 through 1787.14. 

§ 1787.10 Applications for specific 

waivers. 

RUS borrowers may request a specific 

waiver of the Buy American 

requirement through a written, detailed 

explanation showing that: 

(a) The cost between the nondomestic 

product and domestic product is 

unreasonable; 

(b) There is a non-availability of 

domestic products; or 

(c) It is not in the public interest or 

impractical for the RUS Borrower to 

purchase a domestic product. 

§ 1787.11 Cost differential. 

By application pursuant to § 1787.10, 

the Administrator may waive the Buy 

American requirement if the cost of the 

domestic product is unreasonable. 

Given that RUS loans terms normally 

range from 20 to 35 years, and that 


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additional costs will be magnified with 

interest over these terms, the 

Administrator has determined that if the 

lowest bid or offered price is a 

nondomestic bid that is at least 6percent 

lower than the next lowest bid or 

offered price, the RUS Borrower may 

request a cost differential waiver. With 

respect to contracts that are not required 

to be bid, prices of market-available, 

domestic products must be used for 

comparison in a request for waiver. 

§ 1787.12 Non-availability or shortages. 

By application pursuant to § 1787.10, 

the Administrator may waive the Buy 

American requirement upon a showing 

that there is no domestic product 

available in the market in sufficient and 

reasonable quantities and of satisfactory 

quality, and that such shortage of 

suitable domestic alternatives 

jeopardizes the project being completed 

on budget and/or according to 

scheduled planning. A lack of 

responsive and responsible bids to a 

well-publicized request for bids will be 

presumed to meet the conditions of a 

non-availability waiver. With respect to 

contracts that are not required to be bid, 

sufficient evidence must be presented to 

the Administrator in order to make a 

determination. 

§ 1787.13 Public interest or impracticality. 

(a) By application pursuant to 

§ 1787.10, the Administrator may waive 

the Buy American requirement upon a 

showing that application of the 

requirement would be inconsistent with 

the public interest or impractical for the 

RUS Borrower. With respect to 

impracticality, an RUS Borrower may 

request a waiver upon a showing that 

the domestic product is incompatible or 

impractical to integrate with existing, 

significant capital infrastructure or 

existing, critical software already in use. 

Notwithstanding, the burden shall rest 

with the RUS Borrower to present how 

the use of the domestic product would 

create a hardship or negatively impact 

its project. 

(b) With respect to contracts that were 

approved by RUS based on a bidder or 

offer that originally certified compliance 

with the Buy America requirements, but 

which can no longer comply with such 

certification, the Administrator may 

grant an impracticality waiver based on 

a showing that the original certification 

was made in good faith and that the 

product cannot now be obtained 

domestically due to commercial 

impossibility or impracticability, or 

without undue hardship or a negative 

impact to the project. 

(c) In determining whether to issue 

any public interest waiver, the 

Administrator will consider all 

appropriate factors on a case-by-case 

basis, unless a general waiver has 

already been issued by the 

Administrator with respect to the 

product. 

§ 1787.14 General waivers. 

(a) The Administrator may issue a 

general waiver for all RUS Borrowers for 

a determinate period, if the 

Administrator finds that such 

manufactured or unmanufactured goods 

are in shortage regionally or nationally, 

so as to avoid the administrative burden 

of issuing individual, specific waivers. 

(b) The Administrator has determined 

that it is in the best interest of RUS to 

issue a permanent general public 

interest waiver from the Buy America 

requirements for ‘‘small purchases,’’ 

which shall be published in the Federal 

Register for each program under the RE 

Act and amended as needed from time 

to time. In carrying out this exception, 

however, the Administrator shall ensure 

that contracts are not artificially 

fragmented. 

Appendix A to Part 1787—Product 

Procurement 

This appendix shows an example of 

how the 6 percent differential is applied 

to determine award of a bid. In response 

to a request for bids for a digital central 

office a borrower receives four 

responsive bids to the specification, 

three domestic bids and one 

nondomestic bid. The nondomestic bid 

is the apparent low bid. We will 

consider in our analysis the 

nondomestic bid and the lowest 

domestic bid as shown in the following 

table. 

Nondomestic 

bid 

Domestic 

bid 

Total materials ......................................................................................................................................................... $895,000 $920,000 

Installation ................................................................................................................................................................ 155,000 177,000 

Freight ...................................................................................................................................................................... +1,000 +1,500 

Total bid ............................................................................................................................................................ $1,051,000 $1,098,500 

Please note that once the product has 

been determined as nondomestic, the 6 

percent cost differential shall be applied 

to all the material content in the 

nondomestic bid, even if the 

nondomestic product includes domestic 

components. 

In this example, 6 percent of the total 

material content in the nondomestic bid 

($895,000) equals $53,700. This cost 

differential is added to the total 

nondomestic bid as shown in the 

following table. 

Total of the nondomestic bid $1,051,000 

6% of the all material cost .... +53,000 

Total evaluated bid ........ $1,104,700 

This total evaluated bid, (that is the 

nondomestic bid plus the 6% of the cost 

of its material content), is compared 

with all the domestic bids for award of 

the bid. In our example the domestic bid 

($1,098,500) is lower than the 

nondomestic evaluated bid ($1,104,700). 

The domestic bid becomes the low 

bid and the domestic bidder gets award 

of the bid. This product is classified as 

domestic since the cost of the domestic 

components used in the product 

constitutes more than 50 percent of the 

cost of all the components used. 

Dated: November 6, 2018. 

Christopher A. McLean, 

Acting Administrator, Rural Utilities Service. 

[FR Doc. 2018–25815 Filed 11–26–18; 8:45 am] 

BILLING CODE 3410–15–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 13 

Office of the Secretary 

14 CFR Part 383 

Federal Aviation Administration 

14 CFR Part 406 

Saint Lawrence Seaway Development 

Corporation 

33 CFR Part 401 


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