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[Federal Register Volume 89, Number 227 (Monday, November 25, 2024)]
[Rules and Regulations]
[Pages 92849-92852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27456]

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DEPARTMENT OF HOMELAND SECURITY

48 CFR Parts 3025 and 3052

[Docket No. DHS-2024-0022]
RIN 1601-AB13

Homeland Security Acquisition Regulation, Restrictions on Foreign 
Acquisition Update (HSAR Case 2024-002)

AGENCY: Office of the Chief Procurement Officer, Department of Homeland 
Security (DHS).

ACTION: Final rule.

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SUMMARY: DHS is issuing a final rule to amend the Homeland Security 
Acquisition Regulation (HSAR) provisions that relate to the Kissell 
Amendment, a section of the American Recovery and Reinvestment Act of 
2009, that deals with the acquisition of certain clothing, canvas or 
textile products and natural and synthetic fabrics. These changes are 
intended to reduce confusion and provide clarity to the requirements 
under the Kissell Amendment.

DATES: This final rule is effective December 26, 2024.

FOR FURTHER INFORMATION CONTACT: Nancy Harvey, Department of Homeland 
Security, Office of the Chief Procurement Officer, Acquisition Policy 
and Legislation, at (202) 282-8000 or email at [email protected]. Include 
HSAR Case 2024-002 in the subject line.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Background
II. Discussion of Comments and the Final Rule
III. Regulatory Analyses
    A. Executive Orders 12866, 13563, and 14094
    B. Regulatory Flexibility Act
    C. Paperwork Reduction Act
    D. National Environmental Policy Act

I. Background

    In a Notice of Proposed Rulemaking (NPRM), published in the Federal 
Register on July 24, 2024, DHS proposed to amend the Homeland Security 
Acquisition Regulation (HSAR) provisions that relate to the Kissell 
Amendment, a section of the American Recovery and Reinvestment Act of 
2009 (Recovery Act), that deals with the acquisition of certain 
clothing, canvas or textile products and natural and synthetic 
fabrics.\1\
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    \1\ See 89 FR 59877, Homeland Security Acquisition Regulation, 
Restrictions on Foreign Acquisition Update (HSAR Case 2024-002) 
(Jul. 24, 2024).
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    As explained in the NPRM, the Recovery Act was enacted in 2009.\2\ 
Section 604 of the Recovery Act is also known as the Kissell 
Amendment.\3\ The Kissell Amendment requires, with limited exceptions, 
that funds appropriated or otherwise available to DHS may not be used 
for the procurement of certain textiles, clothing and footwear, if that 
item is directly related to the national security interests of the 
United States, unless the item is grown, reprocessed, reused, or 
produced in the United States.\4\ One of the exceptions is a De Minimis 
Exception, which allows the Secretary of Homeland Security to accept 
delivery of the aforementioned textiles, clothing and footwear ``that 
contain non-compliant fibers if the total value of non-compliant fibers 
contained in the end item does not exceed 10 percent of the total 
purchase price of the end item.'' \5\
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    \2\ See Public Law 111-5, 123 Stat. 115,165-166 (Feb. 17, 2009).
    \3\ Section 604 of the Recovery Act is codified at 6 U.S.C. 
453b.
    \4\ See 6 U.S.C. 453b.
    \5\ See 6 U.S.C. 453b(d).
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    The Kissel Amendment further requires DHS to apply it in a manner 
consistent with United States obligations under international 
agreements.\6\ As DHS has explained in prior notices, this includes 
free trade agreements and the World Trade Organization Agreement on 
Government Procurement.\7\ These requirements apply with respect to 
contracts entered into by DHS on or after August 16, 2009.\8\
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    \6\ See 6 U.S.C. 453b(k).
    \7\ See, e.g., 75 FR 32676, (June 9, 2010).
    \8\ See 6 U.S.C. 453b(l).
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    As discussed in the NPRM, in 2009, DHS published an interim rule 
(``2009 Interim Rule'') amending the Homeland Security Acquisition 
Regulation (HSAR) at 48 CFR part 3025, Foreign Acquisitions, and part 
3052, Solicitation Provisions and Contract Clauses, incorporating the 
Kissell Amendment requirements.\9\ In 2010, DHS published a final rule 
(``2010 Final Rule'') adopting the 2009 Interim Rule as final without 
change.\10\ The 2009 Interim Rule made amendments to the HSAR ``to add 
solicitation provisions, contract clauses and related policy statements 
implementing these requirements and

[[Page 92850]]

exceptions for certain DHS contracts, option exercises and orders.'' 
\11\
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    \9\ See Revision of Department of Homeland Security Acquisition 
Regulation; Restrictions on Foreign Acquisition (HSAR Case 2009-
004), 74 FR 41346 (Aug. 17, 2009).
    \10\ See Revision of Department of Homeland Security Acquisition 
Regulation; Restrictions on Foreign Acquisition (HSAR Case 2009-
004), 75 FR 32676 (June 9, 2010).
    \11\ See 74 FR 41346 (Aug. 17, 2009).
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    The regulations also provided an exception for ``incidental amounts 
of cotton, other natural fibers, or wool incorporated in an end 
product, for which the estimated value of the cotton, other natural 
fibers, or wool is not more than 10 percent of the total price of the 
end product.'' \12\
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    \12\ See 48 CFR 3052.225-70(d)(2).
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    On March 5, 2013, DHS issued a deviation regarding the 
applicability of the Kissell Amendment (Deviation 13-01).\13\ Under 
Deviation 13-01, DHS deviates from the language of 48 CFR 3025.7000 
that restricted application of certain Kissell provisions to those 
actions with funds appropriated or otherwise provided on or before 
February 17, 2009.\14\
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    \13\ See HSAR class deviation, 13-01, Applicability of the 
``Kissell Amendment'' to Department of Homeland Security 
Acquisitions (Mar. 5, 2013) (``Deviation 13-01'') available at: 
https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf (last accessed May 31, 2024).
    \14\ ``Effective immediately, the scope of the subpart 3025.70 
shall apply as follows . . . This subpart contains restrictions on 
the acquisition of certain foreign textile products imposed by the 
American Recovery and Reinvestment Act of 2009 on contracts, 
exercising of an option and orders entered into on or after August 
16, 2009.''
    See Deviation 13-01, available at: https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf 
(last accessed May 31, 2024).
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    In addition, on March 14, 2013, DHS issued an amendment to 
Deviation 13-01 (``Deviation Amendment 1'').\15\ Under Deviation 
Amendment 1, the De Minimis Exception described above was to be read as 
applying to ``incidental amounts of non-compliant fibers if the total 
value of non-compliant fibers contained in the end item does not exceed 
10 percent of the total purchase price of the end item . . .''.\16\ 
Deviation 13-01 and Deviation Amendment 1 were both effective 
immediately at the time of their publication in 2013 and are still in 
effect.\17\
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    \15\ See HSAR class deviation, 13-01, Amendment 1, Homeland 
Security Acquisition Regulation 3052.225-70, Requirement for Use of 
Certain Domestic Commodities, (March 14, 2013) (``Deviation 
Amendment 1''), available at: https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01%E2%80%93amendment1_0_0_0_0_0_0.pdf (last accessed May 31, 2024).
    \16\ The clause would not apply to ``incidental amounts of 
cotton, other natural fibers, or wool incorporated in an end 
product, for which the estimated value of the cotton, other natural 
fibers, or wool is not more than 10 percent of the total price of 
the end product.''
    \17\ See Deviation 13-01, available at: https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf (last accessed Apr. 23, 2024); see also Deviation 
Amendment available at: https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01%E2%80%93amendment1_0_0_0_0_0_0.pdf (last accessed May 31, 2024).
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II. Discussion of Comments and the Final Rule

    Interested parties were given until September 23, 2024, to comment 
on the NPRM. DHS received two public comments, neither of which were 
substantive. DHS received one comment that was outside the scope of the 
rule, and another comment that supported the rule. This final rule 
amends the HSAR to better clarify how DHS complies with the Kissell 
Amendment including codifying certain requirements from Deviation 13-01 
and Deviation Amendment 1.
    Consistent with Deviation 13-01 this final rule, defines the term 
``end item'' to mean ``supplies delivered under a line item of a 
contract.'' See 48 CFR 3025.7001(c). As ``end item'' is the term used 
in the Kissell Amendment, DHS believes that defining and using the 
statutory term ``end item'' in the HSAR provisions applicable to the 
Kissell Amendment will also provide clarity.
    This final rule also amends 48 CFR 3025.7000 to explain that this 
provision applies to the Kissell Amendment, the subject of this 
subpart; as well as the description of the type of funds to which the 
Kissell Amendment applies consistent with current practice and 
Deviation 13-01. As explained in the NPRM, DHS issued Deviation 13-01 
on March 5, 2013, and since then the Kissell Amendment has applied to 
``contracts, exercising of an option and orders entered into on or 
after August 16, 2009.'' \18\
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    \18\ See Deviation 13-01, available at: https://www.dhs.gov/sites/default/files/publications/cpo-HSARclassdeviation13-01_0_0_0_0_0.pdf (last accessed May 31, 2024).
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    Consistent with Deviation 13-01 and current practice this final 
rule clarifies that the Kissell restrictions apply to all contracts, 
options and orders entered into on or after August 16, 2009. See 48 CFR 
3025.7002-1. In addition, this final rule updates the provisions 
impacting the De Minimis Exception consistent with Deviation Amendment 
1 to use the statutory term `end item' where appropriate. See, e.g., 48 
CFR 3025.7002-2 and 3052.225-70(d)(2).
    Further, this final rule includes the Kissell amendment under the 
applicable legal authorities. It also fixes a typographical error to 
correctly reference 48 CFR 3025.7002-3 when mentioning the regulatory 
provision for specific application of trade agreements. See 48 CFR 
3025.7002-2(h).
    Accordingly, DHS adopts the NPRM as final, amending 48 CFR part 
3025, Foreign Acquisitions, and 48 CFR part 3052, Solicitation 
Provisions and Contract Clauses.

III. Regulatory Analyses

A. Executive Orders 12866, 13563, and 14094

    Executive Order 12866 (Regulatory Planning and Review), as amended 
by Executive Order 14094 (Modernizing Regulatory Review), and Executive 
Order 13563 (Improving Regulation and Regulatory Review) direct 
agencies to assess the costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility.
    The Office of Management and Budget (OMB) has not designated this 
rule a significant regulatory action under section 3(f) of Executive 
Order 12866, as amended by Executive Order 14094. Accordingly, OMB has 
not reviewed this regulatory action.
Need for the Rule
    This final rule codifies the requirements as set forth in the 
Deviation 13-01 and Deviation Amendment 1, to provide clarity and 
consistency, and align the HSAR with existing DHS practice. DHS is not 
newly implementing the Kissell Amendment, but is, as described above, 
amending the existing regulation to clarify the type of funds to which 
the Kissell Amendment, including the De Minimis Exception, applies.
Benefits and Costs of the Final Rule
    The benefits and costs of a regulation are generally measured 
against a no-action baseline, which is a reasonable forecast of the way 
the world would look absent the regulatory action being assessed.\19\ 
This final rule will not result in new costs since DHS has implemented 
the changes through Deviation 13-01 and Deviation Amendment 1, both 
issued in 2013. The changes to the HSAR will promote clarity and fuller 
understanding of the Kissell Amendment regulatory requirements by 
agency contracting officers as well as potential DHS vendors. This 
additional clarity will be a benefit to industry as improved

[[Page 92851]]

contracting officer understanding of the regulatory requirements helps 
ensure that DHS applies standards similarly across contracting actions, 
making it easier for industry to comply with DHS requirements. A 
summary of the costs and benefits of the rule is shown below in Exhibit 
1.
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    \19\ See OMB Circular A-4, p, 11 (Nov. 9, 2023) (accessible at 
https://www.whitehouse.gov/wp-content/uploads/2023/11/CircularA-4.pdf).

                 Exhibit 1--Summary of Final Rule Changes and Economic Impacts of the Final Rule
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                                          Description of the
         Final CFR provision                    change                   Costs                   Benefits
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48 CFR 3025.7000 Scope of Subpart;     Corrects language to     No new costs since DHS   Provides clarification
 and CFR 3025.7002-1 Restrictions.      clarify that Kissell     has already              on applicability and
                                        Amendment applies to     implemented the          ensures consistency
                                        all contracts, options   changes via Deviation    between the HSAR and
                                        and orders entered       13-01 issued in March    existing DHS practice.
                                        into on or after         2013.
                                        August 16, 2009, and
                                        removes appropriation
                                        date from the scope
                                        criteria.
48 CFR 3025.7001 Definitions; 48 CFR   Changes terminology      No new costs since DHS   Provides clarity on
 3025.7002-1 Restrictions; 48 CFR       from ``end product''     has already              terminology and
 3025.7002-2 Exceptions; 48 CFR         to ``end item'' to       incorporated the ``end   ensures consistency
 3052.225-70 Requirement for Use of     consistently reflect     item'' definition        between the HSAR and
 Certain Domestic Commodities.          Kissell Amendment        through Deviation        existing DHS practice.
                                        applicability of 10%     Amendment 1 issued in
                                        De Minimis Exception.    March 2013.
48 CFR 3025.7002-2 Exceptions........  Editorial correction to  No cost................  Provides clarification.
                                        CFR reference relating
                                        to application of
                                        trade agreements.
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B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996, Public Law 104-121, (Mar. 29, 1996), requires Federal agencies to 
consider the potential impact of regulations on small businesses, small 
governmental jurisdictions, and small organizations during the 
development of their rules. The term ``small entities'' comprises small 
businesses, not-for-profit organizations that are independently owned 
and operated and are not dominant in their fields, or governmental 
jurisdictions with populations of less than 50,000. This final rule 
will provide clarity and consistency between the HSAR and existing DHS 
practice as set forth in Deviation 13-01 and Deviation Amendment 1; and 
does not directly mandate any actions or requirements that will result 
in burdens for small entities. Therefore, DHS certifies this final rule 
will not have a significant economic impact on a substantial number of 
small entities within the meaning of the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq.

C. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. 3501-35210).

D. National Environmental Policy Act

    Section 102 of the National Environmental Policy Act of 1969 
(NEPA), Public Law 91-190, 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321 
et seq.), as amended, requires Federal agencies to evaluate the impacts 
of major Federal actions that may significantly affect the human 
environment, consider alternatives actions provide public notice and 
opportunity to comment, and properly document its analysis. DHS and its 
agency components analyzed the actions in this rule to determine 
whether NEPA applies to them and, if so, what level of documentation 
and analysis is required.
    DHS Directive 023-01, Rev. 01 and DHS Instruction Manual 023-01-
001-01, Rev. 01 (Instruction Manual) establish the policies and 
procedures DHS and its component agencies use to comply with NEPA and 
the Council on Environmental Quality regulations for implementing NEPA 
codified in 40 CFR parts 1500-1508. The CEQ regulations allow Federal 
agencies to establish, in their implementing procedures, with CEQ 
review and concurrence, categories of actions (``categorical 
exclusions'') that experience has shown do not, individually or in the 
aggregate, have a significant effect on the human environment and, 
therefore, do not require preparation of an environmental assessment or 
environmental impact statement. 40 CFR 1501.4, 1507.3(e)(2)(ii). 
Appendix A of the Instruction Manual lists the DHS categorical 
exclusions.
    Under DHS NEPA implementing procedures, for an action to be 
categorically excluded, it must satisfy each of the following three 
conditions: (1) the entire action clearly fits within one or more 
categorical exclusions; (2) the action is not a piece of a larger 
action; and (3) no extraordinary circumstances exist that create the 
potential for a significant environmental effect.
    This final rule amends the HSAR to better clarify how DHS complies 
with the Kissell Amendment. This includes codifying requirements as set 
forth in Deviation 13-01 and Deviation Amendment 1 that are currently 
in effect.
    DHS is not aware of any significant impact on the environment, or 
any change in environmental effect that will result from this final 
rule. DHS finds promulgation of the rule clearly fits within 
categorical exclusion A3, established in the Department's NEPA 
implementing procedures.
    This final rule is a standalone rule and is not part of any larger 
action, and will not result in any major Federal action that will 
significantly affect the quality of the human environment. Furthermore, 
DHS has determined that no extraordinary circumstances exist that will 
create the potential for significant environmental effects. Therefore, 
this final rule is categorically excluded from further NEPA review and 
documentation.

List of Subjects in 48 CFR Parts 3025 and 3052

    Government procurement.

    Accordingly, for the reasons set forth in the preamble, DHS amends 
48 CFR parts 3025 and 3052 as follows:

PART 3025--FOREIGN ACQUISITION

0
1. The authority citation for part 3025 is revised to read as follows:

    Authority:  5 U.S.C. 301-302, 6 U.S.C. 453b, 41 U.S.C. 1303, 41 
U.S.C. 1707, 41 U.S.C. 1702, and 48 CFR subpart 1.3.

0
2. Revise section 3025.7000 to read as follows:

3025.7000  Scope of subpart.

    This subpart implements section 604 of the American Recovery and 
Reinvestment Act of 2009, Public Law 111-5.

0
3. In section 3025.7001, revise paragraphs (a) through (d) to read as 
follows:

[[Page 92852]]

3025.7001  Definitions.

* * * * *
    (a) ``Commercial,'' as applied to an item described in (HSAR) 48 
CFR 3025.7002-1, means an item of supply, whether an end item or 
component, that meets the definition of ``commercial item'' set forth 
in (FAR) 48 CFR 2.101.
    (b) ``Component'' means any item supplied to the Government as part 
of an end item or of another component.
    (c) ``End item'' means supplies delivered under a line item of a 
contract.
    (d) ``Non-commercial,'' as applied to an item described in (HSAR) 
48 CFR 3025.7002-1, means an item of supply, whether an end item or 
component, that does not meet the definition of ``commercial item'' set 
forth in (FAR) 48 CFR 2.101.
* * * * *

0
4. In section 3025.7002-1, revise the introductory text to read as 
follows:

3025.7002-1  Restrictions.

    The following restrictions implement section 604 of the American 
Recovery and Reinvestment Act of 2009, Public Law 111-5, and they apply 
to all contracts, options and orders entered into on or after August 
16, 2009. Except as provided in (HSAR) 48 CFR 3025.7002-2, do not 
acquire, either as end items or components, any item listed in 
paragraph (a) or (b) of this section, if the item is directly related 
to the national security interests of the United States and the item 
has not been grown, reprocessed, reused, or produced in the United 
States:
* * * * *

0
5. In section 3025.7002-2, revise paragraphs (d), (g), and (h) to read 
as follows:

3025.7002-2  Exceptions.

* * * * *
    (d) Acquisitions of items listed in (FAR) 48 CFR 25.104.
* * * * *
    (g) The acquisition of covered items in 3052.7002-1(a) and (b) 
containing non-compliant fibers when the total value of the non-
compliant fibers contained in the end item does not exceed 10 percent 
of the total purchase price of the end item.
    (h) Acquisitions of items otherwise covered by (HSAR) 48 CFR 
3025.7002-1(a) and (b) for which restricting a procurement of the items 
to those that have been grown, reprocessed, reused, or produced in the 
United States would be inconsistent with United States obligations 
under international agreements. Acquisitions of products that are 
eligible products per (FAR) 48 CFR subpart 25.4 are not covered by 
these restrictions; see (HSAR) 48 CFR 3025.7002-3 for specific 
application of trade agreements.

PART 3052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. The authority citation for part 3052 is revised to read as follows:

    Authority:  5 U.S.C. 301-302, 6 U.S.C. 453b, 41 U.S.C. 1707, 41 
U.S.C. 1702, 41 U.S.C. 1303(a)(2), 48 CFR part 1, subpart 1.3. and 
DHS Delegation Number 0702.

0
7. In section 3052.225-70, revise the clause date and paragraphs (a)(1) 
through (4), (b) introductory text, (c) introductory text, and (d)(2) 
to read as follows:

3052.225-70  Requirement for Use of Certain Domestic Commodities.

* * * * *
Requirement for Use of Certain Domestic Commodities NOV 2024
    (a) * * *
    (1) ``Commercial,'' as applied to an item described in paragraph(b) 
of this clause, means an item of supply, whether an end item or 
component, that meets the definition of ``commercial item'' set forth 
in (FAR) 48 CFR 2.101.
    (2) ``Component'' means any item supplied to the Government as part 
of an end item or of another component.
    (3) ``End item'' means supplies delivered under a line item of this 
contract.
    (4) ``Non-commercial,'' as applied to an item described in 
paragraph (b) or (c) of this clause, means an item of supply, whether 
an end item or component, that does not meet the definition of 
``commercial item'' set forth in (FAR) 48 CFR 2.101.
* * * * *
    (b) The Contractor shall deliver under this contract only such of 
the following commercial or non-commercial items, either as end items 
or components, that have been grown, reprocessed, reused, or produced 
in the United States:
* * * * *
    (c) The Contractor shall deliver under this contract only such of 
the following non-commercial items, either as end items or components, 
that have been grown, reprocessed, reused, or produced in the United 
States:
* * * * *
    (d) * * *
    (2) To the covered items in paragraphs (b) and (c) of this clause 
containing non-compliant fibers when the total value of the non-
compliant fibers contained in the end item does not exceed 10 percent 
of the total purchase price of the end item; or
* * * * *

Paul Courtney,
Chief Procurement Officer, U.S. Department of Homeland Security.
[FR Doc. 2024-27456 Filed 11-22-24; 8:45 am]
BILLING CODE 9112-FE-P
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