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[Federal Register Volume 89, Number 241 (Monday, December 16, 2024)]
[Notices]
[Pages 101688-101691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29489]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No.: DOT-OST-2024-0129]

Notice of Proposed Waiver of Buy America Requirements for the 
Pacific Island Territories and the Freely Associated States

ACTION: Notice; request for comments.

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SUMMARY: The Department of Transportation (DOT) is seeking comments on 
a proposed general applicability public interest waiver of the 
requirements of section 70914(a) of the Build America, Buy America Act 
(BABA) and related domestic preference statutes administered by DOT and 
its Operating Administrations (OAs) for Federal financial assistance 
awarded for infrastructure projects located in the Commonwealth of 
Northern Mariana Islands (CNMI), Guam, and American Samoa, collectively 
referred to as the Pacific Island territories. The proposed waiver 
would also apply to discretionary grant assistance provided by DOT to 
the Freely Associated States (the Republic of Palau, Republic of the 
Marshall Islands, and Federated States of Micronesia) in the Pacific 
that is subject to a domestic preference statute (which does not 
include BABA, as that statute only applies to the United States and its 
territories). The waiver will remain in effect for five years after the 
effective date of the final waiver.

DATES: Comments must be received by December 31, 2024.

ADDRESSES: Please submit your comments to the U.S. Government 
electronic docket site at https://www.regulations.gov, Docket: DOT-OST-
2024-0129.
    Note: All submissions received, including any personal information 
therein, will be posted without change or alteration to https://www.regulations.gov. For more information, you may review DOT's 
complete Privacy Act Statement published in the Federal Register on 
April 11, 2000 (65 FR 19477).

FOR FURTHER INFORMATION CONTACT: For questions about this notice, 
please contact Elizabeth Fox, DOT Office of the Assistant Secretary for 
Transportation Policy, at [email protected] or at 202-366-4540. For 
legal questions, please contact Jennifer Kirby-McLemore, DOT Office of 
the General Counsel, 405-446-6883, or via email at 
[email protected].

SUPPLEMENTARY INFORMATION: 

Background

    The Buy America preferences set forth in section 70914(a) of BABA 
\1\ require that all iron, steel, manufactured products, and 
construction materials used for infrastructure projects in the United 
States under Federal financial assistance awards be produced in the 
United States.
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    \1\ The Build America, Buy America Act was included as title XI, 
subtitle A of the Infrastructure Investment and Jobs Act (IIJA) 
(Pub. L. 117-58).
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    Under section 70914(b) and in accordance with the Office of 
Management and Budget (OMB)'s Guidance Memorandum M-24-02, 
Implementation Guidance on Application of Buy America Preference in 
Federal Financial Assistance Programs for Infrastructure, DOT may waive 
the application of BABA requirements in any case in which it finds 
that: (i) applying the domestic content procurement preference would be 
inconsistent with the public interest; (ii) types of iron, steel, 
manufactured products, or construction materials are not produced in 
the U.S. in sufficient and reasonably available quantities or of a 
satisfactory quality; or (iii) the inclusion of iron, steel, 
manufactured products, or construction materials produced in the U.S. 
will increase the cost of the overall project by more than 25 percent.
    BABA also provides that the preferences under section 70914 apply

[[Page 101689]]

only to the extent that a domestic content procurement preference as 
described in section 70914 does not already apply to iron, steel, 
manufactured products, and construction materials. IIJA section 
70917(a)-(b). Federal financial assistance programs administered by 
DOT's Operating Administrations (OAs) \2\ are subject to a variety of 
mode-specific statutes that apply particular Buy America \3\ 
requirements to iron, steel, and manufactured products, including 49 
U.S.C. 50101 (FAA); 23 U.S.C. 313 (FHWA); 49 U.S.C. 5323(j) (FTA); and 
46 U.S.C. 54101(d)(2) (MARAD). Recent annual appropriations acts have 
also required DOT to apply the Buy American Act (41 U.S.C. chapter 83) 
to funds appropriated under those acts,\4\ where a mode-specific 
statute is not in place. These statutes also allow for waivers of the 
Buy America requirements to be issued when the Department determines 
that doing so is in the public interest.
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    \2\ DOT OAs that provide or administer financial assistance 
covered under this proposed waiver include the Federal Aviation 
Administration (FAA); Federal Highway Administration (FHWA); Federal 
Transit Administration (FTA); and the Maritime Administration 
(MARAD).
    \3\ In this notice, references to ``Buy America'' include 
domestic preference laws referred to ``Buy American'' that apply to 
DOT financial assistance programs.
    \4\ For example, section 409 of the Transportation, Housing and 
Urban Development, and Related Agencies Appropriations Act, 2024 
states that ``no funds appropriated pursuant to this Act may be 
expended by an entity unless the entity agrees that in expending the 
assistance the entity will comply with sections 2 through 4 of the 
Act of March 3, 1933 (41 U.S.C. 8301-8305, popularly known as the 
`Buy American Act').''
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    DOT and its OAs provide financial assistance to the three Pacific 
Island territories of Guam, American Samoa, and CNMI through both 
discretionary grants and allocated programs, including assistance 
programs for highways and bridges, public transportation, airports, and 
port facilities. The Freely Associated States (the Republic of Palau, 
Republic of the Marshall Islands, and Federated States of Micronesia) 
in the Pacific region are also eligible recipients of discretionary 
grants under FAA's Airport Improvement Program (AIP).
    During FY 2024, DOT OAs provided more than $132.7 million in 
financial assistance for at least 20 capital projects in the Pacific 
Island territories under various programs where infrastructure is an 
eligible activity and may be subject to BABA or other DOT existing Buy 
America requirements. DOT also provided $47.6 million in AIP 
discretionary grants to the Freely Associated States in the Pacific 
region for 3 projects during that time.
    On April 29, 2024, DOT issued a temporary general applicability 
waiver of the requirements of section 70914(a) of BABA and related 
domestic preference statutes administered by DOT and its OAs. The DOT 
waiver was part of an interagency effort, led by the OMB, to provide 
time for DOT and other infrastructure agencies to collect and analyze 
evidence to determine if a long-term waiver of these requirements is in 
the public interest and allow time for DOT and its OAs to offer 
technical assistance to potential assistance recipients in the remote 
communities in the Pacific Island territories and Freely Associated 
States. The temporary waiver expires on March 1, 2025.
    During the temporary general applicability waiver period, DOT has 
worked with OMB's Made in America Office (MIAO) and with other 
infrastructure agencies to better understand the local manufacturing 
environment, consider how to best balance the equities for residents of 
the Pacific Island territories and domestic suppliers, and explore ways 
to potentially ease supply chain challenges for infrastructure projects 
in those territories. The Pacific Islands are over 5,000 miles from the 
mainland United States and must import products via air or sea. These 
economies have few local heavy manufacturers and largely rely on 
regional supply chains from east Asia, Australia, and New Zealand. Most 
goods, equipment, materials, and supplies are imported and rely on 
shipping with extended timelines and unpredictable shipping cost 
fluctuations. Moreover, materials sourced from the mainland U.S. lead 
to additional shipping fees and longer lead times, thus significantly 
extending construction activity schedules.
    Along with other Federal agencies, DOT has reviewed the U.S. 
International Trade Commission's 2023 report ``U.S.-Pacific Islands 
Trade and Investment: Impediments and Opportunities'', which noted the 
geographic isolation, high costs of shipping, dependence on imports, 
regulatory barriers, limited economies of scale, and environmental 
challenges as persistent barriers that the Pacific Island territories 
face. Additionally, the lack of available land on the Pacific Island 
territories creates barriers for developing new manufacturing and 
assembly facilities. Those infrastructure products readily available 
and produced locally on the Pacific Islands, such as aggregates and 
cement products, are mostly statutorily exempt from BABA requirements. 
For these reasons, the DOT remains concerned that complying with the 
domestic sourcing requirements may increase already elevated project 
time and costs.
    In considering this waiver, DOT consulted with the relevant Federal 
assistance programs in the respective OAs, including the regional 
offices in those agencies that directly administer DOT funding programs 
in the Pacific Island territories and Freely Associated States. DOT 
also relied on other communications that it has received from 
stakeholders in those territories. For example, CNMI and Guam have 
cited their isolated location in the Western Pacific and reliance on 
ocean freight as the only mode of transporting commodities to the 
island as creating significant challenges in obtaining materials from 
domestic sources, with impacts on both project costs and delivery 
schedules. The two territories have also indicated that shipping 
construction materials from the continental United States raises 
shipping costs by approximately 30 percent above the cost to ship 
directly to the islands from Asia.
    In August 2024, the U.S. Department of the Interior (DOI) hosted 
the third Territorial Climate and Infrastructure Workshop in Honolulu, 
HI, which included many representatives from various territorial 
agencies and departments. During the workshop, DOI and DOT led a 
session on the Build America, Buy America Act, during which many 
participants described the structural challenges the territories face 
in complying with Buy America requirements and the desire for relief 
due to the significant cost increases and delays in project timelines 
that would ensue. In addition, in February 2023, DOI hosted the 
Interagency Group on Insular Areas, at which the governors of the 
Territories expressed concerns related to BABA implementation and 
potential project delays and requested that Federal agencies be 
flexible in these requirements, including consideration of waivers.
    Additionally, representatives from American Samoa have indicated to 
the Federal Emergency Management Agency that ``As a containerized 
community, our territories depend on goods, equipment, materials, and 
supplies to be imported.'' They further stated that ``we can purchase 
equipment from foreign countries closer to American Samoa and with 
reasonable prices and shorter shipping time.'' American Samoa 
representatives also noted that availability of materials from nearby 
foreign countries such as New Zealand and Australia would result in a 
significant cost savings to the grantors.

[[Page 101690]]

Proposed Waiver and Request for Comments

    DOT is proposing to use its authority under section 70914(b)(1) to 
waive the Act's Buy America preferences for iron and steel, 
manufactured products, and construction materials used in 
infrastructure projects located within the Pacific Island territories 
of CNMI, Guam, or American Samoa and funded under DOT-administered 
financial assistance programs, on the basis that doing so would be in 
the public interest. The proposed waiver would apply to all awards 
obligated after the effective date and, in the case of awards obligated 
prior to the effective date, the proposed waiver would apply to all 
expenditures for non-domestic iron, steel, manufactured products, and 
construction materials incurred after the effective date. The proposed 
waiver would not apply to the following products that have been 
identified by OMB as critical supply chains that warrant special 
consideration:
     Telecommunications infrastructure:
    [cir] Telecommunications equipment used to transmit and receive 
digital signals across constructed networks (e.g., vaults, cabinets, 
routers, switches, optical line terminals (OLTs), optical network 
terminals (ONTs), wi-fi capable customer equipment, and other 
electronic hardware used to connect the network). This includes:
    [ssquf] Video surveillance equipment, including any equipment that 
is used in fixed and mobile networks that provides advanced 
communications service in the form of a video surveillance service, 
provided the equipment includes or uses electronic components. This 
encompasses any equipment that can be used in a fixed or mobile 
broadband network to enable users to originate and receive high quality 
voice, data, graphics, and video telecommunications using technology 
with connection speeds of at least 200 kbps in either direction.\5\
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    \5\ https://www.fcc.gov/laboratory-division/equipment-authorization-approval-guide/equipment-authorization-system#step2.
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    [ssquf] Broadcasting equipment, including radio frequency devices 
contained in electronic-electrical products that are capable of 
emitting radio frequency energy by radiation, conduction, or other 
means. These products have the potential to cause interference to radio 
services operating in the radio frequency range of 9 kHz to 3000 
GHz.\6\
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    \6\ https://www.fcc.gov/oet/ea/rfdevice.
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    [cir] Broadband equipment (e.g., fiber/coax cable, conduit, 
pedestals, handholes, tower structures, and other physical components 
used to connect to telecommunication equipment)
     Grid-connected utility-scale energy generation and 
stationary storage (>5MW)
     Cargo handling equipment, including cranes, that are 
manufactured by or contain any networks, operating systems, or software 
identified in U.S. Maritime Advisory 2024-0026 or successor advisories 
\7\
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    \7\ 2024-002-Worldwide-Foreign Adversarial Technological, 
Physical, and Cyber Influence https://www.maritime.dot.gov/msci/2024-002-worldwide-foreign-adversarial-technological-physical-and-cyber-influence.
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    While these items would be excluded from this general waiver, DOT 
recognizes that purchases of these items from non-domestic sources as 
part of a federally-assisted project may be warranted in certain 
circumstances. For those individual projects, DOT and its OAs will 
consider requests for potential waivers of BABA or other Buy America 
requirements on a case-by-case basis, with special attention to any 
strategic security issues that may be associated with those purchases.
    DOT specifically requests comment on the items that have been 
identified by OMB as critical supply chains that warrant special 
consideration and whether any of those items should be removed from the 
list, for example broadband equipment. If items are removed from this 
list following the public comment period, then those products would be 
included within the scope of the final waiver.
    Because many DOT-administered financial assistance programs are 
also subject to program-specific domestic preference requirements, the 
waiver proposed in this notice would also apply to those requirements. 
Specifically, the waiver would also be an exercise of DOT's authority 
to issue public interest waivers under 23 U.S.C. 313(b)(1), 49 U.S.C. 
5323(j), 46 U.S.C. 54101(d)(2)(B)(i)(I), 49 U.S.C. 50101(b)(1), and 41 
U.S.C. chapter 83. Under those DOT authorities, the proposed waiver 
would also apply to projects in the Freely Associated States (the 
Republic of Palau, Republic of the Marshall Islands, and Federated 
States of Micronesia).\8\
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    \8\ The proposed waiver under section 70914(b)(1) of BABA 
excludes projects in the Freely Associated States because the 
requirements under section 70914(a) are applicable only to 
infrastructure projects ``in the United States'' and, therefore, the 
BABA requirements to not apply to projects in the Freely Associated 
States. However, airports located in the Freely Associated States 
are eligible recipients under FAA's Airport Improvement Program, and 
the Buy American requirements specific to that program would thus 
also apply to the Freely Associated States.
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    The proposed duration of the waiver is five years after the 
effective date of the final waiver. The Department will periodically 
review this waiver to assess whether it remains necessary to the 
fulfillment of DOT's missions and goals and consistent with applicable 
legal authorities, such as the IIJA, Executive Order 14005, and OMB M-
24-02. The Department may, based on the results of that review, 
terminate the waiver, or take action to develop a new waiver in 
consultation with the MIAO.
    Without the waiver, DOT-assisted infrastructure projects located 
within the Pacific Island territories will experience challenges with 
product delivery, availability, reliability, and project scheduling. 
Infrastructure project schedules rely on readily available products 
delivered within reasonable timeframes. Due to the extreme distances 
that manufacturers for products produced in the mainland United States 
would have to ship products to the Pacific Island territories and due 
to the lack of existing local product supply networks for these 
products, manufacturers may not be able to assure on-time delivery of 
compliant products and associated projects. As a result, the Pacific 
Island territories could potentially face unreasonable scheduling 
uncertainty.
    Under OMB Memorandum M-24-02, 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. DOT's analysis has concluded that this assessment is 
not applicable to this waiver.
    DOT will consider all comments received in the initial 15-day 
comment period during our consideration of the proposed waiver, as 
required by section 70914(c)(2) of IIJA. Comments received after this 
period, but before notice of our finding is published in the Federal 
Register, will be considered to the extent practicable. Pursuant to 
section 117 of the SAFETEA-LU Technical Corrections Act of 2008 (Pub. 
L. 110-244, 122 Stat. 1572), if FHWA makes a finding that a waiver is 
appropriate under 23 U.S.C. 313(b), FHWA will also invite public 
comment on this finding for an additional 5 days following the date of 
publication of the finding.

[[Page 101691]]

Comments received during that period will be reviewed, but the finding 
will continue to remain valid. Those comments may influence DOT/FHWA's 
decision to terminate or modify a finding.

    Issued in Washington, DC.
Polly E. Trottenberg,
Deputy Secretary.
[FR Doc. 2024-29489 Filed 12-13-24; 8:45 am]
BILLING CODE 4910-9X-P
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