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[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Notices]
[Pages 3999-4002]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00713]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

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

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 finalizing a 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 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. This action also terminates the previously issued 
temporary general applicability waiver for this region.

DATES: The waiver is applicable to awards that are obligated on or 
after January 10, 2025, until January 9, 2030.

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 
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 Sec.  70917(a)-
(b). Federal financial assistance programs administered by DOT's 
Operating Administrations (OAs) \2\ are

[[Page 4000]]

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(a) (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 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.
    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.

Issuance of Waiver and Discussion of Comments Received

    On December 16, 2024, DOT published a proposed Buy America waiver 
for projects located within Pacific Island territories of CNMI, Guam, 
or American Samoa and funded under DOT-administered financial 
assistance programs in the Federal Register (89 FR 101688). DOT 
received 12 comments on the proposed waiver from individuals and 
government representatives in both the Pacific

[[Page 4001]]

Island territories and the Freely Associated States and from the 
general public, a steel manufacturer, and a trade organization. Ten of 
the comments received were supportive of the waiver as proposed, while 
two expressed opposition to the waiver.
    Supportive comments noted the difficulties in complying with 
domestic content requirements that the distance from the mainland US 
creates. Shipping materials from the U.S. mainland incurs additional 
costs and lengthy delays that, in turn, imperil project timelines and 
budgets, with one commenter citing cost increases of 50-100%. 
Supportive commenters also noted that the small size of the 
infrastructure projects can also create compliance issues noting 
difficulties contractors face in obtaining Buy America certifications 
from manufacturers for small orders. Additionally, the length of the 
waiver was supported by more than one commenter, noting that the time 
will help entice contractors to bid on their projects and ensure 
projects are completed on time and on budget.
    One commenter requested that the waiver cover specific types of 
vehicles and associated infrastructure. DOT appreciates this comment 
and notes that as the waiver would apply to both manufactured products 
and iron and steel, vehicles should be covered, regardless of which 
category they fall into. Another supportive commenter requested that 
the waiver apply standards to the items procured. DOT notes that the 
waiver only applies to the domestic content requirements, and that the 
materials procured must still meet the necessary performance criteria 
and be suitable for their intended applications, regardless of their 
manufacturing location.
    One commenter raised concerns that the proposed waiver would result 
in tax dollars being utilized for the sourcing of iron and steel, 
manufactured products, and construction materials produced in countries 
of concern or by entities of concern. The commenter also raised 
concerns that the proposed waiver would render the territories' 
projects less resilient because they could foster a reliance on 
regional, rather than allied trading partners. Though DOT acknowledges 
this concern, DOT is confident that, through the implementation of 
existing prohibitions and the exclusion of the specified list of items 
provided in the waiver, this concern is addressed to the fullest extent 
possible under available legal authorities. With respect to existing 
prohibitions, various DOT OAs have prohibitions against use of funds 
for rolling stock purchases from certain entities found at 49 U.S.C. 
5323(u) and 49 U.S.C. 50101(d). This waiver does not impact such 
prohibitions. Furthermore, DOT notes that the waiver applies only to 
domestic sourcing requirements; thus, all other restrictions on the use 
of Federal funding must still be followed, including any funding 
specific restrictions on purchases outside the Buy American statutes, 
and any limitations on funding imposed by the notice of funding 
opportunity or grant agreements. Lastly, the list of products excluded 
from this waiver was crafted with this concern in mind; accordingly, 
DOT incorporated this list of excluded products in this waiver to 
protect against related national security concerns. Taken together, 
these safeguards will ensure that the Pacific Island territories are 
able to rely on nearby allied trading partners for their purchases of 
materials, thereby improving resilience for their critical 
infrastructure projects.
    One commenter questioned DOT's conclusion that the assessment 
required under OMB Memorandum M-24-02 regarding dumping or injuriously 
subsidized products is not applicable to this waiver. To mitigate this 
concern, DOT has added language noting that the cost considerations 
driving this public interest waiver are not due to the use of dumped 
steel, iron, or manufactured products or of injuriously subsidized 
steel, iron, or manufactured products but rather to the increased costs 
of shipping domestic items from the mainland U.S.
    A commenter also questioned DOT's authority to issue a waiver for a 
``deficient program,'' as defined in sections 70912 and 70913(c) of 
BABA. However, DOT notes the identification of a program as 
``deficient'' under the BABA statute does not have any bearing on the 
agency's ability to issue new waivers of Buy America requirements under 
the respective statutes applicable to those programs.\5\ The commenter 
also indicated that they were ``unaware of any instance in which the 
1933 BAA has been deemed applicable to federally assisted building and 
infrastructure construction.'' DOT notes that provisions included in 
annual appropriations acts in recent fiscal years provide the basis for 
applying Buy American Act requirements to financial assistance programs 
administered by DOT.\6\
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    \5\ For more discussion of ``deficient programs,'' see DOT's 
Identification of Federal Financial Assistance Infrastructure 
Programs Subject to the Build America, Buy America Provisions of the 
Infrastructure Investment and Jobs Act, January 2022, available at 
https://www.transportation.gov/office-policy/transportation-policy/made-in-america/build-america-buy-america-60-day-report.
    \6\ See, for example, section 409 of the Transportation, Housing 
and Urban Development, and Related Agencies Appropriations Act, 
2024.
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    Some of the commenters, both supporting and opposing, either 
directly or indirectly referenced the temporary waiver issued by DOT on 
April 29, 2024, apparently viewing the proposed waiver as an extension 
of that waiver. In the Findings section below, DOT is clarifying that 
this is a new, longer-duration waiver with a different public interest 
basis and justification, and the temporary waiver issued April 29, 
2024, is being terminated concurrent with issuance of this waiver.
    Finally, one commenter stated that the 15-day comment period on the 
proposed waiver was insufficient. DOT notes that the comment period 
provided for this waiver is consistent with the requirements of BABA 
and related statutes for new Buy America waivers.

Finding on Waiver and Termination of Temporary Waiver

    DOT is using 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 waiver applies to all awards obligated after the effective date 
and, in the case of awards obligated prior to the effective date, the 
waiver applies to all expenditures for non-domestic iron, steel, 
manufactured products, and construction materials incurred after the 
effective date. The waiver does 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

[[Page 4002]]

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.\7\
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    \7\ 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.\8\
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    \8\ 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.\9\
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    \9\ 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 are 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.
    Separately, DOT also notes that the waiver does not waive the 
requirements of 49 U.S.C. 50101(d) or 49 U.S.C. 5323(u), or any other 
requirements for federal financial assistance. Because many DOT-
administered financial assistance programs are also subject to program-
specific domestic preference requirements, the waiver 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 waiver also applies to projects in the Freely 
Associated States (the Republic of Palau, Republic of the Marshall 
Islands, and Federated States of Micronesia).\10\
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    \10\ 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 duration of the waiver will be for five years, from its 
effective date of January 10, 2025, until January 9, 2030. 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.
    This action is a new public interest waiver being issued on the 
basis of the unique circumstances and ongoing challenges faced by the 
Pacific Island territories and Freely Associated States due to their 
remote location. Accordingly, effective with the issuance of the new 
waiver on January 10, 2025, DOT is also terminating the existing 
temporary general applicability waiver for the Pacific Island 
Territories, which DOT issued on April 29, 2024, to provide time to 
collect and analyze evidence to determine if a more targeted waiver of 
these requirements would be in the public interest.
    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 not found that the cost 
considerations driving this public interest waiver are due to the use 
of dumped steel, iron, or manufactured products or of injuriously 
subsidized steel, iron, or manufactured products but rather to the 
increased costs of shipping domestic items from the mainland U.S.
    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 five days following 
the date of publication of the finding. 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, on January 8, 2025.
Polly E. Trottenberg,
Deputy Secretary.
[FR Doc. 2025-00713 Filed 1-14-25; 8:45 am]
BILLING CODE 4910-9X-P
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