[Federal Register Volume 74, Number 125 (Wednesday, July 1, 2009)]
[Notices]
[Pages 31402-31403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15511]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Rural Utilities Service


Notice of Limited Waiver of Section 1605 (Buy American 
Requirement) of the American Recovery and Reinvestment Act of 2009 
(ARRA) for the Broadband Initiatives Program

AGENCY: Rural Utilities Service, U.S. Department of Agriculture.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Rural Utilities Service (RUS) is hereby granting a limited 
waiver of the Buy American requirements of ARRA Section 1605 with 
respect to certain broadband equipment that will be used in projects 
funded under the Broadband Initiatives Program (BIP). This action 
permits the use of certain essential components of a modern broadband 
infrastructure as specified in section III of this notice.

DATES: Effective Date: July 1, 2009.

ADDRESSES: Send any correspondence regarding this order to David J. 
Villano, Assistant Administrator, Telecommunications Program, Rural 
Utilities Service, U.S. Department of Agriculture, 1400 Independence 
Avenue., SW., STOP 1590, Room 5151, Washington, DC 20250-1590.

FOR FURTHER INFORMATION CONTACT: Ken Kuchno, Director, Broadband 
Division, Rural Utilities Service, U.S. Department of Agriculture, 1400 
Independence Avenue., SW., STOP 1599, Room 2868-S, Washington, DC 
20250-1590.

SUPPLEMENTARY INFORMATION: In accordance with section 1605(c) of the 
Recovery Act and section 176.80 of the rules of the Office of 
Management and Budget (OMB), RUS hereby provides notice that it is 
granting a limited waiver of section 1605 of the Recovery Act with 
respect to certain broadband equipment that will be used in projects 
funded under BIP. (See American Recovery and Reinvestment Act of 2009, 
Public Law 111-5, Sec.  1605, 123 Stat. 115, 303 (Feb. 17, 2009) 
(``Recovery Act''); Requirements for Implementing Sections 1512, 1605, 
and 1606 of the American Recovery and Reinvestment Act of 2009 for 
Financial Assistance Awards, Interim Final Guidance, 74 FR 18449 (Apr. 
23, 2009) (codifying the Buy American provisions at 2 CFR part 176, 
subpart B) (``Buy American Guidance'')). The basis for this waiver is a 
public interest determination pursuant to section 1605(b)(1) of the 
Recovery Act.

I. Background

    The Recovery Act appropriates $2.5 billion in budget authority to 
RUS to establish BIP, through which RUS will provide grants, loans, and 
loan/grant combinations for broadband initiatives throughout the United 
States, including projects in unserved and underserved rural areas. 
Section 1605(a) of the Recovery Act, the ``Buy American'' provision, 
states that none of the funds appropriated by the Act, including the 
funds that have been dedicated BIP, ``may be used for a project for the 
construction, alteration, maintenance, or repair of a public building 
or public work unless all of the iron, steel, and manufactured goods 
used in the project are produced in the United States.'' \1\
---------------------------------------------------------------------------

    \1\ Because the Buy American provision applies only to public 
works and public buildings, completely private projects need not 
obtain a waiver to utilize iron, steel, and manufactured goods 
produced outside of the United States. Note, however, that public-
private partnerships are considered public for purposes of the Buy 
American limitation.
---------------------------------------------------------------------------

    Sections 1605(b) and (c) of the Recovery Act authorize the head of 
a Federal department or agency to waive the Buy American provision by 
finding that: (1) Applying the provision would be inconsistent with the 
public interest; (2) the relevant manufactured goods are not produced 
in the United States in sufficient and reasonably available quantities 
and of a satisfactory quality; or (3) the inclusion of the manufactured 
goods produced in the United States will increase the cost of the 
project by more than 25 percent. If the head of the Federal department 
or agency determines that it is necessary to waive application of the 
Buy American provision, then the head of the department or agency shall 
publish a detailed justification in the Federal Register. Finally, the 
Recovery Act states that the Buy American provision must be applied in 
a manner consistent with the United States' obligations under 
international agreements.

II. Public Interest Finding

    The Agency has determined that, as applied to certain broadband 
equipment used in a BIP project, the application of the Buy American 
provision would be inconsistent with the public interest.

[[Page 31403]]

(See Recovery Act, Sec.  1605(b)(1), 123 Stat. at 303.) A modern 
broadband network is generally composed of the following components: 
Broadband switching, routing, transport, access, customer premises 
equipment, end-user devices, and billing/operations systems. The Buy 
American provision would prohibit RUS from awarding a BIP grant, loan 
or loan/grant combination to a public applicant unless that applicant 
could certify that each element of each broadband network component 
containing iron, steel, and manufactured goods are produced in the 
United States. As explained more fully below, it would be difficult, if 
not impossible, for a BIP applicant to have certain knowledge of the 
manufacturing origins of each component of a broadband network, and the 
requirement to do so would be so overwhelmingly burdensome as to deter 
participation in the program. Requiring a BIP applicant to request a 
waiver on a case-by-case basis would also be such an administrative 
burden on the applicant as to discourage participation in the program 
and would increase RUS' time and costs for processing BIP applications 
for broadband infrastructure projects. Thus, implementing BIP without a 
limited programmatic waiver encompassing broadband network components 
would jeopardize the success of the program and undermine President 
Obama's broadband initiative.
    First, RUS recognizes that much of the finished products used to 
manage and operate broadband infrastructure and offer broadband service 
are manufactured outside of the United States. The manufacturing supply 
chain varies by product and changes constantly due to the influence of 
global supply and demand. The result is a very competitive and complex 
production landscape with components and end products being 
manufactured and assembled in a large number of countries. While, 
arguably, the Secretary could have relied on the ``non-availability'' 
exception for granting a waiver, the burden placed on the Department in 
sourcing and evaluating the availability of each component of broadband 
equipment would be significant, and the task of sourcing and evaluating 
would be difficult to complete given the speed with which Congress has 
told RUS to allocate funds under the Recovery Act. In addition, 
requiring public entities to document the origin of broadband equipment 
and their components in order to determine whether they fit within the 
scope of the Buy American provision would severely complicate those 
applicants' ability to apply for funds and would place an undue burden 
on State and local governments. Taken as a whole, these burdens would 
cause delays and would likely thwart the goal of Congress to 
``establish and implement the [BIP] grant, loan and loan/grant 
combination program as expeditiously as practicable,'' and the Recovery 
Act's requirement that RUS obligate all funds under BIP by September 
30, 2010. (See Recovery Act, Sec.  6001(d)(1)-(2), 123 Stat. at 513.)
    Second, a limited waiver will help facilitate the construction of 
modern broadband networks--an essential component of the Recovery Act. 
Applicants to BIP must have the flexibility to incorporate the most 
technically-advanced components into their infrastructure, and a 
limited waiver gives them the ability to incorporate the latest 
technologies. Third, consistent with the Recovery Act, a limited waiver 
will help stimulate job growth for construction workers, technicians, 
equipment designers, engineers, and others who will operate the 
broadband infrastructure. Fourth, while OMB has clarified which 
countries would be exempt from the Buy American provision, some of the 
key countries that produce broadband equipment would not be exempt. 
Finally, the broadband industry is very dynamic and global, and 
equipment can change over the course of a build out. Subjecting public 
applicants for BIP funds to the Buy American provision ultimately would 
slow broadband deployment and undermine President Obama's broadband 
initiatives.

III. Waiver

    Based on the public interest finding discussed above and pursuant 
to section 1605(c), RUS is granting a limited waiver of the Recovery 
Act's Buy American requirements with respect to BIP funds used for the 
following essential components of a modern broadband infrastructure:
    <bullet> Broadband Switching Equipment--Equipment necessary to 
establish a broadband communications path between two points.
    <bullet> Broadband Routing Equipment--Equipment that routes data 
packets throughout a broadband network.
    <bullet> Broadband Transport Equipment--Equipment for providing 
interconnection within the broadband provider's network.
    <bullet> Broadband Access Equipment--Equipment facilitating the 
last mile connection to a broadband subscriber.
    <bullet> Broadband Customer Premises Equipment and End-User 
Devices--End-user equipment that connects to a broadband network.
    <bullet> Billing/Operations Systems--Equipment that is used to 
manage and operate a broadband network or offer a broadband service.
    Note that this list does not include fiber optic cables, cell 
towers, and other facilities that are produced in the United States in 
sufficient quantities to be reasonably available as end products. To 
the extent that an applicant wishes to use equipment that is not 
covered by the proposed waiver, it may seek a waiver on a case-by-case 
basis as part of its application for BIP funds, stating the statutory 
exemption upon which it is relying and its rationale for receiving a 
waiver.
    This supplementary information constitutes the ``detailed written 
justification'' required by Section 1605(c) of the Recovery Act and 
Section 176.80 of OMB's rules for waivers of the Buy American 
provisions.

    Authority: Public Law 111-5 Sec.  1605, 123 Stat. 115; 2 CFR 
176.10 et seq.

    Dated: June 26, 2009.
Thomas J. Vilsack,
Secretary, United States Department of Agriculture.
[FR Doc. E9-15511 Filed 6-30-09; 8:45 am]
BILLING CODE 3410-15-P