Document ID: DOT-OST-2023-0120-0001
Agency: dot
Document Type: Notice
Title: Buy America Waiver: Pacific Island Territories and the Freely Associated States
Posted Date: 2023-08-09T04:00Z

[Federal Register Volume 88, Number 152 (Wednesday, August 9, 2023)]
[Notices]
[Pages 53949-53951]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17003]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No.: DOT-OST-2023-0120]

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 temporary general applicability public interest waiver of 
the requirements of section 70914(a) of the Build America, Buy America 
Act (BABA) included in the Infrastructure Investment and Jobs Act 
(IIJA) 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 financial assistance that is subject to a DOT 
domestic preference statute and provided by DOT to the Freely 
Associated States in the Pacific (the Republic of Palau, Republic of 
the Marshall Islands, and Federated States of Micronesia). BABA only 
applies to the United States and its territories. The waiver would 
provide time for the Department to collect and analyze evidence to 
determine if a more targeted waiver of these requirements is in the 
public interest. The waiver would also allow time for the Department 
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 waiver will remain in effect for 18 
months after the effective date of the final waiver and will be 
reviewed as often as necessary.

DATES: Comments must be received by August 24, 2023.

ADDRESSES: Please submit your comments to the U.S. Government 
electronic docket site at http://www.regulations.gov, Docket: DOT-OST-
2023-0120. Note: All submissions received, including any personal 
information therein, will be posted without change or alteration to 
http://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 Darren Timothy, DOT Office of the Assistant Secretary 
for Transportation Policy, at [email protected] or at 202-366-
4051. 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 
included in the IIJA 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.
    Under Section 70914(b) and in accordance with the Office of 
Management and Budget (OMB)'s Guidance Memorandum M-22-11, Initial 
Implementation Guidance on Application of Buy America Preference in 
Federal Financial Assistance Programs for Infrastructure, DOT may waive 
the BABA application 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. All waivers must have a 
written explanation for the proposed determination; provide a period of 
not less than fifteen (15) calendar days for public comment on the 
proposed waiver; and submit the proposed waiver to the OMB Made in 
America Office (MIAO) for review to determine if the waiver is 
consistent with policy.
    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 section 
70917(a)-(b). Federal financial assistance programs administered by 
DOT's Operating Administrations (OAs) \1\ are subject to a variety of 
mode-specific statutes that apply particular Buy America \2\ 
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,\3\ where a mode-

[[Page 53950]]

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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    \1\ 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).
    \2\ In this notice, references to ``Buy America'' include 
domestic preference laws called ``Buy American'' that apply to DOT 
financial assistance programs.
    \3\ For example, section 409 of the Transportation, Housing and 
Urban Development, and Related Agencies Appropriations Act, 2022 
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).
    Over five years from FY 2018 to FY 2022, DOT OAs provided over $340 
million in financial assistance for 160 capital projects in the Pacific 
Island territories under various programs where infrastructure is an 
eligible activity and may be subject to BABA or other existing DOT Buy 
America requirements. FAA also provided $88 million in AIP 
discretionary grants to the Freely Associated States in the Pacific 
region for 20 projects over that same time period.
    Economies in 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 
established regional supply chains from east Asia, Australia, and New 
Zealand. Most goods, equipment, materials, and supplies are imported 
and rely on shipping with associated timelines and unpredictable 
shipping fuel costs fluctuations. Moreover, materials sourced from the 
United States lead to additional shipping fees and longer lead times, 
thus significantly extending construction activity schedules. Lastly, 
ongoing gaps in supply chain availability impact lead times for 
materials, increasing project timelines. For these reasons, DOT is 
concerned that complying with Buy America requirements may increase 
already elevated project time and costs--particularly in the short 
run--and seeks time to better understand the local manufacturing 
footprint and the balance of equities for residents of the Pacific 
Island territories. DOT is aware that substantial changes to shipping 
and supply chains to incorporate domestic sourcing requirements in the 
Pacific Island territories could take multiple years to establish.
    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.
    Other Federal agencies have also conducted outreach efforts to the 
Pacific Island territories and received similar feedback. For example, 
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.

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. 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, all expenditures for non-
domestic iron, steel, manufactured products, and construction materials 
incurred after the effective date.
    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).\4\
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    \4\ The proposed waiver under section 70914(b)(1) of the Act 
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 18 months after the 
effective date of the final waiver. The Department will review this 
waiver in 12 months 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-
22-11. 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 and Freely Associated States will 
continue to 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 Freely Associated States 
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 in the Pacific Island 
territories and Freely Associated States could potentially face 
unreasonable scheduling uncertainty.
    On the other hand, the proposed waiver will likely help grant 
recipients establish rules and procedures to manage Buy America 
requirements. Furthermore, the waiver will provide recipients more 
options to efficiently complete projects.

[[Page 53951]]

    Uncertainties regarding capacity, shipping, and supply networks 
make domestic sourcing in the Pacific Island territories and Freely 
Associated States challenging for assistance recipients, shippers, and 
DOT staff in the short run. DOT is engaging to understand opportunities 
to leverage existing shipping and transportation processes to make 
domestic sourcing feasible over the longer term.
    Under OMB Memorandum M-22-11, 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 the BIL. 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. 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: August 3, 2023.
Carlos Monje, Jr.,
Under Secretary of Transportation for Policy.
[FR Doc. 2023-17003 Filed 8-8-23; 8:45 am]
BILLING CODE 4910-9X-P