[Federal Register Volume 75, Number 117 (Friday, June 18, 2010)]
[Notices]
[Pages 34685-34687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14812]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice of Buy American Exception Under the American Recovery and
Reinvestment Act of 2009
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
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SUMMARY: The Rural Housing Service (RHS) hereby gives notice of a
nationwide exception to the Buy American requirements of Section 1605
of the American Recovery and Reinvestment Act of 2009 (``ARRA'') under
the authority of Section 1605(b)(1) (public interest waiver) for de
minimis incidental components of eligible publicly owned essential
community facilities projects using assistance provided under ARRA.
This action permits the use of non-domestic iron, steel and
manufactured goods when they occur in de minimis incidental components
that may otherwise be prohibited under Section 1605(a). As used in this
Notice, ``de minimis incidental components'' means those components
otherwise prohibited under Section 1605(a) that cumulatively comprise
no more than a total of 5 percent of the total cost of the materials
used in a project funded in whole or in part with ARRA assistance.
DATES: Effective Date: June 18, 2010.
ADDRESSES: Send any correspondence regarding this notice to William R.
Downs, Program Support Staff, Rural Housing Service, U.S. Department of
Agriculture, 1400 Independence Avenue, SW., STOP 0761, Washington, DC
20250-0761.
FOR FURTHER INFORMATION CONTACT: William R. Downs, Program Support
Staff, Rural Housing Service, U.S. Department of Agriculture, 1400
Independence Avenue, SW., STOP 0761, Washington, DC 20250-0761,
Telephone: 202-720-1499, e-mail: [email protected].
SUPPLEMENTARY INFORMATION: In accordance with section 1605(c) of ARRA
and Section 176.80 of the rules of the Office of Management and Budget
(OMB) (2 CFR 176.80), RHS hereby provides notice that it is granting a
nationwide exception to Section 1605 the Recovery Act with respect to
de minimis incidental components of eligible Community Programs
projects funded under ARRA. The basis for this waiver is a public
interest determination pursuant to Section 1605(b)(1) of ARRA.
I. Background
The American Recovery and Reinvestment Act of 2009 made funding
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available to RHS to make direct loans and grants for essential
community facilities authorized by Sections 306(a)(1) and (a)(19) of
the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)(1)
and (a)(19), respectively). Section 1605(a) of ARRA, the ``Buy
American'' provision, states that ``none of the funds appropriated or
otherwise made available by this Act 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.''
Section 1605(b) of ARRA authorizes the head of a Federal department
or agency to waive the Buy American provision by one of the following
three determinations: (1) Applying the Buy American provision would be
inconsistent with the public interest; (2) the iron, steel, and
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 iron, steel, and manufactured
goods produced in the United States will increase the cost of the
project by more than 25 percent.
If a determination is made to waive the requirements of Section
1605(a) based on a finding under Section 1605(b), then Section 1605(c)
requires the head of the department or agency to publish a detailed
justification in the Federal Register as to why the provision is being
waived. Finally, Section 1605(d) requires that the Buy American
provision must be applied in a manner consistent with the United
States' obligations under international agreements.
II. Public Interest Finding
RHS has determined that, as applied to Community Programs projects,
the application of the Buy American restrictions to de minimis
situations would be inconsistent with the public interest.
Community Programs projects typically contain a relatively small
number of high-cost components incorporated into the project that are
iron, steel and manufactured goods, such as electrical and mechanical
equipment, concrete and masonry products, wood and steel framing
products, interior and exterior materials and finishes, and specialty
equipment as well as other relevant materials to build structures for
facilities such as community hospitals and clinics, fire stations,
police stations and schools. In bid solicitations for Community
Programs projects, these high-cost components are generally described
in detail in project-specific technical specifications, and public
owners and their contractors are generally familiar with the conditions
of availability, the potential alternatives for each detailed
specification, the approximate cost and, most relevant to this Notice,
the country of manufacture of such components.
Every Community Programs project also involves the use of thousands
of miscellaneous, generally low-cost components that are essential for,
but incidental to, construction of the project. During construction,
these components (for example, nuts, bolts, fasteners, screws and
nails), are incorporated into the physical structure of the project.
For many of these incidental components, the country of manufacture and
the availability of alternatives are not always readily or reasonably
identifiable prior to procurement in the normal course of business.
More importantly, even if for some of these incidental components the
country of manufacture may be known, the miscellaneous character of
these components, together with their low cost (both individually and
when procured in bulk), characterize them as incidental to the facility
or project.
RHS finds that it would be inconsistent with the public interest to
apply the Buy American requirement to incidental components when they,
in total, comprise no more than 5 percent of the total cost of the
materials used in and incorporated into a project. While individual
components may have the same function (e.g. brackets), the specific
manufacturer and configuration may vary from project to project; the
analysis and consideration of individual waiver requests for them,
including determining whether or not U.S. made products exist;
therefore, is expected to be time-consuming and labor intensive far out
of proportion to the percentage of total project materials they
comprise. Further, since the specific use of these low-cost components
can be expected to be widely varied, formulating categorical waivers
for specific types of components would be impractical. Because the
situations described above, i.e., a high number of low-cost,
miscellaneous components, can be effectively addressed by a
comprehensive application of a nationwide de minimis waiver.
Rural Development reviewed an industry-wide survey regarding these
incidental components prepared by an independent contractor on behalf
of the Environmental Protection Agency (EPA). The survey results
indicated that the percentage of total costs represented by these
incidental components is generally not in excess of 5 percent of the
total cost of the materials incorporated into a project. Rural
Development then took the added step to verify the EPA findings by
making similar inquiries to likely Rural Development project
construction contractors to identify the approximate scope and cost of
incidental components within these projects. The responses received by
Rural Development were consistent with the EPA data.
RHS has decades of experience in financing Community Programs
projects in rural America and shares the rationale established by
previous de minimis waivers authored by EPA and Rural Utilities
Service, with respect to incidental components used in similar
projects. Requiring individual waivers for incidental components would
be time prohibitive and overly-burdensome for applicants and RHS. The
purpose of ARRA is to stimulate economic recovery by funding current
public construction. Therefore, a de minimis waiver of incidental
components totaling no more than 5 percent of the total cost of the
materials used in and incorporated into a project is in the public
interest.
III. Waiver
Based on the public interest finding discussed above and pursuant
to Section 1605(c), USDA hereby issues a national waiver from the
requirements of ARRA Section 1605 for any incidental components of the
type described above that comprise in total a de minimis amount of the
project, specifically, for any such incidental components up to a limit
of no more than 5 percent of the total cost of the materials used in
and incorporated into a project.
Assistance recipients who elect to use this waiver shall, in
consultation with their contractors, determine the items to be covered
by this waiver, retain relevant documentation as to those items in
their project files, and be able to summarize in reports to RHS, if so
requested, the types and/or categories of items to which this waiver is
applied, the total cost of incidental components covered by the waiver
for each type or category, and the calculations by which they
determined the total cost of materials used in and incorporated into
the project.
In using this waiver, assistance recipients must consider that
there may be circumstances where there are multiple types of low-cost
components which, when combined with the incidental components
described above, may total more than 5 percent. Assistance recipients
in such cases will
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have to choose which of these incidental components will be covered by
the waiver and which will not. Components that the recipient is unable
to include within the 5 percent limit of this waiver must comply with
the requirements of Section 1605 of ARRA by appropriate means other
than reliance on this waiver.
This supplementary information constitutes the ``detailed written
justification'' required by Section 1605(c) of ARRA and Section 176.80
of the Office of Management and Budget's rules for waivers of the Buy
American provisions.
Dated: May 6, 2010.
Dallas P. Tonsager,
Under Secretary, Rural Development.
May 11, 2010.
Thomas Vilsack,
Secretary, Department of Agriculture.
[FR Doc. 2010-14812 Filed 6-17-10; 8:45 am]
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