May 10, 2022 – The Schools, Health & Libraries Broadband (SHLB) Coalition has written a letter to U.S. Secretary of Commerce Gina Raimondo, formally requesting that the Department of Commerce “issue a waiver of the Infrastructure Investment and Jobs Act (IIJA) ‘Build America, Buy America’ (BABA) requirements for broadband network equipment and consumer devices.”[1]

The BABA provisions require Federal agencies to ensure that “none of the funds made available for a Federal financial assistance program for infrastructure, including each deficient program, may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.”

In its public interest waiver request, the SHLB Coalition stresses that the overwhelming majority of broadband network equipment and consumer devices are not currently manufactured in the U.S., and “most of the component parts are derived from abroad.” The SHLB Coalition states that it wholly supports the goal of increasing U.S. manufacturing, but believes “the timeline of BABA’s implementation could blunt the impact of the IIJA’s historic broadband programs and make it much more difficult to close the digital divide.” Ultimately, the SHLB Coalitions makes the following waiver request and explains why it is needed:

We therefore ask the Department of Commerce to issue a targeted public interest waiver of general applicability for broadband network equipment and consumer devices until such time as companies can set up their manufacturing processes in the U.S.

Without a public interest waiver, sub-recipients are likely to submit hundreds of individual requests to waive the BABA requirements, which will require review by the Department of Commerce and potentially by the Office of Management and Budget as well. Furthermore, states are likely to implement different processes for determining whether projects satisfy the BABA requirements, which will create confusion and uncertainty. By issuing a general waiver ahead of time, the Department of Commerce could substantially reduce the administrative burden, cost increases and delay for sub-recipients who are trying to close the digital divide.[2]

For its legal basis, the SHLB Coalition cites the recent memorandum that was issued by the Office of Management and Budget (OMB), in which OMB clarifies the BABA buying preferences and provides implementation guidance to Federal agencies on the provisions that apply to infrastructure funding programs.[3]

More importantly, the OMB memorandum states that “the head of a Federal agency may waive the application of a Buy America preference under an infrastructure program” when the head of the Federal agency finds any of the following:

1. applying the domestic content procurement preference would be inconsistent with the public interest (a “public interest waiver”);

2. types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality (a “nonavailability waiver”); or

3. the inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent (an “unreasonable cost waiver”).

Before issuing a waiver, however, the head of the applicable Federal agency must make publicly available on the agency’s website a detailed written explanation for the proposed determination to issue the waiver and provide at least 15 days for public comment on the proposed waiver, with general applicability waivers being subject to a minimum 30-day public comment period.

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[1] Letter from The Schools, Health & Libraries Broadband Coalition, to The Honorable Gina Raimondo, U.S. Secretary of Commerce (May 10, 2022) (Waiver Letter), https://www.shlb.org/blog/2022/05/SHLB-Requests-Public-Interest-Waiver-of-Build-America-Requirements-/.

[2] Waiver Letter at p. 2.

[3] Office of Management and Budget, Memorandum For Heads Of Executive Departments And Agencies, M-22-11 (Apr. 18, 2022), https://www.whitehouse.gov/wp-content/uploads/2022/04/M-22-11.pdf.