Project-Specific Waiver of Build America, Buy America Act Requirements for Certain Products: Pipeline Safety; City Utilities of Springfield, MO

Pipeline Safety: Proposed Project-Specific Waiver of the Build America, Buy America Act Requirements for City Utilities of Springfield, Missouri for Certain Products

Dates

Comments must be received by October 15, 2024.

Supplementary Information

Electronic Access and Filing

A copy of this Notice, all comments received on this Notice, and all background material may be viewed online at http://www.regulations.gov using the docket number listed above. Electronic retrieval help and guidelines are also available at http://www.regulations.gov . An electronic copy of this document also may be downloaded from the Office of the Federal Register's website at: www.FederalRegister.gov and the Government Publishing Office's website at: www.GovInfo.gov .

Confidential Business Information

Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this notice contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this notice, it is important that you clearly designate the submitted comments as CBI. You may ask PHMSA to give confidential treatment to information you give to the agency by taking the following steps: (1) mark each page of the original document submission containing CBI as "Confidential"; (2) send PHMSA, along with the original document, a second copy of the original document with the CBI deleted; and (3) explain why the information you are submitting is CBI. Unless you are notified otherwise, PHMSA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this Notice. Submissions containing CBI should be sent to: Mr. Brandon Hollingshead, PHMSA, 1200 New Jersey Avenue SE, E26-316, Washington, DC 20590. Any comment submissions that PHMSA receives that are not specifically designated as CBI will be placed in the public docket for this matter.

Background and Justification for Waiver

The NGDISM program was authorized by the Infrastructure Investment and Jobs Act (IIJA) (Pub. L. 117-58). The program provides Federal funding to municipal- or community-owned natural gas utilities (not including for-profit entities) to repair, rehabilitate, or replace their natural gas distribution pipeline systems or portions thereof, or to acquire equipment to (1) reduce incidents and fatalities and (2) avoid economic losses. The IIJA appropriates $200 million per year for each of Fiscal Years (FY) 2022 through 2026 for the NGDISM program ($1 billion in total). The IIJA provides that 2 percent of this amount shall be used to pay the administrative expenses of the NGDISM program. Accordingly, the total amount expected to be awarded as grant funding over the five-year period is $980,000,000. In FY2022, PHMSA awarded approximately $196 million to 37 municipal- and community-owned natural gas utilities across the nation to fund pipeline replacement projects and the purchase of leak-detection equipment.

Congress also enacted the Build America, Buy America Act (BABA), providing that "none of the funds made available for a Federal financial assistance program for infrastructure . . . 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." IIJA, Public Law 117-58, section 70914(a). Under IIJA section 70914(b), PHMSA has authority to waive the requirements of BABA (1) if a domestic product is unavailable, (2) if using a domestic product would present an unreasonable cost, or (3) if application of BABA would not be in the public interest.

In FY2022, City Utilities was awarded $10 million in NGDISM grant funding to help fund its "Legacy Plastic Pipe Replacement Project," which it initiated in 2010. City Utilities operates approximately 500 miles of "Aldyl A" plastic distribution pipeline within disadvantaged areas of Springfield, Missouri. Aldyl A is a type of plastic commonly used in gas pipelines in the 1960s and 1970s. Aldyl A has since been found to be susceptible to premature brittle-like failures when subjected to stress intensification, presenting a high risk of leakage and associated safety hazards. Additionally, the Aldyl A pipe operated by City Utilities lacks continuous tracer wire, which is used to locate underground pipelines prior to excavation to avoid damaging the pipelines in the course of excavation. The $10 million awarded would allow City Utilities to speed up its Legacy Plastic Pipe Replacement Project by funding the replacement of approximately 13.7 miles of legacy Aldyl A pipe and approximately 1,409 legacy plastic gas services with modern, industry-standard polyethylene pipe. City Utilities will also use the grant funds to install a locator system on the new pipeline, allowing the pipe to be located during subsequent excavations near the pipeline, thereby ensuring the pipe is not damaged.

On December 13, 2023, City Utilities issued an Invitation for Bids (IFB) seeking, among other products, locator markers; meter stops with insulated union; magnesium anodes; 1A meter swivels, nuts, and washers; and direct bury lugs. A more detailed description of each of these products is provided below:

• Locator Markers: Locator markers are small devices placed on buried pipe and valves designed to help operators locate the infrastructure before excavation to help prevent damage to the pipe from excavation equipment. (NAICS: 325211)

• Meter Stops with Insulated Union: Meter Stops are valves that are installed above a natural gas riser upstream of the meter to serve as a shut-off valve to control the flow of gas into the meter and subsequently into the building's gas system. They are crucial for maintenance, emergencies, or when the gas service needs to be shut off. Insulated Unions are fittings attached to the above ground portion of a natural gas utility riser in order to electrically insulate ( i.e., isolate) a structure from the pipeline system to prevent corrosion. (NAICS: 332919)

• Magnesium Anodes: Magnesium anodes are blocks of magnesium that are attached to steel pipe in order to protect against corrosion damage. (NAICS: 335999)

• 1A Meter Swivels, Nuts, and Washers: Meter swivels, nuts, and washers are fasteners used to secure a gas meter assembly. (NAICS: 33251/332722)

• Direct Bury Lugs: Direct Bury Lugs are waterproof connectors used for splicing low-voltage wires, like those used in tracer wire, without cutting the main line wire. They simplify installation and increase the longevity of the connection with pre-filled silicone sealant for waterproofing. (NAICS: 332999)

The IFB remained open for more than a month, between December 13, 2023, and January 15, 2024. In response to the IFB, City Utilities received seven responsive bids. However, each of the respondents to the IFB represented that they would not be able to certify compliance with BABA requirements for the above listed products.

Additionally, prior to City Utilities requesting this waiver, PHMSA independently engaged the supplier scouting services of the National Institute of Standards and Technology Manufacturing Extension Partnership (NIST MEP) to search for domestic manufacturers of 1A meter swivels, nuts, and washers. At the conclusion of the process, NIST MEP identified several companies who stated they had the capability to manufacture these products. However, these companies declined to do so because it would be cost prohibitive for them to begin domestic manufacture of these products in the quantities that City Utilities needs to purchase for its NGDISM project. Accordingly, supplier scouting did not result in identification of any sources that could or would manufacture these products domestically.

On these bases, PHMSA has determined that locator markers, meter stops with insulated unions, magnesium anodes, 1A meter swivels, nuts, and washers, and direct bury lugs are not manufactured in the United States in sufficient and reasonably available quantities or of a satisfactory quality.

Proposed Waiver and Request for Comments

PHMSA proposes to waive the requirements of BABA for the above listed products for City Utilities' Legacy Plastic Pipe Replacement Project funded by NGDISM grant funds. The waiver would be applicable only to City Utilities' project; it would not be applicable to any other NGDISM grant recipient's projects. The proposed waiver would be effective from the effective date of the final waiver through the period of performance and closeout of PHMSA financial assistance for the project, estimated to be February 21, 2028. If the sources of Federal financial assistance applied to the project are changed, PHMSA will consider whether the waiver continues to be warranted, taking into account the project's development status at that time and any changes in market conditions for the products subject to the waiver.

Although City Utilities was awarded $10 million in NGDISM grant funding in FY2022, the majority of funding in NGDISM projects typically goes towards labor costs rather than materials costs. City Utilities estimates that for its FY2022 project the total cost of the products proposed to be waived equals approximately $72,000, divided across five types of products. NIST MEP identified several companies who have the capability to manufacture 1A meter swivels, nuts, and washers, yet declined to do so after engagement with City Utilities on the grounds that it would be cost prohibitive to manufacture these products at the relatively small scale needed by City Utilities.

By contrast, the proposed waiver would have a large impact on City Utilities' ability to successfully complete its NGDISM project and deliver meaningful safety benefits to disadvantaged areas of Springfield, MO. All of the products listed herein are essential to the proper construction of a natural gas distribution pipeline. If this waiver is not approved, City Utilities' project will not be completed successfully. Additionally, City Utilities estimates that its total materials costs for the project will equal approximately $800,000. The cost of the products proposed to be waived therefore equates to 9 percent of City Utilities' total materials costs, which is above the five percent threshold applicable to DOT's Waiver of Buy America Requirements for De Minimis Costs and Small Grants (88 FR 55817).

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. PHMSA's analysis has concluded that this assessment is not applicable to this waiver, as it is being proposed on the basis of nonavailability, rather than public interest or unreasonable cost.

PHMSA 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 IIJA. Comments received after this period, but before notice of our finding is published in the Federal Register , will be considered to the extent practicable.