[Federal Register Volume 89, Number 188 (Friday, September 27, 2024)]
[Notices]
[Pages 79360-79362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22120]


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DEPARTMENT OF TRANSPORTATION

[Docket No. PHMSA-2024-0152]


Pipeline Safety: Proposed Project-Specific Waiver of the Build 
America, Buy America Act Requirements for Certain Products Used by 
Philadelphia Gas Works

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
U.S. Department of Transportation (DOT).

ACTION: Notice; request for comments.

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SUMMARY: The Pipeline and Hazardous Materials Safety Administration 
(PHMSA) is proposing to waive the Build America, Buy America (BABA) 
Act's domestic preference requirements for certain products that 
Philadelphia Gas Works (PGW) needs for its Natural Gas Distribution 
Infrastructure Safety and Modernization (NGDISM) grant project. The 
proposed waiver would exempt the following products used in PGW's 
project from BABA requirements on the basis of nonavailability: 
electro-fusion tapping tees, anodeless risers, transition fittings, 
lockwing valves, magnesium anodes, service adapters, curb valves, caps, 
couplings, and stiffeners. In accordance with section 70914(c) of BABA, 
PHMSA is seeking public comments on the proposed waiver.

DATES: Comments must be received by October 15, 2024.

ADDRESSES: Please submit your comments to the Federal eRulemaking 
Portal at http://www.regulations.gov, Docket No. PHMSA-2024-0152, and 
follow the online instructions for submitting comments.
    Instructions: You must include the agency name and docket number at 
the beginning of your comments. Except as described below under the 
heading ``Confidential Business Information,'' all submissions 
received, including any personal information provided, will be posted 
without change or alteration to http://www.regulations.gov. For more 
information, you may review the U.S. Department of Transportation'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 Mr. Brandon Hollingshead, PHMSA Office of the Chief 
Counsel, 202-366-4400, or via email at <a href="/cdn-cgi/l/email-protection#0c6e7e6d62686362226463606065626b7f64696d684c686378226b637a"><span class="__cf_email__" data-cfemail="6b09190a050f0405450304070702050c18030e0a0f2b0f041f450c041d">[email protected]</span></a>. 
Office hours for PHMSA are from 8:30 a.m. to 5:00 p.m., E.T., Monday 
through Friday, except Federal holidays.

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

    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

[[Page 79361]]

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, PGW was awarded $10 million in NGDISM grant funding to 
help fund the replacement of ``at-risk'' cast iron natural gas main in 
historically disadvantaged census tracts within the City of 
Philadelphia as part of its ``Citywide Neighborhood Safety and 
Modernization'' project. The project, which will be located entirely 
within Philadelphia's historically disadvantaged census tracts, will 
replace approximately 6 miles of aging cast iron, ductile iron, and 
unprotected steel pipelines with modern polyethylene plastic pipe that 
is less susceptible to breakage due to earth movement--the biggest 
threat to PGW's existing cast iron pipelines, especially during the 
winter months.

Justification for Waiver

    PGW seeks a waiver of BABA requirements for certain products on the 
basis of nonavailability. The specific essential products PGW seeks a 
waiver for are listed below:
    <bullet> Electro-fusion tapping tees: Electro-fusion tapping tees 
are rigid sections of polyethylene pipe that are fused to the top of an 
existing polyethylene pipeline. They are used to provide a branch 
outlet from a gas main to a service line. (NAICS: 326122)
    <bullet> Anodeless risers: Anodeless risers are sections of pipe 
that provide a 90-degree connection between underground gas service 
lines and aboveground meter assemblies. Risers are typically made of 
steel but may also include polyethylene components and may include a 
protective sleeve over the polyethylene components. Anodeless risers 
are manufactured in a variety of sizes and may be rigid or flexible. 
(NAICS: 33296)
    <bullet> Transition fittings: Transition fittings are adapters that 
facilitate below-grade transition from polyethylene pipe to steel pipe 
before it exits the ground. The steel section of the fitting is epoxy-
coated for corrosion resistance. Transition fittings incorporate both 
steel and polyethylene components. (NAICS: 332919)
    <bullet> Lockwing valves: Lockwing valves are installed at the 
``head'' of a service line, upstream of a meter assembly, and are used 
to stop or start the flow of gas. They are lockable to resist tampering 
or accidental opening of the valve. They are typically made of brass. 
(NAICS: 332919)
    <bullet> Magnesium anodes: Magnesium anodes are blocks of magnesium 
that are attached to steel pipe in order to protect against corrosion 
damage. (NAICS: 335999)
    <bullet> Service adapters: Service adapters are threaded fittings 
used on a meter set assembly above ground. They are typically made of 
steel and are used to connect two pieces of steel pipe in a meter 
assembly. (NAICS: 332919)
    <bullet> Curb valves: Curb valves are shut-off valves installed in 
a readily-accessible outside location (such as in the footway). They 
are used to control the gas upstream of a gas meter, but downstream of 
the main service tee in the street. Curb valves can be made of either 
polyethylene or steel. PGW requires the use of polyethylene curb valves 
in its system. Accordingly, PHMSA proposes to waive BABA requirements 
for polyethylene curb valves. (NAICS: 326122)
    <bullet> Caps: Caps are added to a pipeline in order to close off 
sections of the pipeline or to cap off dead-end lines. Caps can be made 
of either polyethylene or steel, depending on the material of the pipe 
capped off. PGW is not able to find a BABA-compliant source for steel 
caps. Accordingly, PHMSA proposes to waive BABA requirements for steel 
caps. (NAICS: 332919)
    <bullet> Couplings: Couplings can be used to connect two sections 
of pipe made from either polyethylene, steel, ductile iron, or cast 
iron. PGW requires the use of steel couplings on its distribution 
system. Accordingly, PHMSA proposes to waive BABA requirements for 
couplings made of steel. (NAICS: 332919)
    <bullet> Stiffeners: Stiffeners are inserted into plastic pipe 
alongside couplings to support the pipe, mitigate stress, and provide a 
long-lasting seal. (NAICS: 326122)
    To conduct market research, PGW initially engaged with its normal 
suppliers of gas distribution pipeline parts. Eight of PGW's normal 
suppliers indicated that they could provide BABA-compliant products but 
were not willing to certify to BABA compliance. One of PGW's alternate 
suppliers indicated it could provide BABA-compliant caps, couplings, 
and stiffeners, albeit at an increased cost and a long lead time which 
would cause an estimated 36-week delay in PGW's construction schedule, 
which is untenable for PGW's project. PGW also reached out to 
neighboring gas utilities to inquire about their sources but was 
likewise unable to locate a domestic source for these products that 
way.
    On April 10, 2024, in an effort to locate additional alternative 
suppliers, PGW issued a Request for Quotation (RFQ) titled ``One Time 
Purchase of BABA Compliant Alternatives.'' The RFQ was publicly posted 
to PGW's Procureware website, and was open from April 10, 2024 until 
April 29, 2024. PGW invited 80 suppliers and manufacturers to submit 
bids. As a result of the RFQ, PGW identified BABA-compliant 
alternatives for 8 types of products for which PGW was not previously 
able to find domestic sources. However, PGW still was not able to find 
suitable or readily available alternatives for the 10 products proposed 
to be waived herein.
    On these bases, PHMSA has preliminarily determined that these 
products 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 PGW's ``Citywide Neighborhood Safety and 
Modernization'' project funded by NGDISM grant funds. The waiver would 
be applicable only to PGW's 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's financial assistance for 
the project, which is estimated to be June 30, 2029. 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.
    PGW was awarded $10 million in NGDISM grant funding in FY2022. 
However, labor costs, rather than materials costs, typically make up 
the majority of costs in pipeline replacement projects. PGW estimates

[[Page 79362]]

that only $856,941 of the total project budget will be spent on 
materials. Out of this amount, PGW anticipates that only about $140,201 
would be spent on the products proposed to be waived herein--or 16 
percent of PGW's materials costs. This $140,201 is further split across 
ten different products.
    By contrast, the proposed waiver would have a significant impact on 
PGW's ability to successfully complete its NGDISM projects. Absent the 
proposed waiver, PGW will not be able to comply with BABA requirements 
for the above listed products, either because PGW's market research was 
not able to identify any domestic sources, or it is not feasible for 
PGW to utilize the domestic source it did identify due to the extreme 
construction delays that would result.
    While PGW did find a domestic source for caps, couplings, and 
stiffeners, the manufacturer indicated that it would need a lead time 
of 14- to 16-weeks from the date of order before it could supply BABA-
compliant versions of these products to PGW. To ensure the safety of 
the public, PGW would first need to order a sample of the new products 
to conduct quality control testing, which PGW indicated could take up 
to 4 weeks. If the new products pass quality control testing, PGW would 
then need to place a full order for the new products, resulting in 
another 14- to 16-week lead time to receive them. The entire process, 
from initial ordering of sample products to receipt and acceptance of 
the full order, could result in a construction delay of up to 36 weeks. 
Distribution gas construction cannot proceed without these primary 
components and the alternative extended lead time prolongs the time of 
exposure to potential leaks and threats to life and property. A delayed 
construction schedule could result in safety impacts for PGW's 
customers, especially those located in five USDOT-designated 
historically disadvantaged neighborhoods within the project area. PGW 
estimates that such a delay would push its projected FY2025 project 
completion to the summer of FY2026, subjecting these customers to an 
additional winter season with sag service by cast iron pipes--a time 
when gas leaks are more likely to occur due to frost heave and other 
winter ground movement. Combined with the age of PGW's cast iron 
pipelines in these neighborhoods, this would create an appreciably 
increased risk to residents in these neighborhoods.
    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.

    Issued in Washington, DC, on September 23, 2024, under authority 
delegated in 49 CFR 1.97.
Tristan H. Brown,
Deputy Administrator.
[FR Doc. 2024-22120 Filed 9-26-24; 8:45 am]
BILLING CODE 4910-60-P


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