```

[Federal Register Volume 90, Number 12 (Tuesday, January 21, 2025)]
[Notices]
[Pages 7241-7243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-01320]

-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2024-0131]

Pipeline Safety: Waiver of the Build America, Buy America Act 
Requirements for Gas Service Risers, Gas Service Regulators, and Gas 
Meters Under the Natural Gas Distribution Infrastructure Safety and 
Modernization Program

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

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Pipeline and Hazardous Materials Safety Administration 
(PHMSA) is waiving the Build America, Buy America (BABA) Act's domestic 
preference requirements for certain products widely used in natural gas 
distribution systems on the basis of nonavailability. The waiver will 
apply to awards obligated on or after the effective date of the final 
waiver for recipients of funding under the Natural Gas Distribution 
Infrastructure Safety and Modernization (NGDISM) Grant Program and, in 
the case of awards obligated prior to the effective date, all 
expenditures for covered products incurred after the effective date. 
The waiver will expire after three years after the effective date of 
the final waiver.

DATES: The effective date of the waiver is January 22, 2025. The waiver 
will expire on January 21, 2028.

FOR FURTHER INFORMATION CONTACT: For questions about this notice, 
please contact Ms. Shakira Mack, Office of Pipeline Safety, by phone at 
202-366-5090, or by email at [email protected]. Office hours for 
PHMSA are from 8:30 a.m. to 5:00 p.m. EST, Monday through Friday, 
except federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    A copy of this Notice and all background material, along with 
electronic retrieval help and guidelines, may be viewed online at 
https://www.regulations.gov using the docket number listed above. 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.

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 two 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 approximately $980,000,000. In FY22, 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. In FY23, PHMSA 
awarded $391 million to 65 applicants; and in FY24 PHMSA awarded 
another $196 million to 56 applicants. This brings current overall 
program totals to $784 million granted to 158 applicants, where funds 
are rehabilitating the natural gas system or acquiring equipment to 
improve public safety and reduce economic losses.
    PHMSA expects that a very small portion of NGDISM funding (less 
than about $1.9 million) would be spent each year on the products 
waived from BABA requirements.
    In the same legislation, Congress also enacted the BABA Act, which 
provides 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.'' See IIJA, Public Law 117-58, sec. 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.

[[Page 7242]]

    On August 13, 2024, PHMSA issued a Notice of Proposed 
Nonavailability Waiver of Buy America Requirements for certain 
products, on the basis of nonavailability, and in accordance with 
Section 70914(c) of BABA, PHMSA sought public comments on the proposed 
waiver. The products proposed to be waived included gas service risers 
and gas meters. The notice also sought comment on the availability of 
compliant gas service regulators. PHMSA considers these products to be 
either ``iron or steel products'' or ``manufactured products'' under 
BABA depending on the cost of the iron and steel components 
incorporated in each product. See 2 CFR 184.3. A more detailed 
description of each product is provided below:
     Gas Service Risers: Service risers are sections of pipe 
that provide a 90-degree connection between underground gas service 
lines and aboveground meter assemblies. Risers are made primarily of 
steel but typically also include polyethylene components and may 
include a protective sleeve over the polyethylene components. Service 
risers are manufactured in a variety of sizes and may be rigid or 
flexible.
     Gas Meters: Gas meters are placed outside of a residence 
or business that utilizes natural gas and allows the utility operator 
to track how much gas is being used by the residence or business. Gas 
meters incorporate a variety of components made of different materials.
     Gas Service Regulators: Gas service regulators are devices 
incorporated into a meter assembly designed to allow gas from a higher-
pressure service line to enter a residence's or business's gas lines at 
a lower pressure ideal for everyday use.
    During its initial market research, PHMSA identified a single 
company that currently produces BABA-compliant service regulators. 
Accordingly, PHMSA did not include gas service regulators in the 
proposed waiver it published on August 13, 2024, as the market research 
did not support a clear finding of nonavailability. However, some 
NGDISM recipients expressed concerns about whether a single company 
would be able to supply the volume of regulators needed by all NGDISM 
award recipients. As it is difficult to know exactly the anticipated 
demand for gas service regulators during the life of the NGDISM 
program, it is also difficult to determine if one company can supply 
all regulators needed. PHMSA engaged with the company to determine its 
production capacity for gas service regulators, but PHMSA lacked 
information on the anticipated demand during the life of the NGDISM 
program. As gas service regulators are a critical safety component of 
gas distribution systems, a lack of sufficient supply could unduly 
delay the safety-critical construction projects funded by the NGDISM 
program. As a result, PHMSA specifically requested comments from 
industry on the demand for gas service regulators purchased through the 
NGDISM program to inform its future consideration of any potential 
waivers of BABA requirements for service regulators.

Discussion of Public Comments

    PHMSA has considered all comments received in the initial 15-day 
comment period during its consideration of the proposed waiver, as 
required by section 70914(c)(2) of the IIJA. Public comments regarding 
the NGDISM programmatic waiver were received through August 28, 2024. 
PHMSA received a total of seven comments on the proposed waiver. The 
majority of the commenters noted PHMSA's lack of coverage for certain 
products in the waiver and provided information on the insufficient 
quantities of certain items that were available and met domestic 
content requirements. Commenters also noted the significant lag time 
between order placement and delivery, and limited production capacity, 
which results in limited or no availability of the product. The ensuing 
lack of availability would impede or possibly halt any ongoing natural 
gas system construction. Some of the comments noted supply delays 
ranging from months to possibly two years and result in significant 
overall project construction delays. Public comments also specifically 
requested a broadened scope to expand the range of gas service 
anodeless risers, gas meters, gas service regulators, and additional 
materials, and to extend the waiver duration from three years to five 
years.
    One commenter stated that ``PHMSA should require the use of 
domestically produced aluminum extrusions in the production of gas 
meters,'' opining that PHMSA should mandate aluminum extrusions be used 
for gas meter manufacture. This proposal is beyond the scope and 
consideration of ``Buy America Preferences for Infrastructure 
Projects,'' 2 CFR 184 (Oct. 1, 2024). This should be addressed on a 
broader range and scale, along with various technical studies, 
analyses, and congressional mandates that consider broad industry 
requirements for aluminum extrusion in the gas meter manufacturing 
industry. These concerns cannot be addressed within the programmatic 
waiver for the NGDISM Grants program, which is limited to the program 
grantees and beyond the scope and purpose of this grant program.
    Also, the market share relative to industry is negligible. The 2023 
North American Gas Meter Market size was $3.7 billion.\1\ With current 
NGDISM program awards of approximately 6,000 meters per year, proposed 
NGDISM spending on gas meters would be approximately $1.2 million per 
year. The resulting potential market share of 0.04 percent would not 
provide significant support to BABA compliance.
---------------------------------------------------------------------------

    \1\ Global Market Insights. North America Gas Meter Market 
Size--By Type (Diaphragm Meters, Rotary Meters, Turbine Meters, 
Ultrasonic Meters, Coriolis Meters), By Technology (Smart, 
Conventional), By End Use, By Distribution Channel & Forecast, 2024-
2032.Global Market Insights. September 2024. https://www.gminsights.com/industry-analysis/north-america-gas-meter-market.
---------------------------------------------------------------------------

    In response to PHMSA's specific request for information about 
demand for gas service regulators through the NGDISM grant program, 
commenters representing eligible NDGISM grantees provided an estimated 
total quantity of 40,911 gas service regulators (both current and 
projected) during the fiscal year program period (FY 2022 thru FY 2026) 
and across 30 systems. The average annual market size would be $1.2 
million for anticipated NGDISM projects. This would equate to a 0.2 
percent market share of a 2024 gas pressure regulator estimated market 
value of $552.8 million dollars.\2\ Given this small gas service 
regulator market share, the waiver would have a negligible effect on 
both industry and BABA compliance and create impediments to grantees' 
efforts to enhance safety and reduce economic loss as a result of 
constricted availability.
---------------------------------------------------------------------------

    \2\ FactMR. Gas Pressure Regulators Market Outlook (2024 to 
2034). Fact MR. October 2024. https://www.factmr.com/report/gas-pressure-regulator-market.
---------------------------------------------------------------------------

    The remaining commenters, all potential NGDISM recipients, noted 
similar concerns. Specifically, their concerns focused on the timely 
availability and limited scope of gas service anodeless risers, gas 
meters, and gas service regulators. This is due to a single sole 
provider that may not be able to timely meet the concurrent demand from 
all the various grant projects. This singular provider would be 
responsible for the influx for various models and quantities; varying 
geographical delivery locations and delivery dates to meet operator 
schedules; and most importantly, maintaining continued public safety. 
Any delays or inability by

[[Page 7243]]

the single provider could result in noncompliance, loss of use of a 
basic utility, and public exposure to safety risks from failing 
equipment. In addition, the limited selection could force various 
operators to install risers or regulators that are unfamiliar to their 
technicians or not compatible with their existing operating equipment. 
This would increase the grantee's costs by requiring the purchase of 
new associated compatible equipment and additional training, and 
increase the risk of operator error on new and unfamiliar equipment.
    One commenter noted concerns regarding the domestic availability of 
additional products (transition fittings, electro-fusion tapping tees, 
lockwing valves, magnesium anodes, service adapters, curb valves, caps, 
couplings, and stiffeners) and suggested increasing the waiver duration 
from three to five years. Additional materials may be considered in 
future waivers.
    The proposed waiver facilitated a broad range of interest and input 
from the public and other stakeholders, and PHMSA greatly appreciates 
the robust feedback from members of the public. The comments are 
available on the docket at https://www.regulations.gov, Docket (PHMSA-
2024-0131).

Summary of Changes in the Final Waiver

    PHMSA is making two changes from the proposed waiver in response to 
the information received during the public comment period. First, PHMSA 
is clarifying that all types of risers are included in the waiver. This 
directly addresses concerns regarding the availability of BABA 
compliant gas service risers. Secondly, PHMSA is including gas service 
regulators in this waiver. Based on responses to questions that PHMSA 
posed regarding the availability of sufficient quantities of compliant 
gas service regulators, PHMSA finds that the availability and 
appropriate selection of gas service regulators that are BABA compliant 
are not available in timely and sufficient quantities to meet NGDISM 
grantees' operating conditions and project schedule requirements. 
Therefore, PHMSA has added gas service regulators. The waiver for 
meters is unchanged from the proposed waiver. Public comments to the 
proposed waiver supported including meters and no changes for meters 
have been made in the final waiver.

Final Waiver

    Based on its review of the waiver request, and in consideration of 
comments received on the proposed waiver, PHMSA has determined that gas 
service risers, gas meters, and gas service regulators are not 
manufactured in the United States in sufficient and reasonably 
available quantities. PHMSA is waiving BABA requirements for gas 
service risers, gas meters, and gas service regulators. The waiver will 
apply to obligations made on or after the effective date of the final 
waiver for recipients of funding under the NGDISM Grant Program and, in 
the case of awards obligated prior to the effective date, all 
expenditures for covered products incurred after the effective date and 
will expire after three years.

    Issued in Washington, DC, under authority delegated in 49 CFR 
1.97.
Tristan H. Brown,
Deputy Administrator.
[FR Doc. 2025-01320 Filed 1-17-25; 8:45 am]
BILLING CODE 4910-60-P
```