FR 2025-01365

The document is a notice from the Pipeline and Hazardous Materials Safety Administration (PHMSA), part of the U.S. Department of Transportation. It announces a waiver from the Build America, Buy America (BABA) Act requirements granted to the Philadelphia Gas Works (PGW). PGW requires certain products for its Natural Gas Distribution Infrastructure Safety and Modernization (NGDISM) grant project, and these products are not readily available domestically or would be too costly to purchase if sourced from within the United States. These products are crucial for the project's goal of updating gas distribution systems in some of Philadelphia's disadvantaged neighborhoods.

Significant Issues and Concerns

There are notable concerns surrounding this waiver. One major issue is the waiver effectively bypassing the BABA Act's requirements. While the waiver is justified by the lack of availability and unreasonable cost of domestic products, this situation raises questions about whether PGW conducted extensive due diligence in seeking domestic suppliers.

The discussion on why domestic suppliers cannot meet the needs of PGW is limited primarily to cost and timelines. The document could be strengthened by providing more detailed insights into why domestic suppliers are not a viable option beyond basic financial considerations. Additionally, while there was only one public comment — which supported the waiver — the lack of more extensive public feedback does not appear to have prompted any re-evaluation by PHMSA, which might concern some observers.

Impact on the Public

The waiver may indirectly impact the broader public by setting a precedent for other projects that might seek similar exemptions, potentially undermining the BABA Act’s aim of strengthening domestic manufacturing. It questions the effectiveness and applicability of the BABA Act if repeated waivers allow foreign-sourced products in infrastructure projects.

For Philadelphia, the public impact may be more immediate and direct. The completion of PGW's project could enhance safety standards and infrastructure reliability for gas distribution, particularly benefiting historically disadvantaged neighborhoods.

Impact on Specific Stakeholders

For PGW, the waiver is undoubtedly beneficial. It allows the utility to proceed with its gas distribution modernization project unimpeded by restrictions that may otherwise delay necessary improvements. This grant and the associated waiver will enable PGW to address pressing safety concerns without the significant cost increases or delays that sourcing purely domestic products might incur.

On the flip side, domestic manufacturers might see this waiver as a lost opportunity or as a competitive disadvantage, especially if there is a perception that supply constraints or costs were surmountable. In broader economic terms, this could be viewed as a move that weakens incentives for U.S. manufacturing growth in the infrastructure sector.

In conclusion, while the waiver facilitates progress on a critical safety project for PGW, it also exposes potential vulnerabilities in the BABA Act’s implementation and could spur dialogue on how domestic preferences should be balanced with project feasibility needs in federal funding scenarios.

The document from the Federal Register outlines a project-specific waiver involving financial allocations and references under the Natural Gas Distribution Infrastructure Safety and Modernization (NGDISM) grant program, with considerations linked to the Build America, Buy America (BABA) Act's requirements.

The Infrastructure Investment and Jobs Act (IIJA) has appropriated $200 million per year for each fiscal year from 2022 through 2026, totaling $1 billion. However, $980 million is expected to be awarded as grant funding during this five-year period, considering 2% of the appropriation is set aside for administrative expenses.

Philadelphia Gas Works (PGW) has been the beneficiary of $125 million from the NGDISM funds over the fiscal years 2022, 2023, and 2024. This funding is intended to aid in replacing "at-risk" natural gas pipelines in Philadelphia, specifically targeting historically disadvantaged neighborhoods. Within this project, it is noted that the materials covered by the proposed waiver account for only approximately 0.11% of the total project cost, estimated at $140,201.

These financial references intersect with several identified issues. The waiver effectively exempts certain products from BABA Act requirements, raising questions about whether sufficient efforts were made to find domestic suppliers. While significant project funding is cited, the small percentage attributed to the materials under the waiver may prompt skepticism regarding whether the waiver was necessary, given that domestic sourcing might have been feasible despite potentially higher costs or longer lead times.

Another issue relates to the specific allocation to PGW and its project. The exclusive nature of the waiver, applicable only to PGW and not extended to other grant recipients, might lead to perceptions of preferential treatment. This financial allocation nuance may contribute to the perceived lack of general support, as evidenced by only one supportive public comment, and casts attention on the balance between cost-effectiveness and compliance with federal domestic production mandates.

These financial references highlight the complex interplay between significant federal investment in infrastructure and the associated regulatory requirements, reflecting broader considerations of public interest in the use of taxpayer funds.