March 2024 Driving Force Blog

The pumping industry, a vital component of our infrastructure, is experiencing significant changes due to new federal funding and regulatory shifts. Among these changes, the Build America, Buy America Act (BABA) - part of the Infrastructure Investment and Jobs Act (IIJA) - stands out for its far-reaching implications. We’ll dive into how federal funding is being directed to the pumping industry, the transformative effect of the BABA and the Inflation Reduction Act (IRA) on the groundwater industry, their specific application to pumps and motors, and key points industry stakeholders should be aware of. 

Federal Funding and the Pumping Industry 

The pumping industry, encompassing everything from water and wastewater management to oil and gas operations, plays a crucial role in the economy and environmental management. Recently, there has been a notable increase in federal funding targeted at this sector. This surge in investment is primarily aimed at upgrading aging infrastructure, promoting sustainable water management, and supporting innovative technologies in fluid handling. 

Key aspects of this funding include grants and loans for water infrastructure projects, incentives for purchase of energy-efficient pumping systems, and research funding for developing advanced materials and designs. This influx of capital is not only bolstering the industry’s growth but also encouraging the adoption of more sustainable practices. 

How will funding be awarded?  

Funding for both of these acts will be carried down through the appropriate federal agencies for the respective area, such as the Department of Energy (DoE), Environmental Protection Agency (EPA), Department of Transportation (DoT), Department of the Interior (DoI), Bureau of Reclamation, etc. There will also be portions of the funding that is directly awarded into state revolving funds – making the capital available directly to local governments for clean water / drinking water initiatives.  
The IRA calls for rebate programs for households and companies which include grants for Home Efficiency Rebates based on energy savings predicted from a home upgrade, Home Electrification Rebates based on purchase or installation of high-efficiency home appliances/equipment, and Home Energy Efficiency Contractor training grants through the State Energy Program. 

The Build America, Buy America Act and the Groundwater Industry Challenges 

For manufacturers and users of pumps and motors, these pieces of legislation bring specific considerations. Both of these acts mandate that any infrastructure project receiving federal funding must use American-made products, including materials and equipment used in groundwater extraction and management. This includes specific clauses referencing Federal Acquisitions Regulation (FAR) which limits the amount of foreign material that can be used in “construction materials” for government contracts. Even more specifically, stricter requirements were added in 2021 for predominantly iron or steel products. This includes the aforementioned grants to state and local governments for procuring goods and services. These entities would be required to impose the federal conditions on materials due to the federal funding money.  
Clarifying guidance issued October 23, 2023 states that items incorporated into an infrastructure project can be classified as only one category per item. This means the item can either be an iron or steel product, a manufactured product, or construction material. These are defined as: 
Predominantly made of Iron, Steel, or a Combination: The cost of the iron or steel content of the product exceeds 50% of the total cost of all its components 

Construction Materials: Articles, materials, or supplies that are incorporated into an infrastructure project that consists of only one or more of the following materials: Non-ferrous metals, plastic and polymer-based products, glass, fiber optic cable, optical fiber, lumber, engineered wood, and drywall.  

Manufactured Product: Articles, materials, or supplies that have been processed into a specific form and shape or combined with other materials to create a product with different properties.  

Another important definition to understand is “Component”.  A component is an article, material, or supply – whether manufactured or unmanufactured – that is incorporated directly into a manufactured product, or an iron or steel product. In most systems, this is how our U.S. MOTORS® motor products are defined.  They are a smaller part of a larger manufactured product that is or will become part of the end product that is being funded. 

These requirements make for a more challenging task to accomplish with current manufacturing in the industry, however implications for pumping industry pumps and motors, among other areas, are that there will be an increased demand for domestic products and/or supply chain adjustments to comply with federal requirements to receive federal funding. 

These pieces of legislation are going to be important for industry professionals to keep their eyes on as we move forward. The stage is being for a transformative era in the pumping industry and while this presents challenges in terms of compliance and supply chain management, it also offers opportunities for growth, innovation, and a shift towards more sustainable practices. Stakeholders in the industry should stay informed and proactive in adapting to these changes to capitalize on the emerging opportunities. 

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