Another waiver proposed for certain Build American, Buy American projects

Pago Pago, AMERICAN SAMOA — The US Energy Department has joined the growing list of federal agencies proposing a “temporary general applicability public interest waiver” of the requirements of the federal Build America, Buy America Act (BABA) for federal financial assistance awarded for infrastructure projects in American Samoa, the Commonwealth of Northern Mariana Islands (CNMI), and Guam.

In a federal notice issued late last week, the federal Energy Department said that it provides grants to Pacific territories and most of this funding is for energy infrastructure projects that are awarded to the Pacific Island Territories’ energy offices.

In fiscal year 2022, the three territories received over $13 million through the U.S Energy’s various grant programs where infrastructure is an eligible activity and may be subject to BABA. This funding will support approximately 16 individual projects that may require individual BABA project waivers.

For FY2023, funding is available for the Pacific territories under the Grid Resilience Formula Grant Program: American Samoa at $683,968, Guam at $856,736 and CNMI at more than $1.19 million.

Resilience improvements may include upgrades of individual hardware components, software components, or both, as well as enhancements in operations or new configurations of the grid.

The proposed 18-months waiver seeks to permit the use of non-domestic iron, steel, manufactured products, and construction materials in infrastructure projects located within the three territories.

According to the notice, the U.S Energy Department is considering a waiver for single projects under the Simplified Acquisition Threshold. If applicable, this may include when total federal financial assistance in a single project exceeds the Simplified Acquisition Threshold of $250,000.

WAIVER JUSTIFICATION

The U.S Energy agency summarized economic and logistical constraints faced by the three territories that justify the proposed waiver and the same justification has been cited by other federal agencies such as the U.S. Federal Emergency Management and the U.S Interior Department in their separate waiver proposals.

For example, the territories economies in the three territories are over 5,000 miles from the U.S mainland and must import products via air or sea. These economies have few local heavy manufacturers and largely rely on established regional supply chains from East Asia, Australia, and New Zealand. Most goods, equipment materials and supplies are imported and rely on shipping with associated timelines and unpredictable shipping fuel costs fluctuations.

The economic and logistical constraints were also confirmed by the market research conducted by U.S Energy through outreach from the territories to assess the impacts of BABA. One outreach was at the 2023 Territorial Climate & Infrastructure Workshop and participants were encouraged to provide comments. Furthermore, the U.S Energy engaged with Pacific Island Territory energy officials and listened to experiences and concerns

According to the federal agency, representatives from American Samoa shared that there are little to no manufacturing capabilities within the territories that produce energy sector materials and equipment that would comply with BABA. And there are few retail businesses that do provide some items but are subject to limited supply and enhanced prices.

Additionally, weight limitations often require splitting of orders delivered via air. Since COVID-19, consumer online ordering has increased resulting in further logistics delays.

Furthermore, commercial projects often secure precedence on the limited cargo ships and aircraft that do reach the Pacific Island territories. And availability and shipping times from non-domestic geographically closer locales often meet demand, arrive faster, cost less and decrease administrative burden on resource-challenged energy offices.

The US Energy Department explained that the proposed waiver is critical to provide the time for the agency to collect and analyze evidence to determine if a more targeted waiver of these requirements is in the public interest.

Without the waiver, infrastructure projects located within the Pacific Island Territories will experience challenges with product delivery, availability, reliability, and project scheduling. Infrastructure project schedules rely on readily available products delivered within reasonable timeframes.

Comments on the proposed Waiver are due on or before July 12, 2023.  To receive consideration as a public comment, written comments should be sent to the following: ([email protected]) and put “2023 General Applicability Public Interest Waiver – Pacific Island Territories” in the subject line when sending an email.