EPA’s Proposed Waiver of Buy America for $3 Billion Ports Program Draws Criticism from Labor and Environmental Groups

By Elizabeth Brotherton-Bunch
Apr 26 2024 |
An aerial view of the Port of Long Beach in California. Getty Images

Set to be in effect until 2028, the waiver “misses an opportunity to align with the Biden administration’s goals of promoting emissions reductions and supporting domestic manufacturing.”

Leading labor and environmental groups are expressing concerns with the Environmental Protection Agency’s (EPA) plan to issue an overly broad waiver of Build America, Buy America (BABA) requirements for the $3 billion Clean Ports Program, with one group arguing the waiver “risks permanently offshoring supply chains for clean port technologies—and the manufacturing jobs that come with them.”

The BlueGreen Alliance (BGA), the United Steelworkers (USW), and the Transportation Trades Department (TTD) at the AFL-CIO — which represents 37 affiliated unions, including longshore workers and others in construction and manufacturing — are among the organizations who submitted comments to the EPA urging that the waiver undergo significant improvements. The Alliance for American Manufacturing (AAM) also offered comments urging that the waiver be pulled back and reissued with significant changes.

The proposed waiver is set to last until 2028, long after funding for the program is likely to end. If implemented, the waiver would eliminate the statutory 55% domestic component content threshold for manufactured products used in infrastructure projects funded with federal tax dollars, along with the domestic “manufacture” requirement. Instead, the waiver would put in place an undefined “final assembly” standard, which the United Steelworkers (USW) warned “could allow foreign companies to exploit minimal assembly requirements in the United States, resulting in limited job creation.”

The EPA is also proposing a supplemental “de minimis” waiver that would allow an additional 10% of port equipment purchases to be made without applying any Buy America requirements, even the minimal “final assembly” requirement. This is striking, as the EPA already has an outdated a de minimis policy in place that allows for foreign content up to 5% of a total project cost to be considered domestic for compliance purposes.

“Overall, these sweeping waiver policies undermine Buy America requirements, potentially leading to significant use of foreign-produced equipment with the allocated $3 billion in funding,” the USW said in their comments to the agency.

Several of the organizations expressed concern that should this waiver go into place, it will be a missed opportunity to strengthen critical green manufacturing in the United States — and instead serve as a U.S. taxpayer-funded giveaway to China, which dominates this sector. Indeed, just last week the Biden administration announced it will proceed with an investigation into alleged predatory practices by China in its shipbuilding industry, which makes the EPA’s plan to import critical port products all the more astonishing. (Both the USW and AAM sent supplemental comments to the agency after the administration’s announcement.)

Furthermore, the labor and environmental groups argue that this waiver actually will wind up being a step back in the fight against climate change, as it could lead to the loss of clean port technology manufacturing and supply chains in the United States, making us further reliant on China — a country whose manufacturing comes with a whole lot of carbon emissions.

BGA wrote to the EPA:

“As written, the proposed Buy America waiver for the Clean Ports Program puts existing U.S. manufacturing jobs at risk and crowds out investment from manufacturers that are already making strides to onshore their supply chains in favor of rent-seeking manufacturers with low-road environmental and labor practices.”

TTD President Greg Regan echoed those comments:

“TTD and our affiliated unions recognize the serious impacts from climate change and the severe consequences we face if we fail to respond with responsible measures that reduce our carbon footprint. It is for that reason that we urge the EPA to reconsider this proposed waiver. … As it stands, the proposed waiver could inadvertently incentivize Chinese state-owned and subsidized companies to establish assembly facilities in the U.S., relying entirely on imported Chinese content.”

In its comments, the USW pushed back against the notion that there is not domestic production capacity to meet the needs of the ports program:

“Decades of flawed industrial policies have incentivized offshore production, resulting in a weakened U.S. manufacturing sector. Rebuilding domestic industries and fostering innovation requires sustained commitment and strategic investment to secure long-term economic prosperity.

“However, the lack of domestic capacity is not a sufficient justification for a broad ‘one-size-fits-all’ waiver that removes incentives for companies to invest in U.S. production. It is crucial to develop a Buy America waiver framework that addresses the unique challenges and opportunities of each equipment category. … EPA should reconsider its ‘one-size-fits-all’ approach, and allow recipients to request waivers tailored to their specific projects or products. This aligns with Congress’s intent for Buy America to be applied narrowly, and incentivize investment in U.S. production and workers within each equipment category covered by the program.”

In our own comments to the EPA, AAM argued that the proposed waiver “creates few, if any, incentives for companies to make meaningful investments in U.S. manufacturing capacity or hire workers, overlooks the domestic supply chain for component content, and creates new Buy America loopholes.” And we argued that “countries like the People’s Republic of China (PRC), whose companies are backed by massive state subsidies and are often connected to its military, will stand to benefit from the U.S. taxpayer-funded purchase of zero emission vehicles, cargo handling equipment, locomotives, and vessels – including ocean going vessels and harbor craft.”

“If EPA believes a waiver is necessary, it should rescind its current waiver and propose a new one that prioritizes eliminating loopholes, is short in duration, and is narrow in scope,” we wrote. “EPA’s approach must recognize the unique supply chain challenges and opportunities of the vastly different equipment considered eligible technologies under the Clean Ports Program. Critically, EPA must also broaden its application of restrictions on countries of concern to ensure that the Peoples Republic of China (PRC) does not strengthen its dominance in these sectors with the backing of the U.S. taxpayer.”

Applications for the Clean Ports Program are due by May 28. The agency anticipates announcing awards in December.