Exclusivity rules delay Obama's aid plans
US projects wait for Fed waivers
August 9, 2009
By Mark Drajem
Contractors are searching the US in vain for filters, as well as the bolts and manhole covers needed to build wastewater plants, sewers and water pipes financed by the economic stimulus.
As officials wait for federal waivers to buy those goods outside the US, water projects from Maine to Kansas have been delayed.
Pleas for Waivers
"It's added a whole new level of difficulty," said Kathy Emery, a senior engineer for the West Virginia Department of Environment. "We're continually having changes and further guidance" from federal rule makers, she said.
At stake are the president's efforts to fuel an economic recovery by funnelling stimulus funds to communities, including $6bn for municipal water projects. Lawmakers mandated that the money must be spent on US products, with exceptions to meet international trade obligations.
GE says it assembles hi-tech filtration systems for North American markets at its plants in Toronto and Ontario, with parts from Hungary and elsewhere.
Those facilities were "fully integrated" with GE's US operations and played "a key role in the global distribution" of the filters, GE spokeswoman Kimberly Ramalho said. "We believe that national preferences like 'Buy American' are protectionist and will invite countermeasures from trading partners."
State agencies managing five US water projects have requested waivers to buy filters made by GE and other companies, according to Emery, the West Virginia engineer.
Among them is a plea from West Virginia, which wants to buy a foreign-made membrane filtration system to prevent nitrogen and phosphorous from pouring into rivers. It is made by companies such as GE and Japan's Kubota.
In all, the Environmental Protection Agency (EPA), which administers the water funding, has granted six waivers and has 29 petitions pending.
Justin Kitsch, a spokesman for North Dakota senator Byron Dorgan, a Democrat who was a Buy American sponsor, said: "The recipients of economic recovery funds will work through the process as quickly as possible so more Americans can be put back to work."
The "goal with the Buy American provision is to create jobs".
Business slows
At Aquarius Technologies, which sold equipment to US wastewater plants, domestic business had slowed to a trickle, said Tom Pokorsky, the president of the company in Wisconsin.
"Buy American has stopped US wastewater work this year," he said. "I'm surviving by selling to Canada."
Even that market would not be safe if Buy American sparked a Buy Canada retaliatory initiative, he said.
After watching trucks send manhole covers flying, officials in Maine switched to hinged covers years ago. The ductile-iron ones they used were made across the border in Canada.
While they waited weeks for a waiver to buy more covers for a new sewer project, Norm Lamie ordered steel plates which would be placed over the exposed holes. "(The) EPA did eventually give us the waiver," and the manhole covers are in place, said Lamie, the general manager of one of Maine's water and sewer districts.
In Kansas, a $16 million project for a sludge plant hit delays once officials had accepted federal stimulus funds, said Mike Welch, the president of BRB Contractors.
Construction stalled because US authorities had to authorise the use of Austrian-made equipment unavailable anywhere else, Welch said.
"I would think that with the economy the way it is, someone would make some exceptions and get things done," Welch said.
Maryland is among communities waiting for permission to use the GE filters. Officials decided to go for stimulus money after learning they were eligible for more from that programme than the $6m in federal funds they had expected.
In the end, Maryland pledged $76m, including some from the state's stimulus proceeds, to Frederick County.
Now the project awaits resolution of another Buy American issue because contractors want to use South Korean blowers. - Bloomberg
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