SAM API Gateway with Cloudformation WAFRegional
I finally resolved the issue with the help of the AWS customer service. This is a limitation they have with CloudFormation when dealing with AWS::WAFRegional::RateBasedRule.
Despite the fact that CloudFormation supports creating WAF regional rate-based rules, the association of them with a Web ACL is not currently supported. If you observe link  below, you will realize that: "To add the rate-based rules created through CloudFormation to a web ACL, use the AWS WAF console, API, or command line interface (CLI)."
 AWS::WAFRegional::RateBasedRule: https://docs.aws.amazon.com/AWSCloudFormation/latest/UserGuide/aws-resource-wafregional-ratebasedrule.html
I used the Cloudformation template to generate the WebACL, the RateBasedRule, and the association of the WebACL with my APIGW. Using CodeBuild in our CI/CD pipeline, I'm now adding the RateBasedRule to the WebACL by using the CLI command
aws waf-regional update-web-acl.