The April 7 deadline has come and gone for public comments on President Donald Trump‘s executive order calling for U.S.pipelines to be made with U.S.-produced steel, and some of the most influential titans of industry have come out against it.
The list of heavy-hitters who have voiced their discontent includes the likes of Dakota Access pipeline-owner Energy Transfer Partners, Russian-owned pipe producers Evraz North America and TMK IPSCO, and pipeline giants Williams Companies and EQT Midstream. It also includes the oil and gas industry at-large through its trade association and lobbying groups, such as the American Petroleum Institute (API), Independent Petroleum Association of America (IPAA), Association of Oil Pipelines, American Fuel & Petrochemical Manufacturers (AFPM), and others such as Magnolia LNG.
Noticeably absent from the list is TransCanada, owner of the recently approved Keystone XL pipeline, which the Trump administration has said is exempt from the order. Both Keystone XL and Dakota Access will use steel made by Evraz North America, whose parent company is owned by a close political ally of Russian President Vladimir Putin, as previously reported by DeSmog.
Evraz, Canada, EU say no to “buy America”
In comments submitted to the Department of Commerce, Evraz discussed what “Buy America” would mean to it as a company. Evraz previously lobbied against a “Buy America” amendment tucked into a congressional bill calling for the approval of Keystone XL in 2015.
“The specter of ‘Buy America’ being possibly implemented for pipeline projects has already created a negative impact on the pipeline market, and our business specifically,” Brian Kristofic, trade and government affairs director for Evraz North America, wrote in the filing. “Evraz operates a carefully integrated North American steel supply chain that depends on the free flow of goods between the U.S. and Canada to serve customers in both markets and preserve the viability of well-paying middle-class jobs in both countries.”
According to Evraz North America’s quarter one 2017 federal lobbying disclosure form, the company paid lobbyist John Stinson $50,000 during that time period to lobby Congress and the Commerce Department in opposition to Trump’s order.
Both the Canadian government and the Province of Saskatchewan have also come out against Trump’s Buy America pipeline order. Evraz has major operations in Canada, where pipeline products currently pour across the U.S. border.
“EVRAZ Regina supplies customers in the U.S. and Canada. EVRAZ also has operations in the Canadian provinces of Alberta and Manitoba as well as in the U.S. states of Colorado, Oregon, North Dakota and Illinois, all of which are part of their integrated supply chain to manufacture their products,” wrote Brad Wall, the Premier of Saskatchewan, in his comment. “Imposing local content requirements on the construction of American pipelines puts these mutual benefits at risk as they negatively affect our cross-border supply chains and jeopardize millions of U.S. and Canadian jobs that depend on trade, including EVRAZ‘s jobs in the U.S. that depend on thriving Canadian operations.”
Similarly, the Canadian government pointed to the U.S. and Canadian pipeline industries as “interdependent,” again mentioning Evraz in doing so.
“They are an integral part of each other’s supply chains for finished and semi-finished products, especially in sectors such as automotive, construction and energy,” it wrote. “Many steel facilities operating in both countries are subsidiaries of the same parent companies, including ArcelorMittal, Tenaris, Evraz, Harris Steel and others.”
The Government of Alberta, which oversees the massive tar sands reserves, stepped it up a notch, threatening potential legal action if Trump goes forward with the Buy America order.
“The growth in energy development in Alberta over the past two decades has made our province one of the most important global markets for U.S. equipment and services companies,” it wrote in its comment. “Should the U.S. choose to impose measures that are counter to current trade agreements, Alberta will work with the Government of Canada to vigorously defend its interests within the appropriate fora.”
Welspun, the Indian-owned company with a subsidiary based in Little Rock, Arkansas, also produced some of the steel for Keystone XL and Dakota Access. And like Evraz, it has come out against Trump’s order, writing, “Domestic content requirements will reduce the number of steel mills in our supply chain base.”
However, TMK, the other major Russian-owned oil and gas pipe-making company with U.S. operations besides Evraz, has actually offered support of the order. It says it will only serve to bolster the company’s bottom line.
Beyond North American borders, opposition to Trump’s steel order has come from the European Union.
“The EU is concerned that the memorandum and the subsequent Notice of request for comments refer to a very broad coverage of Buy American obligations which, if implemented, would reduce the opportunities of EU industries to contribute to any U.S. pipeline construction or repair projects in the future,” wrote EU Ambassador David O’Sullivan, later pointing out that the order itself is on shaky legal ground, given existing international trade agreements.
“We would … strongly encourage you to reflect on the negative implications of, and further precedent-setting effects of imposing domestic preference policies or regulations and to ensure full respect of the international obligations to which the U.S. has committed.”
Energy Transfer Partners and industry backlash
Energy Transfer Partners (ETP) justified its opposition to the Trump proposal by arguing it likely would have a “significant adverse impact on project execution schedules” because the current U.S. steel industry lacks the capacity to build the considerable pipeline mileage under proposal.
“This has been evident in past years when construction activity was moderately high,” wrote the company. “The impacts of such a restriction are expected to severely delay project schedules, drive up costs, decrease availability, and lower quality. In general we believe such a restriction or mandate should be thoughtfully crafted so that it sufficiently considers the best interest of public safety, the reliability of pipeline facilities and the financial interests of shareholders or unitholders, ratepayers and employees.”
ETP also admits in its filing that the vast majority of the steel for its pipelines, 81 percent of it, is not sourced domestically.
The American Fuel & Petrochemical Manufacturers (AFPM), of which Koch Industries is a member, did not come out against the order, but rather offered a list of things the Trump administration should consider about its proposal before introducing the final proposed rule. The lobbying group did note it was “concerned” that the initiative would end up “interfering with the free market.”
API and several other industry trade groups, including the Association of Oil Pipelines and the American Gas Association, also commented that the industry was pleased with the flexible language found in the Trump executive order.
“Because the Presidential Memorandum recognizes that any domestic content requirement should be implemented ‘to the extent permitted by law,’ the Associations believe it is important that the plan address potential legal constraints,” wrote the armada of trade associations and lobbying organs. “The Associations therefore respectfully request that interested stakeholders be provided a meaningful opportunity to provide advance comment on any possible domestic content requirement, including comments on possible legal limitations and ramifications.”
The U.S. Department of Commerce will consider all of these comments as it inches toward a draft set of regulations required by the executive order and due on July 23.
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