Feds reject steel tariff exemption to Permian Basin pipeline builder

Pipeline operator Plains All American Pipeline Company has been denied an exemption by the Trump administration of a tariff on imported steel.

The company asked for the exemption for its $1.1 billion “Cactus II” line to carry more oil out of the Permian Basin where there is a shortage of pipelines to carry out to the Gulf Coast refineries.

The denial by the Commerce Department was the first such ruling on a major energy project since the start of the tariffs. Commerce said the exemption was denied because material for the pipeline is available from U.S. producers.

Plains called the ruling “unjust” because it had ordered the imported steel last year from a company in Greece before the start of the tariffs. The company did not indicate how much the tariffs will add to the cost of the 550-mile line.

“The steel tariff exclusion request review process is flawed and does not allow for an applicant to effectively engage,” said Karen Rugaard, a Plains spokeswoman. “We are reviewing our options to challenge this decision.”

Reviews appear “to rely on comments that are not required to be substantiated, and on a review of undisclosed data by staff without meaningful interaction with the applicants,” Rugaard added.

Plains made the purchase from a unit of Corinth Pipeworks Pipe Industry SA in Greece. But this past spring, the Trump administration slapped a 25 percent tariff on imported steel. It also said companies could seek exemptions if metals were not available in sufficient quality or quantity in the U.S.

 

Several major energy companies, including Kinder Morgan Inc are awaiting rulings. Shell and Chevron Corp so far have had mixed results on decisions related to their exclusion requests.

The Commerce Department said 267 exemptions had been approved so far and 452 denied. Of the 26,400 submitted to date, 3,385 have been rejected.