Tariff exemption denied for $1.1B Texas pipeline project

Dive Brief:

The Commerce Department on Monday denied a steel tariff exemption request for a $1.1 billion Texas shale pipeline, ruling that Plains All American Pipeline could buy the necessary steel in the U.S., according to Reuters.
In its application for an exemption, Plains said there were only three steel manufacturers in the world that could supply the steel it needs to build the 550-mile Cactus II pipeline from oilfields in West Texas to the Gulf Coast and that they are all in foreign countries. Panama City, Florida-based Berg Steel Pipe Corp., which was able to oppose the exemption request as part of the application process, said it could supply suitable product, although it would be made with a different process than the material Plains planned on using.
Plains said it should be exempt from the requirement that it purchase steel domestically because it ordered the material from a supplier in Greece well before President Donald Trump imposed the 25% tariff on steel. A Plains spokesperson, who reportedly did not reveal to Reuters how much the decision would increase its pipeline costs, said the application process is flawed and that the company would explore a potential challenge. A Commerce Department official told Reuters that the agency had thus far approved 267 exemption requests and denied 452. Almost 26,500 applications have been submitted to the department.

Dive Insight:

Shell and Chevron got better news from the Commerce Department. The department granted both Shell and Chevron exemptions so that the companies could buy Japanese steel for drilling operations in the Gulf of Mexico, according to the Houston Chronicle. According to Paint Square, however, those companies have been denied several requests as well. Kinder Morgan is reportedly still waiting on a decision as to whether it can use foreign steel on its $1.7 billion Gulf Coast Express Pipeline project.

President Donald Trump's administration's tariffs on steel and aluminum imports have also affected other types of projects that use steel. The Las Vegas Stadium Authority, however, said it will have minimal impact on the budget for the $1.8 billion Raiders stadium and no negative effect on its compressed, 30-month schedule, according to the Las Vegas Sun. Most of the steel for the stadium has been delivered, but Don Webb, COO of the Las Vegas Stadium Co., said resolving contractors' claims regarding steel prices could be "somewhat contentious."

If there are project overruns because of steel or any other reason, the team would have to absorb the cost per the financing deal they struck with the state of Nevada.