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Keystone XL Escapes Trump's US Steel Only Pipeline Order

March 06, 2017
Law360, New York (March 3, 2017, 3:31 PM EST) -- President Donald Trump's executive order calling for U.S. pipelines to be built with American steel won't apply to TransCanada Corp.'s controversial Keystone XL project, whose completion he has pushed for, the White House confirmed on Friday.
[Keith Goldberg| March 3, 2017 |Law 360]
The order issued by Trump on Jan. 24 — the same day he issued presidential memoranda aimed at pushing forward Keystone XL and the Dakota Access pipeline project — directed the U.S. Department of Commerce to develop a plan in which “all new pipelines, as well as retrofitted, repaired or expanded pipelines ... use materials and equipment produced in the United States.”

“We have cleared the way for the construction of the Keystone and Dakota Access pipelines — thereby creating tens of thousands of jobs — and I've issued a new directive that new American pipelines be made with American steel,” Trump said last Tuesday in his address to a joint session of Congress.

But TransCanada Corp.'s Keystone XL project, which recently reapplied for a cross-border permit from the U.S. Department of State after former President Barack Obama rejected the project in November 2015, is exempt from the order because it is already being built, the White House said Friday.

"Well, the way that executive order is written ... it’s specific to new pipelines or those that are being repaired," principal deputy press secretary Sarah Sanders told reporters aboard Air Force One on Friday. "And since this one is already currently under construction, the steel is already literally sitting there, it would be hard to go back. But I know that everything moving forward would fall under that executive order.”

The White House wouldn't say if the Dakota Access project, which is nearing completion, is also exempt, as well as what any potential criteria would be for a pipeline project to be exempt.

“We have to wait for Commerce to provide the plan it was directed to create by the EO, in order to start implementing one,” a White House representative said.

It is the latest indication of Trump's support for the Keystone project, which if completed, would ship oil sands from Canada to refineries on the U.S. Gulf Coast. His Jan. 24 memorandum invited TransCanada to reapply for a cross-border permit and ordered the State Department to review and decide the application within 60 days of receiving it. The department said on Feb. 9 that it received TransCanada's resubmitted application.

“We continue to be encouraged as our presidential permit application makes its way through the approval process,” TransCanada spokesman Terry Cunha said on Friday.

On Monday, TransCanada suspended its $15 billion North American Free Trade Agreement arbitral claim against the U.S. over its cross-border permit denial for the Keystone XL pipeline. The proceeding has been suspended until March 27, according to the case records at the International Center for Settlement of Investment Disputes, which is handling the arbitration.

The move echoed January's pause of a lawsuit that TransCanada filed against the U.S. in Texas federal court over the Keystone rejection. Both disputes may ultimately be moot now that TransCanada has resubmitted its permit application to the State Department.

Environmentalists derided the news that the Keystone XL project would be exempt from Trump's buy-American order.

“The only winner of this ‘deal’ is TransCanada, which is using a $15 billion threat under NAFTA’s deeply flawed corporate tribunal system to outmaneuver Trump and push a dirty and dangerous pipeline across our country,” Sierra Club Executive Director Michael Brune said in a statement on Friday. “TransCanada’s success over Trump is what happens when you have an administration stacked with fossil fuel billionaires and a trade deal that enables corporate polluters to push their agenda at will.”

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