Week Ending March 2, 2018

Infrastructure Session Addresses CWA Conflicts, Chances in Congress, Steel Tariff Issues

This Article Appears as Published in Foster Report No 3188
Infrastructure Session Addresses CWA Conflicts, Chances in Congress, Steel Tariff Issues

With steel executives called to the White House March 1, the possibility of tariffs on steel imports and the impact on pipeline development provided a backdrop to a discussion on Capitol Hill about the Trump administration’s infrastructure package and chances of passing a bill in Congress.

President Donald Trump said he intends to impose tariffs on steel and aluminum imports in the coming week. The level of the tariffs for specific countries is yet to be determined, but the energy sector and lawmakers are wary about the impact such steps could have for energy projects.

Imposing tariffs on steel imports can raise costs for U.S. manufacturers of many different types of products, and the decision runs counter to Trump administration goals for infrastructure development, since tariffs can harm U.S. firms looking to build bridges and other projects, an industry source said March 1.

A March 1 event held by the Policy Resolution Group at Bracewell law firm featured officials from the White House, Senate, House of Representatives and the energy industry addressing the infrastructure principles the White House released in February. Chances for passing a broad infrastructure bill may be limited, but the principles provide a strong framework for House and Senate leaders to craft legislation, said Alex Herrgott, associate director for infrastructure at the Council on Environmental Quality (CEQ).

“We’re optimistic” that legislation can be agreed upon by Democrats and Republicans because infrastructure development is a bipartisan issue, Herrgott said. “We are working collaboratively on both sides of the aisle” about what can be included in a bill. It is early in the year and “I think folks are still trying to understand what’s in the principles,” said Herrgott, who noted that nine committees in each chamber will have a say on any legislation.

He declined to address the impact of steel tariffs for infrastructure development, since that is not an issue CEQ has input on, but Sen. Ted Cruz (R-Texas), answered a question on the topic after his remarks at the Bracewell event. “The history of steel tariffs is not encouraging,” Cruz told The Foster Report.

The U.S. has a robust manufacturing base and a strong energy industry. “Imposing steel tariffs only serves to drive up the costs for manufacturers, for those in the energy sector.  And there are a lot more jobs in America that depend on manufacturing and energy than are directly related to steel,” Cruz said.

The Commerce Department recently recommended that President Trump impose tariffs on imports of steel and aluminum based on national security concerns, which did not go over well with the American Petroleum Institute, the Interstate Natural Gas Association of America (INGAA), the Association of Oil Pipe Lines and others.

Commerce also in February announced investigations into whether imports of large-diameter welded pipe are being dumped in the U.S. or if foreign pipe producers are receiving unfair subsidies. The U.S. International Trade Commission (ITC) is scheduled to make preliminary injury determinations by March 5.

Trump on March 1 posted on Twitter his desire for a trade policy that does not harm U.S. steel manufacturers.  “Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!” the president tweeted.

In a statement, the head of the Center for LNG expressed similar concerns about tariffs on steel endangering U.S. LNG export projects. Such projects benefit the economy, create jobs and reduce the trade deficit, said Charlie Riedl, executive director of the CLNG.In his comments to reporters, Cruz said he believes that Commerce should focus on questions of market manipulation and dumping of goods in the U.S. “I think those are fair and legitimate concerns. But the history of tariffs is that they typically hurt the consumer and have the potential to cost many more jobs than they save,” he said.

The Trump administration “had taken meaningful steps to improve the current permit review process for natural gas infrastructure and it would be unfortunate if their steel tariffs created new and different barriers to projects,” Riedl said.

Permitting reform should be part of any infrastructure bill to try and move it through Congress, said Cruz and Rep. Will Hurd (R-Texas), who spoke at the Bracewell event. Congress does not pass comprehensive legislation too often and including regulatory reform – which might be more contentious among Democrats – in an infrastructure bill might make it more palatable for members of both parties, the lawmakers said in separate remarks.

Permitting reform should address the lack of cooperative federalism at play among selected states, where opposition to pipeline projects and the use of the Clean Water Act (CWA) to block pipeline permits is hindering interstate commerce, said Don Santa, president and CEO of INGAA. “We were excited and appreciative that the administration placed an emphasis on permitting” in the infrastructure principles it released, Santa said.

But a targeted change is needed for amending the CWA to address appeals when a state oversteps its authority under the law, Santa said. As he did in testimony at a Senate hearing, Santa noted that compared with the judicial appeal process for the CWA that tends to be deferential to agencies, the Coastal Zone Management Act allows appeals to the Commerce Department instead of immediately turning to the courts.

Herrgott acknowledged that “there has been some abuse” of the CWA language by states opposed to pipeline infrastructure. Use of the statute to block economic development has only come about in the past two to three years. The goal for CEQ is to get agencies to adhere as close as possible to their authority outlined in the statutes, he said.

INGAA will push for changes from the executive branch while also encouraging Congress to pass infrastructure legislation that includes regulatory reform, Santa said. “Let’s be real. It takes a lot of work to get bills to the president’s desk,” he said, which is why the pipeline group is taking the two-pronged approach for such reforms.

A common refrain during the session was New York state agencies denying permits under CWA Section 401 to block pipelines from moving natural gas to Northeast markets. That is not cooperative federalism, and such state activity was what prompted framers of the Constitution to include interstate commerce provisions, to protect against economic trade battles among the states, said Cruz. To have cooperative federalism, you need to have cooperation, and one state thwarting others from receiving goods is not cooperation, he said.

By Tom Tiernan TTiernan@fosterreport.com

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