Houston — Oil and gas companies are becoming increasingly frustrated with the Trump administration's response to requests for exclusions from tariffs on imports of foreign steel products -- both because of the slow pace of processing the requests, as well as the denial of some of those requests.
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Under Section 232 of the Trade Expansion Act, the Bureau of Industry and Security, an arm of the US Commerce Department, is supposed to grant exclusions to the steel tariffs if companies can demonstrate that they cannot purchase needed steel products from US manufacturers.
However, industry representatives, such as the American Petroleum Institute, say the process of claiming exemptions is non-transparent and unnecessarily burdensome, requiring companies to claim an individual exemption for each specific category of steel product they use.
"The administration's arbitrary process to determine these exclusions lacks transparency as it's not clear how and why certain exclusion petitions are granted or denied," Kyle Isakower, API vice president for regulatory and economic policy, said Friday.
A search of BIS data showed about 60 exclusion requests filed by oil and gas producers and pipeline companies since the Trump administration announced the tariffs. Some of those requests had been granted, some denied and some were still under review.
Shell and affiliated companies had filed about 22 requests. Four were denied and five were granted. Chevron North America Exploration & Production had filed six requests; three were approved and three denied.
"We encourage the administration to balance its objectives on trade with our shared goal of growing the strength of our domestic energy industry," Chevron spokeswoman Veronica Flores-Paniagua said in an email statement on the exclusion requests.
BP Exploration & Production has filed about 15 requests, none of which have resulted in an approval decision to date.
EXCLUSION DENIALS BAD FOR WORKERS: API
Other energy companies that have filed requests for exclusions from the steel tariffs include Marathon Oil, Transcontinental Gas Pipeline and Plains Pipeline.
Isakower decried those instances in which the BIS denied requests for exclusions, calling the denials "bad news for American workers and consumers who have benefitted from increased American energy production."
In recent weeks, Commerce Department officials increasingly have come under fire for their handling of the Section 232 exclusion request process. In addition to representatives of the energy industry, critics have included organizations that represent a broad swath of industries that use foreign-sourced steel, as well as politicians on both sides of the political aisle.
In a hearing before a congressional committee last month Commerce Secretary Wilbur Ross testified that his department had received more than 20,000 exemption requests for steel products and had processed only 98 of them, including 42 exemptions and 56 denials. Ross blamed the slow roll-out of the exemption approval process on a lack of funding for his department.
The steel tariffs and the denial of exclusions is going to hurt the US drive to build pipeline infrastructure, Joel Johnson, CEO of Borusan Mannesmann Pipe US, said in a recent interview with S&P Global Platts.
The steel pipe manufacturer, an affiliate of Turkey's Borusan Group, recently received notice from the Commerce Department that its Section 232 exclusion request had been denied.
"We're a small cog in the whole wheel, but our customers are demanding what we produce," Johnson said. "Without the products that we produce, there is not going to be a lot of gas coming out of the ground. It's in the nation's best interest to keep drilling and keep producing." --Jim Magill, firstname.lastname@example.org
--Justine Coyne, email@example.com
--Edited by Mark Watson, firstname.lastname@example.org