October 2019, Vol. 246, No. 10
Global News
Nice Try, But No Surcharge
After striking out on its U.S. Commerce Department request for exemption from steel tariffs, Plains All American tried a new approach this year – and promptly whiffed again.
Houston-based Plains told the Federal Energy Regulatory Commission (FERC) it planned to tack on a 5 cent-per-barrel fee for users of its new 670,000-bpd Cactus II crude oil pipeline to offset the Trump administration’s 25% tariffs on imported steel. But Plains came back with a filing to remove the surcharge after ConocoPhillips and a unit of Canada’s Encana Corp. asked FERC to reject the surcharge.
Plains had already made clear that it would rebate the fee to shippers if the Commerce Department approved its exemption request. The oil producers, however, contended that Plains was being hasty with the fee, since Commerce could still grant an exemption before the fee took effect next April.
Plains, which had already ordered pipe for the 550-mile project before the 25% steel import tariff was imposed, estimated it would add $40 million to the $1.1 billion cost of Cactus II. The Commerce Department rejected two initial requests for a waiver, and Plains has since filed a third request.
Plains was the first U.S. pipeline operator to attempt imposing a fee to pass along tariff costs to customers and could have set a precedent for other new pipelines whose construction costs were increased by the steel tariff. Plains offered no specific reason for withdrawing its FERC request but could simply be addressing shipper complaints by waiting to impose the fee after a final rejection from Commerce. P&GJ
Comments