Keystone XL builders can use non-U.S. steel, White House says now

[March 04, 2017]  (Reuters) - The Keystone XL oil pipeline does not need to be made from U.S. steel, despite an executive order by President Donald Trump days after he took office requiring domestic steel in new pipelines, the White House said on Friday.

"It's specific to new pipelines or those that are being repaired," White House spokeswoman Sarah Sanders told reporters on Air Force One, when asked about a report by Politico that Keystone would not need to use U.S. steel, despite Trump's order issued on Jan. 24.

"Since this one is already currently under construction, the steel is already literally sitting there, it's hard to go back. Everything moving forward would fall under that executive order," Sanders said. The southern leg of Keystone is completed and started pumping oil in 2013. Some pipe segments that could be used for Keystone XL, which would bring oil from Alberta, Canada to Nebraska, have already been built.

Former Democratic president Barack Obama rejected TranCanada Corp's <TRP.TO> multibillion-dollar pipeline, saying it would not benefit U.S. drivers and would contribute emissions linked to global warming.

Trump's order expedited the path forward for TransCanada to reapply to build Keystone XL.

In weeks after issuing the order, Trump said in speeches and in meetings, including one with manufacturing CEOs, that Keystone would be required to use U.S. steel. In a speech this week to a joint session of Congress, Trump softened that stance saying new pipelines would have to be made with it.

Economists told Reuters days after Trump issued the order that the steel requirement had many loopholes, would not be easily enforceable, and could violate international trade law.

Even if there were no loopholes, U.S. steelmakers would receive negligible benefit from Keystone XL, because they have limited ability to meet the stringent requirements for the project.

A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota, January 25, 2017. REUTERS/Terray Sylvester

The office of Canadian Prime Minister Justin Trudeau said it welcomes the allowance of non-U.S. steel, calling it a "recognition that the integrated Canadian and U.S. steel industries are mutually beneficial."

TransCanada said it was encouraged by the White House statement on non-U.S. steel and that its presidential permit application on Keystone was making its way through the approval process.

Canadian Public Safety Minister Ralph Goodale said on Twitter that allowing non-U.S. steel was "important for companies like Evraz Steel," a local subsidiary of Russia's Evraz PLC, which had signed on to provide 24 percent of the steel before Keystone XL's rejection by Obama.

(Reporting by Melissa Fares on Air Force One, Ethan Lou in Calgary and Timothy Gardner in Washington; Editing by Chizu Nomiyama and David Gregorio)

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