It’s been one of President Trump’s favorite boasts since he took office: By his order, new oil and gas pipelines built in the U.S. will be made from American steel.
As is often the case, Trump has wrapped the claim into an anecdote he often repeats. Referring to his orders to revive the Keystone XL and Dakota Access pipeline projects, Trump recalled last month that he interrupted the signing to ask, “Who makes those beautiful pipes for the pipeline?”
“Sir, they’re made outside of this country,” came the response.
“I said, ‘No more, no more.’ So we added a little clause — didn’t take much — that [if] you want to build pipelines in this country, you’re going to buy your steel, and you’re going to have it fabricated, here. Makes sense, right?”
The story has proved effective with Trump’s audiences, but it’s not an accurate description of what he did. It took the White House only a couple of weeks after the signing to acknowledge that the “Buy America” rule would not apply to Keystone. That would be unfair, officials said, because TransCanada, the company building the line, had long ago bought its pipe, some of it made in the U.S., and the rest in Canada, Italy and India.
Even so, White House officials have insisted that all future pipelines will be covered.
That’s not true, either, according to government documents and interviews with officials in the affected industries.
The actual number of pipelines covered by Trump’s Buy America rule could well be zero.
Rushing things through is risky. You can end up looking like you’re not competent.
Therein lies a tale about the gap between the president’s sometimes extravagant promises and the reality of his governing. White House officials, when asked about the discrepancy, sought to explain it away by redefining Trump’s words — a practice they’ve often followed over the last three months.
Trump revels in executive orders. With his legislative program either stymied — as in the case of healthcare — or far behind schedule, Trump has used orders he can sign in front of TV cameras to provide images of decisive action.
But a review by The Times of the 39 orders and presidential memorandums signed by Trump found that fewer than half actually made a substantive change in federal policy. Sixteen of the directives simply told Cabinet agencies to study a problem and come up with recommendations — something that in many cases the agencies had the authority to do even without a formal order.
Of the executive orders that actually did change policy, two — the original and revised versions of Trump’s ban on travel to the U.S. by residents of several majority-Muslim countries — have been blocked by courts. Another was a freeze on hiring by federal departments, which the White House rescinded last week after it was blamed for worsening backlogs at Veterans hospitals and Social Security offices. And an order from January, reorganizing the National Security Council to add Trump advisor Stephen K. Bannon, was negated by another earlier this month that took Bannon off the panel.
That leaves about a dozen orders that have truly succeeded in changing policy. Most involve rolling back Obama administration environmental policies or toughening immigration enforcement — two priorities on which the administration has focused sustained attention.
A number of Trump’s early executive actions were “not well thought-through,” said John Hudak, deputy director at the Center for Effective Public Management at the Brookings Institution, a Washington think tank. Many of them “were quite rushed. The president was trying to achieve fairly dramatic public policy change too quickly” — as with the travel ban. “Rushing things through is risky,” he added. “You can end up looking like you’re not competent.”
That language largely negates what Trump claims: Current law almost certainly does not allow the government to impose a domestic-content rule on private companies.
The government “lacks statutory authority” to tell a private-sector company, building a project financed by private funds, where to buy from, Jeffrey Shoaf, director of government affairs at Associated General Contractors, wrote to Commerce officials in response to their request for public comment on Trump’s plan. The association represents companies that build major projects.
Pipelines in the U.S. are almost all funded by private-sector money, not tax funds. They do need federal and state permits before they can be built, but those cover specific purposes, such as guarding U.S. waterways from pollution or protecting endangered species. Grafting a Buy America rule onto permits would be a “very dangerous, slippery slope that opens the door to all sorts of federal requirements that have never before been conditions on privately funded construction work,” Shoaf wrote.
In interviews, lawyers for pipeline companies took the same position, declining to speak on the record because their clients want to maintain friendly relations with a White House that is actively supporting most of the oil and gas industry’s agenda.
At the Commerce Department, officials declined to comment when asked whether they had identified any legal basis for the requirement.
The department’s public comment period ended earlier this month, and none of the 81 submissions filed by companies, trade associations and individuals suggested a legal way to enforce Trump’s rule.
White House officials, asked about the issue, offered a now-familiar explanation: The president’s words shouldn’t be given their literal meaning. While Trump has repeatedly talked about the Buy America policy as a mandatory rule, the officials cast it as an exhortation.
“Why wouldn’t the president of the United States suggest — and again, I stress the word suggest — that companies who want to do business in America should also use American products?” said a White House official, speaking on condition of anonymity. Trump was “using the bully pulpit to show companies what the American president would prefer that they do,” the official said.
White House Deputy Press Secretary Sarah Sanders said that “of course the president is fully aware of the specific language of his own memorandum.”
The interpretation that Trump was just offering a suggestion clearly was not what the country’s business leaders heard.
The U.S. Chamber of Commerce, for example, in its submission to the Commerce Department, warned against an “unprecedented” effort to impose a Buy America requirement on private-sector projects. “A core feature of the U.S. free enterprise system … is that private businesses should be free to make purchasing decisions on their own,” the Chamber wrote.
Foreign governments didn’t see it as a voluntary suggestion, either. Australia, Canada and the European Union all submitted comments warning that a ban on using imported steel would violate U.S. obligations under trade treaties, some of which have been in effect for decades.
There’s also a question about whether domestic steel producers would invest the money to build or upgrade facilities to produce the specialized, hardened steel, up to an inch thick, that is required for big interstate pipelines. Until recently, few domestic producers were in the business, in part because the U.S., which already has more than half a million miles of natural gas transmission pipelines, wasn’t building a lot of new capacity.
Some steel companies said they could expand and hire new workers; others, which use foreign steel for part of their supply, said Trump’s stringent rule would drive them out of the business and cause layoffs. Companies that build or own pipelines were skeptical that Trump’s plan could work.
In a lengthy submission to the Commerce Department, trade associations representing the natural gas industry pointed to recent projects that sought to use more American-made steel. In one case, the groups said, only one domestic mill even bid on the project. Its price was “almost double the cost of the other two bids from international suppliers.”
“Pipeline companies, like other manufacturers, value shorter supply chains over longer ones,” the groups wrote. “If it were possible to source all materials and equipment within the borders of the U.S. at a competitive cost,” companies already would have done so, they said.
The better approach, the gas industry said, would be for the administration to provide incentives to steel companies to produce more — an approach that some administration officials suggested may be what the Commerce Department ultimately will propose when it submits its plan, which is due in late July. Already, the administration says it is helping the steel industry through efforts to roll back environmental rules, cut taxes and stringently enforce rules against foreign companies dumping below-cost steel into the U.S. market.
Incentives could boost domestic steel production somewhat, but would be a far cry from the simple rule Trump repeatedly has proclaimed. Whether voters would hold him accountable for the difference is unclear, said Hudak. If new pipelines come online, few voters are likely to know where the steel came from, he noted, but they may remember Trump’s oft-repeated claim that it’s made in America.
“It’s actually a pretty meaningless memorandum,” he said, but “it’s a communications masterpiece.”
Staff writer Brian Bennett contributed to this report.
For more on politics and policy, follow me @DavidLauter.