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  April 19th, 2017 | Written by

Trump’s Executive Actions May Delay Infrastructure Projects

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  • Hastening the approval process for pipelines means courts could invalidate the go-aheads.
  • Requiring local steel in pipelines could yield trade disputes from WTO members.
  • Agencies that change their position must provide a reasoned justification for the change.

President Donald J. Trump has signed a number of executive orders intending to cut through or eliminate regulatory processes to get infrastructure projects up and running quicker.

But a report from the Atlantic Council indicates that such an approach could slow down infrastructure development by increasing the likelihood that aggrieved parties will file lawsuits and trade disputes.

Hastening the approval process for the Dakota Access and Keystone XL, the report said, means courts could invalidate the go-aheads. Requiring local content for steel in pipelines could yield trade disputes from members of the World Trade Organization.

On the Dakota Access pipeline, Trump signed a presidential memorandum essentially directing the Army Corps of Engineers to skip the last part of the contemplated approval process, an additional review of an alternate route and preparing an environmental impact statement. The Corps rescinded the environmental review, allowing the project to proceed, citing the president’s directive.  According to the Atlantic Council report “there is still some risk the court could halt or delay operation of the pipeline and order the army to proceed with more environmental review” because the agency didn’t provide a reasoned justification for its change of procedure.

Trump also signed a memo inviting TransCanada to resubmit its application for Keystone XL and directed agencies to make a decision within sixty days. According to the report, “This accelerated timeline significantly increases the risk that a court could block any decision to grant Keystone XL a permit.” As with Dakota Access, the State Department needs to “ensure that any change in its decision is supported in the record” and not merely presidential fiat.

The Presidential Memorandum Regarding Construction of American Pipelines, signed in January, directed Secretary of Commerce Wilbur Ross to develop a plan within 180 days to require pipelines in the US to use materials and equipment produced domestically.

“Ross will face significant challenges in crafting a plan that avoids creating additional legal uncertainty in a World Trade Organization (WTO) challenge or harming US industry,” said the report.

WTO rules enshrine the principle of non-discrimination between domestic producers and foreign suppliers, meaning, that WTO members are required to give the same treatment to domestic products and imports from all other members. This principle of most-favored-nation treatment actually predates the WTO and is included in Article I of the General Agreement on Tariffs and Trade, WTO’s predecessor, signed in 1947. WTO rules also put limitations on local content requirements and the US has led the world in challenging those provisions when they hurt US exporters.

“Any plan that supports using US steel and equipment in pipelines will need to be carefully designed to avoid being invalidated at the WTO,” said the report. “In addition, LCRs [local content rules] generally harm the economy of the country implementing them by increasing costs in the economy as a whole and harming international competitiveness.”