US EPA expands emergency fuel waiver to 12 states affected by Colonial Pipeline shutdown

The US Environmental Protection Agency late May 11 expanded an emergency fuel waiver allowing 12 states and the District of Columbia to sell off-spec gasoline through the end of the month to alleviate shortages caused by the Colonial Pipeline shutdown.

An order issued earlier in the day only lasted a week and covered three states and the District of Columbia.

The expanded waiver runs through May 31 and covers: Alabama, Delaware, the District of Columbia, Georgia, parts of Florida, Louisiana, Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia.

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The waiver allows sales of summer- or winter-grade gasoline with vapor pressure under 13.5 psi, and it allows any fuel handlers along the supply chain to comingle reformulated and conventional gasoline supplies as needed.

"I have determined that an 'extreme and unusual fuel supply circumstance' exists that will prevent the distribution of an adequate supply of compliant gasoline to customers," EPA Administrator Michael Regan said in a letter to governors.

New highway order

The Department of Transportation separately late May 11 issued a new order allowing trucks to carry overweight loads of gasoline and other fuels on highways to move more supply along Colonial's route.

Major cities in the Southeast were reporting severe outages at gasoline stations as panic buying exacerbates lower refined product deliveries from Colonial.

US Energy Secretary Jennifer Granholm sounded confident in a White House briefing that Colonial could restore full operations within days, and she urged drivers not to hoard supply.

Colonial said it hopes to have the pipeline substantially back online by the end of the week as it restarts one segment at a time.

A ransomware attack forced Colonial to shut all pipeline operations May 7. The 5,500-mile system connects the Houston refining hub to New York Harbor, supplying about 45% of all the gasoline and diesel fuel consumed on the East Coast.

Shipping waivers

The Biden administration is also considering a "temporary and targeted" waiver of the Jones Act to allow foreign-flagged vessels to carry petroleum products from the Gulf of Mexico up the Eastern seaboard.

DOT's Maritime Administration asked shippers to respond to a survey by May 11 to determine the availability of Jones Act-qualified vessels. The Department of Homeland Security would then determine whether to issue any Jones Act waivers to foreign-flagged tankers.

The 1920 law requires all goods shipped between two US ports to be carried on ships that are US-built and US-flagged, with majority US owners and crew.

ClearView Energy Partners predicted Jones Act waivers could have a more significant effect on markets than EPA waivers, but they "come at greater political cost" in coastal areas home to maritime industries.

The Trump administration granted temporary Jones Act waivers in 2017 after Hurricane Irma hit Florida and separately after Hurricane Maria hit Puerto Rico.