US 'stands ready' for shippers' Jones Act waiver requests to meet Southeast fuel shortages

The US Department of Homeland Security "stands ready" to review shippers' waiver requests to move fuel from the Gulf Coast refining hub to the East Coast if they can demonstrate insufficient capacity on Jones Act-qualified tankers, the White House said May 12.

The US Department of Transportation's Maritime Administration concluded an assessment May 11 of Jones Act fleet availability, the White House said, without detailing its findings.

A ransomware attack forced Colonial Pipeline to halt all 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.

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Major cities in the US 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 May 11 that Colonial could restore full operations within days, and she urged drivers not to hoard supply.

Expanded fuel waiver

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.

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.

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.

The DOT 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.

'Political cost'

The 1920 Jones Act 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.

The American Waterways Operators, a trade group whose top issue is defending Jones Act enforcement, urged the Biden administration not to grant any waivers.

"Our data indicates that there is significant vessel capacity available, and we have received no information to indicate that a Jones Act waiver is necessary to address a specific supply situation," AWO CEO Jennifer Carpenter said. "We therefore continue to oppose unwarranted Jones Act waivers."