White House Explores Jones Act Waiver to Ship Fuel by Tanker

The Biden administration took a first step toward waiving century-old U.S. shipping requirements to allow foreign tankers to transport gasoline and diesel to fuel-starved areas of the country, as the Colonial Pipeline Co. outage caused filling stations to run dry.

The U.S. Maritime Administration said it had begun surveying vessels that are qualified to carry goods between U.S. ports, under 101-year-old Jones Act requirements that those ships be built in the U.S. and crewed by American workers.

Although the administration left it unclear whether it will actually waive those requirements Tuesday, the assessment is a first step to any exemptions.

Exempting Jones Act requirements could allow foreign-flagged tankers to step in and fill the supply gap left by the closed pipeline, by taking fuel on a roughly 6-7-day journey from the Gulf Coast to New York Harbor. The alternative could be the delivery of more fuel cargoes from Europe, with ships taking roughly 10 to 14 days to reach the region.

The move comes as President Joe Biden faces increasing pressure to deal with fuel shortages along the East Coast tied to the closure of the Colonial Pipeline system, a major artery for gasoline, diesel and jet fuel. Colonial, the nation’s biggest fuel pipeline, halted operations May 7 after hackers stole almost 100 gigabytes of data and locked the company’s computer in a ransomware attack.

The company is pledging to restore deliveries of gasoline and other fuels to the eastern U.S. by the end of the week. But in the meantime, filling stations across the U.S. East Coast have begun to run out of gasoline as deliveries stop and panic buying sets in.

A number of existing, Jones Act-compliant ships are already used to transport gasoline from refineries in Texas and Louisiana to Florida. The Maritime Administration survey is designed to identify whether there is sufficient capacity on those Jones Act-compliant ships and if a waiver is warranted.

The agency has asked for responses to be provided Tuesday. The actual waiver decision rests with the Department of Homeland Security.

The Biden administration has already taken other steps to blunt supply concerns. On Sunday, it issued an order extending the amount of time truck drivers can spend behind the wheel when transporting fuel across 17 states and the District of Columbia. And on Tuesday, the Environmental Protection Agency waived gasoline volatility requirements in three Mid-Atlantic states and Washington, D.C.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.