EPA, DOT move to boost gasoline availability after Colonial Pipeline cyberattack

The Environmental Protection Agency and the Department of Transportation announced separate actions Tuesday to make more gasoline available for sale on the East Coast, in hopes of averting fuel shortages as the Colonial Pipeline remains almost entirely shuttered by last week's cyberattack.

The steps included an EPA fuel waiver issued Tuesday morning allowing retailers in D.C. and parts of Pennsylvania, Maryland and Virginia to sell dirtier-burning gasoline than ozone pollution regulations would normally allow. It expanded the waiver Tuesday night to add all or part of nine additional states, including Alabama, Delaware, Georgia, the Carolinas and Florida.

Separately, DOT said it is considering a "temporary and targeted" waiver of the Jones Act, a much-debated law that forbids foreign-owned, operated or built ships from carrying goods between U.S. ports. That waiver would also be aimed at helping fuel supplies get where they're needed.

States including Virginia have also issued emergency declarations allowing their own agencies to waive rules to ease fuel backlogs.

The moves came as the Biden administration made repeated assurances that it is trying to forestall fuel shortages, while warning that some may occur anyway.

"These states who are impacted, even with the turning on of the pipeline system, they still may feel a supply crunch as Colonial fully resumes," Energy Secretary Jennifer Granholm said during a briefing with reporters. "But the American people can feel assured that this administration is working with the company to get it resumed as soon as possible."

EPA's action: The Energy Department agreed with the agency's waiver, EPA Administrator Michael Regan wrote Tuesday, calling the cyberattack an "extreme and unusual" occurrence "that could not reasonably have been foreseen and is not attributable to a lack of prudent planning on the part of suppliers of the fuel to these areas."

In its Tuesday night update, EPA extended the waiver through May 31. After that, any winter-grade gasoline already in terminal storage tanks or the distribution and retails systems as of June 1 can still be sold until gone.

Context: EPA typically issues such waivers after natural disasters have damaged refineries or fuel distribution infrastructure, but it can act whenever there is a major fuel supply disruption. For example, EPA issued two fuel waivers to Texas earlier this year in response to the deep freeze that plagued the state and caused fuel shortages that triggered massive blackouts.

And last year the agency delayed the switchover to summer-grade gasoline because of a supply glut of winter-grade gasoline caused by the onset of the coronavirus pandemic that dramatically lowered demand.

The White House said late Monday that it was actively prepping for possible disruptions, even as Colonial Pipeline resumed limited shipments to deliver fuel from North Carolina to a terminal in Maryland. The bulk of the pipeline remains shut.

The Jones Act: DOT announced a separate suite of actions later Tuesday, including the launch of a survey meant to find available ships that comply with the Jones Act. If not enough are available to assist with transporting fuel to areas in need, the Department of Homeland Security will consider waiving the Jones Act for ships carrying petroleum products "within the Gulf, and from the Gulf up the Eastern Seaboard," DOT said.

DOT's Federal Railroad Administration is also canvassing rail operators to "determine their capacity to help transport fuel from ports inland" and find out if there's any way the federal government could help them increase capacity.

The agency has also expanded an earlier-issued waiver easing hours-of-service rules for truckers hauling fuel. The expansion covers shipments to an 18th state, West Virginia.

The EPA and DOT actions "will go a long way to address the situation in the most acutely hit areas," the American Petroleum Institute said Tuesday.

Biofuels: Separately, the ethanol industry on Tuesday called on EPA to expand sales of E15 fuel, gasoline that contains 15 percent ethanol as opposed to the standard 10 percent, to alleviate fuel shortages related to the Colonial Pipeline shutdown.

Ethanol producers have around 180,000 barrels per day of idle capacity, some of which “could be quickly activated or reoriented to help alleviate impending fuel shortages on the East Coast,” Renewable Fuels Association President and CEO Geoff Cooper wrote in a letter to Regan. “For many reasons, utilizing domestically produced low-carbon fuel to help offset the supply shortage is preferable to importing more petroleum products, as is currently being planned.”

"EPA and DOE are continuing to actively monitor the fuel supply situation resulting from the Colonial Pipeline shutdown and considering additional measures to alleviate the impact," EPA spokesperson Nick Conger said, adding that EPA will review RFA's letter and respond.

Sam Sabin contributed to this report.