U.S. considering Jones Act waiver after pipeline hack -Transportation Dept

Jones Act requires goods moved between U.S. ports to be carried by ships built domestically and staffed by U.S. crews

  
FILE PHOTO: The Houston Ship Channel and adjacent refineries, part of the Port of Houston, are seen in Houston, Texas, U.S., May 5, 2019. REUTERS

FILE PHOTO: The Houston Ship Channel and adjacent refineries, part of the Port of Houston, are seen in Houston, Texas, U.S., May 5, 2019. REUTERS

Loren Elliott

WASHINGTON - The U.S. Transportation Department said on Tuesday it was evaluating a temporary waiver of the Jones Act to ensure sufficient gasoline supply to some U.S. states after the ransomware attack on Colonial Pipeline. 

The Jones Act requires goods moved between U.S. ports to be carried by ships built domestically and staffed by U.S. crews.

"The U.S. Department of Transportation (USDOT) has started the work needed to enable consideration of a temporary and targeted waiver of the Jones Act," the department said, as it and other agencies took new steps to ease reported fuel shortages.

Separately, USDOT said it had determined 10 states can transport overweight loads of gasoline on interstate highways under prior presidential disaster declarations.

On Sunday, USDOT issued a temporary hours of service exemption for transporting gasoline, diesel, jet fuel and other refined petroleum products to 17 states and the District of Columbia. The department on Tuesday added West Virginia to the states covered.

The Department of Homeland Security must issue any waiver of the Jones Act and Secretary Alejandro Mayorkas said "we wanted to be poised, at the president's direction, to be ready and to be able to act immediately."

The U.S. Environmental Protection Agency said late Tuesday it had issued a second emergency fuel waiver to help alleviate fuel shortages in states impacted by the pipeline shutdown.

The decision expands on a waiver that EPA issued earlier on Tuesday for the District of Columbia and areas of Maryland, Pennsylvania and Virginia.

The second waiver temporarily lifts requirements for low volatility conventional gasoline and Reformulated Gasoline (RFG) for the District of Columbia and areas of Maryland, Pennsylvania and Virginia. It also includes Alabama, Delaware, Georgia, some counties of Florida, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee.

In 2017, the Trump administration waived Jones Act restrictions to help get fuel and supplies to storm-ravaged Puerto Rico.

Shipbrokers said a flurry of Jones Act tankers were provisionally booked over the weekend to ship fuel from the Gulf Coast to the East Coast to make up for supply shortfalls after Colonial Pipeline shut its system on Friday. These vessels are typically more expensive to charter than foreign-flagged vessels due to limited availability.

The Federal Railroad Administration is canvassing rail operators to determine capacity to help transport fuel from ports inland.

In Virginia, Governor Ralph Northam declared a state of emergency. The southwestern part of the state is directly affected by the Colonial Pipeline disruption, Energy Secretary Jennifer Granholm noted on Tuesday.

Northam said the declaration will help Virginia "prepare for any potential supply shortages and ensure Virginia motorists have access to fuel as we respond to this evolving situation."

(Reporting by Doina Chiacu, David Shepardson and Susan Heavey in Washington Additional reporting by Devika Krishna Kumar in New York Editing by Chizu Nomiyama, Matthew Lewis, Marguerita Choy and Lincoln Feast.) ((doina.chiacu@thomsonreuters.com; 202-898-8322;))

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