US maritime group fears waiver abuse by fuel shippers

As of Friday, the U.S. Department of Homeland Security (DHS) has issued waivers for two companies. The waivers allow foreign-flag ships to be used to move replacement cargos if U.S.-flag ships are unavailable. DHS did not reveal the names of the companies receiving the waivers, but Reuters identified the companies as Valero Energy and Citgo Petroleum.

“This decision was made after careful consideration and consultation with interagency partners across the federal government as part of the whole-of-government response President Biden directed to address the impacts of the Colonial Pipeline shutdown,” a DHS spokesperson said in commenting on the second waiver, issued Thursday.

But based on his letter, Roberts, who is also vice president of government relations for U.S. shipping company Crowley Maritime Corp., does not believe there is enough oversight of the waiver process. It requires a ship availability survey to be conducted first by the U.S. Maritime Administration, and then approval of actual waiver requests by DHS.

Roberts explained that much of the American tanker fleet is typically chartered to oil companies and other refined product shippers, which gives those shippers control over the use of the vessels. However, American vessel owners “had a significant number of vessels that had not been chartered” and were therefore available when the pipeline shutdown occurred last week.

“When the news of the Colonial Pipeline shutdown broke, some refined product shippers snapped up virtually all of those uncovered American vessels,” Roberts stated. “This put the refined product shippers in control of nearly all American tank vessels on the East and Gulf coasts, enabling them to direct or withhold their use in responding to supply shortages caused by the pipeline outage. As the discussion of possible waivers intensified, some charters of the American vessels were cancelled on the belief that foreign vessels could eventually be used instead once waivers were granted.”

Roberts asserted that — to the best AMP’s knowledge — no American tank vessels currently under charter have been diverted to East Coast ports to provide fuel replacements related to the pipeline outage. Shippers have instead loaded cargoes onto foreign ships for which they have sought Jones Act waivers, Roberts stated.

“Some of these companies are the very same companies that previously had provisionally chartered American tonnage or have American vessels under contract currently. It begs the question: why are these companies not using American vessels to assist in the delivery of fuel in this time of national emergency?”

Colonial Pipeline resumed operations Wednesday, but gasoline shortages on the U.S. East Coast caused by the outage as well as panic-buying in the wake of the shutdown could continue to hamper supplies.

Related articles:

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• Ransomware gang blamed for Colonial Pipeline attack expresses regret
• Hours-of-service waiver issued in wake of pipeline cyberattack

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