Colonial Pipeline Impacts On PPA Membership

On May 12 the Colonial Pipeline initiated the restart of pipeline operations at approximately 5:00  p.m. ET, five days after taking its entire system offline May 7 to contain the threat from a ransomware incident.

In response to the Pipeline shutdown, the PPA was in constant communication with PEMA, DEP, PennDOT, State Police, PUC, Homeland Security, Department of Agriculture, the Governor’s Office throughout the week.

The PPA also worked directly with EMA to coordinate necessary information to federal agencies. As a result of this coordination, the following waivers were issued to assist petroleum marketers respond to the supply shortage.

            FMCSA Issues Regional Declaration of Emergency

On May 9 the Federal Motor Carrier Safety Administration (FMCSA) issued a Regional Declaration of Emergency.

The waiver allowed motor carriers and drivers providing direct assistance to the emergency in the Affected States (including Pennsylvania) in direct support of relief efforts related to the shortages of gasoline, diesel, jet fuel, and other refined petroleum products due to the shutdown, partial shutdown, and/or manual operation of the Colonial pipeline system are granted relief from Parts 390 through 399 of Title 49 Code of Federal Regulations except as restricted herein.

This waiver shall remain in effect until the end of the emergency (as defined in 49 CFR § 390.5) or until 11:59 P.M. (ET), June 8, 2021, whichever is earlier.

Click Here to view PPA member communication.

            RFG/RVP Fuel Waiver

On May 11 the EPA issued an emergency waiver of the low volatility Reformulated Gasoline (RFG) requirements in RFG Covered Areas in District of Columbia, Maryland, Pennsylvania, and Virginia.

This waiver is a response to the unexpected Colonial Pipeline shutdown. The waiver begins May 11, 2021, and ends May 18, 2021.

Click Here to view PPA member communication.

            PA Dept. of Agriculture Issues Temporary Enforcement Guidance

            On May 13 the Pennsylvania Department of Agriculture issued temporary enforcement guidance regarding state requirements under the Automotive Fuel Testing and Disclosure Program.

The guidance was issued to coordinate state regulation with the waivers issued earlier this week regarding suspension of RFG and conventional gasoline required specifications.

The guidance suspends Department of Agriculture’s Weights and Measures enforcement to allow the sale of “winter gas” beyond the usual May 1,2021 deadline through June 15,2021.

Similar action was taken by the Department in April 2020 during the collapse of motor fuel demand at the outbreak of COVID.

Click Here to Read The Entire Guidance Document

            IRS Issues Dyed Fuel Waiver In Response To Colonial Pipeline Closure

The Internal Revenue Service announced on May 13 it will not impose a penalty when dyed diesel fuel is sold for use or used on the highway in multiple states (including Pennsylvania). 

Click Here for the notice.

The IRS is issuing the waiver in response to the Colonial Pipeline closure.  This relief is retroactive to May 7, 2021, and will remain in effect through May 21, 2021.

This penalty relief is available to any person that sells or uses dyed diesel fuel for highway use.

 In the case of the operator of the vehicle in which the dyed diesel fuel is used, the relief is available only if the operator or the person selling such fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use.

The IRS will not impose penalties for failure to make semi-monthly deposits of this tax. IRS Publication 510 – Excise Taxes, has information on the proper method for reporting and paying the tax.

            PPA has since received the following guidance from the PA Department of Revenue regarding this waiver: As has been the case in some past instances with this type of treatment of dyed fuel, we strongly encouraged our diesel users in PA to avoid using dyed fuel taxably unless absolutely necessary, due to the extreme difficulty users have removing that product and replacing with clear diesel when the authorization outlined expires.

It only takes a couple ounces of dye to turn multiple thousands of gallons of diesel fuel red, so it is extremely hard for people to flush their fuel lines from dyed fuel once they need to transition back to clear; therefore, we do not recommend attempting to use dyed product in a taxable manner, unless all other resources have been exhausted.

Jones Act Waiver

The Jones Act is a federal law that requires goods (and fuel) shipped between two U.S. ports to be transported on U.S. built, owned, crewed and registered ships.

A waiver would allow fuel supplies to be moved on foreign ships along U.S. coastlines, such as from the Gulf Coast to the Northeast.

In a statement, the White House and the Department of Transportation said it has been monitoring reported shortages and had started work “to enable consideration of a temporary and targeted waiver of the Jones Act.”

As of May 14, two companies were granted a Jones Act waiver. In addition to the two companies, consideration is still being given to provide other companies the waiver.

DOE has confirmed that a blanket Jones Act waiver will not be granted as this is a more difficult process and it takes longer to complete.

TAP HERE for all articles in May 17 EXPRESS Update