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March 30, 2020 11:30 AM, EDT

EPA Issues Waiver to Avert Potential Summer Fuel Shortage

car refuelingLuke Sharrett/Bloomberg

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The U.S. Environmental Protection Agency has issued a waiver intended to avert a potential fuel shortage this summer by providing additional flexibility to the marketplace to transition from winter-grade to summer-grade blends.

“Due to the steep fall-off in gasoline demand as a result of the COVID-19 pandemic, gasoline storage capacity is limited and more time is needed to transition the distribution system in order to come into compliance for the summer driving season,” said a March 27 EPA announcement. “EPA will temporarily waive the summer low volatility requirements and blending limitations for gasoline.”

The announcement comes only a few days after American Trucking Associations and several other fuel marketing associations sent letters to the agency seeking the waiver, fearing potential gasoline and diesel shortages.

EPA logo

“ATA and the trucking industry are very pleased to see the administration recognizing the potential problems involving the continued, uninterrupted delivery of diesel fuel to the retail level,” said Glen Kedzie, ATA’s energy and environmental affairs counsel. “Granting this waiver is a critical step to allow those pipelines to serve the transport of multiple fuels, including diesel fuel.”

EPA said that without a waiver of the summer gasoline requirements, parties upstream of retailers and wholesale purchasers would be required to stop selling the winter gasoline sitting in their storage tanks on May 1, which would prevent them from loading summer gasoline into the storage tanks, resulting in a shortage of gasoline.

“By waiving the low volatility and blending limitations through May 20, 2020, EPA will ensure a steady supply of gasoline,” the announcement said. “EPA will continue to monitor the adequacy of gasoline supplies and, should conditions warrant, may modify or extend this waiver at a later date.”

EPA also said that investigating and initiating enforcement actions against small refineries that were previously subject to an exemption is now a low priority for the agency.

The exemption follows requests by ATA and several petroleum marketers asking the agency to prevent gas and diesel shortages this summer. “During these exceptionally trying times, it is critical for our country to remove all impediments for trucking companies to keep delivering the nation’s supply of food, medicine and other essentialities,” said a March 23 ATA letter sent to the agency. “With more than 80% of U.S. communities relying exclusively on trucks for their freight needs, we must ensure the trucking industry’s fuel supplies keep flowing to the more than 600,000 interstate motor carriers nationwide.”

ATA said that EPA, with the concurrence of the Department of Energy, has the statutory authority to issue a temporary regulatory waiver under a provision in the Clean Air Act that would allow terminals and retail pumps to continue to empty out the winter fuel grades from their pipelines and retail pumps.

ATA sent the letter to the EPA Office of Enforcement and Compliance seeking the waiver of the summer federal Reid Vapor Pressure requirements for gasoline sale ahead of the May 1 terminal deadline. ATA said that without relief from the agency, pipeline bottlenecks will inhibit the conveyance of diesel fuel to distributors and retail locations. Four states — Louisiana, Mississippi, Georgia and Florida — have already granted waivers or indicated that they would not enforce continued sales of winter gasoline blends after the deadline, ATA said.

In addition to the ATA request, the National Association of Convenience Stores, Natso, Petroleum Marketers Association of America and Society of Independent Gasoline Marketers of America sent a joint letter to EPA seeking the waiver.

“With significant amounts of winter grade fuel remaining in tanks, terminals and pipelines, and the inability to sell it after the May 1, 2020, transition date, terminal operators will have limited capacity to take loads of summer grade fuel,” said the fuel marketers’ letter. “If terminal operators cannot take the summer grade fuel, the pipelines are expected to back up. Eventually, refineries will be forced to shut down production. These problems may be exacerbated for pipelines that ship both gasoline and diesel.”

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