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UPDATE 3-U.S. waives shipping restrictions to ease fuel crunch after pipeline hack

·2 min read

(Adds background)

By Bhargav Acharya

May 13 (Reuters) - The U.S. government relaxed a long-standing maritime law protecting domestic shipping commerce to allow an undisclosed company to transport gasoline and diesel to ports in the East Coast after a cyberattack crippled the nation's largest fuel pipeline network.

The Jones Act, implemented in 1920, requires goods moved between U.S. ports to be carried by ships built domestically and staffed by U.S. crew. The waiver will allow foreign vessels to ship petroleum products from the Gulf Coast to East Coast ports in the United States.

The pipeline network, owned by privately held Colonial Pipeline, was targeted by what the FBI said was a shadowy criminal group called DarkSide.

Colonial, which was forced to shut the line, triggering fuel shortages and panic buying in southeastern United States, said on Wednesday it was slowly restarting the network, while adding that it will take several days to return to normal operations.

Pump prices rose to a seven-year high as motorists rushed to fill their tanks.

Efforts to get fuel supplies to areas in the United States facing shortages have been slowed because shipowners have mothballed U.S.-flagged oil tankers that can make coastal voyages, shipping sources said on Wednesday.

Secretary Alejandro Mayorkas of the U.S. Department of Homeland Security did not name the company to which the temporary waiver was granted. The approval was given in the interest of national defense, he said, after consulting the Departments of Transportation, Energy and Defense.

"This waiver will help provide for the transport of oil products between the Gulf Coast and East Coast ports to ease oil supply constraints as a result of the interruptions in the operations of the Colonial Pipeline," he said.

Jones Act restrictions are waived sparingly. In 2017, the former administration of President Donald Trump waived them to help get fuel and supplies to storm-hit Puerto Rico.

Separately, White House Press Secretary Jen Psaki said in a statement that the Biden administration will stay in contact with Colonial Pipeline and offer any assistance to them as needed in the coming days.

Psaki urged people not to hoard fuel and only purchase what they need. (Reporting by Bhargav Acharya, Aakriti Bhalla and Arathy S Nair in Bengaluru; Editing by Kim Coghill, Sayantani Ghosh and Shounak Dasgupta)