FERC Rejects Colonial Pipeline’s Gasoline Delivery Plan Over Unfair Pricing and Quality Concerns

The U.S. Federal Energy Regulatory Commission (FERC) has rejected Colonial Pipeline’s proposal to modify its gasoline delivery system from the Gulf Coast to the U.S. Northeast, citing concerns over fairness, cost, and fuel quality. The decision marks a major setback for Colonial, which operates one of the largest refined fuel pipelines in the country.

In March, Colonial sought FERC approval for a tariff update that would eliminate overlapping shipments of different gasoline grades and discontinue “Grade 5” gasoline—commonly used in certain Northeastern states during winter months. The proposal also included changes to delivery specifications, which the company argued would streamline operations.

However, major oil companies such as Exxon Mobil and BP, along with other shippers, filed protests against the proposal. They contended that the changes would unfairly shift blending margins from shippers to Colonial, potentially leading to higher fuel prices for consumers. Opponents also warned that the proposal could degrade gasoline quality and reduce flexibility in supply chains, negatively impacting both refiners and end users.

FERC agreed with the shippers’ objections, ruling that Colonial failed to prove its proposed changes were “just and reasonable.” The commission’s filing stated that the plan would impose unnecessary costs, degrade product quality, and give Colonial’s affiliate an unfair competitive advantage—all without clear evidence of operational benefits.

The ruling underscores regulators’ commitment to ensuring fair practices and maintaining fuel quality standards across U.S. energy markets. With this rejection, Colonial Pipeline may need to revise its proposal to address the commission’s concerns before resubmitting.