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Biden Administration Approves ‘Temporary and Targeted’ Jones Act Waiver for Puerto Rico Despite Objections

U.S. President Joe Biden receives a briefing on hurricane Fiona’s impact on Puerto Rico from FEMA and other officials at the FEMA Region 2 office in New York, U.S., September 22, 2022. REUTERS/Leah Millis

Biden Administration Approves ‘Temporary and Targeted’ Jones Act Waiver for Puerto Rico Despite Objections

Mike Schuler
Total Views: 3033
September 28, 2022

The U.S. Department of Homeland Security on Wednesday approved a “temporary and targeted” Jones Act waiver for diesel shipments to Puerto Rico in the wake of Hurricane Fiona despite reports that the island is adequately supplied.

Secretary of Homeland Security Alejandro N. Mayorkas said the waiver was issued “in order to address Puerto Rico’s immediate needs.”

“In response to urgent and immediate needs of the Puerto Rican people in the aftermath of Hurricane Fiona, I have approved a temporary and targeted Jones Act waiver to ensure that the people of Puerto Rico have sufficient diesel to run generators needed for electricity and the functioning critical facilities as they recover from Hurricane Fiona,” Secretary Mayorkas said in a statement. “The decision to approve the waiver was made in consultation with the Departments of Transportation, Energy, and Defense to assess the justification for the waiver request and based on input from the Governor of Puerto Rico and others on the ground supporting recovery efforts.”

Specifics of the approved waiver, including duration, were unclear as of Wednesday evening, but based on Mayorkas’ statement it may only apply to diesel.

On Tuesday, Puerto Rico’s Governor Pedro Pierluisi, citing fuel distributor reports of dwindling diesel supplies and shortages, called on President Biden for a waiver pertaining to “petroleum-derived products and LNG” to nine ports and terminals across the island, as well as “any other port that can complement the listed ones.”

Pressure for a Jones Act waiver in Puerto Rico has been building this week after news circulated that a foreign tanker carrying 300,000 barrels of diesel reportedly linked to BP had arrived off Puerto Rico’s southern coast. Because the diesel was loaded in Texas City, Texas, the tanker is prohibited from offloading the cargo under the Jones Act, which requires merchandise (including petroleum products) transported between two U.S. points be carried on U.S.-flag “coastwise-qualified” vessels.

The sudden arrival of the vessel off Puerto Rico—obviously a Jones Act voyage—set off immediate red flags to those familiar with the trade. While we understand an official waiver request was submitted, reporting suggests that the cargo interest may have been too late in making the request. AIS shows the tanker, named GH Parks, remained sitting off the island as of Wednesday evening.

Claims about inadequate diesel supplies on Puerto Rico also remain unclear at best. Similar to Hurricane Maria in 2017, it seems shortages are more related to distribution on the island than a lack of imports—both domestic and international. Puerto Rico Resident Commissioner Jenniffer González Colón, Puerto Rico’s sole Representative to the U.S. Congress, issued a statement today saying she has been informed that the island has adequate fuel supplies. Puerto Rico’s ports director admitted in an interview that the Jones Act wasn’t the issue. Also, both American and foreign ships have been and will continue to supply diesel and other cargoes.

“Granting of this waiver rewards calculated and predatory behavior that undermines a dedicated American supply chain for Puerto Rico, and it is a harmful precedent that invites similar cynical stunts by foreign oil traders,” said Ku’uhaku Park, President of the American Maritime Partnership, which advocates for the domestic maritime industry. “This was a public rush to judgment fueled by hearsay and it weakens the nation and hurts Americans workers and the Administration should never repeat it.” 

Hurricane Fiona made landfall in southwestern Puerto Rico on Sunday, September 18, as a Category 1 hurricane, dumping as much as 30 inches of rain in some areas and initially knocking out power to entire island.

Mayorkas’ statement on the waiver noted that, in 2020, Congress eliminated the Federal Government’s authority to issue long-term comprehensive waivers, except in circumstances where a waiver is required to “address an immediate adverse effect on military operations.”

“Under the law, waivers that do not meet that standard must be reviewed on a case-by-case basis,” the statement added.

Jones Act waivers are just about always strongly opposed by the American maritime industry.

In a statement issued earlier Wednesday before news that the waiver had been approved, AMP president Park said there was “absolutely no justification” for a waiver as “the U.S. Coast Guard, FEMA, the Corps of Engineers, and the U.S. Department of Energy all have made clear that the supply of fuel to the Island is not an issue.”

Jones Act waivers can be issued in the interests of national defense and when it is determined there are no Jones Act ships available. In the case of the GH Parks, because the waiver request was made last minute, perhaps even after the ship departed, the situation raises more questions than answers.

“This stunt by a foreign oil company showing up unannounced in Puerto Rico while on its way overseas hoping to sell its fuel at a premium to Puerto Ricans in need, and thereby triggering a public and political rush to judgment, is bad precedent, a circumvention of U.S. law, and should never be tolerated,” Parks said earlier in reference to the tanker.

When Hurricane Maria hit Puerto Rico, the Trump Administration succumbed to pressure and issued a temporary 10-day full waiver of the Jones Act for Puerto Rico approximately eight days after the storm made landfall. An extension of that waiver was deemed unnecessary.

With Hurricane Ian hitting Florida, this will likely continue to be a story to watch in the week ahead.

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