Biden Administration Issues LNG Jones Act Waiver for Puerto Rico

The U.S. Department of Homeland Security has issued a second Jones Act waiver for Puerto Rico as the island continues to recover from Hurricane Fiona.

The “temporary and targeted” waiver applies to LNG supplies transported from the U.S. mainland, according to the DHS announcement. This latest waiver follows a first Jones Act waiver issued in late September that allowed a BP-chartered tanker to deliver a cargo of diesel to Puerto Rico that had been loaded in Texas—a move that American maritime interests slammed as being illegal and unjustified.

“In support of the Puerto Rican people as they continue to recover from Hurricane Fiona, I have approved a temporary and targeted Jones Act waiver to address the unique and urgent need for liquified natural gas in Puerto Rico,” said DHS Secretary Alejandro N. Mayorkas. “As with the previous waiver, the decision to approve was made in consultation with the Departments of Transportation and Energy 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.”

Puerto Rico’s governor, Pedro Pierluisi, had previously urged President Biden in a letter for a limited Jones Act waiver for “petroleum-derived products and LNG” to help Puerto Rico “diversify its fuel sources, ease supply constraints, and mitigate the risk of a fuel shortage in the middle of the response to the emergency caused by Hurricane Fiona.”

During a visit to the island in early October, President Biden told Governor Pierluisi he was “confident we can do all that you want” during a speech.

Puerto Rico relies on foreign LNG imports for power generation. LNG is imported primarily from Trinidad and Tobago under long-term contracts, with smaller amounts from other countries, according to the U.S. Energy Information Agency. Year-to-date through July, Puerto Rico had received 28 million Mcf of natural gas imports, none of which originated in the United States, EIA data showed.

The DHS’s announcement of the LNG waiver noted that the agency may grant Jones Act waivers when U.S. flagged vessels are not available to meet national defense requirements “if the proposed shipments are in the interest of national defense and after careful evaluation of the issue.”

Amid the United States’ rise as one of the world’s biggest suppliers of natural gas, exports are transported on foreign ships as the U.S. does not have any LNG carriers in the U.S. flag fleet.

Puerto Rico has previously requested a 10-year waiver to the Jones Act in 2018 a year after Hurricane Maria hit the island and caused widespread power issues.

“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,”” the DHS’ announcement today said.

The LNG waiver for Puerto Rico comes as U.S. LNG exports are expected to remain in high demand as Europe looks to replace Russian gas imports following its invasion of Ukraine.

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