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New Bill Targets Puerto Rico’s Jones Act Build Requirement

Mike Schuler
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July 26, 2013

Puerto Rico Resident Commissioner, Pedro Pierluisi, has proposed new legislation aimed at relaxing the U.S.-build requirement of the Jones Act for particular vessel types operating in the Puerto Rico trade.

The bill, titled the Puerto Rico Interstate Commerce Improvement Act of 2013, would allow vessels built outside of the United States to transport bulk cargo, including liquified natural gas, between ports in Puerto Rico and other ports in the United States.

The legislation is strongly opposed by the American Maritime Partnership, representing the U.S. domestic maritime industry. In a statement Friday, AMP argues that the Pierluisi bill would weaken U.S. national defense and undermine the investments made by American vessel owners and operators.

“We strongly oppose Mr. Pierluisi’s legislation because it would directly undermine America’s national security,” the AMP statement said. “The non-partisan Government Accountability Office recently warned in a study specific to Puerto Rico that the ‘military strategy of the United States relies on the use of commercial U.S.-flag ships and crews and the availability of a shipyard industrial base to support’ the nation’s defense.

“The study also found that the U.S. domestic container shipping fleet has a long history of providing regular, reliable service to the island, and in the past few years also offered significant rate reductions,” AMP added.

The GAO report, released in March, examined maritime transportation to and from Puerto Rico and how the Jones Act affects trade, along with any possible effects of modifying the application of the Jones Act in Puerto Rico. What the study found was pretty much as to be expected; determining the “cost” of the Jones Act is a complicated issue, not to mention a slippery slope.

The report only touched upon Jones Act dry and liquid bulk cargo vessels, but stated “some shippers report that qualified bulk-cargo vessels may not always be available to meet their needs.”

Pierluisi’s bill places special emphasis on energy and says that the GAO report indicates that there are not enough Jones Act-compliant vessels available to transport refined petroleum and gas products from the U.S. mainland to Puerto Rico and, as a result, companies in Puerto Rico are importing most fuel from foreign countries like Venezuela rather than from refineries in the United States. This is a problem, Pierluisi notes, given that the U.S. has recently emerged as the top producer of natural gas in the world.

“My bill would enable foreign-built vessels to transport liquefied natural gas and other fuels from the U.S. mainland to Puerto Rico,” says Pierluisi. “This will benefit energy producers in the states, who will gain access to an important new U.S. market and make a positive contribution to their local economies.”

AMP argues that the U.S. maritime industry is actually fully capable of meeting Puerto Rico’s energy demand.

“More specific to Mr. Pierliusi’s concern regarding the availability of natural gas to Puerto Rico, there are fully compliant American vessels eligible to transport Liquefied Natural Gas (LNG) once Puerto Rico develops the capacity to receive it. There are also special provisions of law that already allow LNG to move to the island on foreign vessels from the U.S.”

“Whether it is LNG or any other cargo needed by the Puerto Rican people, the American maritime industry stands ready to work with the Commissioner to ensure that the demand is met,” the AMP added.

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