Anger as Biden administration approves Jones Act waiver for Puerto Rico

The American Maritime Partnership (AMP), representing most of the U.S. domestic maritime industry including ship operators, mariners, shipyards, and pro-defense organizations, has sent a scathing letter to Department of Homeland Security Secretary Alejandro Mayorkas expressing the organisation’s disappointment over his decision to issue a Jones Act waiver in Puerto Rico.

In the letter, AMP president, Ku’uhaku Park stated that not only is the waiver unnecessary and “unlawful”, but granting it sets “the worst possible precedent” that will lead to a rash of new waiver requests from foreign companies looking to exploit humanitarian crises “to enrich themselves.”

Secretary Mayorkas issued a statement Wednesday announcing he has approved a “temporary and targeted” Jones Act waiver for Puerto Rico “to ensure that the people of Puerto Rico have sufficient diesel” as the island recovers from Hurricane Fiona, despite reports from both federal agencies and officials that there are no diesel fuel shortages in Puerto Rico — only distribution issues.

While the specific terms of the waiver have not yet been released, the announcement comes amid public and political outcry that the Jones Act was preventing a foreign tanker from delivering diesel to the island. The issue is the tanker, the Marshall Islands-flagged GH Parks, loaded the diesel in Texas and, under the Jones Act, transporting merchandise between two U.S. points is a restricted trade reserved for U.S.-flag coastwise-qualified vessels.

According to the AMP, not only was the waiver not needed since both American and foreign ships are continuing to supply the island, but the process by which the GH Parks waiver was requested (allegedly by BP) also raises alarms considering the request was made after the tanker had already left Texas for Puerto Rico—an“ unprecedented step of applying,” according to the AMP.

“The Jones Act waiver statute, 46 U.S.C. §501(b)(“Section 501”), requires a determination of the non-availability of American vessels before any waiver can be granted,” the AMP letter explains. “It is a core requirement of the statute. In this case, because the vessel in question was already four days underway when the waiver was applied for, such a determination was not possible. That should have ended the inquiry.”

Not only does AMP blame the DHS, it calls out the U.S. Maritime Administration, the agency responsible for making the availability determination, for conducting an “unprecedented retroactive U.S. availability” survey after the fact, noting that it was “well aware” that American operators reported U.S. vessels were available.

“In this case, DHS simply ignored the U.S. vessel availability element of the Jones Act waiver statute,” the AMP letter stated.

AMP said the most damaging thing about granting the waiver is the precedent it sets.

“Because DHS has now granted an unlawful waiver, it has signalled to oil traders, arbitragers, and others around the world that the American federal government will grant waivers that do not meet the conditions of Section 501.

As a result, DHS can expect a rash of new waiver requests. In that sense, this waiver sets the worst possible precedent, extending far beyond the factual circumstances in this specific case.

“In this case, DHS has rewarded a foreign operator who has been widely criticizsd, both in Washington, D.C. and in Puerto Rico, for its behaviour. This foreign operator took the nearly unprecedented step of applying for the waiver after the vessel was underway, negating the possibility of a legitimate U.S. vessel availability survey. No previous waiver under those circumstances has ever been granted and, until this week, no retroactive vessel availability survey has ever been conducted. Now, DHS has effectively sanctioned this foreign vessel operator’s behaviour. DHS has permitted the waiver recipient to engage in “disaster arbitrage,” the practice of exploiting humanitarian crises to enrich themselves. Oil traders everywhere, including at BP, are likely rejoicing over DHS’s decision. DHS’s actions have established a terrible precedent for similar future activities,” the organisation said.

AMP argued that the government’s “most important contribution” is to provide legal certainty and consistency on these matters, which it says was undermined by the DHS’ decision to grant the waiver. It also said that the waiver is “inconsistent” with President Biden’s executive order on “Ensuring the Future is Mad in All of America by All of America’s Workers.”

“We are disappointed that DHS would ignore the requirements of Section 501, side with foreign operators over Americans operators and mariners in an unprecedented way, and sanction the worst possible commercial behaviour. We urge you to never approve a waiver like this again,” the letter concluded.