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White House Waives Jones Act for LNG Shipments to Puerto Rico

ecoelectrica
The EcoElectrica LNG receiving terminal on Puerto Rico's southern coast (EcoElectrica)

Published Oct 17, 2022 5:52 PM by The Maritime Executive

The Biden administration has granted Puerto Rico's long-sought wish for a Jones Act waiver for LNG shipments, citing the impact of Hurricane Fiona.  It is the second waiver for the island in a month, following a highly controversial decision to allow a foreign-flagged product tanker to divert to Puerto Rico's southern coast.

“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 Homeland Security Secretary Alejandro Mayorkas in a statement. "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 gas importers traditionally source LNG from nearby Trinidad and Tobago and have it delivered aboard foreign-flag tonnage, a process which is fully compliant with the Jones Act. Delivering American LNG to Puerto Rico at public-utility scale is only possible with a waiver: The last Jones Act compliant LNG carriers have long since been flagged out or scrapped, replaced by East Asian-built tonnage. At present, the largest Jones Act LNG-carrying vessel on order is a 12,000 cubic meter LNG bunkering barge, and it is still under construction.

DHS noted that a legislative change in 2020 prohibits it from issuing a long term waiver except if needed to "address an immediate adverse effect on military operations." 

The Biden White House's last waiver allowed the foreign-flagged tanker GH Parks to deliver a cargo of Texas diesel to a terminal near Ponce, Puerto Rico. The Parks was not originally destined for the island, but diverted without prior authorization and waited within sight of the port for a waiver to be granted. The administration's decision to grant a waiver for the Parks drew a scathing rebuke from the American Maritime Partnership, the voice of Jones Act shipowners and unions.  

Puerto Rico's government applied for a 10-year Jones Act waiver specifically for LNG shipments in 2019, and it reportedly came close to securing it. The Trump administration ultimately rejected the idea after a lobbying effort led by several senators. 

The Jones Act's restrictions for traffic between the U.S. mainland and Puerto Rico only apply to shipments of cargo. Passenger vessels have a specific exemption for Puerto Rico in the Passenger Vessel Services Act, which allows foreign-flagged cruise ships to operate direct routes between ports in the mainland U.S. and the island territory.