Trump Reverses Course on Puerto Rico Jones Act Waiver

The USCG cutter James off San Juan. The vessel is serving as an afloat command post for the hurricane recovery effort (USCG)

By The Maritime Executive 2017-09-28 21:03:27

On Thursday, White House press secretary Sarah Huckabee Sanders announced that the Trump administration has decided to issue a Jones Act waiver for Puerto Rico. The island territory is now exempt from cabotage regulations for a period of ten days, allowing it to receive foreign-flagged ships with cargo from U.S. ports.

The administration's position on the question of a waiver evolved gradually over the course of the week. The Department of Homeland Security said Tuesday that a waiver would not be needed because "the limitation is going to be port capacity to offload and transit, not vessel availability." On Wednesday, President Trump said that the White House was considering a waiver but would not yet issue one; he cited industry opposition and the existing availability of Jones Act-qualified ships. In a hearing the same day, Secretary of Homeland Security Elaine Duke said that DHS had not even received a request. “In terms of the Jones Act waiver, we have researched this — I read it in the news clips this morning — we have no known Jones Act waiver requests,” she said. "We are double-checking to make sure it isn't true."

On Thursday, a Homeland Security spokesman told reporters that DHS had issued a waiver for Puerto Rico following a Pentagon decision that it would be in the interest of national defense. Separately, press secretary Sarah Huckabee Sanders said that the waiver was granted at the request of Puerto Rico governor Ricardo Rosello. 

Trump also faced growing pressure from within his own party to issue a temporary waiver. Senator John McCain (R-AZ), a longtime critic of the Jones Act, was among the first to join the call, and Sen. James Lankford (R-OK) said Wednesday that he would "absolutely support [a waiver]." He was joined by Senators John Barrasso (R-WY) and Marco Rubio (R-FL), and House Speaker Paul Ryan (R-WI) praised the exemption shortly after he learned of the White House's decision. 

Senator Rubio explained his support for a waiver in terms of giving Puerto Rican shippers flexibility. "The administration is saying that it's not necessary, they have plenty of vessels. My argument is, what harm would there be to doing it? If they don't need it, they don't need it, but at least it's available to them," Rubio said.

Governor Rossello also appeared to suggest that the exemption was intended to give Puerto Rico an additional set of options, and not to satisfy an immediate operational need. He told local media Thursday morning that he made the waiver request "for the mere fact of having all the possibilities available." 

Industry pushes back on Jones Act waivers

In a statement published Thursday, the Maritime Labor Alliance (MLA) – a group representing the American Radio Association (ARA), Inlandboatmen’s Union (IBU), International Longshoremen’s Association (ILA), International Longshore and Warehouse Union (ILWU), Marine Engineers’ Beneficial Association (MEBA), and International Organization of Masters, Mates & Pilots (MM&P) – pushed back against the idea that the Jones Act hindered the relief effort in Puerto Rico. “The current crisis in Puerto Rico has nothing to do with the Jones Act. There is no shortage of U.S.-flag tonnage available to serve the Island,” MLA wrote. “The emergency in Puerto Rico is caused by lack of the ability to distribute critical supplies . . . to local communities from the ports where these supplies are located.”

The industry group American Maritime Partnership issued a similar statement on Wednesday, highlighting the efforts that American vessel operators are making to bring supplies to the island and emphasizing the availability of suitable tonnage. 

For now, it appears that the distribution bottleneck is on land, as the waiver's opponents suggest. With thousands of containers waiting on the dock in San Juan because of damaged roads and a lack of trucks, foreign-flag container ships may not be able to accelerate the flow of goods to island residents.

Tonnage for petroleum shipping may not be a bottleneck either: Puerto Rico gets much of its fuel from foreign refiners, and Bloomberg reports that six tankers are already off the island’s coast and waiting to unload. 

However, Puerto Rico will benefit from the cargo aboard at least one waivered ship – a foreign-flagged product tanker that got under way last week from a Gulf Coast refinery under the terms of a previous waiver issued for Hurricane Irma, according to Bloomberg.