Trump Administration Extends Jones Act Waiver for Another 90 Days

The White House has decided to extend its long-running waiver of U.S. cabotage rules, but will be narrowing it slightly and applying administrative procedures for voyage-by-voyage approval.

The 150-day waiver has been a success for petroleum interests, opening up lucrative new routes from the Gulf Coast to California that were less commonly served with domestic tonnage. In a statement, the American Petroleum Institute called the waiver "a critical action that will strengthen supply security and help protect consumers from unnecessary price volatility."

The revised, re-extended waiver takes the total covered period out to 240 days, but after strong opposition from U.S. shipbuilders, shipping companies, unions and senior members of Congress, the terms are now slightly different: first, the Pentagon has to consult with the Maritime Administration about each shipment to determine whether there is an available Jones Act vessel and whether the waiver is applicable; and second, the list of eligible commodities under the waiver is somewhat narrower.

Many economic analysts (and all pro-Jones Act organizations) believe that the consumer price effects have been negligible, the majority of the economic gain accruing to refiners and commodity traders rather than end users. But proponents say that the waiver has created opportunities to use domestic energy within the U.S. that did not exist beforehand - for example, domestic LPG shipments aboard gas carriers, a vessel class that does not exist in the Jones Act inventory.

In a statement, a White House spokesperson said that "the waiver has driven a significant increase in domestic deliveries of essential products such as gasoline, diesel, and jet fuel," calling it a "commonsense" measure. Industry voices have generally disagreed.

"The administration extended a waiver that has already failed," said Aaron Smith, President and CEO of the Offshore Marine Service Association (OMSA). "Months in, Americans still aren't seeing a dime of relief at the pump. Meanwhile, American mariners, vessel operators, and shipyards keep paying the price for a policy that was never going to work and has never worked. Every extra day this waiver stays in place is another day of work shipped overseas and another day of uncertainty for the U.S. maritime industry."

"We are deeply disappointed that the waiver has been extended when the public record over the last five months makes clear that the waiver has not been driven by military needs (the statutory standard), has not reduced the price of gasoline for U.S. consumers, and has allowed foreign vessels, including those linked to U.S. adversaries like China and Russia, to take work from Americans," said the American Waterways Operators in a statement. AWO emphasized that it would be working closely with the administration to make sure that all involved vessels comply with applicable U.S. laws and that every voyage meets a legitimate national defense need.

"President Trump’s decision to require a case-by-case review before allowing foreign vessels to carry domestic maritime commerce is an improvement over the previous blanket Jones Act waiver, which took work from American mariners and shipbuilders and froze investment in the maritime industrial base. However, we are disappointed that the waiver has been extended when the public record is clear: the waiver has not lowered fuel prices for American consumers and has been used to increase oil traders’ margins, not meet military needs," said Jennifer Carpenter, president of the American Maritime Partnership.

"We are encouraged that the Administration is taking a key step forward by adopting a limited Jones Act waiver process—one that strictly verifies domestic ship availability and restricts eligible cargo to prevent foreign exploitation," said Matthew Paxton, head of the Shipbuilders Council of America (SCA). "As the U.S. shipyard industrial base works alongside the Trump Administration to spark a generational revitalization of our maritime sector, any future waivers during this 90-day period must be strictly justified on a national security basis to safeguard this historic progress."