New Jones Act provisions restrict maritime waivers during natural disasters
Congress’ spending bill imposed restrictions on maritime commerce following a detour in September that inflamed Jones Act supporters.
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Puerto Rico might need to conjure a new disaster relief strategy to compensate for new restrictions in the Senate omnibus.
Buried in Congress’s 4,000-page fiscal plan for 2023 are provisions that limit the president’s authority to waive Jones Act, the 20th-century law that controls commercial maritime activity between U.S. ports.
New language under Defense spending requires that Congress dispense waivers for ships “laden with merchandise that, pursuant to the requested waiver, could be unladen at points or places to which the coastwise apply.”
If a waiver was requested, government agencies have 48 hours from when the request is made to either approve or deny the extension.
In the event a request is denied, the agency is required to publish an “explanation for denying such waiver, including applicable findings to support the denial,” whereas an approval mandates “an explanation as to why the waiver was in the interest of national defense,” the bill reads.
These new provisions create a hostile cargo shipping landscape for Puerto Rico, an island whose maritime commerce is governed by the Jones Act, which directs Puerto Rican merchandise to travel through ships that fashion the U.S. flag.
Many in Congress call the restrictions a win for the maritime lobby, which derives a steady income from U.S.-Puerto Rico commerce.
A 2012 study by the New York Federal Reserve Bank found that transporting a shipping container to Puerto Rico from the mainland was twice as high as shipping the same container from a foreign port.
The last time the Biden administration waived the Jones Act was in September when Hurricane Fiona lashed through Puerto Rico, leaving it once again scarce of diesel fuel and other resources, prompting Governor Pedro Pierluisi to request a waiver.
After the extension was granted, a ship headed to Amsterdam from Texas rerouted to Puerto Rico and delivered much-needed relief to the disaster-stricken island on the eve of Hurricane Maria’s five-year anniversary.
But Biden’s decision enraged Jones Act supporters in Congress.
Notably, members of the Committee on Transportation and Infrastructure in October wrote a letter in response to the administration’s decision to temporarily lax restrictions to aid in disaster relief.
The letter — signed by Congressmen Peter DeFazio (D), Sam Graves (R ), Salud Carbajal (D), and Bob Gibbs (R ) — expressed “concerns and disappointment with your recent decision to grant Jones Act waivers for the delivery of fuel to Puerto Rico including to allow the delivery of diesel that was sourced from the mainland U.S.,” and called it “novel and problematic.”
It went on to question whether the waiver “sought to take advantage of the vulnerable people of Puerto Rico,” alluding that the waiver enabled windfall profits “by requesting a waiver without passing on the savings to the consumer.”
But critics argue that disaster relief measures served as prime motivators for new waiver restrictions, and the result could harm the possibility of a waiver if another hurricane strikes the island.
The Cato Institute also argues the legislation marks a successful strategy from the maritime lobby to permanently eliminate last-minute waivers.
“This is the equivalent to requiring that a fire truck that’s already on the road [and] driving by a house that’s on fire go back to the firehouse, unload, request permission to go and put out the fire, and wait two days, minimum, before it can go back to put out the fire,” Sean Cota, the president and CEO of the National Energy and Fuels Institute, told the Washington Examiner.
And Puerto Rico has long relied on the U.S. to put out shipping fires in light of unprecedented natural disasters.
In 2017, Republican President Donald Trump waived restrictions after Hurricane Maria dealt tremendous damage to the island, leaving the government desperate for supplies.