Congressional Leaders Oppose Jones Act Waiver

Bipartisan leaders of the U.S. House of Representatives Committee on Transportation and Infrastructure have opposed the Rossello Administration’s request for a 10-year “waiver” of the law that requires ocean shipping between U.S. ports be on vessels that are American built, owned, flagged, and crewed for the shipping of liquid natural gas.

Recognizing that Congress would not grant an exemption from what is commonly called the Jones Act, the territorial administration has been seeking an administrative waiver, which can be granted if needed for “national defense.”

The opposition to the request came in a letter from Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR), Coast Guard and Maritime Transportation Subcommittee Chairman Sean Patrick Maloney (D-NY) and the senior minority party members of the Committee and Subcommittee, Republicans Sam Graves (MO) and Bob Gibbs (OH) to Homeland Security Department Secretary Kirstjen Nielsen.

It stated that the Trump Administration is “considering approval of the request.”

The four wrote that, “there is no valid national security reason for granting this waiver . . . We can do many things to foster . . . the recovery of Puerto Rico from . . . Hurricane Maria, and our Committee has done so. However, there is no justification for waiving the Jones Act.”

Last week, Puerto Rico’s Secretary of State, Luis Rivera Marin, expressed optimism about a waiver after meetings at the Departments of Homeland Security and Defense that followed efforts made by Governor Ricardo Rossello Nevares in December.

Last September, Rivera Marin expressed optimism about getting an endorsement of the request from the Southern States Energy Board, which is comprised of representatives of the governor and legislatures of several States as well as the territory, but the Board subsequently rejected the proposal. Last year, he also expressed optimism regarding approval after a White House meeting.

The Rossello Administration is transitioning the Electric Power Authority (PREPA) from primary reliance on oil to natural gas. It then plans to transition the islands’ electricity needs to renewable energy resources, particularly solar and wind power.

PREPA buys most of its natural gas from a source in Trinidad but U.S. natural gas prices are lower than foreign rates.

A total exemption from the Jones Act has long been a political goal of Puerto Rico’s Popular Democratic Party, which opposes the U.S. statehood that Rossello wants. There is a widespread belief in the territory that an exemption would lower the cost of goods in the islands.

A 2013 U.S. Government Accountability Office (GAO) study did not substantiate the belief, however, although it reported the possibility of it being true in the case of fuel and two other commodities. The GAO found that the ostensible cost advantage of foreign shipping would be mitigated by other factors if foreign vessels were permitted to transport goods between U.S. ports. These included the cost of the U.S. safety requirements and taxes that would then apply in addition to changes in circumstances.

Read the letter here.