Biden Admin Grants Jones Act Waiver

Biden Admin Grants Jones Act Waiver
The Jones Act stipulates goods transported between USA ports be carried on American-crewed ships built and registered in the USA.

(Bloomberg) -- The Biden administration temporarily eased century-old U.S. shipping requirements to allow a foreign tanker to transport gasoline and diesel to fuel-starved areas of the country following the Colonial Pipeline outage.

A waiver has been issued for a single company under the 101-year-old Jones Act, which stipulates goods transported between U.S. ports be carried on ships built and registered in the U.S. as well as crewed by American workers, Homeland Security Secretary Alejandro Mayorkas said in a Thursday statement.

A White House official said Thursday that the waiver applied to a single tanker and other waiver requests are under consideration.

The move is designed to address fuel shortages spurred by the cyberattack on the Colonial Pipeline, which shut down a major artery for gasoline, diesel and jet fuel across the U.S. East Coast. Even with fuel shipments resuming from around 5 p.m. New York time Wednesday, it’s unclear how long it will take for the network to return to normal.

“This waiver will enable the transport of additional gas and jet fuel between the Gulf Coast and East Coast ports to ease supply constraints,” White House Press Secretary Jen Psaki said in a statement.

Biden is also urging Americans “to just purchase what they need, and not hoard fuel, as supply is restored,” Psaki said. Gasoline stations from Florida to Virginia have reported running dry after Colonial was forced to take systems offline May 7, and pump prices soared above $3 a gallon for the first time in six years.

While the government has temporarily lifted U.S. ship requirements to combat fuel shortages after major storms, including Hurricanes Sandy and Harvey, the issue is politically fraught. The Jones Act is championed by some of the nation’s biggest shipbuilders and vessel operators, as well as their allies on Capitol Hill. It also has the backing of a key Biden constituency in organized labor, including the Seafarers International Union.

Waiving the requirements allows foreign-flagged tankers to fill the supply gap left by the interruption to the pipeline. It would take an estimated six to seven days for a tanker to carry fuel from the Gulf Coast to New York Harbor. A single cargo delivery into the U.S. East Coast is usually about 300,000 barrels.

The company and tanker affected by the Jones Act waiver have not been identified.

Under federal law, the U.S. could waive Jones Act shipping requirements if “necessary in the interest of national defense.” However, first, the Maritime Administration “would have to determine that qualified U.S.-flag vessels cannot meet the need,” said Charlie Papavizas, an expert in Jones Act law at Winston & Strawn LLP.

The Maritime Administration completed a survey of available Jones Act-compliant tankers on Tuesday, though the results have not been made public.

The American Maritime Partnership, a group that represents U.S.-flagged ship owners and has opposed efforts to scale back Jones Act protections, did not immediately respond to the administration’s move. Previously, Wednesday, the group’s president said it “does not object to a targeted approach to issuing waivers when there is a legitimate need and when such action does not reward those who would utilize foreign vessels to game the system at the expense of American jobs and national security.”

--With assistance from Jordan Fabian.

© 2021 Bloomberg L.P.



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