Biden Administration Grants Jones Act Waiver to Foreign-Flagged Tanker

After advocacy from the territorial government of Puerto Rico and the left wing of his own party, President Joe Biden has approved a Jones Act waiver for a single foreign-flagged tanker to unload American diesel at a terminal near the port of Ponce. The decision meets a demand from Gov. Pedro Pierluisi for a "temporary waiver . . . to ensure that we have sufficient supplies of fuels such as diesel, and thus electric power service is not compromised" by the impact of Hurricane Fiona. 

The waiver provides unloading permission for the 50,000 dwt product tanker GH Parks. The Parks, which is flagged with an open registry, did not originally intend to go to Puerto Rico: she called in Texas City, Texas on September 16 to load a cargo of diesel, then got under way on a voyage to Europe. After Hurricane Fiona hit Puerto Rico, the Parks diverted for a new destination, arriving off Ponce on the 25th. She has been awaiting permission to unload ever since.

The decision to allow her into port marks the second Jones Act waiver for Puerto Rico in five years: the Trump administration issued a broad 10-day waiver after Hurricane Maria in 2017. Though narrower in scope, the Biden administration's action has raised questions about whether the Parks' shipment was necessary or legal, as waivers can be granted only when a coastwise-qualified vessel is unavailable and the shipment is needed for national defense requirements. 

"This issue of the ship [addresses] the lack of inventory of a supplier, not of the industry in general, and it is known to all that it sailed without first doing the due paperwork [for] the federal government," Puerto Rican resident commissioner in Washington Jenniffer González Colón said in a statement earlier this week.

The American Maritime Partnership, the business association for Jones Act vessel operators and unions, noted that federal agencies found that the island was already well-supplied with diesel before the waiver and that more foreign-origin fuel deliveries were coming soon. (Foreign cargoes can travel between a foreign port and a U.S. port aboard a foreign-flag vessel without a Jones Act waiver.)

Any post-storm fuel shortages experienced by Puerto Rican consumers were related to trucking distribution problems, AMP suggested, and an extra pierside fuel delivery would be irrelevant to the island's immediate energy needs. The foreign tanker in question diverted to Puerto Rico on short notice, and AMP suggested that its new destination was opportunistic.

"Granting of this waiver rewards calculated and predatory behavior that undermines a dedicated American supply chain for Puerto Rico, and it is a harmful precedent that invites similar cynical stunts by foreign oil traders. This was a public rush to judgment fueled by hearsay and it weakens the nation and hurts Americans workers and the Administration should never repeat it," said Ku’uhaku Park, President of the American Maritime Partnership, in a statement Wednesday.

AMP reported that the Department of Homeland Security conducted an after-the-fact survey to determine if Jones Act vessels had been available 12 days prior, when GH Parks left Texas, in what AMP described as a "check-the-box" compliance exercise. 

The outcome illustrates the tensions between President Joe Biden's support for the Jones Act and the recurring pressure to grant Jones Act waivers after hurricanes and other natural disasters. Merits aside, Puerto Rico's demand for a waiver drew public support from a wide section of the political spectrum, from left-leaning Rep. Alexandria Ocasio-Cortez (D-NY) to the pro-business editorial board of the Wall Street Journal. But it was the arrival of a real-world foreign ship that appeared to shift the process, putting a broadcast-ready visual on an abstract debate. Eight members of Congress called for a generic Jones Act waiver last week and received little public response from the administration; two days after the Parks' arrival was publicized, a vessel-specific waiver was granted.