Page 8: of Maritime Reporter Magazine (February 2019)

I

INSIGHTS: THE JONES ACT

Joseph Keefe

Joseph Keefe is a 1980 (Deck) graduate of the Massachusetts Maritime Academy, the editor of both Maritime Logistics Professional and MarineNews magazines. He can be reached at [email protected]

LNG, Energy, and the Jones Act

Three topics that don’t belong in the same sentence. Together, however, they represent fnely crafted plan to insert a hairline crack in U.S. cabotage laws. That effort has much bigger designs than just facilitating a few

LNG deliveries to the island commonwealth of Puerto Rico.

emember the time that you to do with the Jones Act. on the south side of the island currently government ofcials repeatedly couch caught a stone on your wind- The law frm also correctly notes that, receives a supply of LNG from interna- their pursuit of in LNG in purely eco- shield while driving at 65 of the 478 LNG carriers that currently tional sources. That should make island nomic terms, like everything else. And,

RMPH on a major highway? exist in the world, none are Jones Act lawmakers and residents happy, since it yet, virtually every (credible) study or

Remember the hairline crack that devel- eligible vessels, and none are owned by arrives on a foreign hull, from relatively examination of the matter shows that the oped? Remember how that crack never U.S. citizens or registered in the United local sources. So, why is it so expensive? Jones Act has little to do with the price got any bigger? Yeah, me, neither. States. Hence, any LNG exported from Looking to what the island hopes to of anything on the island. The economic

A recent announcement that a New the U.S. mainland could not be shipped accomplish in way of upgrading (and f- discussion is a non-starter for many rea-

Jersey law frm representing the Com- directly to the island on any foreign fag, nally cleaning up) their miserably dirty sons, but beyond that alone, it has noth- monwealth of Puerto Rico had assisted registered tonnage. But, they aren’t un- power generating infrastructure, that ef- ing to do with why a waiver might be in preparing and fling an application for reasonable people. If and when a Jones fort hasn’t even started. So, it’s a little granted in the frst place.

a limited Jones Act waiver isn’t neces- Act eligible LNG carrier becomes avail- premature to ask for something that isn’t sarily earthshaking news. Attacks on able, the limited waiver simply would even yet required. The American Maritime the Merchant Marine Act of 1920 – the expire. Sure. Let’s go with that. And, what if Puerto Rico does build Partnership responds

Jones Act – have come regularly, and in Our petitioners also lament, “Absent a marine facility to accept LNG ship- In a letter addressed to DHS Secretary increasing volumes in the past two years. a waiver, PREPA and Puerto Rico could ments? The business model for LNG in- Nielsen, the AMP maintains correctly

On the other hand, the plea for the waiv- not purchase U.S.-produced natural gas volves a lot of things, including but not that the granting of this 10-year admin- er predictably preys upon base emotions and would be forced to enter into long- limited to ‘cargo swaps’ which might en- istrative waiver of the Jones Act for the and little else in substance. In that way, it term purchasing contracts with foreign tail a U.S. LNG export cargo headed to coastwise movement of liquefed natural is perfectly aligned with virtually every sources of supply.” And, they character- one place, in exchange for another com- gas (LNG) to Puerto Rico is contrary to other request that comes before it. ize their waiver, if granted, “… a win- ing in from across the big pond. That’s the letter and spirit of 46 U.S.C. § 501

In a nutshell, the waiver request re- win situation for everyone involved.” how these things work. Gas from inter- (“§ 501”) on virtually every level and lies primarily on the premise that Puerto It’s a tired, old playbook one that says national locations is ready and available. is uniquely unsuitable for a waiver. The

Rico has some of the most expensive en- that the so-called “Porzio” application Actually, the closest LNG export facility letter goes on to say, “In addition, this ergy costs in the nation, but also leverag- for a limited waiver of the Jones Act to Puerto Rico is not in the continental waiver request is fatly contrary to the es the 2017 Hurricane Maria which blew would be in the United States’ economic United States but is in nearby Trinidad ‘Buy American, Hire American’ policies through the island Commonwealth, and security and national defense interests. and Tobago. of the Trump administration and would notes that repaired electrical infrastruc- They cite a temporary shortage of saline undermine U.S. national, homeland, and ture is being converted from diesel fuel intravenous bags in the lower 48 in the In the Interest of National Defense economic security. Finally, approval to natural gas. And, it may be of interest aftermath of Maria as proof of this na- The CBP has repeatedly held in their of a waiver like this would establish a to readers that the island is intent on re- tional security crisis. That’s it. That’s the rulings that a Jones Act waiver cannot precedent that would severely harm the alizing substantial costs savings in that argument. Nevertheless, there are a lot be issued solely for economic reasons or American maritime industry in Puerto way, as well as being the necessary frst of moving parts to this latest assault on economic beneft. The Defense Depart- Rico and beyond, and would undermine step in a larger plan for the island to rely settled, U.S. law. ment has historically analyzed waivers ongoing eforts to develop a coastwise- more heavily upon renewable energy Puerto Rico Lacks the Infrastructure to by asking if there would be an “imme- qualifed domestic LNG feet.” Spot on.

sources, such as solar and wind power. Accept LNG (and probably always will) diate adverse impact on defense opera- It’s a long letter and a good one, but

That’s nice, but it has absolutely nothing Actually, a single generating facility tions” absent the waiver. Puerto Rico I see little point in rehashing the rest of 8 Maritime Reporter & Engineering News • FEBRUARY 2019