Page 9: of Maritime Reporter Magazine (February 2019)
INSIGHTS: THE JONES ACT
THE LAw FIRM ALso CoRRECTLY NoTEs
THAT, oF THE 478 LNG CARRIERs THAT CUR-
RENTLY ExIsT IN THE woRLd, NoNE ARE it here. When it comes to the Jones Act, pier at its Isla Grande Terminal in San the reasons for its requirement – and for Juan, Puerto Rico, further solidifying its
JoNEs ACT ELIGIBLE vEssELs, ANd NoNE its very existence today – go far beyond commitment to the region. They now op-
ARE owNEd BY U.s. CITIzENs oR REGIs- the letter of the law. That said; it is in- erate some of the cleanest tonnage on the structive to recap a few points I’ve made planet, all it servicing Puerto Rico. They
TEREd IN THE UNITEd sTATEs. HENCE, ANY many times in the past: are not the only U.S. fag operators to do
LNG ExPORTED FROM THE U.S. MAINLAND so. In conjunction with the investment,
The Jones Act and Energy the company and the Puerto Rico Ports
COULD NOT BE SHIPPED DIRECTLY TO THE
The long and circuitous course line Authority (PRPA) also concluded a 30-
ISLAND ON ANY FOREIGN FLAG, REGISTERED to legalizing U.S. crude oil and LNG year lease extension for the Isla Grande exports has fnally come to fruition, property. That kind of investment – and
TONNAGE. BUT, THEY AREN’T UNREASONABLE producing the results that sane, ratio- local commitment – is exactly what is
PEOPLE. IF AND WHEN A JONES ACT ELIGIBLE nal people knew that it would. Greatly likely to create jobs and prosperity, with
LNG CARRIER BECOMES AvAILABLE, THE LIM- benefting the U.S. economy in so many associated tax revenues. What about diferent ways, some of that being real- simple, one-of port calls from a low
ITED WAIvER SIMPLY WOULD ExPIRE. SURE. ized in the form of maritime-related jobs cost fag of convenience carrier? Not so
LET’S GO WITH THAT.
and infrastructure spending. Just look at much.
what is happening in the port of Corpus
Christi, Texas. The decision to export A Hairline Crack crude oil and related energy products the cost of transporting LNG from the waste.’
Even a very small crack in the law
United States, decrease the competitive- Without discounting the horrible trag- was a good one. which will provide the necessary sealift
For the frst time in memory, America ness of U.S. LNG in the world market, edy that the storm represents, it is also capacity to defend our very shores in the became a net exporter of energy a couple and may, in turn, reduce demand for U.S. true that the Jones Act has absolutely next overseas confict – and it is com- of months ago. And, if you don’t think LNG or other forms of energy. And, at nothing to do with whether the needed ing in this dangerous time that we live aid and supplies got inland to those who in – will endanger our ability to respond. that’s important, just imagine what the this point, you probably think I’m argu- trade defcit might now be had this not ing from the position of Puerto Rico. I’m needed this help the most. Nevertheless, Make no mistake about it. And, a 10- come about. Sadly, and at the same time not. President Trump waived Jones Act ship- year waiver for the transport of energy to it was evolving, domestic interests ar- The Jones Act has its place. That place ping restrictions for Puerto Rico at the the island of Puerto Rico will eventually request of the island’s governor, Ricardo be the beginning of the end to the Jones gued (indeed, demanded) that that U.S. has nothing to do with commerce coming to or from our shores; from and to other Rosselló and after an outcry from Con- built and fagged LNG carriers and tank- Act. That’s because; you are either preg- ers be part of the mix. Fortunately, that places. Puerto Rico today receives 75% gress about the scarcity of fuel, food and nant, or you are not. There’s no middle never happened. (or more) of its goods and services from emergency supplies following Hurricane ground.
foreign sources, at market prices. They Maria. The move briefy placated local
Energy today ceases to be a geopo- This request for a limited waiver to sat- litical weapon because we’ve got plenty, could get their toothpaste from Belgium residents and responders who felt that isfy local LNG demand is nothing more we’re free to export it (or not) at will, and or their lumber from South America. the U.S. fag operators were the cause than a head fake. Puerto Rico, should we can do so at market prices. But, with Island trade with the U.S. mainland is of not only this crisis, but indeed, all of it ever even get to the point where it naysayer’s eyes on the low hanging fruit robust and it is robust because it makes their problems. Ultimately, when recov- can import LNG in large volumes, will represented by as many as 5,000 mari- good economic sense. If it didn’t, they’d ery does come, it won’t have anything to choose to get that LNG from foreign ner positions and the boon to U.S. ship- be getting their goods from somewhere do with who delivered the goods in the sources. That’s just economics. What building, it is understandable that Jones else. You could argue that Puerto Rico frst place.
they really want is to insert a tiny crack
Act stakeholders would embrace the actually has the best of both worlds. And in the Jones Act. It didn’t work in the im- concept. Even GAO says that as many yet, they want it both ways: to be a part Local Eforts, Global Implications mediate aftermath of Maria, and if com-
More than U.S. fag vessels, a local mon sense prevails, it won’t happen now. as 100 LNG carriers might be needed to of world’s greatest economy, to sleep fully satisfy that mandate. Beyond this, under the blanket of freedom, but only commitment – and an environmentally Next month, it’ll be something else.
the estimated cost of a typical Jones obey commerce laws when and if it suits correct one at that – are also important.
A tiny crack will eventually grow into
Act compliant, oceangoing LNG carrier them. They also have nothing to do with na- something bigger. Eventually, your dam- would likely be three times as much as it tional defense, but since anti-Jones Act aged windshield had to be replaced. activists can make peripheral arguments, Similarly, regional exclusions to Jones would cost in other places – something Never Let a Good Crisis Go to Waste that will have to be amortized over time, The most recent assault on the Jones so too can we. U.S. fag shipping has Act laws will evolve into the end of the
Act – that is, until this ludicrous propos- as a function of the cost of transporta- provided reliable and regular service to U.S. fag feet and what’s left of our al- tion. And, says GAO, it would take 30 al arose in the past week – came in the the island for many years. That’s not go- ready inadequate sealift capacity.
choppy wake of Hurricane Maria. The ing to change, and, in reality, it may be years based on current domestic ship- All that said; there are options for the building capabilities and infrastructure. line (then) from Jones Act opponents is one of the things that help the island to Commonwealth. They can, for example, that the Jones Act was solely responsible recover.
The bigger picture is even more daunt- go their own way with independence.
Within the last three years, Crowley Deep down inside, however, they know ing. That’s because, based on GAO for the slow and painful recovery there. analysis, these vessels and their associ- Taking a page from Winston Churchill, Puerto Rico Services executed a $48.5 that won’t go well. So, they want to have ated operating expenses would increase these folks ‘never let a good crisis go to million construction contract for a new it both ways. We can’t let that happen.