US approves temporary Jones Act waiver for Puerto Rico after hurricane Fiona

The Biden administration on Wednesday approved a waiver of Jones Act rules in order to address Puerto Rico’s immediate energy and other essential needs subsequent to last week’s Hurricane Fiona.

The decision generated a rapid response from lobby groups who defend the Jones Act rules, which were brought in during the aftermath of the First World War to protect US shipping during times of national danger.

Homeland Security Secretary Alejandro Mayorkas said he had approved “a temporary and targeted Jones Act Waiver” to ensure Puerto Ricans “have sufficient diesel to run generators needed for electricity and the functioning of critical facilities after Hurricane Fiona.” The waiver will allow the use of cheaper and more readily available foreign-flagged vessels.

Hurricane Fiona struck Puerto Rico on September 18th causing an island-wide power outage.

The Jones Act mandates that goods moved between US ports be carried by US-flagged ships. On Tuesday Puerto Rico Governor Pedro Pierluisi asked the White House for a waiver to increase the availability of fuel after the storm.

In 2020 the US Congress eliminated the US Government’s authority to issue long-term comprehensive Jones Act waivers except if required to “address an immediate adverse effect on military operations.”

A tanker called the GH Parks with diesel on board was currently near Puerto Rico’s southern coast after sailing from the US. The vessel appeared to be impeded from discharging due to the Jones Act.

Lobby group American Maritime Partnership (AMP) was having none of it. It claimed that the affair with the GH Parks was an example of “theatrics of a foreign oil company to take advantage of the crisis”.

AMP said that American Maritime had been “meeting and exceeding the needs of Puerto Rican residents in the wake of Hurricane Fiona and there continues to be absolutely no justification for a waiver of the Jones Act”.

It said that “this stunt by a foreign oil company showing up unannounced in Puerto Rico while on its way overseas, hoping to sell its fuel at a premium to Puerto Ricans in need, and thereby triggering a public and political rush to judgment, is bad precedent, a circumvention of US law, and should never be tolerated.”

AMP did not address the fact that the governor of Puerto Rico had requested the waiver.

AMP accused foreign oil traders of seeking “to line their pockets at the expense of the Puerto Rican people”.

It said that the BP vessel GH Parks had set sail from Texas City, en route to an overseas destination, never intending to deliver diesel to Puerto Rico. “Seeing an opportunity to sell its fuel at a premium and take advantage of Puerto Rican residents, BP redirected the vessel to Puerto Rico without following the US Jones Act waiver process”, AMP claimed. It described the Marshall Islands flagged GH Parks as “a 50,000 dwt tanker of obscure beneficial ownership, managed by Synergy Maritime”.

Puerto Rico fuel distributor Peerless made a request for the fuel now on board the vessel to its supplier, BP. Luis Vázquez, general manager of Peerless, told local press that BP had “made the necessary procedures with DHS”, a statement that does not sit with AMP’s assertions.

2009-built, Marshall Islands-flagged, 30,031 gt GH Parks is owned and managed by GY Shipco XII LLC of Majuro, Marshall Islands. ISM manager is Synergy Maritime Pvt Ltd of Chennai, India. It is entered with Gard AS on behalf of GY Shipco XII LLC. It is entered for hull with Gard AS as claims leader on behalf of Hayfin Capital Management LLP. As of September 29th the vessel was underway a short way south of Ponce, Puerto Rico.