September 6, 2006
Jones Act waiver appears limited
The Bush Administration's post-Katrina waiver of the Jones Act appears to be fairly limited.
U.S. Customs and Border Protection yesterday issued a Trade Update for Hurricane Katrina dealing with a number of issues--including the Jones Act waiver.
The update says that "unless otherwise instructed, the waiver of the Jones Act applies only to vessels transporting petroleum and refined petroleum products and ends September 19, 2005 at 12: 01 a.m. eastern daylight time."
The update also notes that Homeland Security Secretary Michael Chertoff "has exercised his discretion and authority to waive the coastwise laws generally for the transportation of petroleum released from the Strategic Petroleum Reserve, whether pursuant to an exchange, sale or otherwise, undertaken in response to the circumstances arising from Hurricane Katrina."
The CBP update notes that "the destruction created by Hurricane Katrina has rendered various U.S. ports temporarily inoperable, thereby necessitating the diversion of incoming foreign cargo from its original U.S. port of destination to the nearest feasible U.S. port. In these instances, CBP can expect to receive requests for permission to use non-coastwise-qualified vessels to transport such diverted cargo from the U.S. port of unlading to another U.S. port. The underlying issue with respect to these scenarios is the coastwise merchandise statute, which provides that no merchandise shall be transported between U.S. points on a non-coastwise-qualified vessel. Consequently, the use of such vessels not covered by the PresidentŐs waiver violates the law.
"CBP field officers and managers do not have authority to waive the provisions of the Jones Act beyond what the Secretary has authorized," says the Trade Update. "However, in view of the exigent circumstances due to the damage sustained by the Gulf coast region, and recognizing the strong need to aid in this humanitarian effort, to reestablish the orderly flow of commerce and to ameliorate as much as possible the considerable financial loss to U.S. shippers and importers, CBP's position is that the requester should be instructed to contact the Maritime Administration (MARAD) at (202) 366-0760 in order to obtain a referral as to any available coastwise-qualified vessel(s) for commodities other than petroleum and refined petroleum products. The requester should be further advised that the failure to use such referenced vessels has potential penalty consequences under the Jones Act. "