Mayorkas faces Congressional ire over Jones Act waivers

Written by Nick Blenkey
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The bipartisan leaders of two key House panels have written Secretary of Homeland Security Alejandro Mayorkas expressing their concern over his approvals of recent Jones Act waivers.

The letter, which concludes with some tough questions, was signed by House Committee on Transportation and Infrastructure Chair Peter DeFazio (D-Ore.) and Ranking Member Sam Graves (R-Mo.) and by Subcommittee on Coast Guard and Maritime Transportation Chair Salud Carbajal (D-Calif.), and Ranking Member Bob Gibbs (R-Ohio)

“We write to express our concerns and disappointment with your recent decision to grant Jones Act waivers for the delivery of fuel to Puerto Rico including to allow the delivery of diesel that was sourced from the mainland United States by British Petroleum Products North America (BPPNA) to Puerto Rico on a foreign vessel on September 28, 2022,” the representatives said. “We concur with the Maritime Administration (MARAD) that consideration of a waiver while a vessel is already underway is ‘novel and problematic’ and would like to better understand the reasoning for your decision to issue a waiver for a company that appeared to be gaming the Jones Act waiver process.”

The letter questions how DHS disregarded waiver requirements: “Moreover, the question of availability was not intended to be answered in retrospect; the statute is intended to be a prospective evaluation to give U.S.-flag ships the first opportunity to move the goods, without the need to waive the law. We do not understand how the Department of Homeland Security (DHS), either independently or acting through MARAD, made a retroactive determination that no U.S.-flag vessels could have performed the move for which the waiver was granted—and did so on the day the waiver was granted.”

The representatives conclude by requesting written answers to these questions:

  • MARAD determined vessels could have been available to load diesel from Texas City, Texas to Guayanilla, San Juan, and/or Yabocoa, Puerto Rico on September 15, 2022.5 How was it possible for DHS to issue a waiver when the statute only permits waivers “following a determination by [MARAD] … of the non-availability of qualified United States flag capacity”?
  • What was the legal justification for performing a retroactive vessel availability assessment and determination, particularly when the statute clearly states that in making availability determinations that MARAD “shall … identify any actions that could be taken to enable qualified United States flag capacity to meet national defense requirements” ?
  • In the days immediately prior to the issuance of the waiver, federal agencies were reporting that there were adequate fuel supplies available on the island, with distribution inland being the predominant issue. Why was there a discrepancy between the agency reports and your “assessment” that fuel was needed on the island that was referenced in your statement approving the waiver? Please provide that assessment.
  • We are concerned that this waiver was sought to take advantage of the vulnerable people of Puerto Rico. Some have described this waiver as an example of disaster arbitrage, where foreign operators make windfall profits by requesting a waiver without passing on the savings to the consumer, when normally the vessels delivering American cargoes to American ports would need to follow American laws, such as tax and labor laws.8 Has DHS considered the possibility that this waiver was requested for disaster arbitrage purposes?
  • Why was the issuance of this waiver necessary and in the interest of national defense?

You can read the full letter below. Interestingly, it contains a link to Maritime Administrator Ann Phillips’ response to what she calls a “novel and problematic” waiver request in regard to the LNG shipment for which Mayorkas subsequently approved a waiver.

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