Congress Pushes Back on Jones Act Waiver

The Jones Act, a 20th century cabotage law that most Americans have never heard of, is very controversial in Puerto Rico. Recently, it has been a source of controversy in Congress, too, as members of the House push back on waivers the Biden Administration extended to Puerto Rico after Hurricane Fiona.

What’s the Jones Act?

The Merchant Marine Act of 1920 says that ships traveling between U.S. ports must be American ships, built in America, with American crews, flying under the U.S. flag. The law was passed for national security reasons and related fears that the United States was losing its edge to foreign competition. In the event of war, the thinking went, the United States might not be able to mount a sea defense, because the needed skills and facilities would have been lost.
The focus of the law was defense, not economic protectionism.
So a ship carrying goods from Maine to Virginia must be an American ship. So must a ship carrying goods from Florida to Puerto Rico. Ships from other countries can also carry freight to the United States, of course, but they can’t carry cargo directly from one U.S. port to another.
Many people believe that the Jones Act increases the cost of goods in Puerto Rico, though this is not supported by the Government Accountability Office’s report on the subject. Major U.S. retailers such as Walmart have also said that the Jones Act does not affect the prices they charge. This continues to be a very widespread belief, however.

Would a Jones Act Exemption Help Puerto Rico?

The post-hurricane waiver

A foreign ship carrying fuel was already en route from Texas to a foreign port when its company decided to send it to Puerto Rico. The ship was flying under a flag indicating the ship was registered in the Republic of the Marshall Islands, a nation freely associated with the U.S.

Ship Flagged by Freely Associated State Gets Jones Act Waiver

Numerous members of Congress, the press, and Puerto Rican leaders asked the president to give a waiver to this ship, and President Biden complied. The Department of Homeland Defense approved the waiver without agreeing that there was any fuel shortage on the Island. The ship was able to dock in Puerto Rico and unload the fuel it carried.
The waiver was a popular move.

Who is objecting to the waiver?

After it was issued, however, a bipartisan slate of members of Congress pushed back on the waiver. House Transportation and Infrastructure Committee chair Peter DeFazio (D-OR) and Rep. Sam Graves (R-MO), Ranking Member of the Committee on Transportation and Infrastructure, sent a letter to U.S. Department of Homeland Security Secretary Alejandro Mayorkas and U.S. Department of Transportation Secretary Pete Buttigieg. The letter was also signed by Coast Guard and Maritime Transportation subcommittee chair Salud Carbajal (D-CA) and leading Republican Bob Gibbs (R-OH).
“We do not understand how the Department of Homeland Security…made a retroactive determination that no U.S.-flag vessels could have performed the move for which the waiver was granted,” the letter said.
Another waiver was granted after the letter had been received. Secretary Buttigieg told Reuters that the Department of Transportation intended to respond to the congressmen’s letter.

What about the future?

Many Puerto Rican leaders, including former Governor Rossello, have asked for a ten-year general waiver from the Jones Act for Puerto Rico. So far, the administration has not considered this sweeping change. Targeted waivers were granted after Hurricane Maria, as well as the more recent waivers following Hurricane Fiona.
A statement this week from the White House reminded shipping companies that “any request to waive the Jones Act … should be made using the standard processes and timelines with which these companies are very familiar.”