Jones Act tank vessels remain available to transport fuel to the Eastern Seaboard; DHS must ensure 'waiver process' is used to meet national defense needs, not manipulated for financial gain

The following letter was sent to President Biden - with copies to Secretary of Homeland Security Alejandro Mayorkas, Secretary of Transportation Pete Buttigieg and Secretary of Energy Jennifer Granholm - by Michael Roberts, president of the American Maritime Partnership, a coalition of which American Maritime Officers Service is a member and which American Maritime Officers supports. On May 13, the Department of Homeland Security approved a second Jones Act waiver for an unspecified company.

The American Maritime Partnership, representing virtually every element of the U.S. domestic maritime fleet, including maritime workers, vessel operators and shipyards, strongly urges the Administration to reject any waiver of the Jones Act for the movement of fuel related to the Colonial Pipeline shutdown unless the waiver is genuinely required to meet an immediate need that cannot be met by American vessels. We are concerned that certain interests are manipulating the waiver process for financial gain instead of attempting to address the national emergency, at the expense of American maritime jobs and our national security.

The Jones Act provides for our national, homeland, and economic security. It ensures that American workers in American shipyards build vessels that are manned by American mariners in U.S. waters. The domestic maritime industry provides over 650,000 family wage jobs across America and contributes over $150 billion in economic impact every year.

A substantial portion of the American tanker fleet typically is leased (or chartered) to oil companies and other refined product shippers. This gives those shippers control over the use of those vessels. However, when the shutdown of the pipeline started last Friday, American vessel owners had a significant number of vessels that had not been chartered to refined products shippers and were available to be deployed in response to the pipeline outage.

When the news of the Colonial Pipeline shutdown broke, some refined product shippers snapped up virtually all of those uncovered American vessels. This put the refined product shippers in control of nearly all American tank vessels on the East and Gulf coasts, enabling them to direct or withhold their use in responding to supply shortages caused by the pipeline outage. As the discussion of possible waivers intensified, some charters of the American vessels were cancelled on the belief that foreign vessels could eventually be used instead once waivers were granted. (It should be noted, however, that to this day, American maritime operators still control a significant number of vessels that are available to respond to supply shortages on the East and Gulf Coasts even without the permission of refined product shippers.)

To the best of our knowledge, no American tank vessels currently under charter to refined product shippers have been diverted to East Coast ports to help alleviate supply issues related to the Colonial pipeline outage. This includes the vessels chartered since last Friday.

Refined product shippers have instead loaded cargoes onto foreign vessels for which they now seek Jones Act waivers. One company has received such a waiver, and we understand that there are several additional requests pending. Some of these companies are the very same companies that previously had provisionally chartered American tonnage or have American vessels under contract currently. It begs the question: why are these companies not using American vessels to assist in the delivery of fuel in this time of national emergency?

Several American ships are currently laden with refined petroleum cargoes and can be diverted to help alleviate fuel shortages much faster than the foreign ships if the refined product shippers would authorize it. These vessels clearly should be used before consideration is given to waivers to allow foreign vessels into our domestic commerce. Even then, waivers should be considered on a case-by-case basis driven by the urgent need for resupply of fuel and not driven by the desire of refined product producers to opportunistically move cargo under waivers to increase their profits, or by the desire to replenish inventory that is not urgently needed cheaper and faster than using either an American vessel or the Colonial Pipeline once it is fully operational.

History has shown that in situations like this shippers and traders will engage in "disaster arbitrage" to reposition fuel at favorable rates when a waiver is granted, even if the fuel is not needed to meet the immediate needs of the crisis for which the waiver was granted. We are concerned that the current waiver requests are for the same or similar purposes, especially since the Colonial Pipeline is resuming full operations.

We strongly urge you to ensure that the waiver process is being utilized for the purpose intended - to meet legitimate national defense needs - and not to approve further waivers that undermine our nation's critical maritime fleet.