US denied some Jones Act waivers in May

President Joe Biden's administration last month declined to waive shipping rules under the Jones Act for seven cargoes meant to ease fuel shortages from the outage of the 2.5mn b/d Colonial Pipeline, according to newly obtained records.

The US Department of Homeland Security (DHS) on 12 May said waiving shipping rules for seven cargoes proposed by a single unidentified company was not necessary, but it did grant the company a waiver for an eighth cargo. DHS at the time said there were enough Jones Act-complaint vessels for six of the proposed fuel cargoes, while the seventh would arrive too late to relieve fuel shortages.

"A waiver for the seven remaining cargoes is not necessary in the interest of national defense because there are US-flagged vessels available to perform these transportations in the near term," US homeland security secretary Alejandro Mayorkas wrote in a 12 May letter that Argus obtained under the Freedom of Information Act.

That letter, which is partially redacted, marked the first Jones Act waiver that has been approved under Biden, in response to a 7-12 May shutdown of the Colonial Pipeline system caused by a ransomware attack. Shipping sources at the time said that the first waiver went to US refiner Valero , which did not immediately return a request for comment.

The century-old Jones Act requires all shipments between domestic ports to occur on vessels that are flagged and built in the US. But at the time of the Colonial Pipeline outage, all available Jones Act vessels near the US Gulf coast that could carry refined products were already booked, according to one shipbroker. That led the Biden administration to conduct a fast-tracked review of requests for waivers.

Mayorkas, in the 12 May letter, said one of the eight proposed cargoes was "urgently needed" to relieve fuel shortages and was in the interest of national defense. But DHS denied the other seven requests because of the availability of US-flagged vessels, and in a separate 14 May letter supplemented the waiver denial for one of the proposed cargoes.

"The Colonial Pipeline resumed operations on May 12, 2021. This has significantly changed the longer-term outlook for the supply situation," Mayorkas said. "In light of the fact that the vessel does not reach [redacted] until June 1, 2021, this does not support national defense needs."

The Biden administration waived Jones Act requirements for a total of two fuel cargoes. Mayorkas approved the second waiver on 13 May to an unidentified company that sources identified as Citgo, which did not respond to a request for comment. In late May, the Malta-flagged Forres Park tanker delivered a diesel cargo from Lake Charles, Louisiana, to New Jersey, a move that would require a Jones Act waiver. The tanker had been chartered by Citgo, according to shipping sources.

By Chris Knight