Jones Act Resilience Considerations

Posted: December 11, 2015 at 12:02 pm

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Kevin O’Shea, Rebecca Haffenden, and Karen Guziel, Risk and Infrastructure Science Center
Global Security Sciences Division, Argonne National Laboratory

Introduction

Following a disaster, emergency managers may need to move goods into a disaster area using maritime shipping. The Jones Act is a Federal statute requiring that commodities moving between U.S. ports be transported via Jones Act-eligible vessels. The discussion below provides an introduction to the Jones Act and recommendations for the emergency management community on working within the Jones Act requirements and understanding when a waiver is justified.

Requirements of the Jones Act

Shortly after the end of World War I, Senator Wesley L. Jones sponsored a bill that would become the Merchant Marine Act of 1920, commonly known as the “Jones Act.” The Jones Act requires that a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel is Jones Act-eligible. Under the Act’s criteria vessels must be:

  • Owned by a U.S. citizen or owned by a partnership or association in which at least a 75 percent interest is owned by a U.S. citizen, and the vessel has a coastwise endorsement to permit it to engage in coastwise trade;[1] [2] [3]
  • At least 75 percent crewed by U.S. citizens;[4]
  • Built (or rebuilt) in the United States;[5] and
  • Registered in the United States.[6]

These requirements, with few exceptions, apply to all trade between ocean and river ports in the U.S. mainland, Alaska, Hawaii, Puerto Rico, and Guam.[7] The U.S. Coast Guard determines vessel eligibility for coastwise endorsement and issues vessel certificates of documentation on the basis of the criteria set forth above. The U.S. Department of Transportation (DOT) Maritime Administration (MARAD) provides assistance to the shipping public in locating Jones Act-eligible vessels for domestic shipping.[8]

Availability of Jones Act-Eligible Vessels

A growing concern related to emergent situations where U.S. port-to-port transport is necessary is the shrinking Jones Act-eligible vessel fleet. Fewer eligible vessels are available in 2015 than at any other time since the act was signed into law.

In 2015, the U.S.-flag oceangoing, cargo-carrying, privately owned merchant fleet totaled 164 self-propelled vessels (1,000 gross tons and above), as listed in Table 1. The number of Jones Act-eligible vessels has decreased steadily from 129 vessels in 2006 to 86 registered vessels in 2015—a 33 percent decline in less than 10 years.[9] A ship that is built or rebuilt outside of the United States, but owned and flagged as a U.S. vessel, would be considered a U.S.-flagged but Jones Act-ineligible vessel.

Table 1 – 2015 U.S.-Flag Vessels by Type and Jones Act Eligibility[10]

Vessel Type Number of Vessels Total Gross Tonnage

(100 cubic feet) b

Total Deadweight

(metric tons)c

Jones Act Eligible Jones Act Ineligible Jones Act Eligible Jones Act Ineligible Jones Act Eligible Jones Act Ineligible
Containership 22 41 622,126 2,287,780 668,860 2,510,517
Dry Bulk 3 3 72,502 86,434 107,031 153,014
General Cargo 7 10 14,319 130,278 10,604 167,308
RO-ROa 9 19 357,487 961,442 170,627 396,389
Tanker 45 5 1,984,243 118,583 3,306,925 196,631
Total Vessels 86 78 3,050,677 3,584,517 4,264,047 3,423,859

a  RO-RO = Roll On, Roll Off.

b  Gross tonnage (GT) is volume of all the ship’s enclosed spaces (from keel to funnel) measured to the outside of the hull framing. 1 GT = 100 cubic feet.

c  Total deadweight is the total weight (metric tons) of cargo, fuel, fresh water, stores, and crew that a ship can carry when immersed to its load line.

Jones Act Waivers in Emergency Situations

Under the current law, the Secretary of the Department of Homeland Security (DHS) has the power to issue waivers for the Jones Act: [11], [12]

  • On request of the Secretary of the Department of Defense (DOD), the Secretary of DHS shall issue a waiver of Jones Act requirements[13] to the extent that the Secretary of DOD determines the waiver is necessary for national defense; or
  • The Secretary of DHS can independently issue a waiver in the interest of national defense—since 2008, the secretary must also obtain a determination from MARAD that a Jones Act-eligible vessel is not available to meet the national defense goals before a waiver can be issued.[14]

It is clear in the Jones Act and associated guidance that waivers will not be issued solely for natural hazard-related events. If the natural hazard event has a direct impact on national defense, such as a direct effect on a military base, it may be possible to obtain a Jones Act waiver.

Waiver Application and Approval Process

According to U.S. Customs and Border Protection (CBP) guidance, a waiver request should include the purpose for which the waiver is sought, the port(s) involved, and the estimated period of time for which the waiver would be in effect. There is no standard form for filing a request. Jones Act waiver requests are directed to CBP Cargo Security, Carriers and Immigration Branch. The Secretary of the DHS evaluates the input from Federal partner organizations, to include DOD and the Department of Energy, and makes the final determination. The waiver will not be granted if (1) MARAD indicates that Jones Act-eligible vessels are available or (2) the waiver request is not necessary for national defense.[15], [16]

Successful Jones Act Waivers

Obtaining a Jones Act waiver for oceangoing vessels in excess of 1,000 gross tons is not a common occurrence. Table 2 provides a noncomprehensive sample of successful Jones Act waivers. The granting of the waiver implies that the shipping activity was necessary for the national defense and that a Jones Act-eligible vessel was not available.[17]

Table 2 – Successful Jones Act Waivers

Event Description Date(s) of Issuance
Exxon Valdez
crude oil spill
Foreign-flagged, oil-skimming barges were allowed to assist with cleanup operations in Alaska. The waiver noted that failure to act promptly could endanger the Nation’s energy supplies.[18] Mar. 1989
Hurricane Katrina Coastwise laws were waived for transporting petroleum released from the Strategic Petroleum Reserve (SPR) in response to circumstances arising from Hurricane Katrina.[19] Sept. 1–19, 2005
Deepwater Horizon crude oil release Two preemptive waivers covering seven vessels were issued to anticipate the need for foreign-flagged vessels to approach closer to shore or seek shelter in a U.S. port because of weather.[20] Skimming vessels are exempt from the Jones Act, and most operate outside the 3-mile limit. June and July, 2010
2011 Strategic Petroleum Reserve sale More than 44 waivers were issued to move 30.6 million billion barrels of crude oil, via 28 contracts to 15 vendors. Aug.–Sept. 2011
Nome, Alaska, fuel delivery A Russian ice-class tanker was used to deliver gasoline from Dutch Harbor to Nome, Alaska. A waiver was granted to avert a fuel shortage that would have created an energy crisis that could impact the Nation’s defense.[21] Dec. 2011
Superstorm Sandy An initial waiver was issued on November 2, 2012. The waiver allowed “transportation of petroleum products from the Gulf of Mexico to the Northeast region of the United States.” The waiver was expanded on November 3, 2012, to include other feedstocks, blending components, and additives used to produce fuels.[22], [23] Nov. 2–3, 2012

 

Most Jones Act waivers are issued for a finite window of time and authorize transport of a specific shipment of goods between named ports. In the case of the SPR purchases in 2011, waivers had durations of 2 to 14 days, with the majority in the 2- to 4-day range.[24] Significant national events, such as Hurricane Katrina and Superstorm Sandy, garnered a larger window of time, but even in these situations, the waiver only covered a window of time long enough to provide the required support until Jones Act-eligible vessels could be obtained to execute the shipping.

Denied Jones Act Waivers

The Secretary of DHS is responsible for the interpretation of the law and its application in granting any waiver for the national defense. For example, in 2014 the northeast was experiencing an extended cold spell, and the State of New Jersey became concerned about its dwindling road salt supplies. State officials learned of a foreign-flagged vessel that could pick up salt in Maine and deliver it to Port Newark. They applied to CBP for a Jones Act waiver; however, their request was denied. The denial noted that the waiver request did not adequately determine the availability of Jones Act-eligible vessels to deliver the salt and cited a lack of State preparation as a contributing factor in the shortage.[25], [26] Issues related to national defense were not mentioned in the denial.

Implications for Emergency Management

The shipping industry is very robust. When private entities or States need commodities, they contact the manufacturers or brokers who interact with shipping companies. Shipping companies determine how to get the commodities from point A to point B. During emergency conditions, however, State government authorities may want to request a Jones Act waiver to facilitate the movement of commodities into an affected area. These authorities should consider the following activities well in advance of an actual event:

  1. Establish communication avenues with MARAD and with representatives of Jones Act-eligible U.S.-flag vessels that can quickly determine vessel compatibility with the cargo to be transferred, the extenuating circumstances for cargo delivery (e.g., damaged port facilities), and vessel and crew availability for any government-initiated waiver requests.
  2. Establish relationships with CBP authorities, MARAD, and shipping and logistics companies to understand the process and the minimum data necessary to secure a waiver.
  3. Establish relationships with shipping and logistics companies to identify sources of potentially essential information to be included in government-initiated waiver requests.
  4. Develop a matrix of points of contact, sources of relevant information, and essential demonstrations of national defense implications (i.e., unavailability of Jones Act-eligible vessels and consequences without a waiver) to facilitate the development of a Jones Act waiver.
  5. Collaborate with CBP to develop acceptable and/or necessary form and content requirements for submitting a waiver request (including elements of due diligence and, where possible, a generic, “fill in the blank” template for waiver requests).
  6. Design and conduct emergency response exercises with scenarios that explicitly require pursuit of a Jones Act waiver to evaluate the accuracy and sufficiency of elements of official emergency plans for pursuit of Jones Act waivers; ensure CBP authorities (field staff as well as those who would review a Jones Act waiver request) are participants in such exercises.

Conclusion

The Jones Act can present a restrictive scenario with regard to moving merchandise between U.S. ports. The shipping industry, however, has evolved to operate within the framework presented by the Jones Act and is generally successful in fulfilling U.S. port to U.S. port shipping needs. Waivers for the Jones Act can be obtained, but the waivers must be in the interest of national defense and a Jones Act-eligible vessel must not be available to carry the shipment. In the case a natural disaster that has created an emergent need for supplies that could be delivered over the water between U.S. ports, it is unlikely that a waiver would be issued, unless the requester can prove an impact to national defense.

Acknowledgement

The work presented in this paper was partially supported by Argonne National Laboratory under U.S. Department of Energy contract number DE-AC02-06CH11357. The submitted manuscript has been created by UChicago Argonne, LLC, Operator of Argonne. Argonne, a U.S. Department of Energy Office of Science laboratory, is operated under Contract No. DE-AC02-06CH11357. The U.S. Government retains for itself, and others acting on its behalf, a paid-up nonexclusive, irrevocable worldwide license in said article to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the Government.


[1]     46 U.S.C. § 55102 (2011), available at http://www.gpo.gov/fdsys/pkg/USCODE-2011-title46/pdf/USCODE-2011-title46-subtitleV-partD-chap551-sec55102.pdf.

[2]     46 U.S.C. § 12106 (2002), available at  http://www.gpo.gov/fdsys/pkg/USCODE-2002-title46/pdf/USCODE-2002-title46-subtitleII-partH-chap121-sec12106.pdf.

[3]     Vessels Entitled to Engage in Coastwise Trade, 19 C.F.R. § 4.80 (2015), available at http://www.ecfr.gov/cgi-bin/text-idx?SID=ec05de713d44ea46e0e33d67b7f1ef66&mc=true&node=se19.1.4_180&rgn=div8.

[4]     46 U.S.C. § 8103 (2013), available at  http://www.gpo.gov/fdsys/pkg/USCODE-2013-title46/pdf/USCODE-2013-title46-subtitleII-partF-chap81-sec8103.pdf.

[5]     46 U.S.C. § 12106.

[6]     Vessel Numbering and Casualty and Accident Reporting, 33 C.F.R. Part 173 (2015), available at http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title33/33cfr173_main_02.tpl.

[7]     The coastwise laws, with some exceptions, do not apply to American Samoa, the Northern Mariana Islands, or the Virgin Islands. See 46 U.S.C. § 55101.

[8]     “U.S.-Flag Waterborne Domestic Trade and Related Programs,” MARAD, http://www.marad.dot.gov/ships-and-shipping/domestic-shipping/, accessed September 28, 2015.

[9]     “Maritime Statistics. U.S. Privately Owned Fleet,” MARAD, http://www.marad.dot.gov/library_landing_page/data_and_statistics/Data_and_Statistics.htm and http://www.marad.dot.gov/documents/DS_USFlag-Fleet_2015.xls, accessed May 8, 2015.

[10]   “United States Flag Privately Owned Merchant Fleet Summary as of 10/9/2015,” MARAD, Oct. 9, 2015,  http://www.marad.dot.gov/wp-content/uploads/pdf/DS_CY15-US-Flag-Fleet-Summary-20151009.pdf.

[11]   “Archive of Emergency Declarations,” Federal Motor Carrier Safety Administration, Aug. 31, 2015, http://www.fmcsa.dot.gov/emergency/archive-emergency-declarations.

[12]   46 U.S.C. § 501 (2013), available at  http://www.gpo.gov/fdsys/pkg/USCODE-2013-title46/pdf/USCODE-2013-title46-subtitleI-chap5-sec501.pdf.

[13]   The CBP is delegated the authority from the Secretary of DHS to grant DOD waiver requests.

[14]   National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 110-417, § 3510 (2009) (amending 46 U.S.C. § 501(b)).

[15]   Jonathon Waldron, “How Difficult Is It to Obtain a Jones Act Waiver?” MarineLink.com, Nov. 24, 2014, http://www.marinelink.com/news/difficult-obtain-waiver381431.aspx.

[16]   CBP, DHS, 2009.

[17]   A central repository of Jones Act waivers is not available. The waivers listed were available in the public domain.

[18]   Waldron, ”How Difficult Is It to Obtain a Jones Act Waiver?”.

[19]   Michael Chertoff, “Waiver of Compliance with Navigation and Inspection Laws,” U.S. Department of Homeland Security, Office of the Secretary, Sept. 1, 2005, http://npga.org/files/public/Jones_Act_Waver_9-05.pdf,.

[20]   “Deepwater Horizon Spill Response,” National Incident Command, July 11, 2010, http://www.uscg.mil/foia/docs/DWH/2751.pdf.

[21]   “Homeland Security Grants Waiver of Jones Act for Nome Fuel Delivery,” Alaska Business Monthly, Dec. 30, 2011, http://www.akbizmag.com/Alaska-Business-Monthly/December-2011/Homeland-Security-grants-waiver-of-Jones-Act-for-Nome-fuel-delivery.

[22]   “Reporting Requirements for the Special Purpose Jones Act Waiver Issued in Connection with Hurricane Sandy Recovery,” MARAD, 2012, http://www.marad.dot.gov/wp-content/uploads/pdf/MARITIME_ADMINISTRATION_JONES_ACT_WAIVER_REPORTING_REQUIREMENTS.pdf, accessed Aug. 24, 2015.

[23]   “Amendment to the Waiver of Compliance with Navigation Laws,” U.S. Department of Homeland Security, Nov. 2, 2012, http://www.cbp.gov/sites/default/files/documents/jones_act_amendment_2.pdf.

[24]   Jones Act Waivers for 2011, U.S. Department of Homeland Security, FOIA Files, available at http://www.dhs.gov/xlibrary/assets/foia/jones-act-1.pdf, http://www.dhs.gov/xlibrary/assets/foia/jones-act-2.pdf and http://www.dhs.gov/xlibrary/assets/foia/jones-act-3.pdf.

[25]   Waldron, ”How Difficult Is It to Obtain a Jones Act Waiver?”.

[26]   Fred Tuccillo, “US Law Blocks Aid as Road Salt Runs Out in NJ,” New Jersey 101.5, Feb. 15, 2014,  http://nj1015.com/us-law-blocks-aid-as-road-salt-runs-out-in-nj/.

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