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Trump waives Jones Act to bring in fuel ahead of Irma's arrival

Highlights


Waiver covers seven states, Puerto Rico

Lasts for seven days, but may be extended

ExxonMobil subsidiary made initial waiver request

The Trump administration is waiving Jones Act requirements until September 15 to address a potential fuel shortage in Florida caused by the approaching Hurricane Irma and lingering Gulf Coast pipeline and refinery disruptions following Hurricane Harvey.

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The Jones Act requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned.

On Friday, Elaine Duke, the acting secretary of the Department of Homeland Security, signed a waiver which will allow gasoline and other refined products to move between US ports on foreign-flagged vessels over the next seven days.

The waiver is needed to "facilitate" shipments of refined petroleum products, including gasoline, diesel and jet fuel, from ports in New York, Pennsylvania, Texas and Louisiana to South Carolina, Georgia, Florida, and Puerto Rico.

The seven-day Jones Act waiver was recommended by both the US Defense and Energy departments.

Administration officials may extend the waiver beyond seven days if they deem an extension necessary, according to administration officials.



"This is a precautionary measure to ensure we have enough fuel to support lifesaving efforts, respond to the storm, and restore critical services and critical infrastructure operations in the wake of this potentially devastating storm," Duke said in a statement. "Hurricane Harvey significantly disrupted the distribution of fuel across the Southeastern states, and those states will soon experience one of the largest mass evacuations in American history while at the same time we'll see historic movements through those states of restoration and response crews, followed by goods and commodities back into the devastated areas."

The Jones Act waiver was first revealed by Brock Long, FEMA's administrator, during a Friday morning briefing on Irma and was later confirmed by Thomas Bossert, Trump's Homeland Security advisor, during a White House briefing Friday afternoon.

"As many tanker ships as possible are being brought to bear on the effort to bring as much fuel as possible in to help Floridians regardless of their flagged vessel status and that's the best we can do," Bossert said.

The waiver was requested by SeaRiver Maritime in a September 2 letter to US Customs and Border Protection. SeaRiver, a Houston-based subsidiary of Exxon Mobil, requested a 30-day waiver to "allow us to use foreign flag vessels to help alleviate disruptions to the transportation of crude oil and petroleum products to the affected areas as well as other US regions supplied from Texas," according to a letter released by CBP.

"While we continue to canvass the market, Jones Act tonnage remains in very tight supply and we are frequently unable to identify suitable tonnage within the given parameters," the company wrote.

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FLORIDA FUEL CRUNCH


Florida Governor Rick Scott said Friday that 8.4 million gallons of additional fuel had been shipped into Port Everglades and more than 5 million gallons into the Port of Tampa as of 6 pm Thursday. He said Port Everglades would closed Friday night and no additional fuel would be shipped to South Florida until after Hurricane Irma had passed.

"One of our top priorities remains fuel availability," Scott said.

Scott has ordered police escorts for fuel trucks across the state Thursday and urged gasoline stations to remain open as long as possible.

"We have asked fuel companies to identify ships that are in route to our ports so we can arrange military escorts to get them here faster," Scott said in a statement.

Florida depends on barge shipments rather than pipelines for 97% of its refined products. The state aims to keep seven days' worth of gasoline in storage at all times, according to James Miller, a spokesman for the Florida Petroleum Marketers and Convenience Store Association.

Last week, Phillips 66 requested a Jones Act waiver in response to the impact of Hurricane Harvey. The waiver was used to move a single cargo of crude from Corpus Christi, Texas, to the Louisiana Offshore Oil Port.

Phillips 66 withdrew the request after the Trump administration delayed a decision on it, according to sources.

"At this point, we've got enough Jones Act tonnage to meet our needs," Dennis Nuss, a Phillips 66 spokesman, said Thursday.

--Brian Scheid, brian.scheid@spglobal.com

--Meghan Gordon, meghan.gordon@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com