US Defense Bill Amends the Jones Act Waiver Process

An obscure measure in the defense policy bill the U.S. Senate passed this week could make it harder for oil and liquefied natural gas transporters to get a waiver allowing them to ship fuel during emergencies, lobbyists and analysts said on Friday.

The changes in the $858 billion annual defense spending bill passed late on Thursday came after lawmakers criticized Biden administration officials for September waivers allowing diesel deliveries to Puerto Rico, a U.S. territory, after Hurricane Fiona cut power for 3.3 million people.

The waivers apply to the Jones Act, implemented in 1920, which requires goods moved between U.S. ports to be carried by a limited fleet of ships built domestically and staffed by U.S. crew. Waivers have historically been requested to allow for movement of vessels during domestic crises such as extreme weather events.

The annual must-pass National Defense Authorization Act, or NDAA, amends the Jones Act waiver process to require the request be made public, establishes a 48 hour holding period after publication, prohibits any ship with goods on waterways from obtaining the waiver and requires a presidential determination that the waiver is needed for national defense.

ClearView Energy Partners, a nonpartisan research group, said in a note that the changes could add "well more than a week" to shipments to places like Puerto Rico.

A bipartisan majority of senators voted on Thursday to pass the NDAA, which now goes to President Joe Biden to be signed.

Kevin Book, an analyst at ClearView, said the changes could delay responses to any emergency fuel supply situation in the U.S. Northeast."Unless there is a national security reason that affects the military's ability to supply itself, virtually nothing else will qualify," said Sean Cota, president and CEO of the National Energy & Fuels Institute.

An Oct. 28 letter from Senator Roger Wicker, a Mississippi Republican, to Homeland Security Secretary Alejandro Mayorkas said the waivers were "in direct contradiction to the government's longstanding express interest in protecting American industry."

The Department of Homeland Security did not immediately respond to a request for comment.

(Reuters - Reporting by Laura Sanicola; Editing by Leslie Adler and Josie Kao)