Department of Homeland Security Approves Jones Act Waiver for Deliveries to Puerto Rico
Action Item: On September 28, 2017, Acting Department of Homeland Security (“DHS”) Secretary Elaine Duke issued a 10-day Jones Act waiver, available here, in the interest of national defense and in response to the devastation caused by Hurricane Maria. The waiver commences immediately and applies to all products shipped from U.S. coastwise points to Puerto Rico. Covered merchandise must be laded on board a vessel within the 10-day period and delivered by October 18, 2017.
This is the second Jones Act waiver issued this hurricane season, and follows a waiver issued earlier this month in response to Hurricanes Harvey and Irma that expired September 22, 2017, found here, and previously reported in recent Client Alerts (September 2017 (No. 3), September 2017 (No. 4)). Notably, this waiver is far broader than the refined petroleum products included in the Hurricane Irma waiver. Now, “all products” may be shipped under this waiver to Puerto Rico. However, carriers or shippers should be aware of the timeline limitations with the 10-day waiver in planning their loading and delivery of merchandise to Puerto Rican ports as the waiver ends on October 8, 2017 at 11:59 p.m. in the time zone where the vessel is loading the covered cargo, and the transporting vessel has until 11:59 p.m. on October 18, 2017, in the time zone of the port of arrival, to arrive at a port covered by the waiver to unload the cargo. Also, a vessel with arrival clearance that cannot immediately unload its cargo may unload its cargo after October 18, 2017, although generally it must unload the cargo at the first opportunity the port authority grants permission to do so.
The waiver does not ease restrictions on foreign-flag shipments from Puerto Rico to a U.S. point. With regard to the issue of collecting empty containers after the waiver period, 46 U.S.C. § 55107 does provide a Jones Act exception for transportation of empty cargo vans, empty lift vans, or empty shipping tanks and related equipment, but only if the items named are owned or leased by the owner or operator of the vessel and transported for its use in handling its cargo in foreign trade.
Discussions on whether the White House or DHS would grant a Jones Act have pervaded the media over the past several days due in large part to a letter from eight members of Congress requesting DHS waive the Jones Act for one-year. Senator John McCain also joined in the call to waive the Jones Act to support relief efforts in Puerto Rico, and submitted a separate letter to Acting Secretary Duke in which he renewed his long-standing plea to fully repeal the Jones Act. Senators McCain and Mike Lee (R-UT) also introduced legislation that would permanently exempt Puerto Rico from the Jones Act.
All normal Customs and Border Protection (“CBP”) requirements for vessel report of arrival, entry, and clearance must be met, although permission is not required for a movement that falls within the terms of the waiver. DHS also advised that carriers or shippers who conduct transportation pursuant to this waiver should provide notice of the vessel, dates of embarkation and disembarkation, type and quantity of cargo, and port of embarkation to JonesActWaiverRequest@cbp.dhs.gov.
CBP has also published a list of questions and answers to inform industry on compliance with this waiver. For example, since some ships may be too large for certain harbors, lightering may be a normal part of the delivery process. Thus, CBP has clarified that if lightering is required from the original vessel, all lightering vessels must commence loading by 11:59 p.m. on October 8, 2017, in the time zone where the lightering occurs. The full list of questions and answers is available here.
Currently there is no indication whether the 10-day waiver will be extended, similar to the Irma waiver. For voyages outside the current waiver period, parties remain free to seek individual waivers from DHS if suitable coastwise-compliant vessels are unavailable. As with the current waiver, individual requests will be closely reviewed by an interagency team, and granted only if they are determined to be “in the interest of national defense,” as explained more fully in our 2014 article on Jones Act waiver policy and procedures.
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©2017 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.