Jonathan K. Waldron, Jeanne M. Grasso, Matthew J. Thomas, and Sean T. Pribyl
Action Item: On September 12, 2017, Acting Department of Homeland Security (“DHS”) Secretary Elaine Duke issued a new Jones Act waiver for refined products, effectively broadening and extending the previously issued seven-day Jones Act waiver by an additional seven days, to now run through September 22, 2017. This second Jones Act waiver also expands the number of states to which the waiver applies, and now includes movement of refined petroleum products, including gasoline, diesel, and jet fuel, shipped from New York, New Jersey, Delaware, Maryland, Pennsylvania, New Mexico, Texas, Louisiana, Mississippi, Alabama, and Arkansas to Florida, Georgia, South Carolina, North Carolina, Virginia, West Virginia, and Puerto Rico. The new waiver can be found here.
This second waiver is due to the continued shortage of energy supply in areas affected by Hurricane Irma. It is based upon the recommendation of the Department of Energy, and issued at the request of the Department of Defense.
As we reported in a recent Client Alert (September 2017 (No. 3)), the Jones Act waiver issued on September 8, 2017, offered a partial solution to the need to facilitate movement of refined petroleum products in the wake of two major hurricanes. However, industry stakeholders encountered commercial and operational challenges in utilizing the waiver due to the limited number of states to which it applied, the compressed window of time available to fix a vessel and arrange for loading, and the post-storm delays and disruption impacting a number of key ports.
DHS has responded to these concerns by lengthening the waiver period and expanding it to the following previously excluded origins: New Jersey, Delaware, New Mexico, Mississippi, Alabama, Arkansas, and Maryland. The extended waiver now applies to covered merchandise laded on board a vessel through and including September 22, 2017, that is, all cargo which is laded prior to 11:59 p.m. local time on the 22nd.
While there have been some industry calls for DHS to clarify in more detail what commodities are within the scope of the waiver, the extension notice simply restates that the waiver covers “refined petroleum products, including gasoline, diesel, and jet fuel” without further elaboration. Accordingly, questions regarding the application of the waiver to particular petroleum products should be carefully reviewed by counsel or addressed with relevant officials.
In addition, U.S. Customs and Border Protection (“CBP”) has published two Cargo Systems Messaging Service (“CSMS”) notices relevant to the Jones Act waivers.
The first, CSMS# 17-000562 (Jones Act Waiver Guidance Update), requests that any member of the trade community who intends to conduct transportation of refined petroleum products under the September 8, 2017, waiver, or who has already commenced such transportation pursuant to this waiver, provide the Vessel name (including IMO number), Commodity, Carrier, and Ports and dates of departure by email to JonesActWaiverRequest@cbp.dhs.gov. This notice is intended to assist CBP in tracking shipments under the waiver.
The second CBP guidance document, CSMS# 17-000563 (Update for Vessel Entrance and Cargo Clearance of Jones Act waivers), is also intended to assist CBP in tracking the use of the Jones Act waivers. CSMS# 17-000563 provides additional guidance to meet the entrance requirements for domestic cargo on foreign vessels, and asks carriers or their agents to provide the following information in the “Other” box on the CBP Form 3171: “Domestic Cargo, as described on attached CBP Form 1302, loaded in Port XXXX to be unloaded in port YYYY.” CBP also requests that carriers provide a CBP Form 1302 with appropriate bill of lading information including product description, shipper, consignee, quantity, and estimated value. The following statement may be included: “Shipment described is a domestic shipment moving under the requirements of the Jones Act waiver issued September 8, 2017.” CBP specifically states that the entities responsible for performing these functions are the “carrier” or “agent.” There could be penalties associated with the failure to follow CBP entry and clearance requirements. While the CSMS messages specifically note the September 8 waiver, their instructions should be read to apply to the second waiver as well.
With regard to commodities or voyages outside the scope of the current waiver, parties remain free to seek individual waivers from DHS if suitable coastwise-compliant vessels are unavailable. Those procedures are generally provided here. 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.
Please feel free to contact us if you have any questions.