Letters

Senators Concerned about Blanket Waivers of Jones Act

October 27, 2005

The Honorable Michael Chertoff
Secretary
U.S. Department of Homeland Security
Naval Security Station
Nebraska & Massachusetts Avenues, NW
Washington, DC 20528

Dear Secretary Chertoff:

As members of the Senate Committee of jurisdiction for American maritime policy, we write to bring several relevant matters to your attention regarding the recent waivers of the Jones Act for the movement of certain petroleum products despite the availability of U.S.-flagged and crewed vessels ready to meet America's needs immediately after Hurricanes Katrina and Rita.

As you may know, the American domestic fleet and Members of Congress did not oppose the first waiver because of the catastrophic nature of the situation. The second waiver, though, was surprising in light of the well-documented availability of U.S. vessels and the operational capacity of our nation's pipeline infrastructure. The American maritime industry wants to help address the nation's needs, and is fully capable of doing so.

First and foremost, we fully comprehend the impact of Hurricanes Katrina and Rita on America's refinery capacity, and, as result, the national energy supply. We appreciate the dedicated efforts of this Administration in addressing the energy needs of our nation. We do not wish to stand in the way of legitimate and valid efforts to ensure a sustained and stable supply of petroleum products.

We are concerned, however, that the aforementioned waivers of the Jones Act may not have been necessary to handle America's energy needs immediately following the hurricanes. Our staffs have received detailed briefings from officials at the U.S. Departments of Homeland Security, Energy, and Transportation, but have yet to receive any information to support the suggestion that this blanket waiver is necessary to advance the flow of petroleum products between points in the United States.

In fact, such waivers can have a negative impact on the American maritime industry if not issued judiciously. We are grateful for this Administration's - and the previous administrations' - support for the Jones Act. However, the two consecutive blanket waivers, which appear unnecessary to address the few situations requiring the use of foreign-flag vessels, undermine that support.

I hope you can appreciate our frustration when American tankers and tank vessels with American crews are available in the Gulf but are bypassed by foreign flag vessels operating inside our waters outside of our laws. If the goal is to move refined product seamlessly between coastwise points in the U.S., these American vessels are available and ready to help. Instead we have received reports of U.S.-flag tanker charters being cancelled immediately after the waiver was announced, and of American tank vessel capacity standing by unused.

We ask you to please review procedures already in place under a 1990 Memorandum of Understanding (MOU) between all relevant Federal departments, which established a system of case-by-case waivers for situations akin to these disasters. Under this MOU, which has worked well in the past, waivers of the Jones Act only occur if no qualified American vessels are promptly available. This common sense, proven approach avoids blanket waivers and looks to American vessels first, while ensuring the seamless movement of petroleum products within our nation.

In addition, the Committee requested copies of the letters sent to the Department of Homeland Security and the Department of Energy from the companies that requested the Jones Act waivers cited in the two orders in the aftermath of the hurricanes. The Committee also requested documentation the Department of Transportation produced regarding a market survey on the availability of U.S.-flag vessels to transport petroleum products. Three weeks later we have yet to receive those documents. We respectfully request that you provide this information to the Senate Commerce Committee as expeditiously as possible.

Thank you for your interest in this important matter. We look forward to your prompt reply.

Sincerely,

Ted Stevens
Chairman
Committee on Commerce, Science, and Transportation

Daniel K. Inouye
Co-Chairman
Committee on Commerce, Science, and Transportation

Trent Lott
Chairman
Subcommittee on Surface Transportation and Merchant Marine

cc: Secretary Norman Mineta, Department of Transportation
Secretary Samuel Bodman, Department of Energy

The Maritime Cabotage Task Force was founded in 1995 to promote the U.S.-flag fleet engaged in domestic waterborne commerce. With more than 350 members, MCTF is the largest coalition ever assembled to represent the domestic segment of the U.S. merchant marine. Nationwide, there are more than 35,000 vessels engaged in Jones Act commerce and they annually move more than 1 billion tons of cargo and 100 million passengers. The Jones Act fleet generates nearly 125,000 jobs, 80,000 of which are aboard vessels and represents a $26 billion private sector investment in vessels and infrastructure. The Act has been broadly supported by every Congress and Administration since its passage in 1920 and is considered a key element in the nation's national defense capabilities.

For more information, contact: Glen Nekvasil, Director of Media Relations (1-888-400-9429)/info@mctf.com

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