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ming barges to assist in clean-up efforts. MARAD, DOD, and the Coast Guard supported the waiver, with the Coast Guard adding that it supported their use until U.S.-fl ag vessels could effectively replace the vessels. DOE also rec- ommended approval citing the interest of national defense since the failure to act promptly and effectively could jeop- ardize the country’s energy supplies. The Customs Service (CBP’s predecessor) ultimately granted the waiver, but mandated that the vessels could not be used for supply purposes. This waiver and other associated waivers were subsequently extended until the threat passed. Hurricanes Katrina and Rita: Following a DOE re- quest, DHS granted a waiver after Hurricane Katrina in 2005. DHS stated that the catastrophic destruction brought about by Hurricane Katrina dramatically imped- ed the production and transportation of oil, gas, and other energy sources. Additionally, the administration decided to draw down the strategic petroleum reserve (“SPR”) and needed foreign-fl ag vessels to transport the supply. There was nationwide support, especially with a spike in gas pric- es following the catastrophe. Additionally, domestic mari- time industry supported the waiver, acknowledging there was not capacity to handle the problem. After Hurricane Rita struck the Gulf Coast a few weeks later, DHS issued another waiver. However, this time the domestic industry protested, claiming that there were coastwise-qualifi ed ves- sels ready and able to assist. Following the general waiver, the administration issued waivers on a case-by-case basis. Libya: In 2011, President Obama decided to draw down the SPR after commencing hostilities in Libya. The Presi- dent authorized the release of 30 million barrels of oil, ap- parently anticipating shortages due to the unavailability of Libyan crude oil. Out of 45 shipments of crude, 44 used foreign-fl ag vessels. Following this SPR drawdown, Congress enacted legislation requiring future SPR waivers to provide a written justifi cation for not using coastwise-qualifi ed vessels. Hurricane Sandy: Following Hurricane Sandy in 2012, DHS issued a waiver to allow foreign-fl ag vessels to trans- port petroleum products to New England and the Mid- Atlantic regions. The waiver did not allow for the transport of crude oil or blendstock components. DHS issued the waiver four days after Sandy’s landfall in New Jersey, and the waiver lasted almost three weeks. Polar Vortex 2014—Waiver Request Denied: With the arrival of a diffi cult winter in 2013-2014, New Jersey ran low on salts to clear roadways. The state requested a Jones Act waiver, which was denied because transporting road salts did not meet the “national security” standard. The state has been criticized for making the request due to poor planning and the availability of U.S.-fl ag vessels. LOOKING AHEAD: ARE THERE WAIVERS IN OUR FUTURE? The last time the United States became involved in a Middle Eastern confl ict, Libya in 2011, the President pre- emptively authorized a release from the SPR and DHS is- sued a Jones Act waiver. Although the U.S. forces have been involved in attacks in Iraq since August, drawing down on the SPR has not yet occurred. Gas prices and petroleum supply have not been interrupted, largely due to expansion in domestic supplies. However, a variety of factors may change this equation. At the time of writing, U.S. forces were increasing participation to hostilities in Syria, and confl ict has raised supply risks in key oil pro- ducing countries such as Iraq, Syria, Yemen, and Libya. Additionally, international sanctions against Iran and Rus- sia have further depleted potential suppliers of oil. Should domestic production slow or confl ict in oil-producing re- gions increase, the administration may need to take a hard look at another SPR drawdown. Additionally, the increase in domestic production could also be a factor leading to Jones Act waivers. Currently, only 50 Jones Act compliant tankers exist, and growth in oil supply outpaces domestic transport capacity. Addi- tionally, under current law, crude oil cannot be exported, leaving producers in a potential conundrum of not being able to get their product to any market. While this in itself may not meet the “national security” standard for issuing a waiver, as we have seen in the past, disruption to energy supplies has been grounds for a Jones Act waiver. Waiving the Jones Act requires meeting a high standard, namely, that a waiver is necessary to the “national defense.” Although requests from DOD trigger an automatic waiver, discretionary waivers by DHS require a number of factors to be met. In addition to demonstrating a national secu- rity need, U.S.-vessels must not be available to undertake the proposed transport. Historically, waivers have not been granted absent a catastrophe, war, or a severe and substan- tial disruption to energy supplies. As evidenced above, this clearly has not happened often unless there was an imminent and substantial threat to the national security of the United States. Do not expect this standard to change in the future. LEGALCOLUMN Jonathan Waldron of Blank- Rome is Chair, Maritime, Inter- national, Trade and government practice group. He concentrates his practice in maritime, inter- national, and environmental law, including maritime security. Mr. Waldron is also the Counsel for the American Salvage Association. November 2014 26 MN MN Nov14 Layout 18-31.indd 26 10/23/2014 10:23:11 AM
