Letter to President Obama

U.S. Senator Mary Landrieu (D-La.) today sent a bipartisan letter to President Obama criticizing the Administration's use of foreign vessels to transport crude oil within the United States during the ongoing Strategic Petroleum Reserve (SPR) drawdown. The letter urges the use of domestic vessels and seafarers -- as required in the Jones Act -- in order to create jobs and improve the economy here at home.

The letter from Sen. Landrieu, who is Chair of the Homeland Security Appropriations Subcommittee, was also signed by U.S. Senator David Vitter (R-La.) and U.S. Reps. Charles Boustany (R-LA-07), Elijah Cummings (D-MD-07), Peter King (R-NY-03), Candice Miller (R-MI-10), Bennie Thompson (D-MS-02), and Pete Visclosky (D-IN-01).

"We strongly urge the Administration to end the practice of waiving the Jones Act for SPR oil distribution and handing American jobs to foreign shipping companies," the letter reads. "The rash of recent waivers, exacerbated by a lack of transparency in the decision-making process, represents a stain on the Administration's determined effort to create jobs and improve the economy here at home, and it should therefore be rectified immediately."

The 90-year-old Jones Act requires the use of American vessels and American seafarers when moving cargo between two points in the United States. Since President Obama's decision in June to release oil from the SPR, the Administration has waived the Jones Act 46 times -- despite the fact that U.S. vessels are ready and available to transport the oil.

"The Administration's current policy provides jobs to foreign seafarers while American seafarers stand by ready to help. In waiving the Jones Act, the Maritime Administration apparently has determined that no American ships are "available.' We would appreciate your assistance in understanding why U.S. vessels that are in the full-time commercial business of transporting oil, are far more experienced in coastline movements of oil than any foreign flag operators, exceed the barrel capacity as defined by the DOE, are owned, controlled and operated by Americans, are not considered "available,'" according to the letter.

In their letter, Sen. Landrieu and the other signees note that the Administration will waive the Jones Act more times since the June SPR release than in all previous Administrations combined over the entire 90-year history of the federal law. They also criticized the Administration's "lack of transparency" in conducting these Jones Act waivers, saying that "at the very least, the American shipping industry is owed an explanation as to why their vessels are being declared unavailable."

The full text of the letter is below:

August 26, 2011

The President
The White House
1600 Pennsylvania Avenue NW
Washington, D.C. 20500

Dear Mr. President:

We are writing to express our extreme disappointment in the Administration's decision to use foreign vessels to transport crude oil within the United States during the ongoing Strategic Petroleum Reserve (SPR) drawdown. Use of foreign vessels with foreign seafarers appears directly contrary to the very purpose of the drawdown -- to provide American jobs and help make the American economy stronger.

As you know, the Jones Act requires the use of American vessels and American seafarers when moving cargo between two points in the United States, and you have previously indicated that you are a strong supporter of the Jones Act. Your Administration first announced a blanket waiver of the Jones Act when declaring its plans for a drawdown this summer. However, upon becoming aware that American vessels were available to help transport the oil, the blanket waiver was withdrawn. We are grateful for that decision to withdraw the blanket waiver.

Unfortunately, in the month since the withdrawal of the blanket waiver, Customs and Border Protection (CBP), an agency within the Department of Homeland Security, has repeatedly waived the Jones Act, based upon the Department of Energy's specifications and a determination by the Maritime Administration, an agency within the Department of Transportation, that no such vessels are available within the U.S. fleet.

Without a blanket waiver, any decision to waive the Jones Act must be made on a case-by-case basis, which under 46 U.S.C. § 501 requires two findings: 1) that there is a national defense requirement; and 2) if so, that there are no American vessels available to meet that requirement. Apparently a national defense finding has been made. As such, the relevant question for the Maritime Administration and DOT is whether American vessels are available.

In fact, they are. Industry officials have identified American vessels ready and willing to transport oil. The Administration is fully aware that U.S. vessels are standing by as the Maritime Administration website includes a list of American vessels that have indicated their availability for this drawdown. We have enclosed an updated list of available U.S.-flagged vessels with this letter. Each vessel on the list exceeds the capacity requirements outlined in the Department of Energy's (DOE) Notice of Sale of the SPR oil. While there is not enough American capacity to transport all of the oil at once, the Jones Act requires that American vessels be used first and that waivers only be granted when U.S. capacity is fully employed. In addition to being the law, that is also common sense in a fragile U.S. economy.

Unfortunately, in the month since the withdrawal of the blanket waiver, Customs and Border Protection (CBP), an agency within the Department of Homeland Security, has waived the Jones Act 46 times since June for this particular drawdown, based purportedly on the Department of Energy's urging that shipments be made only on vessels with a capacity of 500,000 tons or greater, and notification from the Maritime Administration, an agency within the Department of Transportation, that vessels of that size are generally not available within the U.S. fleet. As a result, the vast majority of vessel shipments have been conducted on foreign vessels. We believe that this Administration will waive the Jones Act more times since the June SPR release than all previous Administrations combined over the entire history of the Jones Act. These unprecedented actions represent a lamentable policy position that has negatively impacted the U.S. economy. It is particularly troubling given that the statutory purpose of the Maritime Administration is to help promote the American maritime industry.

The Administration's current policy provides jobs to foreign seafarers while American seafarers stand by ready to help. In waiving the Jones Act, the Maritime Administration apparently has determined that no American ships are "available." We would appreciate your assistance in understanding why U.S. vessels that are in the full-time commercial business of transporting oil, are far more experienced in coastwise movements of oil than any foreign flag operators, exceed the barrel capacity as defined by the DOE, and are owned, controlled and operated by Americans, are not considered "available."

We are also deeply troubled by the Administration's lack of transparency in conducting these Jones Act waivers. At the very least, the American shipping industry is owed an explanation as to why their vessels are being declared unavailable. We have been informed that Administration officials have indicated waivers were necessary to accommodate the "transportation plans" of those that purchased the crude oil from the SPR. We are sure that these Administration officials did not intend to suggest that purchaser preferences should supersede federal law that requires American vessels to be used first. We believe that providing the shipping industry with basic information outlining the basis for each waiver will help ease the extremely high level of tension in the American shipping industry over these waivers, and we would be grateful if you would help us to secure such an explanation from the relevant federal agencies. In addition, if DOE or other federal agencies have established requirements for the transportation of this oil (e.g., lot size minimums higher than those publicly announced), those requirements should be discussed with American industry so they can be addressed in an honest and direct manner.

We strongly urge the Administration to end the practice of waiving the Jones Act for SPR oil distribution and handing American jobs to foreign shipping companies. In addition, we urge you to encourage the appropriate federal representatives, particularly those at the Maritime Administration, to enter into an open dialogue with representatives from American shipping companies to ensure that a regrettable situation such as this one never happens again. The rash of recent waivers, exacerbated by a lack of transparency in the decision-making process, represents a stain on the Administration's determined effort to create jobs and improve the economy here at home, and it should therefore be rectified immediately.

Sincerely,

Cc: Mr. Peter Rouse, Counselor to the President of the United States
The Honorable Steven Chu, Secretary, U.S. Department of Energy
The Honorable Ray LaHood, Secretary, U.S. Department of Transportation
The Honorable Janet Napolitano, Secretary, U.S. Department of Homeland Security
The Honorable David T. Matsuda, Administrator, Maritime Administration
The Honorable Alan Bersin, Commissioner, U.S. Customs and Border Protection