Push to Reverse Obscure Shipping Law Could Flood Puerto Rico with Fracked Gas
By Steve Horn
In the aftermath of Hurricane Maria, the September 2017 climate change-fueled disaster which devastated Puerto Rico and left over 3,000 people dead, the island’s electricity grid was left decimated.
As the island rebuilds, the oil and gas industry, industry-funded think tanks, and their legislative allies have begun a concerted push to flood the island with liquefied natural gas, or LNG. But a century-old federal shipping law known as the Jones Act stands in the way of those ambitions.
LNG is super-chilled methane gas obtained via hydraulic fracturing, or ‘fracking,’ a horizontal drilling technique decried by environmental justice advocates for its public health impact on communities across the country. The method can contaminate nearby air and water with toxic chemicals that have been linked to increased risk of cancer, birth defects, and respiratory issues. Once chilled, the LNG is shipped from ports on tankers and taken throughout the world. The U.S. has transformed into an LNG exporting powerhouse, sending over 5 billion cubic feet per day to the global market in 2018—or over 60 percent more than was exported in 2017.
Climate scientists have also sounded the alarm about the natural gas supply chain and its potential to leak methane into the atmosphere. Methane is a greenhouse gas 86-105 times more potent than carbon dioxide as a heat trapping agent over a 20-year period, the key period during which most climate scientists say major action must be taken to combat the potential ravages of climate change.
Despite these concerns, the Trump Administration’s Department of Energy has eased the way for LNG export companies to ship gas to Puerto Rico and the Caribbean at large by classifying tankers as “small scale,” as reported by The Real News.
That category has exempted them from the more robust and routinized federal environmental review process by considering the entire class of carriers in the “public interest,” as defined in the Natural Gas Act of 1938.
The “small scale” variety of tankers, and the companies which own them, have their eyes set in particular on the Caribbean. That is spelled out explicitly in the Energy Department press release announcing the rule change.
“The finalization of this rule will expedite the permitting of certain small-scale exports of natural gas,” said Secretary of Energy Rick Perry in the release. “The so-called ‘small-scale rule’ will further unleash American energy by reducing the regulatory burden on American businesses while also providing significant benefits to our trading partners in in the Caribbean, Central America and South America.”
But another hurdle stands in the way of the industry dream to turn Puerto Rico into a paradise island for LNG. The global maritime shipping industry is currently governed by a nation-state-centric international legal regime mandating a “genuine link between a ship and a flag state.”
And as it stands today, few LNG vessels are manufactured in the U.S.
Under the Jones Act, ships from other countries cannot move cargo from one U.S. port to another. Because Puerto Rico sits as a “dependency” of the U.S., or what many call a colonial outpost, the Jones Act applies to shipments from the mainland to the island.
“[T]here are about 30-40 LNG carriers around the world that could be used to ship LNG from the U.S. to Puerto Rico under a limited exception, but these ships would still need to be U.S. registered and U.S. crewed,” Susan Sakmar, a law professor at University of Houston and former accountant for Chevron, told The Real News, pointing to a 2013 U.S. Government Accountability Office report. “This has not happened yet, probably because the market is so small that there’s no real economic incentive to do this. The LNG shipping industry has for the most part been developed outside of the U.S., which has never been a major player in LNG until shale gas came along giving rise to US LNG exports.”
From this milieu, a campaign has emerged to create an exemption to the Jones Act as it applies to the U.S.-Puerto Rico relationship. LNG, and the oil and gas industry at large, could stand as the central beneficiary.
Jonesing for Jones Act Reversal
Advocacy for overturning the Jones Act in Puerto Rico predated Hurricane Maria. But in its aftermath, it has taken on new life, particularly as it relates to LNG.
“In the aftermath of Hurricane Maria, which devastated Puerto Rico’s power grid, more focus has been placed on replacing Puerto Rico’s energy supply with LNG and renewables,” said Sakmar, the University of Houston LNG scholar. “As a result, there are occasional calls for the Jones Act to be repealed—or at least waived—to allow Puerto Rico to import greater amounts of LNG from the U.S.”
Hawaii first introduced the idea of an exemption for LNG in 2013 in the form of House Concurrent Resolution 150 and House Resolution 119. Shortly thereafter, Puerto Rico’s U.S. Rep. Pedro Pierluisi introduced his own version of that resolution in the U.S. House of Representatives as H.R. 2838, the Puerto Rico Interstate Commerce Improvement Act of 2013.
“[M]y bill would enable foreign-built vessels to transport liquefied natural gas and other fuels from the U.S. mainland to Puerto Rico,” said Pierluisi of his support for the legislation in a 2013 press release. “This will benefit energy producers in the states, who will gain access to an important new U.S. market and make a positive contribution to their local economies.”
More recently, U.S. House Committee on Transportation and Infrastructure leaders published a letter in February of 2019 detailing that the governor of Puerto Rico, Ricardo Rosselló, applied for a 10-year Jones Act permit exemption back in December of 2018.
In the letter, Committee on Transportation members expressed concern with the proposal, along with the fact that the Trump Administration has taken a liking to the idea.
“Not only has the Jones Act promoted vibrant economic growth and ensured national security, the Act has created hundreds of thousands of good paying jobs in our domestic maritime trades and shipbuilding industries,” wrote the Chairman and Ranking Member of the Committee U.S. Rep. Peter DeFazio (D-OR), the Republican Ranking Member Sam Graves (R-MO), and both the Republican and Democrat Ranking Members of the Subcommittee on Coast Guard and Maritime Transportation. “It has come to our attention, however, that the administration is considering approval of the request from the Governor of Puerto Rico.”
At a Subcommittee on Coast Guard and Maritime Transportation hearing on March 6, DeFazio singled out the oil and gas industry as the entity pushing the hardest to undo the law for its own self-benefit.
“[I]t’s just the oil and gas industry trying to get their foot in the door to dis-establish what is a very successful U.S. story in terms of maintaining at least a minimal merchant marine capability [and] shipbuilding capability,” said Peter DeFazio (D-OR), Chairman of the House Transportation & Infrastructure Committee (T&I), at a committee hearing on infrastructure last week. “If we undermine the Jones Act we won’t have that anymore.”
For its part, Customs and Border Protection told the industry publication FreightWaves that it “is currently evaluating the waiver request, and is working with its federal agency partners to ascertain all facts that will be pertinent to our decision.”
The Trump Administration issued a temporary 10-day Jones Act waiver as a post-Hurricane Maria disaster relief measure, making it easier to bring supplies to the island, and is now mulling over nixing it permanently. At the Argus Crude Summit in Houston on January 24, Harold Hamm—founder and CEO of shale oil drilling giant Continental Resources, as well as President Trump’s 2016 campaign energy adviser and a major donor to his campaign—also came out in support of a Jones Act waiver as applied to LNG.
Corporate-funded think tanks, too, have chimed in on the issue.
The Cato Institute, a longtime recipient of fossil fuel industry donations co-founded by Republican Party mega-donor Charles Koch, has joined the chorus of support for a Jones Act exemption for Puerto Rico. So has another group founded by Charles Koch, the Institute for Energy Research, which published a 2017 report in support of a repeal as Hurricane Maria annihilated Puerto Rico.
“[T]he shale revolution is steaming along, bringing the United States abundant energy, high-paying jobs, and new sway in global energy markets,”argues the Cato article. “But the Jones Act has cut many Americans off from these new resources, leaving them stranded in energy-starved markets. Congress should reform the Jones Act so these new riches can be shared with all Americans.”
Union Backlash, Colonial Critique
Critics of the potential LNG import exemption say they see the events unfolding through the lens of colonialism. One of them is Catalina M. de Onís, an Assistant Professor in the Department of Civic Communication and Media at Willamette University.
“This exception epitomizes how corporate energy interests and their political allies are willing to waive one aspect of an arbitrary law only to the extent convenient for them, rather than addressing widespread calls from civil society to lift this act entirely to transform Puerto Rico’s dependence on U.S. ships and imports,” she told The Real News.
Further, de Onís offered the name of an LNG-powered tanker shipping goods from U.S. into Puerto Rico, Taino, as another case in point of “energy colonialism.” A ship owned by the company Crowley, de Onís says it bears the same name as “a group of indigenous peoples who faced the brutalities of colonization.”
“The ship’s name signifies a violent cultural appropriation and connects past with present exploitation and extraction in this latest iteration of energy colonialism,” de Onís explained. “Changing energy sources without transforming underlying, root power dynamics promises to replicate past energy injustices and colonial abuses, whether it be with LNG or solar.”
Crowley, according to OpenSecrets.org, is one of the top donors to Puerto Rico’s non-voting member of the U.S. House of Representatives, Jenniffer Gonzalez, a Republican. Gonzalez—host of a recent two-day LNG summit attended by diplomats and industry representatives from around the world—has received $12,900 in campaign contributions from Crowley since her 2018 run for Congress.
Another critic is Kobi Naseck, author of the 2018 academic paper “Disaster Capitalism on Puerto Rico:
Causes and Consequences of the Privatization of Puerto Rico’s Public Electric Authority after Hurricane Maria,” who now works as an account manager at the company CivicSolar.
“Jones Act or not, as long as Puerto Rico is reliant on fossil fuels, in times of chronic disaster (financially) or acute disaster (a hurricane), multinational companies use economies of scale to seek out the aftermath of those disasters as new profit frontiers,” said Naseck in an emailed response. “That’s what disaster capitalism is.”
On top of Governor Rosselló’s decision to apply for a 10-year Jones Act reprieve for the LNG trade, the Puerto Rico Electric Power Authority (PREPA) approved building three additional LNG import terminals for the island in its Integrated Resource Plan (IRP). It’s a decision which has come under fire even by its own union, Union Trabajadores Industriales De Puerto Rico (UTIER).
“Many people say that they see a crisis as an opportunity,” said Fredyson Martinez, a spokesman for UTIER. “I don’t share that view.”
Instead, UTIER sees the crisis as a chance to create a new reality, one based on solar energy.
“There is a strong push for renewables, and when we look at our reality, we are a tropical island, so you can figure out that we have an excellent source of energy: the sun,” he said. “We believe that the energy grid has to be more distributed. By that we mean that the people, the users or the customers of the electricity, should also be a producer on their own.”
A previous version of this article mischaracterized the language pertaining to LNG tankers. It does not relate to the country of manufacturing origin. The date of the GAO report is 2013 (not 2015 as originally stated) and the letter by Puerto Rico Governor Ricardo Rosselló was sent in 2018 (not 2019 as originally stated). TRNN regrets these errors.”