Charlie Papavizas Discusses Possibility of Jones Act Waiver Amid Strike with Platts

Winston & Strawn Washington, D.C.-based partner Charlie Papavizas was quoted in the Platts feature “U.S. Refiners May Seek Jones Act Waiver Amid Strike, Torrance Explosion” published February 26, 2015. The article discusses the potential for the first Jones Act waivers in light of an ongoing labor strike and an explosion at a major California refinery that could soon cause gasoline shortages on the West Coast.

According to the article, there has yet to be a Jones Act waiver application submitted, although sources have said ExxonMobil is considering such a request. Because the Jones Act requires all vessels shipping cargo between two U.S. locations to be U.S.-built and have at least 75% of the crew be U.S. citizens, and given that Jones Act vessels are in short supply due in part to the ongoing labor strike, the first Jones Act waiver could be on the horizon.

However, a gas shortage may not be enough to warrant a Jones Act waiver. According to Mr. Papavizas, chair of the firm’s maritime and admiralty practice, a national defense justification is needed for a waiver to be granted. But whether the current gas shortage could be considered a national defense matter is uncertain.

“Sometimes national defense gets interpreted in a funny way,” Mr. Papavizas said. "What was the national defense justification if people couldn't get their gas in gas stations in the Southeast because of Katrina or Rita? I don't know, but it sufficed then."

According to Mr. Papavizas, one thing is certain: if U.S.-flagged vessels are available, even if the shipping companies are charging what refiners deem excessive rates, a waiver will not be granted.

“The trick is ... is there US tonnage available or not?" he said. "When there's literally no capacity left, then I could see a waiver being granted for a period of time until available capacity comes back."