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Case Urges Waiver From Jones Act/Cargo Preference Requirements To Expedite Defueling Of Red Hill

He says waivers are needed to assure full, dependable and cost-effective availability of the ten oceangoing fuel tankers called for under Defense Department’s proposed defueling plan

(Washington, DC) – U.S. Congressman Ed Case (Hawai‘i - District 1) today urged U.S. Secretary of Homeland Security Alejandro Mayorkas to grant an advance waiver from the Jones Act and military cargo preference requirements to provide for the safe, cost-effective, dependable and expedited execution of the Department of Defense’s (DoD) critical defueling of the Red Hill Bulk Fuel Storage Facility at Joint Base Pearl Harbor-Hickam, Hawai‘i.

“As part of [the proposed defueling process], over one hundred million gallons of bulk fuel now stored in the Red Hill tanks must be removed and distributed to other storage facilities under a plan supervised by the Environmental Protection Agency and Hawai‘i Department of Health,” Case wrote Mayorkas.

“The current plan will require ten bulk petroleum tankers to ship the fuel from a pier at Joint Base Pearl Harbor-Hickam to various points, ranging in distance from ten miles away at Kalaeloa to various replacement storage sites thousands of miles overseas.”

Case continued: “A series of highly organized and sequenced events is critical to the plan, which must achieve not only the safe and efficient removal of the fuel but also maintain military operational tempo and readiness in Hawai‘i and beyond. The plan anticipates some twelve consecutive weeks of full utilization of ten oceangoing petroleum storage tankers, with each tanker contracted in advance on a time-chartered basis.”

Case emphasized that tanker contracting and movement must be closely coordinated with the transport of the fuel from Red Hill to the departure pier and loading of the fuel. Subject to pending plan review and removal processes, fuel removal could commence by late 2023, requiring all tankers to be contracted by mid-2023. “The failure to contract or deliver any one tanker in the timing and sequence required disrupts the plan and increases risk of interrupting fuel removal and movement to alternative storage on land,” he wrote.

“Under existing law, these tanker movements for the simple transport of fuel ten miles from Joint Base Pearl Harbor-Hickam to Kalaeloa are subject to Jones Act requirements, and are further subject to government-impelled cargo [aka cargo preference] requirement for overseas movements,” said Case.

“As a practical matter, Jones Act ships are functionally unavailable for this timeframe and prohibitively expensive due to the very limited number of fuel tankers in the Jones Act fleet, which are fully committed elsewhere. Additionally, requirements on government-impelled cargo, if and to the extent available for a committed and predictable period, are administratively complicated and similarly prohibitively expensive.”

The Jones Act is a century-old federal law that requires cargo between U.S. locations to be transported on ships built and flagged in the U.S. There are now less than 100 total Jones Act vessels in service (including the Matson and Pasha container ships that enjoy a duopoly on Hawaii’s cargo lifeline from the continental U.S.) and even less Jones Act fuel tankers all dedicated to other fuel transport routes, as opposed to plentiful international tanker capacity. The government-impelled/cargo preference requirements generally require military cargo between a U.S. destination and a non-U.S. destination to be transported on a U.S. flagged vessel (commonly built and flagged overseas). 

Case said current time charter rates are estimated at $40,000 per day for international shipping, $70,000 per day for cargo preference and $100,000 per day for Jones Act. Assuming each committed charter availability for ten total tankers at ninety days, total cost for all service by international shipping would be about $36 million, versus about $66 million for cargo preference plus Jones Act tankers (assuming just one Jones Act tanker, which may not be the case depending on other domestic destinations for the fuel).

“It is critical to DoD and the people of Hawai‘i that an advance waiver from the Jones Act and government-impelled cargo requirement be issued to provide DoD with the fullest possible range of options to contract internationally available fuel tanker transport on a predictable and cost-effective basis. To allow for the full range of options as to timing and sequencing  of defueling, which require contracting to be complete by July 2023, this waiver should be issued now.”

The Red Hill Bulk Fuel Storage Facility at Joint Base Pearl Harbor-Hickam in Honolulu, Hawai‘i is a DoD 200-million gallon capacity bulk fuel storage facility located just one hundred feet over the principal aquifer for the City and County of Honolulu. In November 2021, Red Hill sustained a major leak, polluting the aquifer, sickening residents and dislocating tens of thousands of people from their homes. As a result, U.S. Secretary of Defense Lloyd Austin, at the strong urging of Hawaii’s Congressional delegation and residents, committed DoD to the safe and expedited defueling, closure and decommissioning of Red Hill. To date, over $2 billion has been directly appropriated to this critical mission.

Attachment: Letter to U.S. Department of Homeland Security Secretary Alejandro Mayorkas.