Jones Act seems safe, but threats always possible

Jones Act seems safe, but threats always possible

Maritime Cabotage Task Force confident, but ready to defend domestic shipping law

The Jones Act appears secure in the current political climate, but the domestic shipping law is always open to threat, the Maritime Cabotage Task Force said in March.

In its 2005 annual report, the task force said support of the Jones Act remains strong in the administration, Congress and federal agencies, including the Departments of Transportation, Defense and Homeland Security. However, the Washington-based task force--a coalition of more than 400 U.S. shipping and maritime labor interests, including American Maritime Officers--cautioned against complacency.

"The MCTF is confident about the Jones Act's future," the report said, but "trade negotiations ... always have the potential to challenge our cabotage regime. In fact, the Jones Act is frequently targeted in World Trade Organization talks."

Named for its sponsor, Sen. Wesley Jones of the State of Washington, the Jones Act was enacted as Section 27 of the Merchant Marine Act of 1920. The Jones Act holds domestic deep-sea, Great lakes and inland waters cargoes--including goods shipped between the continental United States and the remote states and territories of Alaska, Hawaii, Guam and Puerto Rico--for merchant vessels owned, built, flagged and crewed in the United States. Powerful interests in the U.S., foreign-flagged merchant ship alliances and foreign governments--many of which enforce comparable domestic trade restrictions--have sought repeatedly to force roll-back or repeal of the statute.

"For more than 10 years, the MCTF has repelled every attack on the Jones Act, but our work is not done," the task force said in its report. "We must continue our efforts to ensure that there are no more blanket waivers or targeted industry waivers." Hurricanes Katrina and Rita, which devastated Gulf coastal areas of Louisiana, Mississippi, Alabama, Texas and Florida in August and October 2005, resulted in Jones Act waivers by the Department of Homeland Security at the President's request to allow the domestic shipment of crude oil and petroleum products in foreign-flagged vessels, and agricultural interests tried unsuccessfully to secure a Jones Act waiver for the shipment of Midwest grains to the East Coast.

"Further, the mid-term elections in November will bring new legislators to Washington who will need to be educated on the benefits of the Jones Act," the task force report continued. "The MCTF gladly accepts these tasks and will work diligently to preserve and promote the world's most efficient system of domestic waterborne commerce."

Addressing the storm-driven Jones Act waiver issue, the Maritime Cabotage Task Force report noted that domestic shipping interests "respected" the President's decision to issue the first waiver after Hurricane Katrina hit the Gulf Coast with Category 4 strength. "The waiver was lightly used and expired as planned" in September 2005, the report said.

A second waiver in the oil and petroleum product markets was issued for 30 days after Hurricane Rita struck the Gulf Coast. The task force "understood what government officials were trying to accomplish," the report explained, "but could not allow the impression that these waivers were necessary or beneficial--in fact, the opposite was true."

According to the task force report, sufficient U.S.-flagged tanker and tank barge tonnage was available to move crude oil and fuels "at a moment's notice" by the time Hurricane Rita had passed.

"Domestic cargo movement was not made more efficient as a result of the second waiver," the report charged. "The second waiver actually penalized the U.S.-flag fleet. U.S.-flag tanker charters were cancelled immediately upon issuance of the second waiver, and American vessels and crews were forced to stand idly by while foreign hulls and workers moved cargo in domestic commerce."

At the time, the task force explained to all appropriate federal agencies that a Jones Act waiver procedure was already in place--by law, the Jones Act can be waived case-by-case in the legitimate interest of national security when qualified U.S.-flagged merchant vessels are not available for the specific domestic service.

The "challenge to the integrity of the Jones Act" from the oil trade waivers "was real," the task force report said. "Had the MCTF not responded, dangerous precedents could have been set." The task force persuaded federal agencies to work with domestic shipping interests "in future emergency situations" to "protect the Jones Act."

In his introduction to the annual report, Maritime Cabotage Task Force Chairman Philip Grill said the need for either waiver "was questionable at best." He also said that, once the storms had passed, "the American maritime industry played, and continues to play, a major role in the hurricane relief and rebuilding effort."

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