Jones Act milestone marred by off-mainland threats

By Tom Bethel
National President

June 5th marked the 92nd anniversary of the Jones Act, but this significant milestone was marred by emerging threats to the domestic shipping law.

Enacted as Section 27 of the Merchant Marine Act of 1920, the Jones Act holds all cargoes moving by water between and among U.S. ports for merchant vessels owned, built, flagged and crewed in the United States. The Jones Act applies to goods shipped within the continental U.S. and to products moving between the mainland and the remote states and territories of Hawaii, Alaska, Guam and Puerto Rico.

Now public and private interests in three of these non-contiguous locales - Hawaii, Guam and Puerto Rico - are advocating damaging, precedent-setting changes to the law.

In Hawaii, the Hawaii Shippers Council wants Congress to exempt Hawaii, Guam and Puerto Rico from the Jones Act's U.S. construction requirement for all two-way domestic dry cargo trade with the mainland. The Council also wants Congress to allow foreign-built ships to carry liquefied natural gas to Hawaii from the U.S. Gulf Coast and/or Alaska.

In Guam, the legislature asked Guam's delegate to the U.S. House of Representatives, Democrat Madeleine Bordallo, to encourage Congressional support of an exemption from the Jones Act's "build American" mandate for Guam, Hawaii and Puerto Rico.

But the most aggressive, most ambitious effort is underway in Puerto Rico, where 14 members of the legislature filed a resolution calling upon Congress to "legislate for the purpose of exempting Puerto Rico [from] the Merchant Marine Act of 1920, commonly known as the Jones Act."

Unlike their counterparts in Guam, these local lawmakers would lift Jones Act jurisdiction from the Commonwealth in every respect - trade lanes between the U.S. mainland and Puerto Rico would open not only to merchant vessels built overseas, but also to foreign-owned and flagged vessels that employ foreign officers and crews.

This resolution relied heavily upon naive, exaggerated, contradictory, convoluted, inaccurate, irrelevant and illogical arguments addressing such topics as the cost of energy in Puerto Rico, two-way trade between Puerto Rico and Mexico and Puerto Rico and Canada under the North American Free Trade Agreement (neither NAFTA nor the Jones Act requires shippers in Puerto Rico to use Jones Act vessels in these trades), national security and the shipment of automobiles from Chile and Argentina to the U.S. mainland (the Jones Act does not govern trade between the United States and South American countries).

Meanwhile, Resident Commissioner Pedro Pierluisi - who represents Puerto Rico in the U.S. House of Representatives, where he can introduce legislation but cannot vote on the floor - was awaiting a study he had requested more than a year ago from the Government Accountability Office on the Jones Act's economic impact on the islands. This report - expected late this year - will determine what legislative action Pierluisi may or may not direct at the Jones Act.

Pierluisi, a Democrat, speaks vaguely about his objective, alternating between an unspecified Jones Act "exemption" and exemption from "components" of the domestic shipping law.

But, in a statement on his Congressional Web site in June 2011, Pierluisi said that, if the GAO finds what Pierluisi called "significant adverse effect" on the local economy, "I will fight tirelessly until Puerto Rico is exempted from the act." This was a clear, unequivocal indication that Pierlusi would go whole hog against the Jones Act under what he considered the right circumstances.

The case supporting these proposals appears to be that, because they are limited by location and narrow in scope, they would have no harmful effect on the Jones Act beyond Puerto Rico, Hawaii and Guam. The Hawaii Shippers' Council made this very argument in a recent outline of its proposal.

But the notion that a market-specific Jones Act modification would be of no real consequence elsewhere in the United States defies common sense. Approval of either of the three proposals would inspire a fierce "me-too" movement that would not stop at the U.S. construction requirement or at the borders of any given state, region or territory. The truth is that other business and political interests nationwide would by nature attempt to accomplish what these specific proposals would not - outright repeal of the Jones Act.

The Puerto Rico, Hawaii and Guam proposals - and issues arising from them - could be the focus of lively debate later this year or early in the 113th Congress in 2013, and American Maritime Officers is prepared for it under any schedule. But our immediate priority is to help ensure that Jones Act supporters on both sides of the political aisle in the House of Representatives and in the Senate are re-elected in November 2012.

This requires a healthy American Maritime Officers Voluntary Political Action Fund. Individual contributions to the fund via check or money order, authorized dues and/or vacation benefit deductions or by credit card through the official AMO Web site are in fact investments in long-term job and benefit security for all AMO families, and I ask again that everyone in our union participate with me and all other AMO officials, representatives and employees to the greatest possible extent.

As always, I welcome your comments and questions. Please feel free to call me on my cell at (202) 251-0349.