A coalition from several U.S. states and territories has opened a new front in the battle over the Jones Act.
The bipartisan group from Hawaii, Alaska, Guam and Puerto Rico is pushing to eliminate the U.S.-build requirement for non-contiguous states, saying the law raises the cost of goods and services.Their proposal would cover self-propelled vessels over 1,000 GT.
In the last decade, more people have understood how the law affects them as prices have continued to rise and competition has fallen, said Hawaii state Sen. Sam Slom, who in mid-March held what he called the first Jones Act multistate international press conference.
Slom has been involved in the issue for the last 20 years but noted more widespread interest recently.
“We were getting very little traction here in Hawaii,” he said. The late U.S. Sen. Daniel Inouye was “deathly opposed to any changes in the Jones Act.”
The next step is a letter to Congress and President Obama pressing for action. “We just want to get some movement on it,” Slom said.
The change would be “a targeted exemption” to provide relief to noncontiguous areas that don’t have access to rail, road and pipeline, said Michael Hansen, president of the Hawaii Shippers Council, Honolulu, who was also at the conference.
“We have an artificial scarcity of large commercial ships in the domestic trade, and that’s just created by the build requirement of the Jones Act,” he said. “The cost of building major commercial ships in the United States is now well documented to be five times that of constructing comparable ships in Japan and South Korea.”
The group’s tack differs from past efforts by others that included proposed legislation to repeal the law altogether. The Jones Act, specifically Section 27 of the Merchant Marine Act of 1920, requires that cargo moved from one U.S. port to another be on vessels that are U.S. owned, built and crewed.
Asked about the owned and crewed portions, Slom said, “That can be worked out.”
And, Hansen said, “We would not seek an exception to that.”
The American Maritime Partnership (AMP), a strong proponent of Jones Act preservation, recently issued statements on the economies of Alaska and Virginia, noting that “the domestic maritime industry, supported by the Jones Act, sustains more than 478,000 jobs and has an annual economic impact of $92.5 billion,” according to a study by PricewaterhouseCoopers for the Transportation Institute.
A study last year by the Government Accountability Office (GAO) on the Jones Act’s impact on Puerto Rico noted the act is “important to military preparedness and to the shipbuilding and maritime industries, but understanding the full extent and distribution of the costs that underlie these benefits is elusive.”
Pedro Pierluisi, Puerto Rico’s congressional representative who requested the GAO report, introduced legislation allowing foreign-built vessels to carry energy supplies, agricultural products and other bulk cargo between the island and the U.S. mainland.
Electricity costs are especially high, straining family budgets and weighing on current and prospective businesses, he said. Pierluisi said he’ll continue to push his legislation.
The GAO conceded that freight rates could have been affected by carriers’ practices that led to a Department of Justice probe of bid rigging and price fixing in the coastwise trade.
The ongoing investigation has resulted in guilty pleas, convictions and more than $46 million in fines.
