Merchant Marine Act of 1920
The Merchant Marine Act of 1920 is a United States federal statute that provides for the promotion and maintenance of the American merchant marine.[1] Among other purposes, the law regulates maritime commerce in U.S. waters and between U.S. ports. Section 27 of the Merchant Marine Act is known as the Jones Act and deals with cabotage (coastwise trade). It requires that all goods transported by water between U.S. ports be carried on ships that have been constructed in the United States and that fly the U.S. flag, are owned by U.S. citizens, and are crewed by U.S. citizens and U.S. permanent residents.[2][3] The act was introduced by Senator Wesley Jones. The law also defines certain seaman's rights.
"Jones Act" redirects here. Not to be confused with Jones–Shafroth Act, Jones Law (Philippines), or Increased Penalties Act.Other short titles
Jones Act
An act to provide for the promotion and maintenance of the American merchant marine, to repeal certain emergency legislation, and provide for the disposition, regulation, and use of property acquired thereunder, and for other purposes.
June 5, 1920
Emergency Shipping Act, 1917; Rate Emergency Act, 1918; Shipping Act, 1916, § 5, 7, 8;
The Merchant Marine Act of 1920 has been revised a number of times; the most recent revision in 2006 included recodification in the U.S. Code.[2]
Many economists and other experts have argued for its repeal,[4] while military and U.S. Department of Commerce officials have spoken in favor of the law on protectionist grounds.[5] Opponents of this legislation argue it reduces domestic trade via waterways (relative to other forms of trade) and increases consumer prices.[6]
The Jones Act is not to be confused with: the Death on the High Seas Act (another U.S. maritime law that does not apply to coastal and in-land navigable waters), or the Passenger Vessel Services Act of 1886 (which regulates passenger vessels, including cruise ships).
Support[edit]
Supporters of the Jones Act maintain that the legislation is of strategic economic and wartime interest to the United States. The act, they say, protects the nation's sealift capability and its ability to produce commercial ships. In addition, the act is seen as a vital factor in helping maintain a viable workforce of trained merchant mariners for commerce and national emergencies. Supporters also argue that allowing foreign-flagged ships to engage in commerce in domestic American sea lanes would undermine U.S. wage, tax, safety, and environmental standards.[39]
According to the Lexington Institute, the Jones Act is also vital to national security and plays a role in safeguarding America's borders.[40][41] The Lexington Institute stated in a June 2016 study that the Jones Act plays a role in strengthening U.S. border security and helping to prevent international terrorism.[42]
Criticism[edit]
Protectionism[edit]
Critics claim the Jones Act is protectionist, and point to a 2002 report by the United States International Trade Commission that estimated the savings for the U.S. economy that would result from the repeal or amendment of the Jones Act.[43] Critics contend that the Act results in higher costs for moving cargo between U.S. ports, particularly for Americans living in Hawaii, Alaska, Guam, and Puerto Rico.[3][44]
A 2019 study by the OECD estimated that the economic gains to the U.S. economy from the repeal of Jones Act would range from an added $19 billion up to $64 billion.[29]
Failure to accomplish stated purpose[edit]
Another criticism of the Jones Act is that as of 2023, it has already failed in its stated purpose of protecting the American merchant marine: "The Jones Act fleet has dropped from around 250 ships in the 1980s to just 91 today. No use protecting something that's already dead."[45]
The Jones Act lacks any mechanism to force shippers to always use Jones Act ships over all other modes of transport irrespective of price or to force other modes to not compete against Jones Act ships. As a result, the Jones Act fleet is used only where shippers have no choice: for moving large quantities of cargo over the ocean between noncontiguous parts of the United States. It is not used for moving cargo along coastal routes in the contiguous United States. In other words, the coastwise trade (called short-sea shipping by Europeans) is virtually nonexistent in the United States, while most of the 130 million Americans who live near a coastline must put up with road and rail networks jammed with domestic cargo which almost anywhere else in the world would have been routed to short-sea shipping.[45]
Repeal and reform movement[edit]
Legislative efforts to repeal the Jones Act have been repeatedly introduced in Congress since 2010 when the Open America's Waters Act was championed by Senator John McCain, who co-sponsored S. 3525 before the 111th United States Congress,[46] then by Utah Senator Mike Lee,[47] without passing to become law.[48]
In 2019, and again in 2021, Representative Ed Case (Hawaii) introduced three reform Acts: H.R. Bill 298, the Noncontiguous Shipping Competition Act; H.R.299, the Noncontiguous Shipping Reasonable Rate Act; and H.R.300, the Noncontiguous Shipping Relief Act, to Congress.[49]
H.R. Bill 8996, the Jones Act Repeal Act, was introduced by U.S. Representative Justin Amash (Michigan) on December 17, 2020, during the 116th United States Congress.[50] Open America's Waters Act to repeal restrictions on coastwise trade was again submitted, as S. Bill 1646 by Senator Lee on May 13 2021, during the 117th United States Congress.[47]
Amid calls for repeal,[51] advocacy for reform, rather than repeal, of the Act also emerged,[52][53] notably by the Cato Institute,[44][53] Niskanen Center,[54] Mercatus Center and Heritage Institute.[55][56]
Waivers[edit]
Requests for waivers of the Act and its provisions are reviewed by the Department of Homeland Security on a case-by-case basis, and can only be granted based on interest of national defense. Historically, waivers have only been granted in cases of national emergencies or upon the request of the Secretary of Defense.
In the wake of Hurricane Katrina, Homeland Security Secretary Michael Chertoff temporarily waived the coastwise laws for foreign vessels carrying oil and natural gas from September 1 to 19, 2005.[57][58]
In order to conduct an emergency shipment of gasoline from Dutch Harbor, Alaska, to Nome in January 2012, Secretary of Homeland Security Janet Napolitano granted a waiver to the Russian ice class marine tanker Renda.[59]
The Secretary of Homeland Security issued a temporary conditional waiver of the Jones Act for the shipment of petroleum products, blending stocks and additives from Gulf Coast Petroleum Administration for Defense District (PADD 3) to the New England and Central Atlantic Petroleum Administration for Defense Districts (PADDs 1 a and 1 b, respectively) for 12 days from November 2 to 13, 2012, following widespread fuel shortages caused by Hurricane Sandy.[60]
On September 8, 2017, the Jones Act was simultaneously suspended for both Hurricane Harvey, which hit Texas fourteen days prior, and Hurricane Irma, which hit Florida on that day.[61][62] In the same month, the Act was waived, after two days of debate,[63] for Puerto Rico in the aftermath of Hurricane Maria.[64][65]
Requests for waivers of certain provisions of the act are reviewed by the United States Maritime Administration (MARAD) on a case-by-case basis. Waivers have been granted for example, in cases of national emergencies or in cases of strategic interest. For example, in June, 2006, declining oil production prompted MARAD to grant a waiver to operators of the 512-foot Chinese vessel Tai An Kou to tow an oil rig from the Gulf of Mexico to Alaska.[66] The jackup rig will be under a two-year contract to drill in the Alaska's Cook Inlet Basin. The waiver to the Chinese vessel is said to be the first of its kind granted to an independent oil-and-gas company.[67]
Pressure exerted by 21 agriculture groups, including the American Farm Bureau Federation, failed to secure a Jones Act waiver following Hurricane Katrina in the Gulf of Mexico. The groups contended that farmers would be adversely affected without additional shipping options to transport grains and oilseeds.[67]
