Jones Act reform: Going nowhere fast

By: | Issue #647 | at 08:00 AM | Channel(s): Liner Shipping  

Jones Act reform: Going nowhere fast

Enforcement of Jones Act takes lead over change.

Some say that the Jones Act, nearly 100 years old, is one of those pieces of legislation whose time has come and gone. For decades, there have been attempts to repeal or modify it, all without success.

The pendulum is now swinging in the direction of greater enforcement of the Jones Act. Just last year US Customs and Border Protection created a Jones Act Division of Enforcement (JADE), primarily, it is presumed, to catch Jones Act violators in the offshore oil and gas industries. Just recently the Department of Justice settled a case which included payment by a shipping company of the biggest Jones Act penalty ever. (See related story on page 6.)

The Jones Act, passed in 1920, prohibits a foreign vessel from transporting merchandise between points in the United States. A violation of the Jones Act may result in the assessment of a civil penalty equal to the value of the merchandise. A waiver may be obtained, under limited circumstances, from the Secretary of Homeland Security. The act also applies to shipments from points on the North American continent to installations on the Outer Continental Shelf, hence the focus on oil and gas rigs.

Question of Exemptions

Reform efforts in recent years have concentrated on exempting specific trades, such as Puerto Rico, from the act. In 2016, an Alabama congressman offered legislation which would have exempted shipping to and from Puerto Rico from the Jones Act. Then-freshman Representative Gary Palmer, a Republican, said that the measure would provide the island commonwealth some relief from its current economic woes.

Palmer’s was not the first legislation to try to bring relief to Puerto Rico. In 2013, Puerto Rico’s resident commissioner in Washington pushed a similar measure, backed by studies from the Federal Reserve Bank of New York and the Government Accountability Office that concluded that costs are higher than they should be in the Puerto Rico trade, thanks to the Jones Act.

Jones Act critics say its restrictions inflate the price of consumer goods and inhibit economic growth in states and territories not part of the contiguous 48 states. Supporters of the law say that it is necessary for national security—by ensuring a ready reserve of US capacity in case of war or emergency—and creates jobs for US citizens…

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Peter Buxbaum's avatar

American Journal of Transportation

More on Peter Buxbaum

Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly. He was educated at Columbia University.