Monday, January 4, 2021

Latest US Congress Vote Strengthens Native Domestic Freight Carriers Position

Jones Act Regulations Now Extend to Offshore Energy Production
Shipping News Feature

US – Any overseas company which had hoped that the centenary year of the Merchant Marine Act of 1920, the 'Jones Act' might mean a loosening of the regulations which insist upon domestic shipping being carried on US built, crewed and maintained vessels, will have had hopes dashed by the latest legislation.

Opinions on the Act are deeply divided with opponents claiming it restricts trade, thereby pushing rates for domestic waterborne freight up to unacceptable levels by excluding fair competition. Supporters play the patriotism card, saying the legislation is in place to ensure America maintains a home based, loyal fleet in case of military or security needs.

The latest vote in Congress saw the passing of the National Defense Authorization Act (NDAA) (H.R. 6395), which proponents say includes the most consequential maritime legislation enacted in many years. One of the key rulings in the latest Act is a provision confirming that all American laws, including the Jones Act, apply to renewable energy development on America’s Outer Continental Shelf.

With the rapid development of offshore energy, both wind generated as well as more traditional oil & gas, authorities have been reluctant to issue rulings due to the ambiguity of the language in existing legislation. The Jones Act refers only to the transport of ‘merchandise’ in a domestic scenario and extends to personnel transfer, towing, dredging etc., all with ramifications for the industry and now clearly included within the federal statute.

Another key factor in the latest Act is the tightening of the regulations should an emergency administrative Jones Act waiver be required, admittedly a rare occurrence. Straying from the Act to maintain the nation’s defences for example must now only be done if a 'clear and legitimate reason to do so' is proven. Non-defence waivers will be time-limited, and all waivers will now be subject to public reporting requirements by any foreign vessel owner using the waiver to operate in American domestic markets.

The NDAA also saw the passing of two ‘Sense of Congress’ statements, these are non-binding resolutions which express the views of the House of Congress (the view of both the Senate and House of Representatives combined). These were:

  • “It is the Sense of Congress that United States coastwise trade laws promote a strong domestic maritime industry, which supports the national security and economic vitality of the United States and the efficient operation of the United States transportation system; and a strong commercial maritime industry makes the United States more secure.” (Sec. 3522)
  • “It is the Sense of Congress that the maritime industry of the United States contributes to the Nation’s economic prosperity and national security.” (Sec. 8403)

The measures signal to opponents that the status quo is likely to remain for the foreseeable future, despite the opposing view that the Jones Act actually costs US traders by way of inflated shipping rates. Other provisions in the bill include clarifying the coastwise eligibility of existing LNG tankers for domestic trades.

The Congress received the plaudits of the American Maritime Partnership which lobbies on behalf of domestic maritime interests. President Michael Roberts thanked the more than two dozen Members of Congress who developed and promoted the maritime provisions in the NDAA, saying their leadership was absolutely critical in getting the legislation over the finish line and continuing:

“As we end this most challenging year, we are encouraged by Congress’s recognition of the contributions American Maritime makes to our security and to a healthy and resilient American economy. We are also grateful for the tangible progress made in this bill to reinforce the requirement that those who do work in our home waters must hire American workers and obey American laws. We look forward to building on that progress in the next Congress.”

Photo: Courtesy of AMP.