New Jones Act Legislation Pending, with Puerto Rico Focus

Holland & Knight ^ | Oct 23, 2017 | Eric Lee and J. Michael Cavanaugh

[Oatka]

Is Temporary Jones Act Relief Possible for Reconstruction?

HIGHLIGHTS:

Four bills are currently pending in Congress to repeal or limit the reach of the Jones Act, including three that are focused upon relief efforts to assist Puerto Rico after the disastrous effects of Hurricane Maria. None of the bills appears likely to advance immediately, although two of the bills linked to Puerto Rico reconstruction may have appeal as part of a broader relief package for the Commonwealth. The U.S. Department of Homeland Security (DHS) did grant a short-term waiver in the wake of Hurricane Maria to allow use of foreign ships to move cargo from the U.S. mainland to Puerto Rico. Many of the same forces that have kept U.S. cabotage laws essentially intact for some 225 years continue to be aligned against any permanent waiver, either globally or locally focused on Puerto Rico. Four bills are currently pending in Congress to repeal or limit the reach of the Jones Act, which requires use of U.S.-flag coastwise endorsed vessels to move cargoes between ports or places in the United States. Three of the bills are focused upon relief efforts to assist Puerto Rico following the disastrous Hurricane Maria.

The Proposed Legislation

H.R. 3966, introduced by Reps. Gary Palmer (R-Ala.) and Nydia Velázquez (D-N.Y.) on Oct. 5, 2017, would provide that the Jones Act shall not apply for five years with respect to such carriage to and from Puerto Rico. The bill has been referred to the House Committee on Transportation and Infrastructure, as well as the Committee on Armed Services. The bill's text has not yet been released but is described in a press release from Palmer's office. H.R. 3852, titled the Humanitarian Disaster Relief Act of 2017, was introduced by Rep. Grace Meng (D-N.Y.) on Sept. 28, 2017. This bill would add "humanitarian relief" to the criteria for which the U.S. Department of Homeland Security (DHS) may grant waivers under 46 U.S. Code Section 501(b). This bill has been referred to the House Subcommittee on Coast Guard and Maritime Transportation. S. 1894, introduced by Sen. John McCain (for himself and fellow Republican Sens. Mike Lee, James Lankford and Jeff Flake) on Sept. 28, 2017, would generally and permanently exempt Puerto Rico from the Jones Act. The bill has been placed on the Senate Legislative Calendar under General Orders. Sen. McCain also previously introduced S. 1561, titled the Open America's Waters Act of 2017 on July 13, 2017. This bill calls for a general repeal of the Jones Act, similar to several other bills introduced by Sen. McCain going back to 2010. This bill has been referred to the Senate Committee on Commerce, Science, and Transportation. Prospects for Passage and Other Takeaways

None of the bills appears likely to advance immediately, but H.R. 3966 and H.R. 3852 could become key elements of broader Puerto Rico reconstruction legislation, if that concept progresses. DHS did recently grant a short-term waiver after Hurricane Maria to allow use of foreign ships to move aid from the U.S. mainland to Puerto Rico.

Many of the same forces that have kept U.S. cabotage laws essentially intact for some 225 years continue to be aligned against any permanent waiver, either globally or locally focused on Puerto Rico. There are well-established U.S.-flag liner services operating in the Puerto Rico-mainland trade.

Potentially, a case can be made for a broader temporary waiver for Puerto Rican reconstruction project cargos, provided that limitations can be included to offer some protection for existing U.S.-flag services. The Palmer/Velázquez bill, H.R. 3966, would create a five-year Jones Act suspension window to aid Puerto Rican reconstruction. The Meng bill, H.R. 3852, would enable DHS to grant a Jones Act waivers on a case-by-case basis for Puerto Rico (and other coastwise destinations) on the basis of "humanitarian relief efforts" – although a U.S. Maritime Administration (MarAd) finding of unavailability of U.S.-flag vessels would still appear to be required to support such a waiver.

In hindsight, was the September DHS Jones Act waiver for Puerto Rico lawful? Relevant law at 46 U.S. Code Section 501(b) provides that DHS may issue a waiver at the request of the U.S. Department of Defense (DOD) if the latter determines the waiver is required for national defense purposes. DHS may issue a waiver on its own, also for national defense purposes, but only if MarAd finds that U.S.-flag vessels are not available. However, in the case of the Puerto Rico waiver, it appears that DHS did not rely on a DOD directive regarding national defense. Several media sources reported that MarAd found adequate U.S.-flag ships were available.

[Oatka]

The money quote at the end: "Several media sources reported that MarAd found adequate U.S.-flag ships were available."

So there was no need to suspend the Jones Act in the first place, but McCain & Crew are using Puerto Rico as a club to kill it.

Related:

GOP Senators Hold Up Disaster Aid Bill Over Jones Act Shipping Concerns in Puerto Rico – Politico

The takeaway there: "Senator Jeff Flake of Arizona and Senator Mike Lee of Utah are holding up the legislation due to fiscal concerns, but also to allow Puerto Rico to bow out from the Jones Act, according to Politico."

[Fiji Hill]

The Jones Law Blues--Benny Moten's Kansas City Orchestra (1929)

Same Jones (Sen. Wesley L Jones, R-Wash.); different law (supporting prohibition)

[VanShuyten]

How does the Jones Act work for Hawaii and Alaska?

[momincombatboots]

The union folk won’t like that at all.

[Oatka]

How does the Jones Act work for Hawaii and Alaska?

Not the way they want, but while it is Tough Noogies for them, I'd rather we keep our maritime skills here, what little is left.

[gleeaikin]

So you are saying the maritime unions are trying to preserve American maritime jobs? Also I have heard at other times and places that Panamanian and other registries often do not have as good safety standards or treatment of their workers. So good safety and worker treatment costs 40% more to transport? I thought most of the cost was for fuel.

[Oatka]

So you are saying the maritime unions are trying to preserve American maritime jobs? Also I have heard at other times and places that Panamanian and other registries often do not have as good safety standards or treatment of their workers. So good safety and worker treatment costs 40% more to transport?

My take on that is they are for job for preservation and a decent wage for seamen.

IMO, The more important part is that we maintain some semblance of maritime capability and expertise.

Wages appear to run from $30-$50K.

Qualifications for an Able Bodied Seaman ($30K) are:
Previous experience as a tank barge PIC on oil barges required.
Possess a valid Coast Guard Merchant Mariners Document with Able Seaman PIC endorsement.
Knowledge of Coast Guard and state requirements for transfer operations.
Valid first aid/CPR training certificate.
Complete HAZWOPER training within 90 days of hire.
Ability to think and respond quickly to emergency situations (oil spills, mechanical failures, etc.).
Self-motivated.
Ability to maintain professional relations with customers.
Must have physical ability to maneuver cargo hoses, handle barge lines and board vessels by use of an Accommodation ladder, Jacob’s ladder or tugboat.
Must possess good communication skills by voice and/or visual hand signals.
Ability to complete accurate paperwork. Knowledge of basic math skills (add, subtract, multiply, and divide).
Knowledge of company safety practices.
Must be able to read, speak, and understand English over telephone and/or radio.
Valid state driver’s license.

So it's not all beer and skittles.

I thought most of the cost was for fuel.

I suspect it is as you can only automate so far on a ship.

[gleeaikin]

I forwarded this interesting comment to my son in PR as he really feels the 40% higher prices for imported goods is hurting the island. You seemed to react positively to my thought that 40% seemed a bit high if most of the costs were fuel related. I wonder what would be a fairer mark-up, and also a fair period of time to suspend the Jones Act? What is a PIC (person in charge??), and what is HAZWOPER which sort of reminds me of FUBAR? I am also wondering how you became so knowledgeable about this subject?

[Oatka]

I wonder what would be a fairer mark-up, and also a fair period of time to suspend the Jones Act?
It is my understanding that a suspension was not need, as there was enough U.S. bottoms to supply the need.

What is a PIC (person in charge??), and what is HAZWOPER which sort of reminds me of FUBAR?
Person in Charge is correct, and bears a heavy burden. HAZWOPR has to do with Hazard Materials handling and cleanup and is under the aegis of OSHA, much like the MazMat regulations on trucking, which the PIC stands accountable for.

I am also wondering how you became so knowledgeable about this subject?
Not really THAT knowledgeable but manage to keep up with the maritime trade as my dad was a Second Mate in that business back in the '30s and by osmosis, if nothing else, picked up some an interest.

[gleeaikin]

I think the main concern at least for my son who has to live with the 40% mark up on prices is whether costs really justify that difference or is it just easy money from people who have no other choice.

[Oatka]

I think the main concern at least for my son who has to live with the 40% mark up on prices is whether costs really justify that difference or is it just easy money from people who have no other choice.

I know the folks in Hawaii and Alaska have the same concern, but suspect that if the Jones Act was repealed, costs would drop - for a while - then start creeping back up.

While there are many boondoggles in the government, I don't believe they could get away with the Jones Act this long if gouging the captive customer was truly the case.