June 27, 2010
Time to Ship out?
Congressman Djou revs up the debate on a Jones Act waiver for Hawaii
By Lee Catterall
The BP oil disaster in the Gulf Coast is spilling over, politically, to Hawaii, with rhetoric raising the profile of the Jones Act, the maritime commerce law that requires all shipping of goods between U.S. ports to be transported via U.S.-flagged ships, crewed by Americans.
Hawaii’s freshman Congressman Charles Djou and other Republican colleagues are inserting the 1920 law into the public conversation over the spill cleanup—even though it is being misconstrued.
Angry remarks by Geert Visser, the Houston-based consul general for the Netherlands, maintained that the Jones Act’s restriction on foreign shipping between U.S. ports has hampered the Gulf cleanup since the May 23 explosion, prompting calls to grant waivers to available foreign vessels.
In calling for the exemption, Djou said he was “disappointed that the president has failed to waive the Jones Act for foreign ships, who want to assist in the clean-up efforts.”
However, authorization that allows foreign ships to help in oil spill cleanups appears to have already been made, four years ago, in a revision of the Jones Act, otherwise known as the 1920 Merchant Marine Act. But it’s clear that Djou and colleagues have found a highly public platform from which to attack the Jones Act itself.
The oil cleanup issue is a side quarrel of a decades-long issue about the very essence of the Jones Act. Djou’s opposition is in concert with his Democratic opponent in the special election, Ed Case, who proposed an exemption for Hawaii during his years from 2002 to 2007 representing Hawaii’s 2nd Congressional District.
Case said the Jones Act has sheltered the “virtual duopoly” that U.S. domestic cargo lines Matson and Sea-Land have enjoyed from “an open, competitive” international market. That, in turn, has resulted in high retail prices for Hawaii residents, who receive more than 90 percent of their goods and necessities by sea.
A 2002 study by the U.S. International Trade Commission estimated that the Jones Act costs the nation’s economy anywhere from $119 million to $9.8 billion a year by denying access to lower-cost foreign shipping. State Rep. Gene Ward maintained in 1997 that Hawaii residents pay $1 billion a year—$3,000 per household—in higher prices because of shipping costs resulting from the Jones Act restrictions.
However, the U.S. shipping industry’s Maritime Cabotage Task Force, formed in 1995 to defend the Jones Act and other maritime cabotage laws, maintains that those laws “indeed serve important U.S. policy interests, including economic and national security, to the net benefit of the nation and its citizens.”
Case called for exempting Hawaii from the Jones Act, requiring only that shippers comply with other U.S. laws, including labor and environmental requirements.
Djou, in campaigning for Hawaii’s 1st Congressional District seat which he won in May, said Hawaii should be exempt from the act, citing the economic reasons given by Case.
The issue, and its Hawaii connection, seems to be gaining traction. In an editorial Friday, The Washington Post opined: “The Jones Act was an issue in the May 22 House special election in Hawaii” and noted that both Djou and “one of his two Democratic opponents charged that it benefited a handful of ship lines and unions at the expense of ordinary Hawaiians.
“Mr. Djou is preparing a bill to exempt Hawaii. If FedEx can move cargo across the country in European-made Airbuses, why can’t a boat built in, say, Canada, ship wheat from Los Angeles to Honolulu? The Jones Act lobby crushed the last attempt at reform back in the 1990s. May the next one meet with more success.”
The other three members of Hawaii’s congressional delegation—all Democrats—support the Jones Act.
U.S. Sen. Daniel Akaka has said the law has resulted in the reliable delivery of goods so products can go directly to store shelves.
“Hawaii and the nation need a strong maritime industry,” Akaka has said, “and the Jones Act is an essential part of the industry’s survival.”
Inouye and former Rep. Neil Abercrombie won a Hawaii exemption in 2003 from the 1886 Passenger Vessel Services Act, which has requirements for cruise lines similar to the Jones Act’s rules for cargo shipments. That exemption allowed Norwegian Cruise Line to use three foreign-built ships for interisland cruises. Only one NCL ship remains in Hawaiian waters.
The passenger law requires foreign-flagged ships to stop at a foreign port between U.S. ports. The Bush administration proposed to end the practice of foreign ships operating between the mainland and Hawaii with a token stop in Mexico. Proponents of that proposal—frozen for more than three years—and the Jones Act say foreign ships should not benefit from paying low wages and being immune to U.S. laws.
THE JONES ACT mainly prohibits foreign-flagged ships from transporting merchandise from one U.S. port to another, even via a foreign port. In the aftermath of Hurricane Katrina of 2005, President George W. Bush waived the Jones Act requirements so foreign ships could “move the oil and gasoline to where it’s needed” because of damaged pipelines.
The following year, Congress revised the Jones Act, including a provision allowing foreign assistance to clean up an oil spill.
The revised Jones Act states that “an oil spill response vessel documented under the laws of a foreign country may operate in waters of the United States on an emergency and temporary basis, for the purpose of recovering, transporting and unloading in a United States port oil discharged as a result of an oil spill in or near those waters, if … an adequate number and type of oil spill response vessels documented under the laws of the United States cannot be engaged to recover oil from an oil spill in those waters in a timely manner, as determined by the Federal On-Scene Coordinator for a discharge or threat of a discharge of oil.”
In the current BP disaster, that would be Coast Guard Adm. Thad Allen, the U.S. commander overseeing the oil cleanup, who has said that no waivers had been granted because none had been needed. He said 15 foreign-flag vessels have been involved in the cleanup, including one from the Netherlands.
Since Allen made that statement, Deputy Maritime Administrator David Matsuda said one Jones Act waiver request for a foreign deck barge to operate within three miles of the U.S. coast had been denied because American vessels were available to perform the same mission.