Wednesday, June 30, 2010

Oil Spill Dredges Up The Jones Act

Since this article was originally published, the U.S. accepted 22 offers of assistance from 12 countries. Click HERE for information about the offers.

Many Americans may be wondering why no one has come to help us contain the oil spill. Within a week of the explosion, 13 countries offered assistance from vessels and crews with experience in removing oil spill debris. The State Department acknowledged that it received 21 offers of assistance from 17 countries. However, a 1920 law, the Jones Act, foreign vessels and crew are not permitted in U.S. waters.

The Merchant Marine Act of 1920 (P.L. 66-261) is a federal statute that regulates maritime commerce in U.S. waters and between U.S. ports. Section 27, also known as the Jones Act, requires that all goods transported by water between U.S. ports be carried in U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and containing crews of U.S. citizens and permanent residents. At the time this law was enacted, there was a need to support the U.S. merchant marine industry; however, this law favors labor unions and hinders free trade, especially for agricultural products by increased shipping costs.

So, it’s not that other countries don’t want to help; our laws don’t allow them to help. Last week, Senator John McCain introduced legislation that would repeal the Jones Act. A notable point in his speech was the reference to an ITC study in 2002 that showed repeal of the Jones Act would have an annual positive effect of $656 million. Click HERE to read about some of the benefits McCain highlighted in his speech.

The Administration has the ability to grant a waiver of the Jones Act; however, this has not been done. Therefore, some Senators have put forward legislation to waive the Jones Act during emergency situations such as this one; however, McCain proposes to permanently repeal the Jones Act to avoid situations like this one and saving consumers hundreds of millions of dollars
The Maritime Cabotage Task Force, a lobbying group representing Jones Act carriers, shipyards and dredgers seem to support a waiver. The task force said that if foreign-flag vessels are needed for cleanup within domestic waters, it would not oppose waivers to the Jones Act.

The big question still looms like the oil in the Gulf. Will a waiver or repeal happen in time to provide some relief in the Gulf?

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