Welcome to the August issue of the Jones Act Gazette. This month's edition includes news about Sen. Mike Lee's efforts to press for Jones Act reform, turmoil in Puerto Rico bringing renewed attention to the Jones Act, and a new video about the law released by the Federalist Society. In addition, you will find links to op-eds and blog posts written by Cato staff as well as the usual collection of Jones Act news and opinion from the previous month.
Lee Presses the Case for Jones Act Reform
Senator Mike Lee (R-UT) is not letting up in his effort to enact needed changes to the Jones Act. At a July 11 Senate Energy and Natural Resources Committee hearing on U.S. liquefied natural gas (LNG) Sen. Lee highlighted the lack of a single Jones Act-eligible LNG carrier for transporting this energy source between U.S. ports. Directing a series of questions about the Jones Act's impact to Charlie Riedl, executive director of the Center for Liquefied Natural Gas, Sen. Lee wondered aloud:
"...why, on what planet, in what universe would it make sense for us to keep those [cabotage] laws and to not even amend them so as to allow for a commodity that Americans produce in great abundance and rely on in great abundance to be transported from one U.S. port to another, without a Jones Act-compliant U.S.-flagged ship that doesn’t even exist?"
Good question, senator. A rough transcript of Sen. Lee's comments can be found here.
Sen. Lee was back on the attack at a July 31 executive session of the Senate Commerce, Science, and Transportation Committee. Noting the "significant cost imposition" resulting from the Jones Act, particularly in Hawaii, Alaska, and Puerto Rico, Sen. Lee offered an amendment to the Coast Guard Authorization Act to ease the law's burden. The amendment, which did not pass, would have created a waiver process allowing shippers to use vessels that do not comply with the Jones Act if no Jones Act-eligible vessels are deemed available by the federal government (Sen. Lee offered a stand-alone bill to this same end in June). Such a provision would have, for example, allowed the use of foreign-flagged vessels to transport LNG from the U.S. mainland to Puerto Rico, a task that is currently impossible owing to the lack of Jones Act-eligible ships capable of performing this task.
Sen. Lee's introduction of his amendment and related comments can be found at the 32:30 mark of the video found at this link.
Puerto Rico Turmoil Places
Jones Act Back in Spotlight
Recent upheaval in Puerto Rico has prompted a number of observers to highlight the Jones Act's role in contributing to the commonwealth's travails. Washington Post columnist Charles Lane accused the U.S. shipping industry of "[getting] rich at Puerto Rico’s expense via a protectionist law barring lower-cost, non-U.S. vessels from supplying the island," while a New York Timesarticle cited the Jones Act as "one of the main reasons goods generally cost much more in Puerto Rico." Economist Anne Krueger, meanwhile, pointed out that the law "makes [Puerto Rico's] shipping costs much higher than those of its Caribbean neighbors," and Christian Britschgi of Reason magazine cited the Jones Act's role in "making things harder for the Puerto Rican economy."
Federalist Society Debuts Jones Act Video
The Federalist Society unveiled a new video about the Jones Act last month, featuring one supporter and one critic of the law. Calling attention to the Jones Act's shortcomings was James Coleman, an Associate Professor of law at Southern Methodist University with a particular expertise in the energy industry, while defending the law was George Landrith, President of the Frontiers of Freedom Institute. Coleman and Landrith both spoke at the Cato Institute's December 2018 Jones Act conference. Audio, video, and transcripts from that conference can be found here.
Commentary
Writings from Cato Scholars on the Jones Act
For More Short Sea Shipping, Get the Federal Government Out of the Way
If federal legislators are serious about expanding short sea shipping along the country's coasts, a good place to start is confronting the Jones Act.
According to Dr. Jeffry Valentín, Professor of Economics at the University of Puerto Rico, the Jones Act's cumulative economic impact on Puerto Rico from 1971 to 2012 amounts to $29.52 billion. Valentín also co-authored a 2012 study which found that the law cost the commonwealth $537 million in FY 2010 alone ($599 million in 2019 dollars).
