Thursday, July 25, 2013

Updating the Jones Act for the 21st Century

The Committee on the Marine Transportation System (CMTS) is the US government's interagency effort to regulate waterborne traffic and commerce.  It needs to address one of the most important laws governing the marine industry.  The best thing CMTS can do for marine transportation is advocate for changes to the Merchant Marine Act of 1920, aka the Jones Act.  That protectionist law allowed US maritime vessel builders and service providers to operate behind a safe wall for years.  The results have been a mixed bag.

The Jones Act never defined the term "seaman,"  leaving the courts to define exactly which categories of maritime workers are covered and thus eligible for redress of grievances in civil court.  A broader definition means more employers will take risk mitigation seriously knowing that more people can sue them.

The disadvantage of protectionism is that some domestic markets are denied superior service and surge support is unavailable in the event of logistics bottlenecks during crises.  The GAO found that Puerto Rico's economy would probably benefit from access to foreign flag carriers who can operate more cheaply than US carriers protected by the Jones Act.  The Deepwater Horizon blowout in 2010 could have been resolved more speedily if more foreign-flagged vessels had been allowed to participate earlier.  Alas, the Jones Act hindered their ability to respond.

Here's the Alfidi Capital solution.  CMTS should staff "Jones Act 2.0" so the White House can draft legislation for submission to Congress.  The main points are as follows.  First, define "maritime worker" as any sailor, dockworker, rig operator, or any other person who works in, on, or around a waterborne vessel of any draft.  Make that labor classification as broad as possible.  Second, exempt Alaska, Guam, Hawaii, and Puerto Rico from the requirement to ship using only US-flagged carriers.  Those lands are isolated from the US mainland's transportation system and higher shipping costs negatively affect the quality of life and viability of small businesses in those areas.  Finally, allow the Secretary of Transportation to immediately waive Jones Act provisions that prevent non-US flagged carriers from operating in US waters or the outer continental shelf without requiring lengthy reviews.  This waiver would be triggered by the President's declaration of a federally-designated disaster area that mobilizes FEMA, the Coast Guard, and other national-level resources.

These three measures are a small start towards a reformed Jones Act for the 21st century.  I'll bet even Popeye the Sailor Man would support them if it meant he could get his spinach shipped faster and cheaper.  Okay, maybe that's a stretch, but it's the only colorful seagoing image I can manage.