HOUMA, La. - Under pressure from critics during the oil spill, supporters of the Jones Act, the protectionist federal law that’s allowed the south Louisiana maritime industry to flourish, have been faced with questions about whether the nearly century-old law should be kept in place or altered.
The law, officially the Merchant Marine Act of 1920, was passed to protect the American shipping industry by requiring that, in most cases, all merchandise transported by water between U.S. ports be carried only on U.S.-registered ships that are built in the U.S., owned by U.S. citizens and crewed completely by U.S. citizens or permanent legal residents.
For decades, the act has been a major boost to the Terrebonne and Lafourche area, where shipbuilding, repair and maritime work are a crucial part of the economy and provide thousands of jobs.
But the oil-and-gas industry, also crucial to the area’s economy, would like to see a broader interpretation of the act to allow more foreign ships to work on rigs in the Gulf of Mexico, claiming the lack of competition makes oil services more expensive. If that cost was lowered, advocates have argued, more drilling projects could be undertaken.
“It’s a double-edged sword, especially for a place like Houma,” said Loren Scott, an economist and professor emeritus at LSU who has long studied the state and local economy.
In general, measures to make it easier and cheaper to drill for oil and gas benefit the area, he said. But losing or eroding the act would “hammer a pretty important industry.”
During the Gulf oil spill last summer, critics including members of Congress and cable news pundits said the act was barring international vessels that could have helped with the cleanup from entering U.S. waters.
Retired Adm. Thad Allen, who at the time was heading up the Coast Guard response effort, said the act didn’t apply to vessels operating in federal waters more than three miles away from land, where the bulk of the cleanup was taking place. He put in place a process to speed up issuance of documents to waive the Jones Act for certain ships if necessary, but told reporters no such requests had been received.
That discussion renewed the objections of critics, who have long claimed the law stems from a protectionist stance that has become outdated as the world becomes more globalized.
One op-ed last year from the conservative Heritage Foundation, authored by Ambassador Terry Miller and James Jay Carafano contends the Jones Act has raised costs for domestic companies, forcing a decline in the domestic shipping industry.
“The policies it embodies are a remnant of a worldview that contributed to economic collapse and the Great Depression,” their commentary reads. “For example, U.S. scrap iron, a vital ingredient for American steel plants, is shipped from U.S. coastal areas to Turkey, or to Taiwan, or to China rather than to other U.S. ports, because the Jones Act makes such U.S.-to-U.S. shipping prohibitively expensive.”
Former GOP presidential nominee and Sen. John McCain of Arizona last July introduced a bill that would repeal the act, calling it a “1920s law that hinders free trade and favors labor unions over consumers.” It was not passed.
NATIONAL AND REGIONAL IMPACTS
The American Maritime Partnership, an industry trade group, claims the domestic vessel industry makes up almost 500,000 jobs, brings in $29 billion in compensation and $100 billion in economic output, according to a PricewaterhouseCoopers study. It also helps protect national security by keeping foreign boats to external ports, said Matt Paxton, president of the Washington, D.C.-based Shipbuilders Council of America.
Terrebonne and Lafourche parishes have about 8,500 sailors and captains, according to the state Workforce Commission. That doesn’t count the many welders and fitters in the region. “If it wasn’t there, the labor we have in the Gulf Coast ... would be foreign labor,” Paxton said. “You have a lot of cheap foreign labor that doesn’t meet (Occupational Safety and Health Administration) standards.”
Repeal of the act would likely translate into more ships being built overseas, Scott said.
Generally, U.S. goods headed to rigs and platforms in American waters must be carried on U.S.-flagged ships, though U.S. Customs and Border Protection determines what vessels fall under the scope of the act and there are some exceptions.
Chett Chiasson, director of Port Fourchon, said he supports the act but said its restrictions can make it difficult when there aren’t enough American vessels to meet demand, such as for dredges or specialized oilfield equipment.
“It has served its purpose to serve the U.S. marine industry and it’s still adequate. It still needs to be in place,” Chiasson said. “There are probably some things that could be reviewed.”
Still, supporters have been regrouping to pitch their message to new members of Congress and the public.
The obscure Maritime Cabotage Task Force, formed in 1995, was revamped as the American Maritime Partnership, which has a new advertising and marketing campaign.
“We’ve got to do a better job on the part of educating folks on the value and need of this industry,” said Paxton, president of the shipbuilders trade group. “A general theme of a lot of folks in this Congress is, let’s try to do away with laws and regulations that shouldn’t impede commerce and business.”