Merchant Marine Act of 1920

The Merchant Marine Act of 1920 (P.L. 66-261) is a United States federal statute that regulates maritime commerce in U.S. waters and between U.S. ports. Section 27, better known as the Jones Act, deals with cabotage (i.e., coastal shipping) and 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 crewed by U.S. citizens and U.S. permanent residents. Consequently, the purpose of the law is to support the U.S. maritime industry.

In addition, amendments to the Jones Act, known as the Cargo Preference Act (P.L. 83-644), provide permanent legislation for the transportation of waterborne cargoes in U.S.-flag vessels. The Merchant Marine Act of 1920 has been revised a number of times to end these protectionist measures: the most recent and thorough revision was the recodified version of 2006.

Cabotage

The cabotage provisions restrict the carriage of goods or passengers between United States ports to U.S.-built and flagged vessels. Since 2006 increased lobbying has been undertaken to scrap the Jones Act. It has been codified as portions of 46 U.S.C. ch.551 (Coastwise Trade). Nonetheless, the provisions requiring at least three-fourths of the crewmembers must be U.S. citizens. Moreover, the steel of foreign repair work on the hull and superstructure of a U.S.-flagged vessel is limited to ten percent by weight. This restriction largely prevents American shipowners from refurbishing their ships at overseas shipyards. The passenger provision is also why most cruise lines always include at least one non-U.S. port in every cruise.

Seamen's rights

The U.S. Congress adopted the Merchant Marine Act in early June 1920, formerly 46 U.S.C. § 688 and codified on October 6, 2006 as 46 U.S.C. § 30104. The Act formalized the rights of seamen.

It allows injured sailors to make claims and collect from their employers for the negligence of the ship owner, the captain, or fellow members of the crew. It operates simply by extending similar legislation already in place that allowed for recoveries by railroad workers and providing that this legislation also applies to sailors. Its operative provision is found at 46 U.S.C. § 688(a), which provides:

"Any sailor who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right to trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply..."

This allows seamen to bring actions against ship owners based on claims of unseaworthiness or negligence. These are rights not afforded by common international maritime law.

The United States Supreme Court, in the case of Chandris, Inc., v. Latsis, 515 U.S. 347, 115 S.Ct. 2172 (1995), has set a benchmark for determining the status of any employee as a "Jones Act" seaman. Any worker who spends less than 30 percent of his time in the service of a vessel on navigable waters is presumed not to be a seaman under the Jones Act. An action under the Act may be brought either in a U.S. federal court or in a state court. The seaman/plaintiff is entitled to a jury trial, a right which is not afforded in maritime law absent a statute authorizing it.

Criticism

Critics note that the legislation results in costs for moving cargo between U.S. ports that are far higher than if such restrictions did not apply. In essence, they argue, the act is protectionism.

Critics also contend the Jones Act has caused the U.S. shipbuilding industry to build vessels in the U.S. which are more expensive than those built elsewhere. Consequently, U.S. shipbuilders are priced out of the international market for merchant ships. A 2001 U.S. Department of Commerce study indicates that U.S. shipyards build only one percent of the world's large commercial ships. Few ships are ordered from U.S. shipyards except for cabotage. U.S. operators of ships in cabotage have an economic incentive to continue operating old vessels rather than replace them with relatively high cost vessels built in the U.S. The report concluded that the lack of United States competitiveness stemmed from foreign subsidies, unfair trade practices, and lack of U.S. productivity.^{[citation needed]} However, the same argument buttresses that of their opponents who state that without the Jones Act, all remaining US shipyards would be deconstructed or outsourced overseas resulting in the utter destruction of the US Maritime industry. In turn, this would result in higher costs for US Navy vessels and eventually require most Naval ships meant for national defense to be built overseas as well.

Moreover, critics point to the lack of a U.S.-flagged international shipping fleet. They claim that it is economically impossible for U.S.-flagged, -built, and -crewed ships to compete internationally with vessels built and registered in other nations with crews willing to work for wages that are a fraction of what their U.S. counterparts earn.^{[citation needed]} However, the same argument is used by the Seamen Union which claims the Jones Act allows for a well paid, educated, and all American merchant mariner force.^{[citation needed]}

On June 25, 2010, Senators John McCain and Jim Risch introduced the Open America's Waters Act, a bill to repeal the Jones Act. Sen. McCain said the Jones Act restricts shipping and raises costs to consumers in Hawaii, Alaska, Puerto Rico, and Guam. The bill failed.

Support

Supporters of the Shipping Act maintain that the legislation is of strategic economic and wartime interest to the United States. The act, they say, protects the nation's sealift capability and its ability to produce commercial ships. In addition, the act is seen as a vital factor in helping maintain a viable workforce of trained merchant mariners for commerce and national emergencies. Supporters say that it also protects seafarers from deplorable living and working conditions often found on foreign-flagged ships. Finally, they point to the key role played by the US Merchant Marine in supporting Global operations against terrorism and the Iraq and Afghanistan Campaigns. They claim that without these assets, the US would be under substantial foreign influence in conducting its policy in accordance with National Security.

Additionally, some proponents make the case that allowing foreign-flagged ships to engage in commerce in American domestic sea lanes would be like letting a foreign automaker establish a plant in the United States, which does not have to pay U.S. wages, taxes, or meet national safety or environmental standards.^{[citation needed]}

“America needs a strong and vibrant U.S.-Flag Merchant Marine. That is why you … can continue to count on me to support the Jones Act (which also includes the Passenger Vessel Services Act) and the continued exclusion of maritime services in international trade agreements.” Barack Obama, August 28, 2008

“I can assure you that a Reagan Administration will not support legislation that would jeopardize this long-standing policy ... embodied in the Jones Act ... or the jobs dependent on it.” President Ronald Reagan, 1980^{[citation needed]}

The [Jones Act trailership] SS NORTHERN LIGHTS made 25 voyages and 49 port calls [to the Iraqi war zone]. She carried 12,200 pieces of military gear totaling 81,000 short tons and covering over 2,000,000 square feet (190,000 m²). Those statistics clearly demonstrate the value that the U.S.-flag shipping industry brings to the Defense Transportation System.” General Norton A. Schwartz, USAF, Commander in Chief, U.S. Transportation Command, 2005^{[citation needed]}

The Jones Act has been supported politically at least in lip service by Presidents Obama, Clinton, Bush, Reagan, Carter, and Ford, and further all the way back to Woodrow Wilson who originally signed it into law in 1920.^{[citation needed]} It is supported by American military leaders, most recently in a statement by Lt. Gen. Roger Thompson, deputy commander in chief, U.S. Transportation Command. There also are 239 co-sponsors of a pro-Jones Act Resolution in the U.S. House of Representatives.^{[citation needed]}

Furthermore, there are other domestic interests which support the Act both from self-interest in keeping them cost competitive in some areas in contrast to the high-cost of sea traffic as well as more altruistic policies of keeping a diversified transportation system. In fact, all of these transportation interests intersect seafaring cargo at some point in the supply line. Consequently, retention of the Jones Act is also supported from the domestic airline, trucking, and rail industries. "Reduced to its essential terms, the Jones Act simply requires companies operating in the domestic commerce of the United States to comply with U.S. laws. This requirement includes corporate taxes, the National Labor Relations Act, the Fair Labor Standards Act, Coast Guard standards, employing American citizens, etc. American ships are subject to these laws and foreign ships are not. This same fundamental principle applies to every other company doing business in the United States, from agriculture to retail." (Quote from R.J. Pfeiffer 1997. Maritime expert former CEO Alexander Baldwin.)^{[citation needed]}

However, aspects of the cabotage act have been successfully removed, most importantly concerning the requirement that shipping crossing within certain navigational miles of US territory must enter the nearest U.S. port and transfer to another US vessel if the final destination is another U.S. sovereign. Thus on trade through the Caribbean vessels had to turn in at such islands as U.S. Virgin Islands and Puerto Rico, or especially on trade through the Pacific vessels had to turn in on islands such as Midway Island, Henderson Island, Guam, American Samoa, and the Northern Marianas. In the case of the Pacific islands, the long distances required large inter-oceanic US-flagged vessels to be used for the remainder of the voyage, thereby increasing costs. Consequently, foreseeing the rising China and Latin America trade, large multinational corporations successfully lobbied to have the Jones Acts jurisdiction removed from those areas.^{[citation needed]}

Waivers of Shipping Act provisions

Requests for waivers of certain provisions of the act are reviewed by the United States Maritime Administration on a case-by-case basis. Waivers have been granted in cases of national emergencies or in cases of strategic interest.

In the wake of Hurricane Katrina, Homeland Security Secretary Michael Chertoff temporarily waived the U.S. Shipping Act for foreign vessels carrying oil and natural gas from September 1 to September 19, 2005.

In order to conduct an emergency shipment of gasoline from Dutch Harbor, Alaska to Nome in January 2012, Secretary of Homeland Security Janet Napolitano granted a waiver to the Russian ice class marine tanker Renda. Renda was originally scheduled to onload gasoline in Northern Japan for shipment but was unable due to a gale.

The Department of Homeland Security issued a blanket waiver of the Jones Act to all shipping from November 2nd to November 13th 2012, following widespread fuel shortages caused by Hurricane Sandy.

See also

• Flag of convenience
• Passenger Vessel Services Act of 1886 – similar law concerning passenger transportation between US ports.
• Seaman status in United States admiralty law

Further reading

• Sethi, Arjun, The Merchant Marine Act of 1920: The Impact on American Labor (2005).
• Denena, Tony, Maritime Accident Attorney (2012)

External links

• Congressional Research Service Report RS21566 The Jones Act: An Overview.