Posted: March 17, 2023

Talking head misses the boat on the Jones Act

By Paul Doell

Media personality John Stossel got it dead wrong when he complained about the Jones Act in the March 3 edition of the New York Post. Stossel's bitter commentary was distinguished by half-truths and thoughtless ramble on the domestic shipping law's intent and its application.

Referring to the devastation wrought upon Puerto Rico by Hurricane Fiona in September 2022, Stossel noted correctly that residents of the U.S. territory "desperately needed fuel." But this is where fact became fiction.

"Fortunately, an oil tanker was right offshore," he said. "Unfortunately, the U.S. government forbade it to come ashore! Why? Because of a stupid law with a stupid name: the Jones Act."

Stossel did not know - or chose not to report - that federal law provides for measured Jones Act waiver procedures, including a requirement that the Maritime Administration in the Department of Transportation conduct market surveys to determine the availability of Jones Act vessels capable of carrying emergency cargoes to troubled domestic destinations.

But, in the specific case of Puerto Rico in the wake of Fiona, two waivers were approved by Customs and Border Protection in the Department of Homeland Security before these surveys were completed, with one waiver allowing foreign-flagged tanker delivery of diesel fuel and another permitting foreign-flagged transport of liquefied natural gas to Puerto Rico.

While one survey found that Jones Act tankers were indeed available to carry diesel to Puerto Rico, the unfortunate complication was that there were no U.S.-flagged LNG tankers in service in the U.S. or overseas. However, fuel cargoes delivered routinely to Puerto Rico are not typically sourced in the U.S., so these shipments are essentially monopolized by foreign-flagged fleets.

Federal law also requires notice of Jones Act waiver requests to the Department of Defense, which must then assess the potential consequences of denying DOD immediate access to Jones Act ships capable of strategic sealift and other military support services in a national security emergency near or far - wartime assistance many Jones Act vessels and the experienced civilian American merchant mariners aboard them are well qualified for, and which DOD itself cannot provide.

No such notices to DOD were provided in hasty pursuit of two Jones Act waivers to accommodate foreign shipping interests in the wake of Hurricane Fiona and its tragic impact on Puerto Rico.

Whether Stossel knew nothing of these Jones Act waiver procedures or he chose to keep this important, relevant information from New York Post readers is up Stossel to clarify.

Stossel also offered a smug, shallow take on the nature of this venerable domestic shipping law. "The Jones Act forbids shipping anything between American ports in ships that are not U.S. built and crewed," he said, overlooking the fact that the Jones Act also requires U.S. ownership and registry of all deep-sea, Great Lakes and inland waters Jones Act vessels.

"This makes goods cost more - the average Hawaii family must pay $1,800 more a year and sometimes as happened in Puerto Rico, makes a crisis worse," Stossel whined. "Yet America's shipping lobby claims this law is a good thing."

Consumer products shipped from the U.S. mainland to the remote states and territories of Hawaii, Alaska, Guam and Puerto Rico do cost more, but this practical truth would hold no matter what flags the ships hitting these states and territories were flying. The key is that the Jones Act represents working Americans providing products to other working Americans at manageable cost.

What John Stossel and other Jones Act critics in the mainland and in Hawaii, Alaska, Guam and Puerto Rico fail to understand is that, in world shipping, there is often no traditional connection between a ship's country of ownership and the country where a ship is registered. A vessel can be owned in the U.S. or in Europe or in Africa or in the Far East but flagged in Panama, Liberia or any other host nation waving its "flag of convenience" option in wide-open international markets. The seagoing labor slaving aboard these ships is typically poorly trained, of no certain loyalty to the United States - and cheap.

Given the opportunity - through Jones Act waivers and/or exemptions or outright repeal of this domestic shipping law - foreign-flagged merchant fleets would seize waterborne trades between and among U.S. states and territories and exploit cargo demand with exorbitant rates, all to promote wealth abroad while sidelining U.S. Coast Guard-certified civilian American workers at sea and ashore and jeopardizing national security.

Pushing the absurd to its limit, Stossel said: "Foreign ships deliver goods to America from foreign powers all the time. It's only within America that foreign shipping is banned." Yes, but, while these ships call routinely at ports on all U.S. coasts, they are never factored into U.S. defense strategy. These ships are never directed to or expected to stand by in anticipation of national security emergencies.

These scandalous flag-of-convenience ships may very well include the 110 "falsely flagged" vessels identified by the International Maritime Organization as having no legitimate registrations with their flag states.

In its daily Lloyd's List on March 16, Lloyd's of London put these vessels among "a growing number of entirely fictitious and fraudulent flag registries."

Lloyd's added: "These ships can trade freely, calling at ports with little chance of detention because port state control is neither screening for them nor under any obligation to detain them - and, despite this being a known and growing issue under discussion with the IMO's legal committee for the past six years, a lack of information sharing and awareness among governments has seen numbers steadily rise."

Such illegal and dangerous business decisions in the international shipping industry may very well get Stossel's attention at some point, but, for now, his ire is aimed exclusively at the Jones Act. In his New York Post piece, Stossel concluded: "The Jones Act us just another special deal that one industry has scammed out of Congress."

A scam spanning more than a century? Is Stossel aware that the Jones Act accounts for an estimated 700,000 private sector, family friendly jobs at sea and ashore nationwide, provides $154 billion in economic output and enhances U.S. national security through private capital investment and at no cost to U.S. taxpayers?

Here now is an important labor history lesson for John Stossel ...

The Jones Act - named for its sponsor, Senator Wesley Jones of Washington State - was signed into law by President Woodrow Wilson on June 5, 1920, as Section 27 of that year's Merchant Marine Act. This law was driven by the inadequate number of ships available to supply U.S. Armed Forces and U.S. allied military personnel during World War I.

The Jones Act also echoes the first law approved by the first U.S. Congress in 1789, a statute providing for a U.S.-flag cargo fleet in coastal trading.

Having endured on conspicuous cost-free merit for nearly 103 years, the Jones Act remains a target by think tanks like the Cato Institute and by such lawmakers as Democratic Rep. Ed Case of Hawaii and Republican Sen. Mike Lee of Utah, each of whom has seen their bills calling for waiver, exemption or outright repeal of the Jones Act drawing more hopper dust than support in Congressional committee or in floor debate in either chamber.

This Stossel story reminds me of a news report on the arrival of Hurricane Maria in Puerto Rico in September 2017. Geraldo Rivera was live on Fox News, standing as well as he was able to in the fierce wind and heavy rain on a pier in San Juan as he railed heavily against the Jones Act, warning that the residents of Puerto Rico would be forced by law to wait an interminable time for relief supplies when the storm passed.

"Take a look behind me," Rivera said as the camera pulled back to scan the waters. "Here comes a ship loaded with emergency supplies, just in time, no thanks to the Jones Act." There in full view for the TV audience was a TOTE Services ship approaching in close-up - a U.S.-flag Jones Act ship built in San Diego at private expense for shuttle cargo service between Jacksonville and San Juan, capable of strategic sealift in defense emergencies and manned by American Maritime Officers and the Seafarers International Union.