A nearly century-old US shipping law that has broad, bipartisan support in Congress faces a new opposition effort aimed at lessening costs to East Coast refiners.
US Representative Mike Pompeo, a Kansas Republican, last week said that he has begun an effort to repeal certain elements of the law, known as the Jones Act.
“There are pieces of [the Jones Act] that are anachronistic,” Pompeo said at an event at the Hudson Institute in Washington. “We should certainly look at making sure that we reduce the friction associated with the transportation of energy commodities and, frankly, other commodities around the world.”
East Coast refiners have long complained that the Jones Act puts them at a competitive disadvantage to refiners in Canada and Europe and the American Fuel and Petrochemical Manufacturers, the industry’s chief lobbying group, has called reform of the Jones Act a key policy goal this year.
The effort to weaken the Jones Act is still in its nascent stages, but the American maritime industry, and its throng of supporters on Capitol Hill, have already begun to fight back.
The intense lobbying effort is nothing new for the Jones Act, which requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned. But that effort, traditionally focused on the financial health of the domestic maritime industry, has been refocused, this time on national and homeland security.
“A repeal of the Jones Act would significantly undermine national security,” said Tom Allegretti, chairman of the American Maritime Partnership, in a statement to Platts. “Given the state of the world, particularly this week, it’s hard to imagine changing a law that plays a major role in border protection, homeland security and prevention of illegal immigration.”
Allegretti said the Jones Act has massive support from military leaders and the US Coast Guard due to its contribution to maintaining a US-flagged commercial fleet for military sealift, which he said would cost billions for the Department of Defense to replicate.
These points were echoed in recent statements from Representative Michael McCaul, a Texas Republican and chairman of the House Homeland Security Committee.
“The domestic maritime industry in Texas is important not just for the good jobs it provides and the critical role it plays in keeping our petrochemical industry functioning efficiently, but also because it is a critical link in our homeland and border security,” said McCaul. “Tens of thousands of security-screened American seafarers, who crew the hundreds of tugs, towboats, barges and offshore supply boats working all along the Texas coast, help keep terrorists away from our border and our critical petrochemical infrastructure.”
And in a recent editorial, Slade Gorton, a former Washington Republican senator and member of the 911 Commission, wrote that “the most vital benefit of the Jones Act is the law’s critical role in protecting America’s borders and homeland security.”
Pompeo declined to detail how he intended to change the Jones Act, either through legislation or other avenues, and would not identify any other House or Senate member he was working with on the effort. He said there was support within Congress to reform the law, but “not nearly enough” to get such a change passed.
Still, he said many had viewed the end of long-standing restrictions on US exports as unlikely, even days before President Barack Obama signed the change into law in December.
“Times change,” said Pompeo, a member of the Energy and Commerce Committee.
AFPM had pushed for Jones Act reforms, along with a repeal of the Renewable Fuel Standard, to be tied to a lifting of longstanding restrictions on crude exports. When those export restrictions were lifted as part of a government spending bill signed into law December 18, the RFS repeal was never considered and the bill actually included language for the US Customs and Border Protection to better enforce the Jones Act.
Brian Scheid has worked for Platts for six years and has covered multiple beats, including futures and swaps trading, Dodd-Frank financial reform efforts, Congress, the White House and multiple federal agencies, including the Department of Interior, Department of Energy, the Commodity Futures Trading Commission, and the Federal Energy Regulatory Commission.