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U.S. Shipowners Push Back on Jones Act Waiver Request

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By The Maritime Executive 03-20-2020 09:44:36

The lobbying group for America's independent oil producers has asked Congress to temporarily allow the use of foreign ships to carry petroleum cargoes between U.S. ports, drawing strong pushback from Jones Act shipowners. 

In a letter to House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell earlier this week, the American Exploration & Production Council (AXPC) called for "market-based solutions" to reduce the impact of plummeting oil prices on America's oil producers. 

“We want to be clear: our industry is not seeking a bailout from the federal government," said AXPC CEO Anne Bradbury. "What we are seeking is a restoration of a functioning, stable, global market for oil, which removes artificial manipulation of the global marketplace."

These proposed solutions would include postponing the sale of oil supplies from the Strategic Petroleum Reserve and temporarily waiving the Jones Act. "We believe a temporary waiver can allow American producers to move domestic products with greater ease within the U.S.," AXPC wrote. 

In a response, the American Maritime Partnership - the industry group representing Jones Act shipowners - called on Congress to maintain current cabotage rules in this time of crisis. 

"This is an opportunistic effort by those who want to use foreign ships to advance their own economic interests at the expense of American workers who are doing everything in their power to keep this economy moving," said AMP in a statement. "At a time of American crisis and uncertainty, a waiver to the Jones Act would only open our borders and markets to foreign shipping companies with foreign crews that pose an added threat to the safety and security of our nation’s health."

In an open letter, AMP chairman and Crowley Maritime SVP Michael Roberts criticized this proposal to replace American ships with foreign substitutes as "unconscionable" and an example of "rank opportunism at a time of great crisis." 

"As you know, waiving the Jones Act essentially means outsourcing U.S. domestic maritime jobs to foreign shipping companies with foreign crews, including potentially crews from nations currently experiencing the most extreme consequences of the coronavirus pandemic," wrote Roberts. "A waiver would allow foreign vessels and foreign crews to enter purely domestic commerce, a bad idea in any circumstance but certainly more so during the current coronavirus crisis."

Roberts also noted that the legal requirements for a Jones Act waiver are not currently in evidence. Administrative waivers for the Act are only legally possible when "necessary in the interest of national defense" and when Jones Act vessels are not available. 

"There is a more-than-ample supply of domestic tankers and tank vessels available to transport domestic oil and gas now and in the foreseeable future. The American tanker and tank vessel industry is already experiencing the consequences of the challenges in the domestic gas industry, and a waiver would only exacerbate that without benefit to the U.S. economy," Roberts concluded.