The Jones Act & America's Domestic Maritime Industry

What is the Jones Act?

The Jones Act requires that waterborne transportation of merchandise between two points in the United States must take place aboard a vessel that is U.S.-built, U.S.-owned, U.S.-flagged, and U.S.-crewed.  This is also known as coastwise trade and is governed by cabotage laws.  The word “cabotage” is French and means “between the capes.”

 

Legal Background

The law generally referred to as the Jones Act is found in Section 27 of the Merchant Marine Act of 1920 (46 U.S.C. 55102) and bears the name of its author, Senator Wesley Jones (R-WA).  U.S. cabotage laws actually pre-date the Jones Act to the founding of our nation and the First Congress of the United States.  Transportation of merchandise is not the only activity governed by cabotage laws.  They also govern passengers (46 U.S.C. 55103), salvage (46 U.S.C. 80104), towing (46 U.S.C. 55111), and dredging (46 U.S.C. 55109). 

The Outer Continental Shelf Lands Act of 1953 (43 U.S.C. 1333) extends cabotage laws to the U.S. territorial sea and declares installations permanently or temporarily attached to the seabed for the purposes of exploration, development, or production of natural resources to be points in the United States.  As a result, merchandise transported to or from oil and gas facilities located on the U.S. Outer Continental Shelf is required to be carried by Jones Act-qualified vessels. 

 

Benefits of the Jones Act

The Jones Act is the foundation of U.S. maritime policy and a significant source of strength for our nation’s security and economy.  It has enjoyed broad support from the U.S. military and every modern U.S. president.   

Security – The United States military relies upon the domestic maritime industry to build and repair warships, crew commercial and government-owned vessels in times of war or emergency, and supply sealift capacity for the 90% of military cargoes that travel by sea.  Not only is this defense industrial base and highly-skilled workforce indispensable to the U.S. military’s ability to deploy and sustain operations overseas, the Jones Act also supports homeland security by preventing unfettered access to U.S. waterways.  Without secure waterways, we cannot have secure borders.  The prospect of monitoring, regulating, and overseeing foreign-controlled, foreign-crewed vessels throughout the United States’ system of internal waterways would be extremely difficult and represent a major security risk.   

Economy - Nine out of ten U.S. mariners work in the domestic trade.  The Jones Act fleet numbers more than 40,000 vessels, while the domestic maritime industry accounts for more than half-a-million U.S.  jobs and contributes more than $100 billion to the U.S. economy each year.

Safety & Environmental Responsibility - America’s domestic fleet is the safest, most secure, and most environmentally responsible in the world.  The U.S. Coast Guard applies strict requirements for mariner training, vessel design, equipment maintenance, safety drills, navigation and watchkeeping, emissions, and marine pollution.  The Jones Act ensures that vessels plying America’s waters are built, inspected, and crewed to meet those standards.  That reduces injuries, property damage, security breaches, and pollution in U.S. waters, and creates a safe and sustainable marine transportation system, which is the life blood of American commerce.   

Global Context - Cabotage laws are common around the world for nations with significant domestic fleets, and U.S. vessels are restricted from operating in the coastwise trade of other countries as a result.  Many foreign companies also benefit from direct government subsidies as well as lower tax rates, wage rates, insurance costs, and regulatory compliance costs.  U.S. cabotage laws help to ensure a level playing field with these foreign fleets while still allowing for robust competition and innovation between U.S. operators.

 

In Their Own Words

Views on the value of the Jones Act and importance of the domestic maritime industry:

 

“Without the Jones Act, vessels and crews from foreign nations could move freely on U.S. waters, creating a more porous border, increasing possible security threats and introducing vessels and mariners who do not adhere to U.S. standards into the bloodstream of our nation.  We are blessed to have fellow Americans operating U.S. vessels between our ports and on our waterways. Our mariners are best in class in their training, safety and commitment to this great land. Waterborne commerce and our nation’s maritime base are vital to our nation’s economy, security and quality of life.  The Jones Act should be hailed as a commercial and a public policy success. It is the critical factor that ensures a vibrant domestic maritime sector, which in turn helps propel the American economy and protect vital U.S. national and homeland security interests.”

Congressman Duncan Hunter (Chairman, House Subcommittee on Coast Guard and Maritime Transportation) and Congressman Steve Scalise (House Majority Whip), March 2014

 

“The Jones Act is a jobs act, plain and simple…I have seen firsthand, and our people have felt, the negative impacts of hastily and unnecessarily contrived [Jones Act] waivers.  Instead of utilizing our highly experienced and capable domestic manufacturers, waiving the Jones Act literally hands over work to foreign shipping companies, taking away economic opportunity from our people…This is the exact opposite of what we should be doing to create jobs and improve and strengthen the economy.”

Senator Mary Landrieu, Chairman, Senate Energy & Natural Resources Committee, April 2014

 

“This is a very exciting time for American maritime – the surge in our country’s energy production is helping drive record levels of new vessel construction in shipyards across the nation. I appreciate the many benefits of the Jones Act and this vibrant homegrown U.S. industry.”

Congressman Bill Shuster, Chairman, House Transportation & Infrastructure Committee, September 2014

 

“In the military, over 90 percent of our DOD requirements travel by the sea.  It’s quite important to us.  We are a nation that relies on the maritime industry as a critical component of our country’s economy as well as our national security…It’s American ships and American seafarers who have always come through for us in times of peace, war, or national emergency.” 

Vice Admiral William Brown, Deputy Commander, U.S. Transportation Command, February 2014

 

“What can we do together?  You know the phrase the whole is the greater than the sum of its parts…or…there is strength in unity.  That’s why MSC [the Military Sealift Command] supports the Jones Act and any other legislative effort to strengthen maritime shipping and shipbuilding.”

Rear Admiral T.K. Shannon, Commander, Military Sealift Command, September 2013

 

“USTRANSCOM simply could not accomplish its global mission without the capabilities provided by the U.S. strategic sealift fleets and our steadfast merchant mariners.”

“Our primary concern from a national security perspective is the loss of merchant mariners used to man the strategic surge fleet.  Since DOD's organic fleet is maintained with partial crews until needed for real world operations, a loss of merchant mariners in commercial industry could risk bringing those ships to full operating status when the need arises.”

General William Fraser III, Former Commander, U.S. Transportation Command, May 2013

 

“The original goal of the [Jones] Act remains important to military preparedness…commercial U.S.-flag vessels provide employment to trained officers and unlicensed seamen, many of whom could be available to crew government-owned sealift vessels in times of war or national emergency…A decline in the number of U.S.-flag vessels would result in the loss of jobs that employ skilled mariners needed to crew the U.S. military reserve and other deep-sea vessels in times of emergency.”

U.S. Government Accountability Office (GAO), March 2013

 

“The U.S. shipbuilding and repair industry is a strategic asset analogous to the aerospace, computer, and electronic industries.  Frontline warships and support vessels are vital for maintaining America’s national security and for protecting interests abroad.  In emergency situations, America’s cargo carrying capacity is indispensable for moving troops and supplies to areas of conflict overseas.  A domestic capability to produce and repair warships, support vessels, and commercial vessels is not only a strategic asset but also fundamental to national security.”

U.S. Department of Commerce, Bureau of Export Administration, Office of Strategic Industries and Economic Security

 

“As a maritime nation, the United States depends not only on a strong Navy, Marine Corps, and Coast Guard, it also requires a strong commercial maritime industry.  The Jones Act must be maintained so that the more than 8,000 U.S. citizen mariners can continue to provide the economic and military support that is critical to our national interests.

 

Daniel Branch, President of the Navy League of the United States

 

“The greatest danger to the role and function of the United States as a seafaring nation is the decline of its maritime industry and merchant marine . . . .  Today, hundreds of seagoing vessels from larger container ships to tankers and barges and world class deep-ocean drilling platforms are built every year. The projects keep American shipyards in operation, employing approximately 100,000 skilled workers. Moreover, tens of thousands of merchant mariners are at work every day as a consequence of the Jones Act.  As a result, the nation retains the means to build and repair Navy vessels, and provide critical sea lift for the military.

“Ninety years after it became law, the Jones Act continues to be vital to national security needs.  In the face of continuing low-cost subsidized foreign competition, real world economics would dictate that the U.S. shipbuilding industry would decline.  Without the Jones Act, the United States would face the danger of a rapid decline in its merchant marine fleet. It would then be required to provide massive subsidies to that industry, pay exorbitant prices for naval vessels and rely on foreign-owned or flagged vessels to carry critical military cargoes or to build and maintain at great expense a unique, government owned fleet of cargo vessels.  Finally, because Jones Act vessels must conform to U.S. laws and have U.S. crews, waterborne transportation is reliable and the homeland is more secure.”

The Lexington Institute, October 2011