Maritime Lawyer Discusses ‘The Contribution of the Jones Act to National Security’ Report

Posted in Jones Act,Maritime Law on November 14, 2011

On July 8th, 2011, the Lexington Institute published The Contribution of the Jones Act to National Security written by Dr. Daniel Goure.

What is The Lexington Institute?

The Lexington Institute is a nonprofit public-policy research organization headquartered in Arlington, Virginia. Its Mission Statement reads, in part, as follows:

It is the goal of the Lexington Institute to inform, educate, and shape the public debate of national priorities in those areas that are of surpassing importance to the future success of democracy, such as national security, education reform, tax reform, immigration and federal policy concerning science and technology. By promoting America’s ability to project power around the globe we not only defend the homeland of democracy, but also sustain the international stability in which other free-market democracies can thrive.

The Lexington Institute believes in limiting the role of the federal government to those functions explicitly stated or implicitly defined by the Constitution. The Institute therefore actively opposes the unnecessary intrusion of the federal government into the commerce and culture of the nation, and strives to find nongovernmental, market-based solutions to public-policy challenges. We believe a dynamic private sector is the greatest engine for social progress and economic prosperity.

Who is Dr. Daniel Goure?

Dr. Goure is a Vice President of the Lexington Institute and is involved in a wide range of issues as part of the institute’s national security program. Most recently, he was a member of the 2001 Department of Defense Transition Team. Dr. Goure spent two years in the U.S. Government as the director of the Office of Strategic Competitiveness in the Office of the Secretary of Defense. He also served as a senior analyst on national security and defense issues with the Center for Naval Analyses, Science Applications International Corporation, SRS Technologies, R&D Associates and System Planning Corporation. He recently was the Deputy Director, International Security Program at the Center for Strategic and International Studies (CSIS). At CSIS, he was responsible for analyses of:

1. U.S. national security policy;
2. The future of conflict and warfare;
3. The information revolution;
4. Counter-proliferation; and
5. Defense industrial management.

What is the Jones Act?

Only vessels conforming to the provisions of the Jones Act are permitted to carry passengers or cargo between two U.S. ports, a process also termed “cabotage.” In addition, all officers and 75 percent of the crews of vessels engaged in cabotage must be U.S. citizens, with the remainder being citizens or lawfully admitted aliens. These vessels must be built in the United States, owned by U.S. citizens, and operated under the laws of the United States. Provisos added to the Act in the 1930s denies to vessels sold “foreign in whole or in part” or “rebuilt” abroad, respectively, coastwise trading privileges.

There have been some questionable decisions, or rulings, in the last five years that have chipped away at the Jones Act and, post Katrina, there have been many exceptions, or waivers, to the Jones Act when there was an alleged shortage in available U.S. made vessels in the Gulf of Mexico.

What are the conclusions in The Contribution of the Jones Act to National Security?

1. More than in the time of its enactment in and around 1916 through 1920, the Jones Act is  essential to the national security of the United States;
2. The majority of maritime nations impose some type of restrictions on commercial vessel ownership, crewing and/or ship construction;
3. The provisions of the Jones Act were intended to support the U.S. shipbuilding industry and merchant marine as a matter of national security;
4. The Navy will continue to be forward deployed and prepared to project power from the sea and support humanitarian operations. Therefore, the military must have a capable and secure merchant marine fleet that meets its need for sealift;
5. In addition, the Navy will pursue a shipbuilding program designed to a fleet of sufficient size and capability to meet a wide range of military and humanitarian challenges. It will require both an industrial base of sufficient size and experience to build next generation combatants, provide new fleet support vessels and repair and overhaul an increasingly aging inventory;
6. In the face of continuing low-cost subsidized foreign competition, real world economics would dictate that the U.S. shipbuilding industry would decline;
7. Without the Jones Act, the United States would face the danger of a rapid decline in its merchant marine fleet thereby requiring massive subsidies to that ship building industry, pay exorbitant prices for naval vessels if and when they were needed OR  rely on foreign-owned or flagged vessels to carry critical military cargoes OR to build and maintain, at a great expense,  a unique government owned fleet of cargo vessels;
8. A key element in the national strategy to secure the homeland is to gain sufficient visibility into movement of goods and people to the United States so as to uncover and interdict any attempt to use the global transportation network to launch an attack;
9. Without the Jones Act, the Inland Waterways could be utilized by terrorists to reach America’s heartland and many of its largest and most important urban centers;
10. The task of securing U.S. seaports and foreign cargoes is daunting by itself. It makes no sense to allow foreign-owned ships operated by foreign crews to move freely throughout America’s inland lakes, rivers and waterways. Were the Jones Act not in existence, the Department of Homeland Security would be confronted by the difficult and very costly task of monitoring, regulating, and overseeing all foreign-controlled, foreign-crewed vessels in internal U.S. waters.
11. Recognizing the importance of a robust, modern U.S. shipbuilding industrial base, it is critical that:a.
    The Navy and Coast Guard pursue full funding for its shipbuilding program;

    b.
    The Obama administration should seek continued funding for the Title XI Federal Ship Financing Program which offers loan guarantees on contracts to build or overhaul commercial vessels in U.S. shipyards. This program has strong return for the government, as each Title XI dollar can leverage up to 20 dollars of private investment. Title XI encourages the maintenance of commercial facilities and a skilled workforce that can also be employed in constructing and maintaining Navy vessels; and

    c. The Obama administration should expand implementation of the Marine Highway Initiative (MHI). The MHI is intended to accelerate development of waterborne shipping services thereby reducing congestion on land as well as saving money through expanded use of maritime transportation. The results would be a double boost to the economy (ship construction and reduced freight costs), the creation of jobs and support for national security.

Comment by maritime lawyer, Steve Gordon

There are many discussions about the efficacy of the Jones Act. They take place from the docks in Port Fourchon, in maritime blogs, in leading maritime magazines to the halls of Congress.

You have recently seen bills introduced by various senators to limit it and one in particular by Senator McCain to actually abolish the Jones Act. In the last two years, the bills to limit the effect of the Jones Act have all been introduced and/or sponsored by either Republican Senators or Republican Representatives.

All of these bills were to draw attention away from the other side of the Jones Act, i.e., the injury side, which was receiving so much national attention during the Congressional hearings into the Deepwater Horizon disaster. You will recall that the family of a seaman killed while on the job and due to the negligence of his/her employer, may only sue for the “pecuniary” [economic] damage loss due to the death. That is, no mental anguish is legally recoverable to a spouse or child due to the loss of their spouse and/or parent.

Well, I am sad to say that it worked and I can report to you that the Bill that actually passed out of the House of Representatives, which modified the injury side of the Jones Act to simply bring it in line with all other states as to what is a recoverable damage and what is not a recoverable damage, never got off the ground in the Senate.  In the Senate:

1. There were attempts to narrow the bill to accommodate the cruise ship industry but that was not good enough to garner sufficient support;
2. Then the proponents of the bill tried to narrow it even further to accommodate the fishing industry but that also fell short;
3. Then there were attempts to limit it even further to only allow spouses and children of seaman killed while working in the offshore oil industry would be fairly compensated. Surely, when dealing with such a man-made disaster of this magnitude that would garner support…right? Wrong that failed to get any traction as well;
4. Finally, in a last ditch effort to get any type of fairness to this abysmal law that was causing such inequities to the eleven (11) families of the Deepwater Horizon 11 when juxtaposed to the multi-billion dollar profits realized by the culpable parties like BP, Transocean and Halliburton, there was an attempt to limit change in the law for just these eleven families. That went nowhere fast.

Though I agree with the conclusions reached by Dr. Goure and I share his valid reasoning that we are presumably safer when a U.S. worker is on a boat instead of a foreign citizen [although we all know that there are home grown terrorists both inside the U.S. and abroad] I cannot help think about where was this right-wing think tank when these Republican Senators, such as McCain, were using the threat of doing away with the entire Jones Act as a diversionary tactic. Why were they silent then? The truth is that they knew that what McCain and others were doing was not a serious attempt but was just a ploy. McCain said the Jones Act was a job killer and was an impediment to the free trade concepts of capitalism. The truth is, the Jones Act is not only needed for our country’s protection but it is also a job creator not a job killer.

Dr. Goure makes one passing reference to a very important point: “For many years it was common practice for nations to subsidize their shipbuilding industries. A number of countries continue to do so.” You bet other countries subsidize their shipbuilders but we do not. You do not see the Lexington Institute saying that the Obama Administration should do that though. Why not? The reason is that would not be very right wing would it? Recommending government subsidies to an industry to help level the playing field? God forbid! Can’t have that now can we?

Referring back to the Lexington Institute’s Mission Statement: “…..The Lexington Institute believes in limiting the role of the federal government to those functions explicitly stated or implicitly defined by the Constitution….” What is the pursuit liberty? Is it just freedom? Can it mean economic freedom? If Government helps the shipbuilding industry and that creates jobs for U.S. Citizens, does that not get a constitutional blessing?. The Lexington Institutes Mission statement then reveals why Dr. Goure cannot just come out and say what he really wants to say because it states, “[T]he Institute therefore actively opposes the unnecessary intrusion of the federal government into the commerce and culture of the nation, and strives to find nongovernmental, market-based solutions to public-policy challenges. We believe a dynamic private sector is the greatest engine for social progress and economic prosperity.”  This is right wing think nonsense.

Public Sector Assistance = Bad | Private Sector Success = Good | Why are these cast in terms that are always mutually exclusive?

The sadness to all of this is politics. The same dysfunctionality that we saw in passing a bill that made fair damages to families of dead seaman is the same dysfuntionality that will never allow the Jones Act issue to be squarely and completely dealt with in an intelligent manner.

Politics get in the way of truly being American and truly placing America first. Who cares if the U.S. Government gives the shipbuilding industry money to modernize and help make it more globally competitive; who cares if government becomes an active partner in the shipbuilding industry thereby increasing production and thereby increasing its workforce. To the right, government is evil and can do no good in the marketplace. This thought process needs to cease and, unfortunately, I see no way to end this constant struggle to placing getting elected ahead of what is the right thing to do.

We need to keep the Jones Act. Some say it is “protectionist”. What they mean is it is not a law that opens up the marketplace to foreign competitors. But now, according to Dr. Goure, the word “protectionist, in the Jones Act sense, takes on another definition, i.e, that of protection itself as in protection of our borders and heartland. Because of this, the United States Government needs to do whatever is necessary to assist the private sector in achieving success and anyone that stands in the way of that needs to be voted out of their office.

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Jones Act lawyers, Gordon, Elias & Seely, L.L.P. work with Jones Act clients all along the Gulf Coast and throughout the nation. We are the leading offshore injury law firm representing victims of the BP, Transocean Deepwater Horizon disaster, along with assisting businesses that were damaged by the impact of the Gulf oil spill.