Legislation introduced by US Senator John McCain to repeal the Jones Act is unlikely to progress, say experts at a well known US law firm.
July saw Senator John McCain propose legislation titled the ‘Open America’s Waters Act of 2017,’ a bill intended to “repeal the Jones Act restrictions on coastwise trade, and for other purposes.”
Michael Cavanaugh, a partner at Washington DC based Holland & Knight, and Eric Lee an associate at the firm, said the legislation appears to be a broad brush repeal of the longstanding US trade protectionist law restricting transport of merchandise between US ports and offshore energy facilities to US-built, US-flag vessels.
“This is Senator McCain’s fourth effort to eliminate or sharply pare back Jones Act cabotage restrictions in the past eight years,” they explained. “In 2010, he called for a full repeal of the Jones Act. His 2015 and 2016 legislative proposals were more narrowly crafted, striking at the US-built requirement and the related provision at 46 US Code §12132 that any US Jones Act-eligible vessel that is reflagged or sold foreign loses its coastwise privileges permanently and cannot be brought back in by reflagging.”
They explained that the earlier measures would have left in place the requirement for use of vessels currently under the US flag, with 75% US ownership, but that Senator McCain's current measure seems to be an effort to undercut the Jones Act in its entirety, although it is not clear that his draft bill – seemingly aimed more at coastwise vessel eligibility requirements – would do that.
“Like his prior attempts, the new McCain campaign seems unlikely to gather sufficient support to pass either the Senate or House, or to stir much debate leading to other legislation or policy changes,” they said.
“Despite strong support from much of corporate America and traditional Republican interests, including the oil majors and Heritage Foundation, and continuous pressure from US jurisdictions heavily reliant on shipping trade with other states – such as Alaska, Hawaii and Puerto Rico – efforts to reduce the scope of the Jones Act have failed outright or been heavily diluted.”
As they pointed out, the current political landscape is no more favourable to any change, and weakening the Jones Act in any way would appear to run directly counter to the protectionist themes of the Trump Administration.
In contrast to Senator McCain’s efforts, and as highlighted on numerous occasions by OSJ in recent months, US Customs and Border Protection (CBP) recently proposed a tightening of the Jones Act, and a rollback of legal rulings that allow non-US vessels to undertake services in the offshore energy sector in the Gulf of Mexico.
The changes would have reversed decades of precedent and tightened US enforcement of the Jones Act but opposition from various sectors saw CBP drop the plan.
A joint trade group opposed to the proposed changes challenged the proposals. The group included the American Petroleum Institute, Association of Diving Contractors International, Independent Petroleum Association of America, International Association of Geophysical Contractors, International Marine Contractors Association, Louisiana Mid-Continent Oil and Gas Association, Offshore Operators Committee, US Chamber of Commerce and US Oil and Gas Association. Members of the International Association of Drilling Contractors said they were concerned by the uncertainties associated with the proposed changes.