The Jones Act Certified Ohio Tanker (File image courtesy of Crowley Maritime)

Posted on June 14, 2021 at 1:49 PM by

Michael roberts

Expectations of an active hurricane season and the Colonial Pipeline ransomware hack suggest that threats to our infrastructure are expanding and the frequency of crises will increase. America should redouble its efforts to prevent such incidents, and on effective response and mitigation efforts when they do occur.

This does not mean that the government should pull all the levers at its disposal during a crisis. As a result of the colonial pipeline hack, the federal government relaxed fuel standards and lifted hours of service limits for truckers delivering gasoline. Some states have waived weight limits on roads to allow tankers to carry more fuel per load. These measures likely helped increase the amount of fuel delivered to gas stations that were being drained by panicked shoppers and did so without causing significant damage.

However, soon after the pipeline collapsed, some interests in the refining and distribution of petroleum called on the government to waive our national navigation law (the Jones Act). The administration rightly refused to issue a broad “blanket” waiver of the Jones Act. Such a waiver was unnecessary as there were around 50 modern American tankers piloted by American men and women already operating in the region. Some of these ships could have responded quickly to any urgent refueling need along the east coast.

The government nevertheless granted specific exemptions from the Jones Act to two foreign oil companies. In several key respects, these Jones Act exemptions were fundamentally different from other regulatory actions taken. First, waiving fuel standards and truck driving requirements does not substitute foreign workers for American workers. Indeed, urgently or not, we would never consider sidelining American workers from trucking, railways or pipelines so that foreign workers could return to work.

The Jones Act waivers following Hurricane Irma in 2017 had exactly this result. Foreign ships have been chartered to replace American tankers, costing American sailors and their American employers millions. The main beneficiaries (in addition to the foreign shipowners) were the oil traders who had requested waivers to be able to use cheaper foreign vessels and pocket the difference in freight costs (a form of “disaster arbitration”).

In addition, unlike the truck hours of service waivers, the Jones Act waivers did not contribute to the effectiveness of the emergency response. Not a drop of gasoline has reached consumers more quickly because of these exemptions. In fact, a foreign vessel using an exemption embarked on a nomadic voyage from the Gulf of the United States to Europe, then Canada, and finally back to the United States long after the crisis was over.

A key factor that is sometimes overlooked is that US tanker owners lease (charter) their vessels to oil companies and other fuel distributors. This gives control to fuel distributors allowing them to intervene or suspend the use of these vessels in an emergency. Within hours of the fall of the Colonial Pipeline, nearly all of the U.S. un-chartered tankers on the East Coasts and Gulf of Mexico had been picked up by oil companies and fuel distributors.

The fastest way to replenish empty tank farms in East Coast ports – faster than chartering a foreign tanker to carry fuel from Gulf refineries – would have been to deploy or redirect an American tanker that was already stationed in the Gulf. However, several US tankers (controlled by fuel distributors) have remained inactive and, to our knowledge, no operating tankers have been redirected to an east coast tank farm potentially affected by the pipeline failure.

As in past emergencies, lifting the Jones Act did not help resolve the Colonial Pipeline crisis. What it has done is undermine U.S. businesses and jobs by allowing foreign ships (which do not have to comply with U.S. labor, tax, and other laws) to operate in our national waters. American Maritime has an excellent reputation for effective emergency response, both at home and abroad. These waivers discourage investment and recruitment in a U.S. maritime industry that provides critical support to our national and homeland security, and the resilience of our infrastructure.

History has shown that it is extremely rare for a deviation from the Jones Act to contribute to an effective emergency response, when it almost always causes direct or indirect harm. It is important that government policy makers remember these lessons as new crises emerge.

Michael Roberts is the President of the American Maritime Partnership and the Senior Vice President of Crowley Maritime Corp.

The views expressed here are those of the author and not necessarily those of The Maritime Executive.

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