On September 28, 2022, Secretary of Homeland Security Alejandro N. Mayorkas approved a temporary and targeted Jones Act waiver to address Puerto Rico’s needs in the aftermath of Hurricane Fiona. The storm hit the island on September 19, 2022, leaving hundreds of thousands of people without basic services like water and electricity.
History of the Jones Act
After World War I, Congress passed the Merchant Marine Act of 1920, commonly referred to as the Jones Act. This law created a safe network of American vessels after the German Navy destroyed the American fleet during the war. Under this law, vessels transporting goods or passengers between U.S. points must be (1) built in the United States, (2) at least 75% owned by U.S. citizens, (3) and mostly crewed by U.S. citizens.
This law includes exemptions for ports in the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands. An exemption also exists for passenger vessels that travel from U.S. ports to Puerto Rico, but not for cargo ships to Puerto Rico. With the exception of tourist cruises, Puerto Rico is the only U.S. territory that must fully comply with the Jones Act’s mandates.
In limited circumstances, the government may grant waivers to the Jones Act’s requirements. The process for obtaining a waiver is codified at 46 U.S.C. § 501. To qualify under this statute, the secretary of defense or the secretary of homeland security must find the circumstances make a waiver “necessary in the interest of national defense.”
The federal government has previously temporarily waived the Jones Act for Puerto Rico. On September 28, 2017, the Trump administration issued a temporary waiver of the Jones Act to facilitate the response to severe damage caused by Hurricane Maria.
The Future of the Jones Act
Proponents of the Jones Act assert that it benefits U.S. workers by ensuring that vessels are built in America, thereby protecting shipbuilding and merchant marine jobs. However, some commentators and government officials assert that the Jones Act negatively affects Puerto Rico’s economy. According to a 2013 report by the Federal Reserve Bank of New York, shipping costs from the U.S. east coast to Puerto Rico are double the shipping costs to the Dominican Republic because of the Jones Act.
A 2017 CRS report noted that the Jones Act’s provisions related to Puerto Rico may contribute to Puerto Rico importing a disproportionate amount foreign products relative to American goods. The report states, “Comparing waterborne shipping volumes between 1960 and today, one finds that shipments received from the contiguous United States have increased only slightly, while shipments received from foreign sources have increased tremendously. Hawaii and Puerto Rico now receive more cargo from foreign countries than they do from the U.S. mainland.” This analysis is based on data compiled by the U.S. Army Corps of Engineers.
In 2016, Rep. Gary Palmer (R-AL) proposed a measure to exempt Puerto Rico from the Jones Act. If Congress had approved this measure, it would have allowed foreign vessels to replace American ships and crews in their routes between Puerto Rico and the U.S. mainland.
Last year, Rep. Ed Case (D-HI) introduced H.R. 300, the Noncontiguous Shipping Relief Act. This bill exempts foreign-flag vessels transporting merchandise from a U.S. state or territory to Puerto Rico from the Jones Act’s mandates. H.R. 300 sets forth other requirements, including (1) labor standards, (2) minimum requirements for vessels engaging in the transportation of cargo or merchandise in domestic coastwise trade, and (3) environmental standards, among other provisions. Additionally, Senator Mike Lee (R-UT) and Representative Tom McClintock (R-CA) jointly reintroduced the Open America’s Water Act. This bill would repeal the Jones Act and allow all qualified vessels to engage in domestic trade at U.S. ports.
Both of the above bills were introduced in 2021, but no further actions have been taken on them. If the House and Senate do not agree on these bills before the beginning of the 118th Congress in January 2023, they will expire.
Prepared by Jesús Colón Rosado, Law Library intern, under the supervision of Anna Price, Senior Legal Reference Librarian
Law Library of Congress, November 1, 2022
Updated November, 1, 2022: the first paragraph of the last section has been revised.
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