Jones Act Waiver Gets Swamped

by Colin Grabow, Cato Foundation, May 2, 2019

Well, no one said reforming the Jones Act was going to be easy. 

A week after reports emerged that President Trump was leaning toward granting a ten year Jones Act waiver for the transport of liquefied natural gas (LNG) by non-U.S.-flag ships, he seems to have reversed course following a meeting with congressional Jones Act advocates. The president apparently folded—bigly. The members of Congress who spoke with President Trump emerged from the White House projecting supreme confidence that a Jones Act waiver is now effectively off the table. 

While it is impossible to know what swayed President Trump, it beggars belief he was convinced by arguments made on economic grounds. Quite simply, there aren’t any.

If granted, the Jones Act waiver would have allowed Americans in New England and Puerto Rico to obtain bulk amounts of cheap LNG shipped in from other parts of the United States. Such a move would bolster the number of well-paid jobs in the energy sector as well as save Americans money. Furthermore, and perhaps most notably, the waiver would not have cost one single job in the U.S. maritime sector. No U.S.-flag LNG carriers would have been put out by the waiver as none exist, nor are any being built by the few remaining major U.S. shipyards. 

A press release from one of the meeting’s participants, meanwhile, offers a window into the tortured logic employed by Jones Act supporters. “We cannot let the United States become dependent on foreign countries to transport energy and critical products within the United States,” said Sen. Bill Cassidy. But under the Jones Act status quo the United States is dependent on both foreign energy—including from Russia—as well as the foreign-flag vessels that transport it. In the Louisiana senator’s muddled thinking it is apparently preferable to have those same ships transport LNG sourced from other countries rather than make a slight, temporary change to the Jones Act.

This is less a passioned defense than unthinking devotion to a powerful lobby. 

The power of the Jones Act lobby was also displayed by the attendance of Alaskan Senators Dan Sullivan and Lisa Murkowski at yesterday’s gathering. Their advocacy for the Jones Act is particularly galling given that their state is one of the law’s biggest victims. Highly dependent on maritime transport, Alaska bears a disproportionate burden of the Jones Act’s high costs. Indeed, the law is so detested in Alaska that it is written into state law—the result of a 1984 referendum—that the governor must lobby Congress for its repeal. But the interests of the state’s maritime unions and related interests apparently prevail of the popular will of the people. So it goes, both in Alaska and the country as a whole.

Fortunately, President Trump still has time to redeem himself, and there is perhaps solace to be found in the fact that he has demonstrated himself capable of unpredictable policy turns and zig-zags. That he has not yet publicly committed to leaving the Jones Act untouched offers at least a sliver of hope that sanity will prevail and a waiver eventually issued. Drain this swamp, Mr. President.