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Wednesday, May 1, 2019
US Shipbuilders oppose Trump’s proposed LNG carrier waiver
By Michael Hansen @ 6:12 AM :: 3934 Views :: Jones Act

The Honolulu Star Advertiser covers Trump’s Foreign LNG carrier waiver

by Michael Hansen, Hawaii Shippers Council, May 2, 2019

The Honolulu Star Advertiser published on April 25, 2019, the news article, “Possible Trump waiver to Jones Act watched closely,” reporting on the Bloomberg, April 23, 2019, news article, which broke the story nationally.

It's the paper of record and the daily with by far the greatest circulation in the State of Hawaii. The State is solely dependent on ocean shipping for interstate surface transportation, and therefore directly impacted by the domestic shipping laws of the U.S.

The corrected version of the news article quoted the Hawaii Shippers’ Council three times. The correction notice is at the foot of corrected version.

Key excerpts from the Honolulu Star Advertiser’s corrected version:

The Trump administration is said to be considering a 10-year waiver to the Jones Act to allow foreign-flagged vessels to deliver natural gas to Puerto Rico — and possibly nationwide — creating the latest dust-up over the controversial century-old maritime law.

Such a lengthy waiver could signal an erosion of the Merchant Marine Act of 1920 — which brings higher costs to U.S. regions that are noncontiguous to the mainland including Hawaii, Alaska, Puerto Rico and Guam.

“The Jones Act industry is going crazy” because with Puerto Rico’s waiver request, “the camel’s nose is under the tent” — a reference to a possible change in the law, said Michael Hansen, president of the Hawaii Shippers’ Council.

However, a 2017 economic analysis by the Mercatus Center at George Mason University found that the law has become a form of protectionism for U.S. shipbuilders.

“Nearly all analytical studies of the Jones Act have found that it imposes net costs on the U.S. economy” and especially on Hawaii, Alaska, Puerto Rico and Guam, the study reported.

The Cato Institute noted that the Jones Act is defended as an inducement for U.S. shipbuilding, but “over the last century, the number of U.S. oceangoing vessels has collapsed, and what remains is an aging remnant, far older than the international norm for shipping.”

Shipping costs for U.S. flagged vessels for oil and gas point to point in the country are approximately four times those of foreign-flagged ships, according to Cato. Only 96 Jones Act-compliant large ships remain, and none can carry bulk liquefied natural gas, the institute said.

Hawaii has the lowest natural gas consumption in the nation. Hawaii Gas brings in liquid natural gas in highly specialized 40-foot cryogenic shipping containers on board Matson and Pasha Hawaii containerships, Hansen said.

Asked about the Jones Act waiver request, Matson spokesman Keoni Wagner said, “We would be surprised to see any waivers, given the strong bipartisan support this law has in Congress as well as the level of importance that this administration has placed on supporting American jobs.”

Correction: An earlier version of this story incorrectly characterized some of the shipping restrictions under the Jones Act. Under the act, a foreign-flagged ship can call at multiple U.S. ports on a single voyage, discharge foreign import cargo that was loaded at a foreign port, and load export cargo for discharge in a foreign country. But it cannot load domestic cargo at one U.S. port and transport and discharge that domestic cargo at another U.S. port.

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American Shipper reports on opposition to Trump LNG carrier waiver

by Michael Hansen, Hawaii Shippers Council, May 1, 2019

The American Shipper Magazine published on April 25, 2019, the news article, “Jones Act waiver hint rattles U.S. maritime industry,” reporting on the opposition to President Donald J Trump’s proposed waiver to allow foreign LNG carriers to transport LNG between domestic ports.

The American Shipper is a national publication focused on the requirements of merchant cargo owners known in formal legal and transportation terms as “shippers.” Their article originated with the previous report published by Bloomberg on April 23, 2019, revealing that the President is seriously considering a blanket 10-year foreign LNG carrier waiver.

The article mentions several pro-Jones Act groups based in Washington DC. The Transportation Institute was founded in 1967 as a non-profit charitable organization for the purposes of maritime research, education and promotion. The American Maritime Partnership (AMP) was formed in 1995 as the Maritime Cabotage Task Force (MCTF) and is an umbrella industry trade association representing Jones Act shipowners, shipbuilders, ship repairers, and the maritime unions. The American Waterways Operators (AWO) founded in 1944 is an industry trade association representing the owners and operators of vessels in the inland waterways and coastal tug and barge trades. The Shipbuilders Council of America (SCA) founded in 1920 as a industry trade association representing 37 companies operating 80 shipyards across the U.S. Both the SCA and the AWO are members of AMP, and the Transportation Institute and AMP share directors.

Also mentioned was a major supporter of the President and his prospective foreign LNG carrier waiver, Harold Hamm, founder, chairman and CEO of Continental Resources Inc., a top 10 U.S. oil and gas producer. Hamm is also chairman of the Oklahoma City-based industry trade association, the Domestic Energy Producers Alliance (DEPA), which is a coalition of 33 members representing over 10,000 individuals and companies. Hamm in the DEPA February 2019 newsletter stated, “Another issue we are bringing to the attention of Congress is the need to remove or allow waivers of the Jones Act that prevents American Natural Gas in the form of LNG to be shipped from one U.S. port to another.”

Previously, Bloomberg reported, “. . . energy industry leaders have pressed for changes to facilitate natural gas and petroleum product shipments between U.S. states. Among them: billionaire oil man Harold Hamm, the chairman of Continental Resources Inc. and a former Trump energy adviser. In January, Hamm complained at a Houston energy conference that the U.S. has been forced to buy LNG from Russia because there are no Jones Act-compliant tankers to transport liquefied natural gas.”

Key excerpts from the American Shipper:

American maritime industry interests expressed concerns over news reports from earlier this week that President Donald Trump is considering granting Puerto Rico a waiver to the requirement to use U.S.-flag vessels to transport liquified natural gas from U.S. ports to the island.

Puerto Rico’s Gov. Ricardo Rosselló on Dec. 21 requested from the Trump administration a 10-year waiver of the cabotage laws to allow the transport of U.S.-origin LNG to the island on foreign-flag tankers.

“The 650,000 Americans whose jobs depend on the domestic maritime industry would find it inconceivable that President Trump — who is committed to putting ‘America First,’ supporting U.S. jobs and manufacturing, and also just last month signed an Executive Order helping military veterans transition into the American maritime industry — would choose to favor foreign shipping interests over American workers,” said American Maritime Partnership Chairman Matt Woodruff in a statement.

The group has asked President Trump to reject Puerto Rico’s Jones Act waiver request.

“American maritime is the quintessential ‘America First’ industry and we are confident President Trump who has championed and supported our American shipyards, mariners, and industrial base, would not start us down a path now that would cripple our national security,” Woodruff said.

Other pro-Jones Act industry associations include the Transportation Institute, Shipbuilders Council of America, and the American Waterway Operators.

Thomas Allegretti, president and CEO of the American Waterways Operators, told Senate Commerce Committee lawmakers during a hearing in early March emphasized the Jones Act’s importance to supporting the nation’s security and management of emergencies. “Transferring that to foreign assets and crews with no allegiances [to the U.S.] is absolutely absurd to me,” he said.

The Jones Act has also generally had widespread bipartisan support among lawmakers on Capitol Hill. In a Feb. 6 letter to then Homeland Security Secretary Kirstjen M. Nielsen, House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Ore.) and Ranking Member Sam Graves, R-Mo., asked the Trump administration to stand firm against issuing a Jones Act waiver to Puerto Rico.

“We can do many things to foster and support the recovery of Puerto Rico and its citizens from the devastation of Hurricane Maria, and our committee has done so,” the House lawmakers wrote. “However, we believe there is no justification for waiving the Jones Act. ... Again, we urge you to deny this request.”

However, Trump is under equal pressure from traditional anti-Jones Act lobbyists, as well as petroleum industry groups, such as the newly found Domestic Energy Producers Alliance which represents the U.S. LNG producers, to grant Puerto Rico the waiver.

For years, think tanks Cato Institute and Heritage Foundation have attacked the maritime cabotage law on the grounds that it’s financial drag on the U.S. economy. A 2012 report by economists at the University of Puerto Rico claimed the Jones Act caused a cumulative loss of $17 billion to the island’s economy between 1990 and 2010.

Colin Grabow, a policy analyst with the institute’s Herbert A. Stiefel Center for Trade Policy, said President Trump should grant the Jones Act waiver to Puerto Rico “without delay.”

“Granting this waiver would mark not just a triumph of common sense, but also help fulfill President Trump’s campaign promise to take on the Washington special interests who profit from laws such as the Jones Act at the expense of American consumers and businesses,” he said.

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U.S. Shipbuilders oppose Trump’s proposed LNG carrier waiver

by Michael Hansen, Hawaii Shippers Council, April 30, 2019

Real Clear Defense published on February 16, 2019, an opinion-editorial piece, “America Second? – Waiving the Jones Act" – by Matthew Paxton, President of the Shipbuilders Council of America (SCA). It states the Council’s opposition to President Donald J Trump’s consideration of a blanket Jones Act waiver for highly-specialized tankers designed and constructed to transport liquefied natural gas (LNG) known as LNG Carriers.

President Trump’s proposal didn’t become widely publicized until a Bloomberg article was published on April 23, 2019 revealing the proposal. Mr. Paxton’s op-ed preceded the Bloomberg article by approximately two months and indicates how long this issue has been brewing in the nation’s capital.

Founded in 1920 concurrent with enactment of the Merchant Marine Act of 1920 (sometimes known as the Jones Act), the SCA describe themselves on their website: “Shipbuilders Council of America members constitute the shipyard industrial base that builds, repairs, maintains and modernizes U.S. Navy ships and craft, U.S. Coast Guard vessels of all sizes, as well as vessels for other U.S. government agencies. In addition, SCA members build, repair and service America’s fleet of commercial vessels. The Council represents 37 companies that own and operate over 80 shipyards, with facilities on all three U.S. coasts, the Great Lakes, the inland waterways system, Alaska and Hawaii.”

The SCA supports the domestic build requirement and foreign rebuilding prohibition provisions of U.S. maritime cabotage for coastwise-eligible (or. Jones Act-eligible) vessels, and the 50% ad valorem duty on foreign repairs to U.S. vessels of the Tariff Act of 1930. Mr. Paxton also serves as secretary of the American Maritime Partnership (AMP), which was originally organized in 1995 as the Maritime Cabotage Task Force (MCTF), and is the domestic maritime industry’s main lobbying organization.

Key excerpts from Real Clear Defense:

“America first.” This is the phrase we hear repeated by President Trump more than any other—the simple yet powerful promise that our government will “buy American and hire American.”

It is therefore as shocking as it is disheartening to learn that the Trump administration is considering a policy that would undermine the most quintessentially American industry: our nation’s shipbuilders.

The administration is contemplating ignoring U.S. law by allowing foreign ships to move liquefied natural gas (LNG) from U.S city to U.S. city along our coastlines, where the law – known as “the Jones Act” – explicitly requires movement of any cargo between U.S. cities to be transported on American built, owned, and crewed vessels.

Because the Jones Act was instituted as a national security measure, any waiver requires a national defense emergency to be declared by the Department of Defense or the Department of Homeland Security. But no such thing is currently established in the administration’s justification. This would be a gross and blatant violation of the law.

Why would the administration do this? The simple answer is that special interests are prevailing over national interests, as deep-pocketed supporters in the oil and gas industry – those who epitomize the very “swamp” that he vowed to drain – are swaying the debate.

If the President goes through with waiving the Jones Act for 10 years for the purposes of transporting LNG along our nation’s coasts and to Puerto Rico, then his will be the administration that undermines this long-standing American law and does irreparable damage to the all-American industry it supports.

Mr. President: Trust your instincts. Reject any proposed waiver to the Jones Act. Don’t surrender and let the swamp win. Don’t put America second.


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