US Sen Mike Lee calls for Jones Act gas carrier exemption
by Michael Hansen, Hawaii Shippers Council, June 5, 2020
United States Senator Michael S. Lee (R-UT) posted a Tweet at approximately 9:30 a.m., Thursday, June 4, 2020, EST, transmitting a clip of his participation in a Senate hearing. In the clip he notes the complete absence of self-propelled oceangoing liquefied natural gas (LNG) carriers in the Jones Act fleet. As Sen Lee explains, this absence prevents the transport domestic LNG to domestic markets without access to pipeline gas such as the New England states and Puerto Rico.
The clip is approximately eight minutes in length and is accompanied by Sen Lee’s statement “The Jones Act turns 100 years old tomorrow, but this anniversary deserves little celebration.”
The full committee hearing was held beginning at 2:30 p.m. on Wednesday, June 3, 2020. by the Senate Committee on Commerce, Science, and Transportation, in the Dirksen Senate Office Building, Washington, D.C. The chairman, Sen. Roger Wicker (R-MS), was presiding. The ranking member of the committee is Sen. Maria E. Cantwell (D-WA).
The title of the hearing was, “The State of Transportation and Critical Infrastructure: Examining the Impact of the COVID-19 Pandemic,” The purpose was to examine the impact of COVID-19 on surface transportation and the national supply chain.
There were five private sector witnesses testifying at the hearing including four representing various transportation industry trade associations and one representing organized labor. The clip shows Sen Lee’s interaction with two of the witnesses.
The clip leads-off with Sen Lee’s discussion of the Jones Act’s impact on domestic LNG distribution with Alex Oehler, Interim President and Chief Executive Officer, Interstate Natural Gas Association of America (INGAA), which represents the interstate natural gas pipeline industry.
In his interaction with Oehler, which takes up most of the clip, Sen Lee admonishes Oehler to take up the issue of the Jones Act with his membership and support an exemption for foreign LNG carriers to perform domestic transportation as there are no such Jones Act eligible vessels. In response, Oehler advised Sen Lee that the INGAA is aware of the Jones Act but they have not adopted a position on the issue and said he would get back to Sen Lee’s office after consulting with his membership.
Despite Sen Lee’s passion for the issue, it's unclear whether or not the INGAA would support a Jones Act exemption for foreign LNG carriers. Pipeline operators (including for crude oil, petroleum products, natural gas, etc.), such as the INGAA members, are typically in competition with waterborne transportation. Therefore the pipeline operators are unlikely to support a Jones Act exemption for LNG carriers.
Near the end of the clip, Larry Willis, President, Transportation Trades Department, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), addresses Sen Lee after his discussion with Oehler was completed.
Willis began saying, “As somebody who does strongly support the Jones Act, we worry about foreign dependence, whether its in our shipping or whatever else.”
Continuing he said, “This hearing is about protecting, promoting the front line workers; there is no better way to do it than protecting, promoting, quite frankly, expanding the Jones Act.”
Wrapping up his statement, Willis said, “On this one hundredth anniversary Friday, we will celebrate it as the landmark legislation that this Committee and many on this Committee support. Thank you.”
Sen Lee briefly responded to Willis, and the clip ends with the chairman, Sen Wicker, stating, “Senator Lee we’re going to ask the witness to take that for the record.”
It’s not clear what Willis meant by “expanding the Jones Act.” However, it may have to do with new domestic construction subsidies for ships intended for Jones Act trading (to offset the ever escalating cost) and cargo reservation schemes to apply in the U.S. foreign trade (requiring the use of U.S. flag and even U.S. built vessels in the foreign trade). Both of these have been advocated for by the Jones Act lobby, and in certain instances, bills have actually been introduced in Congress over the past several years to implement these measures.