Catlin calls Jones Act into question

by Sam Wilson
Wednesday, February 26, 2014

Lumina News file photo 

Workers with Great Lakes Dredge and Dock Company move the anchor of the cutter suction dredge Illinois, background, in Masonboro Inlet on Feb. 23, 2010. The Merchant Marine Act of 1920, more commonly known as the Jones Act, includes a requirement that all vessels traveling between U.S. ports be constructed in the United States, as well as owned and operated by U.S. citizens.

With Wrightsville Beach nourishment slated to begin in March, some local officials wonder how much a nearly century-old piece of legislation is driving up the cost.

The Merchant Marine Act of 1920, more commonly known as the Jones Act, includes a requirement that all vessels traveling between U.S. ports be constructed in the United States, as well as owned and operated by U.S. citizens.

This rule extends to dredges working on domestic beach nourishment projects, including the one planned for Wrightsville Beach, for which the U.S. Army Corps of Engineers awarded an $8.3 million contract to Covington, La., based Weeks Marine, Inc. in December 2013.

Rep. Rick Catlin, R-New Hanover, said during a Feb. 25 interview he believes the Jones Act increased the cost, because it effectively restricts those projects to a limited domestic dredge fleet. Catlin was one of several local officials who expressed concerns that heightened demand on domestic dredging companies in the Northeast, as a result of continuing cleanup from Hurricane Sandy, would either result in no bids or would drive contractors’ bids up beyond the maximum level at which the project could be funded.

“We were very lucky that Wrightsville Beach got bids on our beach nourishment,” Rep. Rick Catlin, R-New Hanover, said during a Feb. 24 interview. “I was concerned that we wouldn’t, just because there were a limited number of [available dredges].”

Catlin also said the Jones Act has negative impacts on the Port of Wilmington, with local oil companies increasingly trucking fuel to the coast from the Colonial Pipeline further inland. He said the increased reliance on trucked-in fuel puts fuel terminals on the river out of business, reduces federal funding for harbor maintenance (which is tied to total tonnage shipped) and creates a potential energy security issue.

“During Hurricane Katrina, the Colonial Pipeline was shut down for a long time because of the damage to the terminals down in the Gulf, and North Carolina and the states around here came to the terminals on our ports for our fuel,” he said.

Catlin said he has reached out to other local representatives at the state level and feels they have been supportive of a closer examination of the law’s impacts. But, he added, historically the maritime industry has strongly resisted any changes to the law.

Ann McCulloch, director of public affairs for American Waterways Operators, a national trade association for the shipping industry, cited security as a reason for keeping the Jones Act on the books.

“The U.S. [Government Accountability Office] has noted that the domestic strategy of the United States relies on the use of U.S. flagged ships and crews and the availability of our shipyard base to support our national defense needs,” McCulloch said. “Without the Jones Act these military capabilities would be greatly degraded.”

She said some government reports had shown negligible impacts from the Jones Act on consumer goods prices, but said she was unaware of any studies that examined impacts to the costs of domestic dredging.

Layton Bedsole, New Hanover County’s Shore Protection Coordinator, declined Feb. 24 to comment on how much the law drives the cost of dredging, saying he did not have those numbers.

But Howard Marlowe, a lobbyist and partner with Washington, D.C., based Marlowe and Company, who represents the county on beach-related issues, said Feb. 24 a provision of the Water Resources Development Act, currently pending in the U.S. Congressional conference committee would require such cost estimates.

“[It] would result in an analysis of what the impact of the Jones Act is … and if that were to happen it would be helpful in terms of giving us all the facts,” Marlowe said. “Any time you limit competition you have the potential to increase prices for consumers.”

Catlin also said any changes or exemptions to the Jones Act need to be informed by such analysis.

“I’m not trying to create a battle with the maritime industry,” he said. “It just needs to be a good, intelligent, thoughtful discussion.”

Still, Marlowe said it is unknown whether the provision will be included in the final legislation.

“When you’re in the [U.S. Congressional conference committee], it becomes a trading piece,” he said. “It’s in the Senate bill but not in the House bill, and you want to get it in the House bill, but what are you going to get in return?”


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