GAO Details Progress in Jones Act Study

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In a recent press release the Resident Commissioner of Puerto Rico, Pedro Pierluisi, detailed the progress of the US Government Accountability Office (GAO)’s progress on the study of the economic impact of the Jones Act on Puerto Rico, which he requested late last year. The resident commission is the territorial delegate to congress from Puerto Rico and is popularly elected to four year term. This is an important development in the effort for noncontiguous trades Jones Act reform and the study will address the U.S.-build requirement of the Jones Act. – Michael Hansen is President of the Hawaii Shippers Council

GAO Details Progress in Jones Act Study Requested by Pierluisi


Washington, DC – In a letter to Resident Commissioner Pedro Pierluisi, the U.S. Government Accountability Office (GAO) has explained the progress it is making in conducting a study to examine the impact of the Jones Act’s application to Puerto Rico, in terms of its effect on both the Puerto Rico economy and the broader U.S. economy.

In the letter, Lorelei St. James, the Director of the GAO’s Physical Infrastructure Team, defined the “Terms of the Work” that the agency is engaged in, pursuant to a request made by the Resident Commissioner, and supported by Delegate Gregorio “Kilili” Camacho Sablan (D-Northern Mariana Islands), the top Democrat on the Committee on Natural Resources’ Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs; by economists in Puerto Rico; and by the Private Sector Coalition, which represents over 25 organizations on the Island.

The principal objective of the study, according to the GAO, is “to provide policymakers with a comprehensive, descriptive summary of information on the Puerto Rican and Caribbean Basin trade markets, and how the Jones Act potentially affects these markets.”

“I am pleased that the GAO is actively working on my request to determine, once and for all, the economic impact that the cabotage laws have on Puerto Rico. This study should put an end to all of the speculation that surrounds this subject and, if the study concludes that the Jones Act is having a negative impact on our economy, could provide the basis for potential legislative action in Congress,” said Pierluisi.

The Resident Commissioner reiterated his conviction that the best way to seek a change in the Jones Act is to demonstrate through evidence that the law has an adverse impact on Puerto Rico’s economy, and that an impartial and credible report by the GAO is necessary to support any Congressional action on this subject.

“Now is the proper time for this study to be conducted. This study will be ready by the start of the next congressional session. I have pledged that that I will introduce and promote any legislation that is supported by the conclusions in the study, and I expect to have broad support in Puerto Rico for any bill I file on this subject,” said Pierluisi.

According to GAO’s letter to the Resident Commissioner, the agency will attempt to answer three fundamental questions.

First: What is the nature of the oceangoing trade markets in Puerto Rico and the Caribbean Basin and what are stakeholder views on how the Jones Act affects these markets?

Second: How do operating costs compare between Jones Act carriers in the Puerto Rican trade and foreign carriers in the Caribbean Basin, and what are stakeholder views on which U.S. laws might impact costs to foreign carriers in the U.S.-Puerto Rican trade market if the Jones Act did not apply to such trade?

Third: What is known about the costs and benefits associated with the U.S.-built requirement of the Jones Act as it pertains to the Puerto Rican trade fleet?

To answer each of these questions, the GAO will review relevant background literature and interview relevant stakeholders in both the U.S. and Puerto Rico, including carriers and shippers, industry trade groups, government officials, and others to describe the range of views regarding how the Jones Act affects Puerto Rico, the shipping market, and the broader economy. Indeed, representatives from the GAO will be on the Island next week to conduct interviews with stakeholders.

“I urge all individuals and groups that are interested in this subject to cooperate with the GAO to provide the agency with all relevant information it seeks. With this GAO report, we will have a real opportunity to seek our exclusion from components of the Jones Act. It is important that we provide GAO with any and all information that demonstrates how this law affects us. We have spent decades talking about this issue. Now is the moment to act,” said Pierluisi.

In the letter to the Resident Commissioner, the GAO indicated that it will provide a draft of the report to the Departments of Commerce, Defense, Homeland Security, Justice, and Transportation; the Surface Transportation Board and other federal agencies as needed for comment before the report is issued.

The GAO said it would issue its final report between December 1, 2012, and February 28, 2013.