Tuesday, May 20, 2014

Is it time to repeal the Jones Act?

If you have read the press over the last few months you might think it is time to repeal the Jones Act – just a few of the headlines have been:

·         Want energy independence?
o   Waive the Jones Act  --The unsustainability of the Jones Act is becoming more and more apparent as it runs headlong into the energy debate.
·         Missing the mark on the Jones Act
o   The Detroit News …The professor says the widely supported Merchant Marine Act of 1920 — better known as the Jones Act — hurts our nation's security and our booming ...

·         Congressional questions on LNG exports could impact the Jones Act
o   Last month, Congress began consideration of comprehensive legislation to reauthorize the Coast Guard and other maritime transportation programs.

·         Our road salt is finally here, but the Jones Act cost NJ taxpayers an extra $700,000 to get it
o   New Jersey spent $700,000 more to have road salt shipped from Maine to Port Newark by barge than it would have cost had the federal government ...

·         Jones Act waiver denied! So let's close the interstates until NJ gets rock salt
o   Shove the Jones Act right back into his unionista-loving face. The whole thing is absurd. There's a ship ready to get the salt here within 2 days. But it's ...

·         Antiquated law adds billions to fuel costs - New York Post
o   An obscure 1920 law is costing Americans billions of dollars a year in higher fuel costs. The Jones Act requires that cargo shipped from one US port to ...

But this deals exclusively with the Cabotage part of the Jones Act, and make no reference to the crew injury section which we tend to focus on in Marine Insurance.

I am not going to debate here the merit or otherwise of repealing the Cabotage portion… but the likelihood is that if the act is replaced the crew injury part, it’s 90 or so year of use, interpretation and case law could be swept away with the stoke of a pen.

So,  Maritime Attorneys and Claims Specialist, what would you think crew claims would be like IF the Jones Act would be repealed?    Would the result be overall better or worse for us in marine insurance?   Would it create even more uncertainty in crew claims?

However much you might support the idea of repealing the Cabotage section of the law, consider the consequences on crew injuries for the future!

Please post a reply to this to express your thoughts. By entering it into the box below and hitting “publish”.

Thanks  

Ian Greenway


2 comments:

  1. Ian,

    A quick reply. The injury portion of the Jones Act incorporates FELA. It was passed to overcome the Chelentis v Luckenback case. Simply removing it would appear to put the clock back to The Osceola. There would still be Maintenance and Cure, and Unseaworthiness. And probably state remedies. The simple reform for injuries would be to abolish the outdated remedies of M&C, Unseaworthiness and Employer's Liability and replace them with workers' compensation, namely the LHWCA.

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  2. The United States Congress adopted the Federal Employees Liability Act to be applicable to seamen by simply changing the name “Jones Act” and utilizing the term “seamen” in all places where “railroad worker” was used. For the last 70 years, the courts have deemed that the Jones Act extends into “brown water,” oil drilling and, as such, has increased the reach of this act exponentially. The courts have created an extensive jurisprudential outline which Underwriters generally follow that provides definitions for vessels, seamen, and other nautical applications where Jones Act status is determined and coverage issued. At this time, Underwriters are able to utilize those definitions to determine the risk of any maritime insured.

    If the Jones Act was repealed, all manner of maritime jurisprudence would become outdated. Without this jurisprudential outline, Underwriters would require some other standard to evaluate the risk.

    We suspect that if the Jones Act was repealed in its entirety, some type of workers’ compensation scheme, such as the United States Longshore and Harbor Workers’ Compensation Act, would replace it. Terms such as “seamen” would be redefined as well as causes of action pursuant to the general maritime law such as unseaworthiness. While the repeal of the Jones Act would affect maritime employers and their Underwriters, an extensive compensation scheme would require new legislation and new jurisprudence reflecting the court’s interpretation of this legislation.

    In short, the repeal of the Jones Act would require replacement by some type of compensation scheme, we suspect, more closely akin to the United States Longshore and Harbor Workers’ Compensation Act. This new compensation scheme would likely require the courts to administer the practical aspects of the scheme by way of administrative jurisprudence.

    In addition, a new type of claims administration would, in all probability, be necessary. The United States Longshore and Harbor Workers’ Compensation Act is presently administered by the United States Department of Labor. At the very least, unless the legislation repealing the Jones Act replaced it with a new compensation scheme, an expansion of the ALJ network and corresponding examiners would also be necessary in order not to overburden the portion of the Department of Labor dealing with the Longshore Act.

    In conclusion, the repeal of the Jones Act not only affects the employer/insured, it would require a change in rates charged and the way risks are determined by Underwriters and have a profound effect on the marine industry.

    Sidney W. Degan, III
    Degan, Blanchard & Nash

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