Floating ideas to reform the Jones Act has become a perennial exercise in recent years. This past year was no exception as 2013 witnessed continued robust debate over the requirement to use U.S. built, U.S.-flag vessels in the intra-United States maritime trades. Much of the discussion this year has revolved around trade between the mainland and Puerto Rico. Puerto Rico’s resident commissioner in Washington, Pedro Pierluisi, who represents the island in the House of Representatives, introduced legislation to amend the Jones Act allowing bulk cargo to be transported between Puerto Rico and U.S. ports on non-Jones Act vessels. The Federal Reserve Bank of New York also weighed in on the issue, releasing a study showing how Jones Act container shipments are much more expensive than their non-Jones Act counterparts. The Government Accountability Office also issued a report on the Puerto Rico trade, concluding that costs are higher than they should be but warning that modifying Jones Act requirements could jeopardize the reliability of shipping now enjoyed by the island commonwealth. The Jones Act, also known as the Merchant Marine Act of 1920, requires that water transport between two points in the United States use U.S.-owned, U.S.-built, and U.S.-operated vessels.  Pierluisi said his legislation is based on the GAO findings, which issued a report in March 2013 which found that “foreign-flag carriers serving Puerto Rico from foreign ports operate under different rules, regulations, and supply and demand conditions and generally have lower costs to operate than Jones Act carriers have.” Shippers reported that the freight rates are often lower for foreign carriers plying the waters between Puerto Rico and foreign locations. “Lower rates, as well as the limited availability of qualified vessels in some cases, can lead companies to source products from foreign countries rather than the United States,” said the GAO report. Pierluisi’s legislation would allow vessels built outside of the United States to transport bulk cargo, such as liquefied natural gas, liquefied propane, jet fuel, gasoline, oil, chemicals, fertilizer, and animal feed, between ports in Puerto Rico and other ports in the U.S. “The goal is to enable customers in Puerto Rico to source these products in a more efficient and less expensive way from suppliers in the United States, rather than being compelled to purchase these products from foreign countries,” said Pierluisi. The legislation places special emphasis on energy, said Pierluisi, because of the emerging contrast  in how the 48 contiguous states and Puerto Rico source energy products. The U.S. has emerged as a top producer of natural gas, distributing the commodity over a network of pipelines. Puerto Rico continues to generate most of its electricity from more expensive imported foreign oil. Pierluisi blames this state of affairs on the undersupply of Jones Act vessels available to transport refined petroleum and gas products from the U.S. mainland to Puerto Rico. “My bill would enable foreign-built vessels to transport liquefied natural gas and other fuels from the U.S. mainland to Puerto Rico,” said Pierluisi. “This will benefit energy producers in the states, who will gain access to an important new U.S. market.  It will also provide a direct benefit to consumers in Puerto Rico, who will see their electricity bills decrease.” While Pierluisi’s legislation focuses on bulk commodities, a report from the Federal Reserve Bank of New York studied the effects of the Jones Act on the container trades. The New York Fed estimated it costs around three-thousand dollars to ship a twenty-foot container of household and commercial goods from the U.S. East Coast to Puerto Rico. The same shipment costs $1,500 to Santo Domingo, Dominican Republic, and $1,700 to Kingston, Jamaica, destinations not subject to Jones Act restrictions. “Shipping goods to and from Puerto Rico costs considerably more than shipping to and from the island’s regional peers, imposing an important cost on Puerto Rican businesses and dampening the economy’s competitiveness,” said Bryan Riley, an analyst with the conservative Washington-based think tank, the Heritage Foundation. “Much of this relatively high cost of shipping is widely attributed to the Jones Act.” Supporters of the Jones Act say that repeal would wreak havoc on U.S. coastal trades. “Without the Jones Act, existing U.S. flagged vessels would rapidly decline in price,” said Richard Paine, marine finance manager at TCF Equipment Finance. “The equity built into a vessel built for coastwise trade would flounder as the market would flood with foreign competition.” And the GAO report warned that under a full exemption, it is “possible that the reliability and other beneficial aspects of the current service could be affected...Unrestricted competition from foreign-flag vessels could result in the disappearance of most U.S.-flag vessels in this trade, having a negative impact on the U.S. merchant marine and the shipyard industrial base that the Jones Act was meant to protect.” The Hawaii Shippers Council has put forth a middle-ground proposal, which would exempt the noncontiguous trades from the U.S.-build requirement of the Jones Act. The exemption would apply, in other words, to trades between the U.S. mainland and places like Alaska, Hawaii, Guam, and Puerto Rico.  “HSC estimates that U.S. shipbuilding costs are four to five times that for building a comparable ship in South Korea or Japan,” said Michael Hansen, the organization’s president. The Federal Reserve report suggested giving Puerto Rico a five-year exemption from the Jones Act, which after a review, could be rescinded or made permanent. “An even better idea,” according to Riley, would be to “repeal the Jones Act entirely.” “Any of these choices,” he added, “would bring people in Puerto Rico some much-needed relief from the costs imposed on them by this antiquated law.”