Decision postponed on restricting foreign-flag offshore oil vessels

U.S. Customs and Border Protection (CBP) has withdrawn a proposal to strengthen enforcement of the Jones Act, dealing a blow — at least temporarily — to maritime interests fighting to protect American jobs on the Outer Continental Shelf (OCS).

The Jones Act, also known as the Merchant Marine Act of 1920, stipulates that merchandise moving by water between points in the United States must be carried by U.S.-built vessels that are owned and crewed by Americans. CBP, which administers the Jones Act, announced on July 17 that it would modify or revoke several agency rulings — including decisions in 1939 and 1976 — that were “contrary to the legislative intent” of the act.

“What led to the proposal were complaints from the domestic maritime industry, particularly the Offshore Marine Service Association (OMSA) in Louisiana, that foreign-flag vessels were engaging in activities that are reserved for U.S.-qualified vessels under the Jones Act,” said CBP spokeswoman Erlinda Byrd.

The proposal focused on a 1976 decision regarding pipe laying and repair work on the OCS, and a 1939 ruling on what constitutes “vessel equipment.” CBP proposed a new interpretation “to limit the definition of equipment, as it relates to the transportation of merchandise … to articles necessary and appropriate for navigation, operation or maintenance of the vessel itself and the safety and comfort of the persons on board, as opposed to being necessary and appropriate for a vessel to engage in a particular activity.”

Ken Wells, president of OMSA, a trade group representing more than 250 companies in the U.S. offshore energy industry, said the proposal drew a line between the transportation and installation of equipment.

“Foreign boats may be able to install oil field equipment, but only U.S. boats can carry it offshore,” he said. “The problem is that for many years, CBP rulings have allowed foreign vessels to carry cargo to subsea oil and gas locations as long as those vessels also installed it.”

After allowing 30 days for public comment, CBP announced on Sept. 15 that it was withdrawing the proposal. The agency, which received 141 responses, said its decision was based on further research of the issue and “several substantive comments … both supporting and opposing the proposed action.” It said a new notice regarding its interpretation of the rulings would be published “in the near future.”

Wells said OMSA was disappointed by CBP’s decision, but was optimistic about the content of a revised proposal.

“Basically, they received a bunch of comments and they’re going to come out with a new proposal,” he said. “If that is what happens, we’re confident it will not look too terribly different from the one they came out with in July. Customs has looked at several years’ worth of these interpretive rules and decided that they are not in line with what the law says.”

The International Chamber of Shipping (ICS), a trade association representing shipowners from 36 nations, was among the groups critical of the CBP proposal and time frame allotted for comment.

“We are especially concerned about the negative signal which this proposal conveys with regard to the approach taken by the United States toward the maintenance of free-trade principles and relations with its trading partners,” the ICS said in a letter dated Aug. 11. “We are particularly disturbed by the very short notice period for comment on changes that will have serious implications for international offshore operators.”

Rich Miller

By Professional Mariner Staff