The U.S. Customs and Border protection in mid-January issued a document in which it proposes to revise several rulings and amendments to the Jones Act, which prevents foreign-flagged ships from shipping merchandise within the U.S.
While the foreign-built and flagged ships have been prevented from transporting merchandise between the U.S. coastwise points, over the years some exceptions have been made for construction vessels working in the offshore oil and gas industry.
Until now, the foreign construction vessels were allowed to carry aboard pipeline repair material; anodes; pipeline connectors; wellhead equipment, valves, and valve guards; damaged pipeline; and platform repair material. This was not seen as a Jones Act violation because the goods have been seen as a necessary equipment.
However, if the proposal is materialized, foreign-flagged vessels would not be able to carry any of the “items” listed above, and would be violating law if they did.
While the U.S. vessel owners have welcomed the proposed changes, saying the move will secure work for the U.S. flagged ships and the U.S. workers, not everybody is happy.
Members of the International Marine Contractors Association (IMCA) with vessels active in US waters, together with their clients, have expressed “serious” concern over the “hasty” proposals by the Customs and Border Protection agency to revoke longstanding decisions made over the last 40 years concerning the Jones Act.
According to the IMCA, these proposals have been introduced with no prior consultation, in the final two days of the Obama Administration, allowing only 30 days for public comment.
The intention is to prevent non-Jones Act qualified vessels transporting merchandise between coastwise points. However, the effect may be to prevent all foreign flag construction vessels working in the United States. The proposals would also affect US flag vessels which are not coastwise qualified, the IMCA says.
“We understand the drive to protect US tonnage given the difficulties in the PSV (platform supply vessel) market today, but the deep-water construction market represents a very different sector with very different vessels and technologies,” says IMCA’s Chief Executive, Allen Leatt. “It is a truly international market, as no single domestic market can support the heavy investments of these assets. Consequently, there is a real risk to damaging the whole Gulf of Mexico market as the unintended consequences do not seem to have been thought through.
IMCA wants more time
Leatt said: “The Obama Administration attempted similar changes in 2009, but discontinued the effort in the face of serious and substantial concerns raised by a multitude of stakeholders. We are seeking an extension of time for public comment, so that a proper reflection and analysis of the impact can be assessed.
“Stability in the workings of the Jones Act has enabled many successful businesses to be established in the US Gulf States, both offshore and onshore, over the last 40 years, creating huge numbers of US jobs. Given the tough times our industry has endured in recent years, this additional risk to jobs is very concerning if oil companies are faced with a lack of capacity in the market and inevitably higher costs.
“The Trump Administration has called for a freeze pending a review of all regulatory initiatives; equally it is well known that President Trump is ambitious for the US to increase domestic production. These proposals seem to run contrary to both objectives.”
U.S. industry reps rejoice
The American Maritime Partnership (AMP) – which describes itself as the voice of the U.S. maritime industry – on Monday said the U.S. Customs & Border Protection (CBP) move would “restore American jobs by correcting previous letters of interpretations of the Jones Act.”
“The men and women of the American maritime industry commend the U.S. Customs and Border Protection’s efforts to rightfully restore over 3,200 American jobs to the American economy and close loopholes that gave preference to foreign workers and foreign shipbuilding,” said Tom Allegretti, Chairman of the American Maritime Partnership.
Similarly to the IMCA earlier, AMP also hopes the new president will act in its favor.
Allegretti said: “We applaud President Trump’s commitment to ‘buy American and hire American,’ and the correct and lawful interpretation of the Jones Act will ensure the preservation of American jobs and maintenance of the U.S. shipyard industrial base, both of which are critical to our economic security and national security.”
“AMP joins a growing list of government and industry leaders that understand the importance of restoring American jobs to the American economy and support the restoration of this lawful interpretation of the Jones Act, which governs the transportation of equipment and cargo between coastwise points,” the organization said.
The Offshore Marine Services Assiciation’s President Aaron Smith, also supports the CBP proposal.
He said: “The Offshore Marine Service Association (OMSA) applauds the Administration’s strong step to restore the congressional intent of the Jones Act. This Notice opens a domestic market to U.S. mariners on U.S.-built vessels, owned by U.S. companies. The offshore service industry is ready, willing, and capable of completing this work, having recently invested $2 billion in U.S. shipyards on vessels tailored to safely completing this work.”
Offshore Energy Today Staff