The US Customs and Border Protection announced that it will withdraw t several previous letter ruling concerning the enforcement of the Jones Act, which may lead to “loopholes” with major implications for the US offshore industry, with the latter commenting that this decision allows foreign-flagged, non-Jones Act wind turbine installation vessels to operate in the expanding U.S. offshore wind industry.
Specifically, the Jones Act requires all merchandise loaded at one US port and unloaded to another port to be transported on vessels that are:
- built in the United States;
- documented under the laws of the United States;
- owned by U.S. citizens;
- never sold to a foreign citizens.
Specifically, the US Customs and Border Protection’s decision now states how and when foreign-flagged vessels can be used in offshore applications, including the use of crane ships.
The proposed language changes broaden the definition of “vessel equipment” a controversial issue for the US offshore oil and gas sector. The Board now seeks to interpret the “vessel equipment” more broadly including “all articles or physical resources serving to equip the vessel, including the implements used in the vessel’s operation or activity.”
For the time being, CBP has not set any examples of specif articles, commenting that it expects to receive requests for clarification on a case-by-case basis.
Thus, the newly-launched bulletin stated that CBP will make the discussed changed on February 17, 2020.
In light of the news, Aaron Smith, President and CEO of the Offshore Marine Services Association criticised his disappointment towards the US Customs and Border Protection, commenting that the Board placed America second “by creating potential loopholes for foreign vessels and crews to unlawfully operate in American waters and take the jobs of American vessels and workers”.
In addition, Congressman Ed Case (D-Hawaii) issued a set of three bills to modify the Jones Act’s requirements for the non-contiguous states, including an anti-monopoly requirement.
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Firstly, Case proposed the removal of the Jones Act where there are monopolies or duopolies on routes between the US mainland and America’s outlying states and territories.
Also, he called for a reform to bring market competition, while sustaining national security, also proposing two bills; the first would exempt all non-contiguous states and territories from the Jones Act altogether, giving Hawaii the same status as the U.S. Virgin Islands and American Samoa. The second would cap shipping rates on non-contiguous U.S. voyages at no more than ten percent above international shipping rates on “comparable routes.”
Concerning Case’s proposals, US carrier Matson expressed his disagreement, noting that shipping costs are just one of many cost factors that go into local pricing of consumer goods and mark a small fraction of price differences between Hawaii and the mainland.
Moreover, Smith sent a letter to DHS Acting Secretary Wold and White House Chief of Staff Mulvaney expressing their concerns with the CBP’s overstep of Congress, highlighting that they will closely monitor CBP’s implementation of these legally dubious loopholes to ensure that CBP follows the law and requires all foreign-flagged vessels to request and receive letter rulings. If CBP will not enforce the Jones Act as enacted by Congress, then it is essential they at least provide transparent documentation of the use of these new loopholes.
Matson added that
The reason the Jones Act has had such strong bi-partisan support in every Congress and administration in modern times is because it is important to homeland security and national defense, as well as the security of service to remote communities like Hawaii and Alaska . . . The Jones Act also supports more than 650,000 jobs in the U.S., including thousands here in Hawaii.
