Industry applauds US Customs closing Jones Act ‘loopholes’

U.S. Customs and Border Protection officials are poised to revise nearly 30 Jones Act related rulings dating back 40 years affecting the offshore oil and gas industry.

Maritime industry groups that have long criticized those rulings as “loopholes” that opened the Gulf of Mexico to foreign shipbuilders and workers praised the Jan. 18 notice issued by CBP under the outgoing Obama administration.

Tom Allegretti, chairman of the American Maritime Partnership, asserted the move will “rightfully restore over 3,200 American jobs to the American economy and close loopholes that gave preference to foreign workers and foreign shipbuilding.”

The agency’s move to reverse those earlier findings hinges in large part on how it translates federal law governing the coastwise transport of oilfield equipment in U.S. waters.

Starting in 1976, a series of rulings came on use of foreign-built vessels, and whether energy-related equipment counted as “vessel equipment” or “merchandise” subject to Jones Act restriction.

The 1976 case dealt with offshore construction vessel operations, and culminated in 2009 with the so-called “Christmas tree” case, when a subsea valve assembly was determined to be vessel equipment when transported by a construction vessel with the mission of installing it.

Industry groups protested the Customs ruling was too broad, and led the agency to start reconsidering. The new notice, with its public comment period open until Feb. 17, could put the issue to rest.

It comes after years of skirmishing between the U.S. maritime industry and Jones Act critics, who say the 1920 statute and associated law is obsolete and puts the U.S. economy at a disadvantage. Many maritime advocates see an ally in the new Trump administration, with its avowed aim of reviving domestic heavy industries.

“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,” Allegretti said in a statement.

Rep. Steve Scalise, R-La., the Republican majority whip in the House of Representatives, even offered a backhanded compliment to the recently departed Obama administration.

“This corrective action is the right thing to do for Louisiana workers and will also benefit the American economy,” Scalise said in a joint statement with the American Maritime Partnership. “In addition, unlike so many job-killing regulations and rules the Obama administration issued on its way out the door, this agency ruling from Customs actually reverses some of the economic damage the Obama Administration allowed to take place on its watch.”

“The Offshore Marine Service Association 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,” said OMSA president Aaron Smith.  “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.”

About the author

Kirk Moore

Associate Editor Kirk Moore was a reporter for the Asbury Park Press for over 30 years before joining WorkBoat in 2015. He wrote several award-winning stories on marine, environmental, coastal and military issues that helped drive federal and state government policy changes. He has also been a field editor for WorkBoat’s sister publication, National Fisherman, for almost 25 years. Moore was awarded the Online News Association 2011 Knight Award for Public Service for the “Barnegat Bay Under Stress,” 2010 series that led to the New Jersey state government’s restoration plan. He lives in West Creek, N.J.

6 Comments

  1. Avatar

    It’s about time foreign vessels were not able to work in the USA without American seamen there are to many foreign vessels that is called special type vessels that US built vessels could be modified for. I applaud the move to put AMERICA First and American seamen back on vessels .

  2. Avatar
    Scott Johnston on

    The issues are not as simple as presented, as there are competing U.S. interests. If, when the rulings change and more offshore work requires the use of U.S. Coastwise Certified Vessels, the vessel costs to the offshore customers of those services will double, triple, quadruple… Guess who will pay those increased costs? How many U.S. offshore construction projects will be adversely affected? Even worse, there will be increased economic justification to produce the “merchandise” (i.e., topsides, jackets, etc.) at foreign fabrication facilities and deliver them directly for installation on the U.S. OCS. The direct delivery of foreign goods to the U.S. by a foreign flag vessel is not affected by the Jones Act and offshore drilling rigs imported into the U.S. are duty free. So, from that perspective, the protectionist “reinterpretation” of the Jones Act will sacrifice U.S. fabrication and construction projects and U.S. fabrication jobs for some additional shipbuilding jobs, some additional vessel crew jobs, and higher margins for the owners of USCCVs. Also, there are certain vessel types that do not currently exist in the USCCV fleet and no indication that any investors intend to fill those gaps in the near future. When the pace of offshore construction increases, the offshore construction companies will be forced to apply for waivers and that process takes two years and those applications are rarely granted. This is not simply a U.S. vs. foreign issue, it is also a U.S. vs. U.S. issue.

  3. Avatar

    Thanks Scott Johnson for speaking to the truth about what’s really behind the Jones Act. Yeah, a few jobs will be created, but it’s more about ship-owner’s not ship workers making money. Just another smoke and mirrors job. As always, follow the money to find the criminals.

  4. Avatar
    Mike Vernon on

    A wonderful move for a few billionaire ship builders (Chouest!) who has poured millions into getting this passed by lobbying. This will hurt much more than it will help and the premise of “buy American, hire American” is a false one. Every major organization aside from shipbuilders are against this.

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