U.S. Customs and Border Protection (CBP) recently withdrew its proposed changes to the Jones Act that would have deemed foreign flagged vessels banned from operation in the U.S. waters. The Jones Act, passed in 1920, prevents foreign-flagged ships from shipping merchandise between points in the United States. The U.S. Customs and Border protection had in mid-January issued a document in which it proposed to revise several rulings and amendments to the Jones Act.
While the foreign-built and flagged ships have been prevented from transporting merchandise between the U.S. coastwise points, over the years exceptions have been made for construction vessels working in the offshore oil and gas industry.
The foreign construction vessels have been 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. Had the proposal made in January by U.S. Customs and Border Protection materialized, foreign-flagged vessels would not have been able to carry any of the “items” listed above, and would be violating law if they did.
However, the CBP earlier this month withdrew its proposal, citing “many substantive comments CBP received, both supporting and opposing the proposed action.” While the International Marine Contractors Association was pleased, as expected, the U.S. offshore and maritime bodies were not happy about the decision, claiming that the move would harm the domestic maritime jobs.
Aaron Smith, President and CEO of the Offshore Marine Service Association (OMSA), a U.S. organization representing more than 225 member companies, including approximately 100 firms that own and operate marine service vessels, reported that he felt that CBP’s decision was not only disappointing – it was alarming. He claimed that it is an admission that this Administration is wavering in enforcing the law. In 2009, CBP recognized that for decades it had issued flawed interpretations of the Jones Act and issued a notice for revocation. CBP withdrew that proposal–never saying those flawed interpretations were correct–and stated a new notice would be coming in the near future. Eight years later, CBP issued a similar notice, revoking the same flawed interpretations of the Jones Act. Yet, once again it has withdrawn that notice while maintaining their position that the interpretations are legally incorrect. As such, the Administration is declaring they will bow to foreign interests instead of enforcing the law — the Jones Act.
This decision not only contradicts the law – it threatens the ability of U.S. companies to thrive and U.S. mariners to be employed. At a time when our Administration is focused on “putting America first,” it certainly is concerning to see the Administration likewise concede to foreign interest groups that have lobbied and influenced the enforcement of our own laws intended to protect national and economic security interests.
The domestic maritime industry supports President Trump’s agenda to “Buy American; Hire American” and be a “law and order President”. As our President, he certainly is empowered and committed to driving this agenda and enforcing the American rule of law. At this important juncture, our industry calls on him to enforce his agenda and not let foreign companies be put first above American companies and workers.
Unfortunately, foreign interests jeopardized his agenda and the enforcement of the law of the land. The President can take many immediate steps to ensure American mariners are not harmed and the law is enforced. These options–all spelled out in the Administrative Procedures Act or other relevant law–range from Executive Orders, to expedited rule makings, to another 1625 process. However, all of these steps require the President to prioritize the law and American mariners over foreign interests.
It was suggested that President Trump would have to choose between two scenarios: Revocation enforcement which API claims would result in loss of oilfield jobs or no revocation which the domestic maritime industry claims would result in the loss of the U.S. mariners’ jobs. However, Aaron Smith disagreed that it is a choice. He pointed out that the API position is based upon a distortion over what revocation covers. As such, President Trump can–and should–prioritize U.S. jobs, shipbuilding capability, and the rule of law while not risking oilfield jobs. OMSA depends on a healthy domestic offshore energy market. Thus, Smith indicates, OMSA would not support a proposal that endangers that market. While the 2017 Notice does not impact heavy-lift vessels, OMSA and other members of the Jones Act community have offered a statutory solution to help address the flexibility desired by heavy lift vessel operators to move as part of their installation activity. This proposal provides a Jones Act compliant solution by providing a limited waiver to heavy lift vessels transporting merchandise within 500 meters of the intended place of delivery. When conducting these operations, the foreign vessel’s marine crew must be U.S. citizens and operator must pay U.S. taxes.
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