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US maritime industry fears recent government proposals may weaken Jones Act

Highlights

Proposed change seen as 'loophole' to shipping law

Agency may broaden definition, increasing foreign ship movement

Final decision expected late December

Washington —

The US maritime industry fears a Trump administration proposal to modify decades of ship transportation rulings could weaken Jones Act enforcement, potentially altering a century of legal precedent governing movement of crude oil, refined products and other commodities between US ports.

"This interpretive guidance is a huge loophole that is being written into the Jones Act," Aaron Smith, CEO of the Offshore Marine Service Association, told S&P Global Platts in an interview. "This is interpretive guidance that weakens US law."

Last month, the US Customs and Border Protection proposed changes to rulings it had made dating back to 1976 related to ship movements for US offshore oil and gas projects. These rulings had allowed movement of certain equipment, such as risers and pipeline connectors, between offshore projects in US waters and US ports on a foreign ship.

The Jones Act, also known as the Merchant Marine Act of 1920, requires ships transporting goods between the US ports to be US-flagged, US-built and majority US-owned. But these rulings allowed specific waivers from the Jones Act for some offshore oil and gas operations.

Under the change proposed last month, the definition of "vessel equipment" deemed to fall outside of Jones Act requirements may be broadened, potentially opening up additional vessel movements to federal interpretation.

Matt Woodruff, chairman of the American Maritime Partnership, the US maritime industry's trade group, said that "some aspects of the proposed changes by CBP could be implemented in such a way that creates new loopholes to the Jones Act, enabling foreign vessels to do work in American waters that by law must be performed by Americans."

"A robust domestic maritime industry is essential to the nation's security and ability to maintain military readiness, and only full enforcement of the US Jones Act can compete against the foreign subsidies that support foreign shipping," Woodruff said.

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CBP has attempted to make similar changes to previous rulings, in both 2009 and 2017, but those efforts were largely abandoned due to fierce opposition from the international ship operators and oil companies. This proposed change already faces similar opposition, but this time from the domestic maritime industry.

"I wish CBP would get back in their lane, where the Constitution directs them to be, and not try to interpret away the Jones Act," Smith with OMSA said.

A CBP spokesman did not respond to a request for comment.

CBP is expected to make a final decision on the proposal in late December.

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Kshitiz Goliya, newsdesk@spglobal.com