US Customs and Border Protection has formally revised its framework for enforcement of the Jones Act, a change critics claim could allow more foreign flagged vessels to operate in domestic oil and natural gas offshore operations.
The US maritime industry fears the revisions could potentially alter a century of legal precedent governing movement of crude, refined products and other commodities between US ports.
The issue centers on how CBP defines “vessel equipment,” which has been the subject of individual letter rulings for decades. If an item on a vessel is labeled as “equipment,” rather than as “cargo,” it will fall outside the reach of the Jones Act, which requires ships transporting goods between the US ports to be US-flagged, US-built and majority US-owned.
Under the notice, which CBP published Thursday, the agency defines vessel equipment more broadly to include “all articles or physical resources serving to equip the vessel, including the implements used in the vessel’s operation or activity.”
According to CBP’s notice, these “may include those items that aid in the installation, inspection, repair, maintenance, surveying, positioning, modification, construction, decommissioning, drilling, completion, workover, abandonment or other similar activities or operations of wells, seafloor or subsea infrastructure, flow lines, and surface production facilities.”
In the notice, CBP stressed that whether an item departs with a vessel after an operation is completed and is not left behind on the seabed “is a factor that weighs in favor of an item being classified as vessel equipment, but is not a sole determinative factor.”
Aaron Smith, president and CEO of the Offshore Marine Services Association, criticized the notice, arguing CBP was creating “potential loopholes for foreign vessels and crews to unlawfully operate in American waters and take the jobs of American vessels and workers.”
“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,” Smith said in a statement.
Last week, 50 members of Congress, both Democrats and Republicans, wrote to Acting Department of Homeland Security Secretary Chad Wolf and Acting White House Chief of Staff Mick Mulvaney, arguing the changes CBP ultimately adopted could contradict the Jones Act.
“The Jones Act clearly prohibits foreign vessels from engaging in any part of the transportation of merchandise between US points,” the members of Congress wrote. “The responsibility of amending the statute to properly balance US national security with other US interests rests with Congress alone, and no amount of agency-issued ‘interpretive guidance’ or economic analysis by the Administration can change the separation of powers under the Constitution.”
CBP had attempted to make similar changes to previous rulings, in both 2009 and 2017, but those efforts were largely abandoned due to fierce opposition from international ship operators and oil companies.