Trump Administration supports new rules that industry says will weaken the Jones Act and outsource US jobs

The Trump Administration is supporting new U.S. Customs rules that the Offshore Marine Services Association says will weaken the Jones Act and outsource American jobs in the oil, gas and offshore wind farms industries.

The rules are due to take effect in February of 2020.

The U.S. Customs and Border Protection action is the fourth time that changes have been mounted to weaken the Jones Act since President Trump assumed office and appears to break a promise President Trump made to Tom Allegretti, President & CEO of The American Waterways Operators, last May, as reported by AJOT.

In an October analysis, appearing in Lexology.com, Charlie Papavizas, a Jones Act specialist with the law firm Winston and Strawn, warned that the CBP action threatens to outsource jobs in the U.S. oil, gas and offshore wind industries: “On October 23, 2019, U.S. Customs and Border Protection proposed substantial changes to its interpretations of the Jones Act that will affect both the offshore oil and gas and offshore wind industries. The Jones Act is a key driver in how offshore structures are constructed and dismantled and so its interpretation is critical to both operational planning and cost analyses…”

The U.S. maritime industry news service gCaptain reported on December 20th: “The U.S. Customs and Border Protection has decided to revoke a number of previous letter rulings related to the enforcement of the Jones Act that could result in loopholes with major implications for the U.S. offshore industry.”

gCaptain says the CBP action has drawn negative responses from Republicans and Democrats in Congress and from the U.S. offshore industry:

“On behalf of thousands of American mariners and shipyard workers, we are disappointed that the U.S. Customs and Border Protection (CBP) has decided to put 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,” said Aaron Smith, president and CEO of the Offshore Marine Services Association based in New Orleans.

A bipartisan group of more than 50 members of Congress sent a letter to Department of Homeland Security Acting Secretary Wolf and White House Chief of Staff Mulvaney reiterating their concerns with the CBP rule changes that they say undermine the intent of Congress to protect the Jones Act.

The CBP action is the fourth effort to weaken the Jones Act by the Trump administration. The other three initiatives were:

In May 2019, following a meeting with Republican U.S. Senators, President Trump decided not to go ahead with a proposal to waive Jones Act rules that would have allowed foreign flagged ships to transport natural gas from American ports to Puerto Rico and the U.S. Northeast. The President’s decision was hailed by Tom Allegretti, president & CEO of The American Waterways Operators, who told AJOT he was assured by President Trump’s promise to protect the Jones Act: “We are therefore optimistic that when the President considers the 650,000 American jobs supported by the Jones Act, and the importance of the Jones Act to maintaining robust sealift capabilities and protecting our domestic waterways from security threats, he will stay true to his commitment. He came through on that commitment just yesterday (May 1, 2019) in refusing to approve Jones Act waivers that were proposed to him.”

In September, 2017 the Trump Administration’s Department of Homeland Security (DHS) waived the Jones Act requirement for one week to allow oil and gas operators to utilize foreign-flagged vessels to ensure fuel reached emergency responders during Hurricane Irma and following Hurricane Harvey.

A second waiver, later in September of 2017, was approved by the Administration allowing foreign-flag carriers to transport goods to Puerto Rico following the devastation caused by Hurricane Maria. The Trump Administration’s Department of Homeland Security announced on September 28, 2017 that the Jones Act would be temporarily waived. Allegretti told AJOT there was never any need for foreign-flag carriers because U.S. carriers could do the job of supplying Puerto Rico. The real problem, he said, was port facilities and truck transport on the island were seriously damaged by Hurricane Maria disrupting supplies and recovery.

The CBP action is described in ‘CUSTOMS BULLETIN AND DECISIONS, VOL. 53, NO. 45, DECEMBER 11, 2019’ on page 84, which states: “Notice of modification and revocation of headquarters’ ruling letters relating to U.S. Customs and Border Protection’s (“CBP”) application of the coastwise laws to certain merchandise and vessel equipment that are transported between coastwise points….CBP is also revoking its rulings that have determined that a non-coastwise qualified vessel engaging in offshore lifting operations would violate the Jones Act, 46 U.S.C. § 55102, when it moves a short distance to avoid collision with a surface or subsea structure.”