Proposed changes by the US Customs and Border Protection (CBP) that would change long-standing interpretations of rules for vessels transporting specialized equipment used by the offshore oil and gas industry are causing serious concern in the industry.
Member-companies of the International Marine Contractors Association (IMCA) with vessels active in American waters, and their clients, are disturbed about proposed modifications/revocation of ruling letters related to the coastwise laws of the United States, commonly known as the Jones Act. They are also worried about the shortness (30 days) of the consultation period now open for comment. The Jones Act restricts the activities of foreign-flagged vessels carrying merchandise between United States ports; the proposed modifications will have detrimental impact on activities vital to the US offshore oil and gas industry. The document can be located here.
"Since 1953, vessels that transport merchandise to, or between, US ports and US outer Continental Shelf (OCS) platforms or anchored vessels must be United States-built, owned and properly documented for coastwise trade," IMCA's Chief Executive, Hugh Williams, explains. "Until recently the US Customs and Border Protection (CBP) has exempted certain specific activities from the Jones Act including the activities of pipe-laying, cable-laying, diving support work and heavy-lift crane construction and installation work.
"In a notice published on 17 July this year, the CBP stated that it intends to modify or revoke many such long-standing exceptions, and began a 30-day consultation period, so comments need to be received by 17 August. Under the law, the decision would be implemented in 60 days following the CBP's decision. Specifically, the CBP will no longer exempt the installation of 'pipeline connectors' from a foreign-flagged vessel, as the CBP has ruled that such machinery is 'not incidental to the laying of pipeline'. Additionally, the CBP has limited its interpretation of the term vessel 'equipment' which is exempt from the Jones Act, to exclude machinery and goods that are not needed to navigate, operate or maintain the vessel itself," he adds.
"In short, the CBP proposal would overturn over 30 years of precedent on which the offshore industry has relied, and in which it has invested millions of dollars on the necessary resources to conduct oil and gas operations, with precious little time to provide input to CBP for consideration or find suitable alternatives. This could shut down most activities in the deep water Gulf of Mexico for an extended period of time as there are currently very limited numbers of coastwise trade vessels existing that have the capacity, or the trained personnel, to perform these activities currently being performed by foreign-flagged vessels.
"This impending action would have extremely broad and detrimental implications for the US offshore industry and ultimately threaten the national security of the United States. With our North America Section we are working actively with other trade bodies, in urging CBP to retain its current interpretation of the Jones Act as it pertains to pipelaying and the definition of equipment versus merchandise. Please submit your comments to this proposed change."