In the last several weeks, the Jones Act has drawn headlines over how it has shaped the U.S. and worldwide shipping industry. After almost 100 years as a part of federal law, there’s much misunderstanding as to what the law actually does.
The Jones Act requires that all merchandise loaded at one U.S. port and unloaded at another U.S. port be transported on vessels that are:
built in the United States;
documented under the laws of the United States;
owned by U.S. citizens; and
never sold to a foreign citizen.
The Jones Act only applies to domestic U.S. trade. It has no impact on vessels transporting cargo to or from another country. Similar laws also apply to domestic transportation of passengers, towing, dredging, salvage, and fishing. Continue reading “Keeping up with the Jones Act”
The U.S. House of Representatives has introduced legislation that could potentially greatly alter the landscape for oil, gas, and wind installation and decommissioning activities on the U.S. Outer Continental Shelf (“OCS”). Stakeholders should examine the legislation for impacts to their operations.
New Development
The House Committee on Transportation and Infrastructure marked up and approved H.R. 3409, the Coast Guard Authorization Act of 2019 (“2019 CGAA”) on June 26, 2019. This legislation, if enacted, could have significant impacts on how oil, gas, and wind vessel activities are conducted on the OCS. Of particular note, the legislation could have an outsized effect on offshore wind in the United States, which is at a nascent stage and requires installation activities of the type contemplated in the 2019 CGAA.
Background
In January 2017, U.S. Customs and Border Protection (“CBP”) proposed to overturn decades of precedent with regard to offshore operations potentially subject to the Jones Act in its “Proposed Modification and Revocation of Ruling Letters Relating to Customs Application of the Jones Act to the Transportation of Certain Merchandise and Equipment Between Coastwise Points” (the “Notice”). The Notice, which was published in the CBP Customs Bulletin, proposed the modification of approximately 25 CBP rulings that delineated the difference between “equipment of the vessel,” the transportation of which does not implicate the Jones Act, and “merchandise,” which may only be transported by qualified vessels under the Jones Act.
In September 2017, in response to Hurricanes Harvey, Irma, and Maria, the Department of Homeland Security (“DHS”) issued a series of widely publicized waivers allowing carriage of cargo by non-coastwise qualified vessels in the Gulf region and to and from Puerto Rico. Public interest in the Jones Act spiked in mid-September, and some members of Congress introduced legislation for longer-term relief, particularly for Puerto Rico. Although controversial, the waivers for the most part seemed to achieve their intended goal, allowing for additional capacity to be available to move certain critical cargoes, particularly in the energy and other bulk sectors. As discussed in more detail below, the way the waivers were granted was relatively unique in the context of hurricanes, and some controversy arose with regard to the Puerto Rico waiver. The waivers, however, expired as planned with no significant fanfare or controversy, and broader political and public interest in the Jones Act subsided after a flurry of activity. Continue reading “After Flurry of Hurricane Waivers, Calls for Coastwise Changes Recede”
As we are putting this issue of Mainbrace to bed, our thoughts are with the residents of Puerto Rico, Texas, and Florida who are still recovering from the rarest of U.S. tragedies—three major hurricanes to directly hit U.S. land within a month. These disasters brought unique opportunities for neighbors to help one another and for bipartisanship in Congress, including a new deal with President Trump. Continue reading “Recent Hurricanes Wreak Havoc, Produce Bipartisan Congressional Support and Trump Jones Act Waivers”
Action Item: On September 28, 2017, Acting Department of Homeland Security (“DHS”) Secretary Elaine Duke issued a 10-day Jones Act waiver, available here, in the interest of national defense and in response to the devastation caused by Hurricane Maria. The waiver commences immediately and applies to all products shipped from U.S. coastwise points to Puerto Rico. Covered merchandise must be laded on board a vessel within the 10-day period and delivered by October 18, 2017.Continue reading “Department Of Homeland Security Approves Jones Act Waiver for Deliveries to Puerto Rico”
Action Item: On September 12, 2017, Acting Department of Homeland Security (“DHS”) Secretary Elaine Duke issued a new Jones Act waiver for refined products, effectively broadening and extending the previously issued seven-day Jones Act waiver by an additional seven days, to now run through September 22, 2017. This second Jones Act waiver also expands the number of states to which the waiver applies, and now includes movement of refined petroleum products, including gasoline, diesel, and jet fuel, shipped from New York, New Jersey, Delaware, Maryland, Pennsylvania, New Mexico, Texas, Louisiana, Mississippi, Alabama, and Arkansas to Florida, Georgia, South Carolina, North Carolina, Virginia, West Virginia, and Puerto Rico. The new waiver can be found here.Continue reading “Department Of Homeland Security Extends Jones Act Waiver”
Action Item: On September 8, 2017, Acting Secretary of the Department of Homeland Security (“DHS”) Elaine Duke granted a seven-day waiver of the Jones Act in the interest of national defense. The waiver was issued to facilitate the movement of refined petroleum products to be shipped from New York, Pennsylvania, Texas, and Louisiana to South Carolina, Georgia, Florida, and Puerto Rico. Notably, this waiver applies to covered merchandise laded on board a vessel within the seven-day period of the waiver, and interested parties should be aware of the restrictions attendant to this waiver. The actual Jones Act waiver can be found here.Continue reading “Jones Act Waiver Granted In Response to Hurricanes Harvey and Irma”
Action Item: A recently published Rebuild Determination Letter issued by the National Vessel Documentation Center (“NVDC”) adds a significant new criteria in making Jones Act rebuild determinations by calling into question any previous rebuild activity in which a vessel may have been engaged. To ensure future compliance with coastwise trade requirements, industry stakeholders must now consider the additional “cumulative steelweight” test articulated in the recent determination when assessing the extent to which foreign work has been performed on a vessel’s hull or superstructure.Continue reading “U.S. Coast Guard National Vessel Documentation Center Issues Rebuild Determination with Newly Imposed “Cumulative Steelweight” Criteria”
A recent state court decision highlights a division among state, district, and circuit courts on the availability of punitive damages for general maritime law claims. In a unanimous opinion, the Washington State Supreme Court in Tabingo v. American Triumph LLV ruled that punitive damages are recoverable by seaman with a claim for unseaworthiness where the employer acts recklessly.1 Plaintiff Allan Tabingo was working as a trainee deckhand on a fishing trawler when he was seriously injured by a hatch cover closing on his hand, resulting in the amputation of two fingers. Tabingo alleged the vessel was unseaworthy because the vessel operator was aware of the faulty control handle for at least two years, but failed to take any measure to repair the handle. He brought suit against the vessel owners and operators, claiming negligence under the Jones Act as well as a general maritime claim of unseaworthiness, for which he requested punitive damages. A unanimous Washington Supreme Court reversed the trial court’s decision to hold that punitive damages are an available remedy in a claim for unseaworthiness.
In the last days of the Obama administration, U.S. Customs and Border Protection (“CBP”) proposed a major change in coastwise policy in its Proposed Modification and Revocation of Ruling Letters Relating to Customs Application of the Jones Act to the Transportation of Certain Merchandise and Equipment Between Coastwise Points (the “Notice”). The Notice, which was published in the CBP Customs Bulletin, proposed the modification of HQ 101925 (October 7, 1976), a seminal letter ruling upon which CBP and the industry have relied on for over 40 years when applying the Jones Act to vessels engaged in offshore construction, maintenance, and repair activities. (See CBP Customs Bulletin and Decisions, Vol. 51, No. 3, January 18, 2017, available here.)
