New Bill Would Unwrite CBP's Exemptions for Jones Act Offshore Sector

The Chinese-built, Vanuatu-flagged crane barge DB Hedron decommissioning and carrying a jacket to a reef site in the U.S. Gulf of Mexico (Image courtesy Helix Alliance / Triton Offshore)

Congressman John Garamendi (D-CA) has introduced a new bill to compel Customs and Border Enforcement to issue tougher penalties for Jones Act violations. While CBP sometimes pursues multimillion-dollar fines for the most extreme cases, the agency often whittles down penalties and interprets the rules leniently, according to the Offshore Marine Service Association (OMSA) - but the new legislation would require it to change its approach.

The proposed bill, called "Close Agency Loopholes to the Jones Act," would unwrite five decades of CBP letter rulings, the interpretive opinions that the agency issues to resolve questions of Jones Act compliance.

“For nearly 50 years, Congress has stood on the sidelines while federal regulators made bad decisions that erode crucial protections for the American worker," said Rep. Garamendi in a statement. "This stops today."

The bill is aimed closely at the offshore energy sector, where CBP's letter rulings have had the greatest impact. The bill would unwind longstanding CBP interpretations that allow certain uses of foreign-flag seismic vessels, crane ships, cable-layers, pipelayers, research vessels and rock dumpers within the boundaries of the U.S. EEZ and OCS.

“For nearly 50 years, incorrect interpretations have created harmful and dishonest loopholes that force U.S. mariners and vessels to compete against foreign counterparts that have lesser crewing, tax, regulatory compliance, and insurance costs,” said Aaron Smith, OMSA's president. “Big Oil, and increasingly Big Wind, have actively called for and exploited these loopholes to utilize cheap foreign labor at the expense of hardworking, capable Americans."

The bill would also put CBP's letter rulings under the purview of the Congressional Review Act for the first time. This would require the agency to submit copies of proposed rules to Congress and to the Government Accountability Office before the rules take effect. Members of Congress would have the opportunity to challenge the rules under a fast-track resolution process, which has been used successfully to contest non-maritime rulemaking over the years.

In addition, it would create a new process for American maritime stakeholders to contest CBP letter rulings - first with a petition, then with federal court action. Jones Act shipowners, operators, unions and trade associations would have explicit standing to launch a challenge.