USCG: U.S.-Built Trawler is Not Jones Act-Qualified

The U.S. Coast Guard has issued another letter ruling on U.S.-built vessels with foreign-made components. The latest case involves a factory trawler named America’s Finest under construction in the state of Washington. Certain “cold-formed” steel plates were already installed as part of the hull and the cold-forming process was conducted overseas. A U.S. shipyard requested coastwise and fisheries trade status for the vessel, and was just denied by the U.S. Coast Guard.

The U.S. Coast Guard regulatory limitation provides that only 1.5 percent of a vessel’s steel weight may consist of foreign fabricated components. Steel plates sourced overseas but not “fabricated” overseas may be used without such a limitation. But in this case, the U.S. Coast Guard relied on precedent and numerous past determinations that “cold-forming” is considered fabrication of steel and is therefore subject to the 1.5 percent standard. The foreign fabricated steel weight in this case exceeds 1.5 percent.

America’s Finest is, therefore, not eligible for coastwise or fisheries trade status under the U.S. Coast Guard regulations and interpretation. The U.S. shipyard in this case is also seeking a waiver of U.S. build requirements through a legislative process, and will presumably continue to pursue it.

Sandra L. Knapp practices with Gawthrop Greenwood and represents clients in a broad range of transactional and general corporate matters, including asset-based lending transactions, mergers and acquisitions, marine finance, U.S.-based joint ventures for international companies, real estate, sale-leaseback transactions, construction contracts, leases and charters. Prior to joining Gawthrop Greenwood, Sandy was the managing partner of Knapp McConomy Merlie LLP.