Customs Proposes Changes to Jones Act Interpretation

In a notice published July 17, U.S. Customs and Border Protection (CBP) proposes to modify and revoke ruling letters relating to the application of the Jones Act and transportation of certain merchandise and equipment between coastwise points. These changes could affect OCS operations.

The Jones Act restricts the activities of foreign-flagged vessels carrying merchandise between United States ports.  The Outer Continental Shelf Lands Act extends the Jones Act to the outer Continental Shelf and any permanent or temporary installations thereon, including oil production platforms. As a result, vessels that transport merchandise to or between U.S. ports and OCS offshore platforms or anchored vessels must be United States-built, owned, and properly documented for coastwise trade.

In its July 17 notice, CBP announced it will no longer exempt the installation of “pipeline connectors” from a foreign-flagged vessel, based on its ruling that such machinery is “not incidental to the laying of pipeline.”  In addition, CBP stated it intends to limit 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.  

The penalties for a violation are severe and include forfeiture of the merchandise or forfeiture of a monetary amount of the value of the merchandise.

Historically, NOIA members have been of divergent views on issues related to the Jones Act.  Therefore, individual NOIA members who have an interest in this matter are encouraged to make their specific views heard.   

Currently, CBP is accepting comments on the matter through August 16, 2009.  There have also been several requests to extend the comment period by 60 days.  Under existing law, CBP must render a decision within 30 days of the end of the comment period and the decision must go into effect 60 days later. 

Click here for the full CBP announcement and commenting instructions.

We will continue to keep you informed as further developments arise.