How Changes To The Jones Act Could Affect Offshore Transportation

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Offshore Transportation

Many legal scholars, especially those who specialize in the Jones Act, believe that there are changes coming in how the Jones Act will be enforced, which could have potential consequences for both offshore vessels and the entire boating industry. Currently, Customs and Border Protection (CBP) is proposing the revision of as many as 30 Jones Act rules and their interpretations dating back to 1976. Although the changes are unclear, if an audit is conducted, it could change the application of the Jones Act going forward.

The Jones Act limits the amount of merchandise that can be transported between two various points inside US waters and to qualified US-flagged vessels. When it is applied outside of the US territory, which includes those areas of water outside the jurisdiction of US territorial waters, the Jones Act is applied differently through the Outer Continental Shelf Lands Act.

OCSLA most commonly extends the United States’ federal jurisdiction beyond any state water to include devices like offshore lifeboats and those structures which are both temporarily and permanently fixed on the seabed of the United States continent shelf, when they are positioned for connection from land-to-vessel or vessel-to-vessel purposes.

Since there are times when the Jones Act can be extremely vague, and it can become complex to rule in these cases, often the person affected by an incident will seek what is called an “interpretive ruling.” To date, a major exception to the Jones Act involves the carrying of things between two points in the US involving “vessel equipment,” which is not considered merchandise and is not subject to the limitations of the Jones Act.

Due to a ruling that dates as far back as 1939, the definition of “vessel equipment” includes those things which are necessary for the operation, maintenance, or navigation of a vessel at sea. Over time, that definition has been extended to any essentials related to the mission that a vessel is undertaking.

That definition stood until 2009, when there was a ruling that was controversial to those related to a Christmas Tree, which is a subsea assembly. The issue revolved around a construction vessel that was set to install a Christmas Tree. Scholars argued at that time that it went beyond the scope of the interpretation of vessel equipment.

As a result, eight years later, those arguments are still being fought. The first assembly rule was withdrawn, and following a public proposal it was entirely revoked, which led to the revision of a number of definitions related to vessel equipment rulings. In response, there has been a proposal to overhaul a significant number of rulings and examine various other definitions since 1976.

Since it will likely change many definitions, this could have huge potential for the offshore industry in the US. If things are retroactively studied, many rulings going back to 1976 could be altered, and this has the potential to change things in the future regarding what is necessary for a vessel and what is not.

If merchandise isn’t considered vessel equipment, according to the law, it is legal to collect it or to fine a vessel for being in violation of the statute. The fine imposed would be equal to the value of the merchandise, instead of the government seizing it. That could have many offshore operations which deal with “vessel equipment” paying huge fines and losing a good portion of profits.

It could also make it nearly impossible for vessels to carry materials that are used to construct undersea structures or would impose large fines on those who need to transport the materials. Some vessels are allocated purely to the transportation of those things which have been deemed not under the jurisdiction.

If the changes are absorbed, some companies stand to lose a considerable amount. If the changes go through, many things that were once considered vessel equipment could be redefined, which means that the entire transportation system as it operates today could be overhauled, which could leave companies scrambling.

Lots of nervous vessel owners are wondering how proposed changes in the enforcement of the Jones Act will affect them and their ability to transport material. More importantly, how will it affect their bottom line?

 

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