Jones Act legislation introduced by Congressman John Garamendi could adversely affect the operation of the offshore and gas and offshore wind industries in the US, it is claimed
The legislation, the ‘Close Agency Loopholes to the Jones Act,’ aims to close what he described as “nearly 50 years” of loopholes that, it is claimed, disadvantage American workers.
If successful, the effort to stop what are known as ‘letter rulings’ by US Customs and Border Protection, could affect the operation of a wide range of vessels.
The Congressman’s is the latest in a long line of pieces of legislation proposed by politicians in the US designed to promote the interests of American shipowners and mariners. Although well-intentioned, in making it much more difficult for non-Jones Act vessels to work in the US, the legislation could have a profoundly adverse impact on the operation of the offshore oil and gas and offshore wind markets in America at a time when energy prices are already very high and countries around the world are seeking to enhance their energy security.
Representatives of the offshore oil and gas and clean power industries in America have pointed out before that there aren’t enough US-flagged vessels to undertake work currently carried out by international vessels, and there aren’t enough US mariners trained to operate them if built – a process that could take several years.
Responding to the legislation introduced by Congressman Garamendi on 18 December 2022, one leading expert on the Jones Act told OWJ, “The Garamendi legislation, although well intentioned, would upend long-settled interpretations relied upon by the oil and gas and renewable energy industries.
“We won’t know whether it has legs until the new Congress takes over next year, but the legislation risks foreign trade retaliation because the US agreed in the General Agreement on Tariffs and Trade (GATT) not to expand the Jones Act and this legislation could be interpreted to do that.”
Congressman Garamendi, chairman of the House Armed Services Subcommittee on Readiness and a senior member of the Transportation and Infrastructure Committee, said ‘loopholes’ allow federal regulators to circumvent the Jones Act.
“For nearly 50 years, Congress has stood on the sidelines while federal regulators made bad decisions that erode crucial protections for the American worker,” Congressman Garamendi said. “The US Government should do everything in its power to prevent foreign vessels from paying poverty wages to take jobs from Americans working in our maritime industry. Sadly, it has largely enabled it instead.
“This stops today,” said the Congressman. “My ‘Closing Agency Loopholes to the Jones Act’ would finally force federal regulators to enforce the law as Congress intended when it created the Jones Act in 1920. Passing my legislation means maximising job opportunities for American mariners, US-flagged vessels, and domestic shipyard workers,” Garamendi continued.
“In January 2021, President Biden’s first executive order after assuming office directed federal agencies to maximise the use of American mariners, American-built ships, and US-flagged vessels under the Jones Act. Less than 90 days later, Customs and Border Protection issued a letter ruling contradicting the President’s policy to allow foreign vessels to construct energy projects on the Outer Continental Shelf. My bill will force the bureaucrats at CPB to implement the President’s policy by fully enforcing the Jones Act.”
The ‘Close Agency Loopholes to the Jones Act’ would close a number of ‘loopholes’ said the Congressman. This includes closing an ‘oceanographic research vessel’ loophole, that the Congressman claims would prevent commercial vessels engaging in seismic operations ‘from skirting the Jones Act.’
His legislation also proposed closing ‘vessel equipment,’ ‘lifting operations,’ and ‘installation vessel’ loopholes, which would prevent vessels with cranes and similar equipment from moving materials into place to construct offshore energy development projects. Another ‘loophole’ the legislation seeks to close is ‘paid out, not unladen which, if closed would prevent vessels transporting and installing undersea cables from ‘skirting the Jones Act’ and ‘decommissioning’ which would prevent vessels decommissioning offshore platforms on the Outer Continental Shelf from ‘skirting the Jones Act.’ The legislation would also similarly target the operation of geotechnical vessels.
The legislation also seeks to allow Jones Act operators to appeal letter ruling decisions and would subject Customs and Border Protection’s enforcement of the Jones Act to the Congressional Review Act. It would also require foreign-flagged vessels operating on the outer Continental Shelf purporting to operate under a Jones Act exemption to publicly notify Customs and Border Protection, citing the specific exemption and its legal basis.
Responding to the introduction of the legislation, Offshore Marine Service Association chief executive Aaron Smith said Congressman Garamendi had “once again proven himself to be a champion for American mariners and shipyard workers.”
He went on, “Big Oil, and increasingly Big Wind, have actively called for and exploited Jones Act loopholes to utilise cheap foreign mariners at the expense of hard working Americans. The result has been less opportunity for American mariners and shipyard workers and greater profit margins for foreign companies and foreign investors.”
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