Congress decided on 21 July 2020 not to proceed, at least for now, with a measure that would have potentially expanded the application of the Jones Act to oil and gas and offshore wind operations
The measure covering ‘lifting operations’ had been under consideration since last summer.
The Jones Act is a catch phrase for a set of laws that restrict certain maritime activities in US waters to qualified US-flag vessels. Although the first restriction of the transportation of merchandise between two places in the US was enacted in 1817, the ‘modern’ restriction is commonly attributed to a section in the Merchant Marine Act, 1920 and to the principal proponent of that legislation, Senator Wesley L Jones.
Over time, the Jones Act has been interpreted not to apply to the lifting or construction activities of a stationary vessel, such as a jacked-up wind installation vessel. However, the Jones Act was interpreted by Customs and Border Protection (CBP) to apply even to short movements of a foreign vessel when laden with cargo.
These interpretations raised issues with heavy lift operations in the offshore oil and gas industry when foreign heavy lift vessels were required to move, laden with topsides and other structures, from outside drilling safety zones to their work site. CBP reversed its prior interpretations in guidance it issued in November 2019, effective February 2020, exempting lifting operations from the Jones Act.
In the meantime, the House of Representatives Transportation and Infrastructure Committee reported favourably a provision last summer that would have required the use of qualified US-flag vessels for all lifting operations unless an advance waiver was obtained from the US Government.
This was opposed by the oil and gas industry as well as certain offshore wind interests. Although that provision was included in a bill (renamed the Elijah E Cummings Coast Guard Authorization Act of 2020) that passed the House on 24 July 2019 by voice vote, it was never agreed to by the Senate.
On 21 July, the House passed the William M (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, HR 6395, with the Cummings Coast Guard bill included. The lifting provision that passed the House last year was not included in the amendment added to the NDAA. The US Congress will revisit the issue later in the year.
In the meantime, there is ongoing litigation in the US District Court for the District of Columbia where certain Jones Act interests have sued CBP, claiming that some of its ‘vessel equipment’ interpretations were contrary to law.
Earlier this year, the plaintiffs sought to amend their complaint to also challenge CBP’s November lifting guidance. The litigation remains pending.
*Charlie Papavizas is maritime practice partner and chair at law firm Winston & Strawn
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