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Monday, March 22, 2010

Does the Obama Administration Know What it's Doing with the Jones Act?

Solitaire, Largest Pipe Laying Ship in the World. Courtesy of Wikipedia.

While Obama was a Senator and later when he was running for the Presidency he said repeatedly that he was an advocate for a strong Jones Act. He pledged to further strengthen the Jones Act if elected.

Jones Act Preamble:

It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine, and, in so far as may not be inconsistent with the express provisions of this Act, the Secretary of Transportation shall, in the disposition of vessels and shipping property as hereinafter provided, in the making of rules and regulations, and in the administration of the shipping laws keep always in view this purpose and object as the primary end to be attained.

Sec. 1. Purpose and policy of United States (46 App. U.S.C. 861 (2002)), MARAD

You can find more on the Jones Act here.

Curiously, what has happened over the last few months suggests that on this issue at least the Obama Administration is more about platitudes than substance. In an effort to strengthen the Jones Act the Administration tried to institute sweeping changes to the rules that apply to vessels servicing the oil and gas industry on the Outer Continental Shelf (OCS). For thirty years these areas were regulated by the Bureau of Customs and Border Patrol (CBP) as if they were both inside and outside the purview of the Jones Act. Regulations and rulings were interpreted and addressed on a case by case basis.

But the Administration, through the CBP, proposed major changes that would have severely restricted foreign vessels and crews from working on the OCS. Sounds like a great development for U.S.-flagged vessels and crews and U.S. shipyards. The only problem is the oil and gas industry is highly specialized. For example, it may require the use of a vessel capable of burying pipe and a specific depth, a vessel like the Canyon, one of only two of its kind in the world.

The Administration had to back off on its proposed rulings as a result of feedback from the industry and the Department of Homeland Security. A restriction of the use of foreign vessels on the OCS at this time, without the availability of similarly equipped and crewed U.S. vessels, would hamper U.S. energy interests and potentially threaten U.S. security.


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