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On January 18, 2017, Customs and Border Protection (CBP) issued this Notice revoking a number of letter rulings inconsistent with the requirements of the Jones Act. This is a very significant action for OMSA, its membership, and the entire domestic maritime industry. 

Summary

The Jones Act requires U.S. built and owned ships, crewed by U.S. citizens, to be used for the transportation of merchandise from one U.S. point to another U.S. point, also called “coastwise transportation.” The Jones Act is only the most modern iteration of this requirement, the first

The regulation under which these rulings are issued state that the letter, “represents the official position of [CBP] with respect to the particular transaction or issue described therein.” The regulations also say, “Accordingly, no other person should rely on the ruling letter or assume that the principles of that ruling will be applied in connection with any other transaction.” Thus, these letters do not set precedence and certainly do not change the underlying Jones Act.

However, since 1976, CBP has issued dozens of letter rulings, many of which build upon or use other letter rulings as justification and or precedence. These rulings, when taken together, created loopholes in the Jones Act that allowed foreign flagged vessels to engage in the transportation of merchandise. CBP has now realized these interpretations are not consistent with federal statutes, specifically the Jones Act, and the Outer Continental Shelf Lands Act (OCSLA).

To rectify this issue, CBP issued the January 18 Notice, announcing their intention to modify or revoke 25 of these letter rulings. CBP also stated its intention to revoke or modify letter rulings relating to substantially identical transactions. Specifically, the CBP revoked letter rulings relating to the following: (these are broad categories, more specific information is found in the CBP Notice):

       ·         Retrieval of damage pipe incidental to pipeline repair and the transportation of pipe and repair materials during the same.

       ·         Activities related to unforeseeable operations, such as emergency repair.

     ·      Transportation of materials deemed to be “pipeline connectors,” which can include numerous materials provided they touch a pipeline.

       ·         Operations that had been allowed because they were on the underwater portion of the platform, as opposed to the topside.

       ·         Activities involving a de minimis amount of merchandise, and

       ·         The transportation of well head equipment, valves, and valve guards.

 

Additionally, the Notice rolled back the permissive interpretation of the term “equipment of the vessel” that have been developed via multiple letter rulings back to the less-permissible definition found in a 1939 letter ruling which defined “equipment of the vessel” as those items “necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board.” This change will prevent foreign flag vessels from transporting numerous articles of subsea equipment that had previously been categorized as equipment of the vessel. 

Process

The statute under which CBP issued the Notice (19 U.S.C. 1625(c)) allows for a minimum of 30 days of public comment, 30 days of agency review of these comments, and then 60 days after the Notice the ruling is finalized.

However, on February 3, CBP issued this Notice, extending the comment period for an addition 60 days. Therefore, comments are due before April 18.  Additionally, the February 3 notice listed the correct email address for where comments can be sent, please review this notice to ensure your comments are going to the correct location. 

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