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October 1, 2005

CBP gives guidance on Jones Act waivers

U.S. Customs and Border Protection has given some clarification on the limited waiver of the Jones Act exercised by Homeland Security Secretary Micahel Chertoff on September 26.

According to a CBP Trade Update issued on September 29, Secretary Chertoff exercised his discretion and authority to waive the coastwise merchandise statute (46 U.S.C. App. 883, also known as the "Jones Act") so non-coastwise-qualified vessels (i.e., not U.S.-built, owned and documented) can transport petroleum and refined petroleum products to where it is needed. Unless otherwise instructed, the waiver of the Jones Act applies only to vessels transporting petroleum and refined petroleum products and ends October 24, 2005 at 12:01 a.m. eastern daylight time. However, vessel carriers must meet all safety and security requirements that apply to vessels arriving at U.S. ports.

On September 1, 2005, notes the CBP Trade Update, Secretary Chertoff exercised his discretion and authority to waive the coastwise laws generally for the transportation of petroleum released from the Strategic Petroleum Reserve, whether pursuant to an exchange, sale or otherwise, undertaken in response to the circumstances arising from Hurricane Katrina. The Secretary has extended this waiver in response to the circumstances arising from Hurricane Rita. Again, no deadline applies to the waiver pertaining to the transportation of petroleum from the Strategic Petroleum Reserve.

The combined effect of Hurricanes Katrina and Rita has rendered various U.S. ports temporarily inoperable, thereby necessitating the diversion of incoming foreign cargo from its original U.S. port of destination to the nearest feasible U.S. port, says CBP.

"CBP field officers and managers do not have authority to waive the provisions of the Jones Act beyond what the Secretary has authorized," says the Trade Update. "However, in view of the exigent circumstances due to the damage sustained by the Gulf coast region, and recognizing the strong need to aid in this humanitarian effort, to reestablish the orderly flow of commerce and to ameliorate as much as possible the considerable financial loss to U.S. shippers and importers, CBP's position is that the requester should be instructed to contact the Maritime Administration (MARAD) at 202.366.0760 in order to obtain a referral as to any available coastwise-qualified vessel(s) for commodities other than petroleum and refined petroleum products. The requester should be further advised that the failure to use such referenced vessels has potential penalty consequences under the Jones Act. If you have additional questions, please contact CBP Officer William Hunton at 912.964.0832 ext. 232, or by fax at 912.966.0827."

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