April 25 2008

Seabulk Trader loses Jones Act trading rights

In what would seem to be a victory for no more than the plain meaning of words, the U.S .District Court for the Eastern District of Virginia has ruled in Shipbuilders Council of America v. U.S. Department of Homeland Security, that the installation in a foreign shipyard of an inner hull on a U.S.-flag tanker breaches the Second Proviso of the Jones Act, making the tanker ineligible to continue to engage in the U.S. coastwise trade.

Here's what the second proviso says:

"No vessel which has acquired the lawful right to engage in the coastwise trade, by virtue of having been built in or documented under the laws of the United States, and which has later been rebuilt shall have the right thereafter to engage in the coastwise trade, unless the entire rebuilding, including the construction of any major components of the hull or superstructure of the vessel, is effected within the United States, its territories (not including trust territories), or its possessions."

So, what's so difficult about determining that adding a second hull in China is a breach of this requirement? You can read the court's Memorandum of Opinion here, thanks to Tim Colton, who has obligingly posted it on his website, www.coltoncompany.com. Tim has also posted the Court's order, under which the ship in question, the Seabulk Trader, loses its Jones Act trading rights.

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