CBP in new OCS Jones Act crackdown

NOVEMBER 25, 2014 — U.S. Customs and Border Protection is stepping up its efforts to enforce Jones Act requirement on OCS operations.

Law firm Blank Rome is encouraging owners and operators of vessels engaged in Outer Continental Shelf activities to review their operations to ensure compliance with the Jones Act, and to seek routine counsel to avoid the significant fines being imposed by CBP for violations.

Blank Rome notes that CBP issued a Notice to the Area Port of New Orleans Trade Community on November 12, 2014, announcing electronic online reporting of possible Jones Act violations.

Under the Outer Continental Shelf Lands Act (OCSLA), the coastwise laws are extended to structures attached to the U.S. outer continental shelf (OCS) for the purposes of exploration, development, and production of resources.

Over the past several years, there has been increased pressure placed on CBP from various Jones Act operators and associations, support groups and Congress, to step up Jones Act enforcement. Indeed, earlier this year, says Blank Rome, the U.S. Senate Committee on Appropriations issued its report accompanying the Department of Homeland Security ("DHS") Appropriations Bill, 2015, in which it urged more stringent Jones Act enforcement.

In particular, the Senate report urges the DHS:

"to levy penalties for previously documented violations, continue working with the Offshore Marine Service Association in order to investigate future potential violations, and dedicate adequate resources to vigorously enforce the Jones Act on the Outer Continental Shelf."

The Committee also directed the DHS to develop a system to track the status of Jones Act violations, from the time they are reported until assessed penalties have been collected or there is a finding of no violation and the charges are dismissed, and to make information available to the Committee and the public, on a quarterly basis, regarding Jones Act violations.

"In response to this pressure," says Blank Rome, "CBP has increased its efforts to identify Jones Act violations and has pursued multimillion dollar penalties for a number of alleged Jones Act violations related to OCS activities. Notably, CBP has actively pursued violations for activities that apparently have, under previous CBP interpretations, been found not to violate the Jones Act, particularly with regard to items previously viewed as equipment of the vessel."

The new "suspected violation" online reporting system, called e-Allegations, allows anyone to submit information on a suspected violation, including citizens, corporations, importers, legal firms, and other U.S. or international governmental bodies. CBP encourages providing as much information on suspected violations as possible and states that it will not share the details of any allegation. E-Allegations may be submitted anonymously. In addition, suspected violations may still be reported in person to the nearest port of entry. CBP officials in other regions have also recommended that e-Allegations be used to report violations of the coastwise merchandise statute in domestic trades.

Read the Blank Rome briefing HERE

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