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February 12, 2004

Jones Act group likes lease rule

"U.S. ownership, construction and crews for vessels engaged in domestic waterborne commerce will remain the unquestioned foundation of U.S. maritime policy under a Final Rule issued by the U.S. Coast Guard on February 4, 2004," says the Maritime Cabotage Task Force. (MCTF).

"The agency's Final Rule concerning Lease Financing for Vessels Engaged in the Coastwise Trade clearly states it is the intention of Congress that a 1996 amendment to the U.S. vessel documentation laws is meant to expand Jones Act operators' financing options, not undermine the basic principle that vessels operated in the domestic trades must be built in U.S. shipyards and be operated and controlled by U.S. citizens."

"The Coast Guard's strong support for the Jones Act expressed in this rulemaking reaffirms the commitment to the law that has been the policy of the Bush Administration and its predecessors," said Philip M. Grill, Chairman of the Maritime Cabotage Task Force. "This rulemaking amplifies the vital role our cabotage laws play in protecting our national and economic security and in ensuring uniform application of American law to companies operating in domestic waterborne commerce."

Enacted in 1920, the Jones Act requires that cargo moving between U.S. ports be carried in vessels that are U.S.-owned, -built and –crewed. Similar laws and statutes apply the same requirements to the movement of passengers and marine services such as towing, dredging and salvage.

"While the vast majority of transactions under the Lease Financing provision have been legitimate uses of the 1996 amendment," says the MCTF, "some foreign entities have employed complex corporate transactions to thwart Congressional intent. MCTF filed extensive comments with the Coast Guard during the rulemaking process urging an end the abuse of this provision."

"This rulemaking represents a substantial step forward in restoring the certainty necessary to ensure continued investment in vessels and companies engaged in domestic waterborne commerce," said Grill. "America's Jones Act fleet is growing to meet the needs of commerce, but must be assured that the playing field will remain level so that true competition, not unfair advantages, determine which companies thrive in the future."

The MCTF says that the U.S. Coast Guard and U.S. Maritime Administration also published a joint notice of proposed rulemaking on Leasing Financing on February 4 dealing with administrative questions and other issues such as the chartering of lease-financed vessels to persons not otherwise eligible to engage in domestic marine services. Grill cautioned that this rulemaking must be addressed in the same spirit as the Final Rule. "MCTF and its members will continue to advocate that these issues are resolved in a manner consistent with the strong support for the Jones Act expressed in the Final Rule."

The Maritime Cabotage Task Force was founded in 1995 to promote the U.S.-flag fleet engaged in domestic waterborne commerce. With more than 400 members, MCTF is the largest coalition ever assembled to represent the domestic segment of the U.S. merchant marine. Nationwide, there are more than 39,000 vessels engaged in Jones Act commerce and they annually move more than 1 billion tons of cargo and 100 million passengers. The Jones Act fleet generates nearly 125,000 jobs, 80,000 of which are aboard vessels and represents a $26 billion private sector investment in vessels and infrastructure.

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