USA Maritime applauds DOE cargo preference decision

USA Maritime, a coalition of carriers and maritime unions, has applauded a decision that will see the application of cargo preference requirements by the U.S. Department of Energy to imported cargoes purchased with funds made available through its loans guarantee programs.

The U.S. Maritime Administration announced earlier this month that it had reached an agreement with DOE. on the issue. As a result , language posted on the DOE website–in the form of a Frequently Asked Question–has been updated to clarify how the agencies will work together to apply the requirements and consider waiver requests should compliance be unachievable.

Here’s how the DOE FAQ now reads:

7. Does the Cargo Preference Act of 1954, as amended, apply to imports by a project supported by a DOE loan guarantee?

The Cargo Preference Act establishes certain requirements for the use of U.S. flagged vessels in the movement of cargo in international waters.

The Department of Transportation (DOT) has indicated to the Department of Energy (DOE) its view that the Cargo Preference Act applies to all ocean transport of cargos for projects supported by a DOE Loan Guarantee. DOE does not agree with this point of view, but acknowledges that the issue is not free from doubt. After detailed consultations, the two Departments have agreed, as a matter of policy, that DOE will apply the U.S.-flag requirements of the Cargo Preference Act in administering DOE’s loan guarantee program.

In general, the application of the cargo preference requirements will be prospective and will not be applied to ocean transport that has been completed or contracted for under a binding arrangement prior to March 1, 2011. DOE recognizes the potential impact on its projects, and is working cooperatively with DOT’s Maritime Administration to determine how the requirements will apply, and whether specific projects in the application process are appropriate for application of U.S. flag cargo preference requirements. Waivers are available on a case-by- case basis. The waiver process will be administered by the Department of Transportation in cooperation with DOE.

“While the Department of Energy has agreed to apply cargo preference as a matter of principle, partnership between government and industry will be essential to ensure its successful implementation,” commented USA Maritime. The coalition added that it “pledges that it will work with the Department of Energy and the U.S. Maritime Administration to identify a strong and mutually beneficial approach to cargo preference.”

March 9, 2011