Clashing views on CBP Jones Act ruling revisions

APRIL 4, 2017 — On January 18, the Customs and Border Protection Agency (CBP) announced proposed modifications and revocations to around 30 identified rulings, as well as additional unidentified rulings, related to the use of Jones Act vessels in offshore oil and natural gas activities on January 18, 2017.

The proposed changes were hailed by Jones Act advocates, but were greeted with less enthusiasm elsewhere’

Today, the American Petroleum Institute (API) released a report that it commissioned from Calash LLC, saying that it projects “significant and damaging impacts from the Customs and Border Protection Agency’s (CBP) proposed modifications to its rulings related to the use of Jones Act vessels in offshore oil and natural gas activity, including the potential for significant loss of American jobs, reduced U.S. oil and natural gas production, and diminished revenues for federal and state government.”

The Offshore Marine Services Association characterized the API-sponsored study as “a desperate attempt by companies promoting foreign workers to distort facts to enable them to continue to skirt U.S. law.”

According to the Calash report, the impacts of CBP’s proposal could include:

• Losses in the range of 30,000 industry supported jobs in 2017 with as many as 125,000 jobs lost by 2030. The Gulf of Mexico states are projected to be the most impacted by these job losses;
• Decrease in U.S. oil and natural gas production in the range of 23% from 2017-2030;
• Decrease in government revenue more than $1.9 billion per year from 2017-2030;
• Decrease of offshore oil and natural gas spending in the range of $5.4 billion per year and;
• Cumulative lost GDP of $91.5 billion from 2017-2030.

OMSA, however, said that recent studies have concluded the following:

• Revocation will benefit American mariners: In the Gulf Coast region alone, the recent CBP notice will generate over 3,200 new jobs, increase wages and earnings for workers in the region by over $155 million and generate over $700 million in regional economic output.
• Revocation will not disrupt production: This ruling will not impede offshore energy exploration or production given the recent $2 billion investments by U.S. companies. According to IHS Petrodata Construction Vessel database, an average of 19.8 vessels were working in the Gulf Coast region over the past 5 years. U.S. companies have 31 new or retrofitted vessels ready to meet these needs.
• Revocation supports U.S. national and homeland security: By supporting a market for Jones Act vessels, including the $2 billion investment following the 2009 CBP notice, the domestic maritime industry can provide over 1,000 additional unlimited tonnage mariners for the Ready Reserve Force, ready to answer the call of the U.S. military if needed, and provide the industrial base for both commercial and military needs.

You can download the API-sponsored Calash report HERE

You can get OMSA’s perspective on the issue HERE