IMCA’s Concern Over Jones Act Modifications

Thursday, August 13, 2009

Strong support and serious expressions of concern from across the global industry have been expressed to the International Marine Contractors Association (IMCA) following news of proposed changes to interpretations of the Jones Act by the U.S. Customs and Border Protection (CBP). The proposed policy modifications are set to change the long-standing interpretations of rules in the Jones Act for vessels operating in the offshore oil and gas industry.

“Support and opinions have come from far and wide,” said Hugh Williams, Chief Executive of IMCA. “Collective opinion is that if the changes, as written, are adopted, they could have a potentially devastating impact on the U.S. offshore oil and gas industry.

“U.S. companies involved in deepwater oil and gas exploration rely on sophisticated, highly specialized vessels for subsea installation construction support, pipe-umbilical laying, as well as maintenance of seafloor facilities. U.S.-flagged vessels represent less than 20% of such capability, and almost none of the top-of-the-range vessels, so foreign-flagged vessels are essential to maintain operations at their current levels. Indeed, at least five years could be needed to develop a fleet of U.S. vessels to meet the demands of the CBP’s proposal if adopted as proposed.

“Five years is not what is on offer to the industry; instead, the 30-day comment period on the proposed changes is due to end on 16 August, and the revised interpretation is scheduled to be in place within 90 days.

“We urge all likely to be affected by the proposals to request an extension to the CBP’s comment period. Thirty days is a pitifully short time for changes of this kind to be adequately researched and analyzed. We would suggest a minimum of 90 days would be fairer to all concerned providing time for a proper operational impact assessment.

“We have three principal concerns. The first is the lack of clarity in the target of the proposed rule change and the resulting amount of uncertainty. There is a whole offshore oil and gas industry which could be impacted, but the actual target may be quite small. The proposal is silent on the actual operations it wishes to target creating an unacceptable amount of unpredictability. 

“Secondly, the imprecision of the wording in the proposal concerns us. We are seeking clarity, but of course, the comment period is rapidly nearing closure. That shortness of timescale is our third concern. The fact that there is a lack of clarity of the target and interpretation of the wording indicates that all parties in industry and government need enough time to discuss and debate this whole issue fully. Then, with all the facts, a proper decision can be made that will not be detrimental to all parties.”

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