Oil industry associations speak out against proposed Jones Act changes

Oil and gas-related industry groups are speaking out against US Customs and Border Protection Agency’s (CBP) proposed modification and revocation of ruling letters related to its application of the Jones Act vessels in offshore oil and natural gas activity.

Offshore staff

WASHINGTON, DC – Oil and gas-related industry groups are speaking out against US Customs and Border Protection Agency’s (CBP) proposed modification and revocation of ruling letters related to its application of the Jones Act vessels in offshore oil and natural gas activity.

These changes have the potential to cause “significant and damaging impacts” if the modifications were to become effective, according to a recent study by the American Petroleum Institute (API).

According to the API report, impacts from proposed modifications may include the potential for significant loss of American jobs, reduced US oil and natural gas production, and diminished revenues for federal and state government.

The proposed modifications, which the CBP published on January 18 just two days before President Trump took office, look to change the CBP’s application of the Jones Act by restoring aspects of the legislation that would prevent non-Jones Act qualified vessels from transporting certain merchandise and equipment between coastwise points by modifying or revoking prior ruling letters.

“This report projects that the proposed changes to these long-standing rulings would have widespread negative impacts on American jobs and the national economy, as well as a damaging effect on our national energy security,” said API Upstream and Industry Operations Group Director Erik Milito. “The study also concludes that these changes would have an abrupt negative impact on oil and natural gas development and investment in the Gulf of Mexico, further impacting consumers and businesses and substantially decreasing government revenue.”

The CBP’s proposed modifications and revocations would represent a major change in US maritime policy, petroleum industry trade groups say.

Supporters of the CBP’s proposal, such as the American Maritime Partnership, the Shipbuilders Council of America, the Offshore Marine Service Association, and certain lawmakers in Washington, say the modifications will close loopholes and restore American jobs.

But critics say that the changes could have unintended consequences and may prevent foreign-flagged deepwater construction vessels from operating in the Gulf of Mexico, where there is a need for highly specialized vessels.

A recent report by the International Marine Contractors Association (IMCA) finds that that the US coastwise qualified fleet is unable, on its own, to support activities in the US offshore deepwater market.

“The specialist deepwater offshore vessels are operated by international marine contractors based in the United States,” said the IMCA report. “These are companies who employ thousands of US citizens offshore and onshore in high-value, high-skilled jobs and have contributed significantly to the US economy and their local communities for decades. These international companies have invested heavily in fabrication yards, and engineering, design and management capacity, providing thousands of jobs for American workers.”

According to the API report, the CBP’s proposal could lead to job losses in the range of 30,000 industry supported jobs in 2017, with as many as 125,000 jobs lost by 2030. The report says there could also be a decrease in US oil and natural gas production in the range of 23% from 2017-2030, while government revenue would decrease by $1.9 billion per year during the same time period. There could also be a decrease of offshore oil and natural gas spending in the range of $5.4 billion per year.

The CBP has extended the comment period on the notice of proposed modification and revocation of ruling letters until April 18, 2017.

04/13/2017

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