U.S. establishes new Jones Act enforcement arm

by Michael Hansen, Hawaii Shippers Council, July 20, 2016

Platts reported on July 20, 2016, in their news article “US agency creates Jones Act enforcement division,” that the U.S. Customs and Border Protection (CBP) has established a new office in New Orleans to better enforce Jones Act cabotage especially on the Outer Continental Shelf (OCS) where the oil and gas industries operate.

The new CPB division is named the National Jones Act Division of Enforcement or JADE. CPB is an agency of the U.S. Department of Homeland Security (DHS).

On the OCS, the Jones Act cabotage issues generally relate to the operation of vessels that support the drilling and production platforms including anchor handling tugs and various kinds of offshore supply vessels (OSV)'s such as crew boats and supply boats.

Vessels providing transportation by water to points on the OCS are governed by the Jones Act, as are tugboats providing anchor handling and other assist services there (Towing Statute of 1940 (46 U.S.C. 55111) which regulates domestic towage including towing, tug assist, push towboats, anchor handling, etc.).

The genesis of JADE was contained in the Consolidated Appropriations Act of 2015 (HR 2090) signed into law on December 18, 2015 as Public Law 114-113, which contained a provision requiring CPB to better enforce the Jones Act on the OCS. That provision was pushed by the Offshore Marine Services Association (OMSA), which represents the U.S. owners of Jones Act OSV’s.

Key excerpts:

Amid increased pressure from the US maritime industry to boost Jones Act enforcement, the US Customs and Border Protection has created a new division of enforcement for the nearly century-old law.

CBP's Office of Field Operations has created the National Jones Act Division of Enforcement, which has a mission to "assist CBP and industry partners on issues concerning coastwise trade, with the goal of being a clearinghouse for all coastwise trade issues," according to a July 15 notice from Vernon Foret, director of the Area Port of New Orleans.

The division, known as JADE, will be headquartered in New Orleans and will include a staff of Jones Act experts, Foret wrote.

"The JADE will work in partnership with industry stakeholders in the enforcement of the Jones Act, along with all other coastwise trade laws," Foret wrote, adding that the Jones Act was the "foundation" of US maritime policy.

There are few public details on this new division and their future work outside of Foret's notice. Katrina Skinner, a CBP spokeswoman, declined to comment beyond the announcement.

But sources said the JADE was likely created in response to lobbying from the US maritime industry, a fierce defender of the Jones Act, and may lead to more Jones Act enforcement cases.

"This plainly is the outgrowth of industry lobbying to get CBP to take Jones Act enforcement more seriously," said Charlie Papavizas, a partner at Winston & Strawn and chair of the firm's maritime practice.

In December 2015, the $1.1 trillion omnibus bill included language calling on CBP to better enforce the Jones Act.

"CBP is urged to levy penalties, as appropriate, for previously documented violations of the Jones Act; establish specific timeframes for internal review and actions; continue working with the Offshore Marine Service Association to investigate potential violations; and dedicate adequate resources to vigorously enforce the Jones Act on the Outer Continental Shelf," the explanatory statement said.

At the time, sources said it was unusual for OMSA, a trade association, to be mentioned by name in the bill.

Aaron Smith, OMSA's president and CEO, said Wednesday that JADE was a effort by CBP to go after "significant violations" of the Jones Act, though he declined to discuss the details of these violations.

"The establishment of JADE is a recognition that there are serious violations of the Jones Act occurring on a routine basis on the OCS, and CBP intends to correct the situation with aggressive, consistent enforcement of the law, as the statue requires," Smith said.