US-built fish-boat needs congressional Jones Act waiver

by Michael Hansen, Hawaii Shippers Council, May 25, 2017

The online Seafood News reported on May 22, 2017, in a news article, “F/V America's Finest, largest catcher processor built in US in 30 years, may need Jones Act waiver to fish” reporting a U.S. built fish-boat needs a Jones Act waiver.

The ship in question is the Fishing Vessel (F/V) AMERICA’S FINEST, which is scheduled to be delivered in November 2017. The ship owner is Fishermen’s Finest Inc., a Kirkland, Washington-based operator of two catcher/processor vessels in the North Pacific Ocean and Bering Sea. The ship is being constructed at Dakota Creek Shipyard in Anacortes, Washington, and will be Fishermen’s Finest third and largest catcher/processor.

Although the term “Jones Act” is being used in reference to a fishing vessel, it’s not truly a Jones Act issue in the strictest sense. In the narrowest usage, the Jones Act is the informal name for Section 27 of the Merchant Marine Act of 1920, which applies to the transportation of merchandise (cargo) by water between domestic points. However, the term “Jones Act” has come to be used in a far broader sense including to refer to the whole body of federal marine laws and regulations.

The primary federal legislation that protects American fisheries from foreign access are the Nicholson Act of 1950 (46 U.S.C. 55114) and the Magnuson-Stevens Fisheries Conservation Act (FMCA) of 1976 as amended (16 USC Chapter 38), which established similar vessel requirements to the Jones Act for fishing vessels over 5 gross tons including the U.S. build requirement.

The shipbuilding yard, Dakota Creek, misinterpreted the U.S. build regulations and ordered several pieces of steel hull plate to be prefabricated in the Netherlands that exceeded the 1.5% of the total steel weight of the vessel’s hull and superstructure allowed. As such, the U.S. Coast Guard (USCG) will not issue a vessel document to the vessel so that it can be employed in U.S. fisheries.

There is no restriction on the use of foreign steel providing its not "worked." A USCG determination from the Director, National Vessel Documentation Center, issued in 2013, stated, “there is no regulatory or statutory limit on the amount of foreign materials, such as steel, which may be used in the construction of a vessel considered to be built in the United States provided that, . . . . . the steel is not worked in any way and that it is imported in standard shapes and sizes as produced at the mill.”

The foreign components of the F/V AMERICA’S FISNEST go far beyond several prefabricated steel plates. It was designed by the Norwegian naval architecture and marine engineering firm, Skipsteknisk AS, using their proven ST-116 XL design. The main engines will be built at MAN Diesel & Turbo's Augsburg, Germany, plant. MAN will also supply the gearbox, propeller and propulsion control systems. The deck machinery will be supplied by Ibercisa of Spain. The vessel will be classed by Det Norske Veritas / Germanischer Lloyd (DNV GL) as opposed to the American Bureau of Shipping (ABS).

To rectify this relatively minor infraction, the ship owner and shipbuilding yard are now seeking a vessel specific waiver from the U.S. Congress – informally known as a “ship bill” – so that the $80 million F/V AMERICA’S FISNEST can be employed in U.S. fisheries and they can avoid bankruptcy.

Key excerpts:

Fishermen's Finest Inc. and the Dakota Creek Shipyard in Anacortes, WA, have run into a Jones Act issue with the construction of F/V America's Finest, which is the largest catcher processor to be constructed in the US in nearly 30 years.

The F/V America's Finest, scheduled for delivery in November 2017, is a larger version of similar design, being a Skipsteknisk AS (ST-116) vs. the 115 model which was built for O'Hara. The America's Finest is 261 ft vs. the 194 feet of the F/V Arahoa, and is being built by the Dakota Creek shipyard. It is about 86% complete, and is scheduled for delivery in November 2017. It has 49 births.

The issue involves some very complex rules under the Jones Act for what constitutes American built vessels. The Jones Act prohibits vessels not built in the US from participating in either US fisheries within the EEZ, or in the coastal trade between US ports.

Dakota Creek, according to documents circulated industry and congressional offices and provided to SeafoodNews, made an inadvertent mistake in interpreting the regulations.

The US Coast Guard allows the use of foreign steel in basic hull materials for US vessels. However, they only allow steel sheets, plates, beams and bars that are not fabricated or worked on in any way abroad before being imported. If a foreign worker so much as drills a hole in a plate, that disqualifies it, and it becomes a fabricated major component.

Foreign fabricated components are limited to 1.5% of the vessels total steel weight. If they exceed this level, the vessel is disqualified as a US-built vessel.

Dakota Creek bought some hull shell plating that was subject to bending and cutting in Holland, which the company did to take advantage of new cold forming technology for those sections of the bow and stern that used precisely shaped designs to reduce drag and fuel consumption. That technology is not yet available in the US.

The Coast Guard has calculated that the percentage of fabricated foreign steel to be greater than 1.5%, because of a small piece of work done on many separate plates. This is the case even though the total weight of foreign steel is less than 7%, which is the total allowance by the Coast Guard.

If the vessel cannot get a waiver, it cannot be used in a US fishery. Such an outcome would force a sale of the vessel to foreign interests, most likely Russia, at a very steep discount, and would likely bankrupt both Fishermen's Finest which has already paid most of the cost of the vessel, estimated to be between $60 and $80 million, and the Dakota Creek Shipyard.

The waiver is something that must be granted by Congress through a legislative fix. Draft language is already being circulated for insertion an a suitable bill that would allow the vessel to be completed and fish in the US fishery as planned.

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SN: F/V America's Finest, largest catcher processor built in US in 30 years, may need Jones Act waiver to fish