IADC statement on US Customs and Border Protection withdrawal of Jones Act modification notice

Included in today’s Customs Bulletin, the US. Customs and Border Protection (CBP) announced it has withdrawn its proposed action relating to modifications and revision of the Jones Act rulings. In response, IADC President Jason McFarland issued the following statement:

“IADC is pleased with today’s CBP notice. The now-withdrawn proposal offered a new interpretation of decades-old customs rulings and created uncertainty by potentially reclassifying as “merchandise” much of the drilling equipment used in the US Gulf of Mexico. IADC partnered with other industry associations to submit comments to CBP, along with a separate stand-alone comment letter because we believed that the proposed modifications would erect a significant obstacle to the work of offshore drilling contractors. Thus, we thank CBP for its careful consideration of all submitted comments and look forward to working with the agency as an educative resource on this matter and all others pertaining to the offshore drilling industry.”

On 18 January, the CBP proposed revoking or modifying at least 30 rulings. According to the CBP, these rulings are “contrary” to the original definition of vessel equipment – “portable articles necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board.”

Under the Jones Act, only US-flagged and qualified vessels can transport “merchandise.” US citizens must hold at least a 75% interest in the vessel, according to federal law.

In April, API released a report predicting that the proposed modifications and revisions to the Jones Act rulings could lead to the loss of 30,000 industry-associated jobs as soon as this year. Significant decreases in US oil and gas production and in government revenue were also predicted.