Customs denies request for Jones Act waiver

Customs denies request for Jones Act waiver

U.S. agencies concur: port lockout did not create a need to suspend cabotage law

      The U.S. Customs Service in December refused to waive the Jones Act for 90 days.
      The limited waiver had been requested twice by the National Industrial Transportation League, which said foreign-flag domestic ship services were necessary to help clear backlogged cargoes from West Coast docks. The congestion resulted from the 10-day lockout of the International Longshore and Warehouse Union by the Pacific Maritime Association in October 2002.
      Signed into law as Section 27 of the 1920 Merchant Marine Act, the Jones Act holds all U.S. point-to-point waterborne commerce for merchant vessels owned, built, flagged and manned in the U.S.
      Under a 1950 law, Customs can waive Jones Act requirements, but only at the request of the Secretary of Defense, and only in the interest of national security. Customs can also issue an administrative "non-enforcement order," which can have the same effect as a waiver, and which implies no penalty for Jones Act violations.
      In a letter to the NITL, a shippers' trade association in Arlington, Va., Customs said the Department of Defense and the Maritime Administration in the Department of Transportation had found no reason to open coastal trades to foreign-flag ships.
      "The DOD ... has determined that 'there are no direct and immediate adverse impacts on defense operations that, of themselves, could form the basis for a waiver request by DOD,'" wrote Timothy E. Skud, deputy assistant secretary of the Customs Service. "MARAD provides that, notwithstanding your assertion to the contrary, 'to the extent the Maritime Administration is aware of cargoes stranded in West Coast ports, there exists sufficient available Jones Act cargo capacity to move the cargo.'"
      Skud added: "We have reviewed your request in light of the advice of the other interested federal agencies and do not believe that the granting of the waiver is justified. Accordingly, your request for a waiver ... is denied."
      Also seeking Jones Act waivers for West Coast trade were several foreign-flag lines and the government of Japan, which in 1993 asked the World Trade Organization to determine whether the Jones Act complies with WTO rules. The trade dispute adjudicating authority has thus far not ruled on Japan's Jones Act complaint.
      When the waiver requests were filed after the lockout ended, Maritime Administrator William Schubert said in a letter to Customs Commissioner Robert C. Bonner that conditions resulting from the lockout did not meet "the definition of the interest of national defense." Schubert asked Bonner to direct all Customs personnel to "enforce the provisions of the Jones Act."
      Schubert also explained that MARAD was "carefully evaluating all potential alternatives that would alleviate congestion in the ports and expedite the delivery of cargo to its final destination." He urged "all non-Jones Act qualified carriers" to "consider utilizing the available domestic carriers for this purpose."
      Schubert identified five available Jones Act carriers, including Totem Ocean Trailer Express, or TOTE, which owns the roll-on/roll-off trailerships Westward Venture, Great Land and Northern Lights, and which has two large roll-on/roll-off ships under construction at National Steel and Shipbuilding Co. in San Diego. The current TOTE fleet is operated in Pacific Northwest domestic trade by Interocean Ugland Ship Management, which has collective bargaining agreements with American Maritime Officers. IUM will also operate the new TOTE construction under AMO contract.

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