Customs Withdraws Proposal to Revoke Jones Act Waivers

By Mark Edward Nero

US Customs and Border Protection announced on May 10 that it is withdrawing a January proposal to revoke waivers that have been previously granted to oil and gas companies.

The proposal, which was issued two days before Donald Trump’s inauguration as President, would have potentially been devastating for foreign-based oil and gas companies that move product in and around the United States.

The Jones Act, passed in 1920, prohibits foreign flagged vessels from transporting merchandise between points in the United States and mandates that vessels transporting such merchandise be owned and operated by American companies and be staffed by crews of Americans. Customs has provided waivers to the rule for about 40 years.

The oil and gas industry, for the most part, was pleased by the news.

“By rescinding the proposal CBP has decided not to impose potentially serious limitations to the industry’s ability to safely, effectively and economically operate,” said Erik Milito, director of upstream and industry operations for the American Petroleum Institute.

However, a group representing US companies operating offshore service vessels, the Offshore Marine Service Association, issued a statement calling Customs’ reversal deeply disappointing.

“This decision hurts American workers, vessel owners and US shipbuilders,” the association said in a statement. “We call on President Trump to take immediate action and correct these damaging rulings that have continued to put foreign companies first and American companies and workers last.”

Customs said that it has received over 3,000 comments about the proposal before it was pulled, with many in opposition to the possible waiver revocation.

$4 Million in Illegal Car Parts Seized at Port

By Mark Edward Nero

The US Customs & Border Patrol on Feb. 6 said that it has seized more than $4 million in illegal car parts at the Port of Oakland in a shipment from China falsely listed on the manifest as light-emitting diode power supplies.

Customs officials said that officers examining a commercial shipment at the port in mid-October found that instead of containing the LED supplies, it contained 25,600 high-intensity discharge (HID) conversion kits and ballasts, and that the kits’ street value runs anywhere from $150 to $500 apiece, bringing the total estimated value of the seizure to an estimated $4.1 million.

According to Customs, HID kits are used to convert stock vehicle headlights to higher-intensity HID lamps, and are regulated by US Department of Transportation.

Customs officials said they worked with the Department of Transportation to determine that the kits and ballasts weren’t in compliance with US standards and didn’t meet dimensional, electrical and marking requirements.

According to Customs, HID lights can be dangerous to other drivers because they’re very bright, and can result in fire hazards if they are improperly installed in vehicles.

“Products that do not comply with rigid safety standards present a significant hazard to consumers,” Brian Humphrey, Customs’ San Francisco field operations director, said in a statement.

The illegal parts, according to Customs, will likely be destroyed.

Sequestration Affects Customs Operations

Mandatory steep cuts in the federal budget that went into effect March 1 due to a government process called sequestration will lead to workforce reductions and long waits for cargo inspections at US Customs field offices at the Los Angeles-Long Beach port complex and elsewhere, according to Customs officials.

“We anticipate significant potential impacts to cross-border travel and trade,” Customs Deputy Commissioner David Aguilar wrote in March 2 letter to members of the trade and travel industries. “These negative impacts are going to increase as we enter peak travel seasons.”

The sequestration cuts, which include furloughs, reductions in overtime and a hiring freeze, are equivalent to the loss of up to several thousand officers, according to Customs.

Among the impacts Aguilar listed was a decrease in service levels in cargo operations, including the possibility of waits of five days or more at major seaports of container examinations, and “reduced flexibility” to maintain or extend operating hours or respond to requests for new services.

Aguilar said the letter was part of an ongoing dialogue between the Dept. of Homeland Security, U.S. Customs and private stakeholders and that there are plans to continue direct communications on the issue.

“CBP is very concerned about the ramifications of sequestration and we will endeavor to operate in a manner that is least disruptive to our mission and to your businesses,” Aguilar said in the letter, which was sent to 28 trade and travel entities, including the Border Trade Alliance, Cruise Lines International Association, Trade Support Network and World Shipping Council.