Been running Reg gas to Port Everglades for a while and have been sent to anchor or drift the past couple of times for days on end. The port is jammed with foreign tankers causing delays. One of the pilots had told us that foreign tankers are loading in US ports (T.X., L.A.) heading to freeport to discharge a squirt, then discharging the bulk in Port Everglades. How is this allowed? Seems like a loophole to me.
The pilot is totally wrong about almost the whole thing. The foreign tanker discharges the bulk and reloads finished product. The reloaded product is non-USA origin. 100% legal
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I mean, it’s the same cargo with a bunch of paperwork in between. Legal…yes. Loophole? Also yes.
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It’s not, and they are not.
More likely they are discharging fully and loading a different, blended product, which may or may not (likely is) made up in part or in bulk of similar/same source product combined with non-source product.
Not sure if this holding has since been reinterpreted, but a good explainer with examples:
H190675: 46 U.S.C. § 55102; Continuity of Transportation
As @New3M said, yeah, basically.
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Ok so what has changed? I used to run Port Arthur to Port Ev constantly (circa 2012-2017 or so) and never even saw a foreign tanker in PEV much less had to anchor out waiting on them. Why is this prevalent now when it wasn’t before?
Previously, there was a ban on the export of US crude. The law was change to allow US crude to be exported.
Now a lot of crude is exported on foreign flag ships to foreign refineries. And US refineries get their feed stock from foreign bulk storage via foreign flag ships. And a lot of refined products made from US crude are imported back into the US on foreign flag ships.
I think there has always been a certain amount of that from the Caribbean refineries. The Caribbean refineries were mostly built because the environmentalists would not allow new refineries to be built in the US. This also created a Jones Act work around for the oil companies.
It’s not much of stretch to have products exported from Texas on a foreign flag ship to a bulk storage facility in the Bahamas, then have the same foreign ship load supposedly different or mixed products from bulk in the Bahamas to be imported into the US. They probably never even disconnect the hose. Who knows, they may not even actually discharge or load in the Bahamas.
Foreign flag ships and crews are so cheap compared to US flag ships that the oil companies make extra money by doing this, even if the ships go all the way to European refineries.
We need an export duty on crude of about $10 per barrel, and an import duty on crude oil of about $10 per barrel. We need to keep US crude in the US to assure domestic supply and conserve energy independence. And to make sure that US crude being moved to US refineries travels only on Jones Act ships.
We need to allow new oil refineries to be built in the US.
Then we need export and import duties on refined products to insure energy independence and to prevent circumvention of the Jones Act.
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Now you may be able to lease JA compliant ships, boats and barges to start your own JA trade shipping company:
Its come along in the wake of the Ukraine/ Russian war.
Since US-flag ships in foreign trade are mostly foreign built it is mainly the crew cost that make a difference.
FYI; Since US is a founding member of WTO and IMO and signatory to various trade agreements, there are several restrictions on what kind of unilateral action can be taken involving foreign trade and international shipping.
PS> Inflated management costs and profit margin expectation by shareholders MAY also add to overall costs of US shipping.
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Here’s a good Jones Act loophole that got used for a while.
That was a ridiculous and extremely abusive scheme to avoid the Jones Act. They got away with it for far too long. The Norwegian owners should have gotten prison time for that.
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Has a CEO or board member ever gone to jail?
I’ve never heard of anyone going to prison for a Jones Act violation. In theory, vessels violating the Jones Act can be forfeited to the government, but I’ve never heard of it. Just slap on the wrist fines that are part of the cost of doing business in a banana republic like the US
CBP has way more to do than worry about JA violations. Not a top priority, nor even a blip.
the history of the ways people have come up with to circumvent the cost of JA compliance is long and creative. If you incentivize smart people they will find a way.
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This thread had me trying to find the CFR which allows non US flag to go from US port to US port as you see tankers doing all the time in and/or around Port Arthur. Something about partial discharges or loads being acceptable.
They can do that all they want. They just can’t load in Port Arthur and discharge that cargo in Houston.
Check out the chemical tankers that run around the Gulf before going to Europe. 3 or 4 ports, 12 or more docks before they load all 27 cargoes in their 42 tanks.
Nah, the Norwegian owners of US shipyards building JA compliant ships, or who own ships that operate in the JA trade are not breaking any laws. They just use the law of the land to make money.
Isn’t that “the American way”??
That is the “you set the speed limit, so why are you blaming me for driving the speed limit” argument. It doesn’t fit.
Creating a 100 foot long Canadian rail line (to utilize a Jones Act exemption for Canadian railways) on which a stationary railcar is parked, then trucking fish to the rail car and loading it, only for the fish to be immediately unloaded onto a different truck that then crosses the US Border is a blatant evasion of the law.
It’s amazing that they got away with this for so long.
This is US fish caught in Alaska by US flag boats (I assume Norwegian owned through dual citizen Norwegian/American frontmen) which is then shipped from Alaska on foreign flag vessels (I assume owned by the same Norwegians) to New Brunswick, Canada. I assume that the same Norwegians also created and owned this “Canadian railway”.
I have not researched this beyond the headlines. Why bother? The Government has already done whatever it going to do. Im content to form my own opinion base upon my own assumptions.
To borrow a phrase from a famous US Supreme Court tax case, “to avoid is legal, but to evade is illegal.”
This scheme of evading the Jones Act was held to be illegal. Token fines were negotiate and paid. A slap on the wrist after these Norwegians had smiled all the way to the bank for years. This illegal “Canadian railway” scam was stopped.
Only in a banana republic like the US where politicians are so easily bought with campaign contributions (and bureaucrats are controlled by these politicians) could such a scheme last more than a few days.
Once again, we citizens are very poorly represented, and our tax dollars are wasted by our inept government while anyone with money, can get away with almost anything.
If they had actually shipped the fish on a Canadian railway into the US, all the rest of this would probably have been legal.
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Why would there need to be a CFR specifically allowing that? Anything that isn’t forbidden is allowed…
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