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Domestic Shipping

U.S. Shipping in U.S. Waters

Domestic waterborne transportation is safe, reliable, efficient and an established mainstay of America’s national transportation system. This service is provided by U.S.-flag coastwise qualified (Jones Act) vessels that provide essential transportation between ports, coastlines and almost all states and territories -- including Alaska, Hawaii, and Puerto Rico. Each year, tens of thousands of vessels transport over a billion tons of cargo, with hundreds of ferry operators transporting millions of passengers, contributing billions to our nation's economy through freight and passenger revenue, taxes and private investment. This trade is critical to our economy and national defense to ensure both reliability of domestic service and a reliable sealift partner in the event the U.S. needs to deploy overseas in a contingency.  To ensure the survival of this key industry, Congress has passed legislation (the Jones Act) reserving this waterborne domestic trade to specific U.S. vessels.

The Jones Act

A majority of U.S. domestic shipping regulations are driven by the Jones Act (46 U.S.C. § 55102), a section of the 1920 Merchant Marine Act that requires merchandise being transported by water between U.S. points, even by way of foreign ports,  to be shipped aboard vessels that are 1) U.S.-built 2) U.S.-citizen owned and 3) registered in the U.S. This encourages a strong U.S. Merchant Marine for both economic security and national defense by fostering a U.S.-flag fleet that can also be leveraged for U.S. interests during war or emergency.

The Jones Act Waiver Processes —46 U.S.C. § 501

An often-asked question is “can the U.S.-owned, -built, -crewed, - registered requirements of the Jones Act be waived?”  The answer is yes, however, Jones Act waivers are rare as the only basis for a waiver is “interest of national defense.”  There are two types of Jones Act waiver request processes, one for the Secretary of Defense and one for non-Defense entities.

For the Secretary of Defense, under 46 U.S.C. § 501 (a), he or she may request that the Secretary of Homeland Security waive the Jones Act to the extent the Department of Defense considers such a waiver necessary in the interest of national defense. In these cases, U.S. Customs and Border Protection, per a delegation of authority from the Secretary of Homeland Security, processes and can approve these waivers. 

For all other (none Department of Defense) waiver requests, the Secretary of Homeland Security is the only waiver authority, and is only authorized to grant a waiver if he or she considers it necessary in the interest of national defense under (46 § 501(b)).

Consequently, when a waiver request is submitted, the Department of Homeland Security screens civilian entity request and makes a rapid assessment regarding whether there is sufficient “interest of national defense” to proceed. 

If the waiver application passes the test for sufficient interest in national defense, the Maritime Administrator is formally consulted regarding the availability of qualified United States flag capacity to meet the national defense requirements.  The Maritime Administrator is also directed to provide advice regarding how the coastwise qualified U.S.-flag fleet can be enabled to meet the national defense needs.  With these formal determinations onboard, the Secretary of Homeland Security makes the final waiver decision.

The Maritime Administrator must also inform the Secretary of Transportation when he or she issues formal advice, and must post non-availability advice on the Maritime Administration website.  In cases where such determinations are made, MARAD will post its formal non-availability advice here:

Jones Act Non-Availability Advice Determinations

[No determinations made to date]

Special Exceptions

MARAD also administers the following, highly specialized waiver programs:

Small Vessel Waiver Program. Title V of 46 U.S.C. § 12121 authorizes MARAD to administratively waive Jones Act U.S.-build requirements on a case-by-case basis for foreign-built small passenger vessels designed to carry 12 passengers or less.  Approximately 150 granted a year.

Launch Barge Waiver Program. On extremely rare occasions, the launch of an exceptionally large oil rig or offshore platform requires the use of a foreign-built launch barge. 46 U.S.C. § 55108 allows MARAD to make determinations allowing the use of these launch barges when no U.S.-built launch barge is available or technically appropriate. No new waivers have been requested or granted in recent years, however one waiver was granted in 2014.

Anchor Handling Waiver Program. Similar to the Launch Barge Program, MARAD is authorized to make determinations under P. L. 111-281 allowing the use of foreign anchor-handling vessels (used to position mobile offshore drilling units) if no U.S.-flag vessel is available. This specialized MARAD program only applies to operations in the Beaufort Sea and Chukchi Sea, adjacent to Alaska. As petroleum development companies have curtailed exploration and production in these areas, there have been no new waivers granted since 2015.

Aquaculture Program. Per the enactment of the Coast Guard Authorization Act of 2010, codified at 46 U.S.C. § 12102, the Secretary of Transportation has the discretionary authority to issue waivers allowing documented vessels with registry endorsements or foreign flag vessels to be used in operations that treat aquaculture fish for or protect aquaculture fish from disease, parasitic infestation, or other threats to their health when suitable vessels of the United States are not available that could perform those services. The Secretary has delegated this authority to the Maritime Administrator. MARAD has recently been granting approximately four waivers of this type per year.

Oil Spill Vessel Response Vessel (OSRV) Agreement. The Maritime Administration entered into a Memorandum of Agreement with the U.S. Coast Guard, the Environmental Protection Agency and the State Department on July 29, 2010 to expedite requests for exemptions for foreign OSRVs pursuant to 46 U.S.C. § 55113. The Maritime Administration’s role in this process is to assess the market place, and determine U.S.-flag OSRV availability before a decision is made to use a foreign vessel. Used in DEEPWATER HORIZON Spill Response.

Enforcement

U.S. Customs and Border Protection (known widely as "Customs") has direct responsibility for enforcing the Jones Act, but MARAD will first attempt to line up a U.S.-flag vessel before/if Customs allows the shipper to use a foreign vessel so long as it does not impede national interests or defense. Here is the typical process:

Scenario A. A shipper wants to move something anywhere in U.S.-controlled waters for the purposes of U.S. domestic trade, and for whatever reason, they intend to use a foreign-built ship.

  1. Shipper contacts Customs and requests permission to use a foreign-built ship
  2. By law (46 U.S.C. § 501), MARAD is the Federal agency that helps the shipping public locate qualified and available U.S.-flag vessels for domestic (and international) cargo. MARAD searches the U.S.-flag domestic shipping fleet for a vessel that meets the specific request/need.
  3. MARAD makes an official Jones Act availability determination and reports it to Customs
  4. Per the Defense Authorization Act of 2013, MARAD also publishes their determination to the Federal Register within 48 hours
  5. Customs informs shipper of qualified and available vessel, and shipper uses that vessel or forfeits right to ship
  6. If there are no suitable vessels, shipper can recieve a waiver pending Customs review and approval

Scenario B. It has been discovered that a shipper moved something in U.S.-controlled waters for the purposes of U.S. domestic trade but did not use a U.S.-flag vessel OR did not obtain a waiver OR was denied a waiver and still used a foreign-built vessel. Any of these scenarios will result in significant financial, political and/or nautical movement penalties. For details, contact the Office of Cargo and Commercial Sealift.

Waivers

If a U.S.-flagged vessel cannot be procured, the shipper must obtain a waiver to operate in U.S. waters or complete the requested shipping action. MARAD administers the following waivers: 

  • Small Vessel Waiver. Title V of 46 U.S.C. § 12121 authorizes MARAD to administratively waive Jones Act U.S.-build requirements on a case-by-case basis for foreign-built small passenger vessels designed to carry 12 passengers or less. Visit our Small Vessel Waiver Program page for more information.
  • Launch Barge Waiver. On extremely rare occasions, the launch of an exceptionally large oil rig or offshore platform requires the use of a foreign-built launch barge. 46 U.S.C. § 55108 allows MARAD to make determinations allowing the use of these launch barges when no U.S.-built launch barge is available or technically appropriate. Contact the Office of Cargo and Commercial Sealift for more information.
  • Anchor Handling Waiver. Similar to the Launch Barge Program, MARAD is authorized to make determinations under P. L. 111-281 allowing the use of foreign anchor-handling vessels (used to position mobile offshore drilling units) if no U.S.-flag vessel is available. This specialized MARAD program only applies to operations in the Beaufort Sea and Chukchi Sea, adjacent to Alaska.

Questions?

For questions about Domestic Shipping or any of the above programs, contact the Office of Cargo and Commercial Sealift.

Updated: Wednesday, November 6, 2019