What is the Jones Act?
The Merchant Marine act of 1920, better known as the Jones Act, was enacted to create a safe network of merchant mariners within the United States following World War I, in reaction to the American fleet being destroyed by the German navy. The act requires all goods shipped between U.S. ports to be transported by U.S. vessels (and operated primarily by Americans). It further calls for providing the nation with a merchant marine that can transport goods between U.S. ports, increase national security during times of war, and support a U.S. maritime industry.
Are Offshore Oil Rigs Considered Vessels According to the Jones Act?
Under the Jones Act, an oil rig is considered a vessel, which means that employees injured on the job are entitled to rights and benefits under maritime law. The definition of a vessel according to 46 CFR 197.204 is as follows:
Vessel means any waterborne craft including mobile offshore drilling units required to have a Certificate of Inspection issued by the Coast Guard or any waterborne craft connected with a deepwater port or within the deepwater port safety zone, or any waterborne craft engaged in activities related to the Outer Continental Shelf.
Based on this definition, in most cases an oil rig is considered a vessel and is covered by maritime law.
How Does the Jones Act Affect the Oil Industry?
The Jones Act restricts the domestic waterborne transportation of oil, gas, and other goods to vessels that are U.S.-flagged and built, as well as mostly U.S.-crewed and owned. Meeting these requirements isn’t cheap for the oil industry. A U.S.-built tanker costs nearly 4 times more than one built overseas ($150 million versus $40 million), while operating costs for the oil and gas industries are also significantly higher. The inevitable result is expensive shipping rates that can make it cost-prohibitive to transport oil within the U.S., thus making imports more attractive for many companies.
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Is an Oil Platform Considered a Ship?
Platforms are stationary structures while vessels are large ships responsible for transporting oil, supplies, and workers. However, certain vessels such as drilling rigs blur the line between vessel and platform by taking on the duties of both.
Is a Drilling Rig a Vessel?
Under the Jones Act, an oil drilling rig is classified as a vessel, which means that workers injured on a rig are afforded certain rights and benefits under maritime law.
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