Scrutiny from Congress regarding the Trump administration's waiver of the Jones Act is increasing. Rep. Salud Carbajal (D-Calif.) is seeking answers about whether foreign vessels operating in U.S. waters are following immigration, tax, and maritime laws.
In a letter sent on October 16 to Homeland Security Secretary Markwayne Mullin, first reported by Bloomberg Government, Carbajal expressed concerns about the administration's oversight of this waiver. His worries intensified after reports surfaced that foreign-flagged tankers transported petroleum products worth millions between U.S. ports without proper disclosures.
This letter follows a report by gCaptain in September, which revealed evidence of 14 previously unreported domestic tanker trips, along with a potential 15th. This added to an earlier Bloomberg Government investigation that found at least a dozen foreign vessels had transported over $40 million in petroleum products without appearing in the Maritime Administration’s (MARAD) public waiver records.
These missing trips raised questions about the actual level of foreign vessel activity happening under the emergency waiver. A review of MARAD’s September 16 data showed 255 reported vessel movements under the original waiver from March 17 and its extension in May, but the additional findings suggested this number was incomplete.
MARAD previously informed Bloomberg Government that it does not have the legal authority to compel vessel operators to provide the required reports. It is the responsibility of U.S. Customs and Border Protection (CBP), which operates under DHS, to enforce the Jones Act.
Carbajal, who is the top Democrat on the House Transportation and Infrastructure Committee's Coast Guard and Maritime Transportation Subcommittee, is now questioning whether other federal regulations are being enforced.
“These reports raise significant questions about whether DHS and its agencies are adequately enforcing federal laws regarding foreign vessels in U.S. domestic trade,” Carbajal wrote.
One major concern is the immigration status of foreign crew members working on vessels engaged in domestic trips.
Generally, federal immigration rules do not allow foreign crew members admitted under D nonimmigrant status to work on domestic vessels.
Carbajal asked DHS and CBP to clarify how they enforce this rule regarding foreign officers and crew members on ships operating under the waiver, and what legal authority allows them to work on these voyages.
He also requested details about any instances where crew members were found to have immigration status that did not permit domestic service or had left their vessels, along with any actions taken as a result.
Additionally, the letter raised tax issues after recent IRS guidance stated that income from foreign corporations transporting cargo between U.S. ports under the waiver is considered domestic income. This means it does not qualify for the international shipping income exclusion under Section 883 of the Internal Revenue Code or related treaties.
Carbajal wants to know whether DHS has coordinated with the Treasury Department and IRS to identify foreign vessel owners and operators using the waiver, and if any voyage dates, cargo movements, and other necessary information have been shared to determine potential tax obligations.
He also requested information about DHS enforcement of other requirements relating to maritime security, environmental protection, vessel safety and inspections, wages, labor standards, customs, and harbor maintenance.
These inquiries come as the administration has tightened the waiver process. A second 90-day extension that started on August 17 requires operators to submit a Vessel Availability Request prior to the government checking if a qualified U.S.-flagged vessel is available before allowing foreign vessels.
Carbajal indicated that more than 25 domestic voyages under the current waiver have occurred, with some vessels making multiple trips.
Originally issued in March due to energy supply issues linked to the conflict with Iran, this waiver extension is set to last until November 15.
“The Administration has now authorized this waiver for about 250 days, which makes oversight very important,” Carbajal stated.
“Congress has a duty to ensure that a national defense waiver is not misused as a broader exemption from federal law.”
Carbajal requested a response by October 31, including information about coordination between DHS and the Departments of Defense, Transportation, and Treasury, the IRS, and the Coast Guard.
According to Bloomberg Government, DHS declined to comment and directed questions to the Department of Defense, which has not responded.