Offshore Drilling Blowout Preventer A new rule would damage Trump’s plans for more U.S. energy.
https://www.wsj.com/articles/offshore-drilling-blowout-preventer-1492555766
President Trump is filling out his Administration, but too slowly, and an offshore drilling proposal shows why having personnel to mind the store is so important. Barring a late reversal, Mr. Trump may abet his predecessor’s goal of undermining American energy production.
Two days before President Obama left office—the encyclopedia definition of a midnight regulation—U.S. Customs and Border Protection (CPB) rolled out a new rule on the Jones Act. Under this 1920 law, all ships transporting goods between U.S. ports must be U.S.-flagged, constructed in the U.S., owned by U.S. citizens and crewed by U.S. citizens.
Most ships in the offshore oil and gas industry like crewboats or platform-supply vessels already comply with the Jones Act in the Gulf of Mexico, Alaska and elsewhere. But Customs now wants to extend the mandate to certain specialized drilling, construction and engineering vessels. Currently, about 30 CPB regulatory precedents stretching back 40 years exempt these ships from the Jones Act.
The reason is that the drilling industry is global and mobile. Heavy-lift construction vessels, for example, are used to install moorings in deep water and perform other specific, limited tasks. There are 76 in the world—and none of them comply with the Jones Act. The international fleet of crane barges tops out at 173, only 17 of which qualify.
If the CPB reverses historic precedent, the damage will be immediate and disorderly. Current development will be delayed or the rule could even become a de facto moratorium. Removing foreign-flagged vessels from the U.S. supply chain will make future projects riskier and more expensive. Proponents claim U.S. fleets can simply buy new equipment, but that takes time and in any case is a misallocation of resources to satisfy an arbitrary regulation.
The motives of Mr. Obama and career CPB staff are obvious: to reduce oil-and-gas investment. Less obvious is the support of some Republicans in Congress, especially the Louisiana delegation led by Majority Whip Steve Scalise. They’re cheering because they think blocking foreign competition will benefit the local maritime trade.
Perhaps Mr. Trump even buys into this America-first logic. But deep water operations in particular don’t have the scale to support a purely domestic business. Any short-term boon to boat building or shipyards will be exceeded by the disruption to jobs and investment, and the larger economy will lose to the extent there is less oil and gas development.
Mr. Trump only recently nominated a permanent CPB commissioner, and in the meantime the bureaucracy seems to be riding herd. The new rule could be finalized as soon as this month. Mr. Trump is otherwise committed to domestic energy and economic deregulation, and he could serve both goals by ordering a top-to-bottom review of Mr. Obama’s destructive parting gifts.
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