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Dakota Creek seeks Jones Act waiver for new processor vessel

Sep 29, 2017 01:28 PM
America’s Finest, shown under construction in January at Dakota Creek Industries in Anacortes, Wash., has run afoul of the Jones Act for having too much foreign-fabricated steel in its hull.

Courtesy BriarCraft

America’s Finest, shown under construction in January at Dakota Creek Industries in Anacortes, Wash., has run afoul of the Jones Act for having too much foreign-fabricated steel in its hull.

A catcher-processor vessel that’s nearly complete at Dakota Creek Industries won’t be able to fish in U.S. waters unless Congress approves a Jones Act waiver for it. The Anacortes, Wash., shipyard used too much steel fabricated in the Netherlands in the hull of the new 261-foot vessel, violating the statute.

The company is under contract to provide a Jones Act-compliant vessel to Fishermen’s Finest in Kirkland, Wash. Work on the boat, America’s Finest, should be complete in November. The vessel was to start trawling next year in the North Pacific, Gulf of Alaska and Bering Sea.

The boat’s designer is Skipsteknisk AS in Norway. According to Skipsteknisk, “the vessel design has a highly efficient hull shape, which reduces hull resistance when sailing in ice or at open sea.” Dakota Creek had steel plates for the hull bent and cut in the Netherlands, with additional bending, fitting, beveling and welding done in Anacortes. In April, the company self-reported that under Jones Act rules it had used too much foreign-fabricated steel. Roughly 8 percent of the steel in America’s Finest is foreign.

Vessels qualifying for U.S. coastwise trade have to satisfy Coast Guard regulations under Title 46 CFR 67.97. All major hull and superstructure components must be U.S.-fabricated, and the boat has to be assembled in this country, Coast Guard spokeswoman Lt. Amy Midgett said in July.

“Hull materials of foreign origin — including steel sheets, plates, beams and bars — can be used, but if any drilling, cutting, shaping, forming or processing was done on these materials outside the United States, they’re considered foreign-fabricated,” she said. The weight of foreign-origin materials is limited to 1.5 percent of a ship’s steel weight under Coast Guard rules.

In a May 26 statement, Dakota Creek gave its account of what happened: “Ordering basic unshaped foreign steel plate for use in a U.S.-flag vessel is permissible under U.S. law. In this case, in order to obtain state-of-the-art, cold-formed hull plates for areas of the hull requiring shape, a foreign cold-forming process was used to preliminarily prepare these plates. ... This work was minimal, and subsequently, considerable finishing fabrication was done in the United States before the plates could be completed and installed.”

After the company acknowledged the problem, a request for a Jones Act waiver for the boat was sponsored by U.S. Rep. Rick Larsen, D-Wash., and inserted into the Coast Guard Authorization Act of 2017. It was approved on May 24 by the U.S. House of Representatives’ Transportation Committee. On July 20, the House approved a reauthorization for the Department of Homeland Security that contained the waiver request.

In late July, Dakota Creek was waiting to see if Sens. Patty Murray or Maria Cantwell, both Washington Democrats, would introduce a waiver request in the Senate. “Our office has been working with Dakota Creek to find a solution,” Bryan Watt, spokesman for Cantwell, said at the time.

The ship’s ability to fish in U.S. waters is at stake and jobs at Dakota Creek are in jeopardy, according to Larsen’s Washington, D.C., office. In late May, 225 of the company’s more than 300 employees wrote to the congressman, urging him to sponsor the waiver amendment.

The Pacific Seafood Processors Association and United Catcher Boats, trade groups for fishing interests, oppose the waiver. “PSPA believes that before any additional action is taken on this waiver request, all parties would benefit from understanding the reasons for and implications of it,” Glenn Reed, president of the Seattle-based group, said in July. “We recommend a full Coast Guard investigation into the circumstances and also a congressional hearing to give the many interests that would be impacted the opportunity to be heard.”

The PSPA represents processors in Alaska and Washington, and United Catcher Boats represents vessels supplying shoreside plants and mother ships in the Bering Sea and Gulf of Alaska. The PSPA this summer sent a letter to the American Maritime Partnership, a Washington, D.C.-based coalition of shipowners, asking the Coast Guard to investigate. UCB wrote a letter to the Coast Guard.

Builders want everyone to play by the same rules. Build requirements have long been known by operators in Alaska’s fisheries, and Dakota Creek is experienced, having delivered many dozens of Jones Act and U.S. Navy vessels since its founding in 1975. Last year, it completed the 191-foot Alaskan cod longliner Blue North, which also was designed by Skipsteknisk.

Dakota Creek and Fishermen’s Finest didn’t respond to requests for comment in late July.

If Dakota Creek is granted a Jones Act waiver, competitors might demand a gesture for that pardon. For instance, Dakota Creek might be encouraged to bring Dutch cold steel-press technology, which isn’t widely available in the United States, here for the company’s competitors to use.

For Dakota Creek, replacing the hull in America’s Finest isn’t logistically or financially feasible. If it isn’t granted a waiver, the company would most likely sell the vessel overseas and probably at a loss, since U.S. build costs are higher than in many other nations with fewer regulations and lower wages.

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