Jones Act limbo

Two judges' orders cutting converted vessels from the the US Jones Act now are in limbo as one heads for an appeals court.

A judge in Virginia has vacated a recent ruling that would have stripped coastwise trading endorsement of Matson Navigation’s 2,000-teu, 1,200-car Mokihana (built 1982) in order to wait out the appeal over a tanker owned by Seacor Holdings.

Appeal to be heard

The decision comes after the Fourth Circuit Court of Appeals announced that it will review the case of 51,000-dwt Seabulk Trader (built 1983, rebuilt 2007), one of eight tankers owned by the Seabulk Tankers unit of Fort Lauderdale, Florida-based Seacor.

The Mokihana calls at Long Beach after conversion work was partially completed in China.

Both vessels underwent conversions that involved work at Chinese yards, and a key question in both cases involved whether a major component was added that would run afoul of the Jones Act.

Under the federal law, only vessels with the coastwise endorsement may trade between two US ports. Foreign-built ships, as well as ships whose conversions are deemed foreign rebuilds, are not eligible for the endorsement.

Oakland-based Matson Navigation, a 17-ship liner operator, had its Mokihana converted from a containership to a conro by adding a vehicle garage, with some of the work cone in China.

The Seabulk Trader, meanwhile, was converted into a double-hull vessel, also with work done at a Chinese yard.

Shipbuilders sue

In both cases, the Shipbuilders Council of America sued the US Coast Guard’s rulings that the ships were not rebuilt abroad. Now that decision will be scrutinised by appellate judges in the Seabulk Trader case.

“Because that review will involve a consideration of the Coast Guard's interpretation of ‘major component,’ a potentially dispositive issue in this matter, it is appropriate to stay this matter,” Judge TS Ellis, who is presiding over the Mokihana case, writes in his recent ruling. (Click here for the full ruling.)

In a recent securities filing, however, Matson parent Alexander & Baldwin seeks to distance the Mokihana’s conversion from that of the Seabulk Trader.

“While the Seabulk Trader case involves certain issues similar in nature to certain issues in the Mokihana case, Matson believes the two cases are distinguishable in various respects,” the company said.

Marc Fink, the Sher & Blackwell attorney representing the Shipbuilders Council, says Ellis' rulling is an understanable effort for efficiency, since a future appeals court decision will have an impact on three cases, including a recently filed lawsuit involving the 51,700-dwt Seabulk Challenge (built 1981).

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