May 24, 2017 — SEAFOOD NEWS — Fishermen’s Finest Inc. and the Dakota Creek Shipyard in Anacortes, WA, have run into a Jones Act issue with the construction of F/V America’s Finest, which is the largest catcher processor to be constructed in the US in nearly 30 years.

Fishermen’s Finest operates F/V Amerca No. 1 and the F/V Interprid.  These two catcher-processors are part of the Amendment 80 fleet, focusing on flatfish in the Bering Sea.  Fishermen’s Finest recently celebrated their 30th anniversary, and with the America No. 1 they were the pioneer American company producing H&G flatfish from the Bering Sea.

The flatfish fleet, along with the cod longlining fleet, has seen a series of new vessel investments.  The O’Hara corporation, also fishing flatfish, took delivery of the new freezer trawler Araho in January of this year.  That vessel is 194 feet, and takes a crew of 54.  It was built by Eastern Shipbuilding in Panama City, Florida.

The F/V America’s Finest, scheduled for delivery in November 2017, is a larger version of similar design, being a Skipsteknisk AS (ST-116) vs the 115 model which was built for O’Hara.  The America’s Finest is 261 ft vs. the 194 feet of the F/V ArahoA, and is being built by the Dakota Creek shipyard. It is about 86% complete, and is scheduled for delivery in November 2017.  It has 49 births.

The issue involves some very complex rules under the Jones Act for what constitutes American built vessels. The Jones Act prohibits vessels not built in the US from participating in either US fisheries within the EEZ, or in the coastal trade between US ports.

Dakota Creek, according to documents circulated industry and congressional offices and provided to SeafoodNews, made an inadvertent mistake in interpreting the regulations.

The US Coast Guard allows the use of foreign steel in basic hull materials for US vessels.  However, they only allow steel sheets, plates, beams and bars that are not fabricated or worked on in any way abroad before being imported.  If a foreign worker so much as drills a hole in a plate, that disqualifies it, and it becomes a fabricated major component.

Foreign fabricated components are limited to 1.5% of the vessels total steel weight.  If they exceed this level, the vessel is disqualified as a US-built vessel.

Dakota Creek bought some hull shell plating that was subject to bending and cutting in Holland, which the company did to take advantage of new cold forming technology for those sections of the bow and stern that used precisely shaped designs to reduce drag and fuel consumption.  That technology is not yet available in the US.

Dakota Creek’s representatives say they thought this cold forming technology would be allowed because the bow and stern plates were subject to a great deal of additional cutting bending, fitting, beveling and other work all done in the US at Seaport Steel. It turns out that Dakota Creek’s understanding was not correct as per the Coast Guard.

The Coast Guard has calculated that the percentage of fabricated foreign steel to be greater than 1.5%, because of a small piece of work done on many separate plates.  This is the case even though the total weight of foreign steel is less than 7%, which is the total allowance by the Coast Guard.

If the vessel cannot get a waiver, it cannot be used in a US fishery.  Such an outcome would force a sale of the vessel to foreign interests, most likely Russia, at a very steep discount, and would likely bankrupt both Fishermen’s Finest which has already paid most of the cost of the vessel, estimated to be between $60 and $80 million, and the Dakota Creek Shipyard.

Both companies are major employers and vital to the economy of Washington State.

The waiver is something that must be granted by Congress through a legislative fix.  Draft language is already being circulated for insertion an a suitable bill that would allow the vessel to be completed and fish in the US fishery as planned.

The vessel meets all other requirements for US fishing vessels, having been built and assembled in Anacortes, Washington, with 375 people working on the vessel over the past three years, spawning  another 1200 indirect jobs.

Lawyers believe that the only two options are the grant of a Congressional waiver, or a sale of the vessel to a foreign buyer at a loss that would be catastrophic for Washington State and the US Fishing Industry.

Undoubtedly Dakota Creek will have questions to answer, although this might be simply an embarrassing mistake. It seems to us that granting a waiver is the correct and only suitable choice, and we expect that view will also be widely shared in the West Coast fishing industry and the Amendment 80 fleet, once the full details are known.

The waiver would also allow Dakota Creek to complete a commitment to Seaport Steel to bring the new cold forming technology to the US, where it will benefit future vessel construction.

Dakota Creek has requested industry and congressional support for this waiver.

This story originally appeared on SeafoodNews.com, a subscription site. It is reprinted with permission.