IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 01 Mar 2011 | Removal date: open ended
Still in force

Local sourcing

Two departments in the U.S. government had engaged in a dispute over the use of U.S.-flag vessels to transport goods purchased with loan guarantees from the Department of Energy (DOE). DOE had argued that the law that gives U.S.-flag operators priority for transporting government-generated cargo (i.e., the Cargo Preference Act of 1954) did not apply to imported equipment purchased with a DOE loan guarantee. Threatening litigation, the Department of Transportation (DOT) successfully insisted that the requirements be enforced.
The DOE concession on the issue took the form of a change to its statement on cargo preference on a 'frequently asked questions' page about the loan guarantee programs. Following a revision made on March 1, 2011, that page now reads as follows:
 
The Cargo Preference Act establishes certain requirements for the use of U.S. flagged vessels in the movement of cargo in international waters.
The Department of Transportation (DOT) has indicated to the Department of Energy (DOE) its view that the Cargo Preference Act applies to all ocean transport of cargos for projects supported by a DOE Loan Guarantee. DOE does not agree with this point of view, but acknowledges that the issue is not free from doubt. After detailed consultations, the two Departments have agreed, as a matter of policy, that DOE will apply the U.S.-flag requirements of the Cargo Preference Act in administering DOE's loan guarantee program.

owen.barwell@hq.doe.gov, the Chief Operating Officer of the Loan Programs Office.
General information on cargo preference can be found at the Maritime Administration's web site: www.marad.dot.gov/cargopreference. You may also address questions on cargo preference to the Maritime Administration's Office of Cargo Preference and Domestic Trade at (202) 366-4610 or via email to marad.cargo@dot.gov.
 
According to a story in the Journal of Commerce, 'The dispute was closely watched by U.S.-flag interests concerned that if DOE's interpretation of the law prevailed, it could lead to other federal agencies preempting cargo preference requirements.'
 

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