Energy Department Yields on U.S.-Flag Preference

Energy Department Yields on U.S.-Flag Preference

A standoff ended Tuesday between the departments of Transportation and Energy over the use of U.S.-flag vessels to transport goods purchased with DOE loan guarantees.

"This morning the language on the Department of Energy's Web site has changed to indicate how we will be working with (DOT) to make sure those requirements are met," Maritime Administrator David T. Matsuda told members of the House Transportation and Infrastructure subcommittee on Coast Guard and maritime transportation.

Matsuda said the concession by the energy department avoided costly and time-consuming litigation over the matter. DOE maintained that the 1954 Cargo Preference Act, which gives U.S.-flag operators priority for transporting government-generated cargo, didn't apply to imported equipment purchased with a DOE loan guarantee.

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.

DOE changed its statement on cargo preference on a FAQ page about the loan guarantee programs.

"The Department of Transportation has indicated to the Department of Energy its view that the Cargo Preference Act applies to all ocean transport of cargos for projects supported by a DOE loan guarantee," the statement reads. "DOE does not agree with this point of view but acknowledges that the issue is not free from doubt."

Matsuda told the committee that Marad was "working closely with our partners in the administration to ensure that the cargo preference requirements are applied fairly, consistently and with common sense."

-- Contact R.G. Edmonson at bedmonson@joc.com.