Foreign-flag oil tankers can be used to ship Alaskan crude oil to the Virginia Island where it is refined into oil products for shipment to the United States, a federal judge here has ruled.
The ruling is the first of its kind and was made in a suit brought by the American Maritime Association, the Shipbuilder Council of America, and the Seafarers International Union of North America, all of whom claimed the foreign-flag shipment violate a federal statue that requires that shipments between U.S. ports be made only by American vessels.
U.S. District Judge Oliver Gasch rejected that argument, saying the crude oil was changed enough by refining in the Virgin Islands so that the products ultimately shipped into the U.S. were different from the products that left Alaska.
The case involved the use of a Liberian tanker by the Amerada-Hess Corp. to ship $20 million worth of crude oil from Valdez to its refinery in the Virgin Islands. Ultimately, the oil products made from it would come into the U.S.
The groups who brought the suit said the shipment, which left Alaska on Sept. 3, violated the Joint Act requiring the use of only American vessels for such shipments. They sought a temporary court order blocking the shipment at the time, but it was denied.
American shipping groups had argued for several years that such shipments would be illegal but the U.S. Custom Service had said it could not take up that issue until a shipment actually left Alaska.
The various shipping groups claimed in their suit that the use of foreign flag tankers from Alaska would deprive American ships seaman of jobs they would otherwise have.
They argued also that Congress intended to require American ships to be used for all phases of shipments from Alaska, in an attempt to prevent environmental hazards. Gasch said that intent was not written into the applicable statutes, as it should have been if Congress wanted to carry out its intentions.
According to evidence presented in the suit, the crude oil will be refined in the Virgin Island into various petroleum products. Most of the oil to be refined there will become fuel oil for power plants and homes, the evidence stated.