Congress Proposes Bill to Limit Foreign Crews in U.S. Offshore Sector
With activity expected to increase dramatically in the U.S. offshore sector to support the expansion of wind resources in addition to the ongoing oil and gas sector, new legislation is being proposed to close a so-called loophole in the existing rules governing the crewing of vessels under the Outer Continental Shelf Lands Act (OSCLA). According to the bill's sponsors, they are seeking to provide a level playing field between U.S. flagged vessels and foreign-flagged vessels working in the U.S. offshore energy sector by imposing employment limits on the foreign vessels and increasing U.S. oversight to ensure compliance.
“U.S. and Louisiana mariners and maritime companies lose when foreign vessels, which do not pay U.S. taxes, business taxes, or payroll taxes, take advantage of loopholes to hire foreign workers for half the cost,” said co-sponsor of the bill U.S. Senator Bill Cassidy of Louisiana. “This bill levels the playing field to give the American worker a fair shot.”
Current U.S. law requires that all vessels, rigs, platforms, or other offshore structures operating on the U.S. Outer Continental Shelf be manned by U.S. citizens or lawful U.S. permanent residents. The bill’s sponsors are also highlighting that at the end of 2020 the U.S. Congress amended the OSCLA to re-affirm that it applied beyond oil and gas operations to “installations and other devices permanently or temporarily attached to the seabed ... including non-mineral resources.” They contend that the U.S. Coast Guard is not applying the current rules to offshore wind vessels.
“Our bipartisan bill closes an egregious Jones Act loophole so that foreign-flagged vessels are held to the same high standards as US-flagged vessels developing our nation’s offshore energy resources, including for offshore wind projects,” said Representative John Garamendi from California, who along with Garret Graves of Louisiana is sponsoring the bill in the U.S. House of Representatives.
At issue, is 1970s era amendments to the OCSLA that the congressmen believe were added to eliminate potential retaliation by foreign nations against American workers in foreign offshore activities. The amendments created an exemption from hiring Americans or lawful U.S. permanent residents for offshore activities and allows vessels that are more than 50 percent foreign-owned to operate in U.S. waters with foreign crews. Foreign-flagged vessel owners can petition the U.S. Coast Guard for a letter stating that their vessel is more than 50 percent foreign-owned and thus excluded from the requirement to employ U.S. citizens.
“Since labor is the biggest operational expenditure for a vessel operator, operators rely on foreign mariners,” they said in announcing their legislation. “Foreign mariners are often paid 14 to 70 percent less than their U.S. counterparts. Because foreign mariners are not subject to U.S. tax and labor laws, foreign vessels owners are able to leverage the cost savings derived to undercut the charter rates of similar U.S. vessels.”
Contending that the exemption never resulted in the anticipated reciprocal access to foreign waters for U.S. mariners, the proposed bill would limit foreign vessels that gain the exemption to work on the Outer Continental Shelf to only employing U.S. mariners or citizens of the nation where the vessel is flagged. They would also limit the number of visas for crew on those vessels to two-and-a-half times the vessel’s safe manning document. Crew working aboard those vessels would also be required to secure a Transportation Worker Identification Credential (TWIC) to improve oversight.
Other provisions of the legislation require the U.S. Coast Guard to inspect those foreign vessels annually to review compliance with the crewing requirements as well as the owner’s entitlement to the exemption. Exemptions could be revoked and fines of $10,000 per day imposed for violations. Existing exemption letters would expire six months after enacting the legislation and future exemptions would expire every 12 months.
The bill sponsors cite similar limitations on foreign workers in neighboring countries including Mexico and Brazil. Further, they cite obvious support from U.S. organizations including the Shipbuilders Council of America and Offshore Marine Services Association to the proposed bill which they are calling the American Offshore Worker Fairness Act.