Offshore Crewing Requirements: Could It Make Things Worse?

by Blank Rome LLP
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It has been years (2009) since I last wrote an article discussing the availability of U.S. citizens to work offshore in support of oil and gas projects during a downturn in the economy.  And now, it is even worse.  With the price of oil and gas remaining depressed for many months now, and the many new developments related to drilling ashore, and domestic vessels remaining stacked in the Gulf of Mexico (“GOM”), companies are working hard to find work in any market around the world.  This downturn in activity also means less jobs for U.S. citizen seafarers.

This of course all means that everyone is now looking for “workarounds” or novel ideas to find work, which is, of course, expected and the right thing to do under the circumstances.  One interesting idea that is getting some attention is a recent legislative proposal to change the way manning exemptions are granted by the U.S. Coast Guard under existing law that has been in existence for almost 40 years under amendments made to the Outer Continental Shelf Lands Act (“OCSLA”) in 1978.  By way of background, we provide the following before discussing this proposal.

Current Requirements

Through these OCSLA amendments, Congress announced that the U.S. Constitution laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the Outer Continental Shelf (“OCS’), all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed.  What this means in simple terms is that, in general, all vessels and non-vessels (such as platforms) conducting operations on the OCS must be manned or crewed by citizens of the United States or resident aliens.

However, there is an exemption that allows foreign-flag vessels that are over 50 percent foreign-owned or foreign-controlled (i.e., bareboat charter) to engage in U.S. OCS activities using foreign citizen crewmembers.  U.S. law also gives the Coast Guard authority to deny an exemption request where the foreign country of the owner or party with effective control has implemented national manning requirements preventing U.S. citizens from working in that country’s OCS.  The intent of this exemption was to protect U.S. citizens working on a U.S.-flag OCS unit on a foreign continental shelf from being forced to be replaced with a foreign citizen by the coastal nation of that foreign country.

Procedurally, the Coast Guard issues a letter of exemption upon request authorizing the employment of foreign citizens aboard foreign-flag units engaged in OCS activities once the owner/operator certifies foreign ownership or control.  This is typically the procedure that many foreign-flag vessel owners and operators follow in order to continue to use their normal foreign citizen crew complement when engaged in OCS activities for safety purposes to maintain their crews with the special skills and experience necessary to operate these specialty vessels.  This does not take away jobs from U.S. citizens because they are generally not trained to perform the specific specialized operations on these offshore foreign vessels.

New Crewing Proposal

As we understand it, one proposal under consideration would require that any exemption granted to a foreign-flag vessel that is more than 50 percent foreign-owned should limit the foreign citizen crew members to the nationality of the flag state of the vessel and would limit the number of foreign citizens that could be exempted.  Such a provision would be in direct conflict with longstanding international law.  The United States does not have the authority to dictate citizenship requirements for foreign nationals working aboard a foreign-flag vessel if U.S. citizens are not required.  Specifically, the flag state alone has the authority to establish citizenship requirements for its vessels, and the citizenship of the foreign-flag vessel’s crew under international law, are not required to be the same as the flag state unless that specific flag state mandates such a requirement.  Even though the United States has generally made this a requirement for U.S. flag vessels, other countries have not.  And, this proposal would do little or nothing to increase jobs for U.S. citizens on the OCS because the work performed by these foreign-flag vessels cannot be replaced by U.S.-flag vessels.

Implications of the Proposal

The intent of this crewing exemption regime appears to be to ensure that U.S.-flag vessels are given equal opportunity to perform OCS services worldwide, as they have been doing for the past half century.  However, should the U.S. implement further restrictions on crewing, the likelihood is that other countries could reciprocate by restricting offshore opportunities for U.S. citizens serving aboard U.S.-flag vessels worldwide, even further reducing the work available to U.S. citizens.

Most concerning, however, is the fact that the implementation of such a proposal would appear to have the practical effect of potentially shutting down the entire offshore industry.  This is because foreign-flag vessels engaged in various types of specialized OCS activities such as seismic, construction, installation, and other OCS support activities often employ crew members from maritime nations with particular skill sets that cannot be replaced easily.  In this regard, many flag states simply do not have the maritime labor force to crew its vessels.  Consistent with international law, it is common practice to permit an owner or operator to crew a vessel under a particular flag with crew members from any country as long as the crewmember is trained and has the experience to meet international safe manning requirements.

In conclusion, should this proposal be put in place, then the owners and operators of foreign-flag vessels currently engaged in OCS activities would simply stop working in the U.S. OCS because they could not find enough trained and experienced crew to operate their vessels.  This would mean that work in the GOM, including the supporting jobs provided by U.S. citizens, would be further depressed and result in more severe layoffs.  Accordingly, we recommend GOM stakeholders consult with counsel to ensure they are fully informed of the potential negative impacts that this proposal would have on the GOM and the U.S. economy in general, should there be interest on Capitol Hill to move such legislation.

“Offshore Crewing Requirements: Could It Make Things Worse?,” by Jonathan K. Waldron was published in the November 2016 edition of Maritime Reporter & Engineering News. Reprinted with permission.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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