Foreign Flag Vessels in GOM

Professional Mariner Forum
1

This likely has been discussed already here somwhere but I don’t understand the ownership requirments on the OCS. Is it the Jones act the reason some vessels are U.S. flag and other not?

Foreign-Flag Vessels

In general, under the OCSLA manning requirements, the crew of any vessel engaged in OCS activities, whether U.S. or foreign flagged, must be either U.S. citizens or resident aliens. However, a manning exemption exists under OCLSA allowing a foreign-flag vessel to employ foreign nationals if it can be demonstrated that citizens of a foreign nation have the absolute right to effectively control the vessel (i.e., bareboat charter) or that the ownership of the vessel is over 50 percent foreign at every tier of ownership.

2

The Outer Continental Lands Act treats all fixed and floating structures as well as drill rigs in being a point in the US regardless of the flag they fly thus all cargoes carried from land to the structure/rig must be carried on a US flag Jones Act qualified vessel. There is no prohibition in a foreign flagged vessel to do support work such a drilling, pipelaying, subsea IMR, accommodations or dive ops. They are just not permitted to lift anything off land and carry it offshore without a waiver. There are also vessels which cheat and carry equipment anyway and OMSA keeps an eye open for these then drops a dime if it sees foreign vessels lifting equipment at Fourchon.

The manning issue stems from loopholes in the OCSLA that allows vessels 51% owned by foreign corps to keep their foreign manning if the vessel is not “under the effective control” of a US company but they all are. If chartered to Oceaneering they are under Oceaneering’s control but the charterers and vessel owners have argued that they aren’t and so far has BS’d the USCG into supporting this nonsense. IF a foreign vessel working on the OCS is owned by a US company such as the HOS ACHIEVER, it must be all US manned when on the OCS but can become foreign manned if they leave the GoM.

3

[QUOTE=c.captain;167675]The Outer Continental Lands Act treats all fixed and floating structures as well as drill rigs in being a point in the US regardless of the flag they fly thus all cargoes carried from land to the structure/rig must be carried on a US flag Jones Act qualified vessel. There is no prohibition in a foreign flagged vessel to do support work such a drilling, pipelaying, subsea IMR, accommodations or dive ops. They are just not permitted to lift anything off land and carry it offshore without a waiver. There are also vessels which cheat and carry equipment anyway and OMSA keeps an eye open for these then drops a dime if it sees foreign vessels lifting equipment at Fourchon.

The manning issue stems from loopholes in the OCSLA that allows vessels 51% owned by foreign corps to keep their foreign manning if the vessel is not “under the effective control” of a US company but they all are. If chartered to Oceaneering they are under Oceaneering’s control but the charterers and vessel owners have argued that they aren’t and so far has BS’d the USCG into supporting this nonsense. IF a foreign vessel working on the OCS is owned by a US company such as the HOS ACHIEVER, it must be all US manned when on the OCS but can become foreign manned if they leave the GoM.[/QUOTE]

Good clear explanation, thanks.

Regarding your second paragraph, the law says that it has to be above 50% foreign control “at every tier”. So, for example, Transocean is U.S. controlled? I don’t see what’s stopping 100% foreign controlled vessels from taking over the Gulf?

4

[QUOTE=Kennebec Captain;167676]Good clear explanation, thanks.

Regarding your second paragraph, the law says that it has to be above 50% foreign control “at every tier”. So, for example, Transocean is U.S. controlled? I don’t see what’s stopping 100% foreign controlled vessels from taking over the Gulf?[/QUOTE]

vessels carrying cargo (OSVs) still must be owned by US citizens per the Jones Act as they are the only vessels that must be US flagged and built however there is no restriction on foreign owned vessels in the GoM which do not carry cargo. All drillships are foreign flagged and built but if the owning company has a US operating component then it must be US manned. Recently drilling vessels have been working in the GoM with the owners claiming they are foreign owned yet have US operating companies. Maersk Drilling is one of these and when I was on the MAERSK DEVELOPER in 2009, we had many foreign crew who all had OCS-B1 Visas which sucked for the Americans onboard since the US citizens had to pay all their tax obligations themselves but Maersk paid the taxes for the foreign nationals onboard. A very big reason I called BS and left.

Now, I will also say that I have worked on a US owned but foreign flagged dive support vessel in the GoM…the EPIC DIVER which had a few US citizen crew but mostly all Mexican nationals. I learned almost everything I did about the practice of these companies to BS the USCG into believing that there were no Americans available and every year the USCG would issue the waiver letter allowing the foreigners to stay aboard. Clearly there were Americans who were available for the work which galled me to no end and it was during this period that I began my crusade here to bring this dirty truth to light. The foreign companies like Olympic who charter their vessels to Oceaneering are the ones who claim the 51% foreign ownership even though an American company is chartering the vessel and controls its activity in the GoM yet year after year, the USCG roles over on the waivers for those vessels. The cycle repeats over and over endlessly unless someone with muscle takes it on and demands change. This is why I am squarely behind HOS’s efforts to get the USCG to stop the giveaway of the jobs. I have offered them my assistance for gratis but so far I am told that they are going to do this on their own. I do know they have the weight to get things to change.

5

[QUOTE=Kennebec Captain;167676]Good clear explanation, thanks.

Regarding your second paragraph, the law says that it has to be above 50% foreign control “at every tier”. So, for example, Transocean is U.S. controlled? I don’t see what’s stopping 100% foreign controlled vessels from taking over the Gulf?[/QUOTE]

There are several Norwegian built vessels in the gulf, for example the Island Offshore Vessels, which are majority owned by Edison Chouest Offshore. Those particular vessels, although foreign flagged, must be crewed by US mariners as they are effectively managed by a US based company, and have >50% US ownership. Effectively being managed does not necessarily mean there is a office in the US for logistical support; it means where their entire management structure under the ISM code is domiciled.
When I was auditing, I visited several foreign vessels in the GOM. Most had the manning exemption letter posted in the bridge from the USCG. Each letter did have validity terms of a few years. The one common denominator was the DOC, operator, and ownership information were all foreign, although the charter arrangements were “bare boat” so to speak to a US based company (why else would they be in the US).
When the USCG reviews these applications, they spend very little effort on determination of affect on US mariners. If there was any type of mechanism or resources available that the USCG could use in this regard, I would like to know about it. However, I believe this to be non-existent.

6

As I understand it:

The OCS is considered to be under U.S. control. Foreign entitles can operate there, that makes sense, but unlike on land there is no requirement to either use U.S. workers or get a waiver.

There is a requirement for U.S. controlled entities on the OCS to use U.S. workers but there are two ways around that requirement, to obscure ownership or to get waivers.

U.S. Coast Guard does little to check true ownership or to cheeck if waivers are legit.

The Jones Act has U.S. to U.S. cargo requirement which is monitored by the OMSA but otherwise has nothing to do with any of the above.

7

[QUOTE=Kennebec Captain;167680]As I understand it:

U.S. Coast Guard does little to check true ownership or to cheeck if waivers are legit.
[/QUOTE]

The USCG does check all vessel documentation, ownership, including vessel history, and inspects the vessel thoroughly. This is uploaded in MISLE. The USCG actually issues the waiver.

8

[QUOTE=anchorman;167681]The USCG does check all vessel documentation, ownership, including vessel history, and inspects the vessel thoroughly. This is uploaded in MISLE. The USCG actually issues the waiver.[/QUOTE]

So for vessels that the U.S.C.G. determines are effective U.S. control it issues a blanket waiver? Or each crew member is issued one?

Or is the waiver that the vessel is not U.S. control?

9

What level of management determines what country the vessel is controlled by? For example Transocean’s rig managers for the US GOM are located in Houston but the executives are located in the Switzerland headquarters. All TOI personnel in the GOM are Americans or have the right to work in the US. Are TOI rigs under US control or foreign control?

Regarding the vessels with foreign manning, are their vessel managers located in the US or abroad?

10

whatever flag she’s flying?

11

[QUOTE=Kennebec Captain;167680]As I understand it:

The OCS is considered to be under U.S. control. Foreign entitles can operate there, that makes sense, but unlike on land there is no requirement to either use U.S. workers or get a waiver.

There is a requirement for U.S. controlled entities on the OCS to use U.S. workers but there are two ways around that requirement, to obscure ownership or to get waivers.

U.S. Coast Guard does little to check true ownership or to cheeck if waivers are legit.

The Jones Act has U.S. to U.S. cargo requirement which is monitored by the OMSA but otherwise has nothing to do with any of the above.[/QUOTE]

True in all cases. The USCG can look at the licenses held by the mariners on board and their nationality. It is not an issue for the USCG inspector as all the legalities are decided way above the inspectors head. USCG inspections of foreign flagged vessels is cursory. Paperwork in order, enough life boats, OWS working? You are OK. BSEE is much more strict than the USCG on foreign drilling vessels.
Australia on the other hand insists the mariners working in their waters be Australian with very few exceptions.

It is a matter of priorities for the individual government.

12

[QUOTE=tengineer1;167698]True in all cases. The USCG can look at the licenses held by the mariners on board and their nationality. It is not an issue for the USCG inspector as all the legalities are decided way above the inspectors head. USCG inspections of foreign flagged vessels is cursory. Paperwork in order, enough life boats, OWS working? You are OK. BSEE is much more strict than the USCG on foreign drilling vessels.
Australia on the other hand insists the mariners working in their waters be Australian with very few exceptions.

It is a matter of priorities for the individual government.[/QUOTE]

The articles that come up on google are mostly from 2008 and 2009. Evidently it’s mostly during down turns this gets noted beyond working mariners.

As far as the Coast Guard, looks like they forward request for waivers to the U.S. Department of Labor.

Labor has traditional been strong in Australia.

13

TOI’s rigs are Marshall Island flagged or Vanuatu flagged. If they were under the control of one of those countries why would they employ Americans?

14

[QUOTE=Kougar018;167706]TOI’s rigs are Marshall Island flagged or Vanuatu flagged. If they were under the control of one of those countries why would they employ Americans?[/QUOTE]

When a foreign country opens a factory in the U.S. they are not allowed to use foreign workers. All those Japanese and German car companies use American workers. Why should the OCS be any different?

15

[QUOTE=Kennebec Captain;167705]The articles that come up on google are mostly from 2008 and 2009. Evidently it’s mostly during down turns this gets noted beyond working mariners.

As far as the Coast Guard, looks like they forward request for waivers to the U.S. Department of Labor.

Labor has traditional been strong in Australia.[/QUOTE]

True. Labor in the Australian sense of the word means working folks, the middle class and their representatives. The US Dept. Of Labor is sadly another example of regulatory capture.

16

[QUOTE=Kennebec Captain;167682]So for vessels that the U.S.C.G. determines are effective U.S. control it issues a blanket waiver? Or each crew member is issued one?

Or is the waiver that the vessel is not U.S. control?[/QUOTE]

I have volumes I can write about this but I am just getting back home after running my boat on charter for the past 12 hours so too tired to go into detail now but can say briefly that the entire matter of “right to effectively control” is not defined in either 43USC or 33CFR. It leaves the determination in the hands of the USCG to decide and as with almost all similar issues the USCG does not take the side of the American mariner but rubber stamps virtually every waiver request they get. I do not know how many times I have been given lip service by them that they do look at the entire operating structure…they are all nothing but professional BULLSHIT artists!

If there is to be fundamental change with this issue, I believe that someone MUST file a suit in Federal District Court naming the USCG as defendant and only with a Court decision finding the USCG to be in violation will that august body change their dirty ways. If we had a funded professional mariners association as I have been advocating then such a suit could be brought. If it was found that right to control rests with American charterers and not the owners, then the manning for a full 20 vessels would have to become American.

Additionally, Congress can ammend the OCSLA to add these missing definitions and even better to just close all the loopholes written into the Act which is now over 40 years old! For that however will require lobbying which itself is a costly endeavor. This cannot be changed without some mass behind forcing change to occur. That mass needs to be both in numbers of mariners and the money they contribute. This is why I say over and over and over that we need an association to represent our interests. For there to be such an association we need a leader who can get the maximum number of mariners to join him. This is not Jack Hearns nor myself but someone with excellent credentials, reputation, knowledge, ability to write and speak and the ability to reach the mariner community. I know of no one better than John Konrad. He has all that is needed except the willingness to make the effort and this saddens me. Perhaps if more of us implored upon John to come to our rescue he might reconsider? All I know is that we just need somebody to do this or we have got to accept that the winds of change are not going to ever come around to behind us.

.

17

I agree with your opinion but the question I’m trying to ask is why do some offshore companies in the US GOM employ Americans while others do not? What are the specific differences that allow a company such as Stena Drilling to use foreign workers in the US vs a company like Transocean that uses Americans? Surely Transocean’s not just employing Americans out of the goodness of their hearts. All the drilling rigs in the US GOM are foreign flagged, and I believe all the deepwater offshore drilling contractors are incorporated overseas.

18

[QUOTE=Kougar018;167717]I agree with your opinion but the question I’m trying to ask is why do some offshore companies in the US GOM employ Americans while others do not?[/QUOTE]

the major drilling companies for the most part are all American controlled operations even if their headquarters might be in Switzerland. They are traded on the NYSE for starters. Companies like Olympic are Norwegian and might not even have a US office although it should not be the vessel owner but the charterers that are determined to control the vessel when in the GoM. Oceaneering is an NYSE traded company.

as a man once said…follow the money

19

[QUOTE=Kougar018;167717]I agree with your opinion but the question I’m trying to ask is why do some offshore companies in the US GOM employ Americans while others do not? What are the specific differences that allow a company such as Stena Drilling to use foreign workers in the US vs a company like Transocean that uses Americans? Surely Transocean’s not just employing Americans out of the goodness of their hearts. All the drilling rigs in the US GOM are foreign flagged, and I believe all the deepwater offshore drilling contractors are incorporated overseas.[/QUOTE]

Make no mistake about it, there are / were still numerous positions from SDPOS to Toolpushers to OIMs being filled by foreigners (Brits, Scots, etc.) on TOI assets in the GOM. I can’t say for sure that goes on at Sea Drill, Noble, or Diamond in the GOM, but it would not surprise me. Those manning cert waivers for those specific positions / personnel (as somebody said prior) were prominently displayed on the bridge deck p’way bulkheads along with flag state certs, etc on the TOI driller I was working on.

I think the reason that Stena, Maersk, and Vantage get away with all the foreigners they have aboard (no excuse for it being allowed)is because they have / had so few vessels here compared to those other 4 companies. Ultimately, they are filing waivers for a few people on one or maybe 2 vessels. It still sucks, but nothing new there.

An LDO friend of mine at Vantage tells me appalling stories about all the foreigners (RSA, Brazil, Croatia) working as LDOs in the GOM. And some of them are very recent placements (last 6 mos) in ADPO roles.

Another issue (IMHO) is that so many of these companies (sub sea construction, IMR, DSVs, etc.) write up outlandish pre-requisites for work experience (equipment specific, 1000s of hrs experience, etc., etc.) that they use (heavy-handed) to deny applicants. And it really doesn’t matter how or why, b/c the USCG or DOL could give 2 shits anyway.

I recently turned down an offer of cargo supv (2/M) on an FPSO working for Shell/SBM in the GOM on a very long term contract. It wasn’t great wages, but it was guaranteed, long-term work in an imploding market. One deciding factor in declining the offer was because I had zero faith in the employer telling me that that after one year in the GOM, the manning waivers would expire for the C/M and Capt. I have no doubts that if a company like SBM, let alone Shell, want continued waivers for those positions (and others), the USCG will not bat an eye at their extension requests.

20

so the filthy river of corruption runs even deeper in the GoM than even I thought…

surprise, surprise, surprise!