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SCA Weekly Report | October 17-21, 2022
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Add Your Voice in Support of AOWFA
The American Offshore Worker Fairness Act (AOFWA) would require foreign vessels to utilize either U.S. mariners or citizens of the vessel’s home country while operating in offshore energy activities in U.S. waters.
This would change the current practice where foreign vessels utilize crew members from low-wage countries at day rates no American would or should accept. This unfair practice gives foreign vessels a competitive advantage over U.S. vessels and takes jobs away from American mariners.
Closing this loophole will greatly assist American mariners and U.S. companies participating in both the offshore oil and gas and offshore wind industries. The legislation further reduces the cost disparity between U.S.-flagged and foreign-flagged vessels by:
- Requiring foreign mariners working in the U.S. offshore energy markets secure a Transportation Worker Identification Credential (TWIC). Current regulations allow such mariners the option to secure a TWIC while U.S. mariners are required to secure and hold a valid TWIC.
- Limiting the number of visas that can be issued for each foreign vessel operating in U.S. waters and takes steps to ensure that these visas are connected to the mariner’s work on that vessel.
- Requiring each foreign vessel in U.S. offshore energy markets to prove their ownership structure annually.
- Requiring the U.S. Coast Guard to annually inspect foreign-flagged vessels operating in U.S. offshore energy markets to ensure compliance with these changes.
CLICK HERE to send a letter of support for AOWFA to your Congressional Delegation
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MACOSH Meeting: November 16-17, 2022
The Maritime Advisory Committee on Occupational Safety and Health (MACOSH) will meet on November 16 and 17, 2022, with the full committee meeting occurring on Thursday, November 17, 2022 from 9:30 a.m. to 4:00 p.m., ET. Public attendance at the MACOSH Committee and Workgroup meetings will be virtual only. Individuals may submit comments and requests to speak, identified by Docket No. OSHA-2022-0010, electronically at https://www.regulations.gov, which is the Federal e-Rulemaking Portal. Comments and requests to speak, including attachments, must be submitted by November 10, 2022. For more information, including tentative agenda items and access information for the virtual meeting, see the Federal Register Notice.
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Biden Administration Issues LNG Jones Act Waiver for Puerto Rico
The U.S. Department of Homeland Security has issued a second Jones Act waiver for Puerto Rico as the island continues to recover from Hurricane Fiona. The waiver applies to LNG supplies transported from the U.S. mainland, according to the DHS announcement. This latest waiver follows a first Jones Act waiver issued in late September that allowed a BP-chartered tanker to deliver a cargo of diesel to Puerto Rico that had been loaded in Texas—a move that American maritime interests slammed as being illegal and unjustified.
“In support of the Puerto Rican people as they continue to recover from Hurricane Fiona, I have approved a temporary and targeted Jones Act waiver to address the unique and urgent need for liquified natural gas in Puerto Rico,” said DHS Secretary Alejandro N. Mayorkas. “As with the previous waiver, the decision to approve was made in consultation with the Departments of Transportation and Energy to assess the justification for the waiver request and based on input from the Governor of Puerto Rico and others on the ground supporting recovery efforts.”
The DHS’s announcement of the LNG waiver noted that the agency may grant Jones Act waivers when U.S. flagged vessels are not available to meet national defense requirements “if the proposed shipments are in the interest of national defense and after careful evaluation of the issue.”
National Security Strategy
Last week, the Biden Administration released an updated National Security Strategy. The NSS, which was delayed following the Russian invasion of Ukraine, calls for “deeper collaboration” with foreign allies when it comes to developing and producing weapon systems and military technology. The defense industrial base, the document states, “must not only be capable of rapidly manufacturing proven capabilities needed to defend against adversary aggression, but also empowered to innovate and creatively design solutions as battlefield conditions evolve.”
Additionally, the strategy continues the U.S. focus on China as the “pacing challenge” and Russia as an “acute” threat. Now that the NSS has been released, the Pentagon is expected to release the unclassified version of the Nuclear Defense Strategy - and other strategic documents including the Navy Force Structure Assessment - that were on hold.
Coast Guard Releases 2022 Strategy
This week, Admiral Linda Fagan, Commandant of the Coast Guard, released the Coast Guard Strategy which provides a framework for the service’s priorities during the next four years and beyond. The strategy identifies the service’s workforce as a top priority for the Coast Guard and it also builds on Admiral Fagan’s previous calls to generate sustained readiness, resilience and capability to enhance America’s maritime safety, security and prosperity. A link to the study can be found HERE.
MSC Commander: ‘We’re Ignoring the Problem’ of Stressed U.S. Maritime Infrastructure
The American defense maritime industrial base has atrophied to a point where the United States builds less than 1 percent of the world’s ocean-going fleets and has less than 4 percent of the world’s licensed mariners while China establishes itself as a maritime nation, Military Sealift Command’s top officer said Tuesday speaking at the Navy League.
Rear Adm. Michael Wettlaufer said the entire U.S. defense maritime “ecosystem is under stress” from shipbuilding to recruiting and retaining mariners, to shipyards a and ports.
“It’s a three-legged stool…ships, cargo and mariners,” he said. To remain viable, those things need to be driven by other activities, such as subsidies for U.S.-flagged ships engaged in international trade and the need to adjust that to meet the rise in inflation.
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Senate Tees Up Defense Bill
Last week, the Senate teed up the FY23 National Defense Authorization Act by bringing the bill to the floor and adding an additional 75 bipartisan amendments as attachments for consideration. The final Senate vote on the bill is not expected to happen until after November’s mid-term elections.
In addition to the FY23 Defense Authorization, the bill also includes the Taiwan Policy Act of 2022, Authorization bills for Intelligence, Department of State, Coast Guard and the Maritime Administration. While the bill authorizes a total of $847 billion for national defense, it is aligned with an overall national defense topline of $858 billion, with the difference being accounted for by defense-related spending in other legislation that is not under the committee’s jurisdiction. President Biden, meanwhile, has requested $813 billion, or $30 billion more than what Congress enacted for FY-22.
White House Objects to Naval Provisions in Senate’s FY23 NDAA
The White House objects to several naval provisions in the Senate’s Fiscal year 2023 NDAA that would prevent cuts in fleet force structure, extend the San Antonio-class amphibious warship and set a minimum number of amphibious warships in the Navy’s fleet.
The White House “strongly opposes multiple provisions that would limit DoD’s ability to divest or retire lower-priority platforms and certain Navy littoral combat ships, amphibious ships, and expeditionary transport dock ships,” according to the Oct. 18 memo found HERE.
The Senate’s defense policy bill would prevent the service from retiring 12 of the ships on the list – Ticonderoga-class cruiser USS Vicksburg (CG-69), which is almost finished with a modernization period; Dock Landing Ships USS Germantown (LSD-42), USS Gunston Hall (LSD-44), USS Tortuga (LSD-46) and USS Ashland (LSD-48); five Littoral Combat Ships – USS Sioux City (LCS-11), USS Billings (LCS-15), USS Indianapolis (LCS-17), and St. Louis; and Montford Point and John Glenn.
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Biden Administration Sets Date for First West Coast Offshore Wind Lease Sale
The Biden Administration has set a date for holding the first offshore wind lease sale on the U.S. West Coast off of central and northern California. The sale will also be the first-ever in the U.S. to support commercial-scale floating offshore wind, which can be located in deeper waters, as the administration seeks to expand the use of floating wind technology.
The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) will hold the sale on December 6, 2022, offering five California Outer Continental Shelf (OCS) lease areas that total approximately 373,268 acres in two wind energy areas (WEAs) off Morro Bay on the central coast and Humboldt County in northern California. The WEAs have the potential to produce over 4.5 GW of offshore wind energy, enough to power more than 1.5 million homes.
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DOL Publishes Independent Contractor Proposed Rule
Last week, the Department of Labor’s Wage and Hour Division (DOL) proposed a rule that would determine whether a worker is an independent contractor or an employee under the Fair Labor Standards Act (FLSA). Under the FLSA, companies are required to provide benefits such as minimum wage and overtime to employees, but not to independent contractors. To determine whether a worker is an employee or an independent contractor, the employer must analyze whether the worker is economically dependent on the employer for work or is in business for themselves.
The new blueprint urges an analysis of the “totality-of-the-circumstances” for a specific worker instead of looking at particular criteria. As a result, policies for categorizing an independent contractor are much tighter. Before deeming workers to be independent contractors, employers would be required to apply an “economic realities” test. READ MORE HERE.
Biden Announces Release of 15 Million Barrels of Oil from Strategic Petroleum Reserve
On Wednesday, President Biden announced the release of 15 million barrels of oil from the U.S. strategic reserve as part of a response to recent production cuts announced by OPEC+ nations, with more drawdowns possible this winter.
Speaking at the White House, Biden said the Energy Department would sell the remaining 15 million barrels of the 180 million barrels that were authorized for sale in March — a move that he argued would help drive down the price of gas and give families a bit of “breathing room.”
The Strategic Petroleum Reserve, which was established as a national energy safety net after the oil crisis of the 1970s, is at its lowest level since 1984. Biden acknowledged that the reserve's resources have been drained and said his administration would buy crude to refill it once prices fall to $70 a barrel.
U.S. Container Imports Tumble as Supply Stress Gives Way to Slack
After more than two years of surging demand, the volume of container imports coming through U.S. ports has tumbled sharply, raising questions about where a sector once tracked as a supply-chain stress point will hit bottom. Container import volumes across all U.S. ports hit an all-time high in May and pulled back slightly before plunging in August and September. That put the indicator close to the levels last seen in 2019, before the pandemic and a surge in demand for shipments of furniture, clothing and appliances, according to data tracked by Descartes Datamyne.
The question is whether the trendline – an indicator for strength of consumption, the wider economy and trade – flattens out in the coming months, relieving a source of supply-chain distress that had driven prices higher, or whether the boom turns to an outright bust with a potential recession looming, analysts told Reuters.
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If you have any questions, please do not hesitate to contact the SCA staff.
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