Offshore Energy: Vessel and Crew Nationality Requirements

Offshore Energy: Vessel and Crew Nationality Requirements

May 25, 2023
Offshore Energy: Vessel and Crew Nationality Requirements
Introduction
carried by Jones Act-compliant vessels because the site has
The 118th Congress is debating whether to further restrict
now become a U.S. point. Second, CBP has determined that
foreigners from working in the U.S. offshore energy sector
any vessels or floating structures not attached to the seabed,
(i.e., oil, gas, and wind). The offshore wind industry asserts
usually maintaining their position with self-positioning
that proposed restrictions in H.R. 2741, the Coast Guard
propellers used in water too deep for practicable use of
Authorization Act of 2023, would threaten development of
anchors or moorings, are also not U.S. points. For instance,
U.S. offshore wind, affecting developers’ ability to find
a floating hotel (floatel) used to house offshore workers that
workers with the requisite skill set. Proponents contend that
uses such propellers is not a U.S. point.
the nascent offshore wind industry is an opportunity to
ensure that Americans are employed to the greatest extent
Coastwise Transportation for Offshore Energy
possible.
Once U.S. points are established, the second question
determining whether the vessel must be Jones Act
Jones Act Pertains to Some Offshore Vessels
compliant is whether the vessel is transporting merchandise
Under current authorities, only a portion of the workforce in
or passengers between those two points. Generally,
offshore energy may be foreign citizens. Many—but not
construction workers are considered passengers, so vessels
all—of the vessels supporting offshore energy production
transporting workers to offshore energy structures are
must comply with the Jones Act (P.L. 66-261, §27), which
required to be Jones Act compliant. Similarly, supplies and
requires that vessels transporting merchandise or passengers
food for the workers are considered merchandise, requiring
between U.S. points be U.S. built, U.S. owned, and crewed
transporting vessels to be Jones Act compliant.
by U.S. citizens (the officers) or lawful permanent residents
(LPRs, who can form up to 25% of the unlicensed crew; the
Some other types of vessels performing tasks necessary for
remainder must be U.S. citizens). Vessels seeking to engage
offshore energy development need not be Jones Act
in these activities must obtain a “coastwise” endorsement
compliant. Vessels laying electric cable or oil pipe on the
from the U.S. Coast Guard (46 U.S.C. §12112).
seabed between an offshore wind farm or oil rig and shore
points are not engaging in transportation, according to CBP,
Jones Act and Offshore U.S. Points
and therefore can be foreign flagged. The same is true for
Although the Jones Act applies to transporting domestic
vessels conducting surveys of the seafloor to determine the
cargo or passengers (e.g., on ferries), it may be less readily
best locations for oil drilling or erecting wind turbines. For
apparent how the law’s requirements for vessels traveling
vessels operated by diving teams, the human divers are not
between “U.S. points” would apply to offshore energy
passengers, and the equipment they use (robotic undersea
activity. A port is plainly a U.S. point, but Customs and
vessels) is not merchandise, according to CBP.
Border Protection (CBP)—the agency that determines what
maritime activities must adhere to the Jones Act—has
CBP had ruled that vessels handling anchors for rigs that
determined that U.S. points also include offshore points tied
are in deeper waters and floating (instead of standing on the
to U.S. energy production. This is a result of the Outer
seafloor) are not engaging in transportation and therefore
Continental Shelf Lands Act (OCSLA, 43 U.S.C. §§1331-
did not need to be Jones Act compliant. However, in 2005
1356c), which provides, as amended, that U.S. laws extend
(P.L. 109-241, §310), Congress specified that anchor-
to the subsoil and seabed of the outer continental shelf
handling vessels must obtain a “registry” endorsement,
(OCS) and all artificial islands, installations, and devices
which is the licensure that U.S.-flagged vessels sailing on
attached to the seabed or erected thereon for the purpose of
international voyages obtain instead of a coastwise
exploring, developing, or producing resources, including
endorsement. To receive a registry endorsement, a vessel
mineral (i.e., oil and gas) and non-mineral energy resources.
must be U.S. owned and crewed but can be foreign built. In
Thus, offshore wind turbines and offshore oil rigs are
the same act, Congress required that vessels transporting
considered U.S. points.
personnel or merchandise to a floating rig that is not
attached to the seafloor must also obtain a registry
Two exceptions help clarify CBP’s definition of a U.S.
endorsement.
point. First, a pristine seabed that will become a future site
of an offshore energy structure is not a U.S. point. CBP has
While much of the offshore fleet is designed for a specific
determined that the first voyage of a rock-laying vessel that
mission, specialized foreign-flag vessels could also
places a ring of rocks around the planned site of a wind
efficiently transport supplies or personnel from shore to an
turbine to prevent scouring of the seabed at that location
offshore site or from one facility to the next, if not for the
need not be Jones Act compliant because the seabed, being
Jones Act. The Offshore Marine Service Association
undisturbed, is not a U.S. point. However, once an initial
(OMSA), advocating for stricter Jones Act enforcement,
layer of rocks is installed, all subsequent layers must be
has deployed its own vessel in the Gulf of Mexico to
https://crsreports.congress.gov

Offshore Energy: Vessel and Crew Nationality Requirements
document any violations of the act, believing that the Coast
the Coast Guard would determine when a vessel would
Guard and CBP are not adequately enforcing the law.
qualify for an exception from the OCSLA requirements.
Construction and Installation Vessels
H.R. 2741 Crew Nationality Requirements
Perhaps the most technically sophisticated and most
The Coast Guard Authorization Act of 2023 (H.R. 2741,
expensive vessels used in offshore energy development are
§336), ordered to be reported by the House Committee on
the construction vessels that build and install oil rigs and
Transportation and Infrastructure on April 26, 2023,
wind turbines. These vessels are designed differently
discusses manning requirements of vessels, vehicles, and
depending on whether built for the oil or wind market, but
structures. The same provision was passed in the House in
they share common features, such as especially large cranes
the 117th Congress (H.R. 6865) but was not taken up by the
for hoisting and erecting sections of rig or turbine and self-
Senate. The provision would alter the exemptions to the
elevating jack-up “legs” attached to the seafloor to firmly
OCSLA’s crew nationality requirements. This could
hold the vessel in place. For structures constructed in
particularly affect vessels such as WTIVs that are not
deeper water, instead of using jack-up legs, self-positioning
subject to the Jones Act and would be exempted from the
propellers keep the construction vessel stationary.
OCSLA requirements under current law. The bill would
require that these and other OCS vessels hire either U.S.
A wind turbine installation vessel (WTIV) can have a crew
citizens (or LPRs) or citizens of the flag state of the vessel,
of 70-100 individuals, including a vessel crew of 30-40
whereas under current law, the crew of an exempted vessel
navigators/mariners responsible for operating the vessel and
could come from any nation. In the offshore wind market,
a project crew of 40-60 personnel involved in the
some vessels are flagged in Norway, the Netherlands, and
construction of the wind turbines. CBP has determined that
Denmark, which have a strong tradition in offshore energy.
WTIVs need not be Jones Act compliant as long as the
More commonly, vessels in both the oil and wind markets
vessel does not move, other than incidentally, while
are flagged in “open-registry” countries, such as Panama,
constructing the turbine. However, if the vessel were to first
Liberia, the Bahamas, and the Marshall Islands, among
transport the wind turbine components from a U.S. port and
others. Open registries, also referred to as “flags of
then engage in constructing them when reaching the
convenience,” allow crew of any nationality to be hired
offshore point (as is typically done in foreign waters), the
(contingent on meeting international training and English
vessel would have to be Jones Act compliant, as it would be
proficiency standards). Open registry flag states are
engaging in coastwise transportation. Developers of the
typically small states whose own populations often would
earliest U.S. offshore wind projects, including Vineyard
not have the qualifications to support ship crewing or the
Wind 1 off the Massachusetts coast, have stated an intent to
technical skills needed in offshore energy. Thus, although
use WTIVs strictly to perform construction, while a
H.R. 2741 would allow hiring of flag state nationals, the
different “feeder” vessel transports turbine components
primary effect would likely be to hire U.S. citizens.
from shore to the offshore construction site, thus avoiding
the need for the WTIV to comply with the Jones Act.
H.R. 2741 also would require foreign offshore workers to
Dominion Energy is constructing a Jones Act compliant
obtain a transportation worker identification credential,
WTIV for its Virginia project with delivery set for 2024.
which is also required of U.S. mariners. This is a security
screening requiring a visit to a U.S. enrollment center to
In 1988, Congress enacted a Jones Act exemption for
provide fingerprints and identifying documentation.
barges over a certain size and age that are used to transport
and launch, at the construction site, large sections of
Balancing Production with Hire America Goals
offshore oil rigs (46 U.S.C. §55108). The concern was that
The 1978 OCSLA amendments sought to increase the
Japanese and Korean manufacturers of these oil rig sections
number of American workers in offshore projects.
were gaining inroads into the U.S. market because it could
However, Congress recognized that an outright foreign ban
be more economical for U.S. buyers to buy and ship the
would have severely disrupted production during an oil
components from a foreign source than from a U.S. point.
crisis and feared retaliation for American workers working
on foreign offshore projects (H.Rept. 95-590). Therefore,
Outer Continental Shelf Lands Act Requirements
Congress provided some exemptions, as described above.
Separately from the Jones Act, amendments to the OCSLA
In 2022, Congress further facilitated use of foreign crews
in 1978 also contained requirements for the nationality of
on crude oil lightering tankers that shuttle oil from and to
vessel crews on the OCS (43 U.S.C. §1356). These
tankers too large for harbor transit by extending the visas of
requirements apply broadly to vessels, rigs, and platforms
such crews from 29 days to 180 days (P.L. 117-360).
on the OCS, including vessels that may not be subject to the
Jones Act. The OCSLA generally requires that OCS vessels
Similarly, some offshore wind industry advocates contend
be crewed by U.S. citizens or LPRs, with some exceptions.
that the recent proposals would create severe challenges for
For instance, foreign-owned and -flagged vessels are not
the future of domestic offshore wind, given insufficient
required to hire U.S. citizens, which is relevant for the
numbers of specialized workers from the United States or
WTIVs described above. Also, U.S.-flagged vessels are
flag countries to crew wind vessels. The OMSA, by
exempted from hiring U.S. citizens in some circumstances,
contrast, contends that the changes would provide parity for
such as if there is a finding of nonavailability of U.S.
U.S. workers and would spur investment in training and
workers or if specialists are needed for emergencies or
domestic supply chains.
certain temporary operations (33 C.F.R. §141). Generally,
John Frittelli, Specialist in Transportation Policy
https://crsreports.congress.gov

Offshore Energy: Vessel and Crew Nationality Requirements

IF12413
Laura B. Comay, Specialist in Natural Resources Policy

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