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S. 3038: “Now is not the time to enact legislation that could have dire unintended consequences”

Published on 15 December 2023

On 4 October 2023, Senator Bill Cassidy (R-LA) introduced a new version of AOWFA in an attempt to address flaws in the House version of AOWFA (Section 336 of the 2023 Coast Guard Authorization Act). 

S. 3038 attempts to find a balance between the use of US and foreign-flag vessels to maximise opportunities for US companies and workers while avoiding both offshore oil and gas and offshore wind project delays. It tries to accomplish this by acknowledging the lack of US vessels for certain work and includes an implementation delay for export cable lay, inter-array cable lay, umbilical cable lay, and pipe lay activities and a permanent exception for offshore lift and offshore wind component part vessels. Importantly, one of the key underlying premises of proposing this type of legislation is that foreign companies are able to undercut wages paid to crew aboard US-flag vessels and thus leverage the cost savings to force the hiring of foreign-flag vessels and crews.

IMCA Contact

Bruce Gresham
Director for Client Engagement – North America

This underlying premise is simply wrong. Foreign-flag vessels are not competing with US-flag vessels based on crew wages or type of vessel. It is well known by stakeholders that the US-flag vessel market already has a monopoly on all jobs for Crew Transfer Vessels (“CTVs”), Service Operation Vessels (SOVs”) and Offshore Supply Vessels (“OSVs”). Foreign-flag vessels simply do not compete in these areas. It is only when there is no US capability that foreign vessels are used. These foreign-flag specialty vessels must first install the foundations and lay the cable and pipe, in a relatively short timeline, to provide the longer term and ongoing jobs and employment for US vessels and their US crews to support and maintain the installations for years to come after the initial installation work is completed. Moreover, there simply is no US capability now, or in the foreseeable future, to perform installation (except for one turbine installation vessel being built in the US), cable, or pipelaying work. Thus, there is clearly no loophole, no loss of jobs to foreign vessels or workers, no leveraging of cost savings to undercut charter rates, and thus no need to establish an implementation date or exceptions for certain specialty vessels. 

Further, there is presently a dire shortage of US mariners and US companies are struggling to man the current US flagged fleet. Many more US mariners will be needed to crew additional US-flag offshore vessels for numerous vessel categories of vessels, such as CTVs, SOVs, and OSVs, to support upcoming offshore oil and gas and wind projects, many of which vessels have yet to be built. There is certainly no lack of opportunity in jobs for US mariners presently or in the future. 

However, legislation that derails and delays the ability of offshore wind development to move forward with installation projects will most certainly harm US mariners by causing the delay or cancellation of building CTVs, SOVs, OSVs and a host of other supporting vessels and jobs that will be needed to support offshore wind development for decades to come. To compound matters, now is not the time to enact legislation that could have dire unintended consequences given the recent announcements by some OSW developers to terminate some offshore wind projects due to rising costs, permitting frustrations, and supply chain challenges, and lack of installation vessels, among many other challenges. 

Accordingly, before any type of AOWFA proposal is finalised, Congress should first assess the domestic workforce and utilisation of US-flag and foreign-flag vessels offshore as well as the current exemption process. IMCA believes the current system works relatively well but would support enhancements to improve the effectiveness of it. This assessment could be completed by a neutral third-party entity, such as the General Accounting Office, the Congressional Research Service, or the National Academies of Science.

 IMCA has prepared a Myths and Facts Report to address in more detail the various issues raised by S. 3038.