Subsea to Sealift: The Offshore Service Industry Supports the Ready Reserve Force

Historical Context: CBP’s Enforcement of the Jones Act

October 7, 1976 – The Customs Service issues a “letter ruling” allowing a foreign vessel to transport merchandise between U.S. points, in contravention of the Jones Act, thereby opening the door to foreign vessels using cheaper foreign labor and stifling U.S. maritime investment and job creation.

1976 to 2009 – CBP issues more than 160 other flawed letter rulings, which allow foreign vessels to operate in Gulf of Mexico.

July 17, 2009 – CBP announced intent to revoke several letter rulings that were inconsistent with the Jones Act.

September 15, 2009 – CBP withdrew its proposed action at the urging of many owners and charterers of foreign vessels and announced that a “new notice … will be published in the Customs Bulletin in the near future.”

January 18, 2017 – CBP issued its “new notice” calling for revocation of flawed letter rulings to ensure proper enforcement of the Jones Act, benefiting American mariners, and creating markets for U.S. shipbuilders.

What the 2017 Notice Does:

✓ Rejects letter rulings that have improperly allowed transportation of merchandise on foreign vessels because the vessel is

engaged in an otherwise permissible activity, such as installation or repair.

✓ Restores CBP’s long-held and common sense definition “vessel equipment,” to only those items necessary and appropriate for navigation, operation, maintenance, of the vessel and the safety of those onboard. Prior interpretation unreasonably stretched the definition of vessel equipment to allow forging vessels to transport oilfield equipment and materials in contravention of the Jones Act.

Industry Investments Following the 2009 Notice:

✓ Following the 2009 Notice, U.S. companies invested over $2 billion to build or retrofit 31 subsea construction/IMR vessels to perform the highly technical needs identified by CBP; primarily installation, inspection, and repair of subsea facilities.

✓ As these are very large vessels, they require unlimited tonnage mariners. Thus, construction initiated by the 2009 Notice created a need for 1,000 unlimited tonnage credentialed U.S. mariners.

Manning Requirements of a Subsea Construction/IMR Vessel:

• When the 31 subsea construction/IMR vessels are operated as industrial vessels under USCG regulations, they will require a minimum of 13 mariners per vessel under the USCG Certificate of Inspection. This includes 1 Master, 3 Mates, 1 Chief Engineer, 2 Assistant Engineers, 3 Able Seamen, and 3 Qualified Members of the Engineering Department.

• When these 13 mariners and their relief (assuming 14 day/14 day rotation) are multiplied across the 31 IMR vessels it equals 806 total unlimited credential mariners in the subsea construction/IMR fleet.

• Every IMR vessel is equipped with a Dynamic Positioning (DP) System to maintain precise position over a subsea facility. These are inherently “critical activities.” Current best practice (MTS DP Committee) calls for three “dynamic positioning operators” (DPOs) to be on the bridge during DP critical activities, adding 3 Mates (plus relief) to each vessel for a total of 992 total unlimited credential-holding mariners needed by the Jones Act IMR fleet.

• This does not include any additional Mates or Assistant Engineers carried for complex operations, charterer preference, or training purposes, which could average an additional 10 unlimited officers, resulting in approximately 1,000 mariners total.

The M/V Kirt Chouest, one of the 31 subsea construction/IMR vessels built or retrofitted since 2009.

How Jones Act Vessels Support the Ready Reserve Force and National Security

The Ready Reserve Force (RRF) was initiated in 1976 under the Maritime Administration’s (MARAD) supervision to support the rapid worldwide deployment of U.S. military forces. The 46 RRF ships are expected to be fully operational within five to 10 days.

Most RRF ships have maintenance crews of about 10 commercial merchant mariners that are supplemented by commercial mariners during the 27 (average for fleet) activations per year.

RRF ships require 17 to 62 mariners (1,605 total). Due to size these vessels, these mariner must have a valid unlimited tonnage credential.

Today, the bulk of the current U.S. mariner workforce holds limited tonnage or vessel-type limited credentials (Master less than 1600 tons, or Master limited to Offshore Supply Vessels, for two examples) and most engineers hold motor limited credentials.

The exception is within the new offshore supply vessel (OSV) and subsea construction/IMR vessel markets. These vessels are more than 3,000 gross tons and require unlimited tonnage mariners. By supporting a market for these vessels, the CBP notice also supports the creation of more unlimited tonnage mariners for the RRF.

The Jones Act Subsea Construction/IMR Fleet:

Vessel Name Owner Jones Act Qualified

DP Notation

Crane Capacity (tonne)

Year Built/ Converted

HOS Warland Hornbeck Offshore Yes DP2 250 2016

HOS Woodland Hornbeck Offshore Yes DP2 250 2016

Ocean Evolution Oceaneering Yes DP2 250 TBD-2017

Paul Candies Otto Candies Yes DP2 250 TBD-2017

Harvey Sub-Sea Harvey Gulf Yes DP2 250 TBD-2017

Harvey Blue-Sea Harvey Gulf Yes DP2 250 TBD-2017

HOS Warhorse Hornbeck Offshore Yes DP2 250 TBD-2018

HOS Wild Horse Hornbeck Offshore Yes DP2 250 TBD-2018

Harvey Deep-Sea Harvey Gulf Yes DP2 165 2013

Harvey Intervention Harvey Gulf Yes DP2 165 2016

Kirt Chouest Edison Chouest Yes DP2 165 2008

Dove Marlin Offshore Intl Yes DP2 150 2015

HOS Bayou Hornbeck Yes DP2 150 2014

Ocean Alliance Oceaneering Yes DP2 150 2011

C-Installer Edison Chouest Yes DP2 150 2014

Joe Griffin Edison Chouest Yes DP2 100 2010

Kelly Ann Candies Otto Candies Yes DP2 100 2012

Wyatt Candies Otto Candies Yes DP2 100 2012

Chloe Candies Otto Candies Yes DP2 100 2006

Grant Candies Otto Candies Yes DP2 100 2008

HOS Mystique Hornbeck Offshore Yes DP2 100 2008

Ross Candies Otto Candies Yes DP2 100 2009

SURF Challenger Otto Marine Yes DP2 100 2007

Ocean Intervention II Oceaneering Yes DP2 73 1999

HOS Ridgewind Hornbeck Offshore Yes DP2 70 2015

Harvey Discovery Harvey Gulf Yes DP2 64 2006

AMC Ambassador Emas Offshore Yes DP2 60 1998

Brandon Bordelon Bordelon Marine Yes DP2 60 2015

Ocean Intervention Oceaneering Yes DP2 54 1998

Shelia Bordelon Bordelon Marine Yes DP2 50 2015

Bordelon 104 Bordelon Marine Yes DP2 TBD TBD-2018

Offshore Marine Service Association – America’s Lifeline to Offshore Energy

www.offshoremarine.org/SupportCBP

“It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine…" – Merchant Marine Act of 1920 (The Jones Act)