The transition in leadership which began here at OMSA six months ago is now complete and I would like to take a moment to talk about the association and where we are headed. To some extent where we are headed is going to be decided by the challenges we face – for instance, the slowdown in activity in the Gulf, the new emphasis on security and the attacks on the Jones Act that threaten the domestic fleet.

On the plus side, if those challenges aren’t going away, at least they are becoming clearly defined to the point where we can address them:

• The Gulf of Mexico is still slow, but there are some positive signs. Perhaps more importantly, with the major oil and gas companies stepping back from the Gulf, it is possible to identify some of the independents who will lead future activity in the Gulf.
• Our efforts to protect the Jones Act, which have taken so much of OMSA’s time and resources, are starting to produce results.
• After an intensive effort, the industry is meeting the new Coast Guard security mandates.

Our task now is to align the association so that we can meet those challenges. It means changing the organization and it means finding better ways to utilize our main source of strength – you, the members of OMSA.

Since coming aboard at the start of the year, I’ve met with many of you and I’ve done a lot of listening. Where you have made suggestions for improving the association, we have tried to put those suggestions into practice. I hope you’ll see some of those improvements at our upcoming meeting on July 22nd. We’ve shifted the schedule around to make it easier for you to attend committee meetings. We have changed our business meeting format to involve more member discussion on the issues that affect you. We’ve also taken some steps to keep you better informed between meetings. In May we held our first “mini-meeting” with members from the Galliano area. We hope to hold similar get-togethers around the region on a regular basis.

More than anything else, we want to make sure that OMSA’s members are actively involved in the work of the association. We want to make sure we are working on the issues that are important to you as members. We want to make sure that you are involved in developing the industry’s positions and in fighting its battles.

The reasons are simple. You are the experts. You have the most at stake. As professional staff, we can manage the association, we can keep you informed of emerging issues, we can help build consensus among members and we can identify the right process to get things done with the Coast Guard and Congress. But when it comes to issues affecting your business, you are the experts and you are what makes OMSA strong.

That is why, in the coming months you are going to find us calling on you more and more. We may want your opinions. We may want your technical know-how. We might ask you to serve on a task force or committee. Sometimes we will just want to know if we are headed in the right direction on a particular issue.

If we are not involving our members in the work of the association, we are really not representing the industry as well as we can. It would be like running a horse race and leaving the thoroughbred in the stable or going into the World Series with your starter on the bench. The bottom line is, when we put OMSA’s stamp on an issue, we want to make sure we are working for our members and when we go into battle, we are putting all of our strength into the fight.

On June 1st, Bob Alario stepped down as President of OMSA, following over 30 years of service to the association as one our organizers, a consultant to the organization, a board member and then President for 16 of those years. For the next 18 months, Bob will remain available to assist and consult with OMSA as needed.

OMSA’s new President, Ken Wells, joined the association in January as a part of the planned transition. Prior to coming to OMSA, he represented the coastal and inland tug and barge industry with the American Waterways Operators.

OMSA is pleased to announce that the speaker for the membership dinner during the July 22 summer meeting will be David Carmony, Gulf Coast Region Drilling and Production Engineering Manager for Apache Corp. Apache has emerged as one of the leaders in the Gulf of Mexico. Mr. Carmony has been with Apache for more than a decade. He will give the company’s perspective on the future of the Gulf and Apache’s involvement on Gulf projects.

Mr. Todd Hornbeck, President and Chief Executive Officer of Hornbeck Offshore, has been named to the OMSA Board of Directors. He will serve out the remainder of the two-year term held by Mr. Tom Fairley, who resigned from the Board in the spring.

This spring OMSA saw the loss of several industry pioneers.

Mr. Elliot Mistich of Jade Marine, Inc.(Belle Chasse, LA): Survived by wife, Judy Dartez (Tobias , Inc. of Erath, LA), children Elliott Mistich, Jr. and Jamie Bergeron

Ms. Agnes Candies the widow of the late Otto Candies (Des Allemands, LA) Survived by sons, Otto Candies, Jr., Paul Candies, and Kevin Candies

Mr. Meyer Nelkin of Candy Fleet Corporation (Morgan City, LA): Survived by son Kenny Nelkin

OMSA member Canal Barge Co. received a Silver Award in the Large Business Category.

The William M. Benkert Award is the premier national award that recognizes excellence in marine environmental protection. This award was created to recognize vessel and facilities operators who have implemented outstanding marine environmental protection programs - programs that far exceed mere compliance with industrial and regulatory standards.

When we talk about the Jones Act, we generally mean the set of laws ensuring that vessels which operate in the U.S. are U.S.- built, U.S.-crewed and U.S.-owned. But in honor of the Fourth of July holiday that we have just celebrated, let’s look deeper into what the Jones Act really means - this country’s commitment to maintain a strong maritime industry. It’s a concept that goes back to the very birth of our nation.

It was a bitterly cold Christmas Eve and George Washington’s army gathered at the banks of the Delaware River for an all-or-nothing surprise attack on British forces. Washington had personally chosen the soldiers who manned the oars on the small boats that would carry the army across the river. They were fishermen and sailors from Marblehead, Massachusetts. Used to catching codfish in the dangerous waters off the New England coast, they had been specially picked for their toughness and courage. Now in case your history is rusty, the good guys won, America earned its independence and here we are today. In a way, that is how the American maritime industry helped found our nation.

So what does that have to do with us today? We no longer need U.S. seaman to man the oars on ice-choked rivers. Now it seems like we fight our battles with stacks and stacks of letters to Congress and written comments to the Coast Guard docket. In fact our world has changed so much that some argue that we don’t need a Jones Act anymore or that we can afford to water it down with exemptions. But they are dead wrong.

They are wrong because they don’t recognize that, just as the times have changed, the reasons our country needs the Jones Act have changed as well. At times, national defense has been the biggest reason why we needed a Jones Act. At other times, the Jones Act has been critical to our trade strength and global competitiveness. As the maritime industry has adapted, the only constant is that it remains vital that America have a thriving maritime industry, sometimes for reasons that we could not have anticipated.

Now, even as the naysayers call for an end to the Jones Act, we find ourselves in a new area in which security is the new national imperative and because of that we find yet another essential need for the Jones Act. The Coast Guard and its parent Homeland Security Agency have taken on the job of making sure America’s shores are not vulnerable to terrorist attack. The vessels calling on U.S. ports and working in U.S. waters can be divided into two groups – foreign and domestic. When dealing with foreign flag vessels, the government must screen for smuggled weapons and potential terrorists. The U.S. must make sure that foreign ships aren’t secretly owned by people with ties to terrorist groups. On the other hand, the government relies on U.S.-flag vessels as one means of protecting our ports, calling on vessel crews to report suspicious activity and to be the “eye and ears of the waterways.”

The oil and gas platforms in the Gulf of Mexico are critical to America’s energy supply. How important is it to our nation’s security that the vessels working in that environment are American vessels? How much more vulnerable would we be if there were no Jones Act in the oil patch?

The concept of U.S.-built, U.S.-crewed and U.S.-owned takes on a new urgency in a world filled with new threats. And maybe there is a direct line across the centuries between those fishermen rowing across the Delaware and the U.S. Masters, Engineers and AB’s manning the vessels of the Gulf of Mexico.

Jones Act Threats From Many Directions

In the past few years, the threats to the Jones Act have become more complex and have come from a number of different directions. In this environment, protecting the Jones Act means working on a number of fronts. Currently, OMSA is engaged in four different arenas:

Just about ten years ago, Congress passed law allowing for foreign lease financing, meaning U.S. owners could lease vessels from foreign financial institutions, just as they lease vessels from U.S. financial institutions. The goal was to make foreign capital available to legitimately qualified U.S. owners. But somewhere along the way foreign vessel owners started getting into the act, using lease financing to move into U.S. markets where they had previously been excluded. OMSA has been in the lead in fighting to close the loopholes, both in Congress and with the federal agencies, and we are winning. The Coast Guard and Maritime Administration are in the process of finalizing a set of regulations which will allow for legitimate foreign financing, but close the door on foreign companies which would use lease financing to control U.S. vessels. We are also working with Congress to close the loopholes. It may still be necessary to go to court to close the door and make sure it stays closed, but for now, all of the signs are positive.

Very recently, a new wrinkle has emerged that may represent an additional Jones Act threat – debt financing. Specifically, this involves the large supply boats that the French maritime giant Groupe Bourbon is building and Rigdon Marine planned to manage under a lease finance proposal. When the first boat was ready to come out of the shipyard in May, it appeared likely that the Coast Guard would refuse to provide the vessel with a coastwise endorsement, or at least delay the process until it dug deeper into the relationship between Groupe Bourbon and Rigdon Marine. At the last minute, the French conglomerate changed the financing to a vessel mortgage, informing the Coast Guard that it was loaning Rigdon Marine $128-million for 10 vessels (approximately 100% of the announced costs). The Coast Guard approved the first vessel, apparently without reviewing the transaction to see if it was legitimate under the Jones Act.

The fear is that, if allowed to stand, this could open the door to midnight assaults on the Jones Act, with foreign companies directly controlling the finances of purportedly legitimate American companies. OMSA is actively encouraging the Coast Guard to address the problem. If the agency does not move to close the potential loophole, OMSA may be forced to turn to the courts and Congress. This is a very disturbing development and one that OMSA is working hard to address.

One of the rules of thumb for the Jones Act is that foreign vessels can be used for some operations if no U.S. vessel is able to do the job. That is what has happened in the recent past with launch barges. The problem is, what if a U.S. operator was willing to build or modify a vessel but didn’t receive enough notice to legitimately bid on the work? For more than a year, OMSA has been working to address the problem, meeting with Congress and the agencies. A compromise solution may be close at hand.

Increasingly, OMSA members are growing concerned over foreign anchor handling and towing vessels working in the Gulf of Mexico. Some of these foreign vessels appear to be breaking the law. In those cases, OMSA will ask Homeland Security agents to investigate and prosecute if necessary. In other cases, foreign companies will rely on rulings from the Customs and Border Protection (CBP) Agency to argue that their work in the Gulf does not violate the Jones Act. While these must be analyzed on a case-by-case basis, OMSA believes that some of those operations go beyond the bounds of what is allowed under the law. The association is working to encourage CBP to review those operations and tighten the rulings to curb any abuses.

It is a long, complex and drawn out effort. It is also an expensive one. It means engaging Congress, at the local and national level with four different federal agencies, and perhaps going to court. But, as OMSA’s members have made clear, it is a necessary fight and one that the association will be in for the long haul.

Table of Contents

As directed by the Board the OMSA safety committee met to discuss the SafeGulf initiative by four major GOM operators and the need to update the OMSA safety orientation program. The consensus of the committee was that the OMSA safety training program, originally developed in 1994, should be updated to include all of the subject matter required by SafeGulf.

The safety committee determined that the program should be put together in a modular format to accommodate the current training methodologies of various OMSA member companies. Each lesson plan should be developed so that the course may be taught in a single day or each subject area taught individually over a period of time. In either case, upon completion of the required subjects an individual would receive an OMSA Safety Training course completion card. The committee also insisted that all training be developed to be specific to vessel personnel.

The committee was adamant that OMSA should maintain its safety training program independent of SafeGulf and should not participate in the SafeGulf administrative program, training system, database or biometric identification system. The committee insisted that OMSA should not supply social security numbers to SafeGulf or support the collection of social security numbers.

If approved by the board, OMSA’s revised safety program will address two issues in future actions:

The committee will update the current OMSA safety training program to include the SafeGulf subject materials and generally update the current safety training program to include advances in safety since the inception of the program.

In addition to the modular format the program will be designed to address three specific company needs: 1) For companies where this will serve as the primary safety orientation program. 2) For companies subject to STCW an abbreviated program encompassing only those items not covered by BST. 3) For companies with an extensive in-house training program a system to accept current training as meeting the OMSA program.

The system will also have a provision for employees to test out of training. The committee is examining the ability to make the program testing internet based and to provide lesson plans by DVD/video. Provisions for verbal testing will be made for employees with limited education.

A full report will be given at the July 22 OMSA Meeting.

You can now order the full line of Moxie Media Safety, Security and Training Videos through OMSA. By buying your training videos through OMSA you will get the high quality of Moxie Media products with the ease of dealing with OMSA for your ordering and billing. In addition you will be supporting your association. The Moxie Media Security Training Series for Company Security Officers, Ship Security Officers and Maritime Security Awareness are very popular at this time. In the future we will be offering a new Safety Training series to meet the SafeGulf new hire safety orientation requirements. If you have any questions on the breadth and depth of Moxie’s video offerings just visit our website and click on the Moxie link, make your choice and call OMSA to order any of the many Moxie offerings.

A new initiative from the U.S. Minerals Management Service (MMS) to protect Gulf of Mexico facilities from hurricanes may result in more work for offshore vessels. MMS has ordered that all platforms that are more than five years old must be inspected to make sure they are within acceptable risk levels. The order says the platforms must conduct the risk assessments between now and November 2006. MMS became concerned after studying the damage caused by Hurricane Lily. According to the agency, 1200 fixed platforms (more than one quarter of all of the platforms in the Gulf) are more than 30 years old and nearly 400 of them are more than 40 years old. It is not yet known how MMS will ensure that structural weaknesses are addressed once the risk assessments are completed. An MMS representative, Mr. Tom Laurendine, will provide details at the July 22nd OMSA membership meeting.

At the strong urging of offshore operators and elected officials, the Environmental Protection Agency (EPA) has moved to allow new water discharge permits for Gulf of Mexico platforms. Under the Clean Water Act, rigs must have a permit to release produced water from drill sites. However, the permits expired last November and EPA had not renewed them. Since then a number Gulf drilling projects have been put on hold while the leaseholders waited for the permits to be renewed. While no hard numbers are available on how many projects were delayed, the permitting is believed to have contributed to the Gulf slowdown.

EPA had reportedly delayed renewing the permits while it tried to determine whether produced water discharges were contributing to what is known as the “dead zone” along coastal Louisiana. A number of industry groups urged the EPA to renew the permits and the Louisiana Legislature even weighed in, passing a resolution calling for renewal. On June 30, EPA relented, releasing a draft permit which should be finalized later this summer. It is not known whether offshore operators will start drilling again immediately or wait until the permit is finalized.

As the Gulf of Mexico continues to wallow in its current economic slowdown, it is worth looking at the transformation that is taking place in the worldwide energy marketplace. It is a world in which both production supply and consumption demand are being driven by other parts of the globe. It is also a world in which fundamental assumptions about reserves and future availability of energy is changing. The following are a sampling of some of the issues:

A new study by BP shows higher prices for oil and gas worldwide, but higher demand as well. The BP Statistical Review of World Energy looks at the world energy marketplace for 2003. The year saw the highest oil and gas prices in 20 years and an increase in world demand of more than two percent. The study also shows a shift in production, with Russia continuing to emerge as an energy-producing powerhouse. Overall Russian energy production has increased by more than18 percent in the last five years.

Global gas production rose 3.4 percent for the year. However, in North America, gas production fell, led by reductions in Canadian output. Russian gas production continued to expand, rising over four percent. Production in Europe fell with declines coming from the UK, Italy and Netherlands, but production in Norway rose strongly, up 12 percent.

The report indicates the fast rise in LNG sales, which went up by 12 percent worldwide. U.S LNG imports more than doubled.

It is becoming more and more apparent that China is the biggest driver of the changing worldwide energy market. According the BP Statistical Review of World Energy, Chinese oil demand has doubled over the last 10 years. China has now moved ahead of Japan to become the world’s second largest consumer of oil behind the United States.

China’s demand for energy can only increase. According to an investor presentation by Simmons Company, in 1993 there were only 700,000 cars in all of China. Now, China adds another two million new cars a year. The number of motorcycles in the country has also increased in the last decade from 15 million to 90 million. The growth in China’s oil imports, up by more than 30 percent in 2003, are a key reason that world oil demand has jumped. In the short term it puts new pressure on oil prices and in the longer term it means that energy producers will increasingly look to China as a growth market for their products.

Are they or aren’t they? Only the major oil companies know for sure whether they are replacing their reserves quickly enough. The Securities and Exchange Commission says they are and reports that the majors replaced 116% of what they pumped in 2001-2003. However, a new study by Deutsche Bank claims otherwise. Deutsche Bank says oil companies are only replacing about 75% of the reserves that they pumped in the past few years. The analysis says the information the SEC uses is out of date by the time the agency reports it. The study warns that the big producers cut their exploration budgets by one third overall in an effort to streamline their operations. It predicts that companies, under pressure to find new reserves, will have to invest heavily in finding fresh fields.

OMSA Members were well represented in one of the leading safety awards ceremonies for U.S. flag vessels and their crews. The Jones F. Devlin and Ship Safety Achievement Awards Luncheon was held in New Orleans on June 10. Jones F. Devlin Awards are given to vessels that operate for at least two full years without a lost-time injury and Ship Safety Achievement Awards are presented in recognition of outstanding feats of safety that contribute to saving a life or a ship. The luncheon is sponsored by the Chamber of Shipping of America (CSA), the national trade association representing domestic deep draft ship owners, but the awards are open to all domestic vessels.

The M/V CANONERO of Tidewater Inc. was one of two vessels to receive Highest Honors. According to CSA, the award recognized “the crew’s extraordinary courage and superior seamanship in the successful rescue and recovery of two small children clinging onto an ice chest after their fishing vessel had overturned in the Gulf of Mexico in adverse weather condition, but regrettably with the loss of three family members prior to the rescue. While awards are usually reserved for vessels, CSA judges agreed to confer a Highest Honors Award to Brian Song, Engineer on the M/V CANONERO, for his action in jumping into the waters of the Gulf of Mexico to rescue the children.”

OMSA member vessels receiving Citations of Merit were M/V MARTHA LYNN of TECO Transportation and M/V GULF FLEET NO. 302 of Tidewater Inc.

OMSA member recipients of the 2003 Jones F. Devlin Awards (given for two or more years without a lost time injury) were Canal Barge Company, Inc.; ChevronTexaco Shipping Company, LLC; Crosby Tugs, LLC; Kilgore Marine LLC; Kilgore Offshore, Inc.; TECO Transportation; and Tidewater Inc.

At the April OMSA meeting Colonel Herb Fritts spoke to the association about the Louisiana Job Corps facility located at Carville. On May 20th a contingent of OMSA personnel responsible for corporate personnel and recruiting, and Coast Guard REC officials visited the Louisiana Job Corps facility at Carville, LA. The general purpose of the facility is to provide a structured drug-free residential environment where life and job skills are taught to at-risk youth. Current certification programs include auto repair, welding, carpentry, horiculture and office skills. All of the educational programs include national certification programs, such as ASE for auto. The facility will soon be adding API training programs aimed at entry level offshore workers.

OMSA met with the staff to tour the facility and discuss the possibility of adding maritime training to the curriculum. Possible additions to the curriculum include BST, Safety Orientation, RFPNW, RFPEW and Coast Guard MMD. The program has the potential to provide motivated, drug-free new hires with much of their initial training and education out of the way.

OMSA plans on working this through the HR committee, but the first great question for OMSA members is "If we add these programs, will you have jobs for the graduates? If a drug-free 18-22 year-old showed up at your office with an MMD, BST Certificate, OMSA Safety Orientation Card and possibly the one-day pre-sea RFPNW or two-day pre-sea RFPEW certificate, would you have work for them?”

Please come to the HR committee meeting on July 22nd prepared to discuss this opportunity.

All tax rolls are open for public viewing between August 15th and September 15th each year. The dates may vary somewhat by Parish. The tax rolls must be submitted to the Tax Commissioner for approval by November 15th of each year, although most assessors submit the rolls for approval just after the closing for public viewing. Once the tax rolls are submitted for approval it is virtually impossible to change the taxes. The Louisiana Tax Assessors highly recommend that you view the tax rolls and taxable value of your vessels while the rolls are open for public viewing. If you have any dispute or adjustment to the taxable value of your property now is the time to contact your assessor and discuss the issue.

The coastal tax assessors are:

ASSUMPTION (985)369-6385
Teri T. Richard, teririchard663@hotmail.com
Wayne Blanchard, assessor@eatel.net

CAMERON (337)775-5416
Robert E. “Bobby” Conner, camassessor@camtel.net

IBERIA (337)369-4415
Rickey Huval, iberiaassessor@bellsouth.net
Elaine Lannie, personalproperty@hotmail.com

LAFOURCHE (985)447-7242
Michael H. Martin, michael-martin@lafourrchassessor.org
Kenneth R. Neal, kenneth-neal@lafourcheassessor.org

PLAQUEMINES (504)297-5256
Robert “Bobby” Gravolet, ppa@plaqassessor.com
Ann Fox, afox@plaqassessor.com

ST. BERNARD (504)279-6379
Marlene Vinsanau, stbassor@bellsouth.net

ST. MARY (337)828-4100 Ext. 250
Pat Bertrand, smpassr@petronet.net
Emery Thibodeaux

TERREBONNE (985)876-6620
Reggie Landry, tpassessor@internet8.net
Gene Bonvillian

VERMILION (337)893-2837
Michael Langlinais, mikelanglinais@yahoo.com
Celeste Moss

CALCASIEU (337)437-3461
Richard J. Cole , Jr., rjcolejr@cppj.net
Mike Myers

The Coast Guard has recently issued a string of interpretive rulings that pose a serious threat to the ability of U.S. Flag oilfield support vessels to work overseas. Our best estimate is that over 100 OMSA member vessels may be currently threatened.

A series of rulings threatening our current overseas operations began with the issue of Change 3 to Navigation Vessel Inspection Circular (NVIC) 11-93. While this change was not widely know (even within the Coast Guard) it began a process by which the Coast Guard may severely limit the ability of U.S. flag offshore support vessels to operate overseas. Change 3 to NVIC 11-93 was followed in April by a notice in the Federal Register whereby the Coast Guard “re-interpreted” the meaning of the term International Voyage as it applied solely to the application of international ship security regulations. The “re-interpretation” of the term International Voyage as it applies to security regulations was followed in late June by another “notice” in the Federal Register whereby the Coast Guard announced that it was taking a more restrictive stance towards the application of SOLAS to U.S. oilfield support vessels working from foreign ports, in essence doing away with the concept of foreign domestic voyages and applying SOLAS in full to U.S. crewboats, liftboats, supply vessels, etc. working from foreign ports.

Change 3 to NVIC 11-93
This change to NVIC 11-93 essentially eliminates the use of tonnage reconciliation letters for determining the applicability of international regulations to U.S. Flag vessels built before July 18, 1994. Vessels built before July 1994 that had been previously exempted from SOLAS because of their build date would now be required to obtain SOLAS documents to conduct international voyages. The change would also retroactively apply the ISM Code, ISPS Code and any other SOLAS amendments since July 1982 to U.S. vessels based upon their ITC tonnage vs. regulatory tonnage. The Change also adds the term foreign voyage to the definitions section. This term is an expansion of the definition of international voyage and applies international rules to a wider array of vessels.

Interpretation of the term International Voyage as it applies to vessel security
In USCG Docket 2004-17350 of April 6, 2004 the Coast Guard published its interpretation of the term “International Voyage” as it applies to determining the applicability of the International Ship and Port Security Code (ISPS) to U.S. Flag vessels working from foreign ports. Practically speaking this interpretive ruling is limited to vessels in the offshore industry. While this interpretation on its own would seem to have little practical affect on the industry, it appeared to provide the Coast Guard a “backdoor” in implementing the wider array of SOLAS rules on oilfield support vessels working from foreign ports. The interpretation and OMSA comment may be viewed at http://dms.dot.gov/search/searchFormSimple.cfm and entering 17350 as the docket number.

Application of SOLAS to U.S. Vessels Working from foreign Ports
As a follow on to the previous reinterpretation of international voyage on June 21st the Coast Guard announced a significant change to its interpretation of the applicability of SOLAS to U.S. Flag vessels working from foreign ports.

The effect of this interpretation could be felt severely by the industry as it may limit crew, supply, liftboat or any other oilfield support vessels from carrying no more than 12 persons in addition to the crew, whether the persons are passengers or not, unless those vessels are in full compliance with SOLAS passenger vessel construction, fire safety and equipment rules.

For vessels that do not currently have SOLAS certificates it would require compliance with the 2004 SOLAS Code. This interpretive change flies in the face of the plain language of SOLAS and is a change to decades of Coast Guard practice. The notice may be viewed at http://dms.dot.gov/search/searchFormSimple.cfm and entering 17615 as the docket number.

*Note: Ken Parris met with Captain Brusseau of the Coast Guard’s Marine Safety Division Office of Operating Standards to discuss the difficulties that these new interpretations may cause our industry and the potential to seriously disrupt commerce. Ken Wells met with the chief of compliance at Coast Guard Headquarters on July 7th to discuss their re-interpretation of all three issues. A second meeting of OMSA and members to hopefully solve the issues was scheduled for July 13th. OMSA has also briefed congressional staff on the problem. The goal of these meetings is to work out a solution that allows OMSA members to continue to compete internationally.

USCG Docket 1999-5610 published in the Federal Register June 10, 2004 made final the Coast Guard’s proposed rule to implement Regulation V-3 of the STCW Code for all U.S. Flag passenger vessels on an international voyage. This requirement of the STCW Code does not apply to vessels in domestic service. This regulation requires crewmembers on passenger vessels on international voyages comply with the Crisis Management & Human Behavior and Crowd Management training requirements found in Regulation V-3 of STCW Code. The courses run from 2-5 days at an estimated cost of $530-$1200.

When this rulemaking was first proposed four years ago no comments were submitted, as the requirements did not apply to any OMSA vessels. However, with the recent “re-interpretation” of the definition of an international voyage by the Coast Guard in its June 21, 2004 Notice (USCG-2004-17615) these STCW requirements may now be applicable to vessels working from foreign ports. The notice may be viewed at http://dms.dot.gov/search/searchFormSimple.cfm and entering 5610 as the docket number.

Subsequent to the fire on the towing vessel Scandia and resultant major oil spill off the coast of Rhode Island the Coast Guard proposed rules requiring the installation of fixed fire fighting systems on towing vessels. Those rules, originally published in 1997, have now been published as USCG Docket 2000-6931.

The new regulations found in 33 CFR Part 164 require voyage planning by towing vessel operators prior to commencing a voyage. For vessels contracted before January 18, 2000, the new regulations found in 46 CFR Part 27 require the installation of a general alarm aboard towing vessels, the installation of a fire detection system, the ability to communicate with the engine room, a remote fuel shut-off valve and monthly fire drills. For vessels contracted after January 18, 2000, the new regulations also require that the installation meet certain equipment and material construction standards. By April 29, 2005, towing vessels must be fitted with either a fixed or portable firefighting pump and hose system. All towing vessels contracted for after August 27, 2003, must be fitted with a fixed fire extinguishing system protecting the engine room.

The Coast Guard is soliciting applications for positions on this committee. MERPAC advises the Coast Guard on issues related to mariner licensing and documentation. As such it plays a vital role in shaping Coast Guard policy towards our mariners. Meetings are typically twice each year for two days with occasional committee sub-committee meetings in between. OMSA members are encouraged to participate.

OMSA Members John Fontenot of Seacor and Greg Szczurek of Houston Marine attended the sub-committee on June 1st and general committee meetings on June 2nd , along with OMSA vice president Ken Parris as members of the public. OMSA member Ken Dawson of Rigdon Marine (formerly of Four Star Marine) is a MERPAC committee member. Mr. Dawson was unable to attend the MERPAC meetings due to work commitments.

The Coast Guard Merchant Personnel Advisory Committee is tasked with providing advice to the Coast Guard on issues of Merchant Mariner licensing and documentation. On June 2 the various MERPAC subcommittees met to complete/continue work on open task statements. Tasks of interest to OMSA members were:

• Task statement 37 – Credit for sea service on vessels with no, or limited, underway time. This subcommittee was attended by Ken Parris. The focus is on NMC Policy Letter 09-01 which only allows deck personnel serving on liftboats to receive 1-day sea service credit for each 3-days served while the vessel is elevated. OMSA has strongly opposed this policy. The task was closed with a strong statement from MERPAC to the Coast Guard that the Coast Guard should work with OMSA to develop a liftboat specific training program that allows mariners to gain 1 for 1 sea service credit regardless of whether or not a liftboat is elevated.
• Task statement 43 – Recommendations on a training and assessment program for able-bodied seamen on sea-going vessels. This subcommittee was attended by John Fontenot and Greg Szczurek. The subcommittee developed those standards that the Coast Guard will present to IMO as the required STCW standard for AB’s. The recommendation to IMO will mirror current domestic AB training and education requirements. The work group will meet in Boston to continue its work August 16-17. If you are interested in participating contact Ken Parris for an e-mail with the details.
• Task statement 44 – Security training and certification for vessel personnel, vessel security officer, and other vessel personnel. This subcommittee was attended by Greg Szczurek. The standards for SSO training and education will mirror current requirements.
• A new task was accepted to examine the medical standards that should apply to merchant mariners. MERPAC has accepted this task and will commence work in the near future. In the interim the National Maritime Center will send out a second draft of their proposed NVIC on mariner medical standards for review.

John Fontenot of Seacor made a presentation to MERPAC on the regulatory road block to qualification of mariners working on crewboats for overseas service. The crux of the matter is that the STCW Code equates 200 GRT (domestic) to 500 GT (international). Crewboats are all under 100 GRT (domestic) and there operators licensed accordingly. Some of the local governments of foreign locations where these vessels operate are looking for the operators to have a U.S. licensed endorsed for 200 GRT as that equates to the lowest STCW endorsement level of 500 GT. The problem lies in the wording of the regulations in regards to sea service for vessels under 200 GRT. With the current regulatory wording it is impossible for a mariner working on a crewboat to qualify for a 200 GRT license. The MERPAC committee and Coast Guard personnel in attendance from the National Maritime Center understand the problem and have committed to working with OMSA to develop a solution.

On July 30, 2003 the Coast Guard proposed adding mandatory ballast water requirements to 33 CFR 151.2010. Those changes have been adopted and can be found online at http://dms.dot.gov/search/searchFormSimple.cfm and entering 14273 as the docket number. The major changes include the requirement for a ballast water plan and mandatory ballast water reporting.

On June 17th the Coast Guard issued NVIC 07-04 detailing implementing instructions for ballast water control and reporting measures. New Coast Guard regulations will require that vessels equipped with ballast tanks send reports to the Coast Guard prior to each voyage bound for a port or place. The Coast Guard rules may require reports as frequently as daily, to as infrequent as never, depending on vessel operations, exempted are those vessels operating solely within a single COTP Zone do not need to make reports.

International shipping and waterborne commerce is crucial to the American economy. A significant negative impact of international shipping has been the introduction of Invasive Aquatic Species. Simply put, the ballast water of vessels has become a primary source of the movement of non-native aquatic species throughout the world. Invasive species are those that are not native, have no or limited predators in their new home, and cause ecological damage to their new home. Think of it as world-wide similar to our own problem with nutria. This is not just an American problem, but a world-wide problem.

To limit the impact of Invasive Aquatic Species on America the Coast Guard has recently issued new rules and penalties for vessel ballast water control and reporting. The purpose of the reporting rules is to collect data on ballast water intake and discharge that scientist can use to track the movement of Invasive Aquatic Species.

An OMSA workgroup chaired by Steve Bellingham of Stolt and made up of , Dan Ganienne of Hornbeck and Harold Wilson of Tidewater has been working since these rules were first proposed to develop reporting procedures that will allow operators to comply with the rules with the minimum of additional administrative burden. The report developed by the committee is in the form of an Excel spreadsheet that will allow vessel operators to enter a minimum of data and then email or fax the report to the Coast Guard’s Ballast Water Reporting Center. A draft of the report has been completed and copy of the final work product, along with instructions on ballast water reporting, will be sent to each member when complete.

Joseph A. Boevink, age 51, of Panama City, Florida, was sentenced to two months in custody, followed by up to 60 days in a halfway house, and two years of supervised release, for falsely claiming that he had never been convicted of a criminal offense on an application for Merchant Mariner license submitted to the U.S. Coast Guard.

The case marks the first time a merchant mariner, identified through the nationwide U.S. Coast Guard initiative known as "Operation Drydock," has been convicted of a criminal offense at trial. Court records show that in December 2002, the U.S. Coast Guard initiated "Operation Drydock," a comprehensive criminal and counterterrorism investigation designed to identify vulnerabilities in the merchant mariner credentialing process. The Coast Guard, working with the Federal Bureau of Investigation (FBI) National Joint Terrorism Task Force (NJTTF) and other interagency partners, compared the names of over 220,000 credentialed merchant mariners against law enforcement information to identify anomalies. Joseph A. Boevink was identified as an active mariner who had made false statements on his application for a Merchant Mariner Document concerning past criminal convictions and drug use. The U.S. Coast Guard determined that Boevink had falsely claimed that he had never been convicted of a criminal offense (other than a traffic offense), when in fact Boevink previously had suffered convictions for burglary and possession and use of drug paraphernalia.

CBP has begun full enforcement of automated cargo reporting. The regulations first announced in March provide that CBP must receive cargo information electronically via a CBP-approved data interchange system before the cargo is brought into the United States. Customs and Border Protection needs accurate cargo data to protect our homeland and the American people from potential terrorist threats entering through our seaports.

On March 4, 2004, inbound vessel cargo information was required to be transmitted electronically. CBP adopted a progressive enforcement strategy to address violations of the Trade Act Regulations. The enforcement actions included denial of preliminary entry, issuance of penalties at each port of arrival, and denial of unloading. During the informed compliance period, CBP issued warning notices to vessel carriers that arrived in violation of the Trade Act Regulations.

Effective July 6, 2004, all inbound vessel carriers must comply with the Trade Act Regulations' mandate to automate. There are no exceptions or waivers to the automation requirement. Vessel carriers that continue to arrive and present paper Inward Cargo Declarations (CBP Form 1302) to CBP in violation of the Trade Act Regulations will be denied permission to unload cargo. However, passenger vessels will be allowed to disembark passengers.

For more information on the Trade Act Final Regulations (68 FR 68144) for all modes of transport, please log on to CBP's Web site at www.cbp.gov/xp/cgov/import/communications_to_industry/advance_info/.

Several OMSA members have recently called for information on Customs and Border Protection Bureau (CBP) new regulations on automated manifest reporting. While most OMSA members are not required to clear customs when working on the Outer Continental Shelf, vessels returning to the United States from foreign jobs may be affected. The regulations may also affect vessels bringing cargo in from free-floating vessels in the Gulf, such as pipe-laying barges, or from foreign-flag rigs in-between drilling jobs.

In the past, OMSA members have been able to use an agent to clear customs in these cases. However, new CBP rules that went into effect on March 4, 2004 changed the requirements for reporting inbound cargo. Now, carriers must obtain a Standard Carrier Alpha Code (SCAC) and a bond. They must also report their cargo information to Customs electronically. In the case of containerized cargo or some break-bulk cargo, the reports must be filed with Customs 24-hours prior to lading. Bulk cargo and certain permitted break bulk cargo may be reported at the time of sailing, if the voyage is less than 24 hours.

Additional information on the new regulations can be found at the CBP Website – www.customs.gov. Once at the site, click on Trade Act of 2002 - Advance Electronic Information.

This is a repeat article. The following is a summary of outstanding issues involving the establishment of upcoming carriage requirements for Automatic Identification Systems (AIS).

The deadline for many OMSA member vessels to carry AIS is a few months away. As a part of legislation aimed at increasing security in U.S. waters, Congress ordered the Coast Guard to require the AIS units on vessels. As it stands now, beginning at the end of December of this year, the Coast Guard will require AIS carriage for most commercial vessels operating in VTS zones. The carriage requirements will apply to:

• Vessels operating within VTS zones that are Self-propelled commercial vessels of 65 feet of more in length, except fishing vessels and passenger vessels certificated to carry 150 or fewer passengers; Towing vessels of 26 feet of more in length and more than 600 horsepower; or Passenger vessels regardless of gross tonnage certificated to carry more than 150 passengers for hire.
• Vessels on international voyages that are Self-propelled commercial vessels of 65 feet of more in length, other than fishing vessels and small passenger vessels certificated to carry 150 or fewer passengers; Tankers; Passenger vessels that are over 150 gross tons; or Vessels, other than passenger vessels and tankers over 300 gross tons.

For OMSA members operating domestically, this means that vessels that fall under Subchapter L (OSVs and liftboats), conventional tugboats over 600 hp and vessels 65’ in length or over must carry AIS if they travel within the zones covered by VTS New Orleans, VTS Morgan City, VTS Port Arthur (currently under construction) and VTS Houston/Galveston.

As the December deadline for carriage requirements draws closer, manufacturers are gearing up to supply AIS units to vessel operators. Under the regulations, manufacturers operating in the U.S. must be certified by the FCC. The following companies have met the FCC requirements:

Saab TransponderTech ABwww.transpondertech.se
STN Atlas Marine Electronics GmbH www.sam-electronics.de
L-3 Communications www.l-3com.com
Leica MX-Marine www.mx-marine.com/
Marine Data Systems www.marinedata.co.za
Nauticast Schiffsnavigationssysteme AG www.nauticast.com
Kongsberg Seatex AS www.kongsberg-seatex.no
McMurdo Ltd www.mcmurdo.co.uk
Japan Radio Co Ltd www.jrc.co.jp
Furuno USA Inc www.furunoUSA.com

The Coast Guard has a very good website for background on AIS, explaining how AIS works, what vessels are required to carry them and what standards the units must meet to be in compliance. The website address is: http://www.navcen.uscg.gov/enav/ais/default.htm

Diesel boats and ships, which range in size and application from small recreational runabouts to large ocean-going vessels, are significant contributors to air pollution in many of our nation's cities and ports. Although marine diesel engines being produced today must meet relatively modest emission requirements, they continue to emit large amounts of nitrogen oxides (NOx) and particulate matter (PM), both of which contribute to serious public health problems.

In May 2004, as part of the Clean Air Nonroad Diesel Rule, EPA finalized new requirements for nonroad diesel fuel that will decrease the allowable levels of sulfur in fuel used in marine vessels by 99 percent. These fuel improvements will create immediate and significant environmental and public health benefits by reducing PM from existing engines.

At the same time, in a separate action, EPA announced its intent to propose more stringent emission standards for all new commercial, recreational, and auxiliary marine diesel engines except the very large engines used for propulsion on deep-sea vessels. These standards, which are modeled after the Clean Air Nonroad Diesel engines program, would require the use of advanced emission-control technologies similar to those already upcoming for heavy-duty diesel trucks and buses. The availability of clean nonroad diesel fuel required under our new nonroad fuel standards will enable the use of this technology on marine diesel engines. EPA estimates that NOx and PM emissions could be reduced by 90 percent by applying such advanced technology to these marine diesel engines. For more details visit the EPA website at http://www.epa.gov/otaq/marine.htm

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The July 1st implementation date has passed and information received to date indicates OMSA members are in compliance with only a few vessels detained. The few problems reported involving OMSA members have been vessels in which the crew was unfamiliar with their vessel plan, thus requiring the Coast Guard to shut down vessel operations until the crew was familiar with and operating in accordance with the required plan.

The deadline for full compliance with the Security Regulations was July 1, 2004. The deadline has passed and the Coast Guard has shown that there will be no exceptions, exemptions or extensions.

What should companies have done by now:

• Designate a “responsible person.” Each company should have designated a Company Security Officer responsible for ensuring that all aspects of these rules are implemented.
• Submit security plans. You should have submitted each required security plan to the Coast Guard in Washington, D.C. for approval back in December.
• Conduct security classroom training. You should have begun training every vessel employee whether full time, part time, contract or temporary must receive the appropriate level of security training. The training must be documented and recorded.
• Distribute Plans: By now you should have begun distributing the security plans to your vessels.
• Conduct Onboard Security Training. You should have begun training every crewmember in their shipboard security duties. The training must be documented and recorded.
• Conduct Drills. You should have begun conducting onboard security drills. The drills must be documented and recorded.
• ASP Verification Audit. The Coast Guard is required to conduct a verification audit of every vessel using an ASP. Typically this will be done in conjunction with the vessel’s inspection for certification.
• ISPS Code Inspection. Each vessel in international service or each that you plan to bid for international service must request a security inspection by the Coast Guard. Upon completion of a successful Coast Guard Security Inspection, the vessel will be issued an International Ship Security Certificate.
• Continuous Synopsis Record. Vessels in international service were required to have a continuous synopsis record after July 1st.

What’s Next?
The next hurdle for vessel security is to ensure that all vessels conduct required drills. Next spring and summer new to our industry will be required security exercises similar to oil spill exercises. OMSA plans to hold group security exercises to coincide with regular OMSA quarterly meetings as a way to save members time and money.

INTERPRETATIONS OF SECURITY RULES:
On June 1st Ken Parris met with Commander Tim Dickerson of the Coast Guard Marine Safety Center Vessel Security Branch, to discuss the results of Coast Guard security inspections of vessels. During the course of Coast Guard inspections for the issuance of required International Ship Security Certificates some inspectors had reportedly told OMSA security plan holders to modify/amend their plans prior to issue of the required certificates. Commander Dickerson assured Ken Parris that, since the plans were approved by Washington, an inspector could not refuse to issue a required ISSC if the vessel was operating in accordance with the approved plan. Commander Dickerson emphasized that plan changes must be sent to Washington to review and approval. One purpose of this is to prevent wholesale change to the program at the whim of a field inspector. If you have any security plan questions continue to direct them to Ken Parris.

According to the Wall Street Journal, the Coast Guard is currently training local forces to protect oil installations and shipping in the Middle East. About 30 U.S. warships are currently patrolling the Persian Gulf and the Coast Guard is reportedly sending two more of its 110-foot cutters to add to the four it already has in the area. According to one analyst quoted in the Journal, this represents a hidden energy cost for the U.S. taxpayer as the U.S. military spends an average of $4-to 5 per barrel to protect oil leaving the Persian Gulf.

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Louisiana’s new Governor is demonstrating her commitment to attracting oil and gas jobs to Louisiana. Governor Kathleen Blanco made a high profile appearance at the Offshore Technology Conference in Houston to promote the state’s industry. While there the Governor held a number of meetings with oil industry executives, including a private dinner with CEO’s from more than a dozen major energy companies. State officials have been concerned for some time over the number of energy-related jobs that have left the state, especially the positions that have moved to Houston. The state is also taking out regular ads in oil and gas trade publications promoting Louisiana. The Governor made a campaign promise to actively promote the state to outside industry.

A new study by the state of Louisiana predicts that liquefied natural gas (LNG) will have a huge impact on the state in the future, but the study can’t decide whether the impact with be positive or negative. The study, released in April by the LSU Center for Energy Studies, says plans to build LNG terminals off the state’s coast could inject $2.3 billion into state coffers and add more than 10,000 new jobs over the next few years. The researchers predict that up to 14 new LNG plants could be build in the United States over the next few years and that the state could have a shot at attracting as many as seven of those plants.

On the negative side, the study says that, if restrictions are imposed on the LNG industry and gas prices remain high, creating a squeeze on supplies, it could cost the state $1.1 billion a year and result in more than six thousand jobs being lost. Much of the natural gas that arrives into the state by pipeline is used in Louisiana’s refining and industry plants. It is worth noting that the study estimates that Louisiana’s residential and industrial consumption of natural gas equals the consumption of Australia or South Korea.

The Louisiana Legislature adjourned its regular session on June 21. Looking at the big picture, lawmakers approved a budget that did not require raising taxes or cutting state services too broadly, despite a gloomy financial outlook for the state. The legislature also managed to sidestep any controversial changes in tort law.

During the session, OMSA followed a handful of measures that could have directly impacted members. One bill, HB 680 by Representative Murray, would have denied vessel owners the right to seek jury trials in Jones Act cases. That bill died in committee, thanks in part to OMSA members who helped explain to legislators and the Governor how harmful the bill would be to the maritime industry. A second bill, HB 1190 by Representative Jefferson, attempted to protect homeowners in disputes with building contractors, but as the bill was written would also have made it difficult for vessel operators to use the state’s Oil Well Lien Statute in cases where a contractor fails to pay for services. That bill also failed to make it out of committee.

For OMSA members who are responsible for purchasing fuel for vessels, one bill which did pass will offer protection from an additional fee on fuel. Two sessions ago, the state increased the fee for fuel pump inspections that motorists pay at gas stations, inadvertently applied the fee to fuel sold for commercial vessels as well. In this years’ session, HB 478 by Representative Daniel changed the definition to make sure the maritime industry would not have to pay the fee. The bill was passed by both houses and signed by the Governor. OMSA worked with other maritime groups on draft language that would make sure the fee was not charged for fuel to offshore service vessels.

These articles are intended for information purposes only. They are not intended to be a substitute for legal consultation with respect to any specific matter. For such opinion or advice, you should contact legal counsel. Please see your OMSA membership directory for the names of member firms.

In a significant ruling for nonunion employers, which currently employ more than 90% of the American workforce in the private sector, the National Labor Relations Board, on June 9, 2004, reversed its 2000 ruling in Epilepsy Foundation of Northeast Ohio, 331 NLRB 676 (2000), and held that a nonunion employer does not commit a violation of the National Labor Relations Act by denying requests of an employee to have a coworker present during investigatory interviews. IBM Corporation, 341 NLRB No. 148 (June 9, 2004—Released June 15, 2004).

The case before the Board involved a common situation in the workplace, an investigation of a harassment complaint. Three employees requested that a co-worker (one requested an attorney) be present during a second interview by management, and were denied same. The interview was conducted, and the three employees were later terminated. Following Epilepsy Foundation, the administrative law judge found that the employer violated the NLRA by denying witnesses to employees who reasonably believed that the investigatory interview might lead to discipline.

The Board majority, in a 3 to 2 decision, decided that even though allowing Weingarten [NLRB v. Weingarten, Inc., 420 U.S. 251 (1975)—establishing right to union representation in investigatory interviews in unionized workplaces] rights to nonunion employees was a permissible construction of the Act, so was not allowing that right, and policy considerations in the modern workplace supported the latter view.

Two members of the majority, Chairman Battista and Member Meisburg, articulated the rationale for returning to the pre-2000 law, as follows:

In recent years, there have been many changes in the workplace environment, including ever-increasing requirements to conduct workplace investigations, as well as new security concerns raised by incidents of national and workplace violence. Our consideration of these features of the contemporary workplace leads us to conclude that an employer must be allowed to conduct its required investigations in a thorough, sensitive, and confidential manner. This can best be accomplished by permitting an employer in a nonunion setting to investigate an employee without the presence of a co-worker.

The majority opinion also outlined four (4) major policy considerations supporting the overruling of Epilepsy Foundation: (1) coworkers do not represent the interests of the entire work force; (2) coworkers cannot redress the imbalance of power between employers and employees; (3) coworkers do not have the same skills as a union representative; and (4) the presence of a coworker may compromise the confidentiality of information.

Comment: This ruling returns to a common sense approach, recognizing the reality of the modern nonunion workplace, and the many policy and legal reasons supporting confidential investigations. Nonunion employers will now be free from the difficult choices raised when an employee requested a coworker witness in serious investigations, such as whether to complete the investigation without speaking to the subject employee, or to allow a coworker witness and compromise the confidentiality of the investigation. This is the fourth time the NLRB has changed its position on this issue in twenty-three (23) years, so it may not be the final word on the subject. Only time, and Presidential political outcomes, will tell.

Affected employers should alert supervisors and HR representatives who may have been trained to allow coworker representation upon request that the law has changed for now.