(Out with the Old)

Dear Friends,

We have seen the end of 2003! (OMSA members are generally alert people, so you have probably already noticed this.) And perhaps, most of you, being young and vibrant with a full life ahead of you, say “So What?”

Well, excuse me, but the sad fact is, there are some, like me, who have reached that “zone”, viz. 100 years of life tightly crammed into 65 years of age, who do not view the end of 2003 with quite the same casual attitude.

Tell you why! On December 31, 2003, Bob Alario will have, sooner or later, drug his old bones to bed after another full, crushing day at the deadly busy OMSA office. But, upon awakening, on January 1, 2004, he will have crossed that fearsome threshold into the humid, smoky purgatory of semi retirement – that state of mind and period of confusion where you begin to slip into a quasi professional condition somewhere between becoming a gardener, or thinking you’re still “out there” running a huge business and/or trade association “empire”, with a staff of three or four people. Geez! That’s scary!

You see, I’ve been around other old people like me who, at a similar point and station in life, have decompressed too quickly and take on the vacant look and slow shuffle of zombie like creatures. And, believe me, having lived in Haiti for two years, I know something about zombies. Matter of fact, some of my best friends are zombies. (Or, at least, I notice they take on the look of zombies, especially when I try to engage them in deep conversation.)

Oh well, I can’t be sure if you’re listening to me either. So, here, more to the point, is your President’s (soon to be your former President) message.

* * * * *

On January 1, 2004, after more than twenty years of service as either Chairman of the Board or President of OMSA, I will, with deeply mixed emotions, begin the brief period and process of official transition from my office at OMSA into semi and, then, eventually full retirement. I don’t want to exaggerate or accelerate my “farewell”, however. At this point in time, it is more an intermediate change in job description and duties while Ken Wells gets his “offshore” sea legs under him, and learns “where the bodies are buried.” I will be remaining as President until June and, in addition to helping Ken Wells in any way I can, I will be focusing, until then, on legislative and various other policy and tactical issues dedicated to strengthening the foundation and infrastructure of our association. (Actually, I admit it is not likely, knowing my nature, that my retirement from OMSA means I will not be seen, heavily armed, in full uniform, on this or other battlefields for a littler longer yet.)

Then, on January 29, 2004, I will, before all of the OMSA clan, formally turn over the reigns of OMSA’s day-to-day operations to my successor, Ken Wells. Some of you already know, or have recently met Ken. However, he will be more formally and definitively introduced to our membership as OMSA’s President Elect at our first business meeting of 2004, where he will outline his preliminary vision for OMSA, going forward.

The dinner meeting on the evening of January 29th will be the last at which I will act as “Master of Ceremonies”. While I may not yet be going “quietly into the night”, I do intend, at least, to begin fading further into the shadows of OMSA’s day to day operations, still working hard and smart (I hope), but less visible than before. That evening, I propose to do my best to bid a serious professional and fond personal farewell to my beloved OMSA members and friends. I hope to do so without blubbering like a baby throughout my final speech, but I cannot guarantee success.

In any case, I want to issue, through this, my final President’s message, a personal invitation to any and all of my friends out there with whom I have worked over these wonder filled and challenging years, OMSA members or not, to attend and be part of this farewell event, just as you have been a part of the life and experience that has brought me to this mellow point in my full and happy career. Any who may be interested in attending the retirement dinner and farewell need only contact Lillie at 504-734-7622, and she will gladly provide the necessary information regarding the meeting location, time and other details of the scheduled Cajun “wake”. (Elvis is coming!)

I hope to see and visit with all of you who can be there to “see me off” on January 29. T o those who cannot, I hope that we will be able to stay in touch. It would mean a great deal to me.

May God be with you all. Be assured that you will remain in my thoughts and prayers, as always.

Sincerely,

(In with the new)

There’s A New Sheriff In Town

Ken Wells Joins OMSA

As of January 1, 2004, Ken Wells will come to OMSA as President Elect after spending 10 years as the Southern Region Vice President for the American Waterways Operators (AWO). For those of you who don’t know, AWO is the trade association that represents the interests of American tug and barge operators. In his capacity as Southern Region Vice President, Ken represented member interests before state governments, Congress and federal agencies, particularly the U.S. Coast Guard and the Army Corps of Engineers.

Mr. Wells also served as chairman of the Louisiana Association of Waterways Operators and Shipyards and as a member of the Coast Guard Lower Mississippi River Safety Advisory Committee.

Prior to coming to AWO, Ken Wells was a television reporter in New Orleans, Tulsa and Washington D.C. He received an undergraduate degree in Communications and Political Science from the American University in Washington D.C. and a Masters of Business Administration from Southeastern Louisiana University.

He currently lives in Mandeville, Louisiana with his wife, Robin, and two children.

EIGHTH CIRCUIT REVERSES TAX COURT

As you will recall, several months ago, OMSA hosted representatives from the Internal Revenue Service who came to our meeting to outline a position under which the IRS would change the depreciable life of our vessels. The IRS position, which was adverse to our industry, depended heavily upon a previous Tax Court decision.

WE HAVE GOOD NEWS TO REPORT TO OUR OSV OPERATORS!

The United States Court of Appeals for the Eighth Circuit has reversed the above referenced Tax Court decision upon which the IRS relied to increase the depreciation (Asset Class Life) of offshore service vessels. Following the Sixth and Tenth Circuits, the court held that the use of the assets, rather than the user (i.e., owner) of the assets is determinative. Alex Trostorff of Jones Walker (504/582-8232), who has been handling an IRS audit on this issue over the last two years, reports that in informal discussions with IRS representatives it is likely that the IRS will drop its attempts to implement the change in Asset Class for offshore vessels.

A.J. RIZZO: “A Man For All Reasons”

Recently, many of our members learned through the grapevine that A.J. Rizzo, an “old timer” in our industry who has seen many of the original playmakers in this business come and go, was “holstering his gun”. The gun, in my old friend A.J.’s case, was a pen (a computer, actually), for A.J. was an articulate spokesman, a highly competent public relations professional with an extraordinary resumé who has worked, over the years, for a number of the leaders of our industry, including but not limited to companies like Halter Marine and Bollinger Shipyards.

A.J. has certainly earned his spurs and greatly deserves the right to kick back and reflect on his productive years in the offshore marine industry where he was witness to and, in many cases, the herald of many inventions, innovations or people that have either advanced or transformed the industry.

There are so many diverse ways in which good people contribute to our industry, playing roles that make our business interesting and special. The good, solid people who operate our vessels, the engineers that design them, the people who fix’em, the entrepreneurs who risk much to own them, the folks that provide the equipment and services that make them whole and keep’em running, and on and on. A.J. was one of those good people, engaged in another special niche that was only one, but nonetheless a special part of the process. His retirement will leave a hole that will eventually be filled, but he will take away with him a mother lode of institutional knowledge, a particular, likeable personality and a remarkable spirit that will not be replaced.

Table of Contents

TO ACCESS THE MOST CURRENT INFORMATION ON LEGISLATION LISTED IN THIS SECTION GO TO THE THOMAS LEGISLATIVE WEB PAGE AT HTTP://THOMAS.LOC.GOV/ AND ENTER THE BILL NUMBER IN THE ARTICLE.

For several months, OMSA has been intensely engaged with a host of others of like mind, in an effort to prevent foreign controlled corporations from taking undue advantage of a dangerous loophole in the Jones Act, created by ambiguous language and dubious qualifying criteria cleverly engineered into the Coast Guard Authorization Act of 1996.

While we have made significant progress in raising the level of awareness among key congressional offices to the problems that are created by the abuse of the lease finance provision within the 1996 Act, there are still many political issues to overcome, as well as administrative and legislative conflicts that remain to be resolved.

Nevertheless, the broad coalition that has come together from within the U.S. maritime community is encouraged and absolutely determined to press its case against those foreign controlled corporations seeking to gain entry into Jones Act trades through devious manipulation of congressional intent which was, simply, to encourage and facilitate access to less expensive foreign capital, an objective which our group supports, and which our efforts would not impact in any negative fashion.

Simultaneous with our initiative to amend the lease finance provisions, OMSA is also working to demonstrate that the invasion of foreign flag anchor handling vessels, tugs and barges, more often than not, are arguably engaged in violation of U.S. towing statutes, or the Jones Act. Finally, we are also working to establish that the charterers that are end users of special purpose vessels that will be needed in the future to develop and produce deep water prospects, should work more closely, on a more timely basis, with Sec. 2 U.S. flag operators, with a view to identifying what equipment will be needed to meet future requirements. This is so that U.S. citizens can take the necessary steps to participate in supplying the larger, more complex equipment that will inevitably be needed to develop deepwater projects on the U.S. OCS. If we do not accomplish this, we will be locked into a never ending cycle of Jones Act waivers that will be requested and granted by the U.S. congress on the basis that “no U.S. flag equipment of adequate size or capability is available to meet the requirements.”

Along the way, and in the trenches, several legislators came out, strongly and often, to try to assist us, and stayed the course with us. Cong. Billy Tauzin and his staff were the most active during this process. In addition, Cong. David Vitter and, from the very beginning, Cong. Gene Taylor of Mississippi, took personal interest in our efforts and helped to the extent they could. On the Senate side, staff representatives of John Breaux and Mary Landrieu of LA and Trent Lott, Miss., have been very supportive. Our objective, going forward, is to expand the level of cooperation from other congressional offices that will be involved. Sen. John McCain of Ariz., Chairman of the Senate Commerce Committee, and Rep. Don Young, Alaska, Chairman of the House Transportation Committee, will be key to resolving this issue, and we hope to eventually obtain their full support for the proposed amendments.

OMSA is determined to continue its efforts to break this cycle of Jones Act waivers and intrusions, and to expand the access and ability of U.S, owner/operators to meet the future needs of offshore operators for special purpose marine equipment that will be needed on the U.S. OCS.

H.R. 2654, The Rigs to Reefs Act of 2003, has been introduced in the House by Representative by Congressman David Vitter. As our industry is well aware, when an offshore facility located in Federal waters has completed its oil or gas producing life, the facility must be removed from the OCS and the seafloor remediated to remove all vestages of the oil industry from the block. Structure removal and “bottom sweeping” are an important business to many of our members and other companies located along the Gulf Coast.

The purpose of this act, according to Congressman Vitter’s office, is to create an alternative to the removal of offshore facilities. The Congressman’s view is that this could create additional offshore jobs in areas such as mariculture or environmental, ecological or biomedical research stations. This legislation calls for the Department of the Interior to draft regulations that will allow for offshore oil and gas facilities to be converted to other purposes. The Congressman’s office believes that only a small number of facilities would be eligible for such a conversion and that the job’s created by the new industries would be greater than any job loss due to the elimination of the removal of some platforms, in which activity some of our members are engaged.

Your association and affected members have contacted Congressman Vitter’s office concerning this legislation and its potential impact on our industry. Congressman Vitter, to his credit, consequently arranged for a teleconference to obtain direct input from OMSA members, and to answer questions on the issue. We will continue to monitor its progress and keep you informed.

MODU operators now have one more thing to consider when arranging for towing services for U.S. port entry. Under legislation passed by the Congress and signed by the President, non-U.S. vessels are prohibited from providing towing assistance to vessels in the navigable waters of the United States. Section 404 of the “Omnibus Maritime and Coast Guard Improvements Act of 2002,” which was tied to the “Maritime Transportation Act of 2002” states that, except for vessels in distress, only a vessel of the United States may perform the following vessel escort operations and vessel towing assistance within the navigable waters of the United States: (1) Operation or assistance that commences or terminates at a port or place in the United States; (2) Operation or assistance required by U.S. law or regulation; and (3) Operation provided in whole or in part for the purpose of escorting or assisting a vessel within or through navigation facilities owned, maintained, or operated by the United States Government or the approaches to such facilities (other than the St. Lawrence Seaway). Violation of the law carries a civil penalty of up to $10,000 per day for each day of violation.

How this will actually play out in consideration of previous Customs Service rulings on what “IS” or “IS NOT” a point or place in the U.S. on the OCS will have to be seen. OMSA has been attempting to garner congressional support of a legislative solution to this issue and the anchor handling issue. We will keep you posted.

Specifically in 46 CFR 10.464 (h) in the 2002 and earlier editions, 10.464
(g) in the 2003 edition...

g) If you began your service or training in the towing industry before May 21, 2001, you may receive a license as master of towing vessels if before May 21, 2004, you complete the examination required by 46 CFR 10.903(a)(18)(i) and meet either of the following two requirements: (1) Three years of service, including-- (i) Two years on deck aboard a vessel 8 meters (26 feet) or more in length; (ii) One year on deck aboard a towing vessel, with at least 6 months of training or duty in the wheelhouse of the towing vessel; and (iii) Three months in each particular geographic area for which you are seeking authority; or (2) Three years of service aboard towing vessels, including-- (i) One year on deck, with at least 6 months of training or duty in the wheelhouse of the towing vessel; and (ii) Three months in each particular geographic area for which you are seeking authority. The key here is the deadline is to complete testing and service by May 21, 2004. Usually a regulation deadline would be getting the application in by XX, but not in this case. If you miss the deadline then the requirement to work up through apprentice Mate, Mate and then Master will apply. Considering the current backlog for appointments and mailed applications is approximately 8 weeks, applications submitted after 1 JAN 2004 may not allow sufficient time to be evaluated and complete testing.

Please advise your clients and students to not delay submitting their Master Towing applications to avoid missing the deadline.

Richard Wells, Asst. Chief, New Orleans Regional Examination Center

Louisiana Incumbent Worker Training Program (IWTP) Bill HB 1554, by Rep. Ed Murray, D-New Orleans, was recently into law signed by the governor. As finally passed, the bill provides that the IWTP will have a sunset review in 2007; unlinks a 20% tax reduction and benefit increase granted by the Legislature in 1999 from the sunset; and retains the requirement that employers cannot participate until they have been operating in Louisiana for three years.

HB 1656 by Rep. Mike Strain (R-Covington) and SB 819 by Sen. Jay Dardenne (R-Baton Rouge) are workers comp bills brought following Louisiana Supreme Court decisions that negatively affected employers’ workers comp costs. HB 1656 restores employers’ ability to protect themselves against claimant “doctor shopping.” SB 819 restricts the award of penalties to $8,000 for failure to reasonably controvent a claim and $8,000 for an arbitrary and capricious terminations of benefits.

On October 4th Louisiana voters passed a constitutional amendment that provides a property tax exemption for drilling rigs used for the development of offshore resources that are in the state for the purposes of storage, conversion, renovation or repair. This amendment was intended to assist Louisiana shipyards in competing for rig repair work against Texas shipyards.

The Coast Guard has published security rules to promulgate maritime security requirements mandated by the Maritime Transportation Security Act of 2002.

Security plans were required to be submitted to the Coast Guard by December 31, 2003. The Coast Guard has advised that severe monetary penalties will be issued for companies not in compliance with the security planning requirements by January 15th, 2004.

Those of you who are participating in the OMSA/HudsonTrident security planning process should have entered your vessel data. Submission of the OMSA participation letter to the Coast Guard satisfies the plan submission requirement.

What will this regulatory program mean for you and your company in the next 6 months? Read it and WEEP!

Your Company Must:

• Designate a “responsible person.” Each company must designate a Company Security Officer responsible for ensuring that all aspects of these rules are implemented.
• Conduct security audits. You must conduct a security audit of each vessel.
• Conduct Threat Assessments. You must conduct a threat assessment for the operating area of each vessel.
• Write security plans. Taking into account the results of the security audit and factoring in the current threat assessment for the vessel’s operating area you must write a security plan for each eligible vessel.
• Submit security plans. You must submit each required security plan to the Coast Guard in Washington, D.C. for approval. Plans must be submitted by December 31, 2003.
• Conduct training. Every employee whether full time, part time, contract or temporary must receive the appropriate level of security training. Each Company Security Officer (CSO) must receive CSO specific training. Each Ship Security Officer (SSO) must receive SSO specific training. Every other employee must receive security awareness training; this includes contractors and temporary employees. The training must be documented and recorded.
• Conduct Drills. Each vessel must conduct security drills at least once each quarter and whenever the crew/personnel changes by 25% or more. The drills must be documented and recorded.
• Conduct Exercises. Each vessel must conduct a security exercise at least once year. The exercises must be documented and recorded.
• ISPS Code Inspection. Each vessel in 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 ISPS Code Certificate. These certificates are required for foreign operations on July 1, 2004.
• Comply with the regulations. Each eligible vessel must be operating in full compliance with the regulations by July 1, 2004.

The new regulations are hundreds of pages and take hours to read. How will you comply? Can you do this on your own? If not, OMSA can help. Read on:

OMSA has formed a partnership with one of the most experienced security and intelligence firms in the world to prepare the necessary documents, plans, security assessment tools and threat assessments, and have tailored them specifically for the offshore industry. The OMSA/Hudson Trident Security Programs provide every element required to comply with the Coast Guard’s security regulations, from a single source, at preferential prices. OMSA has worked with HudsonTrident (HT) to develop a complete security system, from nuts to bolts, that covers all of your basic needs, with no fluff, no extras and no bells or whistles. This will take the burden off of your company.

The U.S. Coast Guard Has Already Approved The Omsa/Ht Asp Program.

Through our association with HT, we have brought to the table a security provider that the Coast Guard trusts. This trust is vital in our aggressive approval timetable, has helped move us to the front of the approval line and is allowing us to speed up approval and streamline our security processes without (in the USCG’s minds) sacrificing quality.

HT’s security training programs and ship security plans are DNV approved. This should allow our companies with ISM programs to more easily incorporate security into their overall corporate quality systems. OMSA negotiated a price schedule for our members that is significantly lower than the going market rate. In addition, this program, if fully adopted will provide an additional needed revenue stream to the association.

The Coast Guard rules allow trade associations to submit an Alternative Security Program (ASP) for use by vessels in domestic service only. Our plan is applicable to all our industry vessels, including tugs working domestically. The planning program is web based and the OMSA/HT security website is now complete. This is the location where companies will download forms and plans. Train-the-Trainer security training should begin in November.

The first OMSA/HudsonTrident Security Programs Train-The-Trainer course to qualify individuals to teach the Coast Guard mandated Company Security Officer, Ship Security Officer and Security Awareness Training have been held. It was a true success with over 30 instructors trained. In addition to company training personnel qualified your traditional training providers of Delgado, Houston Marine, Sea School and Young Memorial also had instructors in the class. Participation in the OMSA/HudsonTrident security plans is NOT a prerequisite for these courses. These DNV approved courses meet all USCG and IMO requirements for security training. The next train the trainer class will be held in January.

Anyone who signs up for the OMSA security planning process will be listed as participating in the OMSA ASP. This satisfies the Coast Guard requirement to submit a security plan by December 31st.

In addition to HudsonTrident, several other OMSA associated companies are offering miscellaneous security compliance services to the membership.

• O’Brien’s is offering security planning, training and assessment services. To contact O’Brien’s, call Bud Kline at (985)781-0804.
• The Havnen Group is offering security compliance services. Contact Charlie Havnen at (504) 394-8933.
• Seagull AS of Vancuver, B.C. is a leading provider of computer-based education. Seagull has recently added approved computer based security training (CD and online) to its course catalog. Seagull has offered this training to OMSA members at a significantly reduced cost. For CD or online training contact Rob Mueller of Seagull at (604)691-1791.
• OMSA member Moxie Media has developed a video based training system. Contact Martin Glenday at (504) 733-6907 or http://moxiemedia.com.

Cautionary Note:
While it is always your option to search out the best services fit for your business, we feel it incumbent on us to remind you that as compared to companies that may offer one or two “stand alone” components of the required maritime security program, the OMSA/HudsonTrident Security services package, provides all of the required elements for security programs, in full compliance with both Coast Guard regulations and the ISPS Code, using a single provider. There are literally dozens of companies that have sprung up or hung out shingles as maritime security providers in the last few years. While other providers of services may offer attractive pricing, we must caution you to fully investigate any and all claims of program completeness, professional maritime expertise and maritime security experience.

The U.S. Coast Guard issued a series of Navigation and Vessel Inspection Circulars (NVICs) providing guidance on its maritime security program. Go to the coast Guard Navigation Vessel Inspection Circular web page at http://www.uscg.mil/hq/g-m/nvic/. NVIC 03-03 Part 1 and NVIC 03-03 Part 2 provide implementation guidance for facilities. NVIC 04-03 Part 1 and NVIC 04-03 Part 2 provide implementation guidance for domestic vessels and for foreign vessels not subject to SOLAS that call in U.S. ports. It also discusses issuance of the International Ship Security Certificate (ISSC) to qualifying U.S. vessels. NVIC 05-03 Part 1 and NVIC 05-03 Part 2 provide implementation guidance for outer continental shelf (OCS) facilities.

On Tuesday, the Coast Guard published a final rule amending its regulation on the licensing and manning for officers of towing vessels. Effective September 15, 2003, the rule constitutes an essential part of a comprehensive initiative to improve navigational safety for towing vessels and makes final several revisions in response to comments received to the several interim rules that preceded it. The revised regulation expands the license for master of a towing vessel to 300 gross tons in lieu of 200 tons. It also allows the individual to operate internationally on this license instead of only domestically. In addition, the final rule deletes the harbor assist towing license, including it in a limited license that on its face provides a geographical limit to be accessed at the Institute’s web site, www.trans-inst.org.

Source: Maritime Update from the Transportation Institute, June 20, 2003

The USCG National Maritime Center (NMC) issued Policy Letter 08-03 providing guidance on indication of basic safety training on mariners' STCW certificates. Effective immediately, USCG regional examination centers will no longer indicate on such certificates when basic safety training was completed. Mariners are to be continually trained in this respect and vessel operators are to maintain training records in an on-going basis. Since the date of basic safety training frequently changes, placing any date on the STCW certificate would be misleading. www.uscg.mil/hq/g-m/marpers/pag/08-03.pdf

For several years shipyards have built Subchapter “T” & “K” vessels with 24-inch doors as a means of escape. This was an “industry standard” that was overlooked since the new Subchapter “T” & “K” was promulgated in 1996. Recently it was discovered that many shipyards had not conformed to the new regulations when they went into effect. This issue must be corrected in accordance with current regulations to ensure conformity throughout the MSO Morgan City’s inspection zone. “OLD-T” did not specify any dimensions for door sizes, however, new “T” & “K” does. The doors sizes on Subchapter “T” & “K” vessels must conform to reference (a) Vessels previously built that have doors installed smaller than 28 inches will be allowed to keep these doors and will not be forced to install a larger size (b) Vessels currently under construction and in the planning phase must install the correct doors.

Millions of drug tests on employees and job applicants show that positive test results are down to 4.4 percent last year from 13.6 percent in 1988, according to Quest Diagnostics, a company that performed 5.7 million workplace drug tests in 2002, in addition to 1.2 million mandatory tests on truck drivers, airline pilots and other safety-sensitive workers. Of note in the Quest Diagnostics annual index is that while cocaine remains the stimulant of choice among white-collar workers, its use is losing ground to a newer, potent and highly addictive generation of amphetamines, including crystal methamphetamine. The increase, according to Quest’s director of science and technology Barry Sample, has been steady and significant, an observation which is supported by a 17 percent jump in amphetamine use in 2002, and an aggregate increase of 70 percent over the five-year period ending in 2002.

According to an agency which investigates workplace drug dealing, the effects of methamphetamine are five times more intense than cocaine, and last four to six hours, versus one hour for coke. But when users come down from the drug, they are likely to become depressed, agitated and more likely to become violent. Do your company’s policies on illegal drug use and violence need brushing up?

Source: About Management – McGlinchey Stafford Law Firm – Vol XXI Number 7, July 2003

Louisiana law prohibits an employer from requiring an employee or an applicant for employment to pay for the costs of finger printing, a medical examination, or a drug test, or the cost of furnishing any records available to the employer or required by the employer as a condition of employment. La. R.S. 23:897(A). That statute also provides for civil and criminal penalties against the employer for violations of the law.

There is one exception to this statute. Pursuant to La. R.S. 23:897(K), an employer shall have a right of reimbursement from an employee, or an applicant who becomes an employee, provided the employee is compensated at a rate not less than $1.00 above the existing federal minimum wage and is not a part-time or seasonal employee as defined in R.S. 23:1021, for the cost of the employee’s or applicant’s pre-employment medical examination or drug test if the employee terminates the employment relationship sooner than ninety (90) working days after his first day of work or never reports to work, unless termination is due to a substantial change in the terms of employment.

For Louisiana employers who experience a high rate of turnover during the first ninety (90) workings day of employment, this statute provides an effective basis for recouping the costs of a medical examinations and drug tests, which can be expensive. The Louisiana Department of Labor has approved a specific form, which can be used for this reimbursement. This form should be completed at the time an applicant applies for employment.

Source: Mouledoux, Bland, Legrand & Brackett – Spring 2003

NOAA Charts Updates
The National Oceanic and Atmospheric Administration (NOAA) has launched an electronic chart update service via its Nautical Charts <http://nauticalcharts.noaa.gov> Internet site. Users may access chart updates published in the USCG Local Notice to Mariners, NIMA Notice to Mariners, and Canadian Coast Guard Notice to Mariners. Chart updates include information on aids to navigation changes, hazards to navigation, and other essential information for safe navigation.

Acting upon President Bush’s “E-Government” initiative to make information easily accessible to the public, the National Oceanic and Atmospheric Administration (NOAA) has made the set of United States Electronic Coast Pilot books available on the Internet. Provided by NOAA National Ocean Service’s Office of Coast Survey, the set of nine volumes serves as a supplement to NOAA’s Electronic Navigational Charts (ENCs) and paper nautical charts. NOAA is an agency of the U.S. Department of Commerce. The series of United States Coast Pilot nautical books cover the entire U. S. coast, including Puerto Rico, the Virgin Islands, the Great Lakes, the lower Mississippi River, Hawaii, Alaska and the Pacific Islands that are administered by the federal government. All nine volumes are available on the Internet: http://nauticalcharts.noaa.gov/nsd/cpdownload.htm.

The U.S. Coast Guard issued a Navigation and Vessel Inspection Circular (NVIC) entitled Carriage of Navigation Equipment by Ships on International Voyages <http://www.uscg.mil/hq/g-m/nvic/02-03.pdf>. The NVIC notes that the changes to the SOLAS Convention adopted in 2000 and that came into effect in 2002 changed the requirements for carriage of certain navigation equipment for ships engaged on international voyages. Corresponding changes have yet to be made to regulations promulgated and enforced by the U.S. Coast Guard. The NVIC provides that, until the regulations are amended, the agency will accept compliance with the new SOLAS provisions as equivalent to compliance with the regulatory provisions. NVIC 02-03 (June 4, 2003).

The U.S. Coast Guard, working with the Director General of Shipping, Government of India, and on behalf of the IMO, has developed two draft model courses for maritime security training. The two draft curricula are for: (1) Ship Security Officer <http://www.uscg.mil/hq/g-m/nmc/imosec/sso.pdf>; and (2) Company Security Officer <http://www.uscg.mil/hq/g-m/nmc/imosec/cso.pdf>. A draft model course is also being developed for Port Facility Security Officer. The drafts will be under review by the IMO Validation Panel through July 31, 2003.

The International Labour Organization (ILO) issued a Press Release stating that it has launched negotiations on a new, more rigorous identity regime for seafarers with the aim of developing effective protection against terrorism, while at the same time ensuring the rights and freedoms of the world's 1.2 million maritime workers.

The U.S. Coast Guard is seeking applications for appointment to membership on each of the advisory committees important to our industry. The committees are the Merchant Marine Personnel Advisory Committee (MERPAC), Towing Vessel Safety Advisory Committee (TSAC) and National Offshore Safety Advisory Committee (NOSAC). Each committee provides advice and makes recommendations to the Coast Guard on matters related to the committees. The Coast Guard uses the advice of the committees to make decisions on new regulatory initiatives and the application and enforcement of current rules. Without a voice on the committees individuals with no direct experience in our industry will be making the rules by which we must adhere. If you don’t think it is that important just ask a liftboat member what the MERPAC advice to the Coast Guard on liftboat licensing has meant to them. Applications should be submitted by August 30, 2003. Go to the Advisory Committee web page at http://www.uscg.mil/hq/g-m/advisory/app.pdf to download an application.

The U.S. Coast Guard National Vessel Documentation Center (NVDC) expects to implement the next phase of its computerized recordkeeping system over the course of the upcoming weekend. As part of the process, it will no longer want copies (as opposed to the originals) of bills of sale, mortgages, and related instruments. The NVDC will scan the originals into its database and provide a copy of what was scanned in to the submitter. Abstracts of title will be generated by the system and will appear in a slightly different format. As one of the enhancements, instrument types will no longer be shown as acronyms (such as AGPM), but will have the name of the instrument spelled out (such as assignment of preferred mortgage). These changes will be prospective only. The NVDC will not reenter data from legacy abstracts (i.e., those that existed before deployment of the new phase) and will not scan instruments that were previously recorded. (6/23/03).

RSPA is investigating the possible unauthorized marking of high-pressure compressed gas cylinders by ABM Fire Equipment, 73 North Main Street, Milford, NY 13807. RSPA has evidence that suggests ABM Fire Equipment marked, certified and returned to service an undetermined number of high-pressure DOT specification and exemption cylinders as being properly requalified in accordance with the Hazardous Materials Regulations (HMR), when the cylinders may not have been hydrostatically retested and visually inspected. A hydrostatic retest and visual inspection, conducted as prescribed in the HMR, are used to verify the structural integrity of a cylinder. If the hydrostatic retest and visual inspection are not performed in accordance with the HMR, a cylinder with compromised structural integrity may be returned to service when it should be condemned. FOR FURTHER INFORMATION CONTACT: Dave Clark, Hazardous Materials Enforcement Specialist, Eastern Region, Office of Hazardous Materials Enforcement, Research and Special Programs Administration, U.S. Department of Transportation, 820 Bear Tavern Road, Suite 306, West
Trenton, NJ 08628. Telephone: (609) 989-2256, Fax: (609) 989-2277.

Source: Gene Barfield, CSP; Danos & Curole Marine Contractors

In recent months, the Coast Guard has received an unusual number of reports from servicing facilities in the Pacific Northwest of apparent failures of approved inflatable liferafts fitted with Sparklet/SDI Model A128 operating heads. The liferafts self-inflate inside their containers; in some cases suddenly, and in other cases slowly, with the excess gas apparently venting through the pressure relief valves. The end result is the loss of some of all of the gas from the inflation cylinder(s). The same problem has occurred with several inventory cylinders fitted with the A128 heads.

Source: Notice of Life Raft Defect from USCG

As reported here previously, Annex IV of MARPOL, relating to prevention of pollution by sewage from ships, comes into effect on September 27, 2003. There is some confusion, though, over the application of Annex IV. This confusion largely is the result of revision to Annex IV that was adopted on March 13, 2000, but doesn’t come into effect until immediately after the older version of Annex IV comes into effect. Thus, it is the revision that owners and operators will have to implement, not the original version of the Annex. The major difference between the original and the revised versions relates to application. Under the original version, the Annex applies to new ships of 200 gross tonnage and above and new ships of less than 200 gross tonnage that are certificated to carry more than 10 persons. In the revised Annex, it applies to new ships of 400 gross tonnage and above and new ships of less than 400 gross tonnage that are certificated to carry more than 15 persons. The original version applied to existing ships (at the respective tonnage and capacity levels) ten (10) years after entry into force of the Annex. The revised version applies to existing ships (at the 400 gross tonnage and 15 person capacity levels) five (5) years after entry into force of the Annex. See Resolution MEPC.88(44) and Revised Annex IV, found at pages 458-474 in the Consolidated 2002 Edition of MARPOL 73/78. You can’t tell what plays are being called without a current program. (9/23/03).

The fall Towing Safety Advisory Committee meeting was held in Washington. Task 03-01 concerns the issue of "deadhead" or travel time. The Coast Guard has maintained a neutral stance on whether or not travel time should be considered in mariner scheduling. The typical company perspective has been that mariners should arrive at work ready to work. But, with many companies providing transportation or requiring mariners to report to duty at remote locations the question has been raised as to whether or not this time should be counted against the time that a deck officer must be off watch prior to getting underway. Excessive travel time was a factor in several casualties where a tug captain fell asleep at the wheel and hit a bridge killing motorists. This is a major issue with the GCMA. The issue was discussed and left open for further discussion.

• A group was formed between the towing community and recreational boat community to develop ways to reduce collisions between tows and motorboats. Previous meetings had focused on better (more) lighting for barges so that motorboats would stop hitting them. The towing industry felt it was not all their fault that speedboats were running into them. Hence the formation of a joint group to examine issues of boater education and joint use of the waterways. This is a long-term continuing project.

• A group was formed to examine methods of reducing mariner deaths during nighttime barge operations. In simple words, "how do you prevent people from falling overboard at night?" The discussion was lively and the group will continue to meet and discuss options.

• Task 99-01a an examination of remote anchor releases for barges remains open. This task is in response to the Northcape grounding which caused a terrible black oil spill in Rhode Island. The general consensus of the group was that the elimination of single hull barges by OPA'90 has eliminated the need for this project. Although it remains open the group does not feel it needs any further action.

• The rules requiring alcohol testing within two hours of a marine casualty were discussed at length. Industry still has a lot of problems with the requirement to carry alcohol-testing equipment on board each vessel and the fact that a junior member of the crew may be required to test the master. Although the discussion was lively, no solution was generated. I informed the group of the Chematics saliva test that is DOT approved and only costs about $1 each. This requirement was also the result of the North Cape incident.

• Security was a big issue. I informed the group that the OMSA Alternative Security Program would be available and applicable to towing vessels.

• STCW training remains a big issue. Operators of towing vessels on international voyages need STCW certificates.

The Merchant Personnel Advisory Committee meeting held in Houston was extremely lightly attended, both by committee members and by the public. Coast Guard reps from the NOLA and Houston REC’s and Navy personnel from San Diego who were looking for CG acceptance of Navy training programs for the purposes of meeting BST and AB requirements almost outnumbered the 8-10 civilians in the audience. Noticeably absent were training school reps from Sea School, the Morely’s, Chesapeake, Richard Block, etc. Only a couple of representatives from companies were in the audience, including John Moyle of Kirby and John Bergon of Global Santa Fe.

• All of the first day’s activity was devoted to going through the REC reorganization plan. The committee and public members went through a facilitated session to critique the CG’s concept of putting the evaluation function in a central location and having smaller staffs at the REC’s accept applications and give tests. The response was mixed, ranging from a wary acceptance provided that funding and staffing were sufficient to achieve the projected improvements to a cynical prediction that the changes would suffer from the inevitable perception of being “another cutback in services.”
  
• A deputy director of the office in the Homeland Security that is responsible for setting up the “Transportation Worker’s Identity Card” gave a presentation about the work underway to issue ID’s to the estimated 12-15 million people involved in all modes of transportation, from rail to marine to trucks to air to pipelines. It’s a massive job fraught with huge problems, not the least of which is, “who’s going to issue these things and how are they going to be paid?”
  
• The security training issue is going to be a hot one at the STW session in January, with a lot of attention to be focused on a model-training course for ship security officers and company security officers.
  
• Speaking of security, it looks like training courses will go through a de facto approval process as a part of the review of company security plans. Even though the courses will not be scrutinized by the NMC, their description will be a part of the plans submitted. At that point some standard will be applied and if the description isn’t solid enough, the plan might not be accepted. This could make companies nervous enough to look for courses with some form of official stamp of approval, giving the Hudson-Trident-OMSA course a marketing advantage.
  

The unintentional introduction of nonindigenous species into U.S. waters via the discharge of vessels' ballast water has had a significant impact on the nation's marine and freshwater resources, biological diversity and coastal infrastructure. To address this threat and comply with current regulations, the Coast Guard published a Notice of Proposed Rulemaking in the Federal Register, Vol. 68, No. 146 on July 30, 2003. This proposed rule would impose mandatory ballast water management practices for all vessels equipped with ballast tanks bound for ports or places with in the U.S. and/or entering U.S. waters.

On July 1, 2003, the Coast Guard published a notice requesting comments on how best to address implementation of Automatic Identification System (AIS) carriage requirements on certain navigable waters of the U.S. for vessels not on international voyages. The comment period has been extended through January 5, 2004. You may submit comments identified by Coast Guard docket number USCG-2003-14878 to the Docket Management Facility at the U.S. Department of Transportation. A public meeting was held at the 8th Coast Guard District, Hale Boggs Federal Building,501 Magazine Street, Room B100 New Orleans, LA 70130. If you have questions on this notice, contact Mr. Jorge Arroyo, Office of Vessel Traffic Management (G-MWV-1), Coast Guard, telephone 202-267-6277, fax 202-267-4826 or e-mail: jarroyo@comdt.uscg.mil.

Osama bin Laden's Al-Qaeda network has reportedly purchased at least 15 ships in the last two years - creating, perhaps, the first terrorist naval force, according to Joseph Farah's G2 Bulletin. Lloyds of London has reportedly helped Britain's MI6 and the U.S. CIA trace the sales made through a Greek shipping agent suspected of having direct contacts with bin Laden, the online intelligence newsletter reported.

The ships fly the flags of Yemen and Somalia - where they are registered, and are capable of carrying cargoes of lethal chemicals, a "dirty bomb" or even a nuclear weapon, according to G2 Bulletin's sources. British and U.S. officials worry that one or more of these ships could hit civilian ports on a suicide mission. The freighters are believed to be somewhere in the Indian or Pacific oceans. When the ships left their homeports in the Horn of Africa weeks ago, some were destined for ports in Asia.

The U.S. Department of State warned citizens overseas that the threat of terror attacks did not end with the passing of the September 11 anniversary, specifically mentioning the threat of maritime terrorism. "We are seeing increasing indications that Al-Qaeda is preparing to strike U.S. interests abroad," said the State Department's "Worldwide Caution." "It is being issued to remind U.S. citizens of the continuing threat that they may be a target of terrorist actions, even after the anniversary date of the September 11 attacks and to add the potential for threats to maritime interests."

"Looking at the last few months, Al-Qaeda and its associated organizations have struck in the Middle East in Riyadh, in North Africa in Casablanca and in East Asia in Indonesia," the State Department said. The report continued: "We expect Al-Qaeda will strive for new attacks that will be more devastating than the September 11 attack, possibly involving non-conventional weapons such as chemical or biological agents. We also cannot rule out the potential for Al-Qaeda to attempt a second catastrophic attack within the US. US citizens are cautioned to maintain a high level of vigilance, to remain alert and to take appropriate steps to increase their security awareness," the warning said.

G2 Bulletin sources say other potential targets of the Al-Qaeda armada, besides civilian ports, include oilrigs. Another threat is the ramming of a cruise liner. Some British navy officials have expressed concerns about not being able to patrol its coasts adequately against such a threat. If a maritime terror attack comes, it won't be the first. In October 2000, an Al-Qaeda suicide crew hit the USS Cole, a heavily armed ship protected with the latest radar defenses. Seventeen American soldiers died. Two years later, following the attacks on the Twin Towers, a similar attack was carried out against a French supertanker off the coast of Yemen.

Article provided by Sue Resnick, Anti-Terrorism Advisory Council USAO - Southern District of Texas, POB 61129, Houston TX 77208 recorder service providers to obtain USCG approval. NVIC 8-01, Ch-1 (11/20/03).

Terrorism risk insurance – initial claims procedures proposed
The Treasury Department issued a Notice of Proposed Rulemaking (NPRM) for procedures for insurers to follow in filing claims for payment of the federal share of compensation for insured losses under the Terrorism Risk Insurance Program. The department also issued a Press Release discussing the NPRM. Comments on the proposal should be submitted by December 31, 2003. 68 Fed. Reg. 67100 (December 1, 2003).

The U.S. Coast Guard issued a Navigation and Vessel Inspection Circular (NVIC) entitled "Approval of Navigation Equipment for Ships". This NVIC revises an earlier one and clarifies the USCG approval process in light of recent changes to the SOLAS Convention. It also establishes a process for voyage data

The U.S. Coast Guard issued a final rule updating its regulations relating to handling of packaged and bulk-solid dangerous cargo at waterfront facilities. These updated regulations reflect improved safety procedures and modern transportation methods, such as the use of containers. The rule also updates requirements for handling these dangerous cargoes and incorporates industry standards. The changes come into effect on October 27, 2003. 68 Fed. Reg. 55436 (September 26, 2003).

The U.S. Coast Guard issued a Notice announcing availability of the Marine Safety Center Technical Note (MTN) on tonnage measurement. MTN 01-99 Tonnage Technical Policy (www.uscg.mil/hq/msc/mtn.1.99.htm) provides detailed interpretations of the tonnage regulations. The MSC also maintains a list of Measurement Organizations, authorized to perform tonnage measurements on behalf of the Coast Guard. 68 Fed. Reg. 71118 (December 22, 2003).

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.

The U.S. Court of Appeals for the Fifth Circuit ruled that an individual who only occasionally performs the work of a seaman may not bring an action for personal injury under the Jones Act. In the instant case, plaintiff was employed in a shore-based internship as a petroleum engineer. His work sometimes required him to travel by vessel to offshore oil rigs. On several occasions, he assisted crewmembers on the vessel. While assisting with line handling, plaintiff was severely injured through no fault of his own. He brought suit alleging, among other things, negligence under the Jones Act. The court held that, because he was not employed as a seaman and because his connection with the vessel was not substantial (i.e., less than 30%), plaintiff was not eligible to bring suit under the Jones Act. Becker v. Tidewater, Inc.

http://www.ca5.uscourts.gov/opinions/pub/01/01-31420-cv0.pdf, No. 01-31420 (5th Cir., June 19, 2003).

The U.S. Court of Appeals for the Eighth Circuit ruled that, when a collision is caused by a moving vessel drifting from her moorings, the moving vessel is presumed to be at fault. In the instant case, 102 of plaintiff's barges were damaged after defendant's barge broke loose from a fleeting area (apparently on the Mississippi River), drifted downstream, and collided with plaintiff's fleeted barges. The court found that defendant's management was lax because, among other things, it failed to maintain a formal safety program or written procedures for mooring and inspecting barges. American River Transportation Co., Inc. v. Paragon Marine Services, Inc.

http://www.ca8.uscourts.gov/opndir/03/06/022502P.pdf, No. 02-2502 (8th Cir., June 2, 2003).

In order to be covered by the Americans with Disabilities Act (ADA), an entity must employ at least 15 employees. On April 22, 2003, the U.S. Supreme Court ruled that the determination of whether a director-shareholder in a professional corporation is an employee or not for purposes of the ADA and other federal nondiscrimination laws should be based on the Equal Employment Opportunity Commission (EEOC)'s guidance on this issue, which relies on the common law's focus on the "right to control". Clackamas Gastroenterology Associates, PC v. Wells, No. 01-1435 (4/22/03).

The case involved a claim of disability discrimination filed by a bookkeeper who was terminated by a medical clinic in Oregon, organized as a professional medical corporation. The trial court dismissed the claim, filed under the ADA, because it found that the four physician-shareholders who own the professional corporation and constitute its board of directors are not "employees" under the ADA, thus bringing the number of employees below the required 15. The Ninth Circuit Court of Appeals reversed that decision, based on the lower court's reliance on the concept of that the doctors were more analogous to "partners" in a partnership than to shareholders in a general corporation. The Ninth Circuit focused on the broad purpose of the ADA to protect the disabled, and rejected an analysis that would allow a professional corporation to secure the best of both possible worlds by allowing it to assert its corporate status to reap the tax and civil liability advantages and to argue that it is like a partnership in order to avoid liability for discrimination.

The Supreme Court rejected both approaches, and wound up approving the EEOC's approach on the issue of employee status of shareholder-directors, focusing on the common law touchstone of control. According to the Court, it was persuaded by the EEOC's six factor analysis in determining whether a shareholder-director is an employee, which analysis helps determine whether or not the subject individual acts independently and participates in managing the organization, or whether the individual is subject to the organization's control:
1. Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work;
2. Whether and, if so, to what extent the organization supervises the individual's work;
3. Whether the individual reports to someone higher in the organization;
4. Whether and, if so, to what extent the individual is able to influence the organization;
5. Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts;
6. Whether the individual shares in the profits, losses, and liabilities of the organization.

The Court rejected the idea that a person's title–such as partner, director, or vice president–should be used to determine whether or not he or she is an employee or proprietor (employer), and also the idea that the existence of a document styled "employment agreement" compels a conclusion that either party is an employee. Rather, as is the case in analyzing independent contractor versus employee status, the "answer to whether a shareholder-director is an employee depends on 'all of the incidents of the relationship...with no one factor decisive.'" Thus, the court reversed the Ninth Circuit, and remanded it back to that court for a review of the record in light of the Supreme Court's announced standard.

Comment: The case is significant for smaller entities using the professional corporation form of business, since the analysis of employee status will determine whether or not the entity is subject to federal nondiscrimination laws requiring a certain number of employees for coverage purposes. It will also be significant for professional corporations of any size, if they meet the employee coverage threshold, in determining whether or a particular shareholder/director has a right to challenge alleged discrimination under the federal law in question as an employee. Professional corporations wishing to manage and understand their employment law risks will need to undertake a review of the six factors as applied to their particular operations.

Source: Labor and Employment Alert, Greg Guidry, The Onebane Firm

The U.S. Court of Appeals for the Eleventh Circuit ruled that exculpatory clauses of a ship repair contract are not ambiguous where a reasonable construction renders the clauses consistent. In the instant case, one clause of the contract provided for limited liability on the part of the repair facility to the owner, charterer, and other identified parties for damages caused by the facility's negligence. Another clause provided that the facility would not be liable to "any person" for damages caused by its negligence. The court held that the term "any person" in the second clause could reasonably be interpreted as meaning any person other than those named in the first clause. Thus, the ship repair contract was found to be unambiguous and enforceable. Merrill Stevens Dry Dock Co. v. M/V Yeocomico II <http://www.ca11.uscourts.gov/ops/200115127.pdf>, No. 01-15127 (11th Cir., April 30, 2003).

The U.S. Court of Appeals for the Fifth Circuit ruled that a ship involved in a collision that was due, in part, to its lack of a safety system, may be found unseaworthy and the owner may lose its ability to limit liability. In the instant case, two offshore supply vessels collided in the fog on the Mississippi River. Multiple lawsuits followed. The trial court found that one of the vessels was operated at high speed, without running lights or fog signals, without use of radar, and without making use of its radio. The trial court denied the owner's petition for limitation of liability and the owner appealed. The appellate court held that the owner had privity and knowledge of the master's negligence because it failed to provide a lookout; failed to train the master in use of radar; failed to evaluate the vessel's seaworthiness or the master's competence; failed to inspect the vessel's logs; failed to employ a safety manager; and failed to provide safety training or safety manuals. Trico Marine Assets, Inc. v. Diamond B. Marine Services, Inc.

http://www.ca5.uscourts.gov/opinions/pub/01/01-31323-cv0.pdf>, No. 01-31323 (5th Cir., May 28, 2003).

The issue of whether or not “administrative time” like donning uniforms in the workplace is a new and popular area for filing claims. Honda, like a number of other businesses has found this out the hard way. Many businesses require employees to wear uniforms in the workplace. Depending on how the rule is enforced, the employer may be required to pay the employees for the time spent “donning and doffing” the uniform according to a recent experience by Honda Manufacturing in Alabama. Honda required its 2,000 hourly workers to wear lab-style uniforms during their shifts. On-site locker rooms, with laundry services, were provided. Workers would clock in after putting on their uniforms and clock out before they removed them.

The Wage and Hour Division of the U.S. Department of Labor, however, found this practice to be in violation of the Fair Labor Standards Act. Generally, under an amendment to the FLSA, the Portal-to-Portal Act, activities which are preliminary and postliminary to working activities need not be compensated. The Wage and Hour Division has interpreted the Act to require compensation for time spent by employees putting on or taking off mandated uniforms on the employer’s worksite – if the wearing of the uniform is an integral part of the employee’s duties. Since Honda required the employees to wear the uniforms to avoid damage to its products, the time was found to be “hours worked.”

After paying $1.2 million to the 2,000 employees (approximately $500.00 per person) to compe