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SCA Weekly Report | October 24-28, 2022

Shipbuilders Council of America

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SCA Weekly Report | October 24-28, 2022





Add Your Voice in Support of AOWFA


The American Offshore Worker Fairness Act (AOFWA) would require foreign vessels to utilize either U.S. mariners or citizens of the vessel’s home country while operating in offshore energy activities in U.S. waters.


This would change the current practice where foreign vessels utilize crew members from low-wage countries at day rates no American would or should accept. This unfair practice gives foreign vessels a competitive advantage over U.S. vessels and takes jobs away from American mariners.


Closing this loophole will greatly assist American mariners and U.S. companies participating in both the offshore oil and gas and offshore wind industries. The legislation further reduces the cost disparity between U.S.-flagged and foreign-flagged vessels by:


  1. Requiring foreign mariners working in the U.S. offshore energy markets secure a Transportation Worker Identification Credential (TWIC). Current regulations allow such mariners the option to secure a TWIC while U.S. mariners are required to secure and hold a valid TWIC.
  2. Limiting the number of visas that can be issued for each foreign vessel operating in U.S. waters and takes steps to ensure that these visas are connected to the mariner’s work on that vessel.
  3. Requiring each foreign vessel in U.S. offshore energy markets to prove their ownership structure annually.
  4. Requiring the U.S. Coast Guard to annually inspect foreign-flagged vessels operating in U.S. offshore energy markets to ensure compliance with these changes.


CLICK HERE to send a letter of support for AOWFA to your Congressional Delegation




DOD Releases National Defense Strategy; Nuclear Posture Documents

Following the release of an updated National Security Strategy two weeks ago, the Department of Defense has released updated versions of the National Defense Strategy which includes the 2022 Nuclear Posture Review and Missile Defense Review. The documents are intended to provide a roadmap to the Department of Defense and reflect the previously released National Security Strategy as the Department makes key acquisition and operations decisions going forward over the next four years. 


According to the document, China remains the greatest security challenge for the United States despite Russia’s war in Ukraine, and the threat from Beijing will determine how the U.S. military is equipped and shaped for the future. It also says that conflict with China “is neither inevitable nor desirable,” but describes an effort to prevent Beijing’s “dominance of key regions” — a clear reference to its aggressive military buildup in the South China Sea and increased pressure on the self-governing island of Taiwan. It warns that China is working to undermine American alliances in the Indo-Pacific and use its growing military to coerce and threaten neighbors.


At the same time, the 80-page, unclassified report notes Russia’s war in Ukraine and says Moscow is a serious threat to the U.S. and its allies, with nuclear weapons, cyber operations and long-range missiles. And it warns that as China and Russia continue to grow as partners, they “now pose more dangerous challenges to safety and security at home, even as terrorist threats persist.”


China “is the only competitor out there with both the intent to reshape the international order, and increasingly the power to do so,” Defense Secretary Lloyd Austin said at the Pentagon. “Unlike China, Russia can’t systemically challenge the United States over the long term. But Russian aggression does pose an immediate and sharp threat to our interest and values.”


The report reflects that the U.S. for the first time is facing two major nuclear-armed competitors in Russia and China.




DOD Does Not Intend to Enact Policy to Contracts Impacted by Inflation

The Defense Department "does not intend to enact a policy to increase contract prices due to inflation,” according to a new letter sent by Pentagon acquisition chief Bill LaPlante to Sen. Elizabeth Warren (D-MA).


The letter, dated Oct. 19, is a response to concerns Warren raised following defense industry efforts to receive inflation relief on fixed-price contracts, sometimes called “economic price adjustments.” Warren, in an Oct. 5 letter, likened the proposed inflation relief to “corporate welfare.”


“DOD does not intend to enact a policy to increase contract prices due to inflation,” LaPlante states in his letter.


However, LaPlante notes DOD has issued a Sept. 9 guidance memo that has “called contracting officers’ attention” to existing policies. The memo states that contract officers should be open to considering inflation relief for companies working under firm, fixed-price contracts in "extraordinary circumstances.” LaPlante said in September that current levels of historic inflation could qualify as “extraordinary.”


LaPlante, in his letter to Warren, acknowledges that defense officials met with industry associations and “heard their concerns regarding harmful effects of inflation on defense contracts.”




House Lawmakers Demand Answers on ‘Novel and Problematic’ Jones Act Waivers

A bipartisan group of House lawmakers are demanding answers from the Department of Homeland Security Secretary Alejandro Mayorkas over his decision to waive the Jones Act to allow the delivery of fuel to Puerto Rico on foreign vessels.


The first Jones Act waiver was issued on September 28 and allowed for the delivery of diesel that was sourced from Texas by British Petroleum Products North America and transported on a foreign-flagged tanker. House Transportation and Infrastructure Committee chair Peter DeFazio, top committee Republican Sam Graves, and two other lawmakers expressed “concerns and disappointment” over Secretary Mayorkas’ decision to grant the waiver, which Maritime Administration Secretary Ann Phillips herself described as “novel and problematic” as it was requested retroactively after the cargo had already left the U.S.


“We write to express our concerns and disappointment with your recent decision to grant Jones Act waivers for the delivery of fuel to Puerto Rico including to allow the delivery of diesel that was sourced from the mainland United States by British Petroleum Products North America (BPPNA) to Puerto Rico on a foreign vessel on September 28, 2022,” the lawmakers said in a letter to the DHS Secretary and Department of Transportation Secretary Pete Buttigieg.


A second waiver, issued October 16, permitted an energy company called Naturgy, which operates a power plant and LNG receiving terminal on the island, to transship LNG from the Dominican Republic. The LNG cargo originated in the U.S. and was originally shipped to the Dominican Republic on a foreign vessel. 




Crowley, Humboldt Bay to Develop and Operate California Wind Terminal

Recently, Crowley signed an agreement with the Port of Humboldt Bay to be the developer and operator of a terminal to serve as California’s first hub for offshore wind energy installations. Through Crowley’s Wind Services group, the company will enter into negotiations with the port to lease and serve as the port’s developer of the Humboldt Bay Offshore Wind Heavy Lift Marine Terminal. The services provided will support tenants in the manufacturing, installation and operation of offshore wind floating platforms, use of large heavy cargo vessels, and providing crewing and marshalling services in the Pacific waters.


This public-private partnership will support both federal and state government goals to develop more American offshore wind power and reduce greenhouse gas emissions. The U.S. Department of Interior announced on October 18 that waters off the coast of Humboldt Bay areas will be part of the first-ever offshore wind lease sale on the U.S. West Coast on December 6.




Threat of Diesel Shortage Looms as Reserves Dwindle

The Biden administration says it is keeping a close watch on diesel inventories and working to boost supplies following news that reserves have been depleted and could run out in less than a month if not replenished. The Energy Information Administration (EIA) reported this week that, as of Oct. 14, the U.S. had only 25 days of reserve diesel supply, a low not seen since 2008. National Economic Council Director, Brian Deese, acknowledged to Bloomberg that the level is "unacceptably low," and "all options are on the table" to address the situation.


The EIA also said that distillate fuel includes heating oil inventories and is about 20% below the five-year average for this time of year. Areas in the Northeast are already rationing heating oil as temperatures drop, driving concerns that energy costs will surge further.


A White House official told FOX Business the administration is closely monitoring diesel inventory levels, especially on the East Coast, and that it is in touch with U.S. energy firms regarding the need to build up reserves and drive toward solutions. The official added that the administration has also been in regular communication with East Coast governors for months and has readied tools at its disposal, including the Northeast Home Heating Oil Reserve (NEHHOR).


NASSCO Lays Keel of US Navy’s 7th ESB

The keel for the future USS Robert E. Simanek (ESB 7), a Lewis B. Puller-class Expeditionary Sea Base (ESB), was laid at the General Dynamics NASSCO shipyard in San Diego on October 21. Expeditionary Sea Base ships are highly flexible platforms used across a broad range of military operations supporting multiple operational phases. Acting as a mobile sea base, they are a part of the critical access infrastructure that supports the deployment of forces and supplies to provide prepositioned equipment and sustainment with adaptable distribution capability.


Buttigieg Announces $703M for U.S. Port Infrastructure

Today, U.S. Department of Transportation secretary, Pete Buttigieg, announced more than $703 million to fund 41 projects in 23 US states that will improve port facilities through the Maritime Administration’s (MARAD) Port Infrastructure Development Program (PIDP). The Bipartisan Infrastructure Law and additional Congressional appropriations are providing the funding for this effort to improve seaports. PIDP will benefit seaports of all sizes, including the Great Lakes, inland rivers, and Alaska. In addition, this will help improve supply chain reliability through increased port capacity and more efficient operations. It also funds new environmental initiatives.




If you have any questions, please do not hesitate to contact the SCA staff.