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20 January 2021
As is the trend globally, the US wind energy sector has been growing, with a substantial focus on offshore wind farm development. Offshore wind farm projects are under planning and development in multiple US regions. One significant factor in such developments is the regulatory requirements applicable to vessels involved in the construction and maintenance of offshore wind farm structures. Until recently, a significant question remained unresolved – namely, whether the Jones Act coastwise trade requirements apply to vessels involved in wind farm construction.
The Jones Act restricts the transport of merchandise between US points to properly registered US-flagged vessels. However, it was unclear whether the Jones Act applied to offshore wind energy activity. The Outer Continental Shelf Lands Act (OCSLA) extends the Jones Act to points on the outer continental shelf (OCS). Specifically, the OCSLA defines a 'coastwise point' as any point outside the three-mile territorial sea that is permanently or temporarily attached to the seabed of the OCS "erected thereon for the purpose of exploring for, developing, or producing resources therefrom". This language, and other precedential interpretations and applications of the OCSLA, has long been applied to activities relating to the extraction of oil and gas or other similar resources from the OCS. However, this left open for discussion whether wind farms are erected for the purpose of exploring for, developing or producing resources from the OCS. The answer would be determinative as to whether the Jones Act would apply to wind farms on the OCS.
There were several reasons to think that wind energy might not be included in the OCSLA's scope. For example, the Coast Guard and the US State Department created a new visa category that would be issued to crew on foreign vessels working on offshore wind projects to provide a specific annotation for wind activities, separate from the annotation for OCS activities. This could be viewed as demonstrating that the Coast Guard and the State Department do not view wind farm activities as OCS activity.
This question was recently resolved by Congress. In the National Defence Authorisation Act, which is a broad bill passed annually to address defence spending and related areas, including the maritime sector, Congress included a provision specifying that the OCSLA applies to offshore wind farms. The language confirms that offshore wind farms count as US coastwise points, just like offshore oil or gas facilities. Consequently, the Jones Act coastwise trade laws apply to wind farms, restricting the transport of materials to, from and between wind farms on the OCS to properly qualified US-flagged vessels. Foreign-flagged vessels may still install and repair offshore wind farm facilities so long as they do not transport any merchandise between US points.
The National Defence Authorisation Act passed Congress with broad bipartisan support. Former President Trump vetoed the bill for reasons unrelated to the OCSLA clarification, but the veto was overturned by congressional vote, ensuring that the new bill would go into effect. This has created certainty for this issue and guarantees that coastwise-qualified US-flagged vessels will be required for US offshore wind farm development and operation. With the continuing stagnation of offshore oil and gas development in the United States, offshore wind provides a likely growth sector for US offshore construction and supply fleets. There remain opportunities for foreign-flagged vessels to be active in the US offshore wind industry, but the Jones Act will have to be considered in determining permissible activities.
For further information on this topic please contact Michael Harowski at Wilson Elser by telephone (+1 504 702 1710) or email (email@example.com). The Wilson Elser website can be accessed at www.wilsonelser.com.
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