Silent But Deadly: Congress Passes Wind on the OCS
The Jones Act1 and the Passenger Vessel Services Act2 have been work horses of U.S. cabotage laws and policies for over 100 years. These laws, which restrict the coastwise transportation of merchandise and passengers, respectively, work alongside related cabotage laws dealing with towing,3 dredging4 and salvage.5 Taken together, they present overlapping statutory restrictions on entry to the U.S. coastwise trades which effectively create a “coastwise monopoly” for domestic shipping interests and crews.6 With limited exceptions, vessel operations contemplated by these laws may be conducted solely through the employment of coastwise-qualified vessels, i.e., vessels that are built in the United States, owned and crewed by U.S. citizens, and documented under U.S. law bearing a coastwise endorsement.7
The coastwise laws apply to “points in the territorial sea, which is defined as the belt three nautical miles seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline.”8 In 1953, federal laws and, by extension, the coastwise laws, were extended to the outer Continental Shelf (“OCS”)9 through section 4(a)(1) of the Outer Continental Shelf Lands Act (the “OCSLA”) which, as previously amended and until recently, read as follows:
“The Constitution and laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State.”10
Based upon the wording of the OCSLA, it was clear from the outset that coastwise laws would extend to the OCS in connection with the exploration, development or production of mineral resources.11 Less clear was whether the development or production of non-mineral resources, such as wind energy, came within the original jurisdictional purview of the OCSLA. Given the year in which the OCSLA was first enacted, and even prior amendments to section 4(a)(1) in 1978,12 it seems evident that they were not; indeed, the first offshore wind projects did not appear in Europe until the early 1990s.
Wind energy is not a “resource” derived from the subsoil or seabed of the OCS, and no one would seriously contend that wind is a “mineral” in any sense of the word. Thus, while the OCSLA clearly extended the coastwise laws to the OCS in connection with oil, gas and related resource projects, the corresponding question as to the applicability of the coastwise laws to “non-mineral energy resources” associated with offshore wind projects on the OCS was unclear and left unresolved for over 65 years. However, given the slow development of offshore wind energy in the United States, debate on the subject was mostly academic13 since there were few offshore wind projects in actual construction to which these baroque issues could be practically applied.
The uncertainty was finally put to rest on January 1, 2021, when the United States Senate followed in the path of the House of Representatives in voting to enact into law the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021.14 Tucked into the 1,480-page bill was a provision by which Congress, with quiet precision, further amended section 4(a)(1) to now read as follows:
“(A) The Constitution and laws and civil and political jurisdiction of the United States are extended, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State, to – (i) the subsoil and seabed of the outer Continental Shelf; (ii) the artificial islands on the outer Continental Shelf; (iii) installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources, including non-mineral energy resources; or (iv) any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.15”
Section 4(a)(1) of the OCSLA now clearly and specifically provides that the laws of the United States apply to installations and devices permanently or temporarily attached to the seabed of the OCS for the purpose of exploring for, developing, producing and transmitting non-mineral energy resources, such as offshore wind power, as well as exploring for, developing, producing and transporting other “resources,” including offshore oil and gas. As discussed above, the prior text of this section contemplated only that United States laws would apply to installations and devices involving oil, gas and other mineral resources, and this had confounded developers and operators seeking guidance on the laws applicable to the development and maintenance of offshore wind power projects on the OCS.
The legal significance of this statutory clarification is the extension of the coastwise laws to the construction, servicing and eventual decommis-sioning of offshore wind towers and related infrastructure, such as wind tower foundations and offshore electrical service platforms. However, since the precise application of those laws may differ as between the territorial sea and the OCS, the exact coordinates of the installation will be significant.16 That said, the panoply of letter rulings by U.S. Customs and Border Protection (“CBP”) relating to the application of the coastwise laws to projects involving gas, oil and other resource extractions wholly with the OCS will become of interest to the developers of offshore wind projects. A few historical points in this regard:
- CBP has determined that a vessel which is anchored to the seabed of the OCS for purposes of resource exploration, development or production, is considered to be a “point” within the United States for purposes of the Jones Act while it is so anchored. The same is true with respect to mobile rigs, drilling platforms, artificial islands and similar structures.17 Therefore, any other vessel transporting merchandise or passengers between the United States mainland or any other United States coastwise point and such vessel (or similar structure) while it is considered to be a coastwise point on the OCS must be coastwise qualified.18
- CBP has determined that a vessel that is working on the OCS will not be subject to the Jones Act and other U.S. coastwise laws, regardless of whether it is permanently or temporarily attached to the seabed, if it has some purpose other than the exploration, development or extraction of resources. For example, a barge which is laying pipeline on the OCS seabed is not technically involved in OCS activities and, therefore, is not considered a coastwise point and does not have to be coastwise qualified.19 This means that support vessels transporting personnel or equipment to the barge from other U.S. points would not have to be coastwise qualified.20
- The classification of installations and devices which are drilled into the OCS seabed is of jurisdictional relevance. For example, CBP has considered OCS wells to be coastwise points for purposes of the Jones Act and other coastwise laws. Thus, the transportation of a drill rig from one U.S. point to an OCS well is regarded as a coastwise movement, requiring the use of a coastwise qualified vessel. Once a well is permanently abandoned in accordance with U.S. law, it is no longer a coastwise point21. However, CBP has ruled that a platform which is over an OCS well that has been permanently abandoned itself remains a coastwise point so long as it is touching the OCS22. These interpretations will have cross-over relevance to the construction and eventual decommissioning of wind turbines.
Since the passage of the amendments to Section 4(a) of the OCSLA, CBP has had an opportunity to address specific factual scenarios relating to the proposed transportation and unlading of “scour protection” materials to wind turbine generator foundations on the OCS.23 CBP’s modified letter ruling stands out for two reasons. First, as a jurisdictional proposition, CBP recognizes the sharp differences between the territorial sea and the OCS:
“To determine if the proposed transportation occurs between coastwise points, we need to examine the points at which the subject scour protection material will be laden and unladen. CBP treats the seabed of the territorial sea differently from that of the OCS because of the narrower jurisdiction provided by the OCSLA. Within the territorial sea, U.S. sovereignty is unlimited. A country’s sovereignty beyond its territorial sea and over the OCS is more constrained, however, and in this situation is measured by the acts of Congress extending jurisdiction for specified purposes. In its application of the Jones Act, CBP interprets the OCSLA to provide CBP jurisdiction where there is an installation or device attached to the seabed serving a purpose as articulated in the OCSLA – the exploration for, or development, production, transmission, or transportation of resources.”24
Second, the ruling request presented seven different factual scenarios involving the transportation and installation of scour materials to an offshore wind project located on the OCS. Those scenarios involved a proposed assortment of coastwise qualified and non-coastwise qualified scour vessels, bulk carriers, barges and tugs, and U.S. and non-U.S load ports. CBP’s letter ruling illustrates the idiosyncratic nature of the coast-wise laws, as applied on the OCS, and the obvious project inefficiencies created by the mixing and matching of various marine assets in order to satisfy the strict requirements of the coastwise laws.
For example, as stated by CBP, the transportation of scour material to a “pristine” location on the OCS seabed by a non-coastwise qualified vessel would not violate the Jones Act because a coastwise point on the OCS is not pre-established. However, once the first layer of scour material is placed on the seabed, it becomes “attached” to the seabed, thereby creating a coastwise point on the OCS. Accordingly, the subsequent transportation of scour material to each scour protection area must be conducted by a coastwise qualified vessel. On the other hand, the lading of the same scour protection material onto a non-coastwise qualified vessel in Canada and transporting it directly to the OCS site, where the same vessel would install it, would not violate the Jones Act as the movement avoids the transportation of merchandise between United States coastwise points.
In December 2020, the General Accounting Office released a report to certain Congressional committees charged with transportation, infrastructure and energy issues.25 As indicated in the report, only one offshore wind project had been completed in the United States through September 2020 with a small demonstration project nearing completion. Other projects are in the pipeline with 16 commercial leases having been awarded to date by the Bureau of Energy Management for projects in federal waters; Wind power associated with these leases is estimated to have over 21 gigawatts of potential capacity.
The GAO report observes that offshore wind projects typically have four main phases – pre-construction, construction, operations and maintenance and decommissioning – with each phase having specific vessel requirements. The array of vessels that may be required include survey vessels, foundation installation vessels, scour protection vessels, cable-laying vessels, wind-turbine installation vessels, feeder vessels, crew vessels and service vessels. Assembling these vessels will necessarily depend on availability, project competition, contracting commitments and the inevitable strictures of U.S. coastwise laws. These concerns will present major challenges for project developers in the years ahead.
With an administration keen on “doubling offshore wind by 2030 while ensuring robust protection for [United States] land, waters, and biodiversity and creating good jobs,”26 demand for offshore wind power and other offshore renewable energy sources is set to increase in the coming years.27 Now, with the confirmed application of the coastwise laws to the construction and maintenance of offshore wind power installations, participants in the offshore wind industry can expand operations with certainty and this will lead to an even greater demand for coastwise qualified vessels needed to transport, install and maintain United States offshore wind power installations.
1. 46 U.S.C. §55102.2. 46 U.S.C. §55103.
3. 46 U.S.C. §55111.
4. 46 U.S.C. §55109(a).
5. 46 U.S.C. §80104.
6. CBP Letter Ruling HQ 116630 (Mar. 27, 2007).
7. See e.g. 19 C.F.R. §4.80; see also U.S. Customs and Border Protection Informed Compliance Bulletin, Publication No. 1279-1020, The Jones Act at 16-17 (Sept. 2020).
8. CBP Letter Ruling HQ (Apr. 7, 1997). The term “territorial sea” means “the waters 12 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.” 33 C.F.R. §2.22(a)(1). The term “internal waters” means “the waters shoreward of the territorial sea baseline.” 33 C.F.R. §2.24. The term “territorial sea baseline” means “the line defining the shoreward extent of the territorial sea of the United States” drawn according to principles recognized by the United States in certain international conventions. 33. C.F.R.
§2.20.
9. The OCS consists of the “submerged lands lying seaward and outside of the area of lands beneath the navigable waters … [as set forth in the OCSLA], and of which the subsoil and seabed appertain to the United States and are subject to its jurisdiction and control.” 43
U.S.C. §1331(a).
10. 43 U.S.C. §1333(a)(1).
11. Under the structure of the OCSLA, the term “exploration” means “the process of searching for minerals.” 43 U.S.C. §1331(k). The term “development” means “those activities which take place following the discovery of minerals in paying quantities.” 43 U.S.C. §1331(l). The term “production” means “those activities which take place after the successful completion of any means for the removal of minerals.” 43 U.S.C. §1331(m). The term “minerals” includes “oil, gas, sulphur, geopressured-geothermal and associated resources, and all other miner- als which are authorized by an Act of Congress to be produced from ‘public lands’ ….” 43
U.S.C. §1331(q). Following the logic of these various definitions, the term “OCS activity” is separately defined to mean “any offshore activity associated with exploration for, or develop- ment or production of, the minerals of the [OCS].” 33 C.F.R. §140.10.
12. Outer Continental Shelf Lands Act Amendments of 1978, Pub. L. 95-372, Sec. 203(a) (1978).
13. See e.g. C. Papavizas & G. Morrissey III, Does the Jones Act Apply to Alternative Energy
Projects?, 34 Tul. Mar. L. J. 377 (2010).
14. National Defense Authorization Act for Fiscal Year 2021, Pub.L. 116-283, tit. XCV, Sec. 9503 (2021).
15. Id.
16. See e.g. CBP Letter Ruling HQ H309672 (July 15, 2020), revoked by CBP Letter Ruling HQ H312773 (Aug. 3, 2020).
17. A warehouse vessel anchored over the OCS which is used to supply drilling rigs on the OCS also takes on the legal characteristics of a coastwise point. CBP Letter Ruling HQ 114347 (Sept. 18, 1998).
18. CBP Letter Ruling HQ 109849 (Nov. 18, 1988). By contrast, a vessel that is “dynamically positioned” and not moored is not considered a coastwise point because the vessel is not attached to the OCS. Customs Letter Ruling HQ 115531 (Dec. 3, 2001). This means that a non-coastwise qualified vessel could transport merchandise and passengers between a U.S. port and a “dynamically positioned” vessel without violating the Jones Act because the latter vessel is not a coastwise point. This also means that a non-coastwise qualified vessel that
is dynamically positioned over the OCS may carry merchandise to an installation site (in this case, concrete pads) and install that merchandise on the seabed. Id.; see also CBP Letter Ruling HQ 114586 (Jan. 21, 1999) (“A vessel which is not attached to the outer Continental Shelf and not within U.S. territorial waters is not considered a coastwise point for purposes of the coastwise laws.”).
19. CBP Letter Ruling HQ 111126 (Aug. 16, 1990); CBP Letter Ruling HQ 109708 (Oct. 19, 1988).
20. It should be emphasized, however, that if this same barge were laying pipeline within the
U.S. territorial sea, it would be considered a coastwise point which means that all supply ves- sels to that barge would have to be coastwise qualified to the extent that they were carrying supplies from another U.S. point.
21. CBP Letter Ruling HQ 113113 (June 28, 1994).
22. CBP Letter Ruling HQ 109516 (June 15, 1988). In this ruling, the issue was whether a foreign flag barge could transport a platform which was over a permanently abandoned OCS well to another well on the OCS. Although the platform’s legs were severed, CBP determined that it was still a coastwise point because it was still resting on the OCS seabed. Accordingly, the transportation of the platform from one coastwise point to another was a Jones Act movement requiring a U.S. coastwise qualified vessel.
23. CBP Letter Ruling HQ H309186 (Jan. 27, 2021), modified by CBP Letter Ruling HQ H317289 (Mar. 25, 2021).
24. Id.
25. General Accounting Office Report to Congressional Committees, Offshore Wind Energy
– Planned Projects May Lead to Construction of New Vessels in the U.S., but Industry Has
Made Few Decisions amid Uncertainties, GAO-21-153 (Dec. 2020).
26. Tackling the Climate Crisis at Home and Abroad, Exec. Order No. 14008, 86 Fed. Reg. 7619 (Feb. 1, 2021).
27. See White House Briefing Room, Fact Sheet: Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs (Mar. 29, 2021) (https://www.whitehouse.gov/briefing-room/ statements-releases/2021/03/29/fact-sheet-biden-administration-jumpstarts-offshore-wind- energy-projects-to-create-jobs/).
Vedder Thinking | Articles Silent But Deadly: Congress Passes Wind on the OCS
Newsletter/Bulletin
April 12, 2021
The Jones Act1 and the Passenger Vessel Services Act2 have been work horses of U.S. cabotage laws and policies for over 100 years. These laws, which restrict the coastwise transportation of merchandise and passengers, respectively, work alongside related cabotage laws dealing with towing,3 dredging4 and salvage.5 Taken together, they present overlapping statutory restrictions on entry to the U.S. coastwise trades which effectively create a “coastwise monopoly” for domestic shipping interests and crews.6 With limited exceptions, vessel operations contemplated by these laws may be conducted solely through the employment of coastwise-qualified vessels, i.e., vessels that are built in the United States, owned and crewed by U.S. citizens, and documented under U.S. law bearing a coastwise endorsement.7
The coastwise laws apply to “points in the territorial sea, which is defined as the belt three nautical miles seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline.”8 In 1953, federal laws and, by extension, the coastwise laws, were extended to the outer Continental Shelf (“OCS”)9 through section 4(a)(1) of the Outer Continental Shelf Lands Act (the “OCSLA”) which, as previously amended and until recently, read as follows:
“The Constitution and laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State.”10
Based upon the wording of the OCSLA, it was clear from the outset that coastwise laws would extend to the OCS in connection with the exploration, development or production of mineral resources.11 Less clear was whether the development or production of non-mineral resources, such as wind energy, came within the original jurisdictional purview of the OCSLA. Given the year in which the OCSLA was first enacted, and even prior amendments to section 4(a)(1) in 1978,12 it seems evident that they were not; indeed, the first offshore wind projects did not appear in Europe until the early 1990s.
Wind energy is not a “resource” derived from the subsoil or seabed of the OCS, and no one would seriously contend that wind is a “mineral” in any sense of the word. Thus, while the OCSLA clearly extended the coastwise laws to the OCS in connection with oil, gas and related resource projects, the corresponding question as to the applicability of the coastwise laws to “non-mineral energy resources” associated with offshore wind projects on the OCS was unclear and left unresolved for over 65 years. However, given the slow development of offshore wind energy in the United States, debate on the subject was mostly academic13 since there were few offshore wind projects in actual construction to which these baroque issues could be practically applied.
The uncertainty was finally put to rest on January 1, 2021, when the United States Senate followed in the path of the House of Representatives in voting to enact into law the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021.14 Tucked into the 1,480-page bill was a provision by which Congress, with quiet precision, further amended section 4(a)(1) to now read as follows:
“(A) The Constitution and laws and civil and political jurisdiction of the United States are extended, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State, to – (i) the subsoil and seabed of the outer Continental Shelf; (ii) the artificial islands on the outer Continental Shelf; (iii) installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources, including non-mineral energy resources; or (iv) any such installation or other device (other than a ship or vessel) for the purpose of transporting or transmitting such resources.15”
Section 4(a)(1) of the OCSLA now clearly and specifically provides that the laws of the United States apply to installations and devices permanently or temporarily attached to the seabed of the OCS for the purpose of exploring for, developing, producing and transmitting non-mineral energy resources, such as offshore wind power, as well as exploring for, developing, producing and transporting other “resources,” including offshore oil and gas. As discussed above, the prior text of this section contemplated only that United States laws would apply to installations and devices involving oil, gas and other mineral resources, and this had confounded developers and operators seeking guidance on the laws applicable to the development and maintenance of offshore wind power projects on the OCS.
The legal significance of this statutory clarification is the extension of the coastwise laws to the construction, servicing and eventual decommis-sioning of offshore wind towers and related infrastructure, such as wind tower foundations and offshore electrical service platforms. However, since the precise application of those laws may differ as between the territorial sea and the OCS, the exact coordinates of the installation will be significant.16 That said, the panoply of letter rulings by U.S. Customs and Border Protection (“CBP”) relating to the application of the coastwise laws to projects involving gas, oil and other resource extractions wholly with the OCS will become of interest to the developers of offshore wind projects. A few historical points in this regard:
- CBP has determined that a vessel which is anchored to the seabed of the OCS for purposes of resource exploration, development or production, is considered to be a “point” within the United States for purposes of the Jones Act while it is so anchored. The same is true with respect to mobile rigs, drilling platforms, artificial islands and similar structures.17 Therefore, any other vessel transporting merchandise or passengers between the United States mainland or any other United States coastwise point and such vessel (or similar structure) while it is considered to be a coastwise point on the OCS must be coastwise qualified.18
- CBP has determined that a vessel that is working on the OCS will not be subject to the Jones Act and other U.S. coastwise laws, regardless of whether it is permanently or temporarily attached to the seabed, if it has some purpose other than the exploration, development or extraction of resources. For example, a barge which is laying pipeline on the OCS seabed is not technically involved in OCS activities and, therefore, is not considered a coastwise point and does not have to be coastwise qualified.19 This means that support vessels transporting personnel or equipment to the barge from other U.S. points would not have to be coastwise qualified.20
- The classification of installations and devices which are drilled into the OCS seabed is of jurisdictional relevance. For example, CBP has considered OCS wells to be coastwise points for purposes of the Jones Act and other coastwise laws. Thus, the transportation of a drill rig from one U.S. point to an OCS well is regarded as a coastwise movement, requiring the use of a coastwise qualified vessel. Once a well is permanently abandoned in accordance with U.S. law, it is no longer a coastwise point21. However, CBP has ruled that a platform which is over an OCS well that has been permanently abandoned itself remains a coastwise point so long as it is touching the OCS22. These interpretations will have cross-over relevance to the construction and eventual decommissioning of wind turbines.
Since the passage of the amendments to Section 4(a) of the OCSLA, CBP has had an opportunity to address specific factual scenarios relating to the proposed transportation and unlading of “scour protection” materials to wind turbine generator foundations on the OCS.23 CBP’s modified letter ruling stands out for two reasons. First, as a jurisdictional proposition, CBP recognizes the sharp differences between the territorial sea and the OCS:
“To determine if the proposed transportation occurs between coastwise points, we need to examine the points at which the subject scour protection material will be laden and unladen. CBP treats the seabed of the territorial sea differently from that of the OCS because of the narrower jurisdiction provided by the OCSLA. Within the territorial sea, U.S. sovereignty is unlimited. A country’s sovereignty beyond its territorial sea and over the OCS is more constrained, however, and in this situation is measured by the acts of Congress extending jurisdiction for specified purposes. In its application of the Jones Act, CBP interprets the OCSLA to provide CBP jurisdiction where there is an installation or device attached to the seabed serving a purpose as articulated in the OCSLA – the exploration for, or development, production, transmission, or transportation of resources.”24
Second, the ruling request presented seven different factual scenarios involving the transportation and installation of scour materials to an offshore wind project located on the OCS. Those scenarios involved a proposed assortment of coastwise qualified and non-coastwise qualified scour vessels, bulk carriers, barges and tugs, and U.S. and non-U.S load ports. CBP’s letter ruling illustrates the idiosyncratic nature of the coast-wise laws, as applied on the OCS, and the obvious project inefficiencies created by the mixing and matching of various marine assets in order to satisfy the strict requirements of the coastwise laws.
For example, as stated by CBP, the transportation of scour material to a “pristine” location on the OCS seabed by a non-coastwise qualified vessel would not violate the Jones Act because a coastwise point on the OCS is not pre-established. However, once the first layer of scour material is placed on the seabed, it becomes “attached” to the seabed, thereby creating a coastwise point on the OCS. Accordingly, the subsequent transportation of scour material to each scour protection area must be conducted by a coastwise qualified vessel. On the other hand, the lading of the same scour protection material onto a non-coastwise qualified vessel in Canada and transporting it directly to the OCS site, where the same vessel would install it, would not violate the Jones Act as the movement avoids the transportation of merchandise between United States coastwise points.
In December 2020, the General Accounting Office released a report to certain Congressional committees charged with transportation, infrastructure and energy issues.25 As indicated in the report, only one offshore wind project had been completed in the United States through September 2020 with a small demonstration project nearing completion. Other projects are in the pipeline with 16 commercial leases having been awarded to date by the Bureau of Energy Management for projects in federal waters; Wind power associated with these leases is estimated to have over 21 gigawatts of potential capacity.
The GAO report observes that offshore wind projects typically have four main phases – pre-construction, construction, operations and maintenance and decommissioning – with each phase having specific vessel requirements. The array of vessels that may be required include survey vessels, foundation installation vessels, scour protection vessels, cable-laying vessels, wind-turbine installation vessels, feeder vessels, crew vessels and service vessels. Assembling these vessels will necessarily depend on availability, project competition, contracting commitments and the inevitable strictures of U.S. coastwise laws. These concerns will present major challenges for project developers in the years ahead.
With an administration keen on “doubling offshore wind by 2030 while ensuring robust protection for [United States] land, waters, and biodiversity and creating good jobs,”26 demand for offshore wind power and other offshore renewable energy sources is set to increase in the coming years.27 Now, with the confirmed application of the coastwise laws to the construction and maintenance of offshore wind power installations, participants in the offshore wind industry can expand operations with certainty and this will lead to an even greater demand for coastwise qualified vessels needed to transport, install and maintain United States offshore wind power installations.
1. 46 U.S.C. §55102.2. 46 U.S.C. §55103.
3. 46 U.S.C. §55111.
4. 46 U.S.C. §55109(a).
5. 46 U.S.C. §80104.
6. CBP Letter Ruling HQ 116630 (Mar. 27, 2007).
7. See e.g. 19 C.F.R. §4.80; see also U.S. Customs and Border Protection Informed Compliance Bulletin, Publication No. 1279-1020, The Jones Act at 16-17 (Sept. 2020).
8. CBP Letter Ruling HQ (Apr. 7, 1997). The term “territorial sea” means “the waters 12 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.” 33 C.F.R. §2.22(a)(1). The term “internal waters” means “the waters shoreward of the territorial sea baseline.” 33 C.F.R. §2.24. The term “territorial sea baseline” means “the line defining the shoreward extent of the territorial sea of the United States” drawn according to principles recognized by the United States in certain international conventions. 33. C.F.R.
§2.20.
9. The OCS consists of the “submerged lands lying seaward and outside of the area of lands beneath the navigable waters … [as set forth in the OCSLA], and of which the subsoil and seabed appertain to the United States and are subject to its jurisdiction and control.” 43
U.S.C. §1331(a).
10. 43 U.S.C. §1333(a)(1).
11. Under the structure of the OCSLA, the term “exploration” means “the process of searching for minerals.” 43 U.S.C. §1331(k). The term “development” means “those activities which take place following the discovery of minerals in paying quantities.” 43 U.S.C. §1331(l). The term “production” means “those activities which take place after the successful completion of any means for the removal of minerals.” 43 U.S.C. §1331(m). The term “minerals” includes “oil, gas, sulphur, geopressured-geothermal and associated resources, and all other miner- als which are authorized by an Act of Congress to be produced from ‘public lands’ ….” 43
U.S.C. §1331(q). Following the logic of these various definitions, the term “OCS activity” is separately defined to mean “any offshore activity associated with exploration for, or develop- ment or production of, the minerals of the [OCS].” 33 C.F.R. §140.10.
12. Outer Continental Shelf Lands Act Amendments of 1978, Pub. L. 95-372, Sec. 203(a) (1978).
13. See e.g. C. Papavizas & G. Morrissey III, Does the Jones Act Apply to Alternative Energy
Projects?, 34 Tul. Mar. L. J. 377 (2010).
14. National Defense Authorization Act for Fiscal Year 2021, Pub.L. 116-283, tit. XCV, Sec. 9503 (2021).
15. Id.
16. See e.g. CBP Letter Ruling HQ H309672 (July 15, 2020), revoked by CBP Letter Ruling HQ H312773 (Aug. 3, 2020).
17. A warehouse vessel anchored over the OCS which is used to supply drilling rigs on the OCS also takes on the legal characteristics of a coastwise point. CBP Letter Ruling HQ 114347 (Sept. 18, 1998).
18. CBP Letter Ruling HQ 109849 (Nov. 18, 1988). By contrast, a vessel that is “dynamically positioned” and not moored is not considered a coastwise point because the vessel is not attached to the OCS. Customs Letter Ruling HQ 115531 (Dec. 3, 2001). This means that a non-coastwise qualified vessel could transport merchandise and passengers between a U.S. port and a “dynamically positioned” vessel without violating the Jones Act because the latter vessel is not a coastwise point. This also means that a non-coastwise qualified vessel that
is dynamically positioned over the OCS may carry merchandise to an installation site (in this case, concrete pads) and install that merchandise on the seabed. Id.; see also CBP Letter Ruling HQ 114586 (Jan. 21, 1999) (“A vessel which is not attached to the outer Continental Shelf and not within U.S. territorial waters is not considered a coastwise point for purposes of the coastwise laws.”).
19. CBP Letter Ruling HQ 111126 (Aug. 16, 1990); CBP Letter Ruling HQ 109708 (Oct. 19, 1988).
20. It should be emphasized, however, that if this same barge were laying pipeline within the
U.S. territorial sea, it would be considered a coastwise point which means that all supply ves- sels to that barge would have to be coastwise qualified to the extent that they were carrying supplies from another U.S. point.
21. CBP Letter Ruling HQ 113113 (June 28, 1994).
22. CBP Letter Ruling HQ 109516 (June 15, 1988). In this ruling, the issue was whether a foreign flag barge could transport a platform which was over a permanently abandoned OCS well to another well on the OCS. Although the platform’s legs were severed, CBP determined that it was still a coastwise point because it was still resting on the OCS seabed. Accordingly, the transportation of the platform from one coastwise point to another was a Jones Act movement requiring a U.S. coastwise qualified vessel.
23. CBP Letter Ruling HQ H309186 (Jan. 27, 2021), modified by CBP Letter Ruling HQ H317289 (Mar. 25, 2021).
24. Id.
25. General Accounting Office Report to Congressional Committees, Offshore Wind Energy
– Planned Projects May Lead to Construction of New Vessels in the U.S., but Industry Has
Made Few Decisions amid Uncertainties, GAO-21-153 (Dec. 2020).
26. Tackling the Climate Crisis at Home and Abroad, Exec. Order No. 14008, 86 Fed. Reg. 7619 (Feb. 1, 2021).
27. See White House Briefing Room, Fact Sheet: Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs (Mar. 29, 2021) (https://www.whitehouse.gov/briefing-room/ statements-releases/2021/03/29/fact-sheet-biden-administration-jumpstarts-offshore-wind- energy-projects-to-create-jobs/).
