New Ruling on Wind Farms and Coastwise Trade Laws in the U.S.

By Sandra L. Knapp, Esq.

On January 27, 2021, the U.S. Customs and Border Protection office issued a letter ruling regarding several scenarios related to wind farms and the coastwise trade laws of the United States.  It is the first decision by CBP on the issue of coastwise trade laws and the Outer Continental Shelf since the National Defense Authorization Act for FY 2021 was passed.

As we know, a non-coastwise qualified vessel cannot transport merchandise by water, or by land and water, between points in the United States. “Points in the United States” includes the territorial sea, which is a belt three miles wide. A point also includes, under the Outer Continental Shelf Lands Act, installations attached to the seabed in the Outer Continental Shelf (OCS) which is erected for the purposes of producing resources or installation of a device to transport such resources. Recently, the National Defense Authorization Act for FY 2021 amended the law to include “non-mineral energy resources.” Clearly now, any wind farm installations on the Outer Continental Shelf must adhere to the coastwise trade laws. Transportation of merchandise from a U.S. port to a wind farm installation in the territorial sea and on the OCS must be transported on a coastwise qualified vessel.

This is great news for coastwise trade Jones Act operators and shipowners. There may be lingering questions, which will in time be sorted out. Prior to the passage of the National Defense Authorization Act for 2021, a ruling request was submitted to clarify whether a non-coastwise qualified vessel could carry merchandise to the site of a wind farm installation. The decision clearly states that any use of a foreign vessel is prohibited from transporting cargo or people between two coastwise points including a U.S port and a wind farm on the OCS.

The ruling letter makes clear that if the vessel is laden at a Canadian port and unladen at a US OCS point, this would not violate the Jones Act. Further, citing drilling rig rulings, if a floating offshore “service facility” is anchored to the seabed to carry consumables and supplies, such a service facility would be considered a coastwise point and merchandise could not be transported between it and the wind farm installation.

The letter ruling is below for your convenience. Please call us if you have any questions.