What’s New with Offshore Wind Farms and Coastwise Trade Laws in the U.S.

By Sandra L. Knapp, Esq.

Offshore wind farm projects along the East Coast have been dominating the news with headlines covering everything from wildlife, to economic development, politics and clean energy. But what do these projects entail in terms of logistics, foreign vessels, U.S. coastwise vessels, crewing and maintenance?

As we know, a non-coastwise-qualified vessel cannot transport merchandise or passengers 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. Under the Outer Continental Shelf Lands Act, “points in the United States” also includes 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. 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 OCS 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. The U.S. Customs and Border Protection (CBP) decisions clearly state 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 territorial U.S. waters or the OCS. The jurisdiction over the OCS is limited to the exploration or production of resources while U.S. sovereignty within the territorial sea is unlimited.  The grey area in this analysis revolves around what constitutes a “point” in respect to wind farms and whether certain vessels for these projects can be a foreign vessel.

On January 27, 2021, the CBP 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 OCS since the National Defense Authorization Act for FY 2021 was passed.

Since then, the CBP has issued several other rulings regarding the coastwise trade law (also known as the Jones Act) and how it affects the development, constructions, cable laying, foundations, and wind turbine generator units for the projects.

The CBP has stated that the Jones Act does “not apply to activity occurring at the pristine seabed” on the OCS. Once a coastwise point is established on the seabed, then the Jones Act will apply. This analysis sounds simple enough. Nothing in the law is ever simple, however. Below are a few summaries from the rulings:

• At the time of the delivery of the first scour protection material, which is used to lay the foundation for and protect foundations for the wind turbine generator, to the pristine seabed, there is no “coastwise point” and a non-qualified-coastwise vessel can be used to transport the material (mainly consisting of rocks). Once the rocks are placed on the seabed, a coastwise point is created at that location.
• A cable laying vessel that lays cable between two coastwise points is not considered a use in the coastwise trade. That’s because the material is not laden as “cargo” or merchandise but rather is paid out in the course of the installation operation. Therefore, a non-coastwise-qualified vessel may be used. However, if the cable is transported on a vessel that is not laying the cable, then a coastwise qualified vessel must be used. Once the electric transmission cable is laid in the seabed, it is considered a coastwise point.
• When the components of a wind turbine are transported from a foreign port to a turbine installation vessel or foundation installation vessel, they are transported to a U.S. point established by the first load of scour protection material. However, since the merchandise was not transported between two U.S. points, a foreign vessel may be used.
• The installation vessels that are attached to the seabed will be a coastwise point when anchored. A dynamically-positioned vessel has been held by the CBP to lack any permanent or temporary attachment to the seabed and is not considered a coastwise point.
• A crane vessel that is moving merchandise to construct or dismantle a marine structure is not coastwise trade as long as the merchandise is moved solely by the movement of the crane.

Confused yet? There are also scenarios related to the transportation of crew necessary for the installation of the monopiles and turbines. The question there is whether the crew should be considered “passengers” for purposes of the Passenger Vessel Services Act, which requires the transportation of passengers between two coastwise points to be on board a coastwise qualified vessel.

Attorney Sandra L. Knapp is a partner at Gawthrop Greenwood, PC, where she leads the firm’s Maritime & Transportation Law Department. In addition to marine financing, Sandy advises on maritime transportation regulatory matters, including U.S. coastwise trade and citizenship requirements. Sandy is a member of the Maritime Law Association of the United States, past Chair of its Marine Finance Committee and formerly a member of its Board of Directors. She has practiced in the Philadelphia area for over 30 years, representing clients throughout the United States and abroad and was recently named “Female Business Leader of the Year” in Chester County. For more information, contact Sandra L. Knapp at sknapp@gawthrop.com or 610-696-8225.