Congress recently affirmed that the Jones Act applies to offshore windfarms. It did so via amendment to the Outer Continental Shelf Lands Act (the "OCSLA"), in a brief section near the end of the annual omnibus National Defense Authorization Act.1
Originally, the OCSLA extended federal jurisdiction to the outer continental shelf with a focus on the development of subsea mineral resources. The "outer continental shelf" describes an area typically beginning three miles offshore (where state jurisdiction usually ends), and extends somewhere between 200-350 miles depending on the shape and slope of the shelf. Although OCSLA does not explicitly mention the Jones Act, it extends "[t]he Constitution and laws and civil and political jurisdiction of the United States. to the subsoil and seabed of the outer Continental Shelf." In addition, OCSLA extends federal jurisdiction to "all installations and other devices permanently or temporarily attached to the seabed. for the purpose of exploring for, developing, or producing resources therefrom," as well as "any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources".
Prior to the recent amendment, OCSLA's language applied awkwardly if at all to wind farms. The general principle that federal law applies to the subsoil and the seabed itself was not problematic, but the installations and leases it described pertained to mineral resources. Specifically, the installations it described were those that were "attached to the seabed. for the purpose of. producing resources therefrom". In other words, it applied to installations that produced resources from the seabed. This was an odd fit for wind farms, which produce energy resources from the movement of air currents rather than from the seabed itself.
Therefore OCSLA did not provide clear answers to Jones Act issues for windfarms. Instead, the agency responsible for applying the Jones Act (U.S. Customs and Border Protection, or "CBP") resolved questions about offshore windfarms by applying Jones Act language referring to "points to which the coastwise laws apply." This led to a line of interpretation that allowed foreign vessels limited roles in installing wind farm equipment. However, once completed, those installations became "points to which the coastwise laws apply." Similarly, vessels permanently moored to the seafloor were "points to which the coastwise laws apply" in the view of CBP.
The new amendments added language to OCSLA specifying that it applies to "non-mineral energy resources" and "energy" leases rather than only mineral ones. OCSLA will now apply to "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" (emphasis added). Likewise "energy leases" will be available under OCSLA, in addition to the "mineral leases" that it previously established.
In a recent ruling, CBP recognized the recent change to OCSLA and affirmed that the Jones Act would apply to aspects of the construction of offshore wind installations.2 Because the Jones Act extends to installations on the U.S. outer continental shelf, and such installations are considered "points" within the U.S., only U.S. flag vessels that are qualified for coastwise trading may be used to transport merchandise (including wind farm components and spare parts) or passengers (including wind farm technicians) from U.S. ports or other installations on the U.S. outer continental shelf. (Installation of wind farms by foreign flag vessels will be the topic of a future post — watch this blog for updates!)
Footnotes
1. See §9503 of the National Defense Authorization Act for the Fiscal Year 2021, Pub. L. No. 116-283, H.R. 6395, 116th Cong. (2021), amending §4(a)(1) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)(1)).
2. H309186 (January 27, 2021).
This article is presented for informational purposes only and is not intended to constitute legal advice.
