CBP’s Most Recent Offshore Wind Jones Act Ruling Signals A Trend – Energy and Natural Resources – United States – Mondaq News Alerts

08 April 2021

Holland & Knight

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As outlined in a previous Holland & Knight alert on thissubject, U.S. Customs and Border Protection (CBP) earlier this yearfor the first time expressly found that the Jones Act applies totransportation of merchandise from a U.S. port to a location on theU.S. outer continental shelf (OCS) for the purpose of thedevelopment and production of wind energy. (See "CBP Expressly Applies Jones Act to Offshore WindProjects on Outer Continental Shelf," Feb. 2, 2021,concerning HQ H309186 ruling on Jan. 27, 2021). That rulingfollowed an amendment to the Outer Continental Shelf Lands Act(OCSLA) and ended a long-standing ambiguity over whether OCSLAextended the Jones Act to installations and other devices attachedto the OCS for the purpose of exploring for, developing orproducing non-mineral energy resources, such as offshorewind.

In a second ruling, dated Feb. 4, 2021, CBP again addressed theapplication of U.S. coastwise laws on proposed offshore windconstruction activities on the OCS. See HQ H316313. That ruling provided significantguidance on permissible uses of foreign-flag vessels in connectionwith offshore wind activities, including important guidance oninstallation tools and items treated as "vesselequipment" and permissible categorization of installationpersonnel as vessel crew, not passengers.

In the third and most recent ruling, CBP significantly modifiedits first ruling. See HQ H317289, March 25, 2021. The first rulingspecifically addressed scour protection how and when U.S.coastwise qualified, and non-U.S. coastwise qualified vessels,could permissibly transport and deposit on the OCS "scourprotection material" ultimately used to protect turbinefoundations. In the first of seven scenarios presented to CBP, thescour protection material would be laden at a U.S. port anddeposited on a "pristine" location on the OCS. CBPconcluded without discussion or citation to a substantialbody of prior rulings concerning what constitutes OCS coastwisepoints, including rulings to the effect that a "pristine"seabed does not constitute a point that the"pristine" seabed where scour would be deposited would bea coastwise point.

CBP reversed that ruling in the instant modification, concludingthat "at that time of first delivery, there is no coastwisepoint, and hence, no transportation of merchandise from onecoastwise point to another. As a result, the Scour Vessel maytransport the scour protection material to the installationlocation when that location is the pristine seabed, withoutviolating 46 U.S.C. 55102."

First, the three rulings taken together indicate CBP'swillingness to reach back to a substantial body of priorinterpretative principles largely developed in connection with oiland gas activities. It has been unclear how CBP would apply some ofthose principles moving forward, as highlighted in Holland &Knight's Feb. 2 alert, and these rulings provide some guidancein that regard.

Second, CBP's Jan. 27 and March 25 rulings indicate thatdespite looking to existing analogous principles, CBP is willing toset new precedent for offshore wind activities. For example,although CBP revoked part of its initial Jan. 27 ruling findingthat a "pristine" OCS seabed was a coastwise point, indoing so in its most recent March 25 ruling CBP offered a new andrather broad interpretation of what will now constitute a"coastwise point."

Finally, the fact that CBP is actively issuing rulings in thespace is in and of itself an important, if not critical, trend. Thepolitical dynamic regarding renewable energy and offshore wind hasclearly turned the President's plan to promote 30 gigawatts ofoffshore wind by 2030 being just one recent example. Anythingclose to the level of activity needed to achieve such goals willrequire virtually every permutation of available U.S. coastwisequalified vessels and permissible foreign-flag vessels.CBP's active participation in the industry is a necessary andwelcome trend.

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CBP's Most Recent Offshore Wind Jones Act Ruling Signals A Trend - Energy and Natural Resources - United States - Mondaq News Alerts