CBP ‘expressly applies Jones Act to offshore wind projects on OCS’

Law firm Holland & Knight said, “CBP’s ruling is the first one to be issued following the recent amendment to Section 4(a) of the Outer Continental Shelf Lands Act (OCSLA) contained in Section 9503 of the William M (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, HR 6395, 116th Cong § 9503 (2021) (NDAA).

“As amended, OCSLA applies federal laws, such as the Jones Act, to: ‘(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 …’ NDAA 2021, Section 9503 (emphasis highlighting amendment added).”

Holland & Knight said the ruling “ends a long-standing ambiguity over whether OCSLA extended the Jones Act to installations and other devices attached to the outer continental shelf (OCS) for the purpose of exploring for, developing or producing non-mineral energy resources, such as offshore wind.”

The law firm said the ruling was issued in response to an initial request to CBP dated 12 February 2020. A number of other offshore wind-related ruling requests submitted prior to the NDAA remain pending, and it is anticipated that CBP will continue processing those pending ruling requests in the coming weeks.

“With a major jurisdictional ambiguity addressed, CBP, developers and contractors can proceed to the necessary work of planning and seeking interpretive rulings on important, and in some cases novel, operational questions associated with offshore wind construction and operations," Holland & Knight said.

“Although the application of the Jones Act in Gulf of Mexico offshore oil and gas operations provides many analogues to aspects of offshore wind projects, there are significant differences that need to be addressed. Moreover, there are a number of previously established interpretative concepts that will now require new consideration and ruling requests.”

Another law firm, Cozen O’Connor, said, “Of significant note, CBP went on to find (without reference to any prior decisions) that the Jones Act would also be violated by scenarios that involved lading of scour at a US point and unlading on the seabed of the OCS prior to the construction of any offshore wind monopiles.”

Cozen O’Connor said the seemingly straight-forward ruling “belies years of controversy that underly this issue and represents an apparent reversal in CBP’s interpretation of OCSLA.”

It noted that, since at least 2012, the Offshore Marine Service Association (OMSA) has been arguing against CBP’s long-standing position that the Jones Act does not apply to the ‘pristine seabed’ of the OCS.

Cozen O’Connor said the decision “will likely have a significant impact on the methodologies employed by operators of non-coastwise qualified vessels involved in pre-construction OCS activities in the offshore wind and oil and gas industries.”

Another well-known law firm, Duane Morris noted that on 25 January 2021, President Biden signed an ‘Executive Order on Ensuring the Future Is Made in All of America by All of America’s Workers,’ reaffirming his administration’s support for, among other things, the Jones Act.

“The executive order makes it clear that the 100-year-old law will remain intact for the foreseeable future,” said Duane Morris. It quoted a White House press release about the executive order, which reiterated the President’s strong support for the Jones Act.

“The President will continue to be a strong advocate for the Jones Act and its mandate that only US-flag vessels carry cargo between US ports, which supports American production and America’s workers,” the statement said. “With the signing of the 2021 National Defense Authorization Act, the Jones Act has also been affirmed as an opportunity to invest in America’s workers as we build offshore renewable energy, in line with the President’s goals to build our clean energy future here in America.

Among other actions, the executive order creates a new position, director of the Made in America Office at the Office of Management and Budget, to manage ‘buy American’ compliance, and requires a biannual report on and review of every agency’s compliance with Made in America laws, including the Jones Act.

“The president’s nomination of former South Bend, Indiana, Mayor Pete Buttigieg as Transportation Secretary, which was confirmed on 2 February 2021, further underscores the administration’s support for the Jones Act,” Duane Morris said. “In January, Buttigieg expressed his support for the Jones Act, explaining “[The Jones Act] is so important to a maritime industry that creates hundreds of thousands of jobs, as well as a shipbuilding industry here in the US.”