U.S. Customs Agency Issues Guidance on Jones Act Compliance in Connection with Offshore Wind Projects
U.S. Customs and Border Protection (CBP) has issued a ruling stating that the Jones Act does not apply to several specific offshore wind activities, which permits those activities to be performed by foreign vessels.
One of the complicating factors to offshore wind development in the United States is the applicability of the Jones Act, and whether the Jones Act allows related development activities to be performed by foreign vessels. The Jones Act limits the transportation of “merchandise” between U.S. coastwise points to vessels that are built and registered in the United States and are owned by a U.S. citizen. CBP had previously determined that the Jones Act applies, generally, to the transportation of merchandise from a U.S. port and other coastwise points to wind turbine generator foundations. As such, the Jones Act, and its prohibition against the use of more readily available foreign wind turbine installation vessels (WTIVs), has complicated and, in some instances, added substantial cost to the installation of offshore turbines. A recent CBP ruling provides companies involved in offshore wind projects clearer guidance on the applicability of the Jones Act to certain specific windfarm installation activities.
In its April 2022 ruling, the CBP analyzed the applicability of the Jones Act to several specific offshore wind activities and in several instances determined the Act does not apply, which permits those activities to be performed by foreign vessels. For example, the CBP confirmed that a foreign WTIV can move crew members and materials to the work site because crew members are not “passengers” and work materials are not “merchandise,” as those terms are defined in the Jones Act. Similarly, a foreign WTIV may arrive in U.S. waters and install foundations and other project components it has transported from a foreign port.
The ruling also addresses the use of foreign vessels in installing underwater cables, confirming that the Jones Act does not apply to vessels laying electrical cables in U.S. waters between two U.S. points, or to vessels loading that cable at a U.S. port. Similarly, the use of foreign cable lay vessels (which create, lay and bury cables on the sea floor), is permitted, as that activity is not considered “dredging,” a function historically reserved for Jones Act-compliant vessels. The ruling also confirms prior CBP guidance with respect to the installation of scour protection, which is used to prevent loss of seabed sediment around the base of an offshore structure. Foreign vessels are permitted to pick up rocks in a U.S. port, transport them offshore, and place them at a work site – provided the rocks are the first thing being added to the pristine sea floor.
In one instance, the CPB’s April ruling reverses an earlier position regarding the installation of cable protection in favor of Jones Act compliance. Previously, foreign vessels were permitted to load concrete mats and place them on top of laid piping, as the existing pipe was not considered a U.S. point. Based on an interpretation of the Outer Continental Shelf Lands Act, however, the CBP determined that the laying of an electrical cable on the seabed was intended to be made a U.S. point, as it is a means of transporting resources. As a result, installation of concrete mats to protect the piping running from the offshore structure requires the use of a Jones Act-compliant vessel.
While the applicability of the Jones Act to specific offshore wind development activities will continue to require careful analysis, the CBP’s April ruling provides offshore wind developers some clarity moving forward.