Implications of Jones Act Changes to the Offshore Energy Industry
In this article, the authors discuss recent changes to the interpretation of the federal Jones Act of particular interest to the offshore energy industry.
Vessels are the backbone of any offshore construction project, and the Jones Act, which celebrated its centennial this month, regulates their operations in U.S. waters on the Outer Continental Shelf. Originally promulgated as a transportation statute, the Jones Act has governed vessels engaging in offshore construction for nearly four decades. While offshore oil and gas construction operations have been conducted in compliance with the Jones Act for decades, with the burgeoning offshore wind sector there is renewed interest on how the Jones Act will be applied to such projects.
Indeed, planning for Jones Act compliance is a major component of successful wind farm installation operations, as has been the case for years with oil and gas-related work. Interestingly, despite the fact that the Jones Act is now a century old, there have been recent significant regulatory and legal developments in its interpretation.
Specifically, after years of debate within the offshore industry, on December 19, 2019, U.S. Customs and Border Protection (“CBP”) issued its decision in its Customs Bulletin, “Modification and Revocation of Ruling Letters Relating to CBP’s Application of the Jones Act to the Transportation of Certain Merchandise and Equipment Between Coastwise Points” (the “Decision”). The Decision became effective on February 17, 2020.
Offshore developers, vessel operators, and other stakeholders must now face the question: How does the Decision affect offshore activities?
Further, the Decision currently faces challenges both in Congress and the courts. Some members of Congress who are not pleased with CBP’s actions have been focused on legislating in this area and modifying the Jones Act to include restrictions on lifting operations undertaken by installation vessels. This would effectively overrule parts of the Decision.
Stakeholders in the offshore wind, ocean renewable energy, and offshore oil and gas sectors should pay attention to these developments as they will intimately impact offshore construction activities.
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“Implications of Jones Act Changes to the Offshore Energy Industry,” by Jonathan K. Waldron and Stefanos N. Roulakis was published in the October 2020 edition of Pratt's Energy Law Report (Vol. 20, No. 9), an A.S. Pratt Publication, LexisNexis. Reprinted with permission.
This article was first published in Blank Rome’s MAINBRACE: Special Offshore Wind Edition (June 2020).