Keeping up with the Jones Act: How Two Words Could Sink America's Future in Offshore Wind
The U.S. House of Representatives has passed the Expanding Access to Sustainable Energy Act of 2019, which enforces Jones Act requirements for all offshore renewable energy production. However, the bill's current language has the potential to create a loophole that would leave the U.S. Jones Act fleet on the sidelines.
The Jones Act and its
applicability to the offshore wind sector has long been debated by politicians,
activists, and industry professionals. The act requires components transported
between points in the United States to be moved by U.S. built, owned, flagged and crewed vessels. However, it's relevancy as to how it applies to offshore wind
industry operations on the Outer Continental Shelf (OCS) has been questioned.
The latest amendment passed
by the House of Representatives aims to clarify the Outer Continental Shelf
Lands Act (OCSLA), a law developed in 1953 that governs offshore mineral and
energy development. The new amendment would extend the OCSLA to apply to lease
sales for non-fossil fuel energy sources, such as wind power. There are just
two big problems with the new amendment: the words "producing or
supporting."
While the OCSLA
specifically calls out exploration and developing activities for oil and gas,
the language offered around offshore wind only refers to production and support.
The legislation defines coastwise points as devices
permanently or temporarily attached to the seabed for the purpose "of
producing or supporting the production of energy from sources other than oil
and gas." This language indicates that an installation on the OCS would be
considered a coastwise point only when producing or supporting energy
production. This verbiage would likely create a loophole where U.S. Customs and
Border Protection (CBP) could interpret and rule that a wind turbine would not
be considered a "coastwise point" under OCSLA until it is
"producing or supporting" the production of energy.
If this language makes it
through, it will open up transport or feedering operations during installation
and construction to non-coastwise qualified vessels. This loophole could
dramatically impact both the costs of installing offshore wind farms in the U.S.
and the U.S.' Jones Act maritime sector's participation in offshore wind farm
installation activities.
The bill will now go to the
U.S. Senate, and if it is passed, it will be sent to the president's desk to be
signed into law. Until now, this legislation has flown under the radar.
Politicians and industry professionals should recognize the current language's
serious ramifications on America's offshore wind future. These two words have
the potential to either severely limit participation for the U.S. Jones Act
fleet or significantly reduce costs for offshore construction and installation,
spurring the industry to life. Either way, this bill's language is critical,
and its impact will be felt for decades to come.