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Keeping up with the Jones Act

How two words could sink America’s future in offshore wind. By Noelle Thuillier.

The US 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 US 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 US 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 US 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 US and the US’ Jones Act maritime sector’s participation in offshore wind farm installation activities.

The bill will now go to the US 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 recognise 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 US 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.

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Comments

  1. Instead of viewing this as a detriment to the US Flag fleet, it could also be viewed as the opportunity for the US fleet to modernize and compete in an internationally growing industry. Offshore wind does not have the margins that offshore oil used to have and thus cannot support the overhead that that Jones Act vessels and regulation will impose on it. If the USA wants an offshore renewable energy industry that can compete without heavy subsidy with other sources of power, then the main installation assets and maintenance assets need to be able to operate at similar price levels as they do in Europe.
    The rapid evolution of offshore wind in Europe has clearly demonstrated that it can be done at low or zero subsidy only if the correct foundation, turbine and cable installation assets are available and working efficiently. At present these do not exist within the US Flag Fleet and this will impact heavily on any attempts to develop a competitive offshore renewable industry in the US. American operators have proved that they can compete and lead in the international oil and gas industry This same challenge applies to offshore wind in Canada

    1. The Jones Act application is meant for just that, modernizing and competing internationally.

      Th idea that Jones Act vessels can’t be price-competitive is a longstanding myth and as professionals, in general, and as Americans, in particular, we should help dispel it. It has been shown that the cost to build a properly designed modern WTIV of a given capacity is comparable to that of building the more well-known ones in the Far East.

      The concepts have been vetted by all the major industry operators and turbine vendors.

      The law is meant to protect U.S. interests. Why should we give up such protection?

      Jones Act application is essential to protect this industry. This would be a debate if there was an unfavorable price discrepancy as the myth says. When you get more efficient technology at comparable prices, and it is indigenous, why should it not be American made?

      It is fair then to ask why is the Jones Act protection needed? The answer is simple. It acts as an impetus to help turn the industry’s attention inwards and discover the presence of modern, efficient home-grown technology that stays unexplored due to the loud, omnipresent same-old, same-old offerings from overseas.

      The Jones Act will help advance not only the U.S. growth, but also help bring a new era in the world of wind farm development worldwide. Major developers are encouraging the new development for global application.

      As for the article, I don’t see a problem with the wording. The word “supporting” covers the building of turbines. The act of building even the foundations is in support of energy production.

      When an offshore well is being drilled, it is not yet producing when supply vessels carry consumables to the well. Those have to be Jones Act compliant too.

      1. I very much agree with you. To further the conversation, I have been working with a group who has fully approved designs for wind construction vessels built right here in America.
        Sadly we continue to meet with opposition from wind developers, politicians and others in the maritime trades.
        Our program is ready to begin just as soon as someone signs the build/contract pages.

  2. ……or you could scrap the Jones Act altogether and give them a better chance to make US maritime great again!

  3. Or you could understand the impact on commercial fisherman and how they have basically stole their fishing grounds and talk about that!

    1. In Europe, anecdotal evidence seems to show that that offshore windfarms are good for the fishery by providing additional structure. Many windfarms have developed relationships with the fisherman that allow access but reduces the risk to the vulnerable inter-array cables.

      Offshore windfarms have also proved to be very good at providing steady jobs for fishermen whose local knowledge is invaluable for operating the windfarm support crew transfer vessels. Many crews work the CTVs when not fishing which gives them a more steady income. Local, knowledgeable maritime labor is required throughout the life cycle of a windfarm, from the initial surveys through construction, operations and decommissioning.

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