Boffo Offshore Wind Sale Moves Biden Closer to Goal—But Tough Currents Remain

Joan M. Bondareff

This article summarizes the latest developments in the U.S. offshore wind market and then reviews some of the troubling waters ahead.

New Developments

On February 25, 2022, the Bureau of Ocean Energy Management (“BOEM”) announced the results of its mega offshore wind sale of six leases totaling over 488,000 acres in the New York Bight—the first sale in the Biden-Harris administration, which is committed to 30GW of offshore wind by 2030. The results from the auction lasting over three days were over four billion dollars. The provisional winners are:

      1. OCS-A-0537 – Ocean Winds East, LLC – $765M;
      2. OCS-A-0538 – Attentive Energy, LLC – $795M;
      3. OCS-A-0539 – Bight Wind Holdings, LLC – $1.1B;
      4. OCS-A-0541 – Atlantic Shores Offshore Wind Bight, LLC – $780M;
      5. OCS-A-0542 – Invenergy Wind Offshore LLC – $645M; and
      6. OCS-A-0544 – Mid-Atlantic Offshore Wind LLC – $285M.

This sale represents the very serious interest that developers—and states—are taking in offshore wind, gambling that the permitting process will go smoothly.

Continue reading “Boffo Offshore Wind Sale Moves Biden Closer to Goal—But Tough Currents Remain”

Can the Biden Administration Meet Its Offshore Wind Goals?

Joan M. Bondareff and Dana S. Merkel


UPDATE: In the first week of his presidency, President Biden, by Executive Order, set a goal of doubling offshore wind by 2030—an ambitious goal to help put the United States on a path to meet its commitments under the Paris Climate Accords, which President Biden rejoined. To implement the general goal, the three lead departments—Interior (“DOI”), Energy (“DOE”), and Commerce (“DOC”)—subsequently committed to working towards a specific 30 gigawatts (GW) goal by 2030 while protecting biodiversity, promoting ocean co-use, and creating tens of thousands of jobs. (See FACT SHEET: Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs.) This article describes the progress made thus far in meeting this goal and discusses any remaining impediments.

Current Progress on Offshore Wind in the United States

To date, the Biden administration, along with previous administrations, have:

      • Approved 18 offshore wind leases in federal waters;
      • Approved the largest offshore wind farm to be constructed in federal waters (e., the Vineyard Wind project off the coast of Massachusetts);
      • Identified five new Wind Energy Areas (“WEAs”) for potential leasing in the area of the New York Bight;
      • Began the process of identifying additional WEAs in the Gulf of Mexico and off California; and
      • Issued several notices of intent to begin the environmental review process under the National Environmental Policy Act (“NEPA”) for additional wind farms off New York, North Carolina, and South Carolina.

These steps alone have moved the administration closer to meeting or even exceeding its 30 GW goal with a total of 35,000 megawatts (MW) plus in the pipeline, according to a recent definitive report from the DOE’s National Renewable Energy Laboratory. (See Offshore Wind Market Report: 2021 Edition Released.)

Continue reading “Can the Biden Administration Meet Its Offshore Wind Goals?”

Considerations on the Use of Offshore Wind Vessels for U.S. Operations

Jonathan K. Waldron and Dana S. Merkel

As the offshore wind industry is growing in the United States, there is an influx of vessels that are considering operating on the U.S. outer continental shelf (“OCS”), both foreign- and U.S.-flag Jones Act-qualified vessels. An important consideration in planning for operations on the U.S. OCS is how the vessel must be crewed for such operations, which is often overlooked or misunderstood. 

Foreign-Flag Vessels

The U.S. Outer Continental Shelf Lands Act (“OCSLA”) generally requires all vessels that are engaged in “OCS activities” to crew the vessels with U.S. citizens. The U.S. Coast Guard defines “OCS Activity” as “any offshore activity associated with exploration for, or development or production of, the minerals of the Outer Continental Shelf.” There is an exception to this rule that allows foreign-flag vessels that are over 50-percent foreign owned or controlled by foreign citizens to engage in U.S. OCS activities using foreign-citizen crewmembers. To use this exception, a formal application to the U.S. Coast Guard is required, which if validated by the U.S. Coast Guard, results in the issuance of a letter of non-applicability stating that the U.S. manning requirements do not apply to the vessel.

With respect to offshore wind farm work, the U.S. Coast Guard has taken the position that such work is not an OCS activity subject to this OCSLA requirement and the U.S. crew requirement does not apply. However, OCSLA was amended on January 1, 2021, to expressly clarify that U.S. laws, including the Jones Act, apply to offshore wind farm work in the same manner as they do to oil and gas work. The U.S. Coast Guard is now reviewing this change and, ultimately, we expect the Coast Guard to change its position on OCS activities and begin applying the U.S. citizen crew requirements to vessels engaged in offshore wind farm work. 

Continue reading “Considerations on the Use of Offshore Wind Vessels for U.S. Operations”

Favorable Offshore Winds Blowing from the Biden Administration

Joan M. Bondareff 

As part of his Executive Order on Tackling the Climate Crisis at Home and Abroad (EO 14008)—issued on the first day he took office—President Biden made significant commitments to renewable energy. These commitments include collaborating with multiple federal agencies in the United States and promoting critical industry support for the acquisition of electric vehicles for the federal fleet, as well as rejoining the Paris Climate Agreement, the landmark international agreement signed in 2015 to limit global warming. The goal is to have net-zero greenhouse gas (“GHG”) emissions by 2050.

Former Secretary of State John Kerry was appointed as the international climate envoy, and former Environmental Protection Agency (“EPA”) Administrator Gina McCarthy was designated as the domestic climate czar. They have their work cut out for them, as the goal of simply meeting the present Paris Climate Agreement goals may not reduce GHG emissions to the required levels.

Offshore wind will be a critical part of reaching the new domestic and international climate goals. President Biden recognizes this fact in the EO by promising to double offshore wind by 2030. This means, according to the new Director of the Bureau of Ocean Energy Management (“BOEM”), “30 GW of offshore wind by 2030”—a catchy and ambitious goal. Developers also recognize the connection by touting reductions in GHG emissions with each project. But playing the numbers game for this goal is too simplistic. For the United States to realistically double the amount of offshore wind, the states, private sector, and federal government must work together to take the necessary steps to meet and exceed this extraordinary commitment.

A first step was taken with the issuance of the final Environmental Impact Statement (“EIS”) for the Vineyard Wind Project, discussed below. (See Vineyard Wind 1 Offshore Wind Energy Project Final EIS.)

The next step was taken by the Cabinet officials of the departments of Interior (“DOI”), Energy (“DOE”), Commerce (“DOC”), and Transportation (“DOT”) on March 29, 2021, when they made the following commitments:

      • DOI will establish a new priority wind energy area in the New York Bight between Long Island and New Jersey;
      • DOI will issue new lease sales and complete review of at least 16 construction and operation plans (“COPs”) by 2025;
      • DOI/BOEM will issue a notice of intent to prepare an EIS for ocean wind off the coast of New Jersey;
      • DOT will notice $230 million in funding for port infrastructure, with a focus on offshore wind ports;
      • DOE will make available three billion dollars in loan guarantees under the title XVII Innovative Energy Loan Guarantee Program;
      • DOC/National Oceanic and Atmospheric Administration (“NOAA”) will enter into a memorandum of understanding (commonly known as an “MOU”) with Ørsted to share physical and biological data in leased areas; and
      • $20 million will be made available under the National Offshore Wind Research and Development Consortium funded by DOE and the New York State Energy Research and Development Authority.

These steps are taken with a goal of creating 44, 000 new jobs in the offshore wind industry by 2030. (See Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs.)

Continue reading “Favorable Offshore Winds Blowing from the Biden Administration”

Mainbrace Live: U.S. Offshore Wind Industry Update

Blank Rome’s internationally recognized Maritime & International Trade practice group presents a new series of informative webinars covering hot topics in the shipping industry and key insights into 2021 and beyond. Sessions will cover:

    • Sanctions and international trade
    • Offshore wind developments
    • Shipping litigation
    • Maritime regulation
    • Ship finance
    • And more!

For the second webinar in our Mainbrace Live series, Blank Rome LLP Maritime attorneys Thomas H. Belknap, Jr.Joan M. BondareffJonathan K. WaldronDouglas J. Shoemaker, and Dana S. Merkel presented “U.S. Offshore Wind Industry Update” on Tuesday, April 27, 2021.

Tom, Joan, Jon, Douglas, and Dana discussed:

    • U.S. offshore wind development projects and infrastructure
    • Biden Administration’s commitments to expand renewable energy
    • The Jones Act’s impacts on existing and planned offshore wind installation and servicing projects
    • Pitfalls and opportunities for contractors and service providers looking to enter the industry

MODERATOR

PRESENTERS

You can read coverage of this webinar at TradeWinds here.

To watch a recording of this webinar, please go to the webinar on-demand registration page here.

Mainbrace Live: Prepare for the Biden Administration’s Maritime & Foreign Policy

Blank Rome’s internationally recognized Maritime & International Trade practice group presents a new series of informative webinars covering hot topics in the shipping industry and key insights into 2021 and beyond. Sessions will cover:

    • Sanctions and international trade
    • Offshore wind developments
    • Shipping litigation
    • Maritime regulation
    • Ship finance
    • And more! 

To open the series, on April 13, 2021, Blank Rome LLP Maritime Partners Matthew J. Thomas and Kierstan L. Carlson, along with Blank Rome Government Relations LLC Senior Advisor David S. Jansen, presented “Mainbrace Live: Prepare for the Biden Administration’s Maritime & Foreign Policy.”

Matt, Kierstan, and David discussed the outlook for maritime policymaking under the new Administration and its impacts on the global shipping industry, including:

    • Maritime outlook for the new Congress and Administration
    • International trade sanctions and foreign policy 
    • Enforcement trends

MODERATOR

PRESENTERS

To watch a recording of this webinar, please go to the webinar on-demand registration page here.

CBP Modifies First Offshore Wind Ruling

Jonathan K. Waldron, Matthew J. Thomas, Jeanne M. Grasso, and Stefanos N. Roulakis

Stakeholders in offshore wind construction projects, including vessel owners and operators, project developers, and equipment manufacturers, should ensure that their plans for offshore wind development take into consideration the implications of U.S. Customs and Border Protection’s (“CBP”) most recent Jones Act ruling. While a previous ruling issued by CBP in January 2021 changed course by ruling that “pristine sites” were subject to the Coastwise Merchandise Statute (commonly referred to as the Jones Act), CBP has modified this ruling generally in line with past precedent. Nonetheless, CBP’s modification creates some changes for Jones Act compliance in the offshore wind sector.

On January 27, 2021, CBP ignited controversy in its first Jones Act ruling on offshore wind since the passage of the 2021 National Defense Authorization Act (“NDAA”). The NDAA, through an amendment to the Outer Continental Shelf Lands Act (“OCSLA”), clarified that the Jones Act applied to renewable energy projects on the U.S. Outer Continental Shelf (“OCS”), and stakeholders expected that the same cabotage rules which have applied to mineral energy development projects would equally apply to offshore wind. Nonetheless, in HQ H309186, CBP deviated from decades of precedent by ruling that the lading of “scour protection” materials by a non-coastwise qualified vessel at a U.S. coastwise point (i.e., a port or place in the United States), and unlading of these materials at a pristine site on the OCS, would violate the Jones Act. Reversing course after comments from industry stakeholders, CBP issued a modification, which held that the “Jones Act does not apply to activity occurring at the pristine seabed on the OCS, which has been CBP’s longstanding position on the issue.” HQ H317289 (March 25, 2021). While CBP’s reversal appears to be consistent with “longstanding” precedent on pristine sites, the modification itself raises questions about the applicability of the Jones Act in certain contexts as discussed further below.

BACKGROUND

Decades after extending federal law (including the Jones Act) to the OCS for mineral-related energy development projects, Congress enacted the 2021 NDAA, which included a provision confirming that the Jones Act applies to all offshore energy development on the Outer Continental Shelf, including wind energy. While most offshore wind projects were planned with Jones Act compliance in mind, this has generally been a welcome development for all stakeholders, with the hope that it would bring needed clarity and certainty to renewable energy development projects offshore.

However, CBP’s first shot out of the gate in January missed the mark, although the agency should be lauded for issuing a correction in short order last month. In the initial ruling, Great Lakes Dredge and Dock (“Great Lakes”) proposed to transport and unlade “scour protection” materials (i.e., rocks) to protect wind turbine generator (“WTG”) foundations in conjunction with the construction of the Vineyard Wind Project located on the OCS off the southeast shore of Martha’s Vineyard. Great Lakes proposed unlading the materials at the WTG sites on the OCS in layers and at different phases of the WTG installation process using both coastwise and non-coastwise vessels under various scenarios.

Please click here for the full client alert.

New Legislation to Apply the Jones Act to Offshore Renewables

Jonathan K. WaldronJoan M. Bondareff, and Stefanos N. Roulakis







Stakeholders in offshore wind construction projects, including vessel owners and operators, project developers, and equipment manufacturers, should ensure that their plans for offshore wind development comply with the Jones Act. While most stakeholders already assume in their planning that the Jones Act applies, new pending legislation, if enacted, would confirm that the Jones Act does indeed apply to offshore wind construction.

NEW DEVELOPMENTS

The House of Representatives passed legislation, H.R. 4447, the Expanding Access to Sustainable Energy Act of 2019, on September 24, 2020, which included a provision from Representatives Garamendi and Lowenthal (“Amendment 33”) to amend the Outer Continental Shelf Lands Act (“OCSLA”) that would confirm the Jones Act applies to all offshore energy development on the Outer Continental Shelf (“OCS”), including wind energy. While most projects were planned with Jones Act compliance in mind, this is a welcome development for all stakeholders, as it will bring needed clarity to renewable energy development offshore.

BACKGROUND

The Coastwise Merchandise Statute, commonly known as the Jones Act, has evolved over time. The U.S. cabotage laws date back to the founding of the Republic and were enshrined in their current form in the Merchant Marine Act of 1920. These were originally laws that dealt with transportation issues for domestic voyages. However, as time progressed and production of marine resources became feasible, the U.S. Congress passed OCSLA, which extended federal law to installations on the OCS.

Please click here for the full client alert.

Customs and Border Protection Revokes New Ruling Regarding Offshore Wind

Jonathan K. Waldron and Stefanos N. Roulakis

Stakeholders in offshore wind, particularly vessel operators and project managers, should ignore a recent U.S. Customs and Border Protection (“CBP”) ruling on offshore wind. While there had been buzz about this ruling, CBP has revoked the ruling based on a misunderstanding of the facts in question in the ruling request. As such, there are no recent rulings related to offshore wind, and stakeholders should continue to examine their Jones Act compliance plans with experienced counsel and seek rulings as needed.

NEW DEVELOPMENT

A recent CBP ruling, HQ H309672 (July 15, 2020) (the “Ruling”), drew the attention of many in the industry since the last ruling relating to offshore wind was issued approximately nine years ago for the Deepwater Wind project in 2011. The Ruling related to wind farm activities occurring in the territorial sea off the coasts of Rhode Island and Massachusetts. CBP has since published a revocation notice, HQ H312773 (August 3, 2020) (the “Revocation”), which was published on the CBP website on August 12, 2020, retracting the Ruling. CBP’s stated reason for the revocation was the lack of clarity on whether the “activities would occur in the territorial sea or on the Outer Continental Shelf (“OCS”)” and that it would be best to revoke the Ruling “until the coordinates of the installation can be established.”

BACKGROUND

In 2011, CBP issued Blank Rome a ruling on behalf of the Deepwater Wind project that the use of a crane that is aboard a non-coastwise-qualified vessel to load and unload wind turbines in the territorial seas is not prohibited by the Jones Act. No rulings have been issued on an offshore wind project since the 2011 ruling. Since that time, we understand CBP has declined to rule on requests to issue a ruling on the applicability of the Jones Act to offshore wind activities occurring on the OCS and whether a wind farm foundation or other devices attached to the seabed for wind farm purposes would constitute a coastwise point under the Jones Act.

Please click here for the full client alert.

Offshore Wind Will Need Support Vessels – What Form Are You Going to Use?

Keith B. Letourneau and Douglas J. Shoemaker

As the United States develops offshore wind capacity, the need for vessels to support the industry for installation and maintenance will rapidly expand. While it may seem perfectly logical for the industry to adopt the BIMCO WINDTIME form, the SUPPLYTIME 2005 form is more common and generally known to the U.S. service and supply-vessel industry. In any case, we wholly expect that there will be a good deal of modifications to any form or perhaps use of bespoke agreements as the work comes online. We review here the various forms available and look at particular terms and issues we expect to be the subject of specific negotiation and modification.

SUPPLYTIME: Then and Now

The SUPPLYTIME form was first developed in 1975 to meet the rising demand for specialty vessels to support offshore oil and gas exploration and production. This form and its progeny became the leading time-charter terms for offshore-support vessels, and its use has spread beyond the oil and gas industry to include cable and pipe laying, seismic work, anchor handling, surveying, ROV and dive support, and other offshore and near-shore construction work. While there is a 2017 version of the SUPPLYTIME, it hasn’t been widely adopted in the United States, particularly since it came out after the substantial decrease in offshore oil and gas activity. (Interestingly, the drafting committee that developed the WINDTIME form differed from the SUPPLYTIME 2017 committee, and the difference is noticeable.) As for the U.S. offshore marine service and support industry, it appears that the SUPPLYTIME 2005 version remains prevalent at this time. (Obviously, any SUPPLYTIME form used with respect to the offshore wind industry would need to be logically amended to change oil and gas industry references to the appropriate wind-industry terms. For example, the term “offshore unit” in the SUPPLYTIME 2017 form is defined as “any vessel, offshore installation, structure and/or mobile unit used in offshore exploration, construction, pipe-laying or repair, exploitation or production.” There are also repeated reference to the defined term “well”.)

At the heart of the SUPPLYTIME form since the 1989 version came into play is a “knock-for-knock” indemnity provision, allocating liability regardless of fault with each party indemnifying the other for the injury or death of its personnel and for the loss of or damage to its property—without recourse. Initially, this was a difficult concept to accept in the United States—the idea that a party must indemnify another for a loss even though the loss was caused solely by the fault of the other party was a hard pill to swallow. However, in practice, the industry found it far more efficient for the parties to provide insurance for their own people and their own property and simply name the other party as an additional assured, rather than litigate every loss with each party claiming the other was at least partially to blame. The knock-for-knock indemnity concept is particularly efficient where a project involves a number of offshore contractors and all the parties agree to the same allocation of liability.

SUPPLYTIME vs. WINDTIME

The WINDTIME form, introduced in 2013, was primarily intended for offshore wind farm personnel transfer and support vessel services and was largely adopted from the SUPPPLYTIME 2005. Key differences from the SUPPLYTIME 2005 include:

  • the WINDTIME form expressly encompasses an indemnitee’s gross negligence, as well as simple negligence in the knock-for-knock indemnity obligations, but excludes intentional or willful misconduct, while the SUPPLTIME 2005 form only expressly addresses the indemnitee’s negligence;
  • the SUPPLYTIME 2005 form is more owner-friendly concerning cancellation with no provision for the recovery of damages; and
  • the WINDTIME form includes a broader waiver of consequential damages encompassing subcontractors.

It has been reported that the committee drafting the WINDTIME form initially considered, but quickly abandoned, the idea of including contract terms appropriate for installation vessels. We understand that industry practices for installation vessels were considered too varied and complex to reach consensus. Thus, the better option for installation vessels may be a SUPPLYTIME 2005 particularly modified to allocate liabilities and responsibilities, or a bespoke contract. Continue Reading

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