Phone: (504) 568-1990 Address:Fax: (504) 310-9195 601 Poydras Street, Suite 2775Website: www.lawla.com New Orleans, LA 70130

Offshore Wind Farming in the US: Commercial Activities, Regulation & Contracts

David B. Sharpe

Adjunct Professor of Law: Tulane University Law SchoolPartner: Lugenbuhl, Wheaton, Peck, Rankin & Hubbard

OST 2016 – Southampton / Winchester 14-15 October 2016

01THING #2

Commercial Wind Farming Activitiesin the US

Commercial Activities

No commercial offshore wind farms are online in US waters, yet.

Current Commercial Activities

First US project, Deepwater Wind, comes online in the 2nd quarter of

2017, off the coast of Rhode Island.

Commercial Activities“On August 19, 2016, we watched as the 5th tower and associated

nacelle was raised on the Deepwater Offshore Wind Farm

approximately three miles offshore of Block Island, RI.”

Current Commercial Activities“This is the first Offshore Wind

farm erected in the US and, without a doubt, a huge step forward for this controversial

project and alternative energy supply.”

Future Commercial Activities“There has never been a more exciting time for offshore wind in the US.

“By the end of 2015, the US Department of the Interior awarded 11 commercial leases for offshore wind development that could support a total of 14.6 gigawatts of capacity.”

Future Commercial Activities“In May 2016, the US Department of Energy identified three innovative demonstration projects that have made significant progress toward producing power.”

Future Commercial Activities• “Three states on the US east

coast (Mass., NJ & NY) are auctioning leases on hundreds of thousands of acres for offshore wind farms, drawing interest from leading European companies.”

Future Commercial Activities• “UK-based Carbon Trust and US-based

offshore-wind supply-chain organization Business Network for Offshore Wind have entered an agreement which will see them collaborate to support the development of the offshore wind sector in North America.”

Current Commercial Activities• First US-built and US-flagged

wind-farm support vessel (WSV) or crew-transport vessel (CTV), the Atlantic Pioneer, has been delivered.

Commercial Activities• The 21-meter aluminum-hulled

Atlantic Pioneer was designed by South Boats IOW, which has designed and built over 80 WSVs for the European offshore wind sector.

Commercial Activities• In 2011, Blount Boats signed

an exclusive licensing agreement with South Boats covering the US offshore wind industry. 

Commercial Activities

• Unfortunately, casualties involving WSVs have already happened.

Commercial Activities

• On 14 Jan 2014, the ECC Topaz caught fire off the English coast.

Commercial Activities

• Unable to stop the fire, three crew abandoned ship.

Commercial Activities

• The MAIB concluded the fire was started by a “poorly insulated hot exhaust pipe igniting the plywood structure of the vessel.”

Commercial Activities• Just last Sunday, an over-

achieving WSV attempted to consume a lesser vessel in Germany.

Commercial Activities“On 9 October 2016, in the Baltic Sea harbor of Barhöft, Germany,

the Danish WSV catamaran Achiever struck a sailing yacht,

straddling it between its hulls and tearing down its rigging.” 

Commercial Activities• The Achiever is a Danish-

flagged, aluminum-hulled WSV built in 2011.

• Can carry up to 12 passengers at 22 knots. 

Commercial Activities

The sailboat was moored for refueling, and her owners, a

Polish couple, had gone to pay the harbor master for the fuel. 

Commercial Activities• The WSV struck the yacht, tore

it away from the pier and effectively swallowed it between its hulls.

Commercial ActivitiesReportedly, the proximate cause of the accident was a technical failure making it

impossible for the WSV to slow down.

02THING #2

US Regulation ofOffshore Wind Farming

Regulation

US Coast Guard considers WSVs to be “offshore supply vessels” (OSVs) subject to Coast Guard

jurisdiction.

Regulation“Offshore Supply Vessel” means a motor

vessel that regularly carries goods, supplies, individuals in addition to the

crew, or equipment in support of exploration, exploitation, or production

of offshore mineral or energy resources.

Regulation“With the expansion of alternative energy

development to the OCS [outer continental shelf], several USCG Sectors

ask whether vessels supporting construction or operation of these

alternative energy sources, such as wind farms, may be considered OSVs ….

Regulation“‘Energy resources’ is broad enough to include alternative energy resources developed, exploited, or produced on the

OCS…

Regulation

“Accordingly, vessels supporting offshore alternative energy

sources can be properly classified as OSVs.”

RegulationAccording to US maritime

cabotage laws like the Jones Act, WSVs that service windfarms within state territorial waters (generally within three miles of

shore) must be US-built and majority US-owned.

RegulationUncertainty remains about

whether US cabotage laws like the Jones Act apply beyond state

territorial waters on the OCS, by virtue of the Outer Continental

Shelf Lands Act (OCSLA).

Regulation

The Jones Act applies beyond territorial waters by virtue of

OCSLA.

RegulationIn 2005, Congress amended

OCSLA to give the Department of Interior authority to regulate renewable energy projects on

the OCS, like offshore windfarms.

Regulation

But it is not clear whether Congress intended the Jones Act

to apply to such projects.

Regulation

In 2011, clarifying legislation was passed by the House but

never acted upon by the Senate, and the issue remains unsettled.

03THING #2

Wind Farm Contracts in the US

Contracts

BIMCO has published the WINDTIME standard contract for

the time charter of WSVs.

ContractsWINDTIME =

Standard Offshore Wind Farm Personnel Transfer & Support

Vessel Charter Party

Contracts

Allocation of risk in WINDTIME is “knock-for-knock” indemnity.

(KFK)

Allocation of RiskAccording to KFK, each party

“assume[s] responsibility for injuries to its own employees and damage to its own property, without regard to who caused the injury or how such

damage occurred.”

Contracts

In other words, KFK =

Contracts

My people, my property, my problem.

Contracts

(Same goes for you)

ContractsBIMCO’s SUPPLYTIME 2005,

upon which WINDTIME’s KFK regime was derived, is

currently undergoing an update.

Contracts

Target completion date for the SUPPLYTIME update is May

2017.

Contracts

Remains to be seen what contract will be used for future

WSV contracts in the US.

ContractsCaution:

For work on the OCS of the US GoM, choice-of-law clauses are not enforceable under Grand

Isle

Phone: (504) 568-1990 Address:Fax: (504) 310-9195 601 Poydras Street, Suite 2775Website: www.lawla.com New Orleans, LA 70130

Offshore Wind Farming in the US: Commercial Activities, Regulation & Contracts

David B. Sharpe

OST 2016 – Southampton / Winchester 14-15 October 2016