offshore wind farming in the us: commercial activities, regulation & contracts
TRANSCRIPT
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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
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01THING #2
Commercial Wind Farming Activitiesin the US
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Commercial Activities
No commercial offshore wind farms are online in US waters, yet.
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Current Commercial Activities
First US project, Deepwater Wind, comes online in the 2nd quarter of
2017, off the coast of Rhode Island.
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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.”
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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.”
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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.”
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Future Commercial Activities“In May 2016, the US Department of Energy identified three innovative demonstration projects that have made significant progress toward producing power.”
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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.”
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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.”
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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.
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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.
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Commercial Activities• In 2011, Blount Boats signed
an exclusive licensing agreement with South Boats covering the US offshore wind industry.
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Commercial Activities
• Unfortunately, casualties involving WSVs have already happened.
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Commercial Activities
• On 14 Jan 2014, the ECC Topaz caught fire off the English coast.
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Commercial Activities
• Unable to stop the fire, three crew abandoned ship.
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Commercial Activities
• The MAIB concluded the fire was started by a “poorly insulated hot exhaust pipe igniting the plywood structure of the vessel.”
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Commercial Activities• Just last Sunday, an over-
achieving WSV attempted to consume a lesser vessel in Germany.
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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.”
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Commercial Activities• The Achiever is a Danish-
flagged, aluminum-hulled WSV built in 2011.
• Can carry up to 12 passengers at 22 knots.
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Commercial Activities
The sailboat was moored for refueling, and her owners, a
Polish couple, had gone to pay the harbor master for the fuel.
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Commercial Activities• The WSV struck the yacht, tore
it away from the pier and effectively swallowed it between its hulls.
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Commercial ActivitiesReportedly, the proximate cause of the accident was a technical failure making it
impossible for the WSV to slow down.
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02THING #2
US Regulation ofOffshore Wind Farming
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Regulation
US Coast Guard considers WSVs to be “offshore supply vessels” (OSVs) subject to Coast Guard
jurisdiction.
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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.
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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 ….
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Regulation“‘Energy resources’ is broad enough to include alternative energy resources developed, exploited, or produced on the
OCS…
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Regulation
“Accordingly, vessels supporting offshore alternative energy
sources can be properly classified as OSVs.”
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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.
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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).
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Regulation
The Jones Act applies beyond territorial waters by virtue of
OCSLA.
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RegulationIn 2005, Congress amended
OCSLA to give the Department of Interior authority to regulate renewable energy projects on
the OCS, like offshore windfarms.
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Regulation
But it is not clear whether Congress intended the Jones Act
to apply to such projects.
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Regulation
In 2011, clarifying legislation was passed by the House but
never acted upon by the Senate, and the issue remains unsettled.
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03THING #2
Wind Farm Contracts in the US
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Contracts
BIMCO has published the WINDTIME standard contract for
the time charter of WSVs.
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ContractsWINDTIME =
Standard Offshore Wind Farm Personnel Transfer & Support
Vessel Charter Party
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Contracts
Allocation of risk in WINDTIME is “knock-for-knock” indemnity.
(KFK)
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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.”
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Contracts
In other words, KFK =
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Contracts
My people, my property, my problem.
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Contracts
(Same goes for you)
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ContractsBIMCO’s SUPPLYTIME 2005,
upon which WINDTIME’s KFK regime was derived, is
currently undergoing an update.
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Contracts
Target completion date for the SUPPLYTIME update is May
2017.
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Contracts
Remains to be seen what contract will be used for future
WSV contracts in the US.
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ContractsCaution:
For work on the OCS of the US GoM, choice-of-law clauses are not enforceable under Grand
Isle
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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