On August 19, 2016, the fifth tower and associated nacelle were raised on the Deepwater Wind offshore wind farm, located approximately three miles off Block Island, RI. Deepwater Wind will be the first commercially producing offshore wind farm erected in US waters and, without a doubt, a huge step forward. Commercial development of offshore renewable energy sources such as wind and solar energy call for new equipment like crew-transfer vessels (CTVs), and the corresponding risks must be managed and reallocated with contracts and insurance policies. In this presentation, Mr. David Sharpe discusses US cabotage rules and regulations that apply to vessels which support offshore wind farms and contract terms that can be adapted from existing oilfield service contracts to manage risk in the new offshore energy environment.

1. Phone: (504) 568-1990 Address:
Fax: (504) 310-9195 601 Poydras Street, Suite 2775
Website: 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 School
Partner: Lugenbuhl, Wheaton, Peck, Rankin & Hubbard
OST 2016 – Southampton / Winchester
14-15 October 2016

2. THING #2
Commercial Wind
Farming Activities
in the US

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

5. Current Commercial Activities
First US project, Deepwater Wind,
comes online in the 2nd quarter of
2017, off the coast of Rhode Island.

6. 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.”

8. 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.”

9. U.S. DEPARTMENT OF THE
INTERIOR

10. 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.”

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

12. 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.”

13. 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.”

14. 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.

16. 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.

17. Commercial Activities
• In 2011, Blount Boats signed an
exclusive licensing agreement with
South Boats covering the US
offshore wind industry.

18. Commercial Activities
• Unfortunately, casualties involving
WSVs have already happened.

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

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

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

24. Commercial Activities
• Just last Sunday, an over-achieving
WSV attempted to consume a
lesser vessel in Germany.

26. 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.”

27. Commercial Activities
• The Achiever is a Danish-flagged,
aluminum-hulled WSV built in 2011.
• Can carry up to 12 passengers at
22 knots.

28. Commercial Activities
The sailboat was moored for
refueling, and her owners, a Polish
couple, had gone to pay the harbor
master for the fuel.

29. Commercial Activities
• The WSV struck the yacht, tore it
away from the pier and effectively
swallowed it between its hulls.

31. Commercial Activities
Reportedly, the proximate cause of
the accident was a technical failure
making it impossible for the WSV to
slow down.

32. THING #2
US Regulation of
Offshore Wind
Farming

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

34. 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.

35. 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 ….

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

37. Regulation
“Accordingly, vessels supporting
offshore alternative energy sources
can be properly classified as OSVs.”

38. Regulation
According 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.

39. Regulation
Uncertainty 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).

40. Regulation
The Jones Act applies beyond
territorial waters by virtue of OCSLA.

41. Regulation
In 2005, Congress amended OCSLA
to give the Department of Interior
authority to regulate renewable
energy projects on the OCS, like
offshore windfarms.

42. Regulation
But it is not clear whether Congress
intended the Jones Act to apply to
such projects.

43. Regulation
In 2011, clarifying legislation was
passed by the House but never acted
upon by the Senate, and the issue
remains unsettled.

44. THING #2
Wind Farm
Contracts in the US

45. Contracts
BIMCO has published the WINDTIME
standard contract for the time charter
of WSVs.

47. Contracts
WINDTIME =
Standard Offshore Wind Farm
Personnel Transfer & Support Vessel
Charter Party

48. Contracts
Allocation of risk in WINDTIME is
“knock-for-knock” indemnity.
(KFK)

49. Allocation of Risk
According 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.”

50. Contracts
In other words,
KFK =

51. Contracts
My people, my property,
my problem.

52. Contracts
(Same goes for you)

53. Contracts
BIMCO’s SUPPLYTIME 2005,
upon which WINDTIME’s KFK
regime was derived, is currently
undergoing an update.

54. Contracts
Target completion date for the
SUPPLYTIME update is May
2017.

55. Contracts
Remains to be seen what contract
will be used for future WSV
contracts in the US.

56. Contracts
Caution:
For work on the OCS of the US
GoM, choice-of-law clauses are
not enforceable under Grand Isle

57. Phone: (504) 568-1990 Address:
Fax: (504) 310-9195 601 Poydras Street, Suite 2775
Website: 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