In February of 2020, Great Lakes Dredge and Dock Company wrote to the U.S. Customs and Border Protection (“CBP”) requesting guidance on whether the Jones Act would work to protect their interests with regard to ongoing offshore wind construction efforts being undertaken off the coast of Martha’s Vineyard. Specifically, they wanted to know whether the Jones Act’s cabotage restrictions would apply to vessels transporting scour protection material (layers of rock placed on the seafloor around offshore wind turbines to protect them from erosion) from U.S. locations to pristine or undeveloped points on the Outer Continental Shelf (“OCS”).
CBP’s Initial Ruling and Course Correction
In response, CBP issued a ruling explaining that the Jones Act would indeed apply to any vessel carrying scour protection material from a U.S. point to a prospective wind farm on the OCS, since doing so would constitute the transportation of “merchandise” between “coastwise” points.
However, CBP reversed course on this ruling two months later through a subsequent modification to the aforementioned ruling. The modified ruling announced that the Jones Act’s cabotage restrictions would not apply until after the first delivery of scour protection material onto the seafloor. By way of explanation for this modified ruling, CBP proclaimed that a pristine/undeveloped point on the OCS is not a coastwise point until there has first been some deposit or installation of material on the seabed. Thus, the initial deposit of scour material necessary for constructing an offshore wind farm can be achieved without the use of a coastwise compliant vessel.
Great Lakes Challenges CBP’s Regulatory Shift
Understandably, this regulatory shift caused substantial consternation for decision makers within Great Lakes. Not only did this ruling expose the larger offshore wind sector to significant foreign competition, but it also came down just as Great Lakes had begun constructing the very first Jones Act compliant subsea rock installation vessel, an asset specifically intended to meet the growing demand for coastwise complaint construction vessels in this sphere. As such, Great Lakes took the position that CBP’s modified ruling unjustifiably created a regulatory loophole that substantially undermines the interests of the domestic maritime industry.
Great Lakes thereafter filed suit against the CBP in the Southern District of Texas, arguing that their modified ruling should be set aside by virtue of conflicts with the Jones Act, the Outer Continental Shelf Lands Act, and the Administrative Procedure Act. The American Petroleum Institute (“API”) subsequently intervened in that suit in order to contest Great Lake’s standing to bring this action under Article III, to which Great Lakes responded by arguing that because CBP’s ruling opened them up to competition from foreign vessels, they suffered a redressable injury which empowers them to bring suit. The District Court sided with API and dismissed Great Lakes’ action for lack of standing.
Modified CBP Ruling Remains in Effect
On February 7, 2025, the U.S. Fifth Circuit similarly declined to reach the merits of Great Lakes’ challenge by dismissing their claim and appeal for lack of standing. In so ruling, the Court explained that the mere possibility that Great Lakes may face increased competition in the future is not enough to create standing; rather, a party seeking to rely on “competitor standing” is required to show that the government action at issue has caused them to suffer an actual or imminent increase in competition. Great Lakes could not make this showing because their “injury” was merely hypothetical; they did not presently have a vessel capable of handling similar projects, nor could they point to any prospective projects that called for scour protection to be sourced from U.S. points. Therefore, they lacked standing to contest CBP’s ruling.
The Fifth Circuit’s refusal to consider the merits of Great Lakes challenge to the modified ruling means that it remains in force, for the time being. As such, voyages originating from a point within the United States carrying merchandise to pristine locations on the Outer Continental Shelf may permissibly be undertaken by foreign-flagged, foreign built, and/or foreign-crewed vessels. However, once an initial deposit/installation has been made onto the seafloor, any further voyages to that location from the United States will be subject to the Jones Act’s cabotage requirements (so long as that initial deposit or installation was made for the purpose of exploring for, developing, or producing resources, including non-mineral resources such as wind energy).
Matthew Gaar is a member of Kean Miller’s Offshore Energy & Marine group and practices in the firm’s New Orleans office. His Certificate of Concentration in Maritime Law from Tulane Law School uniquely qualifies Matthew to represent clients in all areas of admiralty law, including Jones Act regulatory compliance, maritime tort litigation, and contractual maritime litigation.