Special report: Regulatory roadmap can facilitate approval process for offshore wind projects

Article by Sarah Dicharry and Meghan Smith, Jones Walker LLP 

The Biden administration is making a significant push for the development of offshore wind energy, an effort that in many ways bolsters and complements what has been happening at the state level, particularly in the north-eastern United States. The goal here is to describe the regulatory framework governing offshore federal wind leases, and provide some insight to the inter-agency and inter-jurisdictional review process involved in bringing an offshore wind lease to operation.

With the Energy Policy Act of 2005 (Pub. L. 109-58) (the EPAct), Congress amended the Outer Continental Shelf Lands Act, 43 U.S.C. §§ 1337 et seq., to authorise DOI’s issuance of regulations governing development of energy from offshore sources other than oil and gas. See EPAct, Sec. 388. DOI, in turn, delegated that authority to the BOEM. See 30 C.F.R. § 585.100. In 2009, BOEM published regulations governing leasing of the Outer Continental Shelf to “[p]roduce or support production, transportation, or transmission of energy from sources other than oil and gas[.]” 30 C.F.R. § 585.100(a). BOEM’s regulations establish a four-phase process for the issuance of renewable energy leases, including wind leases; each phase is addressed below.

Phase 1: Planning and Analysis. During this Phase, BOEM consults interested parties to identify offshore areas that may be suitable for wind energy leasing and conducts preliminary environmental analyses under the National Environmental Policy Act (NEPA), which requires federal agencies to conduct an environmental impact analysis before undertaking a “major federal action[] significantly affecting the quality of the human environment.” 42 U.S.C. § 4332(C).

Phase 2: Leasing. The Leasing Phase of the process results in the issuance of wind leases, but there is considerable legwork that must be performed ahead of what may seem like a straightforward process. Under the regulations, the competitive leasing process, which is prioritised, involves four steps. See 30 C.F.R. § 585.211.

First, BOEM publishes a Call for Information and Nominations in the Federal Register to solicit information about the particular areas which should be considered for leasing. 30 C.F.R. § 585.211(a). In response, potential lessees submit technical information about the area covered by the Call for Information and Nominations, such as the data regarding wind energy availability and environmental conditions in the target area, and specific proposals, such as the location of interest for a potential lease. 30 C.F.R. § 585.213. Based on the information collected through this process, BOEM identifies a proposed lease area and develops an approach for conducting environmental analyses (e.g., under NEPA, the Coastal Zone Management Act (CZMA), the Endangered Species Act). 30 C.F.R. § 585.214.

Second, BOEM identifies specified areas for additional environmental analyses. 30 C.F.R. § 585.211(b). This step involves engagement with several interested parties, including other federal agencies, states, local governments, Indian Tribes, etc. For example, the Department of Commerce (DOC), through regulations administered by the National Oceanographic and Atmospheric Administration (NOAA) regulates the federal consistency process under the CZMA (15 C.F.R. part 930). The CZMA (codified at 16 U.S.C. §§ 1451-1464) was enacted in 1972 and governs permitting activity among federal and state agencies. For federal lease sales, the federal government makes the determination whether an offshore wind lease sale will have “coastal effects” which require consultation with the nearby states on environmental review, but a state can challenge the consistency determination in court if it disagrees.

Third, BOEM issues a Proposed Sale Notice in the Federal Register, opening up a 60-day period for comments on the proposed sale. 30 C.F.R. § 585.211(c). In the Proposed Sale Notice, BOEM will solicit comments regarding the proposed lease terms (e.g., the area available for leasing, the term of the lease, lease-specific stipulations) and provide information about the proposed lease auction (e.g., bidding procedures, deposit amount).

Fourth, BOEM issues a Final Sale Notice in the Federal Register, at least 30 days before the date of the scheduled lease sale. 30 C.F.R. § 585.211(d). The formalities of the bidding process depend upon the type of bidding that BOEM chooses to use in a given lease sale (e.g., sealed bidding, ascending bidding, two-stage bidding). See 30 C.F.R. §§ 585.221-558.222. If BOEM accepts a bid, then it will provide notice and lease copies to the entity that submitted the bid, which must execute the lease, satisfy financial assurance requirements, and pay any balance of the bonus bid within 10 business days. 30 C.F.R. § 585.224. Leases are effective “as of the first day of the month following the date a lease is signed by the lessor.” 30 C.F.R. § 585.237(a).

Phase 3: Site Assessment. Following issuance of a commercial wind lease, the lessee has one year (the “preliminary term”) to prepare and submit a Site Assessment Plan (SAP) setting forth the lessee’s proposal to construct a meteorological tower or buoys to evaluate the wind energy potential of the leased area. 30 C.F.R. § 585.235(a)(1). If BOEM timely receives an adequate SAP, then the preliminary term is extended for the period of time “necessary for [BOEM] to conduct technical and environmental reviews[.]” Id. If BOEM approves the SAP, then the lessee may undertake various site assessment activities in the leased area (e.g., install meteorological towers or buoys; conduct site characterisation analyses).

Generally, lessees have five years after BOEM approves an SAP to conduct the approved site assessment activities and to submit a Construction and Operations Plan (COP) describing the lessee’s plans for construction and operations. 30 C.F.R. § 585.235(a)(2). If BOEM timely receives a satisfactory COP, then the five-year site assessment term “will be automatically extended for the period of time necessary for [BOEM] to conduct technical and environmental reviews of the COP.” Id. The submission of a COP triggers BOEM’s initiation of a project-specific NEPA analysis, after which BOEM may approve, approve with modifications, or disapprove of the COP. (The time frames for submission of an SAP and COP may be extended.)

Submission of the SAP and COP also triggers additional CZMA review by coastal states, with slightly different burdens and appellate rights of the states and permit applicants than those available to states and the federal government at the pre-lease sale stage. For example, if a permit applicant is unsatisfied with a state’s consistency determination, it must appeal the decision to the Secretary of Commerce prior to filing suit.

Analysis of a COP also requires input from numerous other agencies, such as the US Army Corps of Engineers (USACE) (e.g., if dredging is required), the US Fish and Wildlife Service (USFWS) (e.g., if there are potential impacts to endangered species), the US Coast Guard (USCG) and Customs and Border Protection (CBP) (e.g., maritime security of vessels, offshore platforms), and the National Park Service (NPS) (e.g., for proposed operations that impact abandoned shipwrecks or offshore areas designated as national monuments), among others.

Phase 4: Construction and Operations. If BOEM approves the COP, then the lessee of a commercial lease “will have an operations term of 25 years [beginning on the day after BOEM approves the COP], unless a longer term is negotiated.” 30 C.F.R. § 585.235(a)(3). The operations term may be extended through a lease renewal or a suspension of the operations term. 30 C.F.R. § 585.235(a)(4). Everyday operations during the life of the project are subject to additional agency oversight. For example, the National Marine Fisheries Service (NMFS) (housed within NOAA), the Occupational Health and Safety Administration (OSHA), and the Marine Mammal Commission (MMC), among others, are each involved in various aspects of operations. A recent Memorandum of Agreement between BOEM and the Bureau of Safety and Environmental Enforcement (BSEE) recognised that while BOEM is the primary subagency tasked with regulation of renewable energy development, it “would benefit from consultation and coordination with” BSEE regarding compliance and enforcement functions (subject matter traditionally within BSEE’s ambit of responsibility).

Thus, under the MOA, BSEE will assist BOEM with various “functional areas” relating to safety and environmental compliance, including, for instance, the development and oversight of Safety Management Systems, structural assessments, incident reporting and related investigations, review of proposed plans for decommissioning and site clearance, etc. BSEE will likely perform important oversight functions as operations continue over the life of the lease and through decommissioning.

Navigating the regulatory maze

The planning of an offshore wind project could touch upon areas of the law and regulations that are administered by at least 13 different agencies including the usual suspects, such as BOEM, BSEE, EPA, USCG, and USACE, but also less obvious agencies like DOC, NOAA, NMFS, NPS, MMC, OSHA, and CBP. Even the FCC may have a part to play if a lease area is sited near submarine cables. And this list does not include various state or tribal agencies delegated certain authorities under the CZMA. Navigating this alphabet soup of agency oversight is a time-intensive process, but the Vineyard Wind LLC (Vineyard Wind) project, the first offshore commercial-scale wind project to be approved in the United States, provides valuable insight into both the leasing process and the inter-agency involvement in that process.

Through the competitive leasing process, BOEM issued a commercial lease to Vineyard Wind in March 2015; Vineyard Wind initially submitted its SAP in March 2017 (and subsequently revised that submission); and Vineyard Wind initially submitted its COP in December 2017 (which submission was also revised over time). After several revisions and extensive environmental analyses, BOEM issued a Final Environmental Impact Statement in response to Vineyard Wind’s (updated) COP in March 2021, and BOEM finally issued a Record of Decision (ROD) approving Vineyard Wind’s COP on the 10^th May 2021. A review of that ROD reflects extensive involvement by several of the agencies mentioned above as well as Tribal and state agencies. Indeed, the Introduction to the ROD notes that the USACE, NMFS, BSEE, USCG, USEPA (US Environmental Protection Agency); the Narragansett Indian Tribe; the Massachusetts Office of Coastal Zone Management; the Rhode Island Coastal Resource Management Council; and the Rhode Island Department of Environmental Management were all “cooperating” agencies throughout the approval process. See Vineyard Wind, Record of Decision (10^th May 2021), available at https://www.boem.gov/vineyard-wind

The Vineyard Wind project illustrates how long it can take to reach approval of a proposed offshore wind project before operations can even begin. For this project, the approval process suffered many delays due to the novelty of the proposal for regulators. For instance, BOEM delayed its publication of a final EIS to undertake additional, far-reaching environmental analyses. The commercial fishing and shipping industries proved to be powerful voices raising concerns, and various studies continue to show that certain offshore wind sites would have major impacts to both the fishing and shipping industries.

Since the regulators have now gone through the full process for a commercial-scale wind lease, and since they engaged in far-reaching studies and analyses during the approval process for Vineyard Wind, approvals for other proposed projects should progress more efficiently. That said, a new lawsuit has been filed in the US District Court for Massachusetts challenging the government approval of the Vineyard Wind project. This shows that project developers should be prepared to litigate challenges by unhappy stakeholders (in this case, a solar company which would be economically hurt by the development of offshore wind). See Allco Renewable Energy Limited, et al. v. Haaland, et al, No. 1:21-cv-11171, D. Mass.

The authors

Sarah Dicharry is a member of the Jones Walker LLP Energy and Natural Resources Industry Team. In that role, she advises E&P companies regarding their rights and obligations under the numerous statutes governing federal lessees, including the Federal Oil and Gas Royalty Management Act, the Royalty Simplification and Fairness Act, the Outer Continental Shelf Lands Act, the Mineral Leasing Act, the False Claims Act, the Administrative Procedure Act, and related regulations.

Meghan Smith is the co-leader of Jones Walker LLP’s Environmental Litigation Practice Group and a member of the Energy, Environmental & Natural Resources and Construction Industry Teams. She focuses her practice on environmental/toxic tort, construction and energy litigation and arbitration, as well as regulatory compliance.

Source: Offshore Magazine