Offshore Wind Development White Paper
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12-14 July 2010 Selected Materials Regarding Offshore Wind Development Karen A. Winters Rebekah M. VanDrake Squire, Sanders & Dempsey L.L.P. Offshore Wind Seminar September 16, 2010 I. INTRODUCTION A US Department of Energy (DOE) report indicates that the United States possesses enough wind to meet at least 20 percent of the country’s electricity needs.1 A number of onshore wind energy projects have been permitted and constructed all over the United States; however, an offshore wind project has yet to be constructed and operated in the US waters. As electricity demands increase and state and federal governments emphasize the importance of clean, renewable energy sources, offshore wind development has been gaining speed. Most recently, the federal Bureau of Ocean Energy Management, Regulation and Enforcement, the lead agency charged with evaluating and permitting offshore wind energy projects in federal waters, approved the country’s first offshore wind project – the Cape Wind Energy Project. The Project received approval after years of opposition from local residents in Massachusetts’ Cape Cod. Currently, a number of offshore wind energy developers are working with the Atlantic coast’s state and federal agencies to begin developing and permitting additional offshore wind farms. The United States also has rich wind resources in its Great Lakes Region. While there are not yet any constructed and operational Great Lakes offshore wind projects, a number of Great Lakes states are working with developers to construct the first offshore wind facility in the country’s Great Lakes. Most recently, the Lake Erie Energy Development Corporation (LEEDCO), developed as an off-shoot of Ohio’s Cuyahoga County Great Lakes Energy Development Task Force, sent bid packages to major developers for a 15-20 MW pilot project to consist of four to eight turbines. On May 14, 2010 LEEDCO entered into a Memorandum of Understanding with General Electric Company, a major Ohio employer and an industry leader in wind turbine technology. This demonstration-size wind farm will provide valuable information as to the cost of construction and operation of a large-size wind farm as well as the electricity yield that such a wind farm is likely to produce. In sum, offshore wind energy development is at the forefront of renewable energy development. The United States has a number of regions rich in wind resources. In siting offshore wind projects, developers must consider the permitting, regulatory, technical, environmental, economic, and community aspects of development. The following provides an overview of select offshore wind materials for both the East Coast and the Great Lakes, including regulatory materials, information regarding current wind farm applicants, and potential offshore wind energy developments. II. EAST COAST A. FEDERAL 1 See U.S. DOE, 20% Wind Energy by 2030: Increasing Wind Energy’s Contributions to U.S. Electricity Supply (May 2008). 12-14 July 2010 1. ENERGY POLICY ACT The Energy Policy Act (EPAct), signed by President Bush on August 8, 2005, amended the Outer Continental Shelf Lands Act (OCSLA) to grant the Secretary of the Department of the Interior (DOI) authority to regulate offshore renewable energy including offshore wind. On March 20, 2006 the Secretary delegated this authority to the Minerals Management Service (MMS). MMS, now the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) 2 , has the authority to issue leases, easements, or rights-of-way for previously unauthorized activities that: (1) produce or support production, transportation, or transmission of energy from sources other than oil and gas; or (2) use, for energy- related or other authorized marine-related purposes, facilities currently or previously used for activities authorized under the OCSLA. 2. MMS (NOW BOEMRE) AS LEAD AGENCY Pursuant to its delegated authority, on April 29, 2009, MMS published its final regulations for outer continental shelf (OCS) renewable energy. See Final Rule, Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf, 74 Fed. Reg. 19637 (April 29, 2009) (codified at 30 CFR Parts 250, 285, and 290). It adopted a “cradle-to-grave” approach, including: (1) coordination through task forces established with state, local and tribal governments; (2) lease and grant issuance, including competitive and non-competitive leasing as well as commercial and limited leases; (3) plans and operations oversight, including site assessment, construction and operations, and general activities, plan approval, and environmental and safety monitoring and inspections; (4) payments to cover bonding activities; and (5) decommissioning at the end of a project’s life span. MMS’ regulations also include mandates related to safety, protection of the environment, coordination with affected state and local governments and federal agencies, fair return for use of OCS land, and equitable sharing of revenue with States. See also U.S. Department of the Interior, Guidelines for the Minerals Management Service Renewable Framework (July 2009). Although BOEMRE has been delegated lead authority for the regulation of offshore wind energy, it must coordinate with several other federal and state agencies during the development, permitting, and operational oversight of offshore wind energy projects. An overview of the federal agencies potentially involved as well as the basis for that involvement is attached. 3. COORDINATION WITH OTHER FEDERAL AGENCIES (A) DOI/FERC MOU On April 9, 2009 MMS and the Federal Energy Regulatory Commission (FERC) executed a Memorandum of Understanding (MOU), clarifying the jurisdiction of each regarding renewable energy projects on the OCS. The purpose of this memorandum was to develop a cohesive, streamlined process that would help accelerate the development of wind, solar and hydrokinetic energy projects. Until March 2009, regulatory uncertainty existed regarding which federal agencies had authority to regulate energy development on the OCS. Both MMS and FERC claimed this authority based on differing interpretations of Part I of the Federal Power Act (FPA) and Section 8(p) of OCSLA, as amended by EPAct. On March 17, 2009, however, the Secretary of the Department of the Interior and the Acting Chairman of FERC 2 See http://www.boemre.gov/. 12-14 July 2010 issued a joint statement on the development of renewable energy resources on the OCS. In this joint statement, the Secretary and the Acting Commissioner requested that MMS and FERC staff prepare a MOU to describe the process by which authorizations related to renewable energy resources in offshore waters will be developed. Specifically, the memorandum recognizes that (1) MMS has exclusive jurisdiction with regard to the production, transportation, or transmission of energy from nonhydrokinetic alternative energy projects on the OCS including renewable energy sources such as wind and solar; (2) MMS has exclusive jurisdiction to issue leases, easements and rights-of-way regarding OCS lands for hydrokinetic projects; and (3) FERC has exclusive jurisdiction to issue licenses and exemptions for hydrokinetic projects located on the OCS. Under the memorandum those entities interested in operating a hydrokinetic project on the OCS must first obtain a lease from MMS. Therefore, offshore wind projects that do not have a hydrokinetic component are within the exclusive jurisdiction of MMS. (B) DOI/DOE MOU On June 29, 2010 BOEMRE and the DOE entered into a five-year MOU “in order to prioritize and facilitate environmentally-responsible deployment of commercial-scale offshore wind and marine and hydrokinetic energy technologies” on the OCS. Pursuant to this MOU, the BOEMRE and DOE agree to work collaboratively regarding information exchange, stakeholder engagement, research of key technical and environmental issues, joint evaluation and development of standards and guidelines and the dissemination of relevant information to decision makers. Implementation of this MOU includes: (1) development of deployment goals for offshore wind; (2) identification and implementation of inter-agency measures to ensure reasonable permitting timeframes; (3) development of a plan for offshore wind resource measurement and prediction; (4) coordination with appropriate parties to acquire resources to develop and characterize variable wind, wave, tidal and ocean current resources; (5) collaborate on the development of technical standards for offshore wind; (6) identify sites with high potential for commercial- scale offshore wind development and pursue priority leasing and permitting for these sites; (7) development of environmental monitoring and mitigation protocols; (8) coordinate studies in support of research leases for offshore wind; (9) joint management of coastal states, tribes, and regional governors associations and other relevant entities; (10) technical assistance; and (11) gathering and disseminating publicly-available data. (C) DOI/FWS MOU MMS and the US Fish and Wildlife Service (FWS) entered into a MOU regarding the responsibilities of federal agencies to protect migratory birds. The MMS and FWS agreed to: (1) collaborate in the protection, restoration and enhancement of the habitat of migratory birds through the development and implementation of management practices that minimize or avoid negative impacts on migratory bird populations; (2) promote research and information exchange related to migratory bird conservation; (3) periodically evaluate the measures described in