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New York Bight Launches Offshore Wind Race in U.S.

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The end of February was a very exciting time for the offshore wind power space.

In the three-day New York Bight auction conducted by the Bureau of Ocean Energy Management (“BOEM”) beginning on February 23, six companies successfully bid almost $4.4 billion for leases of areas covering 488,000 acres of U.S. federal waters.  The leases are in the New York Bight, an area on the Outer Continental Shelf of shallow waters between Long Island and New Jersey.

While this is a remarkable milestone demonstrating the conviction of companies in the energy transition to carbon neutrality, this is only the very beginning of a challenging process to successfully develop offshore wind facilities in these waters.  Below is an outline of some of the requirements, challenges, and hurdles that will need to be satisfied, confronted, and overcome.

Where state and federal jurisdictions intersect

First, the winning bids are provisional and conditioned on competition reviews by the Justice Department and the Federal Trade Commission before they can be finalized.

Next, because the wind generation facilities will be located on the Outer Continental Shelf (seaward of the 3-nautical mile limit off the East Coast), the facilities themselves will be exclusively subject to federal jurisdiction.  Aspects of the facilities located within the states’ coastal zones (landward of the 3-nautical mile limit and below the high water mark), specifically the transmission and interconnection lines, are subject to overlapping state and federal jurisdiction.

Finally, facilities located in uplands (landward of the mean high water mark), such as interconnection lines and substations, are subject almost exclusively to state jurisdiction.

As a result of this regulatory patchwork, permitting can be complex, and there are many opportunities for opponents to challenge the numerous federal and state authorizations needed.  For example, there have already been four lawsuits challenging the first BOEM-authorized offshore wind project (Vineyard Wind).

Federal permitting on the Outer Continental Shelf involves a litany of agencies, with BOEM at the fore. BOEM administers permitting, construction, and operation of offshore wind facilities under the Outer Continental Shelf Lands Act (“OCSLA”), which involves issuing and overseeing the leases described above.

Once BOEM issues a lease for offshore wind development, the lessee enters the site assessment phase of development. During this phase, the lessee submits to BOEM, for review and approval, a Site Assessment Plan (the “SAP”), which describes the lessee’s proposed site characterization activities. These include the lessee’s detailed proposal to construct and operate a meteorological tower or buoys, and other site characterization surveys and studies (such as seafloor mapping and surveys for avian, marine mammal, and archaeological resources). The lessee must also demonstrate how it will undertake these activities safely and how it will avoid unreasonable interference with other uses of the Outer Continental Shelf (e.g., navigation, national security, or defense) and undue harm to natural and cultural resources.

Construction planning needs a decommission Plan

Assuming the SAP is approved (which historically has been a lengthy process), the lessee enters the construction and operation phase of development. During this phase, the lessee submits to BOEM, for review and approval, a Construction and Operations Plan (the “COP”).  This is a comprehensive plan that addresses all activities and impacts of the facilities, from the start of construction, through their operational life, to their ultimate decommissioning and removal.

In particular, the scope of the COP extends to all offshore and onshore activities, and the specific reports include a facility design report and a fabrication and installation report. The plan must also address the construction process, describe the facility’s operation, and provide the timing and means of decommissioning.

As with the site assessment phase, the lessee and BOEM will undertake numerous environmental and technical reviews.  These include analysis of the potential direct and indirect impacts from the construction and operation of the facility, including with respect to geology, water quality, coastal and marine shipping and uses, threatened and endangered species, avian resources, sensitive biological resources and habitats, socioeconomics, archaeological issues, air quality, and climate change.

Many of these environmental and cultural reviews and studies are also mandated by a number of federal laws—some of these run in tandem, and to an extent overlap, with the BOEM analysis.  Prominent among these requirements are analysis under the National Environmental Policy Act, consultation under section 7 of the Endangered Species Act, consultation under the Magnuson-Stevens Act (including with regard to Essential Fish Habitat), consultation under section 106 of the National Historic Preservation Act, and the compliance with the Migratory Bird Treaty Act.

The federal and state agency queue

Other federal agencies beyond BOEM involved in the permitting and review of offshore wind facilities include the U.S. Army Corps of Engineers, National Marine Fisheries Services (“NMFS”), the Environmental Protection Agency (“EPA”), the U.S. Coast Guard, and the Federal Aviation Administration (“FAA”).  The Corps of Engineers exercises jurisdiction under the Clean Water Act (as it relates to discharges of dredged and fill material) and the Rivers and Harbors Act (as it relates to activities affecting navigation). The NMFS has jurisdiction under the Endangered Species Act, the Marine Mammal Protection Act, and the Magnuson-Stevens Act. EPA implements applicable portions of the Clean Water Act and the Clean Air Act.  The Coast Guard oversees Private Aids to Navigation (fixed or floating objects in U.S. waters) and obstructions to navigation, and the FAA makes the determinations on No Hazard to Air Navigation (including a Department of Defense review).

Although much of the environmental and cultural reviews and analysis will be performed or led by BOEM with participation from other federal agencies, given the location of the leases and the presence of certain facilities and components in state waters and state uplands along the coast, state agencies in New York and New Jersey will also review aspects of the projects.

In New York, for example, the New York Department of State’s Division of Coastal Resources reviews federal actions for consistency with the state’s Coastal Management Plan, and the New York State Department of Environmental Conservation reviews and permits projects that may require state-delegated Clean Water Act permits, that may affect freshwater and tidal wetlands and water bodies, and that involve the installation of transmission cables and substations.

In New Jersey, the New Jersey Department of Environmental Protection reviews federal actions for consistency with the state’s Coastal Management Plan and reviews and permits projects that may require upland waterfront development, and that may affect freshwater or coastal wetlands.

We need onshore to work to make offshore work

Interconnecting offshore generating facilities to the onshore grid also poses practical challenges because the existing grid was not designed to accommodate large amounts of offshore power. There are a limited number of easy interconnection points on the south shore of Long Island and along the New Jersey shore where interconnection can occur, and some have limited offtake capacity.

The capacity at these easily accessible interconnection points is currently not sufficient to accommodate the amount of power expected to be generated by all the New York Bight wind facilities, so early movers will be at an advantage as interconnection points get utilized. Other possible interconnection areas may be far removed from the lease areas, which can dramatically increase interconnection costs.

Finally, significant upgrades to and new construction of land-based transmission infrastructure will be necessary to accommodate all of the power anticipated to be generated in the New York Bight lease areas.

Working around the Jones Act

Another major issue that needs to be addressed in the construction and operation of an offshore wind facility is the necessity to comply with the Merchant Marine Act of 1920 (section 27), known as the “Jones Act.”  The Jones Act requires the use of U.S.-flagged vessels to transport people and products between two U.S. points or to engage in dredging and towing activities in U.S. waters. These U.S.-flagged vessels must be built in the U.S., owned by U.S. citizens, and manned by U.S. citizens.

Recently, Congress extended the Jones Act to installations attached to the seabed of the Outer Continental Shelf for the purpose of developing or producing non-mineral energy resources (i.e., an offshore wind turbine erected on the seabed of the OCS becomes a U.S. point to which the Jones Act then applies).

At the moment, there are a very limited number of purpose-built, Jones Act-qualified vessels that are suited to transport, install, and service offshore wind farms in the United States. Moreover, U.S. seaports are also not currently suited for these purposes, which require large, dedicated terminal areas with deepwater access for staging, marshaling, and assembling wind components and other marine facilities dedicated to supporting ongoing maintenance and repair of the wind farm developments.

As a result, construction and retrofitting of a fleet of Jones Act-qualified vessels will be required as well as upgrading and expanding U.S. seaports to accommodate offshore wind activities.

While there is much more work ahead to develop these and other U.S. offshore wind facilities, a path is being navigated and charted by the sponsors and their partners.  Their efforts, along with U.S. federal and state support of a successful transition to carbon-neutral power generation, bodes very well for this burgeoning space of the energy market.

View the article as it appears in Renewable Energy World here.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.