Wind Energy: Offshore Permitting

Congressional research reportOct 22, 2008

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Order Code RL32658

Wind Energy:

Offshore Permitting

Updated October 22, 2008

Adam Vann

Legislative Attorney

American Law Division

Wind Energy: Offshore Permitting

Summary

Technological advancements and tax incentives have driven a global expansion

in the development of renewable energy resources. Wind energy, in particular, is

now often cited as the fastest growing commercial energy source in the world.

Currently, all U.S. wind energy facilities are based on land; however, multiple

offshore projects have been proposed and are moving through the permitting process.

It is clear that the United States has the authority to permit and regulate offshore

wind energy development within the zones of the oceans under its jurisdiction. The

federal government and coastal states each have roles in the permitting process, the

extent of which depends on whether the project is located in state or federal waters.

Currently, no single federal agency has exclusive responsibility for permitting

activities on submerged lands in federal waters; authority is instead allocated among

various agencies based on the nature of the resource to be exploited and the type of

impacts incidental to such exploitation. Likewise, in the wind energy context, several

federal agencies will have a role to play in permitting development and operation

activities.

The Army Corps of Engineers (Corps) has exercised jurisdiction over proposed

offshore wind energy facilities under the Rivers and Harbors Act and the Outer

Continental Shelf Lands Act. This regulatory authority was challenged in Alliance

to Protect Nantucket Sound v. United States Department of the Army. In that case,

the U.S. Court of Appeals for the First Circuit upheld the Corps’ authority to permit

a preliminary data collection tower in federal waters. The reasoning behind this

decision might have been applied to the permitting of larger-scale wind energy

projects, although arguments against an expansive reading of Corps authority

remained viable. To address these legal uncertainties, Congress passed section 388

of the Energy Policy Act of 2005 (P.L. 109-58). This provision retains the role

played by the Corps in permitting under the Rivers and Harbors Act but grants

ultimate authority over offshore wind energy development to the Secretary of the

Interior. The provision also contains various exemptions from the regulatory regime

it establishes for projects that have received certain permits prior to the enactment of

the Energy Policy Act of 2005. Regulations implementing this new grant of statutory

authority are likely forthcoming and could bring additional and significant nuance to

the regulatory process.

This report will discuss the disputes over Corps jurisdiction prior to enactment

of the Energy Policy Act of 2005 as well as the current law applicable to siting

offshore wind facilities.

Contents

Ocean Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

State Permitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Federal Permitting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Early Regulation and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Energy Policy Act of 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2005 EPACT Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Additional Regulation Under Existing Law . . . . . . . . . . . . . . . . . . . . . . . . . 12

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Wind Energy:

Offshore Permitting

Technological advancements and tax incentives have driven a global expansion

in the development of renewable energy resources. Wind energy, in particular, is

now often cited as the fastest growing commercial energy source in the world.1

Currently, unlike much of Europe,2 all wind power facilities in the United States are

based on land; however, multiple offshore projects have now been proposed in recent

years, including the Cape Wind project off the coast of Massachusetts; Winergy’s

proposals off the coasts of Massachusetts, New York, New Jersey, Delaware,

Maryland, and Virginia; and a Galveston-Offshore Wind, LLC project in a portion

of the Gulf of Mexico under the jurisdiction of Texas.3

There are multiple policy questions related to the feasibility and relative

attractiveness of developing wind energy. The focus of this report, however, is the

current law applicable to siting offshore wind facilities, including the relationship

between state and federal jurisdictional authorities. This report will also discuss the

court challenges to early federal offshore wind energy permitting authorities and the

effect that the enactment of the Energy Policy Act of 2005 has had on the regulatory

environment.

Ocean Jurisdiction

The jurisdiction of coastal nations over the world’s oceans extends across

various adjoining and overlapping zones by operation of international conventions

and by the domestic laws and proclamations of individual governments. Jurisdiction

over U.S. waters is divided into four functional areas: the Territorial Sea, the

Contiguous Zone, the Exclusive Economic Zone (EEZ), and state-controlled waters.

The federal government has differing levels of authority in each of these zones vis-a1

See MASS. TECH. COLLABORATIVE, U.S. DEP’T OF ENERGY, & GENERAL ELECTRIC, A

FRAMEWORK FOR OFFSHORE WIND ENERGY DEVELOPMENT IN THE UNITED STATES at 9

(September 2005); U.S. DEP’T OF ENERGY & U.S. DEP’T OF THE INTERIOR, WHITE HOUSE

REPORT IN RESPONSE TO THE NATIONAL ENERGY POLICY RECOMMENDATIONS TO INCREASE

RENEWABLE ENERGY PRODUCTION ON FEDERAL LANDS at 6 (August 2002).

For an overview of offshore wind farm regulation in the United Kingdom, see Nathanael

D. Hartland, The Wind and the Waves: Regulatory Uncertainty and Offshore Wind Power

in the United States and United Kingdom, 24 U. PA. J. INT’L ECON. L. 691 (2003).

Betsie Blumberg, Wind Farms: An Emerging Dilemma for East Coast National Parks, in

NATIONAL PARK SERVICE, NATURAL RESOURCE YEAR IN REVIEW — 2003 63 (March 2004);

see Texas General Land Office, Offshore Wind Energy (available at [http://www.glo.state.

tx.us/news/archive/2005/events/offshorewind.html]).

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vis the states and other nations. Even within these zones, all nations enjoy freedom

of navigation and overflight as well as other internationally lawful uses of the sea,

subject to certain regulatory authority granted to the coastal nation.4 However, it

seems relatively clear that the United States would have sufficient jurisdiction over

each of its zones to authorize the construction and operation of offshore wind

projects.

United States authority in the oceans begins at its coast — called the baseline

— and extends 200 nautical miles out to sea. The first twelve nautical miles

comprise the U.S. territorial sea.5 Under the 1982 United Nations Convention on the

Law of the Sea6 (UNCLOS III), a coastal nation may claim sovereignty over the air

space, water, seabed, and subsoil within its territorial sea.7 United States Supreme

Court precedent and international practice indicate that this sovereignty authorizes

coastal nations to permit offshore development within their territorial seas.8

The U.S. contiguous zone extends beyond the territorial sea to twenty-four

nautical miles from the baseline. In this area, a coastal nation may regulate to protect

its territorial sea and to enforce its customs, fiscal, immigration, and sanitary laws.9

The exact contours of U.S. authority in the contiguous zone are not clearly defined,

although the United States does not claim full sovereignty.10 However, in addition

to the jurisdiction specifically applicable to the contiguous zone, the jurisdiction the

United States exercises over the EEZ also applies.

The U.S. EEZ extends 200 nautical miles from the baseline. In accordance with

international law, the United States has claimed sovereign rights to explore, exploit,

conserve, and manage EEZ natural resources of the seabed, subsoil, and the

superadjacent waters.11 United States jurisdiction also extends over “other activities

for the economic exploitation and exploration of the zone, such as the production of

Restatement (Third) of the Foreign Relations Law of the United States, § 514 (1986).

Proc. No. 5928 (December 27, 1988).

United Nations Convention on the Law of the Sea, December 10, 1982, 21 I.L.M. 1261

(entered into force November 16, 1994) (hereinafter UNCLOS III).

UNCLOS III arts. 2.1, 2.2, 3; see also United States v. California, 332 U.S. 19 (1947);

Alabama v. Texas, 347 U.S. 272, 273-74 (1954).

See United States v. California, 436 U.S. 32, 36 (1978); United States v. Alaska, 422 U.S.

184, 199 (1975); Alabama v. Texas, 347 U.S. 272, 273-74 (1954); United States v.

California, 332 U.S. 19 (1947).

UNCLOS III art. 33.

United States v. De Leon, 270 F.3d 90, 91 n.1 (1st Cir. 2001); see also Vermilya-Brown

Co. v. Connell, 335 U.S. 377, 381 (1948); Cuban Am. Bar Ass’n v. Christopher, 43 F.3d

1412, 1425 (11th Cir.1995) (control and jurisdiction is not equivalent to sovereignty).

UNCLOS III arts. 56, 58; Exclusive Economic Zone of the United States of America,

Proclamation No. 5030, 48 Fed. Reg. 10,605 (March 14, 1983); Territorial Sea of the United

States of America, Proclamation No. 5928, 54 Fed. Reg. 777 (December 27, 1988);

Contiguous Zone of the United States, Proclamation No. 7219, 64 Fed. Reg. 48,701 (August

2, 1999).

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energy from the water, currents and winds”12 and, subject to some limitations, “the

establishment and use of artificial islands, installations and structures; marine

scientific research; and the protection and preservation of the marine environment.”13

In almost all situations, the U.S. EEZ overlaps geographically with the Outer

Continental Shelf (OCS), a geologically distinct area of appurtenant seabed

referenced in several federal laws.14

Thus, it would seem that generally, other nations could not interfere with U.S.

legal authority to permit wind energy projects within the full range of its territorial

sea, contiguous zone, and EEZ.

The relative jurisdiction of the federal government with respect to individual

states is also of importance. The Submerged Lands Act of 195315 assured coastal

states title to the lands beneath coastal waters in an area stretching, in general, three

geographical miles from the shore.16 Thus states, subject to federal regulation for

“commerce, navigation, national defense, and international affairs” and the power of

the federal government to preempt state law, may regulate the coastal waters within

this area.17 The remaining outer portions of waters over which the United States

exercises jurisdiction are federal waters.18

In sum, it would seem relatively clear that the federal government would have

permitting authority, supported by international law, for offshore wind farms.

However, federal authority would be limited by the internationally recognized right

of free passage and by the jurisdiction granted to the states under the Submerged

Lands Act. The attributes of existing permitting regimes at both the state and federal

level are, of course, limited by the confines of current law, discussed below.

UNCLOS III art. 56.1 (emphasis added).

Id. art. 56.1(b).

See U.S. Commission on Ocean Policy, An Ocean Blueprint for the 21st Century: Final

Report of the U.S. Commission on Ocean Policy, Primer on Ocean Jurisdictions: Drawing

Lines in the Water, Pre-Publication Copy 41-44 (2004), available at

[http://www.oceancommission.gov/documents/prepub_report/primer.pdf].

43 U.S.C. §§ 1301-1303, 1311-1315.

Id. § 1301(a)(2). State jurisdiction typically extends three nautical miles (approximately

3.3 miles) seaward of the coast or “baseline.” Texas and the Gulf Coast of Florida have

jurisdiction over an area extending 3 “marine leagues” (9 nautical miles) from the baseline.

43 U.S.C. § 1301(a)(2).

Id. §§ 1314(a), 1311(a)(2).

Id. § 1302.

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State Permitting

States may play a regulatory role when a wind energy project is proposed for

construction in federal or state waters. State jurisdiction over projects located in

federal areas is substantially circumscribed; however, under the Coastal Zone

Management Act19 (CZMA), states are explicitly granted some regulatory authority.

In general, the CZMA encourages states to enact coastal zone management plans to

coordinate protection of habitats and resources in coastal waters.20 The CZMA

establishes a policy of preservation alongside sustainable use and development

compatible with resource protection.21 State coastal zone management programs that

are approved by the Secretary of Commerce receive federal monetary and technical

assistance. State programs must designate conservation measures and permissible

uses for land and water resources22 and must address various sources of water

pollution.23

The CZMA also requires that the federal government and federally-permitted

activities comply with state programs.24 Responding to a Supreme Court decision

that excluded OCS oil and gas leasing from state review under the CZMA, Congress

amended the “consistency review” provision to include the impacts on a state coastal

zone from federal actions in federal waters.25 Thus, states have some authority to

demand that federally-permitted projects in federal waters will not result in a

violation of state coastal zone management regulation.

In addition to consistency review, projects to be constructed in state waters,

including any cables that would be necessary to transmit power back to shore, are

subject to all state regulation or permitting requirements. Coastal zone regulation

varies significantly among the states. The CZMA itself establishes three generally

acceptable frameworks: (1) “State establishment of criteria and standards for local

implementation, subject to administrative review and enforcement;” (2) “[d]irect

State land and water use planning and regulation;” and (3) regulation development

and implementation by local agencies, with state-level review of program decisions.26

16 U.S.C. §§ 1451-1464.

Coastal U.S. states and territories, including the Great Lakes states, are eligible to receive

federal assistance for their coastal zone management programs. Currently, there are 33

approved state and territorial plans. Of eligible states, only Illinois does not have an

approved program. See National Oceanic and Atmospheric Administration, Office of Ocean

and Coastal Resource Management, State and Territory Coastal Management Program

Summaries, available at [http://coastalmanagement.noaa.gov/mystate/welcome.html].

Id. § 1452(1), (2).

Id. § 1455(d)(2), (9)-(12).

Id. § 1455(d)(16).

Id. § 1456(c).

Id; Sec’y of the Interior v. California, 464 U.S. 312, 315 (1984).

16 U.S.C. § 1455(d)(11).

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Within these frameworks, several states, such as New Jersey, California, and

Rhode Island, centralize authority for their programs in one agency.27 In New Jersey,

for instance, the state Department of Environmental Protection (through the Coastal

Management Office within the Commissioner’s Office of Policy, Planning, and

Science) is the lead agency for coastal zone management under several state laws.28

The majority of states, however, operate coastal zone management programs under

“networks” of parallel agencies, with various roles defined by policy guidance and

memoranda of understanding (MOUs).29 Based on a series of MOUs, each agency

is obligated to issue and apply state regulations and permits consistently with the

state’s coastal zone management program.30 Thus, depending on the state with

jurisdiction, offshore wind energy projects can be subject to comprehensive

regulation with permitting authority located within multiple state and local level

agencies.

Federal Permitting

For onshore wind projects on federal public lands, the Department of the

Interior (DOI), through the Bureau of Land Management, has created a regulatory

program under the Federal Land Policy and Management Act,31 but a federal statute

expressly governing offshore wind energy development was not enacted until August

2005 as part of the Energy Policy Act of 2005 (2005 EPACT). Before enactment of

the 2005 EPACT, some permitting in support of offshore wind energy development

had taken place under existing laws. Use of these authorities proved controversial

and was the subject of a lawsuit challenging preliminary permitting actions. The

previous regulatory regime, the conflicts it engendered, and the new 2005 EPACT

legal authority are discussed below.

Early Regulation and Litigation

Prior to enactment of the 2005 EPACT, the Army Corp of Engineers (Corps)

took the lead role in the federal offshore wind energy permitting process, claiming

jurisdiction under section 10 of the Rivers and Harbors Act (RHA),32 as amended by

See Rusty Russell, Neither Out Far Nor In Deep: The Prospects for Utility-Scale Wind

Power in the Coastal Zone, 31 B.C. ENVTL. AFF. L. REV. 221, 240-41 (2004).

E.g., Freshwater Wetlands Protection Act N.J.S.A. 13:9B; Flood Hazard Area Control

Act, N.J.S.A. 58:16A; Wetlands Act of 1970, N.J.S.A. 13:9A; Waterfront Development

Act, N.J.S.A. 12:5-3; NJ Water Pollution Control Act - N.J.S.A. 58:10A; Coastal Area

Facility Review Act (CAFRA), N.J.S.A. 13:19; Tidelands Act, N.J.S.A. 12:3.

Russell, supra note 27, at 241.

Id. at App. E.

43 U.S.C. §§ 1701 et seq.

33 U.S.C. §§ 407-687. Section 10 was enacted in 1899, and its text has not changed

substantively since that time. It states

(continued...)

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the Outer Continental Shelf Lands Act (OCSLA).33 Generally, the Corps has

jurisdiction under these laws to permit obstructions to navigation within the

“navigable waters of the United States” and on the OCS.34

In addition to reviewing offshore construction for potential obstructions to

navigation, the Corps examined wind energy-related development pursuant to the

National Environmental Policy Act (NEPA), which generally requires analysis of the

environmental impacts of federal actions.35 Thus, pursuant to the RHA and NEPA,

the Corps may have examined most of the salient issues present in an offshore wind

energy proposal. Controversy arose, however, with respect to two primary issues that

were litigated in Alliance to Protect Nantucket Sound v. United States Department

of the Army.36 First, it was unclear whether Corps jurisdiction pursuant to the RHA

and the OCSLA extended to all offshore structures or only to those otherwise

permitted for energy or mineral development pursuant to other OCSLA provisions.

On the basis of the language of the statutes at issue, their legislative history, and

Corps regulations and guidance, a federal district court and the First Circuit Court of

Appeals held that the Corps is authorized to exercise RHA section 10 authority for

any offshore structure, regardless of purpose, in state or federal waters.37

(...continued)

The creation of any obstruction not affirmatively authorized by Congress, to the

navigable capacity of any of the waters of the United States is prohibited; and it

shall not be lawful to build or commence the building of any wharf, pier, dolphin,

boom, weir, breakwater, bulkhead, jetty, or other structures in any port,

roadstead, haven, harbor, canal, navigable river, or other water of the United

States, outside established harbor lines, or where no harbor lines have been

established, except on plans recommended by the Chief of Engineers and

authorized by the Secretary of the Army; and it shall not be lawful to excavate

or fill, or in any manner to alter or modify the course, location, condition, or

capacity of, any port, roadstead, haven, harbor, canal, lake, harbor or refuge, or

inclosure within the limits of any breakwater, or of the channel of any navigable

water of the United States, unless the work has been recommended by the Chief

of Engineers and authorized by the Secretary of the Army prior to beginning the

same. 33 U.S.C. § 403.

43 U.S.C. §§ 1331-1356a.

33 U.S.C. § 403. Corps regulations define the “navigable waters of the United States” as

“those waters that are subject to the ebb and flow of the tide and/or are presently used, or

have been used in the past, or may be susceptible for use to transport interstate or foreign

commerce.” 33 C.F.R. § 329.4. Under the RHA, navigable waters “includes only those

ocean and coastal waters that can be found up to three geographic miles seaward of the

coast.” Alliance To Protect Nantucket Sound, Inc. v. U.S. Dept. of Army, 288 F.Supp.2d

64, 72 (D.Mass. 2003) (hereinafter Alliance I), aff’d, 398 F.3d 105 (1st Cir. 2005)

(hereinafter Alliance II); see also 33 C.F.R. § 329.12(a). On the OCS, however, the Corps’

regulatory jurisdiction extends beyond that three-mile limit for, at least, certain purposes.

43 U.S.C. § 1333(a)(1), (e).

42 U.S.C. §§ 4321 et seq.

Alliance I, 288 F.Supp.2d at 64.

Id. at 75.

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The second issue in the Alliance case was whether a section 10 RHA permit was

sufficient to authorize the siting, construction, and operation of an offshore wind

energy facility. Use of federal and federally controlled lands, including the OCS,

requires some form of permission, such as a right-of-way, easement, or license.38

Thus, because any wind turbines would be attached to the seabed of the OCS, some

authorization to occupy the submerged lands of the OCS would be required before

construction could legally take place.39 Use or occupancy of the OCS without such

authorization arguably may constitute common law trespass.40 Questions over the

type of authorization a section 10 permit encompasses spring, in part, from Corps

regulations, which state the following:

A DA [Department of the Army] permit does not convey any property rights,

either in real estate or material, or any exclusive privileges. Furthermore, a DA

permit does not authorize any injury to property or invasion of rights or any

infringement of Federal, state or local laws or regulations. The applicant’s

signature on an application is an affirmation that the applicant possesses or will

possess the requisite property interest to undertake the activity proposed in the

application. The district engineer will not enter into disputes but will remind the

applicant of the above. The dispute over property ownership will not be a factor

in the Corps public interest decision.41

Although issues tangentially related to OCS property interests were addressed

in the Alliance case, the reviewing courts left the matter substantially unsettled.42

Several federal laws would appear to indicate that Congress intends the OCS to be used

only when permission has been expressly granted. See 43 U.S.C. § 1332(1), (3) (“the

subsoil and seabed of the outer Continental Shelf appertain to the United States and are

subject to its jurisdiction, control, and power of disposition ....”; see also 42 U.S.C. §

9101(a)(1)(stating that the purpose of the Ocean Thermal Energy Conversion Act is to

“authorize and regulate the construction, location, ownership, and operation of ocean

thermal energy conversion facilities.”).

See 43 U.S.C. § 1333(a)(2)(A) (applying the criminal and civil laws of states adjacent to

the OCS as federal law); see also Guy R. Martin, The World’s Largest Wind Energy Facility

in Nantucket Sound? Deficiencies in the Current Regulatory Process for Offshore Wind

Energy Development, 31 B.C. Envtl. Aff. L. Rev. 300, n.96 (2004).

The Court of Appeals for the Fifth Circuit has held that because the United States does

not own the OCS in fee simple, it cannot claim trespass based on unauthorized construction

on OCS. On the other hand, the court stated, “[n]either ownership nor possession is,

however, a necessary requisite for the granting of injunctive relief,” because the United

States has paramount rights to the OCS and an interest to protect. Thus damages available

under trespass may not be available for unauthorized construction on the OCS, while

injunctive relief would appear possible even under more constrained interpretations of U.S.

authority. United States v. Ray, 423 F.2d 16, 22 (5th Cir. 1970).

33 C.F.R. § 320.4(g)(6).

See Alliance II, 398 F.3d 105, 114 (1st Cir. 2005). The courts did decide that the Corps

is not required to validate existing property rights or otherwise become involved in ongoing

property disputes prior to issuing a RHA permit. Alliance I, 288 F.Supp. 2d at 77-78.

Despite the Army Corps regulation, additional laws do require the Corps to consider

property rights in granting RHA permits. In determining if issuance of a RHA permit is in

(continued...)

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Accordingly, prior to enactment of the EPACT 2005, it was unclear whether a Corps

permit was sufficient to authorize the use of the OCS for wind energy purposes.43

EPACT 2005 addresses this issue by authorizing offshore wind energy project

permitting without completely abrogating the Corps’ authority under the RHA. This

new legal authority and how it relates to earlier law are discussed below.

The Energy Policy Act of 2005

Section 388 of the EPACT 2005 seeks to address the issues raised in litigation

related to offshore wind energy development by specifically establishing legal

authority for federal review and approval of various offshore energy related projects.

The provision amends the OCSLA by adding a new subsection that authorizes the

Secretary of the Interior, in consultation with other federal agencies, to grant leases,

easements, or rights-of-way on the OCS for certain activities — wind energy

development among them — not authorized by other OCSLA provisions, the

Deepwater Port Act, the Ocean Thermal Energy Conversion Act, or “other applicable

law.”44

(...continued)

the public interest, the Corps, under its own regulations, is obligated to consider the “effects

of the proposed work [i.e. offshore structure] on the outer continental rights of the United

States.” 33 C.F.R. § 320.4(f). In addressing this requirement in the Alliance case, the First

Circuit Court of Appeals held that the Corps satisfied this requirement with respect to the

preliminary data tower, stating: “[i]t is inconceivable to us that permission to erect a single,

temporary scientific device, like this, which gives the federal government information it

requires, could be an infringement on any federal property ownership interest in the OCS.”

Alliance II, 398 F.3d at 114.

Other energy-related developments on the outer continental shelf, for instance, require a

lease issued by the Department of the Interior (DOI), pursuant to the Outer Continental Shelf

Lands Act (OCSLA), prior to development. 43 U.S.C. § 1337.

43 U.S.C. § 1337(p)(1). DOI authority to grant leases, easements, or rights-of-way on the

OCS is contingent upon the permitted activities being consistent with the purposes specified

by the law. The relevant property interest may only be issued if the OCS activity will

(A) support exploration, development, production, or storage of oil or natural

gas, except that a lease, easement, or right-of-way shall not be granted in an area

in which oil and gas preleasing, leasing, and related activities are prohibited by

a moratorium;

(B) support transportation of oil or natural gas, excluding shipping activities;

sources other than oil and gas; or

(D) use, for energy-related purposes or for other authorized marine-related

purposes, facilities currently or previously used for activities authorized under

... [the OCLSA], except that any oil and gas energy-related uses shall not be

authorized in areas in which oil and gas preleasing, leasing, and related activities

are prohibited by a moratorium. 2005 EPACT, § 388(a), adding new 43 U.S.C.

§ 1337(p)(1)(A)-(D).

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The law also makes clear that federal agencies with permitting authority under

other federal laws retain their jurisdiction, despite enactment of this subsection.45

Thus, the Corps, consistent with the Alliance case, will continue to permit offshore

development pursuant to the RHA, and other federal agencies with jurisdiction over

issues related to energy development, such as species impacts, will be similarly

unaffected. The law does not specify which agency will take the lead role in

coordinating federal permitting and responsibility for preparing NEPA analysis.

However, several provisions within section 388 of the 2005 EPACT may indicate

that DOI is charged with primary responsibility. The law directs the Secretary of the

Interior to consult with other agencies as a part of its leasing, easement, and right-of

way granting process.46 DOI is also responsible for ensuring that activities carried

out pursuant to its new authority provide for “coordination with relevant federal

agencies ....”47 The precise division of responsibilities, however, will depend upon

the regulations that DOI eventually issues and any memoranda of understanding

negotiated by the stakeholders with regard to relative roles in the permitting process.

On December 30, 2005, the Minerals Management Service, within DOI, issued an

Advance Notice of Proposed Rulemaking, seeking comments on the development of

regulations to implement section 388 and proposed regulations are likely

forthcoming.48

Although section 388 provides DOI with significant latitude in crafting a

regulatory regime for offshore wind energy development, the law does address

certain aspects of the property interest granting process expressly. First, the law

directs that leases, easements, and rights-of-way are to be issued on a competitive

basis, subject to some exceptions described infra at pp. 11-12.49 The Secretary is

further authorized to provide for the duration of any property interest granted under

this subsection and to provide for suspension and cancellation of any lease, easement,

or right-of-way.50 The law directs the Secretary to establish a system of “royalties,

fees, rentals, bonuses, or other payments” that will ensure a fair return to the United

States for any property interest granted under this provision.51 Beyond this general

guidance, however, the agency would seem to be free to determine what constitutes

a fair return and to require whatever payment systems it deems appropriate.

Id. § 1337(p)(9). For additional discussion, see infra pp. 12-16.

Id. § 1337(p)(1).

Id. § 1337(p)(4).

70 Fed. Reg. 77345 (December 30, 2005).

43 U.S.C. § 1337(p)(3).

Id. § 1337(p)(5).

Id. § 1337(p)(2)(A).

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The law also provides that 27 percent of the revenues collected by the federal

government under this program from any project located wholly or partially within

the area extending three nautical miles from state submerged lands are to be paid out

among coastal states located within 15 miles of the project’s geographic center.52

The distribution is to be done in an equitable manner based on the states’ proximity

to the project.53 More than one state may be eligible to receive a portion of these

revenues, depending upon the location of a project.

The division of payments among states is to be based upon a formula that

equitably distributes revenues based on the proximity of the project to the affected

states’ offshore boundaries. The law establishes that states that have a “coastline that

is located within 15 miles of the geographic center of the project” are entitled to a

revenue share.54 This may prove controversial in some instances to the extent that

there have not been determinative offshore boundaries between states. The Minerals

Management Service has prepared administrative boundaries for use in a variety of

circumstances, including the determination of “‘affected state’ status under the

Coastal Zone Management Act and the OCS Lands Act ...” and to help “define

appropriate consultation and information sharing with States.”55 The notice

informing the public that these boundaries have been established does not appear to

specifically state that they will be determinative in questions over revenue sharing

under section 388; however, these boundaries could form the basis for making

determinations as to proximity to state waters and, therefore, could affect the

distribution of revenues.

In addition, the law appears to authorize considerable regulation of impacts

associated with offshore development by requiring the Secretary to ensure that “any

activity under this subsection” be carried out in a manner that adequately addresses

specified issues, including environmental protection, safety, protection of U.S.

national security, and protection of the rights of others to use the OCS and its

resources.56 In addition, specific financial security requirements are also established

by this subsection. The law requires the holder of a section 388 property interest to

“provide for the restoration of the lease, easement, or right-of-way” and to furnish a

surety bond or other form of security, leaving the amount and the exact purposes to

which any forfeited sums will be applied to the Secretary’s discretion.57 Further, in

conjunction with the authority to require some form of financial assurance, the

Secretary is empowered to impose “such other requirements as the Secretary

Id. § 1337(p)(2)(B).

Id.

71 Fed. Reg. 127 (January 3, 2006).

43 U.S.C. § 1337(p)(4). The Minerals Management Service also appears to have adopted

this interpretation, stating: “MMS interprets the authority granted in section 388(a) of the

Energy Policy Act of 2005 to issue leases, easements or rights-of-way as also providing

MMS authority to regulate or permit the activities that occur on those leases, easements or

rights-of-way, if those activities are energy related.” 70 Fed. Reg. 77345, 77346 (December

30, 2005).

43 U.S.C. § 1337(p)(6).

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considers necessary to protect the interests of the public and the United States.”58

Thus, the Secretary, depending on how these authorities are exercised, may

potentially regulate many aspects of any industry that is permitted to operate on the

OCS under this subsection of the OCSLA.

The 2005 EPACT also contains a provision expressly providing for a state

consultative role in the permitting process. Section 388 requires the Secretary of the

Interior to provide for coordination and consultation with a state’s Governor or the

executive of any local government that may be affected by a lease, easement, or rightof-way granted under this new authority.59 In addition, the law makes clear that it

does not affect any state’s claim to “jurisdiction over, or any right, title, or interest

in, any submerged lands.”60 Thus, states will remain primary in those areas

comprising state offshore waters, and should a state dispute the extent of its offshore

territory, such claims are unaffected by the Secretary’s new grant of authority under

this law.

2005 EPACT Exemptions

As described above, section 388 of the EPACT 2005 sets forth procedures for

granting a lease, easement, or right-of-way in federal waters when the property

interest will be used for certain specified purposes, including wind energy

production.61 However, subsection (d) exempts certain actions from specific section

388 requirements. This “savings provision” states that the law does not require

the resubmittal of any document that was previously submitted or the

reauthorization of any action that was previously authorized with respect to a

project for which, before the date of enactment of this Act —

(1) an offshore test facility has been constructed; or

(2) a request for a proposal has been issued by a public authority.62

Thus, where a project has resulted from a public entity’s request for proposals

or where a project is associated with an existing offshore test facility, previously

submitted documents do not need to be resubmitted and previously authorized

actions do not need to be reauthorized, essentially maintaining the status quo with

respect to these projects.63 This provision does not seem to exempt unauthorized

actions associated with the exempted actions, or, indeed, any other aspect of the

related project, from a requirement to comply with the property interest acquisition

provisions of section 388. Thus, siting and construction of an offshore data tower,

such as Cape Wind’s data tower in Nantucket Sound, would not have to be

reauthorized. However, any activity that had not been authorized before August 8,

Id.

Id. § 1337(p)(7).

EPACT 2005, P.L. 109-58 § 388(e) (August 8 2005).

Id.

Id. § 388(d).

Id.

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2005, such as the construction of additional facilities, would appear to be subject to

the requirements of section 388.

Section 388 also contains two exceptions to the general requirement that a

property interest issued under this provision be granted on a “competitive basis”: (1)

if the Secretary of the Interior determines that there is no competitive interest, or (2)

if the project meets the criteria established by the savings provision in subsection

(d).64 The first exemption, requiring a finding of no competitive interest, is relatively

straightforward, although additional details may be provided at the administrative

level. The second exemption proves more complex in that it may apply more broadly

than the savings provision itself. As the text of the law indicates, “projects that meet

the criteria established under section 388(d)” are exempted from competitive

property interest acquisition.65 It is not clear that the “projects” referenced are limited

to the actions (such as a data tower constructed at the time of the 2005 EPACT’s

enactment) previously authorized. Subsection (d) appears to use the term “project”

more broadly, such that a “project for which ... an offshore test facility has been

constructed ...” might encompass all future offshore development that would be

supported by, or is in some way related to, a qualifying test facility.66 It is also

possible that a “project” for which a test facility has been constructed could be

interpreted more narrowly, such that the term “project” would include only those

actions authorized in conjunction with the test facility itself. In short, because there

is no definition provided for “project” in the law, it would seem likely that the

administering agency would be responsible for providing a definition that is

reasonably supportable by the law.

Additional Regulation Under Existing Law

In addition to the regulatory regime authorized by section 388, it is also

noteworthy that a variety of laws pre-dating the enactment of the 2005 EPACT

remain applicable to offshore wind energy development. Indeed, the 2005 EPACT

makes clear that the enactment of section 388 does not affect the jurisdiction,

responsibility, or authority of any federal or state agency operating under other

federal law.67 Thus, it would seem clear that the state role provided for by the CZMA

and the Corps permitting authority provided by the RHA, both described above,

remain intact. Other federal laws that are likely to be relevant in the permitting

process are described below.

First, the Department of the Interior as well as any cooperating federal, state, or

local entities68 are required to undertake an environmental review process mandated

Id.

43 U.S.C. § 1337(p)(9).

These entities may request cooperating agency status pursuant to NEPA implementing

regulations and thereby contribute to the environmental analysis process.

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by the National Environmental Policy Act (NEPA).69 NEPA requires federal

agencies to take a “hard look” at, and to disclose, the environmental consequences

of their actions. In general, NEPA and its implementing regulations require various

levels of environmental analysis depending on the circumstances and the type of

federal action contemplated. Certain actions that have been determined to have little

or no environmental effect are exempted from preparation of NEPA documents

entirely and are commonly referred to as “categorical exclusions.”70 In situations

where a categorical exclusion does not apply, an intermediate level of review, an

environmental assessment (EA), may be required. If, on the basis of the EA, the

agency finds that an action will not have a significant effect on the environment, the

agency issues a “finding of no significant impact” (FONSI), thus terminating the

NEPA review process. On the other hand, major federal actions that are found to

significantly affect the environment require the preparation of an environmental

impact statement (EIS), a document containing detailed analysis of the project as

proposed, as well as other options, including taking no action at all. NEPA does not

direct an agency to choose any particular course of action; the only purpose of an EIS

is to ensure that environmental consequences are considered. Thus, in practice,

NEPA review will likely provide information on wind energy projects, including

impacts to

existing resources of the final alternative sites in terms of physical oceanography

and geology; wildlife, avian, shellfish, finfish and benthic habitat; aesthetics,

cultural resources, socioeconomic conditions, and air and water quality. Human

uses such as boating and fishing will also be described.71

In addition to the role interested parties and cooperating agencies may play

under NEPA, certain federal agencies have independent sources of jurisdiction over

specific ocean resources. Thus, they would also likely be involved in the permitting

of offshore wind energy facilities. Some of the most relevant authorities are the

Endangered Species Act (ESA),72 the Marine Mammal Protection Act (MMPA),73

and the Migratory Bird Treaty Act (MBTA).74

42 U.S.C. §§ 4321 et. seq.

40 C.F.R. § 1508.4.

See U.S. ARMY CORPS OF ENG’RS, ENVIRONMENTAL IMPACT STATEMENT:

SCOPE OF WORK, WIND POWER FACILITY PROPOSED BY CAPE WIND

ASSOCIATES, LLC 3, available at [http://www.nae.usace.army.mil/projects/ma/ccwf/

windscope.pdf]. See also United States v. Alaska, 503 U.S. 569, 579-80 (1992) (holding

that Corps permitting decisions under section 10 are not limited to considerations of

navigation).

16 U.S.C. §§ 1531-1544.

16 U.S.C. §§ 1361-1407.

16 U.S.C. §§ 703-712.

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Briefly, each of these laws makes it illegal to inflict certain kinds of harm upon

designated species of plants and animals. The ESA prohibits any person, including

private entities, from “taking” a “listed” species.75 “Take” is broadly defined as “to

harass, harm, pursue, hunt, shoot, wound, kill, trap, capture or collect, or to attempt

to engage in any such conduct.”76 Additionally, a federal agency permitting or

undertaking action that could impact a protected species is subject to section 7 of the

ESA, which requires consultation with the U.S. Fish and Wildlife Service (FWS) or

the National Marine Fisheries Service (NMFS or NOAA Fisheries), depending upon

the species affected.77

The section 7 consultation process involves several initial steps leading to a

determination of whether a listed species or its designated critical habitat is present

in a project area.78 If a species or critical habitat is present, then the permitting/acting

federal agency must prepare a biological assessment, evaluating the potential effects

of the action.79 If the acting federal agency determines that a project may adversely

affect a listed species or critical habitat, formal consultation and preparation of a

biological opinion is required.80 The biological opinion contains a detailed analysis

of the effects of the agency action and contains the final determination as to whether

the proposed action is likely to jeopardize the species or destroy or adversely modify

its critical habitat.81 If review results in a jeopardy or adverse modification

determination, the biological opinion must identify any “reasonable and prudent

alternatives” that could allow the project to proceed.82 Projects that will result in a

level of injury to a species or habitat that will fall short of jeopardizing survival may

still be approved subject to certain terms.83 The agency may be allowed to “take”

some individuals of a listed species without triggering penalties under the act. These

incidental takings are to be described in a statement accompanying the biological

Under the ESA, species are listed as either “endangered” or “threatened” based on the risk

of their extinction. An “endangered” species is “any species which is in danger of extinction

throughout all or a significant portion of its range ....” A “threatened” species is “any

species which is likely to become an endangered species within the foreseeable future

throughout all or a significant portion of its range.” 16 U.S.C. § 1532(6), (20).

16 U.S.C. § 1532(19).

Id. § 1536(2).

50 C.F.R. § 402.12(c). It should also be noted that some protections also attach to

“candidate” species, i.e., those proposed but not officially listed. Under current law, an

agency must “confer” with the appropriate Secretary if agency action will likely jeopardize

the continued existence of any candidate species or adversely modify critical habitat

proposed for designation. This is distinct from the section 7 consultation process, less

formal, and meant to assist planning early in the process should the species be listed and

more definite protections attach. See 16 U.S.C. § 1536(a)(4); 50 C.F.R. § 402.10.

50 C.F.R. § 402.12(b),(d).

Id. § 402.14(e).

Id. § 402.14(h).

Id. § 402.14(h)(3).

Id. § 402.14(i).

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opinion.84 Takings allowed under the consultation process are deemed consistent

with the ESA; thus, they are not subject to penalties under the act, and no other

authorization or permit is required.85

The MMPA prohibits, with certain exceptions, the taking of marine mammals

in U.S. waters and by U.S. citizens on the high seas, as well as the importation of

marine mammals and marine mammal products into the United States. The statute

is jointly administered by the Department of Commerce (through NOAA/NMFS) and

the Department of the Interior (through FWS).86 Among the statutory exceptions to

the moratorium is a provision allowing NMFS or FWS to authorize, for a period of

not more than five consecutive years, the “incidental” taking of small numbers of

marine mammals.87 Such incidental takes may be authorized only upon a finding that

the take will have a negligible impact on the species or stock and will not have an

unmitigable adverse impact on the availability of the species or stock for taking for

subsistence purposes by Alaskan natives as authorized by other sections of the

MMPA.88

The regulations establish procedures for administering the MMPA, including

application for authorization for incidental take of small numbers of marine

mammals.89 These regulations set forth the procedures for submission of requests

for such authorization to the NMFS or FWS, standards for review and the form of the

authorization.90

The MBTA is the domestic law that implements U.S. obligations under separate

treaties with Canada, Japan, Mexico, and Russia for the protection of migratory

birds.91 The MBTA generally prohibits the taking, killing, possession, or

transportation of, and trafficking in, migratory birds, their eggs, parts, and nests.92

Like the ESA, the general ban on taking protected birds can be waived under certain

circumstances. Pursuant to section 704, the Secretary of the Interior is authorized to

determine if, and by what means, the taking of migratory birds should be allowed.93

FWS is responsible for permitting activities that would otherwise violate the MBTA.

Id. § 402.14(i)(1)(i)-(v).

16 U.S.C. § 1536(b)(4); 50 C.F.R. § 402.14(i)(5).

The statute defines Secretary as the Secretary of the department in which NOAA is

operating (Commerce) for purposes of regulation related to all members of the order Cetacea

(whales and porpoises) and all members, except walruses, of the order Pinnipedia (seals).

The statute defines Secretary as Secretary of the Interior (operating through the FWS) with

respect to all other marine mammals (manatees, dugongs, polar bears, sea otters and

walruses). 16 U.S.C. § 1362(12)(A).

16 U.S.C. § 1371 (5)(A).

16 U.S.C. § 1371 (5)(A)(i).

50 C.F.R.§18.27 (FWS regulations); 50 C.F.R. Part 216, Subpart I (NMFS regulations).

Id.

Birds that receive protection under the MBTA are listed at 50 C.F.R. § 10.13.

16 U.S.C. § 703.

16 U.S.C. § 704.

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Its regulations at 50 C.F.R. § 21 make exceptions from permitting requirements for

various purposes and provide for several specific types of permits, such as import and

export permits, banding and marking permits, and scientific collection permits.94

More general permits for special uses are also provided for under the regulations,

although an applicant must make “a sufficient showing of benefit to the migratory

bird resource, important research reasons, reasons of human concern for individual

birds, or other compelling justification.”95

It does not appear that FWS has promulgated regulations specific to the sort of

unintentional harm caused by the rotating turbines of wind energy projects; thus, it

is not clear that the permitting process provided for under current regulations is

immediately applicable to wind energy projects.96 The Service has, however, adopted

voluntary, interim guidelines for minimizing the wildlife impacts from wind energy

turbines.97 As these guidelines indicate, compliance does not shield a company from

prosecution for MBTA violations; however, “the Office of Law Enforcement and

Department of Justice have used enforcement and prosecutorial discretion in the past

regarding individuals, companies, or agencies who have made good faith efforts to

avoid the take of migratory birds.”98

Conclusion

Interest in developing offshore wind energy resources continues to grow, and

projects are already in the initial stages of development. It would seem clear that the

United States, vis-a-vis other nations, would have the right to permit offshore

development in its territorial sea and on the Outer Continental Shelf, subject to state

authority over offshore areas under the Submerged Lands Act. The Energy Policy Act

of 2005 provides the Department of the Interior with authority to grant offshore

property interests for the purpose of wind energy development and appears to grant

the Secretary of the Interior the authority to regulate activities resulting from such

development. Additional laws that pre-date the enactment of the Energy Policy Act

of 2005 continue in force and also appear likely to remain a source of regulation,

despite the apparent primary authority granted to the Department of the Interior.

Further, states also may claim a role in the permitting of offshore wind energy

development pursuant to authorities granted under existing federal law.

50 C.F.R. §§ 21.11-21.26.

Id. § 21.27.

See 69 Fed. Reg. 31074 (June 2, 2004) (“Current regulations authorize permits for take

of migratory birds for activities such as scientific research, education, and depredation

control. However, these regulations do not expressly address the issuance of permits for

incidental take.”).

U.S. Fish and Wildlife Service, Interim Guidelines to Avoid and Minimize Wildlife

Impacts from Wind Turbines, (May 2003) (available at [http://www.fws.gov/

habitatconservation/wind.pdf].

Id. at 2.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.