BOEM Auctions Offshore Wind Lease for New York Wind Energy Area
On December 15 and 16, 2016, the United States Bureau of Ocean Energy Management (“BOEM”) conducted a competitive auction for a lease allowing development of an offshore wind farm in an 79,350-acre area south of Long Island. The New York Wind Energy Area begins approximately 11.5 nautical miles from Jones Beach, NY at its westernmost point, and extends approximately 24 nautical miles southeast at its longest portion.
The auction lasted through 33 rounds of bidding, and the provisional winner, Statoil Wind US LLC, bid $42,469,725 for the lease. The five other bidders were Avangrid Renewables, LLC, DONG Energy Wind Power (U.S.) Inc., Innogy US Renewable Projects LLC, wpd offshore Alpha LLC, and the New York State Energy Research and Development Authority (“NYSERDA”). BOEM has previously awarded eleven prior offshore wind leases, which together generated over $16 million; the fact that the New York lease generated roughly three times as much revenue as the other leases combined indicates that there is significant potential for wind development offshore of New York.
After lease execution, Statoil will have a year-long “preliminary term” to submit a Site Assessment Plan (“SAP”) or General Activities Plan (“GAP”). Once Statoil’s SAP or GAP is approved, Statoil will then have a five-year site assessment term, by the end of which it must submit a Construction and Operations Plan (“COP”). Once the COP is approved, Statoil can construct and operate the wind farm for a twenty-five year operations term. Alternately, Statoil may submit a combined SAP/COP, in which case the operations term would begin either five years after approval of the SAP/COP, or when fabrication or installation of the wind farm commences.
Fisheries Groups File Suit against Auction, Auction Winner Seeks to Intervene
Shortly before the auction to lease the New York Wind Energy Area, a lawsuit was filed seeking an injunction preventing the auction and the execution of the lease. The suit was filed by a coalition of commercial fishing interests. It alleges that BOEM failed to adequately analyze the environmental impacts of the proposed wind farm under the National Environmental Policy Act (“NEPA”), and failed to adequately protect fishing interests in violation of the Outer Continental Shelf Lands Act. BOEM and the fisheries groups reached a partial settlement that allowed the lease auction to go forward as scheduled, but required BOEM to notify the plaintiffs and the Court before executing the lease, and allowed the court to hear the plaintiffs’ request for an injunction requiring additional NEPA review before the lease is executed.
On January 9, 2017, BOEM opposed the injunction request and the lawsuit, arguing that the plaintiffs lacked standing to sue and that their suit was premature, as further NEPA analysis of the COP would be required before a COP is approved and construction of a wind farm could commence. On the same day, Statoil filed an unopposed motion to intervene in the lawsuit. BOEM’s briefing also revealed that on December 30, 2016, BOEM received an unsolicited lease proposal for a different location on the Outer Continental Shelf offshore of New York, and will consider whether to initiate the same regulatory process with respect to that proposal that led to December’s lease auction, although it did not identify the location or the entity that made the proposal.
Governor Cuomo Proposes 2.4 Gigawatts of Offshore Wind by 2030
This pending lease with Statoil is the first step toward developing New York’s offshore wind potential, and it is an important component of New York’s goal – announced by Governor Cuomo in his State of the State speech – of developing 2.4 gigawatts (2400 megawatts) of offshore wind power by 2030. The Governor also called on the Long Island Power Authority to approve Deepwater Wind’s proposed South Fork wind farm, a 90-megawatt wind project 30 miles southeast of Montauk.