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Winds of Change: Federal Auction for Offshore Wind Leases in Northeast Set Record High

On December 13 and 14, 2018, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) conducted an auction for three offshore wind power parcels in Massachusetts. The auction not only broke the record [1] for number of companies bidding, but also for being the highest grossing offshore wind lease sale. The promotion of federal offshore land auctions and positive statements [2] from both the Secretary of the Interior and the acting head of BOEM suggest that the Trump Administration remains committed to developing U.S. offshore wind resources.

BOEM holds authority to lease federal lands off the shores of the U.S. consistent with national needs, primarily under the Outer Continental Shelf Lands Act, among other laws. While the leases do not authorize any project-specific development of offshore wind energy, leasing is an important first step toward installing any offshore energy infrastructure.

From the eleven bidding companies, the three provisional winners, Equinor, Mayflower Wind (a joint venture of Shell and EDP Renewables), and Vineyard Wind, collectively bid more than $400 million for nearly 390,000 acres in three parcels. BOEM last offered these three parcels for auction in January 2015, but they went unsold. Several factors likely contributed to this auction’s success: it was the final federal sale of offshore wind leases for a few years, the cost of building offshore wind farms continues to decline, industry expects the offshore wind sector to maintain its pattern of strong growth, and many states are setting aggressive renewable energy goals. For example, although Massachusetts has only 113 MW of installed capacity for wind currently, the state set a target [3] of 2,000 MW of wind energy by 2020.

Further illustrating the Trump Administration’s promotion of wind energy, the U.S. Department of Transportation announced in early December 2018, that the port city of New Bedford, Massachusetts, will receive $15.4 million to expand the port’s facilities to accommodate the growing offshore wind industry. Before the award, New Bedford already had positioned itself as a focal point for the sector, hosting the offices of three offshore wind developers. The grant will allow the city to create a new staging site for these businesses and increase docking space for an additional 60 vessels.

The administration’s continued monetary and bureaucratic support, along with the auction’s impressive results, signal that the offshore wind industry is poised for significant growth. “We are truly blown away by this result,” said [4] Acting Director of BOEM Walter Cruickshank after the auction. “The results make me optimistic about the future of the offshore wind sector.”


Notes:
[1] Solomon Odom, BIDDING BONANZA! Trump Administration Smashes Record for Offshore Wind Auction with $405 Million in Winning Bids, U.S. DEP’T OF THE INTERIOR (Dec. 14, 2018) https://www.doi.gov/pressreleases/bidding-bonanza-trump-administration-s....
[2] Id.
[3] Renewable Energy Snapshot, MASS.GOV, https://www.mass.gov/service-details/renewable-energy-snapshot.
[4] Craig Richard and Ros Davidson, BOEM ‘blown away’ by offshore lease bidding frenzy, WINDPOWER OFFSHORE (Dec. 14, 2018) https://www.windpoweroffshore.com/article/1521282/boem-blown-away-offsho....
[5] Offshore Wind Power, K&L Gates http://www.klgates.com//files//Upload/EIR_Energy_Power_Offshore_Wind_Pow....
[6] Offshore Wind Handbook, K&L Gates (Oct. 2018) http://www.klgates.com/files/Upload/2018-08_OG_Offshore-Wind-brochure.pdf.

Copyright 2020 K & L GatesNational Law Review, Volume VIII, Number 353

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David Wochner, KL Gates Law Firm, Public Policy Attorney
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Mr. Wochner has advised, represented and advocated on behalf of clients on natural gas, LNG and oil related matters, including natural gas and oil commodity and pipeline transportation issues, LNG imports and exports, and natural gas as a transportation fuel, before the Federal Energy Regulatory Commission (FERC), the Departments of Energy, Transportation and the Interior, EPA and on Capitol Hill. He served as lead Washington counsel on behalf of a major international drilling company in multiple Congressional and federal agency investigations and hearings related to the...

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Mike O’Neill is an associate in the firm’s Boston office and focuses his practice on energy, infrastructure, and natural resources issues. His practice deals primarily with energy and environmental issues, particularly with respect to natural gas and oil, especially under the Natural Gas Act, liquefied natural gas (LNG), pipeline safety and compliance, natural gas tariffs, and commodities regulation. He practices primarily before the Federal Energy Regulatory Commission (“FERC”) and the Pipeline & Hazardous Material Safety Administration (“PHMSA”). He also has...

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