Bureau of Ocean Energy ManagementAs a part of President Obama’s Climate Action Plan to promote American leadership in renewable energy, and coupled with the Interior’s “Smart from the Start” wind energy initiative for the Atlantic Coast, the Interior has announced the Nation’s largest offshore wind energy area available for commercial development. The Interior and Bureau of Ocean Energy Management (BOEM) announced on 06/17/14 that more than 742,000 acres offshore Massachusetts will be available for commercial wind energy leasing. By far, this proposed area is the largest in federal waters and will nearly double the federal offshore acreage available for commercial wind energy projects.

The proposed Wind Energy Area is located approximately 12 miles offshore Massachusetts. The Bureau of Ocean Energy Management (BOEM) proposes to auction the Wind Energy Area as four leases. The proposed sale notice triggered a 60-day public comment period ending on August 18, 2014. The end of the comment period also serves as the deadline for any participating companies to submit their qualification packages. To be eligible to participate in the lease sale, the BOEM must first determine that the bidder is legally, technically and financially qualified before the Final Sale Notice is published. The BOEM strongly encourages potential bidders to submit a qualification package as early as possible during the comment period to ensure adequate time for processing.

The Gulf Region will see new lease developments as well. The Gulf Region is preparing for several sales in the Gulf of Mexico occurring in the years 2014-2017 under the Five Year Outer Continental Shelf Oil and Gas Leasing Program. Lease Sale 238, covering the Western Gulf of Mexico, is set for August 2014. This will be followed by Lease Sale 235, covering the Central Gulf of Mexico, and Lease Sale 246, covering the Western Gulf of Mexico in 2015.

 

Guest blogger Krystin Frazier is an attorney in the New Orleans office of King, Krebs & Jurgens focusing on environmental, toxic tort, and oil & gas matters. She is admitted to practice law in Louisiana.

 

The offshore jurisdiction of states in the southeastern U.S. could triple in the relatively near future. Two Louisiana Congressmen, U.S. Sen. David Vitter and U.S. Rep. Bill Cassidy, recently introduced companion bills styled as the Offshore Fairness Act (OFA), which would extend the offshore jurisdictions of Louisiana, Mississippi, Alabama, Florida (partially), Georgia, South Carolina, North Carolina and Virginia to three marine leagues (nine nautical miles) from their respective coastlines. That amounts to an expansion of approximately six nautical miles from their current jurisdictional limits of approximately one marine league or three nautical miles.

At present, two states in the Union – Texas and Florida (in part) – already have offshore jurisdictions extending 3 marine leagues from their coastlines. The Supreme Court of the United States has held that, upon Texas’s admission into the Union in 1845, Congress affirmed Texas’s boundary of three marine leagues, as established by Texas’s First Congress in 1836, through the Annexation Resolution of 1845. U.S. v. States of La., Tex., Miss., Ala. & Fla., 363 U.S. 1, 80 S. Ct. 961, 4 L. Ed. 2d 1025 (1960), supplemented sub nom., U.S. v. Louisiana, 382 U.S. 288, 86 S. Ct. 419, 15 L. Ed. 2d 331 (1965). The Supreme Court similarly has held that Congress’s approval of Florida’s Constitution in 1868, which was done as part of the implementation of the Reconstruction Act of 1867, affirmed the three league boundary along Florida’s Gulf Coast as set forth in that Constitution. Id. However, Florida’s boundary on its Atlantic/eastern boundary was not defined as extending three marine leagues from its coastline in its Constitution, so its offshore jurisdiction extends only three nautical miles off of that coast.

The major hurdle the OFA will face certainly will be its impact on rights to the massive amount of revenue, actual and potential, generated from resources derived from the submerged lands between the existing and potential boundaries. In its current form, the OFA expressly excludes the Outer Continental Shelf Lands Act (43 U.S.C. § 1443, et seq.) and the Gulf of Mexico Energy Security Act of 2006 (43 U.S.C. § 1331 note; Public Law 109-432) from its reach, and it would not impact federal oil and gas leases in affected areas on the date of the transfer of jurisdiction from the federal government to the states. However, the proposed bill expressly provides that it “shall not apply to any interest in the expanded submerged land that is granted by the State after the date on which the land is conveyed to the State” by the federal government. It also provides that the states in question may exercise all sovereign powers of taxation over interests in the expanded submerged lands acquired or created after the date the lands are transferred to the states.  Whether the states or the federal government should receive the tax revenues generated by such future interests certainly will be a point of contention.

In its present form, the OFA also would grant the subject states exclusive management over the red snapper fish, the lutjuanus campechanus, within 200 miles from their coastlines consistent with the U.S.’s exclusive economic zone. At present, the National Oceanic and Atmospheric Administration (NOAA) is responsible for conducting scientifically based fishery stock assessments for the red snapper fish. However, NOAA’s assessments have recently come under increased criticism from states and special interest groups.  If passed, the states would remain in charge of red snapper management until each state’s governor certifies to the Secretary of Commerce, in writing, that NOAA’s stock assessments are accurate and based on sound science.

UPDATE: New Orleans CityBusiness has reported that on Monday, April 22, Texas and Louisiana sued to block federal fishery officials from regulating the length of the red snapper recreational fishing season in federal waters off their coasts.

Other resources:
http://www.boem.gov/Oil-and-Gas-Energy-Program/Leasing/Outer-Continental-Shelf/Index.aspx
http://www.gpo.gov/fdsys/pkg/BILLS-113hr1430ih/pdf/BILLS-113hr1430ih.pdf (House bill)
http://www.gpo.gov/fdsys/pkg/BILLS-113s681is/pdf/BILLS-113s681is.pdf (Senate bill)

Bureau of Ocean Energy ManagementThe Center for Sustainable Economy, a non-profit public interest consulting firm, filed a lawsuit today against the Bureau of Ocean Energy Management (BOEM) in an attempt to halt that agency’s first approved five-year Outer Continental Shelf (OCS) Oil and Gas Leasing Program since the BP oil spill. The Program, which establishes a schedule for 2012-2017 to be used as a basis for considering where and when oil and gas leasing might be appropriate in both the Gulf of Mexico and Alaska, received final approval from U.S. Department of the Interior on August 27, 2012.

The Center for Sustainable Economy contends that the BOEM’s implementation of the Program was a hasty, uniformed, and illegal course of action. In a press release, the Center stated that “[i]ncomplete and flawed economic analysis led BOEM to rush ahead with new offshore leases that may not be economically justified in violation of the National Environmental Policy Act, Outer Continental Shelf Lands Act, and Administrative Procedure Act.”

Industry leaders and GOP members on Capitol Hill certainly are opposed to the lawsuit. E2-Wire, an energy and environmental blog based in Washington D.C., reports that “a number of industry groups—including the American Petroleum Institute and the International Association of Drilling Contractors—have also petitioned the appeals court to intervene in the case on Interior’s side, noting their interests are at stake in the case.” While they believe the Program is too modest and should have made more Outer Continental Shelf areas available for drilling and energy exploration, they recognize that the Center’s success in the litigation would be another setback for an industry still coping with the aftermath of the BP oil spill.

The lawsuit was filed in the United States Court of Appeals for the District of Columbia.

Middelgrunden Wind Plant (HC Sorensen, Middelgrunden Wind Turbine Cooperative, NREL/Pix 17855

On May 14, 2012, the Bureau of Ocean Energy Management (BOEM) announced a finding of “no competitive interest” with regard to a proposed right-of-way grant area off the Mid-Atlantic coast for construction of an offshore wind energy transmission line. While BOEM’s decision represents a key step forward for this federal offshore wind farming project, two fast-moving projects off the coast of Texas suggest that development in waters under state jurisdiction may well have the inside track over federal projects, due to a more streamlined regulatory process. In addition, offshore wind projects along the Gulf Coast benefit from a general population more welcoming to offshore industry, as well as a high concentration of marine and offshore industrial fabricators and service companies that give the Gulf Coast a competitive advantage with lower construction, operation, transportation and maintenance costs.

The Coastal Point Energy project has been licensed for testing by the Texas General Land Office and contemplates installation (planned for the end of 2011 but apparently delayed) of a test wind turbine on a platform in shallow Texas waters of the Gulf of Mexico. Ultimately, Coastal Point plans to spend $720,000,000 on a 300 megawatt wind farm 8.5 miles off Galveston on 12,350 leased acres.  Additionally, the Army Corps of Engineers is developing an environmental impact statement, anticipated to be completed in 2014, for a second project under development by Baryonyx Corporation, Inc.  Baryonyx holds leases in Gulf of Mexico state waters, offshore Willacy and Cameron Counties, and proposes to construct an approximately 300-turbine wind farm.

As the Gulf Coast offshore wind industry continues to develop, it brings with it supply chain manufacturing and related job growth.  An example of the potential for such economic development is the manufacturing facility established by UK-based Blade Dynamics at the Michoud Assembly Facility in New Orleans East.  Incentivized by state tax credits and worldwide demand for wind turbine parts, the company is hiring hundreds of workers. This type of green energy industrial development bodes well for the economic future of a region whose prospects were severely compromised by the Obama Administration’s drilling post-BP spill drilling moratorium and general hostility to the oil and gas industry that traditionally has been the backbone of the area economy.