State Role Prominent as Oregon Offshore Wind Nears Auction

The public comment period for two proposed offshore wind energy areas (WEAs) totaling 219,568 acres off the coast of southern Oregon concluded on October 31, marking a critical juncture in the complex process of bringing this new source of renewable energy to the state.[1] BOEM will now consider the comments and any new information received regarding the draft areas, and then identify final WEAs for Oregon. Once these areas are finalized, programmatic environmental review will begin for the site assessment phase of the leasing process.

If the timeline holds, in 2024 Oregon will become the second West Coast state in as many years to see commercial-scale offshore wind areas auctioned off its coastline.[2] Offshore wind is proceeding more quickly in California, where the first Pacific auction was held last year. But, in a microcosm of offshore wind’s struggles in the United States, the Oregon effort is hampered by the complex regulatory scheme with a wide array of veto points—particularly the stronger state role which is not present in onshore federal permitting.[3]

Potential Oregon Leases and Process Concerns

BOEM whittled down the draft WEAs from two “call areas” proposed in 2022 that spanned almost 1.2 million acres.[4] The agency extended the current comment period amid concerns from nearby counties, tribal nations, and the marine fishing industry.[5] If adopted as proposed, the draft WEAs—located between 18 and 32 miles off the coasts of Lane, Coos, and Curry Counties—could support up to 2,665 MW of floating offshore wind development. That figure equals nearly 90% of Oregon’s stated goal of building 3 GW of floating offshore wind energy infrastructure by 2030.[6] But in a June 2023 letter, Oregon Governor Tina Kotek, joined by both the State’s Senators and the two Representatives of coastal districts, urged BOEM to “pause” its process until the state can engage further with stakeholders, claiming that the BOEM process “has created significant friction with coastal communities, the fishing industry, and Tribal government.[7] The letter also asserts that additional time will permit the State of Oregon to develop “a more coordinated approach.”[8] Kotek followed up the letter with a request in August that BOEM hold additional public meetings before releasing the draft WEAs.[9] Six Oregon agencies submitted comments on the draft WEAs in October largely affirming the Governor's request for BOEM to slow its process and expand its analysis of potential impacts.[10]

Despite setting a 3 GW offshore wind generation goal, Oregon has not yet incorporated offshore wind into its Statewide Planning Goals, which govern land use policy at the local and state levels.[11] The state is still working to amend its Territorial Sea Plan (TSP), which implements the Statewide Planning Goals related to coastal and ocean resources,[12] to better address marine renewable energy and undersea cable permitting. Because floating offshore wind facilities would be located in federal waters, the draft amendments focus on the transmission component of these projects. The proposed amendments to the TSP would require the Department of State Lands to convene all relevant state agencies at the pre-application phase to coordinate the cluster of state permits and authorizations required for seafloor development within Oregon’s territorial sea.[13]

Part 5 of the TSP states that “Oregon prefers to develop renewable energy through a precautionary approach that supports the use of pilot projects and phased development in the initial stages of commercial development.”[14] The draft amendments to Part 4 of the TSP would not alter that language, but would add an impetus to “coordinate the development and installation of infrastructure” on the seafloor in light of “growing development” of offshore wind farms and other renewables in the region.[15] The Part 4 amendments are currently pending review; the notice of proposed rulemaking was submitted in September and public comment closed on November 3.[16]

The state studied analogous permitting processes in California and Washington as models for the draft amendments.[17] The amendments are significant because the TSP is a framework within which local land use policies are developed, and through which Oregon makes federal consistency determinations under the Coastal Zone Management Act.[18] In this way, the TSP’s stance on offshore wind can directly impact development even in federal waters via the CZMA’s consistency provision. Moreover, since the TSP is required by state law to be “compatible with the comprehensive plans of adjacent coastal counties and cities,”[19] amending the TSP will not eliminate the need to work with coastal counties when permitting offshore wind in Oregon.

Investment in Offshore Wind Rising in Line with Federal and State Goals, but Uncertainties Loom

BOEM’s role in offshore wind development in Oregon is keyed to the Biden Administration’s target of building 30 GW of offshore wind generating capacity by 2030, and specifically 15 GW of floating offshore wind by 2035.[20] Buttressing this aspiration are substantial investments by industry. The National Renewable Energy Laboratory reported in August 2023 that there were almost 53,000 MW of offshore wind planned or at some stage of the development process in the U.S.—a 15% growth over the previous year.[21] And an industry investment report in early 2023 found that new market investments had tripled in 2022 as long-term generation targets set by U.S. states multiplied nearly twofold.[22]

Despite this front-end growth, the market faces uncertainty regarding the multi-layered regulatory and permitting process that projects must navigate at the federal, state, and local levels before beginning construction. While BOEM and Oregon have done significant work to develop the state’s offshore wind resource, it remains to be seen how turbulent the steps ahead will be for individual projects.

Recent lease auctions off New York and the Gulf Coast illustrate this sensitivity, and the resulting variety of potential outcomes for offshore wind development between states. In early 2022, BOEM set a record when its New York Bight auction garnered $4.37 billion in winning bids for roughly 480,000 acres of lease areas.[23] By contrast, BOEM’s subsequent August 2023 lease auction near Louisiana and Texas indicated lower enthusiasm for offshore wind development in that region. The Gulf Coast auction received only two bids for three lease areas, and only one of the three areas was sold—for only $5 million. Slow wind speeds, low electricity prices, and a lack of state power purchasing mandates are among the likely factors.[24] And in New Jersey, despite significant support from the state government, the developer of the 2,248 MW Ocean Wind projects cancelled them on November 1, citing financing costs and permitting delays.[25] Because of the state role in offshore wind through the CZMA, the specific regulatory and political environments of coastal states will influence site selection moving forward.

Progress in California

Landing squarely between the New York and Gulf auctions, BOEM’s November 2022 California lease auction garnered roughly $760 million in winning bids from five companies. The California auction—the first offshore wind auction in the Pacific Ocean, and the first floating offshore wind auction ever held by BOEM—is the ripest for comparison with potential outcomes in an Oregon lease auction, should such a sale occur, given the similarities in technology, topography, and location. The California auction prices were not as high as some had hoped, but the result was strong enough to indicate industry confidence in a viable floating offshore market on the West Coast.[26] Like in California, bidders in an Oregon lease sale would be betting on relatively new (currently not operational in the U.S.) floating offshore technology in a new region, to be installed off the coasts of rural areas where offtake agreements, interconnection points, installation ports, supply chains, and skilled workforces are still under development.[27]

One component of the confident trajectory being mapped so far in California is the state government’s efforts to support offshore wind development. Through legislative and regulatory change, the state is cutting a path through the many laws with which offshore wind developers must comply and making the state permitting process more comprehensible. Efforts have included passing Assembly Bill 525,[28] pursuant to which the California Energy Commission in May 2023 created a permitting roadmap for offshore wind projects.[29] Gov. Newsom also recently signed Senate Bill 286, which modifies the requirements under the California Coastal Act of 1976 to require the California Coastal Commission to process a consolidated coastal development permit for any offshore wind energy project or associated development, including transmission facilities.[30] This requirement replaces a previous rule that the developer, the state agency, and local governments consent before moving forward with a consolidated permit.[31] The law’s chief author claims the law will shave five years off the current permitting process.[32]

Conclusion

The future of wind energy development off the coast of Oregon will hinge on numerous factors, not the least of which is the nature and degree of state and local government involvement in the permitting process. As BOEM continues to advance its draft lease areas toward a potential 2024 auction, would-be bidders must monitor state actions affecting not only local permits, but also CZMA consistency determinations and the planning of infrastructure buildouts needed to connect offshore projects to the grid.

For more information, please contact Marten Law's offshore wind team: Isabel Carey, Richard Allan, and Aidan Freeman.

[1] See Isabel Q. Carey, Offshore Wind Development in Oregon: A Status Report, Marten Law News (Apr. 5, 2022) (analyzing earlier phases of Oregon offshore wind planning), https://www.martenlaw.com/news....

[2] California became the first site of an offshore wind auction on the Pacific Coast in 2022, and BOEM has said it still plans to auction wind areas off of Oregon in 2024. See U.S. Says to Complete Offshore Wind Auctions on Schedule Next Year, Reuters (Sep. 25, 2023), https://www.reuters.com/busine....

[3] Section 307 of the Coastal Zone Management Act (CZMA) requires “any applicant for a required Federal license or permit to conduct an activity, in or outside of the coastal zone, affecting any land or water use or natural resource of the coastal zone of that state” to include with its application “a certification that the proposed activity complies with the enforceable policies of the state's approved program and that such activity will be conducted in a manner consistent with the program.” 16 U.S.C. § 1456(c)(3)(A). If a state objects, the Interior Secretary can overrule it on appeal “after providing a reasonable opportunity for detailed comments from the Federal agency involved and from the state, that the activity is consistent with the objectives of [the CZMA] or is otherwise necessary in the interest of national security.” Id.

[4] A Wind Energy Area Siting Analysis for the Oregon Call Areas, BOEM, at 1 (Aug. 2023), https://www.boem.gov/sites/def....

[5] See, e.g., Affiliated Tribes of Northwest Indians, Resolution #2023-39 (May 2023), https://atnitribes.org/wp-cont...; Pacific Fishery Management Council, Letter to Jean Thurston-Keller, BOEM, Sep. 20, 2023, https://www.pcouncil.org/docum....

[6] H.B. 3375 (2021), https://olis.oregonlegislature...; Carey, Offshore Wind, supra note 1.

[7] Letter from Tina Kotek et al. to Elizabeth Klein, Director of BOEM, June 9, 2023, https://subscriber.politicopro....

[8] Id.

[9] See George Plaven, Kotek Requests Public Meetings on Offshore Wind, Capital Press (Aug. 14, 2023), https://www.capitalpress.com/state/oregon/kotek-requests-public-meetings-on-offshore-wind/article_6cd128de-3ab8-11ee-9d2b-f3149ed81f97.html.

[10] The Department of State Lands, for example, said that it "supports developing pilot demonstration projects prior to approval of large commercial buildouts." Comment from Oregon Department of State Lands (Oct. 23, 2023), https://www.regulations.gov/comment/BOEM-2023-0033-0758.

[11] Oregon’s Statewide Planning Goals set statewide land use policies to which local and state actions must adhere. See OAR 660-015-0010(4) (setting Goal 19, relating to Ocean Resources), https://www.oregonocean.info/i....

[12] See Territorial Sea Plan, Oregon Coastal Mgmt. Pgm. (providing links to all sections of the TSP), https://www.oregon.gov/lcd/ocm....

[13] Oregon TSP Part 4, Rulemaking Draft § 4.2 (“Joint Agency Review Team”) (Sep. 2023), https://www.oregon.gov/lcd/OCM.... The proposed amendments would replace the current text of OAR 660-036-0001 (“Telecommunication Cables, Pipelines, and Other Utilities”).

[14] Oregon TSP Part 5, https://www.oregonocean.info/i....

[15] Oregon TSP Part 4, Rulemaking Draft § 1.3(f) (Sep. 2023), https://www.oregon.gov/lcd/OCM....

[16] Oregon Land Conservation and Development Dept., Notice of Proposed Rulemaking: Amend Territorial Sea Plan Part Four—Uses of the Sea Floor (Sep. 18, 2023), https://www.oregonocean.info/i....

[17] See Nataliya Stranadko, Submerged Cable Analyst, Presentation: Washington & California Permitting Process, Oregon Dept. of State Lands (April 12, 2023) (presented to the TSP Part 4 Working Group), https://www.oregonocean.info/i....

[18] See Federal Consistency, Oregon Coastal Mgmt. Program (describing CZMA and Oregon’s correlated coastal management program), https://www.oregon.gov/lcd/OCM....

[19] ORS 196.465(1).

[20] See Isabel Q. Carey, Inflation Reduction Act Benefits U.S. Offshore Wind Development, Marten Law News (Sep. 29, 2022) (discussing federal legislation and executive action on offshore wind), https://www.martenlaw.com/news....

[21] Nat’l Renewable Energy Lab’y, Offshore Wind Market Report: 2023 Edition, DOE/GO-102023-6059, Executive Summary (Aug. 2023), https://www.energy.gov/sites/d....  

[22] U.S. State Demand for Offshore Wind Nearly Doubled in 2022, Despite Economic Headwinds, Business Network for Offshore Wind (Feb. 21, 2023), https://www.offshorewindus.org....

[23] New York Bight, BOEM, https://www.boem.gov/renewable....

[24] Nichola Groom, First US Offshore Wind Auction in Gulf of Mexico Attracts Paltry Interest, Reuters (Aug. 29, 2023), https://www.reuters.com/sustai....

[25] Stanley Reed and Tracey Tully, Offshore Wind Firm Cancels N.J. Projects, as Industry’s Prospects Dim, N.Y. Times (Nov. 1, 2023), https://www.nytimes.com/2023/1....

[26] See, e.g., Kavya Balaraman, ‘Proceed with Caution’: Key Takeaways from California’s First Offshore Wind Energy Auction, Utility Dive (Dec. 19, 2022), https://www.utilitydive.com/ne....

[27] See Floating Offshore Wind: Benefits & Challenges for Oregon, Oregon Dep’t of Energy, at 30–54 (Sep. 15, 2022), https://www.oregon.gov/energy/....

[28] Calif. Assembly Bill 525 (2021), codified at Pub. Res. Code Ch. 14 § 25991, https://leginfo.legislature.ca....

[29] See Press Release: California Continues to Advance Offshore Wind with New Report Detailing Options for Permitting Projects, Calif. Energy Commission (May 10, 2023), https://www.energy.ca.gov/news....

[30] Calif. Sen. Bill 286 (2021), to be codified at 6 Pub. Res. Code Div. 6 Part 2, https://leginfo.legislature.ca....

[31] Id.; see 20 Cal. Pub. Res. Code § 30601.3.

[32] Press Release: McGuire’s Landmark Offshore Wind Expediting Act Signed by Governor Newsom, Cal. Sen. Mike McGuire (Oct. 7, 2023), https://sd02.senate.ca.gov/new....