The Nickel Report

On October 18, 2022, the Department of the Interior announced that the Bureau of Ocean Energy Management (BOEM) will hold an offshore wind energy lease sale on December 6, 2022, for areas on the Outer Continental Shelf (OCS) off central and northern California.

This will be the first-ever offshore wind lease sale on America’s west coast and the first-ever U.S. sale to support potential commercial-scale floating offshore wind energy development. Auction details, lease terms, and qualified bidding companies that can participate in the auction will be outlined in a Final Sale Notice (FSN) to be published in the Federal Register later this week.

However, a pre-publication version of the FSN is available here. And maps of the lease areas to be offered, final lease instruments, and other materials relevant to the lease sale can be found here.

The draft FSN details certain provisions and conditions of the leases, auction details, the lease form, criteria for evaluating competing bids, award procedures, appeal procedures, and lease execution. At bottom, BOEM will offer the following five leases for sale in a single auction using a multiple-factor bidding format: Lease OCS-P 0561 (63,338 acres); Lease OCS-P 0562 (69,031 acres); Lease OCS-P 0563 (80,062 acres); Lease OCS-P 0564 (80,418 acres); and Lease OCS-P 0565 (80,418 acres). In sum, this lease sale will auction 373,268 acres of land for offshore wind development.

This lease sale is critical to achieving the Biden administration’s deployment goals of 30 gigawatts (GW) of offshore wind energy by 2030 and 15 GW of floating offshore wind energy by 2035. It also creates an opportunity for the 43 entities which BOEM has determined are legally, technically, and financially qualified to hold commercial wind leases in offshore California.

That said, BOEM will offer bidding credits for those who enter into community benefit agreements, invest in workforce training, and bolster supply chain development. However, BOEM will require winning bidders to make efforts to enter into project labor agreements, engagement with Tribes, underserved communities, ocean users, and agencies. An additional caveat, BOEM has stated that the issuance of any lease resulting from this sale does not constitute approval of project-specific plans to develop offshore wind energy. And such plans, if submitted by the Lessee, are subject to environmental, technical, and public reviews prior to final authorization from BOEM.

A final note, it is important to consider the impact that the Inflation Reduction Act has on this lease sale of offshore wind in California. Specifically, BOEM’s statement in the FSN that: “Conducting Lease Sale 259 [oil and gas in the Gulf of Mexico] is needed for BOEM to satisfy the requirements in Section 50265(b)(2) of the Inflation Reduction Act (IRA) and issue the leases resulting from this lease sale.” Further analysis on federal offshore leasing strategy, and the IRA’s effect on the regulated community, may be found in a recent article written by Hunton Andrews Kurth attorneys in Offshore Magazine.

The attorneys at Hunton Andrews Kurth stand ready to assist developers with their offshore wind energy needs and have experience at every level of the offshore wind energy lease sale process.