The Nickel Report

On January 12, 2023, the U.S. Department of the Interior’s (DOI) Bureau of Energy Management (BOEM) announced the signature of a Notice of Proposed Rulemaking (NOPR) addressing the regulations governing wind energy development on the Outer Continental Shelf (OCS). As BOEM notes in the NOPR, the first OCS renewable energy regulations were promulgated in 2009 by the Minerals Management Service, the predecessor to BOEM.  Through the NOPR, BOEM intends to modernize its regulations by implementing reforms identified by the agency and recommended by stakeholders since 2010, when BOEM was established. 

In addition to the NOPR, DOI announced on January 17, 2023 that it also signed a final rule on January 12, 2023, reassigning the existing regulations governing safety and environmental oversight and enforcement of OCS renewable energy activities from BOEM to the Bureau of Safety and Environmental Enforcement (BSEE).  The Principal Deputy Assistant Secretary for Land and Minerals Management, Laura Daniel-Davis, said that the final rule was aimed at “advance[ing] regulatory clarity and transparency for the offshore wind industry” by  “allow[ing] the bureaus to focus on ensuring that future clean energy development and operations continue to occur in a safe and environmentally responsible manner.”  The final rule will take effect immediately upon its publication in the Federal Register.

With respect to the NOPR announced on January 12, it explains that BOEM is proposing changes that include “incremental funding of decommissioning accounts; more flexible geophysical and geotechnical survey submission requirements; streamlined approval of meteorological (met) buoys; revised project verification procedures; reform of BOEM’s renewable energy auction process; and greater clarity regarding safety requirements.”  Publication of the NOPR in the Federal Register—which will likely occur by early February—will initiate a 60-day public comment period on the proposed rule.

BOEM estimates that the proposed revisions—if and when finalized—will save wind energy developers approximately $1 billion over a 20-year period.  The NOPR describes the proposed rule as including eight major components:

1. Eliminating unnecessary requirements for the deployment of met buoys;
2. Increasing survey flexibility;
3. Improving the project design and installation verification process;
4. Establishing a public Renewable Energy Leasing Schedule;
5. Reforming BOEM’s renewable energy auction regulations;
6. Tailoring financial assurance requirements and instruments;
7. Clarifying safety management system regulations; and
8. Revising other provisions and making technical corrections.

The NOPR proposes to accomplish these eight components and broader policy goals by “modernizing regulations, streamlining overly complex and burdensome processes, clarifying ambiguous provisions, enhancing compliance provisions, and correcting technical errors and inconsistencies.”

For example, in the first component of the proposed rule, BOEM recognizes that, in the nearly 15 years since the OCS renewable energy regulations were promulgated, the offshore wind industry has largely shifted from gathering meteorological data using towers (“met towers”) fixed to the seafloor by foundations to using meteorological buoys (“met buoys”) anchored to the seafloor to gather the same data.  BOEM proposes to eliminate both the regulatory requirement to develop a site assessment plan for data collection conducted from met buoys and the limited lease requirement for installing off-lease met towers and met buoys.  Likewise, in the second component of the proposed rule, BOEM notes that there is often uncertainty regarding the precise locations of offshore wind turbines at the time submission of construction and operations plans (COPs) is required, and lessees have therefore requested permission to submit geotechnical data for turbine locations after COP approval but before project construction begins.  BOEM proposes to defer certain geotechnical survey requirements to align more closely to industry practice.  The third component of the proposed rule focuses on the role of the certified verification agent (CVA) in reviewing the design, fabrication, and installation of offshore wind projects, and would revise the regulatory language to describe the CVA’s role in terms of verification rather than certification. 

In the fourth component of the proposed rule, BOEM proposes to establish a commitment for the Secretary of the Interior “to publish a schedule of anticipated lease sales that BOEM intends to hold in the subsequent 5 years . . . [so that it may] provide advance notice to stakeholders of areas being considered for future lease sales.”  If adopted, this new proposed schedule “would be updated at least once every 2 years to reflect any changes,” and “would include a general description of the area of each proposed lease sale, the anticipated quarter of each sale, and reasons for changes made to [any] previously issued leasing schedule.”  In the fifth and sixth components of the proposed rule, BOEM proposes to revise the regulations pertaining to pre- and post-auction procedure based on lessons learned through previous auctions—including by specifying actions to be taken if a provisional winner does not meet its obligations and if a lease is relinquished, contracted, or canceled—and to revise financial assurance requirements of lessees and grant holders to more closely align with the financial risks those requirements were intended to alleviate, including through allowing for incremental funding of decommissioning accounts.  In the seventh component of the proposed rule, BOEM proposes to revise and clarify the requirements relating to safety management systems and safety reporting requirements.

Another potentially significant change is found in the eighth, catch-all component of the proposed rule, whereby the Department seeks to—among other things—“restructure commercial lease terms into four periods tied to activities required to develop the lease; explicitly allow regulatory departures before and after a lease or grant is issued or made; authorize civil penalties without either notice or a time period for corrective action when violations cause or threaten to cause serious, irreparable, or immediate harm or damage; add specific procedures regarding lease segregation and consolidation; and standardize the annual rental rate per acre across most grants.”

The 364-page NOPR is both lengthy and technical, and will require careful thought and consideration from interested parties—especially the regulated community, whose wind energy development and operations on the OCS will be impacted by this rulemaking.  Many of the proposed changes are potentially significant, and warrant comment from interested parties, especially from those in the regulated community who have existing OCS wind energy projects in their development portfolios or those parties who are thinking about expanding to such investments.