December 19, 2023

Offshore Wind: New California Law Aims to Simplify and Expedite Offshore Wind Energy Development

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California recently enacted two laws—the Offshore Wind Expediting Act (SB 286) and the California Offshore Wind Advancement Act (AB 3)—to accelerate the development of offshore wind energy that could have significant implications for the industry and its stakeholders. The new laws aim to streamline the offshore wind permitting process, promote collaboration among state agencies and interested parties, and support the development of a seaport readiness strategy and in-state manufacturing goals.

This Legal Update summarizes some of the key provisions of the new laws and practical takeaways for investors and other stakeholders interested in pursuing offshore wind opportunities in California.

California’s Recent Offshore Wind Focus

The two new laws are consistent with other initiatives in California. For example, in our previous Legal Update, we analyzed another recent California law, AB 1373, which facilitates the procurement of power from large-scale, long-lead time projects (such as offshore wind, battery storage, and geothermal projects) through a “central-buyer” mechanism at the California Department of Water Resources.

Together, new laws AB 1373, SB 286, and AB 3 are intended to convey strong policy support for California’s efforts to establish itself as a leader in offshore wind energy.

The Offshore Wind Expediting Act (SB 286)

SB 286 establishes a “consolidated permitting” approach for offshore wind projects in the coastal zone, which is governed by several overlapping jurisdictions, agencies, and regulations.

“Consolidated permit” approach

Under this “consolidated” approach, the California Coastal Commission (CCC) will issue a consolidated coastal development permit for offshore wind projects after coordinating with relevant local authorities and incorporating their recommendations into the final permit. The streamlined permit would be relevant for projects associated with the construction and operation of offshore wind energy projects and transmission facilities needed for those projects. The State Lands Commission (SLC) will act as the lead agency for purposes of review and compliance with the California Environmental Quality Act (CEQA) and will coordinate with the CCC and other responsible agencies on CEQA and National Environmental Policy Act (NEPA) review.

New working group and “statewide strategy”

The law also creates a California Offshore Wind Energy Fisheries Working Group, which will include representatives from the commercial and recreational fishing industries, offshore wind energy industry, California Native American tribes with affected tribal fisheries, and other stakeholders. By January 2026, the working group is required to develop a statewide strategy to avoid or minimize impacts to fisheries from offshore wind projects. The working group will also develop best practices for communication, socioeconomic impact analysis, data collection, adaptive management, and fishing and tribal agreements. The CCC plans to adopt the strategy—which will be binding on applicants seeking permits or approvals for offshore wind projects—by May 2026.

The law also directs the working group to develop a framework for reasonable compensatory mitigation (e.g., restoration, establishment, enhancement, and preservation), which will include a payment structure to compensate fishing and tribal interests for “unavoidable impacts” from offshore wind projects. The SLC (or relevant local trustee) will consider this framework when granting leases for offshore wind projects, and the lease revenues will be deposited into a new Offshore Wind Energy Resiliency Fund, which will be used for the compensatory mitigation program.

The California Offshore Wind Advancement Act (AB 3)

AB 3 requires the development of a second-phase plan and strategy for seaport readiness, building on the existing strategic plan that was developed by the California Energy Commission (CEC) and the State Energy Resources Conservation and Development Commission (SERCDC).

The law requires a study and report on California’s seaport readiness strategy by December 2026, which will identify the infrastructure, workforce, and environmental needs and opportunities for seaport development and offshore wind deployment. The law also requires a report on the feasibility of achieving 50% and 65% in-state offshore wind manufacturing by December 2027 and the potential economic and environmental benefits and challenges of increasing the local content of offshore wind components and services.

Some Key Takeaways – Benefits and Other Considerations

The laws are expected to reduce the offshore wind permitting timeline by five years, providing more certainty for offshore wind developers and investors, and are consistent with California’s ambitious stated goals of producing up to 5,000 megawatts (MW) of offshore wind energy by 2030 and up to 25,000 MW by 2045 as part of its broader goal of achieving 100% clean energy by 2045.

However, the laws also pose challenges and risks for the offshore wind industry and its stakeholders, including the following:

  • While the laws go some way toward reducing duplication, inconsistency, and delay in obtaining approvals for offshore wind energy projects, developers should be mindful of the potential for public participation and litigation challenges to the consolidated permit process and the environmental plans and effects, as well as the need to coordinate with local governmental agencies and California Native American tribes to address their recommendations and concerns, consistent with CEQA, the California Coastal Act, and the CCC's tribal consultation policy. (Note, however, that, in July 2023, California enacted SB 149, which streamlines judicial review of energy projects and procedures around documentation under CEQA, with the express goal of making California more competitive for funding, including in connection with the Inflation Reduction Act and the Bipartisan Infrastructure Law.)
  • The laws aim to provide more clarity, consistency, and transparency for offshore wind energy developers, operators, and stakeholders on how to avoid, minimize, and mitigate impacts to ocean fisheries and fishing communities and how to compensate them fairly and reasonably for economic impacts. However, applicants will still need to be prepared to engage with the fisheries working group and comply with the terms, recommendations, and best practices established in the statewide strategy, as adopted by the CCC, and to participate in locally negotiated agreements with the fishing industry and offshore wind energy leaseholders, as appropriate, to further streamline the approval process.
  • While SB 286 provides a source of funding and a mechanism for delivering reasonable compensatory mitigation for unavoidable impacts associated with offshore wind energy projects, developers and operators should be aware of the potential costs and obligations that may arise from the payment structure to reasonably compensate commercial, tribal, and recreational fisheries and impacted commercial fish processors for unavoidable impacts, as well as the proportionate amount from each lessee that is sufficient to cover state costs. The payment structure is likely to include investments in fleet improvements to promote resiliency, reasonable compensation for the commercial fishing industry for personal property losses caused by offshore wind energy projects, and reasonable compensation for lost commercial and tribal revenue due to reduced fishing grounds.

We will continue to monitor for our clients the progress and outcomes of the working group, the seaport readiness strategy, and the in-state manufacturing goals, as well as the studies that are required.

Additional Author: Jason Pham

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