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Legal Update

US Department of Interior Approves Offshore Wind Project

30 April 2010
Mayer Brown Legal Update

On April 28, 2010, the Secretary of the US Department of the Interior signed a Minerals Management Service (MMS) record of decision approving a commercial lease and associated easement in federal waters in the Nantucket Sound to the developer of the Cape Wind Energy Project, allowing for the construction and operation of a wind energy project on the US Outer Continental Shelf (OCS). The Cape Wind Energy Project would be the first such wind farm located in US offshore waters, making this long awaited decision a critical step forward for the emerging US offshore wind industry.

Pursuant to the Energy Policy Act of 2005, the Secretary of the Interior has discretionary authority (which it has delegated to MMS) to issue leases, easements or rights of way for wind farms and other renewable generation projects to be located on the OCS. The MMS decision for the Cape Wind Energy Project was issued after an extensive review process and over substantial opposition from groups concerned with potential visual and environmental impacts of the project.

The MMS decision was also issued despite the recommendation of the Advisory Council on Historic Preservation (ACHP) that the MMS approval should not be granted because the project would adversely affect property protected by the National Historic Preservation Act. In its April 2, 2010, recommendation letter to Department of Interior Secretary Ken Salazar, ACHP found that the Cape Wind Energy Project would adversely affect the viewsheds of a number of historic and cultural properties, and that it would have a direct adverse effect on the Nantucket Sound seabed. The Department of the Interior is required to consider ACHP comments on certain projects but is not legally bound to follow ACHP’s recommendation.  

In a letter to ACHP issued at the same time as the MMS decision, Secretary Salazar explained that the NHPA requires Interior to take account of historic or cultural resources, but it does not preclude Interior from making a decision that impacts those resources. Secretary Salazar further explained that the approval reflects the need to balance the importance of developing renewable energy sources—for purposes of energy security, battling climate change and job creation—with the need to preserve environmental and cultural resources near the project’s location.

Nevertheless, recognizing the concerns of ACHP and others, the approval for the Cape Wind Energy Project granted by the MMS Decision is conditioned upon the project having obtained other required permits and approvals, and upon specific mitigation and monitoring measures to minimize environmental harm that will be binding conditions in the lease. Among other things, the MMS decision approves a wind farm design that is reduced from 170 turbines in the original proposal to 130 turbines, and that is reconfigured from the original proposal in order to diminish visual effects of the project from Nantucket Island. In addition, both daytime and nighttime lighting of the wind turbines is to be eliminated unless required by the Coast Guard for navigation safety, and the turbines must be painted off-white to reduce contrast with the sea and sky while remaining visible to birds. The MMS lease also requires the developer to conduct additional seabed surveys to protect archaeological resources prior to bottom disturbing activities and contains a Chance Finds clause that requires the developer to halt operations and notify Interior in the event of an unanticipated archaeological find.

The Cape Wind Energy Project still faces a number of additional hurdles before it can proceed with construction and eventual operation. For example, the project is still awaiting Federal Aviation Administration approval, and it does not yet have a power purchase agreement with the local utility. Some opponents of the project have indicated that they intend to file suits based on various environmental regulations in an attempt to further delay the project. However, it is certain that the MMS decision is a major milestone both for the Cape Wind Energy Project and for the US offshore wind development community. The MMS record of decision and the correspondence between Interior and ACHP regarding the Cape Wind Energy Project also provide an instructive record for other offshore wind project developers, including highlighting a number of mitigation measures that may apply to other projects as a condition to MMS approval.

For more information about the Minerals Management Service approval process, please contact at +1 713 238 2650.

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