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Monday, July 25, 2011

Federal Legislative Update: Politics and Geography

Offshore wind project developers and industry supporters have spent almost as much time clamoring for a comprehensive tailored legislative package as they have working on their own projects. Although some progress has been made at both the state and federal levels, there is nearly universal agreement that the absence of coordinated federal and state regulatory schemes has seriously impeded project progress and, worse, has discouraged investors from committing to capital-intensive offshore wind projects in the United States. While everyone seems to agree that top-down legislation would help streamline offshore wind in the United States, legislators have yet to agree on what that legislation will look like.

Since June 2011, three pieces of proposed legislation affecting offshore renewable energy have been introduced on Capitol Hill. The first two bills, H.R. 2170 and H.R. 2173, propose to fast track offshore wind projects abating certain prerequisite environmental studies and curtailing the associated public comment periods. The third bill, S.1397, proposes to extend the Investment Tax Credit (“ITC”) for offshore wind. Notably, the congressmen who are sponsoring the first two bills are mostly from states without active offshore wind projects. These bills have been met with significant industry resistance. In contrast, the congressmen who introduced the third bill all hail from states with active offshore wind projects. This bill has been widely lauded by industry members and advocates.

H.R. 2170 and H.R. 2173

On June 14, 2011, United States Representative Rob Wittman (VA-1) introduced two bills: H.R. 2170, “Cutting Federal Red Tape to Facilitate Renewable Energy Act”; and H.R. 2173, “Advancing Offshore Wind Production Act”. These bills seek to streamline the development of offshore energy projects by limiting or entirely eliminating certain obligations normally required under the National Environmental Policy Act (“NEPA”).

Unless a proposed action is eligible for a categorical exclusion, NEPA requires federal agencies to consider detailed evaluations of the environmental impact of any (a) the proposed action; (b) a no action alternative; and (c) alternative courses of action.

Proposed bill H.R. 2170 limits the scope of environmental assessments associated with offshore wind projects. Accordingly, H.R. 2170 eliminates the need to consider alternative courses of action in the environmental assessment as follows:

a Federal agency shall—
(1) consider only the proposed action and the no action alternative;
(2) analyze only the proposed action and the no action alternative; and
(3) identify and analyze potential mitigation measures only for the proposed action and the no action alternative.
See H.R. 2170. In addition, H.R. 2170 shortens the public comment period from the statutory minimum of 45 days to 30 days.

H.R. 2173 legislates a categorical exclusion for offshore meteorological site testing and monitoring projects. Accordingly, offshore wind developers would be allowed to install meteorological site testing and monitoring projects without preparing the otherwise mandatory environmental assessments and/or impact statements.

Although both H.R. 2170 and H.R. 2173 would have the potentially desirable effect of shortening the list of regulatory mandates for developers, both industry representatives (see testimony of Chris Taylor on behalf of AWEA) and environmental advocacy groups (see Brandi Collander on behalf of NRDC) have indicated strong opposition to both bills on the grounds that reduced or eliminated opportunities for public involvement will lead to an increase in litigation volume, which, in turn, will cause more development delays.

Both bills were co-sponsored by the same nine additional House members: Rep. Paul Broun (GA-10), Rep. Jeff Duncan (SC-3), Rep. John Duncan, Jr. (TN-2), Rep. Bill Flores (TX-17), Rep. Doc Hastings (WA-4), Rep. Raul Labrador (ID-1), Rep. Doug Lamborn (CO-5), Rep. Jeffrey Landry (LA-3) , Rep. Tom McClintock(CA-4), Rep. Steve Southerland (FL-2). With the exception of Representatives Wittman (VA) and Flores (TX) whose districts are not directly involved with offshore wind, none of the bills’ sponsoring congressmen hail from states with active offshore wind. Notwithstanding the opposition testimony, both bills were approved by the House of Representatives’ Natural Resources Committee on July 11, 2011.

S. 1397

On July 21, 2011, Senators Tom Carper (D-DE) and Olympia Snowe (R-ME), filed S. 1397, the “Incentivizing Offshore Wind Power Act.” S. 1397, also known as “A Bill to Amend the Internal Revenue Code of 1986 to Provide For an Investment Tax Credit Related to the Production of Electricity from Offshore Wind.” Although the text of S. 1397 is not yet available, Sen. Carper’s office has issued a press release describing the terms of the bill as follows:

Specifically, the Incentivizing Offshore Wind Power Act provides the offshore wind industry with enhanced stability by extending investment tax credits for the first 3,000 MW of offshore wind facilities placed into service – which is an estimate of 600 wind turbines. These tax credits are vital for this new clean energy technology because there is a much longer lead time for the permitting and construction of offshore wind turbines, compared to onshore wind energy. Once awarded a tax credit, companies have five years to install the offshore wind facility. Companies cannot receive other production or investment tax credits in addition to the offshore wind investment tax credit.
See, Offshore Wind Development Coalition ("OWDC") have announced their support for S. 1397. In fact, the OWDC had previously identified legislation extending the ITC as a key goal.

Co-sponsors for S.1393 include: Sen. Sherrod Brown (OH), Sen. Benjamin Cardin (MD), Sen. Susan Collins (ME), Sen. Christopher Coons (DE), Sen. Frank Lautenberg (NJ), Sen. Robert Menendez (NJ), Sen. Jack Reed (RI), and Sen. Sheldon Whitehouse (RI). Significantly, all of S.1397’s sponsoring legislators represent states hosting active offshore wind development projects.

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