Federal Update: BOEM Requests Comments on Proposed Lease Auction Process

BOEM Issues Auction Format Information Request; Public Comments Due on January 12

On December 5, 2011, the Bureau of Ocean Energy Management (BOEM) published a notice in the Federal Register entitled “Request for Information on the State of the Offshore Renewable Energy Industry—Auction Format Information Request (AFIR)” (AFIR) which seeks comments on proposed lease-sale auction procedures designated for offshore wind energy development on the Outer Continental Shelf. The AFIR provides for a 45-day public comment period set to expire on January 12, 2012. BOEM has also announced a workshop designed to educate stakeholders about the proposed auction format options and to solicit feedback. The workshop will take place on Friday December 16, 2011 from 8:30 a.m. to 3:30 p.m at the South Interior Building in Washington, D.C. Additional information about the workshop can be found here.

The auction methods proposed in the AFIR were designed in consideration of BOEM’s program objectives, which include:

• BOEM’s statutory obligation to seek a “Fair Return” for leases granted on the OCS;
  economic efficiency;



• program efficiency and manageability;



• “lease boundary flexibility” to enable bidders to select optimal lease areas within the confines directed by BOEM;



• fair competition among all interested bidders;
  process transparency;



• equal treatment and consideration of all bids by BOEM; and



• consistency.

The AFIR proposes several potential auction formats for use in a variety of circumstances including single lot leases and multiple lot leases. For example, for single lot auctions, BOEM proposes to employ a “simultaneous ascending clock auction” or SACA format. Under a SACA, BOEM would set the minimum bid price for a specific lot. If more than one bidder is willing to meet the asking price, BOEM would increase the price incrementally, requesting bidder acceptance at each increase until only one bidder remains. If all bidders drop out at the same price point, BOEM has indicated a number of possible approaches to break the tie. BOEM has also suggested a number of rules that would apply to bidders in a SACA, such as minimum and maximum numbers of lots that a prospective bidder can bid upon.

For multiple lot auctions, BOEM proposes a number of alternative auction formats including variations on the SACA approach. One proposed alternative to the SACA approach would ask bidders to submit bids at or above the designated minimum lot price in each round of bids. The auction would end when each subsequent round of bidding yields the same bid prices as the previous round. BOEM would then award the lease to the bid producing maximum revenue.

A general description of the proposed auctions is provided in the AFIR. A more comprehensive explanation of the auction formats along with BOEM’s commissioned study of various auction formats for the issuance of renewable energy leases (conducted by Power Auctions LLC) is available here.

Court Orders Reconsideration of FAA Approvals for Cape Wind Offshore Wind Project

On Friday October 28, 2011, the United States Circuit Court of Appeals for the District of Columbia issued a decision vacating and remanding the Federal Aviation Administrations’ ("FAA") 130 identical Determinations of No Hazard which were issued with respect to the proposed Cape Wind 130-turbine offshore wind farm. See Town of Barnstable, et al, v. Federal Aviation Administration, No. 10-1276 (D.C. Cir. 2011).

Summary of the Decision

The lawsuit, filed by long-standing opposition group Alliance to Protect Nantucket Sound (the “Alliance”) and the town of Barnstable, MA (together, the “Petitioners”), alleged that the FAA “violated its governing statute, misread its own regulations, and arbitrarily and capriciously failed to calculate the dangers posed to local aviation.” The FAA, along with intervening party Cape Wind Associates, LLC, responded by alleging that the petitioners had no Article III standing to challenge the FAA determinations. Id. at 3. Although the Court’s decision is likely to lead to additional delays for Cape Wind, the ruling does not per se negate the validity of the submerged land lease issued by the Department of the Interior (“DOI”) to Cape Wind in October 2010.

With respect to the threshold question of standing, the FAA argued that even if the Petitioners could allege harm, the fact that “FAA’s hazard determinations, by themselves, have ‘no enforceable legal effect’” means that reversal of the FAA hazard determinations would not redress the grievance. Id. at 5. Although the Court agreed that the FAA hazard determinations were not enforceable on their own, the DOI incorporated a provision into the submerged land lease requiring that Cape Wind abide by “any future mitigation measures that the FAA might deem necessary to reduce or eliminate a hazard on Cape Wind.” Id. at 6. Accordingly, the Court held that the DOI’s inclusion of the FAA hazard mitigation provision is sufficient basis to find it “‘likely as opposed to merely speculative,’ that [DOI would cancel or retract the Cape Wind lease] if faced with an FAA determination that the project posed an unmitigatable hazard.” Id. at 10 (additional citations omitted).

The Court then considered whether FAA properly issued its No Hazard Determinations. Although the petitioners’ alleged that the FAA violated both its governing statute (49 U.S.C. Sec. 44718(b)) and its own internal guidelines (“Procedures for Handling Airspace Matters”, FAA Order 7400.2G (April 10, 2008)), the Court’s ultimate ruling regarding the FAA’ hazard determinations rests solely on the FAA’s application of its internal guidelines. Id. at 10. Importantly, the Court did not issue a declaration stating that the Cape Wind turbines present a hazard – mitigatable or otherwise. Rather, the Court merely remanded the determinations to FAA “to require the FAA to address the issues and explain its conclusion.” Id. at 13-14.

What Happens Next?

There are at least two possibilities as to what will happen in the wake of the Circuit Court’s decision. First, the FAA and Cape Wind Associates could appeal the decision by submitting a writ of certiorari to the Supreme Court of the United States. However, if the Supreme Court does not grant certiorari, the decision of the Appeals Court will stand. Moreover, even if the Supreme Court does choose to hear the matter, a Supreme Court affirmation of the lower court ruling could further dampen the perception that the U.S. offshore wind industry has the support of the U.S. government.

The alternative is for FAA to follow the Circuit Court’s order. FAA would be within its authority to re-issue all 130 Determinations with a “No Hazard” finding provided FAA includes further explanation of its conclusions. Under principles of administrative law, the FAA’s hazard determinations must not be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). In other words, the agency must “adequately explain its result…." Public Citizen, Inc. v. FAA, 300 U.S. App. D.C. 238, 988 F.2d 186, 197 (D.C. Cir. 1993).

Nevertheless, even if FAA finds that it must issue one or more determinations indicating a hazard, the Circuit Court decision indicates that FAA may make recommendations for mitigation measures to overcome these hazards. Accordingly, the only circumstance under which DOI may need to reconsider Cape Wind’s lease is in the event that FAA finds that there are unmitigatable hazards associated with the Cape Wind turbines.

Litigants’ Statements About the Case

Given the longstanding enmity between Cape Wind Associates and the Alliance, both parties issued public statements regarding the decision of the Circuit Court.

The Alliance to Protect Nantucket Sound issued a press release stating that the decision is "a resounding victory for the Cape and Islands community and the citizens of Massachusetts" and that the "FAA case is the first of multiple federal lawsuits challenging this poorly sited and expensive project and is just the tip of the iceberg of the problems the courts will consider relative to the Nantucket Sound location."

Cape Wind spokesman Mark Rodgers issued Cape Wind's official response to the decision: "The FAA has reviewed Cape Wind for eight years and repeatedly determined that Cape Wind did not pose a hazard to air navigation," he said. "The essence of today's court ruling is that the FAA needs to better explain its Determination of No Hazard ruling."

Offshore Wind Investment Tax Credit: House Companion Bill Introduced

On October 18, 2011, Representative Bill Pascrell, Jr. (NJ-D) introduced H.R. 3238. H.R. 3238 is the companion bill to S. 1397 (previously discussed here) which was introduced on July 21, 2011 by Senators Tom Carper (D-DE) and Olympia Snowe (R-ME). The bills, both titled the “Incentivizing Offshore Wind Power Act”, propose an extension of the investment tax credit (“ITC”) for qualified offshore wind energy generation projects.

The bills, which contain nearly identical provisions, call for the Treasury to select up to 3000 MW of offshore wind projects which will qualify for tax credits if they are placed into service over a 5 year period. The tax credit would be the same 30% ITC that is granted to many other renewable energy sources. The five year extension of the ITC for offshore wind projects has been proposed in recognition of the longer siting, permitting and finance process required for offshore renewable energy projects-- a process that is currently estimated to take between 5-7 years. The existing ITC has a sunset provision expiring in 2012 that will render nearly all of the proposed offshore wind projects ineligible for the credit.

Co-sponsors for the Senate bill 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), all of whom represent states hosting active offshore wind development projects. The co-sponsor for the House bill is Representative Frank LoBiondo (NJ-R). There are at least three offshore wind generation projects proposed for both state and federal waters off the coast of New Jersey.

AWEA Offshore 2011: The Highlights

At last year's American Wind Energy Association Offshore Windpower Conference and Exhibition in Atlantic City, Secretary of the Interior Kenneth Salazar and Jim Gordon from Cape Wind signed the first-ever submerged land lease for an offshore wind farm on the United States' federally managed outer continental shelf. Many of those in attendance last year fully expected that the lease-signing would signal an increase in project momentum-- and many industry participants and observers fully believed that construction on the Nation's first offshore wind farm might begin in 2011.

At this year's Offshore Windpower Conference and Expo, attendees spent three days discussing what has happened-- and what has not happened-- since October 2010. Here are some quick highlights from the event:

Secretary Salazar and Maryland Governor O'Malley Present Keynote

The Conference kicked off with a keynote address presented by Department of the Interior Secretary Ken Salazar, Maryland Governor Martin O'Malley, AWEA CEO Denise Bode, Michelle Siekerka from the New Jersey Department of Environmental Protection, and program co-chairs Aileen Kenney (Deepwater Wind) and Jim Lanard (Offshore Wind Developers Coalition).

Following last year's lease signing, Secretary Salazar's comments seemed a little more subdued this year. Although the Secretary did not release any industry-shaking news, he affirmed that both he and the Obama administration are committed to creating an offshore wind industry in the United States. To that end, Secretary Salazar announced that the Bureau of Ocean Energy Management expects to announce lease agreements for as many as five wind farms in as little as a few weeks or months.

Deepwater Wind Announces Siemens as Turbine Supplier

Deepwater Wind announced that it signed an agreement with Siemens Energy to buy the company’s latest offshore wind turbines for deployment in the Block Island Wind Farm, a project that remains on track to be the nation’s first offshore wind farm.

Under the agreement, Siemens will supply five of its new 6.0-megawatt direct drive offshore wind turbines for the Block Island Wind Farm. This will be the first project in the United States, and one of the first anywhere in the world, to use the new turbine, which will be commercially available for the project.

The Block Island Wind Farm is one of several proposed small demonstration-scale offshore wind projects (such as Fishermen's Energy's proposed 6-turbine project to be located 2.8 miles off of Atlantic City, NJ) that may become the first offshore wind farm built in North America. The Block Island Wind Farm is a 30-megawatt project to be located in Rhode Island state waters. The project also includes a transmission cable connecting the island to the mainland grid for the first time. Pursuant to a heavily litigated but now approved 20-year power purchase agreement, National Grid has agreed to buy all of the output from the project.

The project is scheduled to be in the construction phase in 2013 or 2014, although the timing of construction is dependent on the permitting process and final turbine specifications.

Highlights from the Developers' Panel

The last session of the conference offered attendees to hear updates from two full panels of offshore wind developers actively pursuing offshore wind projects in the United States. The thirteen developers on the two panels represented the largest number of developer panelists ever put on stage at an AWEA Offshore Windpower Event.

Developers represented on the panel included: Tim Ryan (Apex Wind/ North Carolina), Ian Hatton (Baryonyx/ Texas), Bill Moore (Deepwater Wind / Rhode Island), Doug Copeland (enXco / California), Andy Kinsella (Mainstream Renewable Power/ United Kingdom), Erich Stephens (Offshore MW), Dennis Duffy (Cape Wind Associates/ Massachusetts), Daniel Cohen (Fishermen's Energy/ New Jersey), Chris Wisseman (Freshwater Wind/ Ohio), Robert Gibbs (Garden State Offshore Energy/ New Jersey), Peter Mandelstam (NRG Bluewater Wind/ Delaware), Carolyn Heeps (RES-Offshore), and Theo de Wolff (Seawind Renewable Energy Corp.).

Following an opportunity for each developer representative to provide an overview of his/her company and project status, the panel responded to questions from the audience. One of the most compelling responses was offered up by Theo de Wolff from Seawind Renewable Energy. Jim Lanard asked the panel to consider whether the Department of Energy's recent grants (bestowed upon research and development facilities seeking to lower the cost of offshore renewable energy projects) were supporting the right technologies. Mr. de Wolff responded by saying that, with all due respect to the Department of Energy, at least some of the $43 million in grant money would be better spent deploying existing offshore wind technology and getting "steel in the water." Mr. de Wolff's comments echoed the frustration of many industry participants in the audience who responded with enthusiastic applause.

Finally, Jim Lanard presented his closing remarks by setting forth three challenges. His first challenge was to the federal government. He asked federal officials to be prepared to respond to the question, "what have you done for this industry lately?" at next year's Offshore Windpower event in Virginia Beach. Second, Jim challenged state officials to work harder to develop markets and market-promoting mechanisms that will enable developers to get projects into the water sooner. Finally, he challenged the non-governmental organizations to report back on how to reach consensus among parties with different opinions, approaches, objections and concerns about offshore wind.

DOI, BOEMRE issue new Call for Information

On August 17, 2011, the Department of the Interior and the Bureau of Ocean Energy Management, Regulation and Enforcement’s announced a Call for Information and Nominations (“CFI”) for the development of offshore renewable energy projects on the Outer Continental Shelf adjacent to the state waters of Massachusetts and Rhode Island. The Federal Register notice of the Call for Information and Nominations is available here.

The CFI invites developers to identify proposed project locations within the Area of Mutual Interest (“AMI”, also known as “the Call area”) identified by the state of Rhode Island and Massachusetts in a landmark agreement in July 2010. The Call area was designated in consideration of the Rhode Island Special Area Management Plan and through a process involving BOEMRE’s Rhode Island and Massachusetts Renewable Energy Task Forces, which include federal, state, and tribal government partners.

BOEMRE is also seeking public comment – through a Notice of Intent to Prepare an Environmental Assessment – on important environmental issues and reasonable alternatives related to the proposed leasing, site characterization and assessment activities in the offshore area under consideration. The Notice of Intent to prepare the EA is available Request for Interest (RFI) regarding another area of the Outer Continental Shelf adjacent to Massachusetts state waters. BOEMRE is currently reviewing the information and nominations received in response to the RFI and will be drafting a separate Call to determine competitive interest after consulting with the BOEMRE – Massachusetts Renewable Energy Task Force. Once BOEMRE has completed its review of the RFI responses and public comments, the agency plans to issue a Call for Information and Nominations and will prepare an environmental assessment.

On August 18, 2011, Neptune Wind, an ocean-based renewable energy developer headquartered in Winchester, MA, announced its plan to respond to the CFI with a proposal to develop, construct and operate a 500 MW offshore wind farm approximately 20 nautical miles south of the Massachusetts/Rhode Island border. The project, entitled Nomans Wind, would be constructed in depths ranging from 20 to 40 meters and will employ turbines featuring a jacket structure foundation press release, Neptune Wind stated that it expects to submit its response and proposal by the October 3, 2011 deadline.

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.

Rhode Island Supreme Court Affirms Block Island PPA

On Friday July 1, 2011, the Rhode Island Supreme Court unanimously voted to uphold the Rhode Island Public Utilities Commission’s approval of a power purchase agreement between utility National Grid and offshore wind developer Deepwater Wind with regard to a proposed wind energy installation to be located three nautical miles southeast of Block Island in Rhode Island state waters (the “PPA”). See In re: Review of Proposed Town of New Shoreham Project, No. 2010-273-M.P. (4185)(July 1, 2011)(“New Shoreham”).

The New Shoreham decision resolved a challenge brought by third party intervenors, Conservation Law Foundation (“CLF”), Toray Plastics (“TP”) and Polytop Corp.(“PTC”) (together, the “intervenors”) as to the legality of a PPA submitted by Deepwater Wind and National Grid in 2010 ("2010 PPA"). Under the 20-year 2010 PPA, National Grid will pay up to 24.4 cents per kilowatt hour for electricity in the first year of operation with an annual 3.5% increase over the lifetime of the project. The intervenors alleged that the rates set by the PPA are nearly three times higher than the 6.9 cents per kilowatt hour that National Grid pays for electricity from traditional generation sources such as natural gas-fired facilities and nuclear power plants, and therefore are not “commercially reasonable” as required under R.I. Gen. Laws § 39-26.1-7 (2010) (Rhode Island’s Long Term Contracting Standard for Renewable Energy statute) (the “LTC statute”).

At the heart of the parties dispute is the definition of the term “commercially reasonable”. Under the original LTC statute passed by the General Assembly in 2009, the PUC was required to review the Block Island PPA using the definition set forth at § 39-26.1-2(1): “terms and pricing that are reasonably consistent with what an experienced power market analyst would expect to see in transactions involving newly developed renewable energy resources.”

In 2009, National Grid and Deepwater Wind submitted their initial PPA to the PUC (the “2009 PPA”). Citing the above definition of “commercially reasonable”, the PUC rejected the 2009 PPA. Specifically, the PUC found that when it compared the terms and pricing of the 2009 PPA to any renewable energy project, “regardless of sizing restrictions, technology, location or novelty”, the 2009 PPA was not “commercially reasonable.” See 2009 PUC Decision.

Subsequently in 2010, the Rhode Island General Assembly issued an amended version of the LTC statute ("Amended LTC"). The Amended LTC included, among other changes, a special new definition of the term “commercially reasonable” which was to be applied solely with regard to the PUC’s review of a Block Island offshore wind project PPA. The Amended LTC definition provides that the PPA’s “terms and conditions [will be considered] commercially reasonable [if the] terms and pricing…are reasonably consistent with what an experienced power market analyst would expect to see for a project of similar size, technology and location, and meeting the policy goals in [§ 39-26.1-7(c)(i); (c)]."

Following the enactment of the Amended LTC, National Grid and Deepwater Wind resubmitted their PPA to the PUC ("2010 PPA"). The 2010 PPA contained pricing and terms that are virtually identical to those set forth in the 2009 PPA. The PUC approved the 2010 PPA in August 2010.

The intervenors appealed the PUC’s decision to the Rhode Island Supreme Court through a petition for certiorari filed in September 2010. The intervenors argued that the PUC had “exceeded its authority or acted illegally, arbitrarily, or unreasonably” when it approved the 2010 PPA.

Following exhaustive briefing and oral arguments by both parties (see here), the Rhode Island Supreme Court issued its decision on July 1. In its 75 page opinion, the Court unanimously rejects the intervenors’ challenge and upheld the PUC’s approval of the PPA. In so doing, the Court stated:

Although we view with trepidation the General Assembly’s unwavering quest to sink this demonstration wind farm into the sediment of Rhode Island’s continental shelf, we nonetheless are constrained by our standard of review and the bounds of the revised [long-term contracting] statute.

Notably, the Court held that the Amended LTC statute did not require the PUC to balance the costs of the project against the benefits. Rather, the PUC’s review of the PPA needed only to consider the criteria set forth in the Amended LTC statute. Thus, held the Court, the PUC acted appropriately when it considered only potential positive impacts of the project.

The Court concluded the Opinion with what could be construed both as a critique of the General Assembly's 2010 amendments to the LTC as well as a whimsically quaint wish for the ultimate success of the Block Island offshore wind project, and for the U.S. Offshore Wind industry generally:

...it is this Court's fervent hope that our Legislature's William Seward-esque policy decision championing this amended purchase-power agreement proves as lucrative and majestic as the Alaska Purchase of 1867.

Because the case does not concern federal law or a federal constitutional challenge to Rhode Island state law, this decision is final and is not eligible for review on certiorari to the U.S. Supreme Court. Nevertheless, while this particular obstacle to development of the project has been eliminated, Deepwater Wind still has significant hurdles to overcome before it can begin construction of its Block Island project. For example, Deepwater Wind must still secure permitting from, among other agencies, the Rhode Island Coastal Resources Management Council and the U.S. Army Corps of Engineers. Hopefully, the affirmation of its PPA with National Grid will bolster investor confidence and help Deepwater Wind to procure the over $200 million in front-end financing needed for the project.

The New Shoreham case is among the first of what will likely be many challenges to PPAs fashioned for offshore wind installations. Because the upfront development, permitting, supply-chain, and construction costs for offshore wind are so high, PPAs negotiated for these projects typically present rates that are significantly higher than rates associated with traditional and/or existing generation sources. As in Rhode Island, states will most likely be forced to enact legislation that authorizes exceptional terms (see e.g., New Jersey) and/or requires state utility commissions to employ special analytical criteria for new renewable generation projects if these projects have any hope of being built.