Selected Materials Regarding Offshore Wind Development. Karen A. Winters Rebekah M. VanDrake Squire, Sanders & Dempsey L.L.P.

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1 I. INTRODUCTION Selected Materials Regarding Offshore Wind Development Karen A. Winters Rebekah M. VanDrake Squire, Sanders & Dempsey L.L.P. Offshore Wind Seminar September 16, 2010 A US Department of Energy (DOE) report indicates that the United States possesses enough wind to meet at least 20 percent of the country s electricity needs. 1 A number of onshore wind energy projects have been permitted and constructed all over the United States; however, an offshore wind project has yet to be constructed and operated in the US waters. As electricity demands increase and state and federal governments emphasize the importance of clean, renewable energy sources, offshore wind development has been gaining speed. Most recently, the federal Bureau of Ocean Energy Management, Regulation and Enforcement, the lead agency charged with evaluating and permitting offshore wind energy projects in federal waters, approved the country s first offshore wind project the Cape Wind Energy Project. The Project received approval after years of opposition from local residents in Massachusetts Cape Cod. Currently, a number of offshore wind energy developers are working with the Atlantic coast s state and federal agencies to begin developing and permitting additional offshore wind farms. The United States also has rich wind resources in its Great Lakes Region. While there are not yet any constructed and operational Great Lakes offshore wind projects, a number of Great Lakes states are working with developers to construct the first offshore wind facility in the country s Great Lakes. Most recently, the Lake Erie Energy Development Corporation (LEEDCO), developed as an off-shoot of Ohio s Cuyahoga County Great Lakes Energy Development Task Force, sent bid packages to major developers for a MW pilot project to consist of four to eight turbines. On May 14, 2010 LEEDCO entered into a Memorandum of Understanding with General Electric Company, a major Ohio employer and an industry leader in wind turbine technology. This demonstration-size wind farm will provide valuable information as to the cost of construction and operation of a large-size wind farm as well as the electricity yield that such a wind farm is likely to produce. In sum, offshore wind energy development is at the forefront of renewable energy development. The United States has a number of regions rich in wind resources. In siting offshore wind projects, developers must consider the permitting, regulatory, technical, environmental, economic, and community aspects of development. The following provides an overview of select offshore wind materials for both the East Coast and the Great Lakes, including regulatory materials, information regarding current wind farm applicants, and potential offshore wind energy developments. II. EAST COAST A. FEDERAL 1 See U.S. DOE, 20% Wind Energy by 2030: Increasing Wind Energy s Contributions to U.S. Electricity Supply (May 2008).

2 1. ENERGY POLICY ACT The Energy Policy Act (EPAct), signed by President Bush on August 8, 2005, amended the Outer Continental Shelf Lands Act (OCSLA) to grant the Secretary of the Department of the Interior (DOI) authority to regulate offshore renewable energy including offshore wind. On March 20, 2006 the Secretary delegated this authority to the Minerals Management Service (MMS). MMS, now the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) 2, has the authority to issue leases, easements, or rights-of-way for previously unauthorized activities that: (1) produce or support production, transportation, or transmission of energy from sources other than oil and gas; or (2) use, for energyrelated or other authorized marine-related purposes, facilities currently or previously used for activities authorized under the OCSLA. 2. MMS (NOW BOEMRE) AS LEAD AGENCY Pursuant to its delegated authority, on April 29, 2009, MMS published its final regulations for outer continental shelf (OCS) renewable energy. See Final Rule, Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf, 74 Fed. Reg (April 29, 2009) (codified at 30 CFR Parts 250, 285, and 290). It adopted a cradle-to-grave approach, including: (1) coordination through task forces established with state, local and tribal governments; (2) lease and grant issuance, including competitive and non-competitive leasing as well as commercial and limited leases; (3) plans and operations oversight, including site assessment, construction and operations, and general activities, plan approval, and environmental and safety monitoring and inspections; (4) payments to cover bonding activities; and (5) decommissioning at the end of a project s life span. MMS regulations also include mandates related to safety, protection of the environment, coordination with affected state and local governments and federal agencies, fair return for use of OCS land, and equitable sharing of revenue with States. See also U.S. Department of the Interior, Guidelines for the Minerals Management Service Renewable Framework (July 2009). Although BOEMRE has been delegated lead authority for the regulation of offshore wind energy, it must coordinate with several other federal and state agencies during the development, permitting, and operational oversight of offshore wind energy projects. An overview of the federal agencies potentially involved as well as the basis for that involvement is attached. 3. COORDINATION WITH OTHER FEDERAL AGENCIES DOI/FERC MOU On April 9, 2009 MMS and the Federal Energy Regulatory Commission (FERC) executed a Memorandum of Understanding (MOU), clarifying the jurisdiction of each regarding renewable energy projects on the OCS. The purpose of this memorandum was to develop a cohesive, streamlined process that would help accelerate the development of wind, solar and hydrokinetic energy projects. Until March 2009, regulatory uncertainty existed regarding which federal agencies had authority to regulate energy development on the OCS. Both MMS and FERC claimed this authority based on differing interpretations of Part I of the Federal Power Act (FPA) and Section 8(p) of OCSLA, as amended by EPAct. On March 17, 2009, however, the Secretary of the Department of the Interior and the Acting Chairman of FERC 2 See

3 issued a joint statement on the development of renewable energy resources on the OCS. In this joint statement, the Secretary and the Acting Commissioner requested that MMS and FERC staff prepare a MOU to describe the process by which authorizations related to renewable energy resources in offshore waters will be developed. Specifically, the memorandum recognizes that (1) MMS has exclusive jurisdiction with regard to the production, transportation, or transmission of energy from nonhydrokinetic alternative energy projects on the OCS including renewable energy sources such as wind and solar; (2) MMS has exclusive jurisdiction to issue leases, easements and rights-of-way regarding OCS lands for hydrokinetic projects; and (3) FERC has exclusive jurisdiction to issue licenses and exemptions for hydrokinetic projects located on the OCS. Under the memorandum those entities interested in operating a hydrokinetic project on the OCS must first obtain a lease from MMS. Therefore, offshore wind projects that do not have a hydrokinetic component are within the exclusive jurisdiction of MMS. (B) DOI/DOE MOU On June 29, 2010 BOEMRE and the DOE entered into a five-year MOU in order to prioritize and facilitate environmentally-responsible deployment of commercial-scale offshore wind and marine and hydrokinetic energy technologies on the OCS. Pursuant to this MOU, the BOEMRE and DOE agree to work collaboratively regarding information exchange, stakeholder engagement, research of key technical and environmental issues, joint evaluation and development of standards and guidelines and the dissemination of relevant information to decision makers. Implementation of this MOU includes: (1) development of deployment goals for offshore wind; (2) identification and implementation of inter-agency measures to ensure reasonable permitting timeframes; (3) development of a plan for offshore wind resource measurement and prediction; (4) coordination with appropriate parties to acquire resources to develop and characterize variable wind, wave, tidal and ocean current resources; (5) collaborate on the development of technical standards for offshore wind; (6) identify sites with high potential for commercialscale offshore wind development and pursue priority leasing and permitting for these sites; (7) development of environmental monitoring and mitigation protocols; (8) coordinate studies in support of research leases for offshore wind; (9) joint management of coastal states, tribes, and regional governors associations and other relevant entities; (10) technical assistance; and (11) gathering and disseminating publicly-available data. (C) DOI/FWS MOU MMS and the US Fish and Wildlife Service (FWS) entered into a MOU regarding the responsibilities of federal agencies to protect migratory birds. The MMS and FWS agreed to: (1) collaborate in the protection, restoration and enhancement of the habitat of migratory birds through the development and implementation of management practices that minimize or avoid negative impacts on migratory bird populations; (2) promote research and information exchange related to migratory bird conservation; (3) periodically evaluate the measures described in the MOU intended to protect, restore and enhance migratory birds and their habitats; and (4) participate annually, or as needed, in the Council for the Conservation of Migratory Birds to evaluate implementation of the MOU. Each has delineated obligations under the MOU. Among other items, MMS agreed to: (1) integrate migratory bird conservation principles into MMS approvals, procedures and practices; (2) avoid or minimize negative impacts on migratory bird resources; (3) expand the current MMS practice of including migratory birds in the scope of environmental reviews; (4) incorporate migratory bird habitat and population management objectives into planning processes and guidance; and (5) identify, in coordination with FWS, MMS-issued OCS leases and other areas for support facilities that have the potential to adversely affect migratory bird populations. FWS agreed to: (1) assist in identifying migratory bird areas and habitats; (2) keep MMS informed of any

4 bird conservation updates or changes in policy; (3) make available any relevant FWS data; (4) inform MMS staff of meetings and workshops relevant to assessing migratory bird issues; (5) conduct information programs; and (6) review and provide comments on NEPA documents and management actions. 4. COORDINATION WITH EAST COAST STATES MOU BETWEEN AND EAST COAST STATES On June 8, 2010 the DOI entered into a MOU with Maine, New Hampshire, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Maryland, Virginia and North Carolina to create an Atlantic offshore wind energy consortium to coordinate issues of regional applicability to promote the efficient, expeditious, and responsible development of wind energy in the Atlantic OCS. In this regard, DOI and the states agreed to collaborate to: (1) clarify permitting responsibilities and authorities among federal and state agencies, evaluate options for expediting the OCS leasing procedures, evaluate feasible pilot programs and promote effective communication among all regulatory bodies; (2) inventory existing environmental data, evaluate and address research gaps, create efficient processes to share technical information and research, and develop effective models on the OCS; and (3) address investment challenges and other financial barriers, evaluate solutions for deficiencies in deployment and maintenance infrastructure, identify opportunities to reduce project development costs and increase reliability, examine regional offshore wind transmission strategies and identify additional priorities for the development of OCS wind. The MOU requires that the DOI and states draft an action plan to meet the aforementioned goals. The action plan is not yet available for review. (B) ISSUANCE OF SEVEN LEASES FOR WIND RESOURCE DATA COLLECTION On November 6, 2007 MMS announced an interim policy authorizing the issuance of leases for the installation of meteorological or marine data collection. It received more than 40 nominations of areas of interest, and, ultimately, narrowed these down to seven lease blocks offshore of Delaware and New Jersey. It announced its selections and inquired about competing nominations. Three companies, Bluewater Wind Delaware, LLC, Deepwater Wind, LLC, and Fishermen s Energy of New Jersey, LLC, proposed wind resource data collection activities. In June 2009 MMS published its Issuance of Leases for Wind Resource Data Collection on the Outer Continental Shelf Offshore Delaware and New Jersey: Environmental Assessment. As required by the National Environmental Protection Act, MMS conducted this environmental assessment to determine whether the issuance of seven lease blocks for wind resource data collection would have a significant effect on the human environment and whether an Environmental Impact Statement needed to be prepared. MMS issued a Finding of No Significant Impact regarding these leases, noting that the proposed leases would be located 8-17 miles offshore and would have virtually no visual impact. Further, it stated that operation of the meteorological towers would have no significant impact on air and water quality, coasts, wildlife, fishing or recreational activities. Additionally, MMS included several mitigation measures in the form of lease stipulations that would reduce or eliminate potential impacts to the environment. B. EAST COAST STATES

5 1. DELAWARE DELAWARE RECEIVES DELEGATION FROM EPA FOR OFFSHORE WIND AIR QUALITY Delaware has become the first state to be delegated authority for enforcing and implementing offshore wind permitting related to air quality. The Delaware Department of Natural Resources and Environmental Control (DNREC) was granted authority by US EPA under the federal Clean Air Act. Pursuant to this delegation, DNREC has primary authority to implement and enforce the federal OCS regulations. It adopted these regulations at 7 DE Admin. Code 1140 in June Specifically, these regulations provide that Delaware s land-based air pollution control requirements apply to sources located on or above the OCS. The first project subject to these regulations will be the proposed meteorological tower associated with the Bluewater Wind project. Delaware s regulations will require that any emissions that occur during its construction and operation, or during a future project s construction and operation, will be controlled to the same level as those emissions levels applicable to land sources. (B) NRG BLUEWATER WIND NRG Bluewater Wind is proposing to build an offshore wind project located 13 miles from the Delaware shore in the Atlantic Ocean with a 450 MW nameplate capacity. The Delaware General Assembly passed House Bill 6, requiring local utility Delmarva Power to contract with new power resources to guarantee stable electricity prices. Additionally, the legislature passed Senate Bill 74, a Renewable Portfolio Standard, requiring that 20 percent of Delaware s electricity come from renewable sources by the year Bluewater Wind submitted a proposal in response to Delmarva Power s Request for Proposal for construction of a new power plant. Bluewater Wind and Delmarva Power signed a Power Purchase Agreement (PPA) and received approval from the Delaware Public Service Commission in June and July Bluewater Wind is currently involved in the permitting and public outreach for the development of this offshore wind energy project. Recently, US EPA requested additional details regarding the ship used to construct the meteorological tower, for which MMS has granted Bluewater a lease, before issuing a permit for its construction, which may delay the project. 2. RHODE ISLAND BLOCK ISLAND PROJECT In August 2010 the Rhode Island Public Utilities Commission approved a PPA for offshore wind energy. Deepwater Wind and National Grid signed an amended 20-year PPA for the Block Island Offshore Wind Project. An initial PPA was not approved by the PUC. Subsequently, the Rhode Island legislature enacted new legislation to clarify the intent of laws intended to promote clean energy through the development of a demonstration-sized offshore wind project. Notably, the approved PPA provides that Deepwater Wind would return to ratepayers any cost savings it achieves during assembly and construction of the wind farm. Deepwater Wind intends to later build a larger-scale wind farm with approximately 106 wind turbines located in federal waters about 15 miles from land. (B) DEEPWATER WIND RHODE ISLAND, LLC

6 Rhode Island entered into a Joint Development Agreement with Deepwater Wind Rhode Island LLC by which each agrees to pursue an offshore wind project in Rhode Island and the proximate federal waters. The proposed project is expected to be constructed in phases. Phase I entails the development of an approximately 20 MW capacity wind farm while Phase II will include development of a 385 MW nameplate capacity wind farm. (C) RHODE ISLAND/MASSACHUSETTS MOU On July 26, 2010 the governors of Rhode Island and Massachusetts executed a MOU to collaborate in the development of offshore wind energy. Each has invested significant resources in investigating the potential for wind energy, for example, Rhode Island s Special Area Management Plan (SAMP) and Massachusetts s Ocean Management Plan (OMP... The MOU establishes an Area of Mutual Interest (AMI), which is located approximately 400 square miles off of the coast of the two states. Pursuant to the MOU, Rhode Island and Massachusetts have agreed to coordinate the permitting and development of offshore wind projects in the AMI. Further, Rhode Island s SAMP is the designated entity for planning and assessment for the AMI and the Massachusetts Executive Office of Energy and Environmental Affairs is incorporated in the SAMP process as it affects the AMI. Neither the Cape Wind Energy Project nor Rhode Island s Deepwater Wind project are located within the AMI; however, a second wind farm planned by Deepwater Wind would likely be partially located in the area, and under this Agreement, Deepwater will not need support from Massachusetts to apply for a lease. 3. MASSACHUSETTS CAPE WIND ENERGY PROJECT Prior to MMS delegation of authority over offshore wind energy, Cape Wind Associates, LLC (CWA) filed an application with the US Army Corps of Engineers in November 2001 to construct an offshore wind power facility on Horseshoe Shoal in Nantucket Sound. Corps of Engineers issued a permit for Cape Wind to construct a meteorological tower, which was constructed in the fall of In November 2004 the Corps of Engineers issued a draft EIS for public review and comment. However, following the adoption of the Energy Policy Act of 2005, MMS became the lead agency for this project. Under EPAct, CWA was grandfathered from competition for the project. It submitted its application to MMS in After years of opposition, on April 28, 2010 BOEMRE approved the first offshore wind project the Cape Wind Energy Project. BOEMRE published its Environmental Assessment of the Cape Wind Energy Project and its record of decision (ROD). Pursuant to this record of decision, BOEMRE will offer a commercial lease and associated easement to CWA. CWA proposed a 130-turbine wind farm to be arranged in a grid pattern in the federal waters of Nantucket Sound, just off of Cape Code, Martha s Vineyard and Nantucket Sound. A solid dielectric submarine inner-array cable from each turbine will interconnect within the array and terminate on an electrical service platform. The proposed service platform will connect to a landfall location in Massachusetts via a 115 kv submarine transmission cable system. While the ROD approves a commercial wind lease to CWA, the eventual construction and operation of the wind facility will be based on MMS approval, approval with modifications, or disapproval of CWA s Construction and Operations Plan. The project is expected to meet up to 75 percent of the Cape and Islands electricity needs. Most recently, the Massachusetts high court overruled objections from local residents and activists claiming that the CWA developers failed to obtain proper permits for construction of the wind farm. The Supreme Judicial Court for the County of Suffolk upheld a May 2009 decision by the State s

7 Energy Facilities Siting Board to approve CWA s petition to build 18 miles of underground and undersea electric transmission cables to connect CWA s proposed offshore wind farm to the regional grid. After receiving a denial by the Cape Cod Commission in 2007 for the construction of the project, CWA sought a catch-all permit from the Siting Board for a certificate of environmental impact and public interest. Opponents of the Siting Board s approval argued that CWA circumvented the required individual permits for the construction and operation of the project. The court disagreed, basing its decision on the Siting Board s rules, which provide that no state or local agency can override the Board s decisions. Additionally, the court emphasized that federal jurisdiction in this area is paramount because the wind farm will be located on federal property. Thus, the Cape Wind Energy Project has jumped another hurdle towards constructing and operating its wind farm. 4. NEW JERSEY GARDEN STATE OFFSHORE ENERGY Garden State Offshore Energy (GSOE), a joint venture between PSEG Renewal Generation and Deepwater Wind, is developing a 350 MW wind farm off of the coast of South New Jersey to produce more than 1.2 billion KW-hours annually. The project is expected to be located approximately 16.2 miles off of New Jersey s coast. GSOE was one of five proposals submitted in response to a Request for Proposals issued by the New Jersey Office for Clean Energy in October New Jersey selected GSOE as its preferred offshore wind farm developer in October GSOE has now begun evaluating wind quality and potential environmental impacts in the area and will begin the state and federal permitting processes. (B) NRG BLUEWATER NRG Bluewater Wind plans to build an offshore wind farm and has received a US$4 million dollar grant from New Jersey in 2008 for installing an offshore meteorological tower. NRG Bluewater Wind also won a New Jersey-sponsored competition, allowing it to develop a 350 MW wind project off of the coast. The potential site is located more than 15 highway miles from land. Although NRG Bluewater has received a lease for its meteorological tower, applications remain pending with federal agencies to construct the tower. US EPA has not issued a permit for the tower yet because it requires additional information regarding emissions from the vessel used to construct the tower. NRG Bluewater has indicated that it may not be able to construct the tower until next year because of the delays in obtaining its permits. 5. NEW YORK LONG ISLAND-NEW YORK CITY OFFSHORE WIND PROJECT In June 30, 2010 the New York Power Authority (NYPA) announced that the NYPA Trustees have authorized the application for a lease from BOEMRE for lands beneath the Atlantic Ocean for development of the Long Island-New York City Offshore Wind Project. NYPA seeks a lease for approximately 64,500 acres about miles offshore of Long Island. It is undertaking technical and environmental studies to determine the feasibility of the project. If it is granted a lease, NYPA intends to assign its lease rights to a project developer selected through a competitive process. III. GREAT LAKES

8 IV. A. FEDERAL 1. U.S. ARMY CORPS OF ENGINEERS AS LEAD AGENCY The Army Corps of Engineers is the lead permitting agency for offshore wind development in the Great Lakes. Pursuant to Section 10 of the Federal Rivers and Harbors Act, the Army Corps of Engineers governs the navigation and structures in navigable waters. Further, pursuant to Section 404 of the Clean Water Act, the Army Corps of Engineers regulates discharges of dredged or fill materials into waters of the United States. As indicated above, a number of federal agencies are also involved in the development of Great Lakes wind energy, including US EPA, US FWS, US Coast Guard, as well as relevant state agencies. The Army Corps of Engineers considers both the primary and secondary impacts associated with jurisdictional activities. It issues both nationwide and standard permits. Nationwide permits are issued for projects with minimal impact on the aquatic environment with inclusion of regional conditions developed by the Army Corps of Engineers District and relevant state agencies. A standard permit, on the other hand, is only issued after full public participation. During this 30-day public participation period, the Army Corps of Engineers accepts public comments and submits a notice to adjacent properties and interested properties. The Army Corps of Engineers determines compliance with US EPA Section 404(b)(1) guidelines and prepares an Environmental Assessment and Statement of Findings. A standard permit is valid for three to five years and may be extended. Of particular interest/concern to permitting offshore wind energy are: ice, navigation, recreational boating safety, migratory birds/bats, acoustics, aesthetics and public opinion. 3 B. REGIONAL 1. GREAT LAKES COMMISSION S GREAT LAKES WIND COLLABORATIVE In 2008 the Great Lakes Commission formed the Great Lakes Wind Collaborative, a multi-sector coalition of wind energy stakeholders working to facilitate the sustainable development of wind power in the Great Lakes. In November 2009 the Collaborative released its own siting principles and guidance for offshore facilities. Although these principles are not binding on offshore developers, they provide a framework of the important issues facing offshore wind development in the Great Lakes. 4 C. STATE None of the Great Lakes states have passed any formal state regulations governing offshore wind. Thus, a number of existing state laws will be applicable as projects develop for offshore wind energy. For example, pursuant to the Coastal Zone Management Act of 1972, most of the Great Lakes states have coastal zone protection programs. Further, individual state power siting boards and 3 Additionally, the International Joint Commission (IJC) prevents and resolves disputes between the United States and Canada under the 1909 Boundary Waters Treaty. In particular, the IJC rules upon applications for approval of projects affecting boundary or transboundary waters and may regulate the operation of these projects; it assists the two countries in the protection of the transboundary environment, including the implementation of the Great Lakes Water Quality Agreement and the improvement of transboundary air quality; and it alerts the governments to emerging issues along the boundary that may give rise to bilateral disputes. It does not appear that the IJC has been required to resolve any transboundary disputes over offshore wind development to date. 4 See

9 environmental agencies will be involved in permitting offshore wind energy projects in the Great Lakes (as discussed above). 1. OHIO GREAT LAKES ENERGY DEVELOPMENT TASK FORCE The Cuyahoga County Commissioners created the Great Lakes Energy Development Task Force 5 in August 2006 to explore the legal, technical, environmental, economic, and financial aspects of developing advanced energy technologies, including wind technology, in Cuyahoga County. Specifically, the Task Force was created to respond to volatile fossil fuel-based energy world markets, address federal Clean Air Act non-attainment status areas, and engage in the growing economic development for renewable energy. The Task Force is chaired by Cuyahoga County Prosecutor William D. Mason and is comprised of a number of individuals and organizations, including citizens, governments, non-profit and for-profit entities. The initial focus of the Task Force is to investigate the potential for offshore wind energy. In 2008 the Cuyahoga County Board of Commissioners approved a US$1,041,454 contract with JW Great Lakes Wind, LLC to examine the legal, technical, economic and financial aspects of developing a Great Lakes Wind Energy Center. It is hoped that the Wind Energy Center would include both an offshore wind demonstration project of several turbines in Lake Erie to produce 5-20 MW, as well as a research center for the development and monitoring of new wind technologies. The Task Force conducted the Great Lakes Wind Energy Center Feasibility Study (published in April 2009) 6, which indicates that it is feasible to develop an offshore demonstration wind turbine project in Lake Erie. The Task Force intends to utilize the Feasibility Study to establish a wind-energy cluster in Northern Ohio. As part of its investigation, the following reports have been generated: Avian Risk Assessment Report, Onshore Interconnection Report, High Voltage Cabling System Design, Wind Resource Assessment Report Part 1, Geological and Geotechnical Desktop Study, and Ecological Desktop Study. The Task Force has contracted with JW Great Lakes Wind for a follow-up avian bird and bat study. See also Discussion of the LEEDCO Project, infra. (B) LEEDCO PROJECT The Lake Erie Energy Development Corporation (LEEDCO) developed as an off-shoot of the Great Lakes Energy Development Task Force. LEEDCO is a non-profit organization, created as a public/private partnership with the purpose of accelerating offshore wind development in the Great Lakes. In March 2010, LEEDCO sent bid packages to major developers for a MW pilot project to consist of four to eight turbines. On May 14, 2010 LEEDCO entered into a MOU with General Electric, a major employer within Ohio and an industry leader in wind turbine technology. As entities with a common interest in exploring the development of a scalable, competitive longterm offshore wind energy market and supply chain in the Great Lakes region, LEEDCO and GE agreed to collaborate to accelerate offshore wind development in this region. LEEDCO agreed to advocate to 5 See 6 To view the Feasibility Study in its entirety visit US/GLWECFeasibilityRpt.pdf.

10 organize community input regarding the grant of submerged land leases for offshore wind power projects, participate in the National Environmental Policy Act process for environmental assessments and impact statements, and participate in the application process for Certificates of Authority from the Ohio Power Siting Board. As an initial matter, LEEDCO and GE agreed to cooperate in the development of a 20 MW offshore wind farm to be the first fresh water installation of direct-drive technology designed for an offshore application. The parties goal is to locate five offshore wind turbines eight miles off of Cleveland s coast. Additionally, due to the high cost of offshore wind energy, LEEDCO and GE agreed to work to lower the cost of offshore wind. GE will develop its turbine technology to reduce capital costs, improve performance, improve reliability and lower operation and maintenance costs. GE and LEEDCO will also collaborate to determine the optimal construction equipment and foundation design and to obtain funding to support technology development. Further, where appropriate, the Parties agreed to engage Ohio universities to collaborate on offshore wind research issues. Research is already underway at Case Western Reserve University s energy institute. Beyond the initial project, the parties also agreed to facilitate the emergence of a multi-gigawatt market for offshore wind in Lake Erie and the other Great Lakes. In this regard, the parties agreed to use reasonable efforts to identify and bring Ohio manufacturers into the offshore wind supply chain and attract new suppliers and manufacturers to Ohio. (C) OHIO WIND WORKING GROUP In 2003 Ohio created the Ohio Wind Working Group, a consortium of stakeholders managed by the Ohio Department of Development, devoted to the development of offshore wind energy in Ohio. The Ohio Wind Working Group is a forum on wind energy development information in Ohio and is composed of manufacturing, government, development and research sectors, as well as local landowners. Its members work collaboratively to address obstacles in wind energy development and educate the public on the benefits of wind energy. Funding is provided through the DOE s Wind Powering America Program. 7 (D) OFFICE OF COASTAL MANAGEMENT REGULATIONS The Ohio Department of Natural Resources Office of Coastal Management is in the process of drafting rules for the placement of wind powered facilities in Lake Erie. These rules are not yet available for public comment and review. 8 (E) OHIO POWER SITING BOARD Although the Ohio Power Siting Board has not issued regulations governing offshore energy facilities, it published a guidance document regarding the siting of new energy infrastructure including a segment on potential offshore wind facilities. 2. WISCONSIN 7 See 8 See

11 PSCW S WIND ON THE WATER GROUP As is the case in many other states, Wisconsin established a Renewable Portfolio Standard that requires that 10 percent of Wisconsin s electricity be produced from renewable sources by To help achieve this goal, the Governor s Task Force on Global Warming was formed. The Task Force recommended that the Public Service Commission of Wisconsin (PSCW) complete a feasibility study for generating electricity from offshore wind resources in the Great Lakes. In April 2008 PSCW formed a Study Group to examine the technical feasibility, economic potential, environmental impacts, and legal requirements associated with developing wind energy on Lake Michigan and Lake Superior. PSCW published its Harnessing Wisconsin s Energy Resources: An Initial Investigation Into Great Lakes Wind Development, Docket 5-EI-144 (Jan. 15, 2009). The report indicates that while offshore wind development is technically feasible, there are a number of environmental, economic, technical and legal issues to resolve. 3. MICHIGAN MICHIGAN GREAT LAKES OFFSHORE WIND PERMITTING DRY RUN As offshore wind development began gaining interest in the Great Lakes States, the Michigan Economic Development Corporation and the Great Lakes Renewable Energy Association contracted Mikinetics Consulting, LLC to draft a report regarding the permitting process for prospective offshore wind projects. The purpose of the project was to create guidelines for the permitting and development processes to encourage developers to consider siting their projects off of Michigan s coast. 4. NEW YORK NYPA GREAT LAKES OFFSHORE WIND PROJECT New York is uniquely situated in that offshore wind energy may be developed off both its Atlantic and Great Lakes coasts. As indicated above, the NYPA has approved an application for a lease for its Long Island-New York City Offshore Wind Project off of the Atlantic coast of New York. On December 1, 2009, NYPA issued a Request for Proposals for the development of 120 MW to 500 MW wind generating projects. NYPA announced on June 4, 2010 that it would start the multi-phase review process for five proposals vying to construct the Great Lakes Offshore Wind Project (GLOW Project) in the New York State waters of Lake Erie and/or Lake Ontario. (B) HOUNSFIELD WIND FARM (GALLOO ISLAND) PROJECT Upstate New York Power Corporation seeks to develop a 269 MW hybrid offshore/onshore wind farm on Galloo Island in Lake Ontario. On February 27, 2009 the New York State Department of Environmental Conservation published its Draft Environmental Impact Statement for the Hounsfield Wind Farm. The action subject to review involves the permitting and approval for the construction and operation of a wind farm consisting of up to 84 wind turbines capable of generating up to 252 MW of power at peak capacity and related support facilities. Upstate New York Power Corporation has submitted an application for a Certificate of Environmental Compatibility and Public Need to the New York Public Service Commission for a 50.6 mile 230 kv Transmission Facility From Galloo Island in the Town of Hounsfield, Jefferson County, to the Fitzpatrick-Edic Substation in the Town of Mexico, Oswego County. Upstate

12 Power also submitted a Joint Application for USACE permits on June 16, A supplement to this application that addressed the transmission line was submitted on July 14, To view these applications, visit Upstate New York Power Corporation s website at

13 OTHER FEDERAL AGENCIES POTENTIALLY INVOLVED WITH OFFSHORE WIND ENERGY AND BASIS OF JURISDICTION Responsible Federal Agency/Agencies Council on Environmental Quality US Fish and Wildlife Service (FWS); National Oceanic and Atmospheric Administration (NOAA); National Marine Fisheries Service (NMFS) FWS; NMFS NMFS US EPA; US Army Corps of Engineers; NOAA NOAA Statute/Executive Order National Environmental Policy Act (NEPA), 42 U.S.C et seq. Endangered Species Act, 16 U.S.C et seq. Marine Mammal Protection Act, 16 U.S.C Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C et seq. Marine Protection, Research, and Sanctuaries Act, 33 U.S.C et seq. National Marine Sanctuaries Act Summary of Key Provisions Federal agencies must prepare an Environmental Impact Statement (EIS) to evaluate potential environmental impacts of any proposed major federal action that could significantly affect the quality on the human environment and to consider alternatives to the proposed action. Federal agencies must consult with the FWS and NMFS to ensure that proposed federal actions are not likely to jeopardize the continued existence of any species listed at the federal level as endangered or threatened or result in the destruction or adverse modification of critical habitat designated for such species. Prohibits, with certain exceptions, the taking of marine mammals in US waters and by US citizens on the high seas and the importation of marine mammals and marine mammal products into the United States. Federal agencies must consult with NMFS on proposed federal actions that may adversely affect essential fish habitats. Prohibits, with certain exceptions, the dumping or transportation for dumping of materials including, but not limited to, dredged material, solid waste, garbage, sewage, sewage sludge, chemicals, biological and laboratory waste, wrecked or discarded equipment, rock, sand, excavation debris and other waste into ocean waters without a permit from EPA. Ocean dumping of dredged materials may only occur under the Army Corps of Engineer s permitting authority. Prohibits the destruction, loss of, or injury to, any sanctuary resource managed under the law or permit and requires federal agency consultation on federal agency actions that are likely to destroy, injure or cause the loss of any sanctuary resource.

14 FWS Executive Order Responsibilities of Federal Agencies to Protect Migratory Birds (Jan. 10, 2001) Federal agencies taking actions likely to negatively affect migratory bird populations must enter into a MOU with the FWS to ensure that environmental reviews mandated by NEPA evaluate the effects of agency action on migratory birds. NOAA s Office of Ocean and Coastal Resource Management US EPA; MMS EPA; US Coast Guard; MMS US Coast Guard US EPA Coastal Zone Management Act, 16 U.S.C et seq. Clean Air Act, 42 U.S.C et seq. Clean Water Act Section 311, 33 U.S.C. 1321; Executive Order Implementation of Section 311 of the Federal Water Pollution Control Act of October 18, 1972 as Amended, and the Oil Pollution Act of 1990 Marking of Obstructions, 14 U.S.C. 86 CWA Sections 402 and 403, 33 U.S.C and 1343 Coastal states may protect coastal resources and manage coastal development, and a state with such a program may deny or restrict development off its coast if it reasonably foresees effects would be inconsistent with the state s program. Federal agencies are prohibited from providing financial assistance or issuing a license for any activity that does not conform to an applicable, approved implementation plan for achieving and maintaining National Ambient Air Quality Standards. US EPA, or an authorized state agency, must issue a permit before construction of any new major stationary source or major modification of a stationary source of air pollution. The owner/operator of a stationary source that has more than a threshold quantity of a regulated substance must submit a Risk Management Plan to US EPA. In the Western portion of the Gulf of Mexico, MMS has authority pursuant to OCSLA. The discharge of oil or hazardous substances into or upon navigable waters of the United States, adjoining shorelines, or into or upon waters of the contiguous zone, or in connection with activities under OCSLA, or which may affect natural resources belonging to the US is prohibited. US EPA and Coast Guard are authorized to establish programs for preventing and containing discharges of oil and hazardous substances. MMS is directed to establish requirements for preventing and containing discharges of oil and hazardous substances from offshore facilities. The Coast Guard may mark for the protection of navigation any sunken vessel or other obstruction existing on the navigable waters or waters above the continental shelf. A National Pollutant Discharge Elimination System Permit from US EPA, or an authorized state, is required before discharging any pollutant into territorial waters, the contiguous zone, or the ocean from an industrial point source, publicly owned treatment works or point source composed entirely of storm water.

15 US Army Corps of Engineers; US EPA US Coast Guard Army Corps of Engineers US EPA National Park Service; Advisory Council on Historic Preservation; State or Tribal Historic Preservation Officer NPS; ACHP; State or Tribal HPO Federal Aviation Administration CWA Section 404, 33 U.S.C Ports and Waterways Safety Act, 33 U.S.C et seq. Rivers and Harbors Appropriation Act, 33 U.S.C. 401 et seq. Resource Conservation and Recovery Act, 42 U.S.C et seq. National Historic Preservation Act, 16 U.S.C t; Archaeological and Historic Preservation Act, 16 U.S.C c-2. American Indian Religious Freedom Act, 42 U.S.C. 1996; Executive Order Indian Sacred Sites Federal Aviation Act, 49 U.S.C ; 14 CFR Part 77 A permit is required before discharging dredged or fill material into US waters. Authorizes the US Coast Guard to implement, in waters subject to U.S. jurisdiction, measures for controlling or supervising vessel traffic or for protecting navigation and the marine environment. The Army Corps of Engineers has the authority to review and regulate certain structures and work located in or that affect US navigable waters. OCSLA extends jurisdiction to the seaward limit of federal jurisdiction. Waste generators are required to determine whether they generate hazardous waste. RCRA requires permitting of hazardous waste treatment, storage and disposal facilities and requires their demonstration that the permit provisions will be met. Each federal agency must consult with ACHP and state or tribal HPC before allowing a federally licensed activity to proceed in an area where cultural or historic resources might be located. Federal agencies must facilitate Native American access to and ceremonial use of sacred sites on federal lands. FAA requires that when construction, alteration, establishment, or expansion of a structure is proposed, adequate public notice be given to the FAA as necessary to promote safety in air commerce and the efficient use and preservation of the navigable airspace.