Senate inflation bill would allow for new North Carolina offshore wind leases

A sweeping piece of legislation introduced by powerful U.S. Senate Democrats would lift a Trump-era moratorium on new offshore wind leases in the Atlantic Ocean off the coasts of North Carolina and other Southeastern states.

The 10-year moratorium went into effect July 1 despite efforts to omit offshore wind led by wind industry trade groups and a bipartisan group of congressmen including North Carolina’s Deborah Ross and David Rouzer.

The Inflation Reduction Act of 2022, announced Wednesday as an agreement between West Virginia Sen. Joe Manchin and Senate Majority Leader Chuck Schumer, would lift the moratorium if it becomes law. Lifting the moratorium through legislative action has long been seen as a safer route to allowing new wind leases in the Southeast than further legislative action like the one proposed last week by President Joe Biden.

Other offshore wind provisions in the bill include $100 million for planning of offshore wind transmission, tax credits for the production of offshore wind components and setting a prevailing wage for laborers and mechanics who work in offshore wind.

In a Thursday statement, Katharine Kollins, president of the Southeastern Wind Coalition, said, “These provisions bring us a step closer to achieving the assurance and certainty that industries need to capture the massive economic and climate benefits of offshore wind. We are looking forward to bipartisan support for this bill on the Senate floor and eager to witness the Southeast make the most of this once-in-a-generation opportunity.”

The Senate bill only lifts the moratorium on offshore wind leases in the Atlantic. The moratorium is still in effect for oil and gas exploration in the Southeast.

At the same time, the Inflation Act ties future offshore wind leases to oil and gas leasing in the Gulf of Mexico.

For any new offshore wind area to be leased, the provision says, the year-long period leading up to it must include at least one new oil and gas lease and at least 60 million acres — or 93.75 square miles — of oil and gas leases.

Biden executive actions

Earlier this month, Biden indicated that he intended to use executive actions to reverse the moratorium.

“We’re going to make sure that the ocean is open for the clean energy of our future, and everything we can do — give a green light to wind power on the Atlantic coast, where my predecessor’s actions only created confusion,” Biden said July 20, announcing a series of actions the administration plans to take to address climate change.

Biden’s remarks seemed intended to reverse the 10-year moratorium on new energy leases in federal waters off of Florida, Georgia, North Carolina and South Carolina that then-President Donald Trump enacted in the run-up to the 2020 election.

The moratorium, which went into effect on July 1, was widely viewed as an effort to prevent oil and gas exploration in the Southeast. But it was written broadly, pausing “any leasing” for the purposes of energy exploration, development or production, including offshore wind.

“The most certain pathway to Southeast development — and the way that’s going to give businesses confidence in investing hundreds of millions of dollars in lease areas — is through legislation that would overturn the moratorium,” Kollins said in an interview.

A spokesperson from the Department of the Interior referred The News & Observer to the White House for comment. The White House did not respond to questions about whether addressing “uncertainty” meant trying to find a way around the moratorium and, if so, how that would be accomplished.

Both the federal and state governments have offshore energy production targets, with Biden looking for 30 gigawatts nationally by 2030 while Gov. Roy Cooper wants wind off of North Carolina to generate 2.8 gigawatts of power by 2030 and 8 gigawatts by 2040.

There are three existing wind leases off of North Carolina’s coast, including two adjacent leases off of Brunswick County that were leased earlier this year to Duke Energy and TotalEnergies for $155 million and $160 million, respectively. When built out, the Bureau of Ocean Energy Management estimates that those areas could power as many as 500,000 homes. In 2017, Avangrid leased an area off of Kitty Hawk that could power as many as 700,000 homes.

With Biden in office and the July 1, 2022, deadline looming, North Carolina politicians called on BOEM to do whatever it could to reverse the moratorium. Cooper sent a letter, as did seven bipartisan members of North Carolina’s congressional delegation. Those efforts failed, though, and the moratorium went into effect as scheduled.

Legislation or executive action?

For the last three years, industry officials have generally believed that the moratorium cannot be overturned via executive action, necessitating legislation.

The basis for that was a 2019 court decision that upheld the Obama administration’s withdrawal of parts of the Alaskan coast and canyon areas in the Atlantic from leasing plans. The Trump administration tried to reverse those withdrawals with an executive order, but a federal court in Alaska ruled that Congress only intended to give the power to withdraw areas from leasing.

Erik Milito, president of the National Ocean Industries Association, said a plain reading of the Trump moratorium indicates that it applies to all energy sources, including offshore wind.

“At this point, absent congressional action, the only step that the administration can arguably take would be to send a signal to the market, to the public, that it’s preparing to move forward with leasing areas that are within this moratorium area,” said Milito, whose trade association represents both fossil fuel and renewable energy interests.

Those steps can include identifying new lease areas and reviewing them.

BOEM has started that process for two potential leases areas off of North Carolina, including a 691-square mile area that wraps around the Kitty Hawk area’s eastern and northern boundaries and a 1,192-square-mile area that is about 44 nautical miles from shore at its closest point.

Should the Biden administration press ahead with new leases while the moratorium is intact, Milito added, potential bidders would sense “a cloud” over the process because federal courts could reach the same opinion for wind that they did for oil and gas.

For a time, the best chance at the moratorium being overturned by Congress appears to be an amendment that Ross, a Wake County Democrat, and Rouzer, a Wilmington Republican, introduced to the National Defense Authorization Act.

The defense spending bill passed the House last week. Ross and Milito expressed optimism that this effort, the third attempt at overturning the moratorium, will be the one that proves successful.

“The difference is that the NDAA is a must-pass bill, and so this is in a piece of legislation that absolutely will get bipartisan support,” Ross said.

Could NC receive part of wind lease money?

Another piece of federal legislation that moved last week could lead to North Carolina reaping more benefits from offshore wind. The bipartisan Reinvesting in Shoreline Economies & Ecosystems Act moved out of Senate committee on July 21 and was headed for a full vote.

The bill includes a provision that would make states eligible for 37.5% of the revenue gained from any offshore wind lease taking place after January 1, 2022. That means North Carolina could receive a significant portion of $118 million from the leases off of Brunswick County, with South Carolina likely receiving some of the proceeds.

Annual operating fees would also be subject to revenue sharing. Proceeds would be earmarked for coastal projects; hurricane protection; mitigation of damages to fish or natural resources; and implementation of conservation plans approved by the federal government.

A similar program is already in place for oil and gas leasing, Milito said, adding that it allows states in the Gulf to free up their coastal funds for other projects.

“The fact that it’s happening off your coastline requires your state to bear a lot of the burden because your coasts and your ports and your infrastructure are now taking on a lot of that work that supports it,” Milito said. “So without that coastline along the state you couldn’t have the efficiencies needed to manage those activities.”

If the Senate approves the legislation, the House would still need to take it up.

This story was produced with financial support from 1Earth Fund, in partnership with Journalism Funding Partners, as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.

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