Blog: US BOEM Proposes Modernized Offshore Wind Regulations … – Mondaq

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On January 12, 2023, the Bureau of Ocean Energy Management
(“BOEM”) within the US Department of Interior
(“DOI”) released a Notice of Proposed Rulemaking
(“Notice”) for its Renewable Energy Modernization Rule
(“proposed Modernization Rule”). The Modernization Rule
updates the first set of BOEM regulations governing offshore wind
on the Outer Continental Shelf (“OCS”) promulgated in
2009.

BOEM’s renewable energy program has matured since BOEM
promulgated the first set of regulations in 2009—BOEM has
conducted 11 auctions and issued and managed 27 active commercial
leases over this time period. Based on this experience, BOEM has
identified opportunities to modernize its regulations to facilitate
the development of offshore wind energy resources. BOEM believes
that the proposed Modernization Rule is necessary to advance its
energy policies in a safe and environmentally sound manner that
would provide a fair return to the US taxpayer by modernizing the
current regulations, streamlining overly complex and burdensome
processes, clarifying ambiguous provisions, enhancing compliance
provisions, and correcting technical errors and inconsistencies.
Through the proposed Modernization Rule, BOEM is aiming to reduce
administrative burdens on both developers and BOEM staff, reduce
developer costs (which it projects will save the renewable energy
industry $1 billion over the next 20 years) and uncertainty, and
implement greater regulatory flexibility to further adapt to a
rapidly changing industry with increasing demand for OCS renewable
energy.

Summary of the Proposed Modernization Rule’s Major
Reforms

The proposed Modernization Rule contains eight major reforms
identified by BOEM and recommended by industry since 2010: (1)
eliminate unnecessary requirements for the deployment of
meteorological (“met”) buoys; (2) increase survey
flexibility; (3) improve the project design and installation
verification process; (4) establish a public Renewable Energy
Leasing Schedule; (5) reform its renewable energy auction
regulations; (6) tailor financial assurance requirements and
instruments; (7) clarify safety management system regulations; and
(8) revise other provisions and make technical corrections. The
details of each proposed reform are discussed below.

1. Meteorological Buoys Requirements Modifications

The proposed Modernization Rule eliminates both the site
assessment plan (“SAP”) requirement for met buoys and the
limited lease requirement for installing “off-lease” (or
activities occurring on the OCS conducted outside the leasehold of
a BOEM commercial lease) met towers and met buoys. However,
off-lease met towers and met buoys would continue to require US
Army Corps of Engineers (“USACE”) permits given the
USACE’s jurisdiction over obstructions deployed in US navigable
waters under Section 10 of the Rivers and Harbors Act. BOEM is
eliminating these requirements because when it first finalized the
SAP process in 2009, the industry gathered met data primarily from
towers fixed in place by foundations pile-driven into the seafloor.
However, the industry now uses buoys anchored to the seafloor that
gather the same data at lower costs and with less environmental
impact. And although BOEM’s existing SAP process is well-suited
for the complexities involved with installing met towers, BOEM
believes the process has proven to be both unreasonably burdensome
for simply anchoring met buoys on the seafloor and redundant with
the USACE’s overlapping process.

2. Geotechnical Survey Requirements Modifications

The proposed Modernization Rule defers and/or extends the
required time periods for meeting certain geotechnical survey
requirements, such as engineering site-specific surveys (e.g.,
boreholes, vibracores, grab samplers, cone penetrometer tests, and
other penetrative methods), until after construction and operations
plan (“COP”) approval but before construction. The
proposed Modernization Rule also reorganizes the COP data
requirements by topic and will incorporate updates to BOEM’s
guidance on best practices for surveying. To ensure the site is
suitable for construction, avoid seafloor hazards, and identify
historic and cultural resources, the regulations currently require
detailed geotechnical survey data for each proposed wind turbine
location in the COP submitted by the lessee before project
construction is authorized. However, in response to requests made
by lessees, BOEM is proposing these changes because it has learned
that the precise location of each wind turbine may be uncertain at
the COP submittal stage, and geotechnical data collected primarily
for engineering purposes are more relevant to the review process
after COP approval.

3. Project Design and Installation Verification Process
Modifications

The proposed Modernization Rule expands the independent,
third-party certified verification agent’s (“CVA”)
review of a project’s design, fabrication, and installation to
include verification of the design and commissioning of the
critical safety systems to assist BOEM in meeting requirements of
the Outer Continental Shelf Lands Act and its implementing
regulations. BOEM is proposing this change to both ensure that any
activities authorized by BOEM are carried out safely and encourage
additional firms to participate in offshore renewable energy
projects as CVAs. The proposed Modernization Rule also changes the
regulatory language defining the CVA’s role from
“certify” and “certification” to
“verify” and “verification” to further align
with the proper industry standard term. Lastly, the proposed
Modernization Rule enables BOEM to instead approve CVA nominations
before COP submittal and allows separate facility design reports
(“FDRs”) and fabrication and installation reports
(“FIRs”) for major project components. BOEM is proposing
these changes to both encourage developers to seek CVA review
throughout their project design process and permit the use of
specialized CVAs to verify specific project components.

4. Public Renewable Energy Leasing Schedule
Introduction

The proposed Modernization Rule introduces a new commitment by
the secretary of DOI to publish a schedule of anticipated lease
sales that BOEM intends to hold in the next five years, to be
updated at least once every two years. This proposed schedule will
include a general description of the area of each proposed lease
sale, the anticipated quarter of each sale, and reasons for changes
made to the previously issued leasing schedule, if any. Comments on
the timing and scope of a scheduled lease sale can be made during
the public comment opportunities afforded by BOEM during the
planning process for each particular lease sale scheduled (e.g.,
Request for Interest, Call for Information and Nominations). BOEM
is proposing this change to provide advance notice to stakeholders
of areas being considered for future lease sales in order to
increase certainty, enhance transparency, and facilitate planning
by industry, the states, and other stakeholders.

5. Renewable Energy Auctions Procedures
Modifications

The proposed Modernization Rule reorganizes and clarifies the
pre- and post-auction procedures. In particular, it addresses the
use of bidding credits and specifies actions to be taken if a
“provisional winner” (a newly added term) fails to meet
its obligations or if an existing lease is relinquished,
contracted, or cancelled. The proposed Modernization Rule also
simplifies and clarifies the auction regulations, replacing the
currently enumerated auction formats, bid systems, and bid
variables with a more flexible process to accommodate an emerging
industry while allowing for auctions to be customized based on
circumstances. However, the proposed Modernization Rule preserves
the option to use multiple factor auctions. BOEM is proposing these
changes to deter potential bidder collusion and more clearly
outline auction processes and requirements—based on lessons
learned from the 11 prior auctions.

6. Financial Assurance Requirements Modifications

The proposed Modernization Rule tailors the financial assurance
requirements (which are required of lessees and grant holders to
protect the US taxpayer against potential liabilities arising from
any default on lessee or grant holder regulatory obligations) to
both allow incremental funding of decommissioning accounts in
accordance with a BOEM-approved schedule during the lease term and
expand the acceptable categories of financial assurance
instruments. The proposed Modernization Rule also eliminates the
supplemental financial assurance currently required before COP
approval and simplifies the requirements for financial assurance
during the early stages of a commercial lease. BOEM is proposing
these changes to better align those requirements with actual risks
posed as a result of such a default.

7. Safety Management System Requirements
Modifications

The proposed Modernization Rule clarifies the information
requirements for safety management systems by introducing both a
performance-based approach to provide flexibility in determining
the best way to ensure personnel safety on and near the OCS and
provide a lessee or grant holder streamlined oversight if it
acquires a safety management certification from an accredited
conformity assessment body. The proposed Modernization Rule also
adds two safety reporting requirements: (1) an annual summary of
how a safety management system performed (normalized to work hours
and energy generation) and (2) a report every three years
summarizing the results of the most recent safety management system
audit and the corrective actions implemented and providing a
description of any changes made to the SMS since the prior report.
BOEM is proposing these changes to align with industry practice, to
clarify safety management systems requirements, and to incentivize
lessees and grant holders to obtain a safety management
certification from an accredited conformity assessment
body—all in order to reduce the frequency and intensity of
regulatory oversight activities.

8. Other Modifications and Technical Corrections

The proposed Modernization Rule includes various modifications
that do not fit within any of the major reforms discussed above,
the most significant of which are (1) restructure commercial lease
terms into four periods tied to activities required to develop the
lease; (2) explicitly allow regulatory departures before and after
a lease or grant is issued or made; (3) authorize civil penalties
without either notice or a time period for corrective action when
violations cause or threaten to cause serious, irreparable, or
immediate harm or damage; (4) add specific procedures regarding
lease segregation and consolidation; and (5) standardize the annual
rental rate per acre across most grants. The proposed Modernization
Rule also both corrects technical errors in the existing
regulations and makes corrections to ensure consistency between the
proposed changes and existing practice.

Next Steps

Public comments on the proposed Modernization Rule will be due
to BOEM 60 days after publication of the Notice in the Federal
Register
, which is supposed to occur in the coming days. Once
the public comment period ends, the proposed Modernization Rule
will be subject to further changes at BOEM’s discretion
depending on the public comments it receives.

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This
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article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
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