Developing Offshore Wind in California – Environmental Permitting and Interconnection Considerations
February 18, 2022
Downey Brand Energy Publication
The California coast offers significant potential for offshore wind development that can help the state reach its renewable energy goals. Developers of wind energy projects located off the California coast will face a number of regulatory challenges, including extensive environmental review, federal and state permitting, and interconnection to the electric grid. There are several variables in the development process that affect which permits are required for offshore wind projects, and federalism issues (i.e., the interaction between state and federal requirements) are yet to be resolved. Offshore wind developers must determine how projects will be integrated with the existing electric transmission grid. In California, there are several options for interconnection, including connecting to infrastructure left at sites of retired power plants or connecting through new, and perhaps innovative, arrangements. However, where such infrastructure is located within California’s “coastal zone,” as designated under the California Coastal Act, careful planning and negotiation with state agencies will be necessary. This article provides an overview of environmental permitting and interconnection considerations for developers and other stakeholders interested in offshore wind development.
Background of Offshore Wind in California
California has set increasingly ambitious greenhouse gas (GHG) reduction and renewable energy development goals for itself. The California Global Warming Solutions Act of 2006 mandated that the state reduce its GHG emissions to 1990 levels by 2020. The state achieved this goal and, with the passage of SB 32 in 2016, raised its goal for GHG emissions reduction to 40 percent below 1990 levels by 2030. Subsequently, California passed legislation setting energy procurement targets to help reach its GHG reduction goals. The 100 Percent Clean Energy Act of 2018 (SB 100) requires that by 2045, 100 percent of retail sales of electricity to end-use customers and electricity procured by state agencies must come from eligible renewable energy sources and zero-carbon resources. A study by the National Renewable Energy Laboratory (NREL) suggests that offshore wind projects can help the state reach these renewable energy goals and identified areas off the West Coast of the United States as having potential to generate large amounts of energy.
To help pave the way for offshore wind development in California, on September 23, 2021, California Governor Newsom signed AB 525, which requires the California Energy Commission (CEC) to: (1) prepare a strategic plan for developing offshore wind resources by June 30, 2023; and (2) establish specific offshore wind energy generation targets for 2030 and 2045 by June 1, 2022. The Biden administration is also prioritizing offshore wind development. President Biden signed a climate executive order in January 2021, setting the goal of doubling offshore wind by 2030. There are currently several California offshore wind initiatives underway, at the federal and state levels. At the federal level, for instance, the U.S. Bureau of Ocean Energy Management (BOEM) is developing leases for two wind energy areas offshore Central and Northern California: Morro Bay Wind Energy Area and Humboldt Wind Energy Area. At the state level, the California State Lands Commission (SLC), which holds title to a majority of the submerged and tidal lands in California, is also considering two applications for wind energy projects off the Santa Barbara County coast: CADEMO Demonstration Project and Ideol USA Vandenberg Air Force Pilot Project.
Offshore wind project development requires a number of federal and state environmental permits. The permitting process varies depending on where the offshore wind project is sited.
Permitting Process for Projects in the Outer Continental Shelf
- U.S. Bureau of Ocean Energy Management Lease & Authorization
BOEM is responsible for regulating offshore energy uses located on the Outer Continental Shelf (OCS), which extends from three nautical miles offshore to the edge of the Exclusive Economic Zone ending at 200 nautical miles offshore. (30 C.F.R.§ 585.100.).
BOEM has a four-step process for authorizing offshore wind development. First, in the planning and analysis phase, BOEM publishes a Call for Information and Nomination to identify Wind Energy Areas. Second, BOEM conducts a leasing process that varies depending on whether it is competitive or non-competitive. Leases grant developers the exclusive right to pursue and plan an offshore wind project in the area, not the right to construct facilities. Developers must still seek BOEM approval for actual development of the leased areas. Third, the lessee conducts site characterization studies. The lessee must prepare a Site Assessment Plan (SAP) for BOEM review and approval. Fourth, the lessee prepares and submit a Construction and Operations Plan (COP) that BOEM must also approve. Once the COP has been approved and other relevant agencies have completed their reviews and authorizations, construction can being. (For more information on BOEM’s leasing process, see Wind Energy Commercial Leasing Process.).
- National Environmental Policy Act
Given the number of “major federal actions” necessary for the development of offshore wind, environmental review pursuant to the National Environmental Policy Act (NEPA) is applicable to offshore wind projects sited in the OCS. (See 42 U.S.C. § 4332.). Typically, for such projects BOEM acts as the lead NEPA agency and coordinates with other federal, state, and local agencies throughout the environmental review process. The multiple stages of BOEM’s authorization process may require multiple rounds of environmental review. For example, on July 28, 2021, BOEM formally designated the Humboldt Wind Energy Area, triggering NEPA. On January 11, 2022, BOEM released the Draft Environmental Assessment that analyzes the potentially significant environmental effects of issuing a lease and site assessment activities, not development activities. If and when BOEM issues a lease, the developer-lessee must prepare a Construction and Operations Plan, which BOEM must evaluate under NEPA and approve.
Permitting Process for Projects in California Waters
- State Lands Commission Lease
The California State Lands Commission (SLC) is responsible for managing submerged public lands in California, which extends from the mean high-tide line out to three nautical miles from shore. The Commission issues leases for use or development in public lands under its jurisdiction. Applicants submit a lease application to the Commission; the application is reviewed to determine if the proposed action is in the best interest of the State. (See 2 C.C.R. § 2802.). Any offshore wind project sited in California waters under SLC’s jurisdiction will require an SLC lease.
The two offshore wind applications SLC is currently reviewing, the CIERCO CADEMO Offshore wind Demonstration Project and the Ideol USA Vandenberg Air Force Pilot Project, are both for the construction, operation, maintenance, and decommissioning of the projects. The two applications will go through extensive environmental review before staff brings the applications before the Commission for consideration of a lease.
- California Environmental Quality Act
Offshore wind projects permitted by SLC must also go through the California Environmental Quality Act (CEQA) environmental review process. CEQA requires state and local government agencies to inform decision makers and the public about the potential environmental impacts of proposed projects, and to reduce those impacts to the extent feasible. (For more information on CEQA see CEQA Chronicles.).
For the purpose of CEQA review, the SLC may act in the lead agency role. In that case, SLC can begin the environmental review process once the lease application is deemed complete. Under CEQA, SLC can review the two applications together. For the Vandenberg Offshore Wind Energy Projects, the applications were deemed completed in 2020 and SLC began an early scoping and public engagement process. SLC released a Draft Preliminary Environmental Assessment in July 2021. Although not part of the formal CEQA process, this document will serve as an early foundation of information for preparing the Environmental Impact Report (EIR) for the projects. The Draft Preliminary Environmental Assessment will go through a public comment process, after which staff will prepare a staff report and the Commission will consider whether to hire an environmental consultant to prepare an EIR. If approved, staff will prepare a Notice of Preparation (NOP) that will go through a public comment process. Staff will then prepare the draft EIR, which will also go through a public engagement process. The final step is for the Commission to hold a public meeting to consider whether to certify the EIR.
Coordination of State and Federal Environmental Review
Transmission cables interconnecting offshore wind projects in the Outer Continental Shelf to a land-based substation will inevitably pass through State waters, requiring state level discretionary approvals. These approvals will trigger CEQA. Federal and state agencies can likely coordinate their NEPA and CEQA environmental reviews in a joint document. Under current regulations, agencies can prepare joint CEQA/NEPA environmental documents when both statutes are implicated. It has yet to be seen, however, if this process will be utilized for offshore wind projects. Under AB 525, the CEC’s strategic plan must include recommendations on NEPA and CEQA coordination.
Building Out Onshore Infrastructure & Other Regulatory Considerations
In conjunction with the main environmental review processes associated with the BOEM and SLC permits, offshore wind projects may also require permits from a variety of federal and state agencies for construction activities and onshore development.
- State Lands Commission Lease
Regardless of where an offshore wind project is sited, in the OCS or in State waters, development will likely require an SLC lease for transmission cables that pass through areas within SLC jurisdiction.
- Clean Water Act Section 404 Permit
The construction activities associated with offshore wind projects are likely to implicate discharges of dredged or fill material into waters of the United States, and will therefore require a Clean Water Act (CWA) section 404 permit from the U.S. Army Corps of Engineers (Army Corps). A section 404 permit is required for the discharge of dredged or fill material into waters of the United States, which, among other things, includes the territorial sea, the area that extends from below the high tide line to a distance of three nautical miles. (33 C.F.R. § 328.4.). A discharge of fill material includes a broad scope of activities, such as the placement of pilings or the building of any infrastructure that requires rock, sand, soil, or other materials for construction. On the other hand, a discharge of dredge material occurs with the addition of dredged material to, including redeposit within, the waters of the United States. (40 C.F.R. § 232.2.). Construction and excavation activities and the placement of certain structures within the territorial sea would likely trigger the need for a CWA section 404 permit. Further, issuance of a section 404 permit triggers the need for CWA section 401 water quality certification (addressed in more detail below), as well as a consistency determination from the California Coastal Commission.
- Section 10 of the Rivers and Harbors Act
A permit under section 10 of the Rivers and Harbors Act (Section 10 permit) may be required for construction activities, substations, and transmission cables within the navigable waters of the United States, defined as “those waters that are subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be susceptible for use to transport interstate or foreign commerce.” (33 C.F.R. § 329.4.). Section 10 of the Rivers and Harbors Act prohibits unauthorized obstructions to the navigable capacity of any waters of the United States. (33 U.S.C. § 403.). Activities outside of the limits of the navigable waters of the United States may also require a Section 10 permit if any activities affect the course, location, or condition of the water body. To conduct such activities, developers must secure authorization from the Army Corps. Like a CWA section 404 permit, a Section 10 permit will also trigger the need for a CWA section 401 water quality certification, as well as a consistency determination from the California Coastal Commission.
- State Water Quality Certification
The issuance of permits under CWA section 404, section 10 of the Rivers and Harbors Act, and other possibly required federal licenses and permits may trigger Section 401 water quality certification. CWA section 401 requires water quality certification for any federal permit or license covering an activity that may result in a discharge into waters of the United States, which include the territorial sea. (33 U.S.C. §§ 328.4, 1341.). In pertinent part, waters of the United States are defined to include the “territorial sea,” defined above. Generally, the states and authorized tribes with jurisdiction over the location of a discharge’s origin are responsible for issuing the certification, which may be conditioned on limitations necessary to ensure compliance with state water quality criteria (in California, called water quality objectives) and “any other appropriate requirement of state law.” (33 U.S.C. § 1341(d).). The State or Regional Water Quality Control Board(s) issuing the certification may view onshore construction activities, laying transmission cables for interconnection, or other construction or operational activities in waters of the United States as implicating potential water quality concerns. (For more information on water quality issues see Water Quality Law.).
- Waste Discharge Requirements
On April 2, 2019, the California State Water Resources Control Board (State Water Board) adopted a State Wetland Definition and Procedures for Discharges of Dredge or Fill Material to Waters of the State (Procedures). The Procedures establish application and review requirements for the discharge of dredged or fill material to waters of the state, which includes both federal and non-federal waters of the state, wetlands, and other aquatic features. In doing so, the Procedures supplement existing application submittal and review requirements for the regulation of discharges of dredged or fill material into all waters of the state, and establish procedures for the Regional Water Quality Control Boards’ review and approval of individual water quality certifications, waste discharge requirements (WDRs), and waivers of WDRs for dredge or fill activities (collectively referred to as “Orders”). The Procedures largely duplicate (and in some respects are inconsistent with) federal permitting procedures for discharges of dredged or fill material, but add a significant new layer to the already byzantine regulatory process for permitting projects that involve fill of federal and state waters and wetlands. Because waters of the state include all federally jurisdictional waters (i.e., waters of the United States), as well as other water features under state jurisdiction, any discharges of dredged and fill material to an aquatic resource generally triggers compliance with the Procedures. (For additional information regarding the Procedures, see After Years of Handwringing and Lengthy Stakeholder Negotiations, California Water Board Adopts State Wetland Definition and Procedures for Discharges of Dredge or Fill Material to Waters of the State.).
- Coastal Zone Management Act
The federal Coastal Zone Management Act of 1972 (CZMA) requires all federal agency activities (including federal development projects, permits and licenses, and assistance to state and local governments) affecting the Coastal Zone be consistent with the enforceable policies of the California Coastal Program. (See 16 U.S.C. § 1456.). The California Coastal Commission (CCC) has two review processes to implement this requirement: (1) a consistency determination for federal agency activities and development projects; and (2) a consistency certification for federal permits and licenses, and/or federal support to state and local agencies. The legal tests, review periods, and dispute resolution mechanisms differ between the two processes.
BOEM’s planned leasing activities must be consistent with the California Coastal Program. On January 24, 2022, BOEM submitted a consistency determination for leasing activities in the Humboldt Wind Energy Area, which CCC staff are in the process of reviewing. The CCC will likely have to conduct another round of consistency review when specific offshore wind projects are proposed in the designated lease areas. Additionally, consistency certification is required for various Federal permits a project may require, including a CWA section 404 permit and a section 10 permit under the Rivers and Harbors Act.
- Coastal Development Permit
The CCC has jurisdiction over California’s Coastal Zone, the land and water area extending offshore to the limit of California’s jurisdiction and extending inland generally 1,000 yards from the mean high tide line. (Public Resources Code § 30103.). Project proponents must obtain a Coastal Development Permit (CDP) for any “development” located in the Coastal Zone. (See Public Resources Code § 30600(a).). Building out onshore infrastructure will likely involve some level of development in the Coastal Zone and may, therefore, require a CDP. The California Coastal Act defines development broadly to include a wide range of activities in the Coastal Zone, such as, “the placement or erection of any solid material or structure” and “construction, reconstruction, demolition, or alteration of the size of any structure.” (Public Resources Code § 30106.). Where an offshore wind project may take advantage of existing infrastructure located in the Coastal Zone, such as existing substations and transmission lines at decommissioned power plants, the project may instead be considered “repair or maintenance,” which has the potential to influence the scope of the activities covered by the CDP. CDPs are generally not required for repair and maintenance of existing developments so long as the repair does not increase the size of the existing development. (Public Resources Code § 30610(d).). However, potential project proponents should note that the repair and maintenance exception to the CDP requirement is narrow, and requires a fact-specific analysis of the scope of any reconstruction activities. Importantly, any offshore wind project “development” activities within the Coastal Zone that fall outside the California Coastal Act definition of “repair or maintenance,” would continue to require a CDP.
In issuing a CDP, the CCC will review the project to ensure that the Coastal Zone is protected, public access to the coast in maintained, and, where appropriate, ensure that the safety, health, and welfare of surrounding neighborhoods and communities are upheld. (See Public Resources Code § 30253(a)–(e).). As part of this review, development in certain environmentally sensitive habitat areas may be curtailed, prohibited, and/or require extensive mitigation. The CCC, in evaluating offshore wind projects, will also be influenced by its Sea Level Rise Policy Guidance, which recommends a methodology for addressing sea level rise in CCC planning and regulatory actions, including an overall planned retreat of certain coastal infrastructure, which may be made a condition of any issued CDP.
The power generated by offshore wind resources will need to be brought onshore and integrated with the existing electric transmission grid.
Power from offshore wind resources in the Central Coast area is expected to come onshore at the sites of retired power plants, to take advantage of existing substations and transmission lines. According to recent studies by the California Independent System Operator (CAISO), the 500 kV substation at the Diablo Canyon Nuclear Power Plant, which is scheduled to retire by 2025, can accommodate about 4400 MW of offshore wind generation from nearby resources, but a new 500 kV substation will need to be added near the site of the Morro Bay Power Plant, which was retired in 2014, to accommodate the 2300 MW of offshore wind resources expected to be developed in that area.
North Coast offshore wind resources present a greater transmission challenge than Central Coast resources. The North Coast has an eventual offshore wind development potential of over 14,000 MW, but there are no existing substations that can handle this level of generation. Even the relatively modest initial addition of 1600 MW of offshore wind in the Humboldt area will require significant new transmission infrastructure. The CAISO is currently considering three options for connecting the Humboldt wind resources to the existing grid: two new 120-mile Alternating Current 500 kV lines to connect to the Round Mountain-Table Mountain line; a subsea Direct Current cable to a new 230 kV substation in the Bay Area; and overhead Direct Current lines to a new 500/230 kV substation in the Bay Area. The estimated costs of these options range from $1.2 billion to $4 billion.
The CAISO is also considering options for interconnecting individual offshore wind units to the grid. One possibility is for each unit to connect by an individual dedicated cable to an onshore substation. Alternatively, multiple projects could be linked to form an offshore grid and the aggregated output of those projects could be delivered onshore by a single cable, an approach that is being explored for offshore projects in New York and Denmark. However, the deep ocean floor off the California coast might require a different solution.
Once the power from offshore wind resources is brought onshore and connected to the existing transmission grid, additional investments in interconnections, substations, and transmission lines will be needed to accommodate the power flows from offshore resources. To connect the 10,000 megawatts of offshore wind needed to meet the state’s goal of relying on zero-carbon resources to supply 100% of retail electric demand by 2045, the CAISO estimates that investments with a total cost of over $8 billion will be needed.
The magnitude of the needed investment in transmission infrastructure has led to some creative alternative proposals. One proposal is to use undersea cables to transmit power directly from the Central Coast wind resources to the Los Angeles area load centers, avoiding the need for at least some of the substantial upgrades to the existing transmission grid that will be required over the next two decades.
While the California coast offers significant potential for offshore wind development that can help the state reach its renewable and zero-carbon energy goals, the path to construction and operation of these projects will be challenging. Developers will have to navigate complex and extensive environmental review and federal and state permitting. The processes and authorizations discussed herein are by no means an exhaustive list. Offshore wind developers must also resolve interconnection issues and plan for how projects will be integrated with the existing electric transmission grid. While there remains some uncertainty in how offshore wind will develop in California, it is certain that developing an offshore wind project in California will require careful planning and negotiation with various federal, state, and local agencies, and stakeholders. Potential developers and other interested parties will need to stay apprised of the many regulatory requirements and issues related to interconnection.