The Inflation Reduction Act (IRA) tethered wind lease sales in the U.S. to oil and gas lease sales through 2032—both offshore and onshore.
But that may not mean the two are inextricably linked.
“There is a good argument that these stipulations were designed only to swing one way. Wind leases depend on oil and gas leases, not the other way around,” Scott Segal, partner and co-chair of law firm Bracewell’s Policy Resolution Group, told Hart Energy. “At least that was my understanding when it was adopted. Perhaps suspending wind leases might suggest a need to adjust oil and gas leases, but that’s not readily apparent to me.”
The insight was shared as the Democrat-backed IRA and the challenged offshore wind sector remain in the crosshairs of President Donald Trump. The Republican’s bevy of executive orders included directing federal agencies to pause disbursement of funds appropriated through the IRA—and to pause offshore wind leases and permitting activity pending review.
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The U.S. has more than 150 gigawatts (GW) of installed wind power generating capacity, mostly onshore as offshore wind developers work to develop commercial-scale projects. The Biden administration was targeting 30 GW of offshore wind capacity by 2030.
Section 50265 of the IRA states that the Interior Department must have offered offshore oil and gas development leases covering at least 60 million acres in the previous year in order to issue offshore wind development leases. It also states that the Interior Department may only issue onshore wind and solar rights-of-way if, in the previous 120 days, it has held onshore oil and gas lease sales totaling at least 2 million acres (or 50% of the acreage for which expressions of interest were submitted for that period, whichever is less).
The provisions lapse in 2032.
“While Section 12(a) of the Outer Continental Shelf Lands Act (OCSLA) grants the president authority to withdraw unleased lands from disposition, the scope of this power, especially concerning existing leases, remains somewhat ambiguous,” Segal said.
He added that like any other provision in the IRA, changing the section tying wind and oil and gas lease sales “would require an act of Congress absent some unlikely constitutional challenge.”
Legal obstacles ahead?
Approved during the Biden administration, the 2024-2029 National Outer Continental Shelf (OCS) Oil and Gas Leasing Program includes three lease sales—all for acreage in the Gulf of Mexico—in 2025, 2027 and 2029.
The five-year offshore wind lease schedule includes up to 12 potential offshore lease sales through 2028 in the Atlantic, Gulf of Mexico, Pacific and waters offshore U.S. territories.
On the offshore wind permitting front, there were seven projects in the permitting process, according to the Permitting Dashboard for Federal Infrastructure Projects.
The offshore wind executive order issued by Trump on Jan. 20 is pending an environmental, economic and ecological review led by the Interior Department, according to the White House. For existing wind energy leases, the review will determine whether there is a need to end or amend such leases and identify legal bases to do so.
The wind energy memorandum, which is effective until revoked by Trump, also prohibits relevant federal agencies, including the Interior Department, Department of Agriculture, Department of Energy and Environmental Protection Agency, from issuing or renewing approvals, rights of way, permits, leases or loans for onshore or offshore wind projects until the assessment is complete.
Several companies already have offshore projects underway.
Trump’s wind energy executive order may have other legal obstacles it will need to overcome, specifically regarding the directive to review and potentially terminate existing wind energy leases, according to Segal.
“Such actions could violate contractual rights or exceed executive authority, leading to protracted litigation,” he said. “Past legal precedents indicate that abrupt policy shifts impacting existing agreements often result in complex legal disputes. I would think challenges are likely by private litigants or perhaps even from disappointed states counting on wind projects to meet their energy goals.”
To be continued
Looking at Trump’s other energy-related executive orders, another potential issue is the seemingly opposing approaches to the National Environmental Policy Act (NEPA).
“The wind executive order seems to rely on a pretty muscular approach to National Environmental Policy Act (NEPA) remedies. But the Unleashing American Energy executive order by contrast seeks to streamline and limit NEPA,” Segal said. “It’ll be interesting to see which view prevails.”
Offshore wind surfaced during the recent hearing of former North Dakota Gov. Doug Burgum, the president’s Interior Department secretary nominee. Sen. Angus King, whose home state of Maine is working to develop offshore wind resources, pointed out that 36% of North Dakota’s electricity comes from wind.
“I hope one of the projects you might undertake, when and if you are confirmed, is to convince your boss that wind power isn’t all bad,” King said. “He is well known for his opposition to wind power, but you know that the benefits are there. Of course, baseload is also important. Storage is important to balance the grid. I understand that. … We are, as you know it, facing a huge energy challenge over the next 15 to 20 years.”
Acknowledging the good wind resources in Maine and North Dakota, Burgum said the key is baseload versus intermittent.
“We’ve got to have the right balance and we maybe have tipped a little too far in one direction … We need an all-of-the-above strategy; it’s what we’ve had in North Dakota,” Burgum said. “But we need more, and the thing we’re short of most right now is baseload.”
He added that he would take a look at projects underway, and if it makes sense and projects are already authorized by law, the projects will continue. The president’s concerns are with the “significant amount of the tax incentives that have gone toward some forms of energy that have helped exacerbate this imbalance that we’re seeing right now today,” Burgum said.
The U.S. Senate Energy and Natural Resources Committee on Jan. 23 voted 18-2 to recommend Burgum as secretary of the Interior Department.