(The Center Square) — New Jersey is facing a legal challenge over lucrative tax breaks the state has pledged to a Danish energy company to develop an offshore wind project.
A lawsuit filed Thursday in state Superior Court by two citizens groups asks a judge to declare unconstitutional a recently approved law granting Ørsted Wind an estimated $1 billion in tax breaks for its 1.1 gigawatt offshore wind project.
“The Legislature’s giveaway of federal tax credits to Orsted benefits a single company in violation of the New Jersey Constitution,” said Bruce Afran, legal counsel for Protect Our Coast NJ and Defend Brigantine Beach, which filed the lawsuit. “Basically, the Legislature caved to the Danish engineering company, giving away a billion dollars in tax credits to relieve Orsted from its commitment to build Ocean Wind 1 from its own money.”
Earlier this month, second term Democratic Gov. Phil Murphy signed an agreement with Ørsted Wind giving the company tax breaks on one of two energy projects it is developing off the coast. Under the plan, Orsted will be allowed to keep federal tax credits that were supposed to be passed to New Jersey utility ratepayers to offset the potential for higher electricity rates.
Murphy and Democrats who pushed the plan through the state Legislature argued the tax relief was needed to help the company deal with inflation and the lingering impact of the COVID-19 pandemic.
New Jersey Republicans have strongly criticized the plan, which they said would cost the state an estimated $1 billion and shift the cost of developing offshore wind to taxpayers.
Critics of the project have appealed the New Jersey agency’s determination that the offshore wind project is consistent with the state’s coastal management regulations.
Meanwhile, Ørsted has filed lawsuits against county and local governments saying that they are dragging their feet on approving preconstruction permits for the project.
Ørsted’s Ocean Wind I project, which received approval from the U.S. Bureau of Ocean Energy Management this month, calls for building nearly 100 towering wind turbines about 15 miles off the coast of Atlantic City. The project still faces many hurdles, including state and federal permits.
President Joe Biden is pursuing plans to add at least 35 gigawatts of offshore wind in the U.S. by 2030, beginning with Vineyard Wind off the southern coast of Massachusetts. Biden says the plan will boost the nation’s clean energy industry and create jobs.
But the rush to construct towering wind turbines off New Jersey’s shoreline and elsewhere along the Atlantic coast has raised concerns about the potential impact on the fishing industry, whales and other marine life and tourism in coastal communities.
Critics of the green energy projects have pointed to an uptick in whale beachings and deaths over the past year, with a group of New Jersey mayors calling for a suspension of wind projects off the coast until federal and state governments conduct investigations.
Republican members of the state’s congressional delegation have filed legislation calling for an investigation into the environmental review process for the “rushed development” of offshore wind farms along the New Jersey-New York coastline.
Federal and state environmental officials have said there is no evidence that whale deaths are related to offshore wind development.
