The Department of the Interior declared on Monday there was "no overlapping competitive interest" in proposed areas for building the line off the mid-Altantic coast. The statement cleared the way for an environmental review of the Atlantic Wind Connection line. Uncertainty about offshore interests have led to delays in other wind projects.

The project faces regional and federal regulatory hurdles which backers hope to clear within two years so it can nail down financial agreements and start transmitting power by the end of 2017. The AWC, which would transport up to 7,000 megawatts of power, is also backed by a private company called Good Energies, and Japan's Marubeni Corp.

Clearing the competitive interest hurdle allows the project to "intelligently plan for the backbone transmission system," said Bob Mitchell, AWC's CEO.

The United States does not yet have any offshore wind farms. But the AWC backers hope companies will build them soon, so they can transmit power that has not been generated by burning of fossil fuels.

Construction of the lines also would strengthen the aging power line system in densely populated cities in states from Massachusetts to Maryland.

The environmental review of the line, which will consider its impact fishing and other factors, could take up to 18 to 24 months.

Interior officials said the government hopes to move forward in coming months with lease sales for companies interested in building the wind farms.

"The governors up and down the East Coast are extraordinarily interested in broadening out their energy portfolio with offshore wind," Tommy Beaudreau, the chief of Interior's Bureau of Ocean Energy Management, told reporters in a teleconference.

"We have seen a level of engagement and interest by the governors ... in getting steel in the water."

The officials stopped short of saying when they expected wind farms to begin producing power off the coast.

The government hopes to avoid litigation in wind power development that has dogged the Cape Wind project off the Nantucket Sound with years of delays.

Beaudreau said the government and AWC backers have worked from the start with stakeholders on wind energy areas to find ones unaffected by conflicts in order to avoid legal delays.

(Reporting By Timothy Gardner; Editing by David Gregorio and Tim Dobbyn)

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