The first offshore wind farm became operational in 1991 in Vindeby, Denmark. By 2008, large offshore wind farms had been built in Denmark, the UK, the Netherlands, Ireland, and Sweden with a total capacity of 1200 MW. Offshore wind farms have the potential to generate a significant fraction of US electrical consumption, but the US currently lacks offshore wind farms and is still developing a regulatory system. At the state level only Texas has a leasing system for offshore wind. Since all offshore land is the property of the state and cannot be legally developed without a lease from the government, these absences have stalled development. We review and compare regulatory and leasing systems developed in Europe and the US to inform a discussion of the major issues associated with the development of an offshore leasing and regulatory system. We focus on the tradeoffs between encouraging a sustainable energy source and ensuring environmental protection and public compensation. We conclude that there are likely multiple effective methods of regulation. (C) 2009 Elsevier Ltd. All rights reserved.