Guidelines for MMS Renewable Energy Framework

MMS has just posted guidelines that provide details of the types of information required in making application for interim and commercial leases on the OCS and also for implementation of the MOU between MMS and FERC.

From the issuance:
These guidelines will evolve and will be revised and updated as necessary as we implement the OCS renewable energy program.  Also, as we gain experience with renewable energy development on the OCS, we may update our regulations to include energy-resource-specific provisions.  These guidelines do not change the letter or intent of the REAU regulations.

You can view the regulations here -REN Guidebook August 2009

President Obama Announces Ocean Task Force

On June 12, 2009, President Obama announced the formation of an Oceans Task Force, comprised of heads of various federal agencies, to develop a national policy on oceans that “ensures the protection, maintenance, and restoration of the health of ocean, coastal, and Great Lakes ecosystems and resources, enhances the sustainability of ocean and coastal economies, preserves our maritime heritage, provides for adaptive management to enhance our understanding of and capacity to respond to climate change, and is coordinated with our national security and foreign policy interests.”

Additional information about the task force is available here.

Interestingly, the proposed policy endorses use of adaptive management, a strategy which OREC has long endorsed.  Funding for an adaptive management fund is included in the Senate version of the energy bill, described in further detail in the New York Times.

OREC Summary of MMS Regulatory Framework

As you know from our earlier post, the MMS regulations for leasing on the Outer Continental Shelf which issued back in April will take effect on June 22, 2009.  In anticipation of the regulation effective date, MMS is conducting a series of workshops to describe this new Regulatory Framework and to respond to questions.  For more information about the workshops, visit the MMS Press Release here.

Last week, MMS kicked off its workshop series with a program at Department of Interior in Washington D.C.   OREC’s two summer staffers, Alex Smith and Anthony Moliterno, attended the hearing and prepared this summary which has been uploaded.  The summary describes the key features of the proposed regulation and also reports on the questions raised by other meeting participants. You can also view the MMS Power Point presented at the workshops here.

FERC FY10 Budget Shows Limited Growth For Marine Renewables

We at OREC recently reviewed FERC’s FY10 Budget to see if we could glean any insights about the future of the marine renewables industry.

Going by FERC’s budget predictions, there won’t be much significant growth in the marine renewables industry, at least over the next two years.  From the budget document:

Since FY 2007, FERC has experienced a moderate increase in interest in both conventional hydropower projects and hydrokinetic technology projects with over 10,000 MW of new hydropower proposals before the Commission.  This trend is a result of high oil prices and market forces, growing interest in low emission, domestic and renewable energy sources, state renewable portfolio standard policies, and federal incentives consisting of tax credits, tax free bonds and direct subsidies.

In FY 2008 Commission staff developed licensing procedures for pilot projects tailored to meet the needs of entities interested in testing new hydrokinetic technology, while minimizing the risk of adverse environmental impacts. The goals of the pilot procedures are to:  accommodate the rapidly expanding interest in hydrokinetic technologies; allow developers to test their new technologies; determine appropriate siting of these technologies; and confirm their environmental effects, all while maintaining Commission oversight and input. The process allows the issuance of short- term licenses (five years) of small scale hydrokinetic projects (5 MW or less) in as few as six months to allow for project installation, connection with the electric grid, operation, and environmental testing as soon as possible.  Projects eligible to use this process are of limited size, are removable or able to shut down on short notice, and are not located in waters with sensitive designations. The resulting license would be short-term and include rigorous environmental monitoring and safeguards.   The Commission expects three FTEs will be necessary in FY 2010 to work on these new technology issues, consistent with FY 2008.

So - three Full Time Employees to handle marine renewable for FY2010 and no growth over FY2008.  Moreover, the Commission doesn’t appear to be anticipating any larger scale projects - which is probably reasonable given that so few small projects have gotten through licensing.  Though I wish the news were better, I tend to believe that the Commission’s assessments of its needs are probably accurate.  This is the first time I’ve wished for more government (since more FTEs for marine renewables would mean more projects) rather than less.

President Obama, Secretary Salazar Announce Framework for Renewable Energy Development on the U.S. Outer Continental Shelf

The MMS Rule is out.  Here’s a synopsis and News Release. The 579 page document is available online at: http://www.federalregister.gov/OFRUpload/OFRData/2009-09462_PI.pdf.

We’ll post a synopsis as soon as we’ve had time to absorb this.  Sean and Carolyn will also be participating in tomorrow’s MMS conference call on the rule and we’ll update you if we learn any more.

Memorandum of Understanding signed April 9,2009

On April 9, 2009, Commissioner Wellinghoff of FERC and Secretary Salazar of DOI signed a Memorandum of Understanding to clarify “jurisdictional understandings” regarding renewable energy projects in waters on the OCS. Salient features of the MOU along with my comments are listed below.

1.  Acknowledgment of Jurisdiction:  The MOU acknowledges that MMS has exclusive jurisdiction to issue leases on the OCS for all renewables, including hydrokinetic, and that FERC has exclusive jurisdiction to issue licenses and exemptions for hydrokinetic projects on the OCS.

2.  FERC will not issue preliminary permits for projects on the OCS.

Presumably, this feature is intended to avoid the type of claim jumping issue caused by the Grays’ Harbor project.  At the same time, we recognize that some OREC members will be disappointed by the loss of the ability to file a preliminary permit so as to conduct studies and maintain site priority.  It may be that the only mechanism to preserve priority for a site is to obtain lease rights.

3.  MMS will conduct NEPA analysis for issuance of leases while FERC will conduct NEPA analysis for licenses.  Each agency may choose to become a cooperating agency in the other’s process.

This requirement is a bit troubling because it suggests that there will be two NEPA processes - one for the lease and one for the license, rather than a uniform NEPA process.  OREC is already working separately on measures to develop a single joint, uniform license process and we will continue to so.  We would appreciate additional member input on this matter.

4.  FERC will not issue a license until an applicant has first obtained a lease.

This provision is a logical consequence of having both FERC and MMS on the OCS.  However, a lease is not a prerequisite to filing a license application, only to its issuance.  In the interim, if a company files for a license and does not have a lease, it seems that a competitor apply for a lease for lands that are within the scope of the license application.  Of course, there are ways to prevent this - for example, to bar MMS from issuing a lease for a site covered by a pending license application.  But as currently drafted, the MOU does not contain this protection.

5.  Other issues:

FERC and MMS will cooperate to determine how to handle hybrid (wind/wave) operations and projects that straddle the OCS and state lands.

6.  Annual Charges/royalties

There is not discussion as to how FERC and MMS will handle annual charges and royalties.  MMS intends to assess royalties for leases while FERC assesses annual charges under Section 10 of the FPA for hydrokinetic projects.  Will developers wind up paying both?

This summary is necessarily cursory as we prepare for the Global Marine Renewable Energy Project next week.  We can continue discussion of the MOU at that time.

You can find the entire Memorandum Of Understanding here or it can be found on our Resources page under FERC and MMS Regulatory Orders.

Breaking News: FERC and MMS Announce Agreement on Offshore Renewable Energy Development

On March 17, 2009, FERC and MMS announced an agreement to resolve the jurisdictional disputes which have stymied offshore renewables development.  We’ve included the Press Release at the end of this post.  Over the years, OREC and its members’ consistently supported a negotiated resolution of the MMS/FERC dispute and we are gratified that the agencies have agreed to this approach.  While the final details of the resolution are not in place, we remain optimistic.

To view the briefing paper that FERC provided to Hill staff, click here

FERC/MMS Press Release Below

Interior and FERC Announce Agreement on Offshore Renewable Energy Development

WASHINGTON, DC – In a joint statement issued today Secretary of the Interior (DOI), Ken Salazar and Acting Chairman of the Federal Energy Regulatory Commission (FERC) Jon Wellinghoff announced that the two agencies have confirmed their intent to work together to facilitate the permitting of renewable energy in offshore waters.

“Our renewable energy is too important for bureaucratic turf battles to slow down our progress.  I am proud that we have reached an agreement with the Federal Energy Regulatory Commission regarding our respective roles in approving offshore renewable energy projects.  This agreement will help sweep aside red tape so that our country can capture the great power of wave, tidal, wind and solar power off our coasts,” Secretary Salazar said.

“FERC is pleased to be working with the Department of the Interior and Secretary Salazar on a procedure that will help get renewable energy projects off the drawing board and onto the Outer Continental Shelf,” Acting FERC Chairman Jon Wellinghoff said.

Below is the joint Statement between DOI and FERC signed by Secretary Salazar and Acting Chairmain Wellinghoff:

JOINT STATEMENT BY THE SECRETARY OF THE INTERIOR AND THE ACTING CHAIRMAN OF THE FEDERAL ENERGY REGULATORY COMMISSION ON THE DEVELOPMENT OF RENEWABLE ENERGY RESOURCES ON THE OUTER CONTINENTAL SHELF

The United States has significant renewable energy resources in offshore waters, including wind energy, solar energy, and wave and ocean current energy.

Under the Outer Continental Shelf Lands Act, the Secretary of the Interior, acting through the Minerals Management Service, has the authority to grant leases, easements, and rights-of-way on the outer continental shelf for the development of oil and gas resources.   The Energy Policy Act of 2005 amended the Outer Continental Shelf Lands Act to provide the Interior Department with parallel permitting authority with regard to the production, transportation, or transmission of energy from additional sources of energy on the outer continental shelf, including renewable energy sources.

The Interior Department’s responsibility for the permitting and development of renewable energy resources on the outer continental shelf is broad.   In particular, the Department of the Interior has permitting and development authority over wind power projects that use offshore resources beyond state waters.

Interior’s authority does not diminish existing responsibilities that other agencies have with regard to the outer continental shelf.   In that regard, under the Federal Power Act, the Federal Energy Regulatory Commission has the statutory responsibility to oversee the development of hydropower resources in navigable waters of the United States. “Hydrokinetic” power potentially can be developed offshore through new technologies that seek to convert wave, tidal and ocean current energy to electricity.   FERC will have the primary responsibility to manage the licensing of such projects in offshore waters pursuant to the Federal Power Act, using procedures developed for hydropower licenses, and with the active involvement of relevant federal land and resource agencies, including the Department of the Interior.

We have requested our staffs to prepare a short Memorandum of Understanding that sets forth these principles, and which describes the process by which permits and licenses related to renewable energy resources in offshore waters will be developed.

Secretary of the Interior
Acting Chairman of the Federal Energy Regulatory Commission

Background on FERC-MMS Juridictional Dispute

In the next week, we may see Congressional hearings on how to resolve the FERC-MMS jurisdictional dispute on the Outer Continental Shelf.  The Congressional Research Service issued this paper on the topic in October 2008 (click here) and our counsel, Carolyn Elefant wrote an extensive post on the topic at her Renewables Offshore Weblog. Here’s the introduction:

As I remember, the provisions of the Energy Policy Act of 2005, which authorized the Mineral Management Service to lease property on the Outer Continental Shelf (OCS) for alternative energy projects, were intended to clarify who’s the boss on the Outer Continental Shelf. Before EPAct of 2005, it wasn’t one hundred percent clear how companies like Cape Windcould acquire definitive property rights for siting projects on the OCS and the new law closed that gap.

Except…in closing one gap, EPAct 2005 created another question about which agency, FERC or MMS (or both) have the power to authorize wave or tidal projects on the OCS. Without any further guidance from Congress, FERC and MMS have been duking it out ever since….Read on by clicking here .

Secretary Salazar Holds Press Conference

Last week, Department of Interior Secretary Salazar held a press conference to discuss, among other things, the Mineral Management Service’s plans for management of the Outer Continental Shelf.  Earth2tech.com has a good summary here.

Salazar stated that he is committed to issuing the long awaited rules for authorizing alternative energy projects on the Outer Continental Shelf and expects new rules to issue “in the coming months.”  As OREC members are aware, OREC participated extensively in the rulemaking process since February 2006, filing lengthy comments on various MMS initiatives (see OREC Policy Statements here ).  Presumably, the new regulations will resolve the ongoing jurisdictional dispute between MMS and FERC.

FERC Chairman Kelliher To Depart

On January 7, 2009, FERC Chair Joseph Kelliher announced his intention to step down from the Commission effective January 20, 2009.  Kelliher, who was appointed by President Bush, served on the Commission for three and a half years. In a recently issued Press Release, OREC thanked Chairman Kelliher for his service as Chairman and his leadership in formulating policies to promote the emergence of a marine renewables technology in the United States. Here’s one of Chairman Kelliher’s statements regarding marine renewables from December 2006.

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