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New legislation aimed at expediting development of offshore renewable energy projects gaining speed among coastal states

October 15, 2009


As climate change drives the search for clean sources of energy, previously untapped sources of renewable energy are drawing increasing attention. By far the largest source of energy lies off the coast in the vast oceans. The Pacific Ocean off the West Coast of the US has enormous potential for hydrokinetic power through waves and the tide while the shallower continental shelf on the East Coast is perfect for wind power projects.
However, in order to allow for efficient and responsible development of these sources of energy, it is critical that a comprehensive regulatory framework exists to lease and permit these projects.
Numerous coastal states have passed or are in the process of passing legislation to expedite development of renewable energy projects within state territorial waters (within three miles of the coast). However, most of the renewable energy potential lies on federal submerged lands on the outer continental shelf (OCS) between 3 and 200 miles from the coast. The federal regulatory framework was initially characterized by uncertainty and inefficiently creating high potential costs and making it difficult to move forward with experimental and pilot projects.
The Minerals Management Service (MMS) actually addressed this uncertainty by issuing comprehensive rules in April, 2009 detailing application, plan submission, and environmental review requirements for competitive and noncompetitive leases.
For wind project developers, obtaining a lease from the MMS is the only area of concern.  While the rules detail a complex and lengthy process, it was clear enough to spur wind development.
For hydrokinetic projects, on the other hand, it was entirely unclear whether a lease from the MMS was sufficient or even required due to an ongoing jurisdictional dispute between the MMS and the Federal Energy Regulatory Commission (FERC). The MMS claimed it was given express authority to lease lands on the Outer Continental Shelf for renewable energy purposes by the Energy Policy Act of 2005. FERC argued that it had jurisdiction over hydrokinetic projects because it is required to issue licenses for projects involving generation of electricity using water (dams and other hydrokinetic projects on rivers).
This dispute was resolved on April 9, 2009 when the Department of Interior (MMS) and FERC signed a Memorandum of Understanding (MOU). Moreover, the nature of the relationship between FERC and the MMS was clarified by joint guidance issued on August 3, 2009. Under the MOU and guidance, an applicant must receive a lease from the MMS and a permit from FERC. For a competitive lease sale process, the applicant must first obtain a lease from the MMS and then seek a FERC permit. For a noncompetitive lease sale process, the applicant is encouraged to file applications simultaneously. Hopefully the agencies will coordinate to prevent duplication and avoid unnecessary delays since the complex process is already wrought with potential for red tape. In fact, the guidance stipulates that the competitive lease sale and permit process for a hydrokinetic project might already take over four years!
Finally, on June 12, 2009 President Obama issued a memo and proclamation to establish an Ocean Policy Task Force. Hopefully this task force will develop and implement a comprehensive regulatory and ocean planning framework that will streamline the process for developing wind and wave projects while also ensuring that the oceans are protected.
For a link to MMS/FERC guidance and MOU, please click here:
Source: Leor Pantilat
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