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Several East Coast House Democrats introduced legislation (H.R. 1696) yesterday to permanently ban offshore drilling in the Mid- and North Atlantic OCS planning areas.  These areas cover offshore lands from Maine through North Carolina.  Rep. Frank Pallone (NJ) sponsored the legislation along with Albio Sires (NJ), Steven Rothman (NJ), James Moran (VA), and Kathy Castor (FL).  House leaders have, however, said they do not intend to seek a blanket reimposition of the recently elapsed moratorium. 

This week, Gulf of Mexico coastal states and communities will receive over $25 million from bonus bids and rental fees associated with 2007-08 OCS oil and gas lease sales.  Texas, Alabama, Louisiana, and Mississippi will all receive a portion of funds associated with these sales pursuant to the 2006 Gulf of Mexico Energy Security Act (GOMESA).  The bulk of the money was received from the March 19, 2008 sale.  By law, some of these funds must be used for coastal protection activities, such as mitigating damage to wildlife and natural resources; carrying out a federally-approved marine, coastal, or comprehensive conservation management plans; and mitigating the impact of Outer Continental Shelf activities.  A complete list of disbursements can be found here.  For more information, see the Department of the Interior's news release.

Long Island Power Authority and Consolidated Edison, New York-based electric utilities, announced the successful completion of a feasibility study on a proposed wind farm they plan to construct 13 miles offshore the Rockaway Peninsula, New York. The study found that the interconnection of up to 700 megawatts (MW) of wind power would be feasible with certain transmission system upgrades. Although the proposed wind farm is currently expected to produce 350 MW of generation, it will be designed to expand up to 700 MW, making it one of the largest proposed offshore wind farms in the United States. The next steps include studies of environmental impacts, economic costs, and community impacts. If the utilities move forward with the plan, the project would be subject to the jurisdiction of the U.S. Minerals Management Service under the Energy Policy Act of 2005 and a recently signed MOU between the MMS and FERC. Reuters provides further information.

Noting the environmental impacts of climate change and industrial activity in sensitive areas, 67 House Democrats transmitted a letter to President Obama yesterday urging a "science-based" approach to management of the Beaufort and Chukchi Seas and the Arctic National Wildlife Refuge (ANWR).  They contend that "[t]he most notable and immediate ... threat is from the aggressive and risky expansion of oil and gas activities in the region from the last eight years."  The letter outlines four specific proposals: create an interagency task force to craft comprehensive Arctic energy policy; pass new legislation to protect ANWR; conduct a new assessment of Arctic ecosystems; and suspend new offshore leasing, E&P, shipping, commercial fishing, and mining.  The letter was authored by Reps. Inslee (WA), Markey (MA) and McCollum (MN), and key signees include Energy and Commerce Committee Chairman Henry Waxman (CA), Natural Resources Committee Chairman Nick Rahall (WV), and Foreign Affairs Committee Chairman Howard Berman (CA).

Interior Secretary Ken Salazar today addressed the board of directors for the American Petroleum Institute.  Interior's news release provides the Secretary's remarks. 

Today's Central Gulf of Mexico Oil and Gas Lease Sale 208, which was attended by Interior Secretary Ken Salazar, attracted $703,048,523 in high bids.  Secretary Salazar stated, "today's lease sale will help us make a wise addition to our nation's energy supply."  The single highest bid at the sale exceeded $65 million, offered by Shell Gulf of Mexico.  Shell submitted the most high bids (39) of any sale participant, followed by BP and Marathon.  Before MMS issues the leases, the agency will evaluate each bid to ensure that fair market value is paid.  See the MMS press release for more information about Central Sale 208.

On March 18, 2009, the Minerals Management Service (MMS) published notice of four public stakeholder meetings with Secretary of the Interior Ken Salazar.  During these meetings, Salazar seeks to gather information and input that will be used to develop a comprehensive plan for the development of conventional and renewable energy resources on the Outer Continental Shelf.  Look for logistical information on the MMS website approximately two weeks before the meetings.  For more information, and to view a list of the meetings, please see the notice in the Federal Register.

The Minerals Management Service (MMS) said yesterday that it received 476 bids on 348 tracts of federal lands for offshore oil and gas leases. MMS said that 56 companies submitted bids, but the Associated Press (via the Houston Chronicle) suggests that the interest in these OCS blocks appears to be less than last year’s record-setting lease auction.

In a major development for offshore renewable energy on the OCS, FERC Acting Chairman Jon Wellinghoff and Interior Secretary Ken Salazar today announced an agreement between their agencies to facilitate the permitting and siting of renewable energy projects on the OCS.  Salazar stated that the 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," while Wellinghoff confirmed that the agreement "will help get renewable energy projects off the drawing board and onto the [OCS]."  While this agreement appears to settle the jurisdictional dispute, the details have yet to be worked out. 

The brief joint statement reaffirms Interior's and MMS's broad "responsibility for the permitting and development of renewable energy resources on the [OCS] .... [i]n particular, [its] permitting and development authority over wind power projects that use offshore resources beyond state waters."  It also expressly states that "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."  Wellinghoff and Salazar state that they have requested their agencies' staffs prepare a short memorandum of understanding setting forth the principles outlined in the joint statement and "which describes the process by which permits and licenses related to renewable energy resources in offshore waters will be developed."

In addition, testifying this morning before the U.S. Senate Committee on Energy and Natural Resources and commenting on the new agreement with FERC, Salazar indicated that he expects the MMS will be able to move forward in the next couple months to finalize the rules for offshore wind power development on the OCS. 

This appears to be a win-win for both agencies.  MMS maintains authority over offshore wind power projects and likely will have a cooperating agency role in hydrokinetic projects.  FERC will have permitting and licensing authority over offshore hydrokinetic projects.  Although there are no details at this point, this appears to resemble the regulatory structure applicable to LNG deepwater ports, in which the U.S. Maritime Administration has lead agency authority over the siting and licensing of the projects, and in which MMS is a cooperating agency granting the appropriate leases and rights-of-way. 

While this agreement undoubtedly will provide some regulatory certainty for many project developers going forward, how the two agencies actually flesh out their respective authority remains uncertain.  In particular, in offshore locations where there are competing offshore wind and hydrokinetic proposals with overlapping land claims, there is no indication at this point how such claims will be resolved.

On Wednesday, March 18, 2009,  Interior Secretary Ken Salazar will attend Minerals Management Service lease sale 208, which will offer 6,458 blocks on the Outer Continental Shelf in the Central Gulf of Mexico Planning Area.  It is estimated that this lease sale could produce up to one billion barrels of oil and 5 trillion cubic feet of natural gas.    In addition to conventional resources, Salazar also emphasized the important role that renewable energy will play in the DOI's approach to the use of energy resources and creation of energy initiatives.  Salazar explained, "I have established a task force to help identify renewable energy zones on public lands that are best suited for harnessing wind, solar, and geothermal power." On Thursday, March 19, Salazar plans to meet with the American Petroleum Institute's board of directors.  During his conversation with oil and gas executives, Salazar intends to explain to the industry that, "they are, and will remain, an important part of our energy future. We need to work together on common sense solutions to the energy challenges we face. We share much common ground. We need an open and honest dialogue. And we need to move forward, with common purpose, to build a comprehensive energy plan for America."  For more information, read Interior's news release.

The New York Times published an article today on the ongoing jurisdictional dispute between FERC and MMS over the siting of hydrokinetic power projects on the OCS.  While the dispute centers squarely on which agency has authority to authorize projects in federal waters that generate electric power from ocean tides, waves and currents, offshore wind power appears to be caught in the wake.  Offshore project developers have been waiting for months for MMS to issue a set of rules governing the development of all offshore renewable energy resources on the OCS, including wind.  Without the rules, it is difficult for any project developer to proceed with certainty.  As a result, wind power projects on the OCS, which FERC is not claiming jurisdiction over, also have stalled.

While Both Interior Secretary Ken Salazar and FERC Acting Chairman Jon Wellinghoff (reportedly soon to be named Chairman) have expressed confidence that the dispute will be resolved, Secretary Salazar has characterized the dispute as a significant threat to renewable offshore development, while Chairman Wellinghoff has downplayed its importance by comparison.  According to the New York Times article, Interior and FERC are reported to be close to a memorandum of understanding resolving the dispute.  Given the Obama Administration's push to aggressively develop domestic renewable energy resources and the growing chorus of complaints about the delay from the offshore renewable energy industry, it seems likely that both agencies are getting significant pressure to resolve this turf war.

Last week, the Massachusetts Energy Facilities Siting Board tentatively approved granting Cape Wind Associates, LLC, a Certificate of Environmental Impact and Public Interest regarding the construction of two new transmission lines that would interconnect to a proposed wind facility in Nantucket Sound.  While the decision is not final, it is an encouraging step for the project developers.  The Board expects that a final vote on the Certificate will be taken within 60 days.  If approved, the Certificate, comprising nine state and local permits, would overturn the Cape Cod Commission's denial of the project. 

In a news release, Cape Wind President Jim Gordon said, "This decision represents a major victory for the people of Massachusetts who are waiting for the clean energy jobs from Cape Wind which will help us become more energy independent and make Massachusetts a global leader in clean offshore wind energy production."  Cape Cod Commission attorney, Eric Wodlinger, suggested the Board needs to consider the project's impact on state resources when making a final determination, noting "We argue that the siting board should not put on blinders at the three-mile border."  The Cape Cod Times provides additional coverage.

Interior Secretary Ken Salazar on Wednesday issued an order establishing the Departmental Task Force on Energy and Climate Change ("Task Force").  Secretary Salazar charged the Task Force with "developing a strategy that is designed to increase the development and transmission of renewable energy from appropriate areas on public lands and the Outer Continental Shelf."   This strategy will include identifying and prioritizing "renewable energy zones," which will be specific locations in the U.S. that are best suited for large-scale production of solar, wind, geothermal, incremental or small hydroelectric power on existing structures, and biomass energy.  The creation of this Task Force and the articulation of its duties make clear that the Obama Administration's "comprehensive" strategy on domestic energy development includes a heavy focus on developing renewable generating facilities, including those located on the OCS.  A major part of this strategy will include developing a transmission infrastructure that is capable of delivering renewable energy to the nation's population centers.

Interior Secretary Ken Salazar today announced the schedule for four regional public meetings that will be an important and possibly influential step in the Obama Administration's development of its Outer Continental Shelf (OCS) policy. These public meetings are in connection with the Administration's review of the 5-year Oil and Gas Leasing Program (the "Plan") that was proposed by the Bush administration. The meetings will be held in Atlantic City, NJ on April 6; New Orleans, LA on April 8; Anchorage, AK on April 14; and San Francisco, CA on April 16. At each meeting, Secretary Salazar will present Interior's findings on OCS energy resources and potential environmental impacts, and will solicit public comment. If any interested parties wish to submit comments, but cannot attend one of the four regional meetings, they are encouraged to submit written comments electronically or by mail. Secretary Salazar recently extended the public comment period on the proposed Plan to Sept. 21, 2009.

On March 9, 2009, Senate Energy and Natural Resources Committee Chair Jeff Bingaman released a draft electric transmission bill.  This comes almost one week after Senate Majority Leader Harry Reid released his version of a bill with similar objectives -- to improve and augment the nation's electric transmission infrastructure in order to bring renewable power to consuming markets.  Like Reid's draft legislation, Bingaman's bill as written includes renewable power generated from offshore energy facilities.  

The Bingaman bill contains significant provisions favoring federal authority over siting of transmission infrastructure and applies to "high-priority national transmission project[s]."  Included among the qualifying energy sources identified in the legislation is energy generated from ocean energy, which expressly includes tidal, wave, current, and thermal.  Any entity that seeks to operate, construct, acquire, or modify a high-priority national transmission project would be required to submit an application to FERC (assuming the proponent does not already have an existing certificate).  Click here to read the draft bill.

The Senate Energy and Natural Resources Committee is slated to hold a hearing on electric transmission on Thursday, March 12, 2009.

In an interview with the Associated Press on Monday,  Interior Secretary Ken Salazar called for the creation of "renewable energy zones" to promote the development of offshore wind projects, among other renewable initiatives.  He argued that the waters off the Atlantic coast hold some of the country's greatest wind energy potential and, although the "rules to move forward" with offshore energy are not in place, he promised to move aggressively to develop such offshore resources.   Commenting on opposition to offshore energy siting, Salazar stated that it is critical that "we get this thing done and not get stuck in a not-in-my-backyard syndrome."  He signaled his support for the Cape Wind Project off the coast of Cape Cod, MA, and expressed his desire to review concerns raised by Gov. Tim Kaine regarding oil and gas production offshore Virginia.

Salazar's comments appear to echo Senator Harry Reid's (D-NV) recently introduced renewable energy transmission legislation, which direct the President to designate "renewable energy zones."  Under the proposed definitional language, renewable energy would include wind power projects and ocean-based hydrokinetic power projects.

Today, Santee Cooper, the Coastal Carolina University, and the South Carolina Energy Office announced the deployment of six buoys in state waters as well as the OCS that will be utilized to gauge the potential for offshore wind energy projects.  The buoys, which will measure wind characteristics, will extend six miles from the coastline and may be in place by mid-March.  Santee Cooper, South Carolina's state-owned power company, also plans to install an offshore platform about six months after the buoys are placed.  Once erected, the platform will collect seasonal data for at least a full year, which will be used to show the possible contribution of wind energy to South Carolina's energy needs.  The effort, named the Palmetto Wind Research Project, places South Carolina in position to be a leader in developing offshore wind energy in the United States and could make it the first in the nation to build an offshore wind farm.  The buoy project is being funded by Santee Cooper and a U.S. Department of Energy grant administered by the South Carolina Energy Office.
 
From a regulatory standpoint, those pursuing the Palmetto Wind Research Project will have to grapple with the lack of a federal regulatory framework.  The Bush Administration was due to release a framework for  the Minerals Management Service's Alternative Energy and Alternate Use Program, but left the ultimate regulatory drafting to the Obama Administration.  In addition to any federal regulations, the project will have to be approved to ensure that it does not interfere with shipping lanes, rescue routes for the Coast Guard, habitats and migratory paths for protected bird species, Federal Aviation Administration track equipment, and commercial fishing areas.  The Sun News and Carolina Live provide additional information. 

On March 4, the MMS formally gave notice that it is extending the comment period on the Draft Proposed 5-Year Outer Continental Shelf (OCS) Oil & Gas Leasing Program ("The Plan"). The 180-day extension moves the deadline for receipt of comment from March 23, 2009 to September 21, 2009. States, stakeholders and affected communities are encouraged to submit comments to the MMS, as the Obama Administration formulates its OCS policy. See the Federal Register for the notice.  

Senator Mary Landrieu (D-LA) told Environment & Energy Daily [subscription required] that she plans to work with senators from other energy-producing states to address "excessive" increases in taxes and other costs associated with oil and gas production, including production on the OCS in the Gulf of Mexico, in the Obama Administration's proposed budget. Sen. Landrieu noted that raising costs of production could limit development of domestic energy supplies; however, her stance on these provisions places her at odds with Rep. Nick Rahall (D-WV), Chairman of the House Natural Resources Committee, who already endorsed this part of the budget.

According to a statement earlier this year by Jack Gerard, President of the American Petroleum Institute, "[a] full 70 percent of Virginians in a July poll supported increased offshore development."  Currently, the lease sale of a portion of the OCS offshore Virginia is set for 2011.  Now, as the gubernatorial race in Virginia heats up, the issue of offshore drilling has become a major point of contention among the candidates. 
 
In 2008, following the expiration of the presidential and congressional moratoria on offshore drilling, Governor Tim Kaine (D) wrote to the Bush Administration requesting a cautious and thoughtful approach to offshore drilling including a delay.  The U.S. Minerals Management Service rejected that request.  Kaine then penned a second letter in February 2009, this time to new Secretary of the Interior, Ken Salazar, in which he urged Salazar to take a slow approach to opening the outer continental shelf to offshore drilling.
 
Kaine's efforts to delay offshore development of oil and gas resources are becoming an important issue between the candidates in the gubernatorial race.  Candidate Bob McDonnell (R) has voiced a strong support for offshore drilling and is opposed to any delay.  In his own letter to Salazar, McDonnell wrote, "[t]he delay advocated by Governor Tim Kaine would eliminate Virginia's ability to start early, and place the commonwealth into the same five-year program underway for other Atlantic states."  Other Virginia gubernatorial candidates, Terry McAuliffe (D), Brian Moran (D), and Creigh Deeds (D), have sided with Kaine.  McAuliffe explained in a letter to McDonnell that stimulation of the Virginia job sector should be in green and renewable jobs, and that drilling in the offshore area of Virginia should be off limits.  Moran has taken a hard stance against offshore drilling in general.  Deeds echoed McAuliffe's sentiment on job stimulation in the green sector over offshore drilling.  The Northern Virginian Daily and Energy Current provide additional coverage.
 
The 2011 Virginia lease sale is the only lease sale currently on the table for the East Coast.  As currently envisioned, drilling would be limited to a wedge-shaped area of about 3 million acres.  Situated 50-140 miles offshore, any platforms would be far enough offshore as to be invisible from the beaches.  MMS has estimated that the net revenues from drilling offshore Virginia could be as much as $340 million, and that there could be as much as 130 million barrels of oil and 1.4 Tcf of gas in the area.  Absent a federal bill providing otherwise, the state of Virginia would not receive any money paid by oil and gas companies in connection with any offshore drilling.  The Virginian-Pilot provides additional information.

Today the Environmental Protection Agency (EPA) issued a Final Rule and a Proposed Rule to update the OCS air quality standards in North Carolina and Alaska, respectively. These rules are promulgated pursuant the Clean Air Act (CAA). The CAA mandates the routine update of air quality regulations governing OCS sources located within 25 miles of a state’s seaward boundary except for certain areas in the Gulf of Mexico. The OCS standards must be updated to match the corresponding on-shore air quality regulations (COA). These rules will append the Code of Federal Regulations to make the appropriate COA rules applicable to sources on the OCS.